Energy Transition Now Podcast – Episode 10 with Siobhan Clarke

David Linden: Hello, everyone. I’m your host, David Linden, the Head of Energy Transition for the Westwood Global Energy Group. And you’re listening to energy transition now where we discuss what the transition really means for the oil and gas and the broader energy industry. In our last episode, we looked at the approach needed and the options you have to develop greenfield and adapt brownfield assets for a net-zero future. More broadly, though, a successful energy transition is going to rely on technology and innovation. And it’s a question I often get asked is what are oil and gas companies doing about that, especially sort of greening IOCs what are they doing to invest, that’s really going to make an impact in the energy transition? And what approach are they taking? So with us today, we have the excellent Siobhan Clark from bp Launchpad to help us look at one really, at least in my mind, fascinating model or approach than an oil company is taking. Siobhan’s an operating partner at bp Launchpad, where she’s investing in and scaling energy companies. Her background is in sales and strategy roles in start-ups and big tech, and she’s also co-author of The Founder Handbook. Siobhan, I know you have a lot on your plate at the moment with the news, at least as we’re recording at the moment of your recent acquisition of Blueprint Power. I’m sure we can talk about that in just a minute, but thanks for taking the time to come on to the podcast.

Siobhan Clarke: Really excited to be here, David. It’s obviously a pretty great moment when you are kind of announcing into the Blueprint to just bubbles and the energy bubbles over of what we’re creating here. Really excited to have the conversation today.

David Linden: Well, I’m looking forward to it, that’s for sure. OK. I mean, as I just mentioned, you know, a lot needs to happen if we’re going to de-carbonise our world economy and technology and innovation is going to be core to that. So let’s start, I guess, with the macro view. It would be good to get your view around, you know, how are we – so governments, companies, et cetera – how are we going to accelerate the innovation that’s needed to make the energy transition a reality?

Siobhan Clarke: Absolutely. I think this is one of the most interesting questions that plays out there because there are multiple models of innovation. There’s a lot of stuff that people will do in terms of their own R&D, their own development internally within companies. There’s a lot that the energy industry has done in terms of moving towards investing in start-ups and being these strategic investors that VCs have kind of moved into in that direction. And what we’ve taken the approach out of bp Launchpad is what I like to call extremely high conviction investing. So extremely high conviction means that we do like to take a majority position very early on in digital companies that have an ability to address net-zero. And then we layer a bunch of interesting things on to help that. But before we get into that and I think we are going to get into that on our conversation, let’s take a step back to just reflect a little bit about what’s been happening in terms of innovation and innovation dollars into the energy transition. So, yeah, about two over the last two or three years, we’ve seen such an acceleration of deep commitments by governments, by companies in addressing net-zero and moving towards that direction. So we’ve had a sway of people move into that particular space in the last couple of years. The other trend that we’re seeing is that the people that have been entrepreneurs who accelerated through cloud software from 2010 onwards that have exited their businesses are now looking and turning around and say, “What’s the next biggest problem that I should solve?” And they’re doing that in the light of, whoa, look at all these deep commitments that have been made. And so people with software backgrounds that have scaled and created enterprise software companies are moving into this particular space and saying, “How do I bring software together, software hardware, digital assets together with energy to solve this net-zero issue?” And there’s a couple of data points, David, just to add into that. There’s something like BNEF says that venture capitalists alone poured something like 17 billion in 2020 into climate focussed companies by the first half of this year. So in the first six months, that had already reached 14 billion. So we’re surpassing that and there was this huge acceleration into that space. And we know that any early stage entrepreneurs, they need funding and support from investors who understand the technologies that are moving from lab to market and their technology readiness levels. They need investors who can break the mould of short investment cycles and really challenge risk profiles. And so we’re seeing a very different profile of investor coming to support and scale these growing companies. And so funding is one of those challenges, but it also takes more than it’s it’s about people, it’s about talent, it’s about scaling, and standing on the shoulders of others.

