The Entrepreneurs for Impact Podcast: Transcripts
#123
$1.2B for Investment in Climate Software – John Tough, Managing Partner at Energize Ventures
PODCAST INTRODUCTION
Chris Wedding:
My guest today is John Tough, Managing Partner at Energize Ventures. Energize Ventures is a leading climate software investor that manages $1.2 billion across two strategies, venture capital and growth equity. In addition, John is the former Chief Revenue Officer at Choose Energy, the largest online energy marketplace in North America and former investor at Kleiner Perkins.
01:30
In this episode, we talked about how they make investment decisions using the PMTEDI model. If you're intrigued, good. Sorry, you got to listen to the pod to know what that acronym stands for. We cover the size of checks they write for Series A through Series C stage companies, and what revenue targets they aim for at each stage. The four mega trends they're investing in and sample portfolio companies for each. How they develop investment theses with deep dives and active pursuit of 60 plus companies that might be the sector winner.
The benefits of investing in climate startups in the EU. The importance of asking why now when picking the right CEOs to back. Why he's read 200 plus biographies as a way to be a better investor. The reason that you shouldn't be so concerned with your competition. How scarcity creates clarity. Why problem first, technology second, is their preferred approach and a whole lot more. Hope you enjoy it and please give John and Energize Ventures a shout-out on LinkedIn, Slack, or Twitter by sharing this podcast with your people. Thanks.
PODCAST INTERVIEW
Chris Wedding:
John Tough, Managing Partner at Energize Ventures, welcome to the podcast.
John Tough:
Thanks, Chris, thanks for having me.
Chris Wedding:
We joked before pressing record that you've got a twin brother, so you were the Tough brothers and I just thought, man, what a badass bumper sticker in many forms that could take.
John Tough:
My brother's name's Dough, he's in New York, he's a blonde version of me. We moved to town growing up and it was always the best just to go somewhere with the Tough brothers. We played soccer, we played tennis together. He said in a pre-call, “My retirement career will be doing some sort of show with him.”
Chris Wedding:
There you go. So, for listeners, maybe they've heard of Energize, maybe not yet, lots on that to come, but important that you didn't just step into climate tech. You were there maybe like I was before Clean Tech 1.0 began. Your comment earlier was, you were involved in clean tech when corn was the big idea, that's a soundbite in and of itself. Midwest ethanol plants. Oh, how far we've come.
03:59
John Tough:
Yeah, certainly. It was the summer of 2006, I decided I didn't want to be a doctor anymore. I had a biology and chemistry degree from Duke and investment banks were scouring undergrads for biology and chemistry degrees who could help them explain what ethanol was and how that process could work in the first wave of the renewable energy transition. And back then the Midwest was where the renewable energy transition was starting because corn was the big idea. So, that's why I had no connections to Chicago. I moved here at undergrad and boy, it's been a journey.
Chris Wedding:
Well, you've just made it very clear for all listeners who want to start and run a venture and growth equity fund with hundreds of millions of dollars, the key to get there is a biology and chemistry degree, right?
John Tough:
Yeah. There's a very clear path, of course. Yes.
Chris Wedding:
Yeah, I laugh because my unexpected path into private equity was, not that I was great at finance back almost 20 years ago, it was more that I knew a lot about green real estate, was getting a PhD in green real estate and this environmentally focused PE firm was focused on real estate.
John Tough:
You just need to find one job to get going. Sounds like the green real estate, I mean, that markets become tremendously large now. You were also a little ahead of your time, but it's probably fun to watch it grow.
Chris Wedding:
It is fun to watch it grow and to see all the combinations of that real asset focus with today's venture tech to spawn new categories like PropTech.
John Tough:
That's right.
Chris Wedding:
Yeah, good times. All right, so let's get right to it. Energize Ventures, what's the summary, John?
John Tough:
The summary is Energize is the leading climate software investor. That is an intentionally simple statement over the last few decades. There's been many permutations of the word climate, whether it's clean tech, there's been digital focus, there's been hardware focus. We point our arrow where our strengths exist, which is there is this big movement in the sustainability space, there's this big movement in the digital space. We firmly believe those two are colliding and Energize invest at the heart of that thesis, which is primarily software companies addressing the acceleration of sustainability and climate movement.
