In this episode, we sit down with Nick Ellis, Principal of the Amazon Climate Pledge Fund, to discuss their approach to investing in startups and how they work with their portfolio companies beyond just providing capital.
Learn about Amazon’s approach to open-sourcing their expertise and how collaborations can benefit both the company and the entrepreneur. Don’t miss out on valuable insights and actionable advice for entrepreneurs.
Show links
WEBSITE- https://www.theclimatepledge.com/
LINKEDIN- https://www.linkedin.com/in/nickellis/, https://www.linkedin.com/company/amazon/
Full Transcript
Sean Ammirati 0:19
All right, on this week’s episode of Agile Giants, I’m joined by Nick Ellis,a principal of the Amazon Climate Pledge Fund. It’s a 2 billion (with a B) dollar fund, where he’s in charge of managing the funds growing portfolio of investments and relationships. And this really continues the theme we’ve been looking at at Agile Giants, where we’ve been focused on entrepreneurs in more traditional startups working with large corporate partners to deliver transformative innovation together.
And in this third episode, we’re going to look into Amazon, a company you’ve no doubt heard about, but how their investments in these startups can help the company decarbonize its business and meet net zero emissions by 2040. I will go through a couple examples of that there was a recently announced investment we’ll talk about, as well as the other portfolio companies. But really, I think to me, this is really examples of Amazon thinking large around climate and sustainability, not just by themselves. But thinking big and ambitious around that via startup collaboration, I think what you’ll see is how these collaborations truly are a win-win.
Nick, thank you so much for joining me, I really appreciate you taking the time to chat with all of us at Agile Giants. I previewed a little bit about where we’re going in the intro. But maybe if you could start by just giving the elevator pitch for the Amazon Climate Pledge Fund, I think that’s probably a helpful place to begin here.
Nick Ellis 2:21
Happy to do so, Sean. And thank you again, for having us on the show. The Amazon Climate Pledge Fund is a $2 billion corporate venture capital fund set up by Amazon back in 2020 to make investments and startups that can help us decarbonize our operations. The fund currently has 20 public investments, they range across six different verticals, everything from agriculture, to energy production, to cement and steel. And it has a global mandate that really gives us an opportunity to try and identify some of the best and brightest ideas that we can use in industry today to get to net zero by 2040.
Sean Ammirati 2:55
Yeah, those are big numbers. And it’s thinking big, right, this is Amazon. But my sense is like there’s a lot of value beyond the capital, obviously. There’s lots of places you can go get capital if you’re one of these companies. I think it’s great that Amazon is certainly leading with some checks as well. But I’m curious, like, beyond the investment capital, how do you guys end up working with your portfolio co investments here?
Nick Ellis 3:23
It’s a great question. And I think it speaks really to the difference in strength of what Amazon can bring to the table, which is not only do we seek to be a catalytic investor in these companies, but to also become a catalytic customer for them. And the prototype for this is really Rivian, where we were an early investor, and then later placed an order for 100,000 trucks that landed them on many folks’ radar, and has led to a lot of the success that we’ve seen over the past few years with them. For us at Amazon, the mental model that we use is around trying to open source the best of what Amazon has to offer. So certainly, we can be a powerful customer reference.
But there’s a number of other things that we’ve learned we do relatively well that can help these startups on their journey. Let me give you just a few quick examples here. One is we will work with them to dive deep on their recruitment, hiring and organizational development plans. We know for many startups, this is a difficult process to do well and it’s determinant to their success. And in a lot of ways you can think of Amazon, especially a company like maybe AWS, where I’ve spent some time is one of the most successful hyperscale startups ever. We’ve grown, from when I joined $20 billion dollar run rate to over 80 billion, that workforce has swelled in size, and we found a way to bring those people on and still maintain a high bar for culture. And so we try and share those best practices with our companies. The other things we do are to lean in on some of the mid and long term opportunities we see with these companies. One example would be just around public policy. We see obviously changing winds here in the US and in the EU. And there’s a very active conversation in both those theaters about how to design these incentives in a way that really catalyze these various industries and get us to net zero. And for Amazon, we have an outsized interest in seeing those regulations done well. So working with our portfolio companies who are really some of the leaders in thinking about how to design offset systems or subsidy systems to get those right. And so that’s another example of where we can bring the strength of our public policy teams that are global footprint to bear and make sure that we’re creating forward looking regulations that are going to support these industries over the next 10 and 20 years as they transform.
