David Friedberg: Hey, everybody, it's Sunday. So we're going to talk about being a VC. Molly has a question for me about marking investments. It's very technical, but very important. If you've ever thought about

SPEAKER_01: starting a fund or if maybe you're running a fund now, very important conversation. And we go into

SPEAKER_02: a lot of details for about 20 minutes. It's so great. I really we're really I'm leveling up. I'm leveling up. I feel like it's been forever since we had BC Sunday School too. So it's great. And

Jason Calacanis: then we have this week in climate startups. I am talking with Sam Tiker, who is the CEO and chief reef officer at a company called coral beta, which I'm super into they're doing coral regeneration.

SPEAKER_04: That's like the word of the future. By the way, none of that net zero, we need to regenerate

SPEAKER_06: the stuff that we're losing. I cannot wait to go to an even greater barrier reef for a great barrier reef off of Long Island. Let's go put more coral everywhere. I love it. All right,

SPEAKER_07: it's gonna be a great episode. Stick with us. This week in startups is brought to you by Dell for startups. Visit dell.com slash twist to apply for Dell for startups and save up to 45% off on select items. Lemon.io. Need to speed up your product development without draining your budget? Hire vetted engineers from Europe at lemon.io. Go to lemon.io slash twist to get 15% off for the first four weeks. And swag.com. Swag.com is the best place to buy, customize and distribute custom gifts and promotional products. They work with some of the best brands like Yeti, the North Face, Ember mugs, and more. Visit swag.com slash twist and use code twist for 10% off your order. Okay, everybody. It's

SPEAKER_11: Sunday. And everybody loves we're talking to Brad Gerstner. He said one of the great parts about listening to this week in startups since Molly joined this year is watching Molly learn to be an investor. So every Sunday, you can go back to all the previous Sunday episodes. We start with a VC Sunday school, just where Molly asked me questions about what she's experiencing. And

SPEAKER_01: I do my best to give her my advice and how other VCs think about important topics in investing in

Jason Calacanis: startups. So what's on your mind? This very, very reassuring to know. And I hope you all appreciate that. I'll sit here and ask the dumb question for you because there is something that someone is saying every single day, either in a meeting or on CNBC that you don't know, but you're too afraid to ask. So I'm here for you, my friends. I'm here for you. So given the state of the economy, which we talked about extensively on Friday, there is a lot of conversation about marking. And I want to ask you sort of generally what that means, who it's for when you mark things, when you mark them up versus when you mark them down, what it means when you mark them down, like marking is just sort of one of those words that everybody throws around that makes me think of, you know, a piece of like, paper, and a pen, and I just want to,

SPEAKER_21: I just want to understand it better. So marking is what value you put on a private company. Now, it's very easy to put a value on a public company, take the number of shares, your times about the share price, and then you have the value of that enterprise. Now, of course, you can take out debt. And, you know, they might have some assets like inventory, but by and large, the market cap, for most people, the value of a company is the stock price times the number of shares. And so if you are a public market investor, and you want to know what your portfolio is like, you just open up your wealth front or your Goldman Sachs app or Robin Hood, and you look at the number of shares you have, you have 100 shares of Coinbase, you know, at $10, you got a $1,000, if it goes down to $1, you got 100 bucks, it's very easy to understand the value of Coinbase, or Uber or Google. Now, when Uber, Google and Coinbase were private companies, well, how do you assess the value of a private company? Fine, you're not, people are not trading the shares in private companies every minute of every day, or in crypto land 24 hours a day, seven days a week 365 days a year. So there are moments in time when a company gets valued. And those moments are when investors decide they want to buy shares in a company. So you go through an accelerator Y Combinator launch accelerator tech stars, and those companies put in 100k or so and they get six or 7%. That gives a value on the company of broadly

David Friedberg: speaking 1.89 $2 million. So you could say the company is worth $2 million because somebody bought 6% of it for that amount. Now the company does a seed round, somebody puts in $1 million for 10%. Okay, you know, that happened to you know, whatever, six months after they graduated. Now we know the company is worth 10 million. Okay. But let's say that was on a convertible note. So you have the $2

SPEAKER_11: million valuation on a convertible note, and I have a $10 million convertible note. Which is it worth because these are loan devices for people don't know what a convertible note or safe is, it's an

David Friedberg: agreement that when you do issue equity, I will get this amount of equity, the dollar amount and that I put in and edit this can valuation cap. So we haven't actually issued shares. So intellectually, can you say it's worth 10 million? Well, people made an agreement, there's a piece of paper, it's signed to the million dollars got shipped seems reasonable to me that you can make that. So in our

SPEAKER_30: funds, we take a conservative approach. Okay, when we invested, what was it worth? That's where we

David Friedberg: market now after that, we have to make a decision as a firm. And actually, I was just trying to make this decision intellectually. Let's say this two and $10 million occurred. And let's say we were the investors, they went to the launch accelerator, and we own roughly 15% of the company. Now somebody comes along. And let's say it's crazy boom times like it's been for the last few years. And they

SPEAKER_21: invest and they buy shares and it's $100 million post, or it's $100 million, it's a $50 million valuation, $50 million valuation. And somebody puts in 10 million, but it's on a convertible note as well.

David Friedberg: So shares haven't been issued. Do we market at the $10 million level, or at the $50 million level 10 million when we invest it or 50 million when this new investor, some people will just market right up, they want to get that credit. So that means when they share their list of investments with their LPS,

SPEAKER_21: it looks like Whoa, we have 6 million, or if we own 15%, we have like $7.5 million or so in value here. So we got over $7 million in value. And we put in a million and 100. So we put in 1.1, we got 7 million in value. That's a, you know, six x plus six and a half x. So this is looking like a really good investment. We've got a lot of profit here, right? We made 6 million bucks. And so LPS will be excited. Now what if that company never raises another round and goes out of business? Okay, now, when that company does go out of business two years later, all of a sudden, you're sending a statement to LPS, and that has gone to zero, or let's say the company raises money again at 10 million. Okay, all that value got wiped out companies no longer worth 50 is worth 10. And so this dance occurs, some people take an aggressive approach and just pay somebody marked it up, we're gonna mark it up. And then there's crazy moments that happen, like some individual who worked at the company sells the shares to you know, one of these funds that buy secondary shares, and they buy it for 100 million. Now, where do you market Molly, we invested at 10, this $50 million invest this valuation of 50 million happened, and then a transaction occurred on second market, which is like a NASDAQ marketplace for this, or some syndicate on AngelList decided to sell some secondary shares in a company like Uber, which has happened many times or Robinhood, where do you pick the mark? Am I going to pick it on that transaction?

David Friedberg: And so some people there, it's a you have to decide as a fund manager what you want to do. I've taken a very conservative approach, or I should say my team took them, I told them take the most conservative approach, we don't mark these things up, uh, all too often. And now I'm thinking I've been maybe too conservative. And so I've been thinking about, hey, if the $50 million valuation did occur, that jump from 10 to 50, I'm talking about, did the revenue go 5x? Just like some supporting information. And when I talked to people who do audits, they said, Well, you can make the decision as the as the as the general partner here, um, of what you want to do. And if you're too aggressive, well, then you might have a compression in what people think your fund is worth. And they might have been counting on that money. Right? They might be or, yeah, and if you're too conservative, investors too. Yeah, exactly. And if you're too conservative, then they might be delighted. So

SPEAKER_21: which would you like to do? I was told firms like Sequoia, you know, um, and some other firms like to hold these things at very low marks so that they can then just surprise their investors when the actual cash on Star Trek. Yes. Like, yeah, I need 10% more. It's not possible. And then all of a sudden, well, here's 15% more. Yeah. So, um, so it's everything I could tell you.