06:25
Chris Wedding:
Well, I'd like to encourage folks who are listening, that you just delivered your summary in a series of words that are in quotation marks. The leading climate software investor. It wasn't more than five words when folks think about, “Hey, who's Energize?” Here's five words, right?
John Tough:
Yeah, five words and if you go to the 30,000-foot view in our space, climate now is synonymous with such a big opportunity. Like you said, there's real assets in real estate, there's infrastructure, you have private equity, you have venture capital, you have growth equity, you have debt and there's a lot of ways to be successful. We were picking the one area that we know best, which is climate software.
Chris Wedding:
Cool. You also are not a one trick pony. Although, God bless you if you were with hundreds of millions of dollars to do this, but you're at least a two-trick pony. What are the two strategies you guys have, John?
John Tough:
Yeah. So, at Energize, we started as a venture capital firm with the idea that the earliest companies in the software space are really good finding capital partners, primarily on the West or East coast to help develop the technology. What we felt was missing was a capital partner who could help scale these technology companies as they got into their early commercialization stage.
So, our venture capital platform focuses on late Series A, Series B companies with call it four or 5 million of software revenue that are really starting to scale and when we leverage our network, our team and our process to truly help them scale. As our average check for a venture capital platform is call it 10 to $20 million upfront, and we reserve a similar amount for follow on. That's the first of the two strategies.
The second is growth equity, which is if you're in the venture space, it can be quite synonymous, but when you look at it from the limited partner lens, I found that they look at the spaces very differently. And so, for us, growth equity is a quite different beast and it's really looking at companies with at least 50 to 60 million of revenue that are still scaling materially at least 50% per year and have a path to profit, either immediately or within the 18 months that we invest and probably an exit opportunity in the next three to four years. So, a little more secure of an investment.
Chris Wedding:
Yeah, that's super helpful clarity. I think sometimes as entrepreneurs talk to investors, it can be much less discrete in knowing whether you're a fit or whether you're not, but those metrics you just ran through make that quite clear. You're on fund two for venture and where are you in growth equity?
John Tough:
So, our most recent ventures fund we closed about 24 months ago, that was the 30-million-dollar vehicle. We're in the final processes of our second growth fund right now and it'll be a similar scale.
Chris Wedding:
Yep. Got you. Okay, and geography wise, is this just US, is this other geographies?
John Tough:
Yeah. Good question. We've found that first of all, the climate opportunity is global, but our strengths exist in North America and Europe. And so, about two thirds of the opportunities we invest in are in North America, one third are in Europe, but that European number is growing.
09:48
In fact, in the last 12 months, half of our investments were based in Europe and there's a few reasons for that. Certain countries in that region, the Nordics for example, show you what the future will look like. If you want to know what the future of mobility looks like, you can look to some of the Nordic countries to see how they've adopted EVs, how they've integrated EVs into their grid, how consumer behavior has changed.
And so, when we're looking at what software companies to invest in or what businesses will accelerate or capture new economics in a new environment, you can look to those markets. And Germany's done a great job with solar and so has Spain for that level. And so, again, you can look to the future by looking at a few of those countries.
Chris Wedding:
Would you say that the valuations of the companies you invest in look different if they're in Europe versus the Bay Area?
John Tough:
The simple answer is yes. The approach to valuation in Europe will usually be a few turns, multiple turns lower than anything you see on the west coast. Now, the big question is, can you develop the business so that that arbitrage goes away by the time you exit it? We're still in the proof stage of that question, but the entrepreneurial set there is growing. The market there is probably a few years ahead of North America, and we're staying very active. I think it'll be a bigger area going forward than it was historically.
Chris Wedding:
So, the EU companies, or certainly context, may show us the future and have different valuations. That could be a powerful combination, huh?
John Tough:
Correct. One of the big opportunities that we see is, we're looking at companies where we can help bring them to North America as part of our investment. One of our most recent investments is a company called Monta based in Copenhagen and they're the Android for EV charging, if you will. So, the number of hardware manufacturers for EV chargers in Europe is in the hundreds to this point and the real estate owners, the site hosts, they don't want to have to control seven different applications in order to the drivers. So, Monta now sits on top of that entire layer in several European countries.
They had no North American presence and so as part of our investment into them, we said, “Hey, we're going to bring you here. We will show you the market. We'll get you your first customers. We'll give you the marketing materials on how to speak to customers here.” And that's a big part of the value that we look to bring for our investments.
