Former California State Controller Steve Westly Funds Green Tech Ventures
From helping build eBay, to serving as California state controller, Steve Westly can claim dramatic successes in public and private service. The investment portfolio of his newest venture, The Westly Group, includes an impressive list of companies with some of the most promising clean technologies on the market. In the following VerdeXchange News interview, Steve Westly discusses the promise of clean tech and the ongoing political struggle to implement climate change legislation.
You’ve made the transition from eBay, to state controller, and now back to the private sector with The Westly Group. What is the focus of The Westly Group, and why you chose clean tech as your re-entry into the private sector?
It’s exciting to me that we’re trying to “change the world.” Everybody understands that the fight against global warming is the one fight we can’t lose. It’s the challenge of our generation. The environment is something I’ve been passionate about since 1979, when I went to work for Jimmy Carter at the Office of Conservation and Solar at the Department of Energy. So it’s something I’ve spent a lot of my life working on. It’s exciting, and the stakes couldn’t be higher.
$2.9 billion in venture capital has made clean tech a huge growth sector. What niche has the Westly Group carved out for itself in this marketplace?
We’re focused on later-stage clean teach firms—firms that we think will go public in the next 12–24 months, firms with real revenues—so I know I can put my background in marketing and business development (as well as my network of contacts throughout California) to help grow these firms and make them successful.
What is the promise of the green tech firms in your investment portfolio?
Let me choose three of them. One is Tesla Motors, where I sit on the board. This is a company that has the ability to change the auto industry as we know it in America. Tesla produces the first major zero emissions vehicle, which goes from zero to 60 in less than four seconds, has a range of 200 miles, and will be on the streets later this year, so that’s exciting.
We’re involved in two solar companies. One is Akeena Solar, which is one of the largest residential solar installers in the United States. I think everybody understands that if you can get to a point where you don’t have to pay a penny for electric bills because you’ve been smart enough to put solar on your roof, you’ve accomplished an extraordinary thing. If it gets to the point where you don’t pay a penny for gasoline or electricity, because you’ve taken the solar panels home with you when you buy your car—that is a world-changing thing that we’re going to need to do more of.
There’s another firm called E.I. Solutions that’s also a leader in solar. This firm focuses on commercial solar; they just finished installing the largest corporate solar installation in the United States at the Google Complex. Around the country, more and more companies are stepping up. Google put in 1.6 megawatts of solar on their roof. I think they’re really setting the standard for companies that are saying, “Get off the oil addiction.”
VerdeXchange News interviewed Robyn Beavers of Google for our May issue at their Mountain View campus before they flipped the switch on that solar project. Does their solar commitment presage other companies in the Silicon Valley and California doing likewise? What stands in the way of scaling-up such pilot efforts?
Nothing stands in the way. I think what people needed is someone to lead. And Robyn and Google have taken that initiative and said, “We’re going to be a leader.” A lot of firms in Silicon Valley and up and down California are looking at what Google has done, and CEOs are asking the question, “Hey, why can’t we do the same?” The state’s utilities—PG&E and Southern California Edison—have aggressive plans and are providing incentives for companies that act now. Some of these subsidies go away over time. Don’t wait—give E.I. Solutions, or whatever solar provider you like, a call, and get with it.
One of the revelations that Robyn shared with verdeXchange is how she had to single-handedly craft the relationship with her utility provider to make the project work. You’ve been a leader in state government, you know the utilities, and you know the promise of solar. What could streamline this process and take advantage of what Google has done for others considering solar?
PG&E, SoCal Edison, and private companies are getting better at making the entire process easier for the customer. What’s really needed is more states to provide incentives like California has done. The Governor pushed through his Million Solar Roofs initiative through the Public Utilities Initiative; we now have the most lucrative solar subsidies in the United States. I’m hoping the next four or five governors will step up and take similar actions. Also interesting is that it looks like the Congress is going to pass a solar subsidy; it’ll make it that much more affordable to use solar, along with a number of other areas like biodiesel and ethanol—that is great. But when you get to a zero emission solar, that’s hard to beat.