I’ll give you one other quick example here of things we’d like to do. Obviously, when you’re looking to become a customer, there’s a host of challenges or hurdles, you have to clear to serve a big customer like Amazon, and really become what you might call enterprise-grade or ready for a big customer like Amazon. And we’ll work very closely with our portfolio companies through that process, everything from helping them harden their IT systems and information security, to pass our rigorous reviews, to understand some of the reporting and compliance requirements they might meet in the US or other areas. And make sure really, that these portfolio companies are learning as quickly as humanly possible, how to serve some of the biggest customer opportunities that they see out there in this segment. So those are just a few ways. It’s really a growing list and something we’re very much learning on the fly. But we found a couple important ways that we can lean in to help these portfolio companies and really differentiate ourselves from many other investors out there today.
Sean Ammirati 6:22
Yeah, I love that on on lots of levels. I think the AWS thing is fascinating. I hadn’t really thought about that. But it’s interesting, one of the things when we started the Corporate Startup Lab at Carnegie Mellon that we said, hey, we think corporate startups, things like the Apple iPhone, Amazon AWS, and you know, these these projects that start small, but become massive inside these big companies. We think there’s a lot they can learn from traditional startups. But certainly, over the last decade that the success those kinds of ventures have had, it’s it’s fascinating, think about those going now back to a place like, like Rivian. And that is certainly, you know, transforming how we think about mobility, electrification of vehicles, things like that. When you think about the payoff for a company like Amazon, and a payoff for the the startups here, maybe we can start with the Amazon side of that, how do you think these collaborations help Amazon? And then we can, we can continue on the portfolio side of it. But how do these collaborations help a company like Amazon?
Nick Ellis 7:21
I think there’s a couple of key benefits were discovered by working with these companies. The first is just mutual learning. A lot of these technologies are new innovations, they need to be tested, they need to be refined. And we found that we can have a really principal hand in helping shape how those technologies are designed, similar to what we just discussed around designing policy, that really makes sense. And so that dialogue, for me has been incredibly eye opening. You know, Amazon has some very difficult use cases to solve for. And most of the startups are really hungry to even hear about it, learn about it, figure out how to meet that requirement. So that, to me is one of the most obvious things that we do and we learned such an enormous amount from that process.
Nick Ellis 8:00
I think the other key insight here is it starts to give us some surety around what our glide path is to net zero. And so as we build confidence with these portfolio companies, and how they can solve to reduce our fleet fuel emissions, or our packaging footprint, it starts to get us moving down that glide path a couple of years ahead and really understand, alright, how do we accelerate that journey so that it’s not just 1% or 2%, but maybe soon 10% or 20%, that we can chip off. And that’s a process that only happens through collaborative work. And it takes time. But you know, on our side, we’re committed to that long term work. And I think that’s a great value add that we can bring to those portfolio companies, which is we’re a serious long term partner here that’s going to work with you to get this right. And we’ll create a positive feedback loop is the way to think of it, where we build momentum, we build confidence, we start to see more commercial success. And then obviously, the decarbonisation benefits start to play out from there.
Sean Ammirati 8:55
Yeah, and Nick, I didn’t prep you for this. But as you’re talking, it’s clear that one thing I should have weaved into this as well. What got you personally interested in doing this role inside of Amazon, and maybe give people a little bit of a sense of your journey as well?