Chris Wedding:
So, you all, I'm guessing, touch in some way or see in some way hundreds if not thousand plus potential deals per year. Maybe describe to the entrepreneurs listening your process from getting to email, you're in the data room, maybe issuing a term sheet.
John Tough:
Sure. This is always like the, how was the process? How was the sausage made? I think we're pretty unique and I'll share the end to end. A lot of firms will find a really cool technology and then go try to find the problems the technology solves. At Energize, we invert that equation. So, we have a team of 12 investors here. Every single one, myself included, at any given time has at least one deep dive going.
13:08
A deep dive for us is a problem we see in the market. So, for example, for that Monta equation, the problem was proliferation of EV drivers and EV charging infrastructure is going to make a really messy equation. How do we solve it? That deep dive usually results in about a 60 to 100 company engagement and usually those engagements are happening by us going outbound.
We love inbound. We look at every inbound we get, but since it's thematically focused, we are in LinkedIn, we are in your Twitter DM, we are everywhere we think you'll be. We're going to try to find you. Then if once we find a company, we're gathering market stats, we find out who the best potential companies are and we take you to the partnership for several meetings.
Just to get really detailed for you, there are five parameters, now six actually, that we invest companies upon. We call it PMTEDI. Product, does the product work? Can it be validated with customers? Market, what's the market size today? What's it by 2030? What's it by geography? What's your penetration today? Team and this is a bit of a wild card because most people are new to climate, but have you survived a difficult period? How have you shown the resilience required to be successful in the climate space? Do you have a diverse team of different backgrounds, experiences, and ethnicities? Economics, that's the E, which is, what's the customer profile? How much of the value do you capture? What's the customer contracts, et cetera? Deal, which is the D and that's just, to your point in Europe versus America, is the price fair or not? And then the last letter is I, impact. So, for every investment, we track impact metrics and then when we write a term sheet, we insist upon the company tracking the metrics that we list in our term sheet. So, PMTEDI, that's our framework.
Chris Wedding:
Appreciate the detail there. Let's say maybe the opposite of a deal going from the hundred you reach out down to a term sheet you do a deal. The other perspective, maybe some examples of approaches by CEOs that lovingly make you just cringe a little bit. What are some things they cannot do to maybe boost their odds of getting to a yes?
John Tough:
I'm sure that amongst your CEO groups, this is a common question. So, I'm hoping that some of these answers are consistent, but some of the red flags that we see are when only the CEO shows up and it's always I, the use of I consistently without the we is an immense benchmark for our team. Being overly obsessed with competition at a stage where we invest is usually a big negative. We're looking for teams that are aware of competition, but are focused on product and focused on execution. What we've seen is there's a big overlap between those that get far too into the weeds and obsession with competition at that early stage.
Then the final one, my partner, Juan Muldoon, here says a lot, which is scarcity drives clarity. There are 50 things every startup can do and when we are speaking with an entrepreneur or their entire team, we want to hear really concise feedback on what they want to accomplish in the next 12 to 24 months. If they have a laundry list of 12 items, none of them are getting done and so usually the answer is do less and do less better. And so, if we can get that really precise answer on what risks they're trying to unlock in the coming quarter of quarters, that's really valuable.
16:56
Chris Wedding:
I wonder whether the book Essentialism is required reading.
John Tough:
It should be. Yeah, it's on the bookshelf, that's for sure. There's several that we have our team read and that is certainly one.
Chris Wedding:
I was just looking back through the underlined portions in my copy a couple of mornings ago and that phrase, less, but better, something like that, or the idea that priority with plural only entered the English language like maybe 120 years ago.
John Tough:
I don't remember that part.
Chris Wedding:
If you have multiple priorities, it's not really a priority, right?
John Tough:
Right.
Chris Wedding:
And you just can't get them all done or there's another great part talking about the etymology of the word decision, where I believe the CIS, C-I-S, is related to kill, like homicide. That is you're killing things which you're not going to do. I mean, a touch grim, but very, very essential.
John Tough:
No, listen, it makes sense. There was a stat I saw recently that said, we were talking about the 2007 boom, like $5 billion went into the peak of clean tech in 2007. I think we generally know that that wasn't a great period for investing. There were too many things being focused on.