What is the promise of ethanol, biofuels, and wind as options for investment by the Westly Group? What are some of the firms you find most attractive?
We love biodiesel for a few reasons. First, 50 percent of the vehicles in Europe run on diesel. Mercedes and Honda are coming out with vehicles next year; GM is following. We’ve seen an increase in demand for efficient diesel for America. If you can get rid of the diesel—which is carbon-dependent and oil-dependent—that’s a huge home run. One of the firms we like is a firm call Imperium Biodiesel out of Seattle. It has the advantage of being able to use multiple feed stocks as an input. In other words, it’s not just dependent on soy, or not just dependent on corn; it can use multiple feed stocks. It’s a huge advantage if you can use whatever’s least expensive or in most plentiful supply.
As someone in state government when AB 1493 and AB 32 passed, what’s the prospect of California remaining on the cutting edge of clean teach and climate change mitigation? The governor has just appointed a new chair for CARB, Mary Nichols; is this a positive?
I think the rest of the world is looking to California to lead. As I have often said, where Washington has failed, California must lead. Obviously, we’ve moved things ahead with AB 1493 and with AB 32. Now, the question is, are we going to execute? A lot of people learned over the weekend that perhaps the administration wasn’t pushing to execute as quickly as we though; I think that would be a shame if it were true.
I have a lot of respect for Mary Nichols, and I hope that she can move things forward quickly. Now that the governor has gotten so much positive press, I hope he’ll deliver on the promise by making sure California continues to push execution and implementation as fast as we’ve pushed legislation.
What is the role of unions in the clean tech/environmental movement of California? Most of Silicon Valley avoids dealing with unions; do unions have any role in mitigating climate change?
That’s a great question. I think the labor movement needs to give that some thought. The good news is that you’re going to see a lot of facilities built for biodiesel and for ethanol. I hope that the building trades can work with management investors to make sure there’s as many of the facilities as possible are union-built. I think what’s interesting is, we’re seeing whole industries, like the American auto industry, begin to shrink. That appears to be the reality. The question is can new industries, like the electric car industry, be based in California and work cooperatively with the new realities of the market.
There is a rapidly developing scheme of government incentives and regulations emerging—carbon taxes, cap and trade, outright grants, and incentive programs. What are your thoughts on the role of government involvement in green tech markets globally and in California?
I think the government needs to play a leadership role. The reason that Germany is the number one solar nation in the world is because their president and their parliament pushed through the most substantial solar subsidies on the planet. That was a smart piece of government action; it literally changed the global solar landscape. California has done something similar with AB 32. But it’s up to the private sector to follow up and make it happen. What I’d like to see is a closer relationship between government and entrepreneurs so that we’re moving as quickly as possible to reduce our dependence. One other thing that I learned is that government needs to provide consistent goals and directions for industry to follow and to resist the temptation to change regulations too frequently.
In addition to direct investment by the Westly Group, you provide consulting services for implementers looking to connect the green dots and navigate public policy. What does that involve; who are your clients?
Clean tech is a huge industry; depending on how you look at it, it could be considered the largest in the world. What we’re doing is looking at a lot of spaces, consulting with some of the smaller firms to help them grow quickly, using some of the expertise I had the opportunity to learn at eBay, other high-tech companies, and in government. I’ve been lucky; I’ve been one of the few people that has worked at executive levels in both the public and the private sector. I’m interested in learning about the areas that the marketplace is going to declare as the winners. I think Tesla is one of those: they have already sold $45 million worth of vehicles, and that’s an area we know is going to continue to grow.
Solar is another, and I think Akeena and E.I. are going to be winners in the solar space. So we’re trying to identify firms that are winners and help them grow as quickly as possible. I believe that their success is going to lead more job creation in California.