SPEAKER_20: So a single company can have multiple marks across multiple firms. Sure. I mean, potentially every time an investment occurs, when they go from the

David Friedberg: accelerator seed, et cetera, they'll, oh, yes. So if multiple firms might look at the same series of events. Yeah. So your, your firm a I'm firm B, we both did the $10 million round, the $50 million round comes up, I'm holding a 10, you marked it to 50. And then a third firm might say I saw these secondary transactions, I'm going for the 100. And then you're an LP in all three firms. And you look at them and you're like, Okay, they all invested in calm.com or Uber. And now they all have a different version of events. And you're like, Yep, that's private markets.

Jason Calacanis: The end, it all comes out in the wash. So the marking really is becomes a signal of your judgment, your style and your judgment as an investor. Sure. I would think LPs probably think that. Yeah. LPs probably have that.

SPEAKER_01: They must be having that discussion. I don't know that. I would assume. Yes, that's another interesting observation Molly. I think

David Friedberg: they're probably looking at it going like, yeah, this person's conservative and realistic. This is like a Bill Gurley benchmark, you know, Sequoia type confident, but conservative. And then like, this person is like a new, you know, crypto fund, totally, you know, whatever that's marking everything about everything. Yeah, I mean, I saw this because sometimes some of these like young gun firms, you know, started sending me their LP updates. And I remember replying to when I said, I turned to our team, I was like, Am I an LP in this? Do I know this person, but I don't remember being an LP. No, like, you're definitely not. I'm like, can we search? We all search our Gmail boxes, superhuman try to find this email. Like, did it? It's like, no, they offered, but you never responded or whatever. You declined or whatever. And I asked them, I was like, do you know, you're sending this to me? Was it a mistake? I don't want to get confident information. Like, no, no, we just wanted you to know how we're doing in case you want to do the next one. So that's very nice.

SPEAKER_21: Thank you. Um, and then I'm looking at it and like, they're marking everything up at a really increased pace. And it was like a lot of crypto investments. And I just think about it now, man, that person might have 90% of those markups gone. And so you were in that fund for two years, crypto went bonkers, they made a bunch of great trades at that time. And you thought this was a 10x fund. And now it's maybe you get your money back, or maybe you do less or you double your money. So live by the gun, die by the gun, live by the sword, die by the sword, you know, you want to be aggressive, you know, you then

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SPEAKER_30: When do you mark down? And what does that look like?

SPEAKER_21: Well, yeah, so people who have combinations of public equities and private equities in a fund like a hedge fund might or somebody's private equity people might just came up with tiger. Right. So there's a lot of talk about tiger global, which has been absolutely brutalized. I think they were the ones who came in. I should probably have heard in the news. 52% right now in their public fund. A lot of their information gets leaked because they send out notes every quarter. And they explain how they're doing. And then people can do redemptions. So because they're like one of these public private hybrids, people can redeem their shares. I guess it's not like a venture firm where you're stuck for 10 years, you can't take your money out. And so because they have redemptions, they need to put values on things and have to value the private market companies. And that's when we were talking, I think on Tuesday or Wednesday, it was Tuesday, Tuesday show we're talking about they marked down um, two companies read it was marked down fidelity did yeah, they marked down fidelity and stripe stripe 13% and 40% if I remember the numbers correctly. So they're just looking at it realistically and saying, Okay, we bought in, they were about to do an IPO, the market was hot. And we thought read it would be worth this amount per share. Now we think it's worth this amount. So they bring super realistic and maybe taking a little medicine now. And because from what I heard from an insider,

David Friedberg: Okay, let's say you had 80% public equities, and but 20% private. Now, you're 20% you're 20% private. Um, had like crazy up rounds and it became, you know, they became double in value, right? And then your stock market collapses. And those shares become worth 40%. Yeah, they're worth you know, if it was $100 portfolio. So if the timing was $80 worth of public equities in and out with 40. Yeah, and then your privates were worth 20, but they doubled and went to 40. Now you're sitting here with $80. You've lost 20% of the value overall the fund, you got $40 worth of public equities $40 worth of private. But the privates, nobody believes those marks because those marks happened before the stock market crashed. And there's this lagging effect. So now

SPEAKER_21: you're like, Well, wait a second, I bought into a fund that was 80% public market equities and 20% private. And now I'm gonna fund that's 5050. Mm hmm. So how do I get it back? And maybe I want my money back. Or I don't want to be this private, you know, so the privates get marked down by 13 and 40 20% or whatever. Now that $40 is down 20% take $8 out of 40. And you get $32, right? So now it doesn't. Now it looks like it's 60, whatever, you know, percent public market equity.

Jason Calacanis: So this is what's happening, I think. So that's just a shell game. That's just made up. That's just like, we need this to look. I mean, I it's I understand that it's a shell game about improving confidence in a market so the people aren't like, give me all my money. And they don't actually have

SPEAKER_62: that money because the private part is not like in this case, it might be trying to be intellectually honest about the private companies being overvalued while also trying to shape how the optics look.

David Friedberg: And this is where I think this gets complicated. Mm hmm. Because people are looking at it saying, well, you're picking this value. How did you pick it? Right? It wasn't a consensus pick.

Jason Calacanis: Right. And we talked about that in an earlier episode, the valuations and where they come from, and they come from the market. Right? Yeah. And the market of public equities,

David Friedberg: he's got it, you got retail investors in there, you got endowments, like, there's a wild process in which public market equities get valued, right? And quarterly returns, and you got analysts predicting stuff, you don't have analysts predicting what happens with Reddit, right? You have Reddit predicting what's happening with Reddit, and they may not give you information, but certainly they're not required to give you information like a public company. So you have all this infrastructure to analyze, and the marketplace in real time, whatever number of hours per week, marking the

SPEAKER_21: value of coinbase. Yeah, that's not happening for Reddit. Yeah. So somebody's got to do that. And if

David Friedberg: that's somebody's making a judgment call, you know, it does create this, how did you make that judgment call? And then also, if it was a marketplace of, you know, 100 VCs competing for a deal. Well,

SPEAKER_21: those are individuals making guesses and projections about the company. It's, again, not a bunch of analysts, like in public markets with, you know, and there's not a lot of information, it might be a more nascent company. So it's so fascinating. Well, and then back to this question

Jason Calacanis: of how it reflects your judgment. Okay. Um, how does this start to come into play, then when funds are raising, when they're going back to their LPs? Yeah, if you have a long, long, long history of marking

David Friedberg: up or marking down too much, right? The sophisticated investors will look at your marks. And because they're in other funds, they might know what Uber is really worth and where other people valued it. And yeah, they might actually answer that question. Where are you valuing Uber right now? Are you valuing it based on Massa's round where he did that round? Are you on the the round before it? Just where are you valuing it? And so they just, they'll probably do their own homework there. Because remember, they have insight into 25 venture funds for the last 30 years, you know, if you're somebody like Yale, Yale is known as being the most rigorous in terms of their venture capital approach with their endowment. And Yale might have, you know, 40 years worth of data that nobody in the world has down to the level of the individual partners and who did what which deal. So they'll know rule off did YouTube and Moritz did Google and this person did this deal like thing. And then those people, if they didn't in that case, but if people left one firm and went to another, and they're judging this new firm, they might say, Oh, this partner, Mamoon went from social capital to Kleiner. I'm not basing Kleiner based on Kleiner's track record.