David Linden: OK, that’s fascinating. OK, so you’re one of those people, I guess who’ve come from software into energy. Is that correct?

Siobhan Clarke: Yeah, it’s really been a really interesting journey of having spent 20 years at the from coding once upon a time. You know, everybody says there are coder once upon a time, but that was really doing electrical electronic engineering at university to start-ups to supporting governments on how do you take small pieces of tech, turn that into the multinationals of tomorrow. What policies enable those things to thrive to do really well, then MBA at the time when the iPhone came out in 2007, which is always fun because instead of going off to work for a bank or something like that as a traditional MBA, I decided I’d work for a couple of start-ups that were doing interesting things on the iPhone app. Now, they never really went anywhere that particular stage, but everybody has a failed start-up in them. So I joined Cisco sales and strategy roles around the world at helping to create cities of the future. It was the Internet of Things. It was the acceleration of cloud. And all of that particular movement, as well as investing in software companies at a very kind of early stage.

David Linden: OK. And that’s I guess what you’re then trying to ultimately do at Launchpad is try and bring some of those things to reality. But you did talk about, you know, it’s in your intro there around this high conviction model and how that maybe differs. Can you just maybe talk us through a little bit more around that? Why is, dont want to call it special, but why is the bp Launched a bit different, maybe to some of that traditional VC  that we’ve seen?

Siobhan Clarke: Mm hmm. There’s a couple of areas and there’s a couple of things that we think about for ourselves. One, so to be clear, the scale of engine for new digital platform businesses that can help bp and the world to get to a net carbon energy position. Net-zero, carbon energy position. Yeah, we have worked out and we did a lot of work looking at what’s interesting in venture capital. What what do you got in private equity that is about speed, that is about movement? What are you getting in venture capital, that is around vision. And therefore, if you’re doing that together with a large corporation such as bp, how do you bring that bp advantage to support the company to grow? So there’s three things that we see that are very different for us. The first one is around the people. So bp Launchpad is made up of about 40 to 45 people off in a number of different practises that have done this before. So they’ve been part of the scaling journey before they know what it feels like to go from 50 to 400 people in two months, two months, two years to go from 50 to 400 people in two years. They know what it feels like to go through multiple changes of leadership, of instilling in mature processes. They know what it feels like and the tools and techniques to go from founder-led sales into a mature and commercial sales engine. So you’re effectively taking and standing on the shoulders of giants of this team that’s doing it before that is supporting a new portfolio company for growth. So that’s pretty exciting and different from what I’ve seen out there. For those in the VC world, they might see that as like the platform model in VC and kind of taking that and helping that to to really grow connections people that have done it before understand the problems and the challenges and scaling. We also see the second thing is that our purpose and our purpose is very aligned with bp, the ability to reimagine energy for people on the planet. With our focus as Launchpad about leveraging, investing in and scaling digital companies that have an ability to address this net-zero that have an ability to reimagine that and connect into it. And that relationship is so important in terms of creating that value proposition. The expertise that bp has in terms of safety, cybersecurity, in terms of operating large industrial assets, in terms of renewables and growing capability. And you then connect that and the capability with the start-up and make those connections into the business. And we see this even with some of our portfolio companies where we want to test out a proof of concept, we want to see if a new approach to AI is going to work. We’ve got a site for you to try that. Let’s work out how that does so that you’ve got a faster ability to be able to scale a lot as an organisation.

David Linden: And I remember when we and we also first met a couple of years ago now, ultimately at another conference. But I remember you talking about the idea of taking a majority stake and so that being core to your conviction in that sense, but you also take on the high risk, is that correct? It is about taking a majority stake is about, you know, taking you know that higher risk on board and going, let’s go. This is what we believe in.