In Q3 of 2021, there was something like $15 billion invested just in one quarter alone and I think what we're seeing is a lot of people had a lot of money in the last few years to try a lot of stuff and that market's gone. We can talk about that if you like, but those firms that can refocus and kill, like kill stuff that's not essential, are going to win. They’ll find that they have a lot of stuff right now that they were doing that wasn't essential.
Chris Wedding:
Speaking of that, what kinds of experiments or company theses do you think were tested when there was much more capital being invested in climate tech companies than today? Not that it's the death knell, but which ones at least are off of you-all's list as like, “That was a cool experiment by us or others, but not for more capital from us,”?
John Tough:
Yeah, those are what I call lessons learned. Thankfully, we avoided a lot of the I'll call them material science bets, which I think are necessary, but I don't think that the newest investors in the space realize the risk they're taking. For us, what we've learned lessons on is, if you're going to have an intersection of hardware and software, so we invested in a firm called Volta Charging, it's EV charging network, we really believed in their value in the market. It's just really, really hard to put real assets in the ground these days.
19:37
The biggest lesson for us there is, even if you have the better product, if the limiting factor which in that case is interconnection requests or local permitting or other items in the NIMBY scale, that is as fast as you can go. That's a lesson that every few years people forget that when these assets actually interact with the physical world, there is a natural growth rate allowed. I think we've experienced that lesson. Others have experienced the lesson and I'm guessing there's a big wave of books that'll be written about what went right and what went wrong about this time.
Chris Wedding:
How about let's go to what's working, which is to say, let's talk about, pick some number of your portfolio companies. They're clearly all your favorite, but just randomly pick a few and maybe make it more tangible for listeners like what you invest in and why.
John Tough:
So, the four mega trends that we believe in at Energize are, one, electrify everything. We believe that most of anything that uses energy in this market can be electrified. There are some very extreme industrial processes that cannot, but almost everything else can.
An investment in that space, to give an example, is a firm called Aurora Solar. Aurora is the leading software tool that helps solar installers design the optimal system. So, every day, thousands of installers are crawling America and Europe, trying to install more rooftops. The backend tool that they used, that like 90% of the market uses these days design that system is Aurora Solar.
We led the Series B back in 2018, a sub $10 million revenue business then. It's grown 10X plus in the last four years. It's just a great example that they don't focus on the hardware, but they help the hardware deployment happen faster. They help lower the soft costs of the equation. They help lower the permitting costs, the design costs, no longer to somebody to get on the roof and go measure, you can do it all remotely. That's been a big driver of climate progress.
Chris Wedding:
I believe that Aurora wears this strange horn on its head. Is that right? Is there a unicorn? Is that right?
John Tough:
Yeah.
Chris Wedding:
I was like, “Where’s he going with this question?”
John Tough:
Yeah, the unicorn, that's correct. We have databases internally. We think they were the fastest company to [inaudible – 00:22:02] million ARR in the climate space in history. That just shows how that type of company couldn’t have existed in the last climate boom, it couldn't have existed five years ago, really, at this scale. You need the hardware cost curves to decline materially and then once those cost curves are below or at parity with the grid, then software does a really good job at helping deploy faster. That was one example.
Chris Wedding:
Delicious numbers, John. Yes. Number two.
22:28
John Tough:
We're big believers in, well, I'll just call the carbon platforms and you had Brennan from Patch on your podcast last year and just generally, we believe that just like the solar markets and battery materials markets of a decade ago, that tremendous investment has happened to lower the material costs, to lower the production costs of a more efficient carbon market.
And so, we're looking at firms like Patch that will help enable the buyers and sellers of the ecosystem. The awareness for emissions awareness is at all-time highs, both from the regulated purchases and the unregulated and a huge market that we expect will be quite commonly known amongst the general public in the coming years.
Chris Wedding:
Amazing. If we're walking through the mega trends and then we have two to four, is that right?
John Tough:
Correct. That's right. We have two so far. Number three is resiliency and adaptation. So, we're pretty pragmatic folks here at Energize. We realized that even with all these adjustments, we're probably in for some pain in the infrastructure layer. And so, we're looking at software tools and applications that can help asset owners better prepare or better react in real time to the increasing number of disasters, wind, fire, water, et cetera.