SPEAKER_21: I'm going to go get Mamoon's track record. Oh, they did slack. They did, you know, Carta. I'm going to go look at what he did at social capital with Chamath. Now he's running Kleiner.

David Friedberg: I'm going to double click on that and figure out, like, what is Mamoon as a player worth? It would be like somebody leaving one team to go to another, right? Like LeBron goes to the Lakers. You're like, Okay, let's bring LeBron stats from the last team he was on, not like based on who

SPEAKER_01: was the last Laker player stats, right? The Lakers are just a logo. Kleiner Perkins, just the logo. Who's the player on the team, right?

SPEAKER_87: And then finally, and then I promise I will stop this episode.

SPEAKER_88: No, no, no, it's so interesting.

SPEAKER_89: Finally, I'm learning a lot. By the way, it's good that you're asking me because I've literally been going through this. I literally was talking to auditors last couple of weeks.

SPEAKER_90: So it's awesome. It's perfect. Yeah. I mean, that's, by the way, if, if dear listener,

Jason Calacanis: it sometimes feels like VC Sunday school doesn't necessarily go in the order that you would learn this job. It's because it's actually going in the order in which I am learning this job.

SPEAKER_93: We'll resort these episodes a year from now. You know, exactly. We'll make some sense out of it.

Jason Calacanis: Turns out that was 201. This was a 301. This was a master. Yeah. Um, w one of the metrics by which we are judged, if not the metric in some ways is IRR, internal rate of return. So how does marking, it seems somewhat obvious how it plays into IRR.

SPEAKER_20: If you've got higher markings, uh, you look like your internal rate of return is amazing. There's a lot of games you can play with IRR. Yeah, a lot of games.

SPEAKER_21: So it's basically, when did you make the investment? And then, you know, how has it grown since? So that's why venture firms pull down money over time. If you raise a $10 million firm, you don't get the $10 million on January 1st of this year. That was the start day of the firm. You might take down a million of that and deploy a million of it. Then six months later, a million that six months later, a million. Why do you do it that way? Well, you start the clock on your IRR whenever you draw the money down. And then, uh, we were talking on one of the all in podcasts recently about people have a line of credit for their, um, venture firm. What does that do? Well, I can take the money, the million dollars for January 1st from Silicon Valley bank or Comerica or first Republic or whatever big bank that gives a line of credit, pay 1% interest on it a year when market, when rates are low. I heard this, yeah. Deploy the million. And then pull down the million in six months. Now I've artificially, uh, taken six months, uh, I've clipped six months off the IRR window, which if it was a 10 year fund, it would be like taking 5% out, but I only paid 1% for that privilege or even less. And so then you can kind of game it that way, um, through taking loans. And so there's all kinds of interesting things there. And obviously, if you mark things up aggressively, the IRR looks better.

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SPEAKER_30: a 15% discount for the first four weeks of work with a developer. What a nice offer. Thanks, lemon.io. At the end of the day, when I was an LP and various funds, what I learned was what cash did I

SPEAKER_21: put in what cash they take out. I know this takes 10 years or so sometimes it takes 15 to get everything cleaned up. Sometimes they get majority of the money comes in year seven or eight because it is a power lower business with the top companies and top returns returning the bulk of the money. So if I put in a dollar, did I get two, three, four or five back? Just cash on cash. That's all I look at. Yeah. Take out all your fees. Take out your money. Yeah. Yeah. Multiple on investor capital. Yeah, I think that's the most intellectually honest at the end of the day. It takes a long time. And it's hard. You know, Chamath was talking about this like, and he just put it in the top. He put something in his letter this year. He did his annual letter. And he just put his returns there. And you know, it's like, you might have five, a five x fund on paper, and you've returned, you know, one times their capital, you know, they put in a dollar and you get back a dollar. Okay, so now everything's profit from here. Great. Now we have to figure out the five x that's remaining. How do we collect that? How do we get those shares in private companies, public or sold or secondary to get that money? And that's where liquidating your investments and being able to realize your gains is a big part of what we do. How do you realize gains? Right? And it's really hard because if you sell something in secondary, you sell something to another investor in a private company before it goes public. And it 10 x is well, you just you miss that upswing. If it goes down 80% you miss the opportunity to cash in out of peak. And I think there was some crazy moment where like Fred Wilson and Zynga was famous story. Fred Wilson had invested in Zynga, Mark Pincus his company, the Farmville

David Friedberg: company very early. And that company wound up doing really well. And before the IPO, I think they sold their shares or some of their shares to Kleiner which wanted to buy them and maybe they bought them at twice what 50% or twice with the IPO wound up going out because they didn't know the IPO price yet. So Kleiner another venture firm then puts the money in there locked up. And I think famously Zynga collapsed after the IPO went down to like a dollar to a share, it was a disaster.

SPEAKER_21: So all those people who made that trade right before the IPO looked really smart. In fact, the people who sold Uber shares like I did to Masa and to some other people, that price was much higher than the

David Friedberg: current stock market price. Now it doesn't mean in another five years, you'll look stupid. But at some point you will look stupid. Right? Yeah, everybody looks stupid at some point. That's like the roller coaster of the decade. There's no way to peak. How do you pick the peak of a stock? You know, this is why like, I have always taken the approach of if I have the opportunity and I'm, you know, I've made 20, 50, 100 times my money. Sure, I'll sell 10 or 20% of my position. Yeah. And then if that happens again, sure, I'll sell 10 or 20% of my position. And then when it goes public, I'll have 60 to 80% of my original position, but I'll have taken what I like to call idiot insurance against, you know, anything else. And because we're an early stage fund, yeah, why not give our LPs a little return, which then would build our confidence in us to do the next fund? Right. So when you chip off a little bit and you're like, I thought this was a good trade, we happened to make one of these trades at one sandwich company where we sold 24% of our position. And it returned the entire second I didn't really return the entire second fund we did. And it wasn't expected. But now that funds in the black, and the market is corrected. And because SAS because SAS has compressed, maybe now I'm at half of where I was. You know, with that that company is got half the value was so if I sold 20% of that value, man,

SPEAKER_21: it's almost like I got a free ride there, right? Yeah, I did. So that's where time to money is like another complicated thing. This is all very interesting and important. What's most important is meeting a lot of great founders, placing small bets, working your ass off to make sure that company successful and getting to know them. And when you find a winner plowing more money into it. So when we talked about inputs and outputs on Friday show, when I was talking about like, hey, not to how not to get laid off as an individual, the input is how many great companies you meet with, the output is how many bets you place on promising companies, and how many bets you place on winning companies, and perhaps that second thing of all those three things determines your outcome. So meeting with a lot of companies important, placing a lot of bets and great companies important. But doubling, quadrupling 10xing down the amount of money that goes into the winner. I think when you actually get to the end of the returns, what I'm starting to learn is that's actually the most important part. Because if you don't go from 2% ownership to 15. Well, now you've got this like nice to a $3 million win. But if you do go from two to 15. Now you have this $15 million win, I'm talking about like for investors, it can be like a dramatically different outcome. And you probably saw it, because you saw the revenue going up, you got all this good news. And you didn't place more bets. It's like having aces and the flop comes down ace, you know, um, nine, two, and it's three different.