Siobhan Clarke: Absolutely. And there’s always that for every founder, an entrepreneur that is out there, they have a choice and they have a choice about how they want to build their business, how big they want to build their business who they want to do that with, and there are multiple paths that you can choose for ours we believe in, as I said high conviction. We do like to take those majority stakes because we fully get backing in behind something. For the entrepreneur, what does that mean? That means that we’re taking away that need for them to be going out and doing endless funding rounds into the business. So we take that away and allow them to concentrate on running and growing the business in the capacity as they see fit with a support from all of these scaling experts and access to bp and some of the bp advantage that may be able to bring way.

David Linden: So what’s what’s the ambition then, for launchpad I remember reading about, you know, five unicorns by 2025, and maybe if you want to explain what the unicorn is, for the listener will be helpful. But I remember that reference quite public reference to that. So yeah. What’s the ambition and is five unicorn still the right thing?

Siobhan Clarke: For the listeners that are out there the unicorn is obviously it’s a fictional creature, but it’s also a great fictional creature. It is a statement of ambition. Unicorn was actually a phrase that was coined something in 2014 by one of the VCs in Silicon Valley. Its definition is a company that has a billion dollars worth of enterprise value. And so for us, the way that we translated that was, hey, if you can create five unicorns, if you can create five billion dollars worth of enterprise value, so how are we creating massive value as a statement of ambition about how fast we want to scale these companies, how fast we want to work with the entrepreneurs to change and address this net-zero. So for us, it’s like we’ve taken that how many unicorns and we’ve translated into the phrase of it’s about being incredibly ambitious by finding and working with the right teams that is creating massive value, but also having an impact on the world. Got it.

David Linden: Got it. Okay. Look forward to seeing some mythical creatures coming out of the Launchpad. So look, I sort of alluded to it earlier, but you’re taking a sort of a higher stake, setting yourself also taking majority stake, excuse me and setting yourself some quite ambitious targets ultimately. It does, in its own way, create a potential for risk as well. And as I, you know, and many others who work in the energy industry, excuse me, you know, risk isn’t exactly something that some of these larger companies wish to have. So what is the risk of the model is such that you do see and maybe how you managing some of that?

Siobhan Clarke: Mm hmm. I mean, the biggest and most obvious one, David, is that they just never reach scale. They just never actually deliver on their potential. That kind of comes in. It’s a risk that’s obviously a risk that we’re willing to take because we go after that high conviction kind of investing. But there are a couple of ways that we look at how to deal with this. First of all, there’s the back to the connection of people that have done it before. So those people that are part of the Launchpad core team that actually when they’re working with the companies, know what to look forward to go, “Oh, we failed at this once upon a time at this start-up. Let me tell you how to get around that or what’s the approach that we take to it.” So there’s that level in itself. The second level is that we operate through a similar to the VC model in terms of their shareholder board and management team matters. So we operate these companies with boards in that context, in order to be able to help give direction, strategic direction and oversight to the business and in the way that that is growing so that there is an independent point of view on it. And the third thing is that like any good investor, we have regular portfolio reviews we’re looking at where is the company moving in the direction to the overall investment thesis that we had? Is that still held true has the market moved slower or faster, done something different in that direction? Is there more support or challenge that we should be working with this portfolio company, around to unlock in a different direction. And the third, well, the third part, the other part is that we’re really only two, three years old as Launchpad. We haven’t yet had the exits. As we’ve said upfront, we have an absolute statement of ambition around this. And I think, you know, we’re going to do our best to create that, to get success through. But there’s always a risk in early-stage companies and we’re willing to take on that risk because we have the conviction in some of the people in the companies that we’re investing in.

David Linden: OK, OK, so it’s an interesting point you mentioned around exit, though, so where do these companies end up?

