Patrick Collison: evaluation

Transcript context

…That's so interesting. I think there's an interesting thread here in how it relates to Stripe climate, in that you're subsidizing learning curves that East Asian countries did for their own internal companies. You haven't picked out a specific company that's going to necessarily be the key to carbon sequestration. How do you think about this? Well, a way to unify the two points, and I'll speak about Stripe in a second, is Say's law about demand creating supply. In as much as Stripe aggregates more and more global demand, it seems too self-aggrandizing to call it “The theory of Stripe", but some vague hunch in Stripe is that this aggregation of demand can have important expansionary effects with respect to the ensuing supply. Stripe climate is some version of this hypothesis, applied on a much smaller scale than Stripe itself, but still real and maybe important. For folks who aren't familiar, which I assume is most of your audience, the basic idea goes like this; We observed in 2018, that everyone seems to agree, that carbon removal will be very important. Even if we decarbonize the economy on the most optimistic timeframes, there'll still be an accumulated stock of carbon, which will be a problem. It sounded pretty weird, that there were virtually no carbon removal companies in the world in 2018. Maybe there were two or three. No companies had ever purchased from carbon removal companies, which were really sort of science projects. So we thought: "Well, somebody's got to start and it might be valuable to not only transfer some dollars, but to confer some credibility on this sector." Not that Stripe is the world's most credible company, but it's better than nothing. So we started contracting with some of these carbon removal companies. That went pretty well and they seemed kind of appreciative of us and so we thought somewhat more about this. Then, in 2021, we formed Frontier, which is an AMC, an advanced market commitment. That was inspired by the first AMC, which was a pre-commitment to purchase vaccines for developing world's countries for diseases that were market failures, where either pharma companies hadn't pursued the vaccines, or where the profits weren't sufficient to pay for the program. So we decided to do this for carbon removal. We raised a billion dollars. Stripe was the first investor. We're not actually investing, we're just buying, so we were the first company to commit. Then we were joined by Shopify and Alphabet and Meta and JP Morgan and a bunch of other companies. And now there's a fairly active sector of carbon removal companies. Frontier has contracted with between 40 and 50 companies, the overwhelming majority of which didn't exist when we started out with this. We ran an anonymous survey back at the end of last year, where we asked them to what degree was the existence of Frontier causal in their starting the company in the first place. Again, it was an anonymous survey. I think it was 74% of the companies that said that Frontier played a causal role in their starting the company. So these inducement effects can be pretty significant. Yeah, that's huge. What are other ideas you've come across, where an AMC would be an effective instrument of moving forward the tech?…

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