Pale Blue Dot: Hampus Jakobsson

We created Pale Blue Dot for a number of reasons. Principally, it was and remains frustrating that there aren't enough early-stage, operator-led climate-tech funds. As a result, there are few who know how to be in the trenches with early-stage founders. This is mainly because it's a nasty stage to be in. You have to do a lot of stupid bets. A major challenge relates to assessing founders. Do they really want to change the world for the better? Will they stay the course? Will they sell their technology to the military instead? I jokingly say that it's a combination of Texas Hold'em and reading papers. The technical stuff is searchable, but picking people is a real bet. As a team, we’d previously done 150 odd investments in start-ups and people. As a result, we believe that we are well placed to pick the right people.

In general, the biggest problem with algae-tech relates to demand. How can you create something which has a natural demand? At the end of the day (part-joke, part-truth) if you're selling to a company they care about three things, and if you're selling to a person, they care about three other things. Companies care about increasing revenue, decreasing cost, or decreasing risk. Therefore, when you start talking about increasing biodiversity, you're not checking one of those boxes. Meanwhile, consumers care about getting "paid, made or laid." Are you going to tick one of those boxes with an algae product?

You need to nail one of the following components: reduced price, increased convenience, or better quality. Right now, algae doesn't really check any of those boxes. That’s a problem.

Despite this, there are some exceptions to the rule. For example, our portfolio company betterfish positioned its algae product as an alternative to tuna, but as it isn't from tuna it isn't only better for climate, it is naturally cheaper. Using algae instead of tuna comes with additional benefits like increasing biodiversity, creating local jobs, and providing consumers with healthy food. When they position their product in this way, the buyers say "wow, you've made a better tuna" and few need to "care" that it’s algae. They can capture buyers who care about price and health. If you can increase the margins for companies, decrease the price for the consumer and provide something that's better for the world, you’ve really nailed it.

There are many problem areas but we are thinking particularly hard about saving biodiversity, moving pension fund money and improving supply chains.

I'm super interested in biodiversity. I think we're going to wake up one day and realise that we've missed the problem. We're all talking about carbon, but we don't talk about the thing that creates it. When we fixate on carbon that way, then carbon offsetting works and planting eucalyptus trees works, but these solutions can be terrible for biodiversity. Ecosystems are highly complex. They need a predator-prey system, they need different hierarchies, and different things keep everything in check. I fear that we're building a system where we promote the destruction of biodiversity in the name of climate.

Another area of interest revolves around moving pension fund money. Pale Blue Dot is a $100 million fund. As a result, our biggest job involves picking the right people. When it comes down to investing big money into these teams, we're simply not enough by ourselves. In order to figure out climate change, we need to move pension fund money into these ventures.

In addition, we're also hoping supply chains become shorter and more transparent. Currently, we have a system designed to promote cheap labour and separate production from consumption as much as possible. We have no transparency around environmental variables like water consumption for example. Although the markets only worry about price, we've seen massive price spikes in 2020 which show how we cannot control anything, least of all prices. How broken are other variables in the supply chain? What about things which hurt the environment? How much exponentially worse are these secondary variables compared to price? There's a huge need to create transparency so we can really understand what's going on. Improving this area can have massive benefits for communities and climate.

I propose a Venn diagram perspective on this which separates books into three main areas: red, blue, and green. In the blue sphere, you have books by technologists like Bill Gates, who suggest that we need to invest heavily into technology. His book "How to Avoid a Climate Disaster" is the most prominent in this area. Then you have the green sphere, which proposes a degrowth approach. Things like eat less, travel less, buy less. If you read Arne Næss for example, on extreme green, you would think about ecology a lot better and the degrowth movement. The problem with that circle is that it only works if the majority does it. When comparing the blue mindset with the green, I think blue generally wins. Nevertheless, there are certainly things we should reduce because some problems are very hard to solve through technology alone. Our attitude towards buying new things all the time as a society is one such example.

Finally, we have the red circle, which highlights that we need to change the economic system. People in this corner argue that we are now profiting by destroying the planet. Of course, the reds are really right about many things, but the problem with this corner is that it can oversimplify the challenge as a fight against capitalism. If you go too far in that direction you can create a world where certain kinds of innovation are inhibited.

My favourite book in the red sphere (and the book I think most people should read) is "How to Blow Up a Pipeline". When you're reading that book, you see how the legal system is actually protecting exploitation. In addition, the author explains how we need to discuss topics in order to force the hand of the system and create drastic change.