Siobhan Clarke: Yeah, there’s a couple of different routes about where they could end up. As I said earlier on, you know, our ambition is about reimagining energy for people and the planet. It is about connecting into the overall bp strategy. So one of the places about where they could end up is moving from Launchpad into bp. They could have the potential to become a business unit in bp that maybe doesn’t even exist yet today. It could be that they are “You know what? That doesn’t necessarily make sense in the longer term for bp’s strategy. But let’s spin that into a company that is supported by other investors that want to take this company to a next level.” It could be that we are creating those companies where they’re supportive for the entire industry, so someone else from bp decides actually there’s a great deal of value there. We want to help that company to get to the next level in the next stage. I’m really curious to see how this evolves over the next couple of years – given that we’re just announcing, as you say, the seventh portfolio company today – where this evolves and where those companies end up. We’re all here because we want to create this sustainable, growing, ever evolving portfolio, because the back to the innovation point at the beginning, innovation in these markets constantly change. So the ability to be adaptive and agile to that Launchpad gives us, in some ways, that flexibility.

David Linden: Very interesting, yeah. No, so certainly it’s kind of a balancing, conviction with the right people and skills with ultimately, I guess governance is kind of what you talked about there. And then optionality, optionality around whether it’s exit or how you think about that business as you go forward. OK, no very interesting. Very interesting indeed. But let’s maybe talk to one of the things you’re actually doing right now is, as you say, which is the latest acquisition, acquisition number seven or portfolio company number seven, should I say Blueprint Power. Can you maybe just talk us through what was the commercial rationale for Blueprint? How does it fit in with what you’re doing and what can it do?

Siobhan Clarke: Yeah, as you said, company number seven, company number seven, very excited. I’m really looking forward to the point when we get to company number 20 and we’re kind of evolving that portfolio. But for now, back into Blueprint Power. Blueprint is exactly the kind of company that we want to help kind of scale this journey on it. Now, we met Robyn actually a couple of years ago. It’s been a long kind of understanding and connection with Robyn and watching what they’ve been creating and what they’ve been doing. So there’s a little bit of the relationship building that we’ve been doing with the entrepreneurial community. So in this case, what we were really tied into was this vision that Robyn had in terms of buildings as the ability to be able to support energy back into the grid. Buildings as the place that we can optimise in terms of their energy flows and what is happening today. And all of that leading to obviously a connection about revenue and supporting kind of revenue in alternative sources of that for the building owners themselves. Robyn and the team were incredible, what we got really, really excited about it was their technology and their capability. We got really aligned around the vision that Robyn, that Nick and the rest of the team had, and we saw this as a deep connection to be able to say, “You know what? How do we support a closer connection into enabling buildings as a way to address net-zero?” And so that’s where the that’s where some of the rationale had come from. Obviously, we do all of our cases as well through full economics, you know, full investment rationale back to the governance point, earlier. We do the checking on how what assumptions do we see this build-out? Where does where does the product roadmap go for itself? How does that team develop and are we all aligned to run those particular visions itself? So Blueprint, it really is about pursuing for us, an ambitious growth plan. It’s going to help to grow the team. It’s going to help to launch in several additional major US urban power markets beyond New York. And we want to explore how Blueprint kind of connects in with bp’s regions, cities and solutions and the trading business to, you know, overall lower the cost of renewable energy and sort of support the entire decarbonisation of cities and obviously into carbon-intensive industries at the right time.

David Linden: I mean, I can see the strategic and the commercial rationale coming through very clearly there. Maybe just to take a step back, though, you know, can you just talk through their business model or at least what they do a little bit more to sort of give us that sense of what is it that they do that’s unique or different in that sense? And how does it align with what you’re trying to create here? I’m assuming that’s the kind of software energy overlap.

Siobhan Clarke: Mm-Hmm. Yeah, and it’s the two tie-ins that we see back to this story of, “How do we create or how do we connect digital assets with large industrial in order to be able to address net-zero so effectively as a Blueprint Power they have, they have an ability to be able to pull the data from the building to understand what is happening in the building from an energy perspective, over a long time frame. And so therefore give recommendations on what needs to be done to support them. The second thing that they do is that they have a piece of hardware and software that can be connected into the building to help to then control those assets in a particular way. Now, in our future, in the future that we all see, we want to start adding-in, how do you add-in batteries into that in order to be able to support where the building is not using that energy, going back onto the grid. How do we add in other sources combined heat and power? Do you connect into the microgrids in a different way? So we see this as the ability to have data to understand what is happening in a building. With respect to its energy, its sources, its timing, its usage, and then help to optimise that for the building owners or for the owners of the connection.