David Friedberg: All right, there's no straight, right? There's no straight, there's no flush. And you got top set, you probably want to get more money in that hand. And maybe somebody hit a pair of nines. Maybe somebody hit their set of twos or their set of nines, you're gonna get all the money in or maybe

SPEAKER_21: somebody is a dope and they have 10 jack and they want to chase a straight or something. Well, actually, in that case, ace two, you do have a straight on the board. Uh, with ace two, you know, the person could have three, four, and they're going for a five. So yeah, all kinds of weird can happen. Um, I love which is harder BC or poker? Well, I would say poker clearly much harder. Because in what we do, I feel like when you have great deal flow, like we do because of the podcasts, and because of my track record in the book, you know, over time, and the reputation, and your reputation is part of the reason I wanted you here is like, you're going to have better deal flow, if you have better deal flow, that's like getting better cards to start. Yeah. So I kind of feel like when you're playing cards, you're going to get like an extra king and extra ace, you know, every orbit, Yeah, every, you know, 10 hands. And in my job, I probably with my reputation now and get like, you know, aces and kings and queens, like 10 times more than a new VC. Um, because they just have more deal flow coming in. Yeah, you don't want to miss it. That's one of the keys to not missing the good

SPEAKER_51: stuff. So got to keep your eyes wide open. All right, this is an epic epic one. VC Sunday school. I love it. No, no, no. What do we got up next?

Jason Calacanis: We're down to the dirt. Okay, next we have a super cool company this week in climate startups. We've been talking about this company for a while. Actually, I finally got the coral, the coral regeneration company on the show. Sam Tiker, the co founder and chief reef officer at Coral Vita, which was founded in 2015. They're actually growing. They've figured out how to juice the growing process of climate change resistant coral, resilient coral. And so they grow it 50 times faster through a commercial model and they're restoring reefs at scale restoration as a service. Super interesting company. It took so long to get them on the show because they won the Earthshot prize and like Prince William had to come to visit, you know, it happened. Um, but it's just a fascinating interview and it's fascinating that they are commercializing this process instead of doing it in an NGO way because they're like, let's go, let's use the power of all of the, it's a, you know, coral is like a $3 trillion contributor to the global economy. And they're like, uh, great.

SPEAKER_126: I, when I, I, I hate to talk about it, but when I went to see the Great Barrier Reef a couple years ago, five years ago, maybe now. Yeah. Um, half the coral was white and, and broken and it was, you know,

David Friedberg: tragic and depressing. And I don't want to say that because I don't want to dissuade anybody from going,

SPEAKER_06: but I do want to be honest. I was kind of like shocked. Um, now it was worth going. It's a bucket list for me. If anything, that's why you should go too. Well, that is kind of part of it,

David Friedberg: but you also got the profound sense of sadness from the people who work on the reef that like, maybe this is the end. Um, and they're, they're not going to be doing dive trips

SPEAKER_21: because they're already not doing dive trips to some locations that maybe 20 years old or great.

David Friedberg: And this antler coral, which you see on the right there, they look like antlers. A lot of it was broken because as it dies, it becomes brittle and it's broken, but it's heavy and it's floating at the bottom of the ocean. And so we would go by and see like antler coral,

SPEAKER_21: like a whole bed of it just floating and broken there. And you're just like, oh my God, I want to cry, you know, but now science, right? Like if they, and that's from like a one degree difference or two degree difference, that coral, my understanding and talking to the dive masters was like even one or two degrees difference a year or over a decade, some of the coral just wasn't resistant. And so they, they, they exist at this like temperature or water temperature that is a very narrow. Now with science and breeding, there's obviously some coral that have a wider range and are more resilient. And so if you can make it faster, put them under stress and then get more of them out there. Oh my God, this could be, you can have places that have no coral reefs. And you can, you can make, you can make a coral reef bigger than the Great Barrier reef. Why not make the coral, the Great Barrier reef 10 times bigger? Like what's the downside?

SPEAKER_106: There is a life. I don't think there's a, I don't think there's a downside in this one.

Jason Calacanis: Yeah. No, I asked him too. I was like, are you creating zombie coral that's going to take over the ocean? And they were like, okay, well, first of all, no, but two or B, if that happened, great. Like runaway coral would be great. And we should, and I just want to note before we go into that interview that on Friday, uh, news came out that carbon dioxide levels in the atmosphere have reached the highest in human history. Humans pumped 36 billion tons of carbon dioxide into the atmosphere in 2021, more than in any previous year from burning oil, gas, and coal.

SPEAKER_01: Let's get to work, baby. Everybody go to the syndicate.com slash climate and sign up. If you're a credit investor, if you know, a credit investor, sign up and just read Molly and I's deal memoirs in the climate space. And we're meeting with climate companies. If you want to meet, uh, uh, Molly, molly at this week in startups.com and I'm Jason at this week in startups.com email us. I'd love to meet your company or just apply over there. All right. I'm going to look forward to this interview. Let's go.

SPEAKER_138: That's great. Here we go.

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SPEAKER_141: use the promo code twist for 10% off. Sam Teicher is co founder and chief reef officer at Coral Vita, which

Jason Calacanis: should give you a hint about what we're going to talk about today. Welcome to the show. Thanks so much for having Molly. Let's start with the basics. What does Coral Vita do? And how does that title play into it?

SPEAKER_145: Coral Vita grows climate change resilient corals to restore our world's dying reefs. So I am a coral

SPEAKER_147: farmer, which is definitely not what I expected to be growing up in Washington DC with thoughts on education reform to making peace in the Middle East. But I am now fully focused on helping scale coral reef restoration around the world. So I've been a diver since I was a kid. I have a lifelong love for nature and the ocean. And I studied climate change during college, actually from a national security perspective. And again, didn't think that this was the space I was going to work in. But in addition to the love for coral reefs, they're actually also one of the most valuable ecosystems on our planet. So the latest estimates are that they generate $2.7 trillion annually through things like tourism and coastal protection and fisheries. There's up to a billion people in over 100 countries and territories that depend on coral reefs, along with 25% of marine life, which is pretty astounding for one ecosystem that takes up less than 1% of the seafloor. However, half of the world's coral reefs are already dead. That's happened since the 1970s. And we are on track right now to lose over 90% by 2050. So this is obviously ecological tragedy. It's also a socioeconomic catastrophe. And the best thing full stop to do for coral reefs is to stop killing them, which requires action by our leaders and government and industry and the media to step up on and solve on climate change and habitat destruction, pollution and overfishing. But that's clearly not happening fast enough. And so that's where coral reef restoration comes in. It's akin to reforestation, only we're growing corals and planting them into reefs. And we, being my co-founder, Gator and I, out of grad school back in 2015, came up with the idea for Coral Vita to transform this space to a sort of restoration economy and help scale and kickstart this whole global movement to preserve the ecosystems that sustain us all. And when you're starting up your own company, you do get to pick your own titles and ultimately settled on chief reef officer for the work that I do. What's Gator's title? Gator is president. So we're boring.

