As a new year approaches and we continue to grapple with the impacts of the Covid-19 pandemic, we once again look ahead to new themes, ideas, and technological innovations. Since our last year’s tech predictions, the world has changed. Extreme temperatures, heatwaves, droughts, and unpredictable weather have become more frequent and more severe — as evidenced by the string of wildfires, floods, and tropical storms across the globe.
From an investor’s perspective, it’s never been more apparent: the time to act on climate change is now. We are at the threshold of a major shift in industry. Everything in the global economy must be re-engineered to move away from carbon-emitting fuels such as petroleum, natural gas, and coal toward more Earth-friendly alternatives.
“You don’t need to make batteries from Lithium,” says Playground Global general partner Peter Barrett. “You don’t need to make fuel out of fossils, solar panels out of silicon, or beef out of cows. We already know how to generate green hydrogen from renewable energy. We know how to use hydrogen to fuel regional aircraft at commercial scale. It’s also good for lots of other terrestrial applications from trucking to providing reliable, distributed backup power for homes or data centers. Some of these solutions (like green hydrogen) are in hand — their scale realization is just a problem of capital, engineering, and will. Others will require better computers and more research to create the necessary chemistries and materials, but these and other fulcrum technologies can have an impact in years, not decades.”
“Climate innovation won’t come in broad new areas that no one has ever thought about,” says Playground Global general partner Laurie Yoler. “The question to ask is: Where are the biggest demands for energy coming from, and are there things we can do to make these systems dramatically more efficient and sustainable?”
Fulcrum technologies will be key enablers in our shift away from fossil fuels. Understanding the technical points of leverage in the decarbonization landscape will be absolutely critical. From quantum chemistry for new materials like batteries, to new catalysts like photofuels, and superconductors for energy transmission and storage — fulcrum technologies will offer a rich set of early stage opportunities.
Progress has been slow because of misaligned incentives. The Department of Energy last month received $3.5 billion to expand direct air carbon capture facilities around the country. While its intentions are good, many criticize it as a risky bet with taxpayer money. Others have outright condemned the effort calling it a form of greenwashing.
“We don’t have scalable solutions to direct air capture of carbon yet, but physics allows all kinds of possibilities. While I think it is necessary and inevitable, we don’t yet have the right chemistries and materials to make it practical,” says Barrett. “It’s easy to be distracted by panaceas and turn otherwise laudable efforts into fig leaves for those who would continue to pile carbon into the atmosphere because ‘we will just remove it with direct air capture at some point in the future.’”
The disconnect between the national conversation and the technologies that actually matter in our effort to decarbonize is vast. “People hear about things like direct air carbon capture, but they don’t really appreciate that there are larger engineering efforts already underway, that there are other battery chemistries besides lithium for example,” says Barrett. “There are all kinds of ways that you afford energy storage, where energy density is not much of a problem. Sodium batteries have slightly lower density, but sodium is 1/10th of the cost of lithium.”
Making the issue worse is an unstable, underfunded US power grid that is not yet capable of integrating renewables at scale. We believe because of the inherent limitations of the US power grid, large tech companies, many of which already generate megawatts of solar energy, will build their own renewable generation and storage facilities. “At data centers,” says Barrett, “I think energy storage is largely going to be hydrogen.”
Through increased focus and investment, we hope to drive a new conversation around the technologies that will make a difference in our efforts to decarbonize. The use of lithium batteries for energy storage and renewables is a prime example. We would need to increase lithium production by many orders of magnitude to meet demand. “Electrification is absolutely necessary,” says Barrett, “but if everybody had an electric car and attempted to charge at home, the grid would collapse under its own weight. We need to invest in upgrading the grid: technologies like HTS transmission lines have an important role to play here.”
The unfortunate truth is that even if we hit targets outlined by the United Nations to reduce carbon emissions, the Earth’s climate has fundamentally changed. We will still need to adapt to new weather patterns and more frequent natural disasters.
The Promise of Next-Gen Compute
Advances in compute will help us cope with a changed climate. “Quantum computing will play a key role in enabling the design of better catalysts and better batteries,” says Playground Global general partner Matt Hershenson. “Improving the efficiency of high-powered computing — through new architectures and advanced optical interconnects — will also help by reducing datacenter power consumption.”
“There are any number of these significant contributors of carbon that are chemical and industrial processes that can be entirely replaced with the advent of the right chemistries and materials,” says Barrett. “Quantum will play a major role in directly engineering things like catalysts for production of photofuels, or for understanding and designing high temperature superconductors.”