One of those investments actually is Maria from Sinai, who you had in your podcast recently this year. Their platform, it's, hey, how do you help firms decarbonize faster? How do you help them make better plans for the future on thinking about ways to lower their footprint going forward as a corporation? We just think that's going to be a huge corporate governance driver in the next decade and we're excited to work with her on that opportunity.
Chris Wedding:
Yeah, Maria's great.
John Tough:
Then the fourth thing, it's the biggest bucket is industrial digitization, which is, you can decarbonize real estate, the residential real estate and commercial real estate and that's a huge component, but there's still this enormous industrial market that needs to be decarbonized. Our whole idea is, if you can digitize the backbone of those industries, you can help them move more quickly. You can help them make better decisions more quickly. One example there would be a firm called Nozomi Networks and what Nozomi does, it's actually cybersecurity and it helps highly decentralized assets be more secure in the industrial network. We always get this from our LPs, how is that a climate company?
So, if you were to walk into a GE power plant somewhere in North Carolina, of which I'm sure there are a few nearby, the cybersecurity system is something on site, but it's actually primarily just a big, big door because that's a very closed unit, a wind turbine has a computer at the bottom of it. It is much more easily hacked. There is somebody who could walk up to that turbine and break open the door, stick in the thumb drive and make the turbine go faster. So, how do you stop that with an increasingly distributed and decentralized energy network?
25:35
Nozomi does exactly that. It helps protect and stop non-command center controls for distributed assets. Their biggest customer base are renewable energy companies. So, that shows you that wasn't an opportunity that was available that long ago.
Chris Wedding:
Yeah. Well, I'm both excited and a little scared by what you just said. Thank you. It's a nice combo.
John Tough:
Yeah, I guess that's part of the sales pitch they give as well.
Chris Wedding:
Yes. I imagine that that was where that came from. Okay. So, we've talked through your process, how you've been around climate tech and clean tech for almost 20 years, your four megatrends, example companies in each. If you think about that entire spectrum of what we just walked through, what are a few lessons that you think you've learned around investing in impact companies in the climate space?
John Tough:
Yeah, this could take a few hours.
Chris Wedding:
I got time. I think for us at Energize we were always looking for the why now and maybe one of the negatives of being around the space for as long as we've been now, Chris, is I see a lot of companies I’m like, “Oh, that's exactly like X, Y, Z from 2010.” I see that a lot and my gut instinct is to maybe say that's not that exciting, but the beauty is I’m surrounding myself with people who are younger than me now, who are here to test the assumption of, why now? What first principles have changed that may make that more exciting? The ability to really dissect what has changed in the market is probably the most important thing that we can do for every company. Because the biggest worry I hear when I hear an entrepreneur when they say, “We need to solve this to stop climate change,” well, and that's a very good way of losing money, to say that sentence right there.
The fact is the market doesn't care about that statement. What the market cares about is, is it economic to institute this technology to make a more efficient system? And if you can convey the profitable nature of your solution to a Fortune 500 company, that's very exciting. And so, we're looking for those entrepreneurs who've A, tested the why, and B, have really gotten in front of customers and proven that they're willing to pay for their system. That's the reason we stay at the Series A and Series B level, which is you tend to have a few enterprise accounts, and corporations more or less don't do contracts for charity. And so, if you've proven that Caterpillar, GE, big companies are willing to spend budget on you outside of their innovation budget, we get very excited. So, just to rewrite those three.
Number one, the why now. Number two, proof of the economics, not just in the mission. I think that's an unfortunate state, but enduring. Then number three, I mentioned this earlier in the call, this space is very different. Robert Smith is the founder of a firm called Vista Equity Partners, which is a big BE firm and he says, “All software is the same. It tastes just like chicken,” and that's just wrong.
28:47
When you are selling to a critical infrastructure customer, the purchasing pattern is incredibly different. They need these software systems to advance their program, to advance their sustainability initiatives, but if you try to sell to Caterpillar, Ford, any of these big names, software like you sell to another tech company, you're going to fail. And so, a big part of how we get involved and what we want to see is somebody who respects how different the space can be. Sustainability and climate, it's harder. Just straight up, it's a harder space.
Chris Wedding:
Well, and some buyers may like tofu and not chicken, right?
John Tough:
As somebody who has been here long enough, as long as they're buying, I don't care what they like.