SPEAKER_81: Yeah. If he wants, I guess, you know, with a name like Gator, it's cool to play it straight with the

SPEAKER_150: title. He's already got a good title with the name. Yeah. Yeah. You guys split it up just right.

Jason Calacanis: Let's talk a little bit about actually your journey to this, because previously you worked on climate resiliency initiatives at the White House for the Global Island Partnership. You co-authored Sustainable Development Goal number 14, Life Below Water. How did you come to all of that work before

SPEAKER_153: settling on this specific company? So I mentioned earlier being pulled into

SPEAKER_147: about 18 different interests and ultimately studied climate change within a sort of political science degree in college and got into the Yale School of the Environment for my master's program, which is where Gator and I later met, decided to take a gap year before going back to school and was looking at non-profit think tank government type jobs in my hometown of DC. When a classmate and friend of mine, Vedant, who's from the country of Mauritius out in the Indian Ocean, invited me to set up the environmental branch of his NGO, Eli Africa. And I thought, best job in DC, tropical island for a year, I'm 22. I'll see you guys later. I'm going to the other side of the world. And while out there, helped set up sort of environmental programming for the students we were working with. It was a sort of originally an NGO focused on providing education for at-risk kids. We did mangrove and terrestrial reforestation. And then we got a grant from the United Nations in partnership with the Mauritius Oceanography Institute to do a coral reef restoration project. So again, had this lifelong love for diving, but I'm not a marine biologist. This wasn't where my background was, but have this deep passion for the space. And got to see how coral reefs can be brought back to life in the right conditions. So restoration in this field has existed for several decades. It's been done from Mauritius to the Red Sea, to Australia, to Florida. And there's an amazing global community of scientists and NGOs and governments who have been doing this work for many years. Traditionally, coral farming has been done by those entities and is usually grants and donation funded. So with a still over a decade later amount, tremendous amount of gratitude to the UN for funding that initial project. It's not the most straightforward thing to get a UN grant. And it only was big enough to let us grow 5000 pieces of select group of fast growing coral species one time, and then the project funding expired. And that was kind of the end of the project. And 5000 corals is great for one lagoon, but one island nation like Mauritius needs closer to 5 million corals every year, and needs to be done with more holistic restoration growing more diverse and resilient species. So the traditional NGO led grant funded ocean based these underwater garden nursery model for growing the corals. In my mind, given the scale of the challenge, 90% of the world's reefs dead by 2050 just wasn't going to cut it. And so got to grad school, met Gator. He was coming more from the environmental science background, I still was interested in policy. While in grad school, I interned in the Obama administration at the Council for Environmental Quality within the White House that did climate adaptation work. And then for this Global Island Partnership, which is a coalition of island nations fighting for the survival of islands through sustainability and conservation. So loved all of that, but also was frustrated by bureaucratic inertia, the funding restraints that are often imposed upon NGOs, and that impact on scalability and Gator felt like as in sort of academia, he was almost writing the obituary for the planet, as he likes to say. And we thought, there needs to be more, there needs to be better, we need greater scale and urgency to solve a lot of these environmental issues that matter and that matter to us. And ultimately, together with our passion for coral reefs, looked at that tremendous value that they provide and what's at risk by them dying and thought, well, if we can incorporate breakthrough science developed by amazing other practitioners around the world, grow corals in months instead of decades, strengthen the resilience to climate change, but then create a land-based commercial farming model, perhaps that could transform the space to where it needs to go. And that's how Coral Vita was born.

Jason Calacanis: Katie Grant- There's a couple things in there that I want to unpack specifically. One is the commercial piece. So you alluded to, you know, having this grant from the UN that that ran out funding over, which is not atypical for nonprofits. Is that the reason you decided to go this commercial route? Like it's, you know, it's hard to imagine finding a business model around regrowing coral, even though it's so necessary, which is so so much the challenge with a lot of what we consider to be climate tech and as an investment opportunity, you know, so it seems like one of the many innovations you have done here is figure out how to make this like a venture scale startup.

SPEAKER_153: Yeah, I would say that's the chief innovation we've brought to the table at this point. Again,

SPEAKER_147: we don't take credit for the methods to grow corals faster, make them stronger. There's amazing scientists, some of our original advisors, I'll pioneer that. Again, other entities around the world that have shown restoration is feasible. But having that ability to actually unlock sustainable financing to do ecosystem scale restoration is one of the key challenges that's held back the space. Coral restoration is probably the last thing that anything is innovated for. I mean, so many things are just literally off the shelf, hardware store solutions, and we need robotics, and we need mechanization and artificial intelligence, and, and, and finance. And we're trying to tackle a lot of those things. But specifically with the business model, again, not thinking I was gonna be an entrepreneur growing up, but recognizing that, given the world we live in, what will motivate a lot of key stakeholders if we can showcase not only the impact of our work and making it financially sustainable in its own right, but that it can help protect assets in a way that they normally would only look at as something that belongs to the commons, say, but actually has a direct bottom line interest to them. A hotel not only relies on a coral reef off its shore for the tourism draw for snorkelers and scuba divers, but also because that reef on average reduces 97% of wave energy. So it can lower insurance costs and, and sort of the damages incurred during either from a hurricane or long-term erosion. So our thought was, yeah, if we can create a business where we actually get those customers that depend on the tourism and coastal protection and fisheries benefits of reefs to pay to restore them back and then unlock that sustainable funding that small one-off disparate grants and donations isn't going to do. So our model, to boil it down as simply as possible, we've got sort of four key revenue streams. One is online brand partnerships. We've got one with Corona beer in the UK, and they are driving people towards our adopt a coral program. So you could be in Los Angeles, you could be in Nairobi, you could be in Barbados, where I actually am on a work trip right now. You like what we're doing, you want to support our work, you can adopt a coral and that funds restoration. Then there's conservation finance mechanisms. So there are actually insurance policies being developed for coral reef restoration, as well as mangrove restoration. You've got blue bonds, most people at this point know about carbon credits, biodiversity credits are emerging. So tapping into those things can also help fund these projects. The farms are primarily based on land for us, which I'm sure we'll get into later, it gives a number of benefits. But in addition to being a coral production facility, the farms are both education centers for local communities, it's a key part of our model. So through workforce development and education, empowering the communities where we work, as well as being a revenue generating tourism attraction in its own right, come visit us in Grand Bahama, visit the farm, have a fun experience. And that can help fund a lot of our operations. And then finally, and this is, I think, the more innovative approach is selling restoration as a service. So we'll riff on SAS, we're going for RAS, and looking at the hotels, governments, developers, insurers, cruise lines, development agencies, anyone that cares about or depends on the ecosystem services of reefs can hire Coral Vita to restore those valuable ecosystems.

Jason Calacanis: There's probably the parts of your business that are big now versus the parts you want to be big down the road. Like, do you imagine is restoration as a service, the ultimate goal, that you will have enough supply that you'll be growing coral quickly enough that you could not only transplant coral into places where it already exists, but potentially even create new forests?

