The day the music died

What we’re telling climate companies about VC, raising, and commercializing in 2024/25

Khosla

We were amused to see that Keith Rabois, Managing Director at the venture capital firm Khosla Ventures, recently said at an event on the Art of Hiring that he recommends startups not hire anyone over the age of 30, No, really, he said that. Aside from being blatantly illegal, this is also just really dumb, and therefore quite on-brand for Rabois. Like many in his profession, he brands himself as a contrarian (it’s in his twitter bio), despite starting professionally as a litigator at one of the world’s largest law firms, a tech apprenticeship at Paypal in the peak mafia days, VC apprenticeships under Vinod Khosla and Peter Thiel, and the fact that a cursory review of his investments reveals little ambition and lots of cookie-cutter vertical SaaS. 

Contrarian, as is so often the case in the venture capital ecosystem, is a thin code for “asshole.”

Among Rabois’ most touted recent investments is a light-industrial staffing platform called Traba, a company that modeled its work culture on the Chinese 9-9-6 schedule, and the CEO of which has said with a straight face that he wants to build the business to a trillion-dollar valuation. Spoiler, he will not, because it’s a staffing platform. 

Note to young people; Between the two of us, we’ve worked at 7 startups as senior leaders, with considerable commercial success. Anyone telling you that it’s necessary to work 80 hour weeks to achieve greatness has no idea how to design systems and no respect for your life and health, and anyone telling you that a staffing platform will reach Nvidia-scale valuations is either deeply stupid or lying in order to get you to work at below market rates in exchange for underwater equity. Keith Rabois and Traba leadership are not stupid. 

Their CEO, Mike Shebat, is a similar type of outsider to Rabois. Which is to say, of course, that he worked at Blackrock, Uber, and is a tall, generically handsome white man. This is not meant as an insult. Your writer is a medium-height, generic white man, and has made a good living scaling vertical SaaS companies. You work with the tools that you’re given. 

Our readers may be thinking they wandered into the wrong substack. Aren’t we here to talk about climate tech? Indeed we are, so let’s start approaching the point. 

Climate founders; Companies like Traba and CEOs like Mike Shebat are your competition for capital. 

You should take this seriously. We find the claims that Traba can achieve one of the ten or so highest valuations of any company on Earth (there are currently 8 trillion dollar businesses) to be useful only in indicating the quality of the recreational drugs available in Miami, but that company is going to be successful and exit big. It’s a modern, vertical SaaS update to a big, broken market in need of a platform of record, and there are few better schools than Blackrock and Uber to learn how to sell and fundraise. Shebat is following a known playbook, and executing the hell out of it. 

We don’t blame him, or Rabois. As we’ve written many times, VCs are money managers. Their job is to multiply and return capital, and the most efficient ways to do so in the current macroeconomic environment are high-margin SaaS, AI disruptors, or ideally both in the same company. 

There is also less capital to go around. The Harvard Endowment and its peers are way down, insurance companies are getting hammered by the fallout from hurricanes and wildfires, pensions are still unwinding their considerable investments in commercial real estate and legacy industries. Traditional LPs are running light, which leads to a flight to safety in VC. 

If Coral has a central subject (this is admittedly questionable at times), it’s commercialization; How do we help climate companies make enough money, quickly enough, to entirely control their own destiny and go on to change the world? Our consulting practice has focused in 2024 on much the same topic. We have the privilege of talking to and working with a lot of wonderful founders, and they’re currently more nervous than we’ve seen in our years in the tech ecosystem 

Here’s our updated set of guidance for founders getting ready to raise and kickstart sales in 2025. 

AI, Ecosystems, Anchors

• Perhaps the most common question we’re asked is “Should I add an AI angle to be more attractive to investors and customers?” We’re not happy about writing this, but yes.  Yes, you should. There are many ways to hack this depending on your particular industry. 

  • For climate SaaS companies, decision and recommendation engines are easily labeled as AI. Build great dashboards, open APIs as early as possible, and make sure to add the automated interpretation layer, preferably in a chat interface, over large pools of data. Certain OpenAI interconnectivity functions can cut development times considerably. 

  • For climate IOT, invest in considerably more on-device compute than you think necessary. Lean into a bright future of localized, lightweight LLMs as a way to outsource compute load to the edge. This can be baked into your business model as a passthrough or subscription cost to your customers, and lower your AWS spend. Thoughtfully deployed, this can help IOT companies approach the margins of pure-play software. 

  • For everyone else, use as much AI tooling as possible. Codify prompt engineering into job descriptions, likely in your product management function. Form partnerships with relevant AI providers in your vertical to serve as a data partner for training new models. Write splashy press releases and do comarketing webinars. Build a narrative about your efficiency and scalability as a result of AI. Tell it loudly and often. 

• Hire or create a partnerships function as early as possible. Selling is tough in 2024 and will stay that way in 2025. True or not, the perceptions of higher pricing and inferior product quality hinder climate companies in direct sales motions. Hire, transfer, or promote someone early whose job is to create an ecosystem around you, preferably in partnership with non-climate companies. Give lead-share bonuses or revenue share up to 20% of the deals that a partner brings to you. Make sure to do weekly enablement sessions, webinars, and collateral creation for your partners. Selling is hard, so borrow someone else’s infrastructure. 

  • We recommend hiring a former direct seller or promoting someone from your sales team into BD. The skills are largely transferable, and career-long BD folks are among the most unctuous sleazeballs you’ll ever encounter in tech. 

• Invest heavily in making sure that every paying customer is happy and growing. Staff a support phone number which is answered on the first ring, and by someone helpful and knowledgeable. This can sometimes be outsourced depending on your degree of technical complexity, but get it done. 

• Reforecast your zero-cash date at the end of each month, based on a rolling 3m model. When in doubt, always plan around the more conservative scenario. 

• Invest in the best investor decks and update materials in the market. Pay someone to make it sing if you don’t have the expertise in house. 

• Take a hard, honest look at your cap table, funds, access to capital, and commercial prospects. Look, we hate to say it, but this company may not be your big one. Rapid changes in the macro environment kill lots of companies. If you have the option for an aquihire that makes you a few nickels, takes care of the team, and creates the optionality to go big again in 2-4 years, maybe consider it. 

• If you’re ideating or still early enough to pivot, some sectors that we think are the most commercially viable and fundable in the next 24 months are;

  • Modular renewable energy for disaster recovery and grid resilience

  • IOT for fire and flood early detection. Lots of plays around hardware, custom OS, local LLMs. 

  • AI for insurance with extremely high local specificity. Block by block, house by house. This is a brutally difficult category, but deeply necessary. We’re terrified at the cost of folks moving, or not being able to afford to move, out of their newly uninsured houses after disasters. 

  • Batteries. Chemistry, hardware, software. 

  • LLM-powered chatbots for educating consumers and climate action. A good first business for a small team or even a solo entrepreneur. 

  • AI for farming, forestry, coral reefs. 

This is not our sunniest piece, and it’s not meant to be. It’s rough out there, and the competition is brutal. Consider it a call to arms. Get lean, get aggressive, get a little mean in the pursuit of cash. The world needs your companies to survive, grow, scale, and reach escape velocity. 

As always, we’re here to help in any way possible. 

Please consider forwarding this piece to a friend or tossing it on the social platform of your choice. Coral Carbon is free and always will be, and every subscriber helps us keep doing this. If you want to work with us directly, stop by our new online home;

https://www.coralcarbon.io/