Chris Wedding:
Yeah. Related tangent here, as a father, I’ve honed my dad joke skills and exhibit A, just a few seconds ago. I heard this research recently saying that dad jokes actually help kids develop emotional health and the theory is, it puts kids in uncomfortable situations and they learn to deal with that. I was like, okay. So, there is a great parenting benefit to my poor humor with my kids.
John Tough:
Yeah. Listen, I've also mastered the dad joke, or at least I think I have. I'm sure they roll their eyes, but I'm all for them.
Chris Wedding:
Hey, it's Chris. Just a brief message from our sponsors and we'll get back to the show. Just kidding, we don't take sponsors. On the other hand, I do have the privilege of leading the only executive peer group community for growth stage, CEOs, founders, and investors fighting climate change. With monthly group meetings, annual retreats, and one-on-one executive coaching calls, our members help each other boost revenue, impact, capital raised, clarity, confidence, work-life balance, and team effectiveness. Today's 30 plus members represent over $8 billion in marketing cap for assets under management for climate solutions. If you're interested, go to entrepreneursforimpact.com and join the waiting list today. All right, back to the show.
With that, let's switch from John, Managing Partner at Energize Ventures, to John, just period, John. So, hey, what advice might you give your younger self to be more effective, happier, more productive, et cetera, on this path?
John Tough:
We talked about this a little bit earlier. Biology and chemistry, investment banking. So, when you're at Duke and you want to go investment banking, it's like a really big exciting moment. You get there and you're like, “Oh, this isn't that exciting.” Then you're in investing banking. You're like, “Okay, I want to go to private equity or venture capital. Let's do it.” Then you get in, you’re like, “Oh, this isn't that exciting.” I think that there's so many people who follow a very rigid rule set. I follow it myself and the feedback I'd give to my younger self and my kids is, you really need to see what you care about and try to get involved in that as early as possible.
I was influenced by, I considered joining firms that were focused on traditional venture capital, traditional growth equity and I needed to work with something that mattered. And so, I wish I had been more comfortable saying that out loud at a younger age. I couldn't imagine a better job now, but the younger, just don't follow the path. It's easier to say now, but it's hard when you're in the moment.
32:37
Chris Wedding:
Well, I liked that a lot. Maybe saying it in other words, it’s like the things we want may not be the things we want. Some level of experimentation is great. Or maybe it's like, we shouldn't really want what other folks think we should want perhaps.
John Tough:
Yeah. It leaves the professional world to – So, I lived in the Bay Area for seven years. I lived in Chicago for four after undergrad, moved to the Bay Area for seven years because you had to be there. You have to be in the Bay Area if you want to do early stage investing and be in entrepreneurship. I had a family, I had that hard decision, do I trade off my career for my family and move back to Chicago? What a silly idea, like you can work anywhere and COVID made that obvious, but I think some of these geographies love to make it obsessive about how important it is to live there and be in the network. I'm far more productive, our team's far more productive working in the way we work, remotely. Again, I couldn't have said that to my late 20-year-old self, I would not have understood it, but now it's easy to say.
Chris Wedding:
Yeah, your pre-Bay Area self.
John Tough:
Yes.
Chris Wedding:
Or one could actually work in the space from a little cabin in the woods in Chapel Hill, perhaps.
John Tough:
I'm envious of your background. Downtown Chicago looks far inferior to that.
Chris Wedding:
Well, when I get the pleasure of advising some of my Duke students on job choices, career choices, I say, “What are you solving for?” “Well, I should have taken this job.” “But what are you solving for?” And those are variables besides just money and options and all the rest. They know that, but it's just spelling it out, perhaps.
John Tough:
Yeah, it's hard to break through.
Chris Wedding:
It is. Tell us some habits or routines that keep you healthy, sane, and focused in what is a rewarding, but demanding job.
John Tough:
We have five ethos here at Energize. One of them is family first and I lean into that probably more than anybody. I have two boys and a girl, seven, four, and one and I might get my energy by being with them. It's exhausting. It's like a second job away from the main job, but 5:30 every day, I'm on the train back home if I'm working in the city, seeing them every night if I'm not and it's a big part of where I get my energy.