Engineering the tools to help navigate our increasingly complex world remains at the heart of Playground’s mission. Correctly applied, advances in automation, next-gen compute, robotics, and other precision technologies will help us realize an entirely new economy.
One of the clearest examples is in agriculture and land use. With a growing number of people on the planet and the shrinking supply of arable land, food security is a top concern. “We need to feed twice as many people with the same land,” says Playground Global general partner Bruce Leak. “We can’t do that with more fossil fuels or more chemical fertilizer runoff spoiling rivers and oceans. That’s just not the path to success. We need to start growing things more sustainably.”
“It’s the whole economy now that needs to be making big shifts,” says Playground Global general partner Jory Bell. “And, I think, increasingly, we’re kind of up against the wall in terms of not having done enough to decarbonize and transition the economy over the last few decades. It is a desperate situation and at this late stage advanced technology has to somehow save the day…which is kind of daunting, but I think also a monumental opportunity.”
We need entrepreneurs and inventors to take greater risk and to build companies with a focus toward the reduction of carbon emissions. Incrementalism won’t get us there. We have already seen a groundswell of interest in the category — as evidenced by the $60 billion+ that poured into decarbonization from American investors alone during 2021. We expect to see more enthusiasm around the category in the years ahead.
New Space Takes Off
We also remain excited about the growing opportunities in the space industry, which saw a record-setting $10 billion of private investment in 2021. These investments cover a wide range of technologies from providing services to government agencies such as NASA to pursuing other areas such as space tourism.
“Fundamentally, there’s been a transition away from government sponsorship and control with legacy military / government contractors doing all the work,” says Playground Global general partner Jory Bell. “The thing that’s really interesting is that companies have had so much success with a new paradigm for developing aerospace in the private sector with primarily private money and a very iterative, test-rich, hardware-rich development method.”
This new paradigm has led to renewed enthusiasm from a whole generation of students and professionals who have been inspired by the accomplishments and success of the private sector. They inherently think about space exploration and the development of new technologies differently — with a greater willingness to take on ambitious projects.
The private sector is now being embraced by the old guard. In early 2021, NASA announced a $45 million initiative to support 365 small businesses and research institutions to develop new innovative approaches and technologies to help expand humanity’s presence in space and improve life on Earth. Last month, the agency also announced 20 partnerships to mature industry-developed space technologies for the moon and beyond. With repeated endorsements from leading government agencies, the future of space remains bright.
The Great Resignation & Going Hybrid
In addition to building exciting new technologies, we expect many organizations to take a step back and closely examine business operations. Among the many challenges facing companies now is the Great Resignation — a mass exodus from places of work that resulted in 19 million US workers quitting their jobs in 2021. This sustained wave of departures was the symptom of a much larger shift in corporate culture and the rapidly changing expectations of employees.
Businesses must now thoughtfully navigate discussions around complicated topics such as race and social justice, climate change, workforce operations, employee burnout, employee retention and increased cyber risk. More than ever, enterprises must remain agile and ready to respond to a rapidly changing world.
“It used to be that boards were primarily composed of active or retired CEOs,” says Playground Global general partner Laurie Yoler. “Now, because of the many questions surrounding the future of work, and employee engagement and retention, forward-looking boards are realizing the need for a chief human resources officer (CHRO) on the board. At the same time, because of the continued supply chain shortages, boards are asking whether they have board members who understand supply chain dynamics and logistics automation.”
Assembling the right team for oversight is critical to staying ahead of emerging issues. Empowering workers with technology has become imperative. “Automation is now being accepted for the dull, dirty and dangerous jobs, where before there were questions around what it was going to do to labor,” says Yoler. “Now people are realizing that employees get really burned out, get sick, tired, and we have to have solutions to fill in. It’s not about job replacement. It’s about supporting workers.”
The shift to hybrid work has only amplified the challenges of running an effective business. Outside of the physical perimeter of the office, there remains a heightened focus on digital operations. “Cybersecurity remains a top priority in the boardroom, as there was a 700% increase in ransomware events this year, which exposed vulnerability in critical systems and infrastructure,” says Yoler. “85% of critical infrastructure is in the private sector, so enterprises need to be far more active in cybersecurity detection and defense.”
Engineering The World We Want To Live In
At Playground Global, we remain committed to leveraging our knowledge in applications of next-gen compute, engineered biology, and other frontier technologies to help promising companies at the earliest stages change the world for the better. If you’re a founder with an ambitious, deeply technical idea, we’d love to hear from you. Drop us a line!