SPEAKER_153: Well, we'll definitely always adhere to whatever their local and international regulations are and

SPEAKER_147: respect biosecurity and things of that nature. But there is definitely an opportunity to yes, revitalize existing reefs that are degraded. But if the water quality and ecological conditions allow for it could actually build reefs that weren't previously there, that usually would include deploying artificial reef structures. But again, as far as like, I've mentioned insurers before, I don't think insurers in the US Defense Department are who spring to mind when you think about progressive environmentalists, but they understand risk. And I mentioned the DoD because DARPA, which is effectively the R&D arm of the Defense Department, about a year and a half ago, actually put an RFP out for innovations in coral and oyster reef restoration, because they've got bases along the coast that are facing sea level rise and increasing storms. And artificial sort of traditional concrete gray sea walls and breakwaters are expensive, don't offer a lot of benefits and actually also don't relatively have a long shelf life. Whereas if we can innovate on coral and oyster reef restoration, which provide fishery habitat and our tourism draws and reduce wave energy that are also self repairing, it actually becomes much more cost effective. And so you could deploy structures that then corals or oysters could get attached to. So yes, those types of reefs could be created where they maybe didn't once exist. And so our ultimate vision, there's a thriving restoration economy. And there are large scale land based coral farms in every nation with reefs around the world. Coral Vita, hopefully being involved in some capacity, all of them, but really, there's a need for everyone to be empowered in this space, other restoration practitioners, scientists, NGOs, local community leaders, but our idea is to work in partnership with any and all of them together with the private sector and government. So that instead of growing hundreds and thousands and tens of thousands of corals, we can grow hundreds of thousands, millions, and ultimately billions of corals, because that is what we need to ensure that reefs survive and thrive for generations to come given the threats that they face.

Jason Calacanis: So when you talk about those partners, I feel like I need to back up to the beginning, I feel like I'm all the way ahead of myself. Let's go back to basics, though, which is how are you getting that coral in the first place? And tell me about this process of making coral grow more quickly, because I don't think people realize how long it takes to regrow coral and that that's why

SPEAKER_153: this is such a huge catastrophe when it dies off. So the simplest analogy I can give is imagine taking

SPEAKER_147: a cutting from a tree or a flower that you can then graft. So corals produce asexually and sexually, asexually is again, fragments break off, and then they can sort of attach and grow like grafting. And then again, akin to pollination, corals also make babies. It's pretty remarkable, you should look at videos of coral spawning that happens after the full moon, once or twice a year, we still don't quite understand how they all sync up. It's amazing. We do the sexual spawning work too, but our main focus is on fragmentation. And so we go out to the reefs, collect pieces of coral and these scientifically accepted practices. We try to emphasize ones that are living but maybe have broken off because of a storm or a fisherman dropped their anchor, but we also can take cuttings using tools very carefully. We bring them to our farms, which are again, primarily based on land. So we have an aquaculture system of raceway tanks, four foot by eight foot tanks that clean seawater is pumping through under sunlight, and the corals will grow there for six 1224 months, until we feel they're ready to go out and actually be out planted into the reefs. There's a few different ways to do it. But just imagine going down with underwater drills, and sort of this non-toxy epoxy sort of glue or cement that then the corals grow over and sort of you plant it, they will come and the reef start coming back to life along with often the sort of the fish life. That depends on the reefs. And so what we're doing, again, I mentioned before in Mauritius, I can only grow a limited coral species. So some corals are what are referred to as fast growing. So you can have a branching coral. One's called staghorn coral in the Caribbean, because it looks like the horns of a stag. So you have a cutting the size of your thumb, and it'll get to your hand and wrist in six to 12 months. So most restoration projects just grow the branching corals because they grow fast. It's reasonable to be able to sort of use them for restoration. But there's many, many other types of species that are bouldering or encrusting and plating. The brain corals maybe spring to mind for people that know the reefs. And to go from the size of a coin to the size of your hand or a basketball could take decades, if not longer. So what we're using is a process known as micro fragmenting that was pioneered by one of our original advisors, Dr. David Vaughn. We're basically one coral. So corals are animals, for those who don't know, with plants living inside of them that make rock for their skeleton, they're pretty funky creatures. One piece of coral is actually a colony. Each little sort of dot that when you look at a coral, it's a polyp, and it's almost like a mouth. And it's a genetic copy of one another. So they literally are clones. And so if you take one piece of coral, and you cut it up into these tiny little micro fragments, and you put those micro fragments near each other, it triggers a natural healing process, almost like scar tissue, and the corals will fuse back in themselves. So we cut them up, they fuse back together, we kind of fuse back together, so that we can get a dinner plate sized brain coral in a year or two, as opposed to decades. And then at the same time, being on land, we control the conditions in our tanks. So rather than growing them in the ocean and being subject to whatever's out there, for lack of a better sort of analogy, we basically can either take the corals to the spa or to the gym. So we can make the conditions just the way they like it for optimizing for health, or for growth. Or we can mimic future ocean conditions. One of the driving factors threatening coral reef health is climate change. The climate is destabilizing, we're already seeing mass coral die offs, largely driven by ocean temperatures rising. So we can mimic future ocean temperatures, as an example, raise the temperatures, bring them back down, raise the temperatures, bring them back down, stress harden the corals, so that when we outplant them, they have a better chance of surviving the threats that they face. So we'll go through those processes in the farm. And then again,

SPEAKER_162: the corals get outplanted into the reefs, and then we'll monitor them in the years ahead.

Jason Calacanis: And you're matching to the best of your ability, like you're not introducing brand new coral species in areas where it's never existed before, you're matching what's already there, native species only.

SPEAKER_147: So in the Bahamas, we're using Bahamian corals. In the Caribbean, actually, all the corals across the Caribbean Basin are actually the same. So I'm in Barbados, the same corals here, that we have in Bahamas, but we wouldn't even take Bahamian corals to Barbados, even though they're the same species, nor would we bring Red Sea corals into the Caribbean or anything like that.

SPEAKER_169: And it's not, I mean, it's interesting that it's, it's kind of like creating pluots, like it's not

SPEAKER_173: genetic modification. It's really just grafting and stressing, basically.

SPEAKER_168: Yeah, we're corals have a natural ability to adapt. Corals, as all life on Earth has gone

SPEAKER_147: through a lot of changes, the planet has changed. The thing is, though, it is rapidly changing in unprecedented ways. That is, it is really climate destabilization. And the ecosystems and the climate that's allowed humans to make the jump from hunter gatherers to modern civilization is going out of whack. And that's really what's allowed us to be all right. And so the ocean is changing so quickly that the corals can't keep up. So we're basically just assist, the process is known as assisted evolution. It also is pioneered by our former advisor, Dr. Ruth Gates. She and her partner, Dr. Madeline Van Oppen started this field before she passed away several years ago. But there's many researchers trying to figure out how do we strengthen corals ability to survive the threats that they face. So we're really just acclimating the corals, accelerating processes so that they can more rapidly adapt.

Jason Calacanis: So then who becomes your customers? You touched on this a little bit,

SPEAKER_173: but let's just drill down more specifically, who needs and will buy restoration as a service?

SPEAKER_150: All right, Molly, you're a hotel owner. And I'm thinking about where I'm going on my dive vacation.

SPEAKER_147: And I'm checking at your hotel. And I learned that the reefs that used to be a huge draw there are dead. I'm probably going to go spend my money elsewhere. And I might go spend my money in another country. My sheets are amazing. How dare you, sir?