Now, do I go crazy some days? You bet. And so, I'm running or using the rowing machine three or four times a week, but back to maybe the previous generations too, it used to be you have to trade off your family for your career. I fundamentally believe that if that's where you're working, you're making a poor choice, you can have both. I get a lot of energy from family. I mentioned I have a twin brother, we stay close. I have two sisters and I try to keep all of that pretty close.
35:33
Chris Wedding:
Yeah, totally agree. I think sometimes when we get those emails from a co-worker, a partner or whatever else, and there's some reason they can't attend or can't join to whatever event and it's because of family, my first few words are often, “Family first,” dot, dot, dot, doesn't matter what the next, family first.
John Tough:
Yeah. The people who I want to like me more than anything are my kids. So, if I think sacrifices, it's a pretty easy equation.
Chris Wedding:
Yeah. Well, you mentioned the ages and really you can see mine when they were about those ages in the background here. Now they're 11, 15, 17.
John Tough:
Okay.
Chris Wedding:
I'm pretty sure the oldest one still loves me. I'm pretty sure, but I take confidence in that Mark Twain quote that said, “When I was 17,” or something, “I thought my dad didn't know anything and by age 22, I was amazed how much my dad had learned.” I'm pretty sure it was Mark Twain had changed, but anyway.
John Tough:
Obviously, I’m not there yet, but somebody described the early teenage years as going to the dark side of the moon. So, I have something to look forward to there. I'll enjoy it for now, but yeah, it's an important part.
Chris Wedding:
Yeah. Actually, I think from the book Essentialism, there's a story about Clay Christensen, the famous, I guess, innovators dilemma maybe in the book.
John Tough:
Yeah, from Harvard.
Chris Wedding:
The early days in his consulting career, his boss is like, “All right, we got to work extra. We need you to come in on Saturday.” This is like some young analyst associate being like, “Ooh, yeah. I reserve Saturdays for my family,” and the managing director’s all pissed off and comes back and he’s like, “All right, fine. We'll accommodate that, but you got to come in on Sunday.” He's like, “Yeah, about that, Sunday is for God. Sorry.” He didn't get fired and I thought, man, the gumption let’s say.
John Tough:
I think it's about consistency, really. So, like we tell our team that and I tell my team on like Thursdays at 4:30 I'm leaving early because I'm Coach Tough for one of the soccer teams. If you lay it out there and then you're consistent about it, people respect it. It's when you're inconsistent about what you deem a priority is when you lose your team, whether you're an entrepreneur or an investor, people admire consistency.
Chris Wedding:
Well, when my wife complains about how much I love my routines, I'm going to remind her of that quote. I’ll say, “Mr. Tough said.”
38:02
John Tough:
Yeah, routine.
Chris Wedding:
How about some books, podcasts, tools, quotes, John, give us some that you think listeners would find value in.
John Tough:
Beyond this great show—
Chris Wedding:
Clearly. Yeah.
John Tough:
…of course, I'm a real sucker for autobiographies, usually in the finance or sports arena. I started when I was doing road trips from Chicago to SF when we were moving in the first time. The first one I read or I listened to was actually Andre Agassi's Open. That just showed me how the public persona of an individual is so different than what you see behind the scenes. If you haven't read that, it's jarring, frankly. And so, I just like play read, I was planning a couple hundred of biographies in some capacity.
Well, one of them that is relatively recent that I learned more from than I expected was Bob Iger is The Ride of a Lifetime. It was his journey through Disney. What I liked about it most was he actually had really good management advice throughout the book as well, which is rare. Then I'd say, it was probably John Malone, he's got this book called Cable Cowboy. He was the first individual to roll up a lot of the communications networks in America.
Anyway, you're focused on innovating industries like climate tech, you forget that eventually it will be a more dated sector and it will have to have profits and use economics and all of that. It's interesting to watch how those industries evolve because there tends to be repetition amongst business models, whether you want to admit it or not. And so, seeing how other successful individuals have built businesses is helpful.
Chris Wedding:
Yeah. No need to reinvent the wheel.
John Tough:
No.
Chris Wedding:
Even though the industry name may sound different.
Chris Wedding:
By the way, I noticed from recent podcasts, you didn't ever answer that question. So, anything new that you're reading?
Chris Wedding:
Oh my gosh, what a great question.
John Tough:
I see a ton of books behind you. Maybe it's just what you're picking up again.
