Californian venture capitalist and entrepreneur Steve Westly on black gold, electric vehicles and why deglobalization is not the future.
A venture capitalist, a philanthropist, a politician, a lecturer, a writer: Steve Westly's history, experiences and achievements make the Californian one of today's most interesting voices when it comes to the future of sustainable investments and clean energy. He talked to MAG/NET about the meaning of the "new normality", the future of oil companies and the reasons why deglobalization is not the future.
Mr. Westly, in parts of the world, the situation is slowly but surely going back to normal. Does the "new normality" mean we'll largely go back to how things used to be?
Steve Westly: I don't think this is going to be the case. Our goal cannot be to get back to business as usual. A crisis is an opportunity to move our companies more quickly toward a better future. As Kevin Kelly, the founder of WIRED, puts it: "When crisis and disaster strike, don't waste them. No problems, no progress."
You see the crisis as a disruption – in a positive way.
It's more of an acceleration. The Covid crisis is not creating new trends; it's making all of the trends we already know about move faster: Coal, oil and natural gas are shrinking, there's a global move to renewables, electric vehicles and smart buildings. When you look at many of the most successful companies from these sectors, you notice that, a few years ago, none of them existed. Today, they're 100 billion unicorns. If you're a smart investor, this is where to go now.
Others seem to take a different approach: When it comes to oil, for example, specialists talk about how they expect oil prices to go back to normal within a few years. China’s oil demand has by now recovered to more than 90% of the levels before the pandemic.
When the crisis hit in April, oil prices went below zero for a short period of time. They might look better now. But the reality is: Oil belongs to the past. The same is true for fossil fuels in general. And this is not even a question of mentality or philosophy – just look at the numbers. Since 2011, the top four US coal companies lost 44 billion US dollars of market cap. At the same time, the cost of storage of renewables is declining rapidly. This makes them cheaper than carbon based fuels.
How does the fossil fuel sector react?
Even in the most conservative sectors of the economy, people realize the changes happening. We're in the middle of a seismic shift. European oil companies know they have to become leaders in renewables if they want to stand a chance in the future. US companies are still behind in that regard.
Whole countries and states such as Texas depend on oil to function…
Yes, Texas has built on oil. But this is shifting now as the oil industry is shrinking. The state will face a series of challenges caused by lower investment in public education, the lack of environmental protection and the uptick in Covid cases. But Texas, too, is changing. They're now talking about investing more in public health and education. Texas is moving toward becoming a blue state.
The multi-talent from Silicon Valley is the founder and managing partner of The Westly Group, a large sustainability venture firm with close to 420 million US dollars under management. The group focuses on capital efficient, high-growth companies in promising sectors such as energy and mobility. He also runs the Westly Foundation, which provides education and health care services for children and underserved communities throughout California.
Before founding The Westly Group, however, he was active in other fields: education and politics. Westly lectured at Stanford's Graduate School of Business and has published two books on alternative energy and utilities. After helping guide the online auction company eBay through its period of most rapid growth, taking the company public in 1998, he also served as the Controller and Chief Fiscal Officer of the state of California. In the 2008 election cycle, he was involved as a California co-chair in the Obama for America campaign.
The move to electric vehicles is another trend the Covid crisis has accelerated.
Yes, and this is a long-term development. Car sales will likely decrease for the near future. The industry has to reinvent itself. That's something that Tesla has done right. Innovation is key. If you're in the car business, your job is not to make boxes anymore. It's about how to bring in new economic models – your client can pay ten dollars a month for a new entertainment program in your cabin, or choose a self-driving option. Tesla is not only an auto company, but also a tech company. Their cars have become online devises – while major car companies still haven't figured out how to bring vehicles with internet access on the market.
Even traditional producers that didn't believe in e-mobility have now converted, such as VW.
VW have redeemed themselves after the Dieselgate when they falsified pollution emission results. They are trying to become leaders again in the sector of e-mobility, which bothers some people. Especially in the car industry, you often hear the accusation of greenwashing. But what people tend to forget is that, as a phenomenon, greenwashing is very telling and, in a way, a good sign. Global companies understand their customers want them to be green.
What do you mean?
Why do companies greenwash? Because the public wants them to be green. They respond to a certain pressure – not in the right way, of course, but it's a proof that the pressure does exist. Millennials are coming into charge. If you want to be successful as a company, you can no longer afford not to care about climate change, or to be anti-diversity, or homophobic.
That seems to be a very optimistic outlook.
I certainly don't expect of more separation and deglobalization in the future. There will be more global collaboration, not less. We need it to fight the Covid crisis and find a vaccine – and it's happening right now. We are making progress at a dramatic rate to find a cure. Once they have found a vaccine, they will produce it extremely fast, and it will be spread around the globe. For the first time ever, you have the entire world working in the same direction.
Steve Westly is a speaker at the LGT Next Generation Academy (NGA). The NGA offers young entrepreneurs and investors the opportunity to consolidate their knowledge of finance and asset management. It is also a platform for international exchange and presents inspiring lectures and workshops on the topics of entrepreneurship and innovation.