SPEAKER_150: I you know, but those aren't going to help me out too much when I'm trying to see beautiful marine life. Fair. I see where I'm going with this. You could tell me you could tell me more about how lush the bet is. The draw that a coral reef has

SPEAKER_147: for tourism economies is huge. In the Bahamas, latest estimates were that $350 million over, I think, 10% of GDP is related to reef based activities. And that could be even higher. Not to mention the coastal protection and the fisheries benefits, which are huge, having lived through Hurricane Dorian and seen how mangrove forests and coral reefs actually save people's lives and with a community that's so dependent both artisanally and culturally on fishing where you just keep going on the list. But going back to that example of the hotel, to ensure that your bottom line is protected, you can hire us to restore the reef that draws in your scuba and snorkel tourists. And if you keep going outwards from there, governments with national economic interests, coastal insurers who are worried about increasing property damage, corporate sponsors, the idea that there can be a range of customers who rely on reefs that are threatened by their loss, they represent our main customer base, I am really intrigued by the emerging conservation finance market that's coming online. So blue bonds are becoming a thing, I referred earlier to biodiversity credits, which are still fairly nascent, but I think have a lot of potential because there's a lot of corporations that aren't just trying to be carbon neutral or carbon negative, but also nature positive. And that you have Swiss Re and Willis Towers Watson literally inventing insurance schemes to catalyze financing and scaling of restoration. Those I think could be really huge for injecting capital into this space to then do large scale restoration.

Jason Calacanis: So tell me how, what, what would that look like for you to be part of a blue bond?

SPEAKER_180: Like it would finance maybe 20 years of restoration and there would be some returns based on

SPEAKER_153: based on whatever the inherent values are that the reefs provide. I mean,

SPEAKER_147: it sort of depends on who the stakeholders are involved in it. I mean, they might be interested on the tourism benefits, they could be interested in marine biodiversity increasing, they could be interested in wave energy reduction, some sort of combo. So those are, again, still fairly nascent, but there's a lot of stakeholders that have been sort of pioneering those and pushing those forward. Often, though, they're looking for larger scale projects and there haven't been a lot of opportunities to supply corals at a large scale, which is, again, one of the reasons why we're trying to do this differently so that we can have coral farms that are growing hundreds of thousands, if not millions of corals for restoration. And that can tap into those types of projects in the Seychelles. And most recently in Belize, they just announced last year, foreign debt is being forgiven by nations in exchange for that money being spent on conservation and sustainable development. So if we had a farm in the Seychelles, we could potentially tap into that as another funding mechanism. So there's a lot of really intriguing stuff that's coming online that can really catalyze, not just our work and not just coral reef restoration, but all of these different ecosystems getting restored. Taking off my hotel owner hat and putting my investor hat on.

Jason Calacanis: How recurring is this revenue when you say it's restoration as a service? Is that an ongoing contract with my hotel? I'm switching hats here again. Or is it a kind of one and done replanting,

SPEAKER_147: and then you're on to the next? Well, I'm now talking back to the hotel owner, would you like to have an annual monitoring and literally need a hat? Yeah. Okay, so I can have that I can have an annual monitoring and maintenance fee? Yeah, there's different things that we could build it. I mean, there is sort of we restore reefs on a per hectare basis. There's always going to be local context that sort of dictates what that price point would be. But it's we do baseline surveys, what kind of corals, how many go into it. And we would always, at some scale monitor how the restoration project is doing. And it's not just a matter of like, good job, we planted 15,000 corals, but how many corals survive? Did they reproduce? How did that change before and after the amount of fish life, a range of other things. And so we can build in longer term projects. We signed our first restoration contracts actually last year with the Bahamian government, as well as the Grand Bahama Port Authority. And so early days, for sure. But we're getting a lot of interest for other restoration projects in the Bahamas from resorts, and the government has expressed interest in scaling up their existing project with us, but also in other countries as well. That's kind of the next stage for us is thinking beyond the Bahamas, where are our next farms going to be? How are they going to be built? Who's going to pay for it? And there's a from Costa Rica to the UAE and the Maldives,

SPEAKER_162: Florida, Australia. Unfortunately, coral reefs need help everywhere. And so we're, we're eventually trying to work everywhere that there are coral reefs. How much space does it take

Jason Calacanis: to build one of these farms? Like, where do you find that? Is that part of your partnership agreement?

SPEAKER_141: Where, you know, what's the, what's the mechanism?

SPEAKER_153: It's not a huge footprint, all things considered. I mean, right now we have

SPEAKER_147: in Freeport, Grand Bahama at our farm, two and a half acres of land. And we are using a fraction of that to grow 30,000 corals a year. And is it like one giant Olympic sized swimming pool kind of situation? No, we've got closer to closer to bathtub situation. Okay. So series of bathtubs, raceway tanks, they're sort of four foot by eight foot. And they're sort of space next to each other. So you can walk through and in and around them. But we have got enough land on that site to grow hundreds of thousands of corals a year if, you know, we decided to scale up in that way in the Bahamas. And so again, translating that out into being able to regrow miles and miles of reefs in Grand Bahama and around the country, that's sort of the scale we're trying to go to. So it doesn't require a ton in terms of the footprint on land. And yeah, what we basically are looking for when it comes to where the next farm is going to be is ecological need, economic opportunity and strong partnerships. So the ecological need is almost, again, unfortunately, always the case, but not every reef can be restored, whether because of upstream pollution and water quality issues, lack of good oversight against destructive fishing practices. So that does play a factor into, you know, making sure that most of the threats have been mitigated. Then, can we make this financially sustainable, there's a good tourism market for visiting the farm, people who pay for restoration, this, that and the other. And then are there partners on the ground, which in the case of us in Freeport, it was the Grand Bahama Port Authority gave us land for next to nothing and expedited the permitting process together with the support from the Bahamian government that sort of incentivized us to come on down to set up shop there. And so looking at where the next farms are going to be, again, here in Barbados could be a site for a new farm, figuring out from a permitting, a land perspective, and then also that economic evaluation together with the ecological assessment

Jason Calacanis: is sort of how we figure out what's coming next. So ideally, the client, the partner helps with that process, right? Like ideally, you sign a contract, if it's certainly it seems like if it's with a government or a fishery or something like that, like, hey, let's work together to find the land and do the permitting. And or do you are you just like, don't worry about it? We got it?

SPEAKER_197: It's well, I'd always take help. And so what I would say is it depends if we have

SPEAKER_147: there's sort of two scenarios. There is one, let's just say we're like, we've set up a farm in country X, and then clients, we already have the farm clients can then acquire corals from us throughout the whole country for restoration. The other option, which is kind of more of like we're maybe going to be taking like a franchise approach is that and this is definitely the case for hotels, and we've gotten interest in this is what we call sort of a coral cabana. So rather than setting up a sort of large scale or a giga scale farm growing hundreds of thousands or millions of corals, it's a smaller scale facility that can grow 10,000, 20,000 corals a year that could be located literally at the hotel. So not only we restore reefs there, but then they have a new tourism draw at their facility. You know, you go down to some of the hotels in Nassau, and they've got, you know, tanks with stingrays and wave pools and all sorts of stuff like that. So this would be a new feature that also that has a positive impact on the local ecosystem. So that's another way that it could happen. And that would definitely factor with a client actually giving us land, but we're certainly trying to figure that out. It definitely helps reduce a lot of the burden if we're able to actually get land in kind provided to set up these facilities. And when we're talking to particularly local or national governments, we're like, look, this is not only going to be a coral production facility that protects this valuable asset for you, but it's also going to be a new tourism attraction in and of itself, which is going to help taxi drivers to hotels. I hate this is a weird sentence to say, but I think it's fair to say we just gave Grand Bahama a huge boost on its profile because we actually just had Prince William and Kate of the United Kingdom come visit the coral farm. So that's a place I think a lot of people now want to come to. And so now they want to spend their money in Grand Bahama. And then it's also this education center building that capacity, hiring locally and creating new jobs, providing long term education opportunities. So there's a lot of reasons, I think, to work in partnership with Coral Vita.