David Linden: We often and folks like the IEA may be over-play this point, but the idea of energy efficiency and using energy efficiently does seem to be a major enabler that is very difficult to do unless you have the right, the right kit. And you know, this company certainly sounds like it’s trying to deal with some of that. OK. It’s clearly an interesting opportunity. I could see how it fits very clearly with your strategy and your rationale of what you’re trying to do. If we just take a step back and look at some of the other companies in your portfolio and a few of them, yeah, maybe the earlier ones as you were starting to think about where you were going, et cetera, you know, originally, I guess, were about optimising hydrocarbon extraction, and I could see the overlap there with the software side of things, et cetera. How, you know, how are these companies helping with the  energy transition?

Siobhan Clarke: Absolutely. And here there’s a couple of things to kind of address upfront, isn’t there. And a question like David, which is, you know, until we’re no longer dependent on hydrocarbons, we need to make the extraction as sustainable as possible. And I you had Dominic Emery come on and talk a little bit about the energy outlook and kind of that rapid scenario, etc. So we can see that emissions from the energy used to reduce by 70 percent by 2050. But oil and gas is still going to account for a certain proportion of the energy mix. And there is a balance to be had between these two. As you as you led in with the question we’re talking through. Where that translates into for us as Launchpad is that whilst our top-level investment thesis is very much about how do we invest and scale digital companies that have an ability to address net-zero, we break that down into first one around industrial analytics for energy system optimisation. So that helps us to look at the existing energy systems and how do we optimise for those. So we’ve got Onyx in there and we’ve got Stryde in there that can help on both of those two elements, plus LYTT and Fotech. We also have a second investment thesis, which is around intelligent commodities, where a commodity could be carbon, it could be waste, it could be lithium and some of the finite resources that exist. And that is about how do we understand what is happening? How do we use technologies data technologies to understand what is happening in a particular space? How much is there? Can we trace that through a particular supply chain and we firmly see finite carbon having the ability to sit within that in the verification of carbon credits associated with forestry. Our third investment thesis, which is really where Blueprint Power sits at the heart of, as well as open energy, which is round, and we interchange these terms of digital energy. But for me, it’s about a vision for the electron economy on the electron economy and the entire electrification of the grid, and we’ve moved away from molecules to electrons. Will be a balance, of course, but if we’ve moved away from that, how do we how do we optimise for the energy systems that are there, given that everything is moving towards a data led approach?

David Linden: Okay. But but but I’m assuming. If I listen to you and you’ve got this different investment thesis, you know, the world’s your oyster in one way, because in theory they’re all different parts of the energy mix and the system need to be optimised. As you say, there will be a significant shift over to the electrons, but maybe not all of it, for sure. And we do need to get better at understanding how stuff works in simple terms. So, yeah, I mean, does that in theory mean that you could go after anything?

Siobhan Clarke: You’ve almost like pulled on, David, like the ideal venture capital investment thesis, right? It’s broad enough to be able to give a scope to work with, but specific enough, and we have some deeper levels under the investment thesis on those. I keep promising to share those in a blog at some point. But we’ve been keeping them a little bit close to our hearts as we go out and engage with the entrepreneurial community on those. And I think it’s it’s really interesting in an evergreen fund if you want in bp Launchpad, something like this, as we said, an active portfolio we will get to. Those are the first three investment thesis that we’re connected into and working. But that could evolve and will evolve. Does that evolve into the ability to transport goods in a different way that gets us into advanced mobility or electric vehicles and different comparisons? Do we do that in terms of a move into user interfaces and some kind of a connection that automates into the energy systems? There’s so many different ways that I think we’ve yet to even come up with on those and even for some of our existing investment thesis as well. So we have a next level that we tend to protect for ourselves, which is, you know, we will share one day. There’s there’s so much more that I think even we need to be doing to say, what are the next connection points in a particular value chain and a particular component? And which ones do you need to scale more than others? And I think that’s a really interesting conversation to get into. And it’s one that we have a lot with our CEOs because as we take the CEOs in there, obviously at a very early stage, still in some cases, and they will go after scaling and growth. But there’s also the but there are many different routes to achieving that. So you could go after an inorganic acquisition trail to tap into different parts of that value chain in order to be able to create this $5 billion worth of enterprise value further down the line and the massive value connected to it.