Chris Wedding:
It's true. Well, honestly, I've been reading more books on executive coaching so I can be better at helping these three dozen climate CEOs I have the amazing pleasure to work with. Let's see. I was rereading my underlined notes from the DataGene recently. What's over here? The Happiness Project by Gretchen Rubin, which was this like type A person’s approach to experimenting with what leads to happiness.
40:23
John Tough:
Oh, interesting.
Chris Wedding:
So, that's a really good one. I've been sharing this book called Remote, which was written pre-COVID by the founders of 37signals, I think, aka Basecamp, how to lead great teams when they're not together. I think you might've seen that one. I tell you what, the one I really want to get through, but I haven't focused enough is Influence, which is a classic and Robert is his first name and maybe—
John Tough:
Cialdini. Yeah.
Chris Wedding:
Cialdini, thank you. Yeah.
John Tough:
Yeah. I mean, some of those classics they're a classic for reason. They keep coming back. You forget that it's the simple things that end up driving engagement and influence.
Chris Wedding:
Yeah, the problem was I took that book first, listeners may have heard this, but I tried to take a spring and fall solar retreat at a tiny home in the mountains of North Carolina. I just read and hike and meditate and maybe visit a brewery or two, but all alone. I brought Influence with me and I was like, “This is the wrong damn book for a mountain retreat.”
John Tough:
Yeah, you blew yourself.
Chris Wedding:
Yeah.
John Tough:
Yeah. Nope. That's a more social book I'd say.
Chris Wedding:
Yeah, that's right. Well, John, we're at the end here. Is there a final message, a call to action, a question you wanted to answer we didn't get to? What's a final word or two here?
John Tough:
I think what I'm most excited about is the community that is officially established around climate tech, this podcast, for example, it's a really hard space. There are regulatory issues, there's competitive issues, there's geopolitics, there's consumer interests. Everything in climate, you couldn't define probably a harder area to work in right now and yet it's probably the most rewarding. Last time most of the ecosystem hadn't been fully formed and so it mostly disintegrated. What I feel right now is that the staying power of this climate community is here. It's like, it's here and it's going to endure.
Just the more that everybody here engages, and helps and gives advice and join some important networks, the better because it's not a journey to do alone, whether you're an entrepreneur, whether you're an investor, whether you're a buyer of the product at a corporation, it's like reach out and get involved. And so, I'm pretty excited to just see the tentacles all coming together.
42:54
Chris Wedding:
Well, clearly, you're speaking from my book. I mean, that is the reason I created this climate CEO peer group community is, it’s a super hard job.
John Tough:
It’s really hard.
Chris Wedding:
I mean, it's really rewarding, but you don't need to figure it all out on your own. How about learning from a few dozen great humans doing the same thing?
John Tough:
Yeah, exactly. If you're using AI, it doesn't matter, it's the we and your we can be a bigger group than you probably initially expected.
Chris Wedding:
Which really ties back a little bit to one of your cringe factors around who you look for is like, if you say I a lot, probably you need to be saying we a lot more for your company or for your sector.
John Tough:
If I hear somebody say I a lot, I'll send them to you and Chris. I’ll say, “Go to Chris and come back to us in six months and then we'll hear your pitch again.”
Chris Wedding:
Yeah, there you go. Hey John, this is awesome. Rooting for the success of Energize, your new funds, the dry powder, and of course your portfolio companies, many of which are our friends.
John Tough:
Yes. Thanks Chris. Thanks for having me today. This is fun.
Chris Wedding:
All right, man. Talk soon.
Thanks for listening and if you want more intel on climate tech, better habits and deep work, then join the thousands of others who have subscribed to our Substack newsletter at entrepreneursforimpact.com or drop me a note on LinkedIn. All right. That's all, y'all. Take care.
ABOUT OUR PODCAST
We talk about #ClimateTech #Startups #VentureCapital #Productivity and #Leadership.
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Learn about our guests’ career paths, founder stories, business strategies, investment criteria, growth challenges, hard-earned wisdom, productivity habits, life hacks, favorite books, and lots more.
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Dr. Chris Wedding is a 4x founder, 4x Board member, climate CEO peer group leader and coach, Duke & UNC professor, ex-private equity investor, ex-investment banker, podcast host, newsletter author, occasional monk, Japanophile, ax throwing champ, father of three, and super humble guy (as evidenced by this long bio). 😃
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