SPEAKER_162: And that's the way that we try and approach things.

SPEAKER_180: Good flex. And but also that does speak to how much attention you've gotten, right? Like,

Jason Calacanis: this has really captured people's interest for I think, I mean, people have a soft spot for oceans, and everyone can kind of understand the coral problem and the magnitude of it. But you have attracted a lot of awards and grant funding and visits from princes and princesses. Like, how, how's it all going?

SPEAKER_147: All in all, pretty good. So last year, we won the earth shop prize, which is one of the biggest environmental prizes ever created, launched by Prince William, inspired by John F. Kennedy's moonshot. But the idea is that within the next 10 years, we need to solve so many environmental problems here. And so there's five earth shots, revive our oceans, protect and restore nature. There's a few other ones as well. And so it's completely honored and still blown away that we won the revive our oceans category. And again, it really is a credit to all the other coral restoration practitioners out there who've paved the way. It's also opened up a range of opportunities for us for where new farms are going to be. And how do we scale more effectively? What technologies can we start developing that maybe we didn't have the budget for in a range of different factors from artificial intelligence to robotics? And we'll see what comes next. And they also really help with the storytelling. Because again, I have an interesting business where I hope to get put out of business. That's probably not gonna happen anytime soon. But that's why storytelling is so important. Because if we can actually use the idea of planting a coral, adopting a coral, giving that as a gift to someone, to then have a conversation of why did that coral need to get planted? And why do reefs matter? And what's happening to them? Oh, what can we do to actually protect ecosystems? Let's take action on climate change and habitat destruction. That can actually, I think, be a very powerful tool beyond the physical restoration work we're doing on our own. And so the Earthshot Prize has given us a tremendous amount of focus, again, on on us, but really on coral restoration as a field on coral reefs and the threats they face.

SPEAKER_197: And to have David Attenborough talking about your work is quite something. And yeah, it's really good.

SPEAKER_207: Flex two. You get three tops.

SPEAKER_147: I was really getting no disrespect to the members of the royal family, but I was more excited to meet Sir David Attenborough. I haven't met him yet. So I can't check that one off the list yet. But we had one of the other Earthshot Prize winners was the nation of Costa Rica. And I think that's a cool thing about Earthshot Prize. It's not just about a solution or a team, but it's this can be an idea. And they have a model where they were paying citizens to plant trees. And so by winning the prize, they're trying to show like, look, other nations, you can do this too. The city of Milan was also a winner for one of their food waste programs. So I was at the climate conference in November at COP26 in Scotland and had the opportunity, among others, to meet the president and minister of climate for Costa Rica, who then invited us to come check out Costa Rica as a site for a future coral farm. So a range of opportunities are opening up for us right now. It's a really, really exciting time. Although we've also had our shares with the high highs, low lows, because we launched our farm in Grand Bahama in May 2019 and had an amazing first few months of success until we were one of the two main islands, along with Abaco to get crushed by Hurricane Dorian, which was the strongest storm in recorded history to hit the Bahamas. I don't advise staying for category fives. 225 mile an hour winds are no joke. And in addition to the truly heartbreaking devastation across the country, we had a 17 foot storm surge at our farm. And so it was completely knocked out of commission. We just did humanitarian work, rescue, relief and rebuilding for the next few months in our local community, and then did get it reopened in March 2020, about two weeks before the pandemic started. So we've had our fair share of tests and resilience as well. But if having gotten through all that, we also really experienced what the climate crisis is like and just why this work is so important, because I mentioned earlier, saw how mangrove forests literally save people's lives out in East East Grand Bahama. And in places where the mangroves have been cut down, there was heartbreaking devastation and loss of life. So yeah, we were doing good all in all. But I think that also really redoubled our commitment to doing our work because it's needed now more than ever.

Jason Calacanis: You like the coral have been to both the gym and the spa. And in a awkward turn, let's talk about technology. Because you did mention that working on technologies and drones and AI or thinking about incorporating those things. To what extent is there a tech

SPEAKER_169: component to what you're currently doing? And what do you hope to build?

SPEAKER_153: So we've got a definitely more high tech focus than traditional restoration projects. In addition,

SPEAKER_147: obviously, being on land, we're powered by an aquaculture system. Again, other marine institutes that are doing that, we're definitely integrating more advanced water filtrations and remote monitoring sensors, and within the aquaculture system itself, which we really think can be plug and play and scalable in the Bahamas and other places around the world. There's definitely an opportunity for integrating artificial intelligence and machine learning into how the coral farming process can be optimized or how the reefs can be monitored. And there are plenty of other people again working on such technologies. I'm not trying to say this is just us at Coral Vita. There's people who are

Jason Calacanis: studying how... Although I will say with the investor hat back on, like I definitely want you to tell me about something that's defensible and no one else is working on. Well, that one might be off the record

SPEAKER_147: off the podcast, since we're still working on it. But there, I will say that one thing that one of our existing investors and advisors is a man by the name of Tom Chi, who is formerly the co founder of Google Lex. And Tom, independent of us and his own entity, but we're providing some input to him, as are a number of other people, got a National Science Foundation grant to basically do a coral outplanting robot. Because right now, you plant corals by hand, which is a lovely, lovely day at the office. And I'm not complaining. And it works when you're talking about planting tens of thousands of corals. But if we're calculating what goes into, forget about being able to grow, but what goes into outplanting hundreds of thousands and millions and billions of corals, hand planting is not going to do it. Tom actually was a judge for XPRIZE a few years ago, when they crowdsourced ideas for what their next XPRIZE should be. And our idea actually for a sort of saving coral reefs XPRIZE, together with another team was selected. And that's kind of where Tom's idea for this came from, because he calculated that just to offset the current rate of loss of reefs, you would need 720,000 divers planting 24, 7365. Again, even if we had that many corals, which we really don't, that's just not possible. So there's a huge need for material scientists and engineers and financiers and all these people to start coming into this space. Because, again, we're really excited about the work that we're doing. But we don't have a ton of time. And there's a huge room for innovation and collaboration across the board, to really help scale this and make it more effective,

SPEAKER_157: because we're, we are very much on the clock. But there is definitely some cool stuff that's starting to take off.

Jason Calacanis: All right, I'm taking this conversation offline. Sam Teicher is co founder and chief reef officer at Coral Vita. Thanks so much for the time.

SPEAKER_143: Thanks so much, Molly. Looking forward to planting corals with you and everyone listening one day soon.