David Linden: I guess part of the reason I was asking the question is, because the whole system needs to change. And the key question always is as well, “Which technology do you scale and why?” And you basically said that there right? There are multiple ways of doing that, whether it’s at a company level or at a macro energy system level. So it does become quite complex and quite interesting. But if you if your thesis is broad enough to attach it to go and attack those, then that’s great. And I look forward to the blog to get a bit more detail. But, you know, maybe it’s a sort of a, I dont want to call it a closing question, but one of the last questions I had was around, you did talk about governance being important and how you hold your businesses accountable, but keep them on the track and help them out through that through their journey. You know, with your mission being to support the net-zero target, I guess, that the world is aiming for. How do you think about then having your own kind of emissions reduction targets or certainly for your portfolio kind of ESG KPIs? Is that something that’s front and centre for how they have to operate? Or is that just a given and the rest is more about how we can scale this thing?

Siobhan Clarke: First and foremost, it’s always about how do we scale this thing? And if it is linked to the investment thesis, then that should be working towards the net-zero. I think you bring up a really important point and it is something that we’ve been discussing back and forth internally. As we know, the ESG landscape and how do you measure these things is fraught with questions and inconsistencies and different approaches to its mix. And interestingly, we’re seeing incredible growth in what we would call carbon accounting and start-ups in a particular space. Companies that are coming in to try and use data pulled from sources and automate that process to give a different set of verification across a number of setups, as an aside. It’s a really interesting space. It is an active conversation across all of our portfolio companies at the moment about how do we instill together that reflection of that part of what we’re trying to do? How do we bring that design into it? Certainly talked about the boards, but how do we hold ourselves accountable to it?

David Linden: I think it’s a fair point to say that you’re not the only ones, right? So something that, you know, I wrote a blog of sorts of my own recently around the difficulties of what is the finance community really want when it’s saying it’s ESG aligned and what it wants for its portfolios. It is a complex picture that you have to unpick and try and understand what you really trying to aim for here.

Siobhan Clarke: But I think it’s a good one to do, and I think there’s a from a very personal point of view. Do you think that the U.K. can have a leading position and the ability to do that in the same way that the U.K.’s corporate governance laws are pretty, pretty spectacular. They’re leading in the world, the financial systems as well. There is an ability to take a thought leadership position here within that, and we could be if we fast forward to us having a conversation two or three years from now, we could be talking about this is the moment we set these rules and this is what it looked like and we pulled in this software to be able to track that and see what that looked like. And here’s the regulation that filtered it in to make that happen. That would be a pretty exciting place to be.

David Linden: I agree, and we’ll definitely have to get you back in two to three years time to talk about those unicorns. So yeah, but no, look, thank you very much. I think we have reached the end of the time available, but thank you so much for taking the time to come talk to us, especially as you’ve just literally closed your seventh portfolio company. So I appreciate you taking the time, Siobhan, it is a really interesting space of you know, technology and innovation, but also software playing such an important role in the energy industry as well and how the two overlap. So I appreciate you taking the time.

Siobhan Clarke: Pleasure. Thanks for having me, David.

David Linden: No problem at all. And thanks everyone for listening. I hope you enjoyed it as well. Please make sure you subscribe. Give us a rating, share with your friends and speak to you next time.

 

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