Nick Ellis 9:11
Yeah, happy to speak about that for a moment. So I was incredibly fortunate to be asked to join the Climate Pledge Fund team about a year and a half ago. I was previously working at AWS advising some of our most valuable Silicon Valley startup relationships. And I think for me, I have always been looking for not just technology and innovation, but business model and social innovation. So these types of ideas that can really transform the world for the better. And so when the opportunity came to work with the Climate Pledge Fund, it was one of those dream assignments where I thought, I have a chance to put my skills to work, making a big impact at a very determinant company on a very determinant issue right now, in a moment when it matters. You know, we talk a lot about the decisive decade here ahead of us. And for those of us that are going to live for the next 30 to 50 years and watch climate change play out. I would argue this is the moment we need to be here doing this work. So for me, it was an easy yes and a great opportunity. And I think more broadly fits into this idea that we need to keep inventing. I think one thing I’ve really enjoyed being in Silicon Valley now for almost a quarter century, is the inventiveness and the way in which we keep proving people wrong, and solving problems, people said, were impossible to solve, and are making progress in these types of things, I think are so important, especially when you look at the scope of climate change today, and how much invention and work it will take. And I just know right now, in the work that we do here at the Fund, and elsewhere in Silicon Valley, and around the world, these are the determinant bits of work that are gonna make that difference over time.
Sean Ammirati 10:40
Yeah, I think Silicon Valley, both the geography and Silicon Valley, it’s sort of the mindset, that’s exactly right. Right, this sort of like, you know, group of people who think about the world like, maybe we’re at ground zero at one point in the bay area there. So let’s talk about a few of your investments, maybe. So maybe we start with Hippo Harvest, which is this recent announced announcement that had about working with them and investing in them? Can you talk a little bit about the motivations for Amazon to get involved in that business and how you see that playing out?
Nick Ellis 11:14
Absolutely. Hippo Harvest is our first investment in the agricultural space. And it is a startup based in Northern California, that runs a greenhouse operated primarily by robots to grow leafy greens. So think of your lettuces, your spinaches, the types of things you’d put in a salad. We saw a key customer concern come into sharp focus for us, which is that our end customers and Amazon, the retail customers that are buying online or shopping at Whole Foods, want better, healthier produce at a more affordable price, that we realized this was getting harder and harder to deliver on. Obviously, the food supply chain is getting increasingly disrupted, not just by fires and floods, but by fuel costs, and labor shortages. All these things are creating inflationary pressures down the line for our customers when they’re shopping in the store. And we know that’s not a sustainable recipe for success. So when we met Hippo Harvest, and they presented this really disruptive idea of using robotics in the agriculture environment, to be able to drive down that cost of production, but increase the quality of the produce, we thought this is an important skill to unlock. And that relationship over the last 15 months has seen us take that from an idea to something that we’re actually delivering into our stores in our fresh network in the San Francisco area today. And demonstrating just that, we brought that product to market at a price competitive with organic greens. And under quality that I would encourage listeners and viewers to test and find as better than almost anything else out there on the market. So I think it’s really a great example of inventing, of simplifying one of these very hard problems and delivering a result to customers that we hope will really be pleasing for them.
Sean Ammirati 12:50
Yeah, I think to me, it also speaks to the breadth of this kind of Climate Pledge Fund to like, my guess is people would think about Rivian or Infinium, like companies, that’s probably what comes to mind. But like robotic farming, there’s a pretty wide lens that you have into what companies fit your your mandate. How do you think about what is in and out of scope for you all?
Nick Ellis 13:24
So there’s really two key criteria that we consider when we look at a new investment for the fund. But first is can it reduce a piece of Amazon’s carbon entitlement or carbon footprint. And so that’s the first cut. And even something like agriculture, which seems a little far afield not to play on the pun, it’s actually really core to our customers, because everybody is buying produce and buying pasta and buying food. And we know this is a key piece of our footprint at the end of the day. So that’s how you find something seemingly outside of scope right in our sweet spot at Amazon. And then there’s the obvious areas where we run a large fleet of last mile delivery vehicles, long haul trucks, airplanes, container ships, each of these have their own embedded and embodied carbon carbon footprints and these are areas where we know we need new inventions. And so thus the investments centered around Infinium, like you mentioned, to help decarbonize the fuel usage in those vehicles.
Nick Ellis 14:19
The other big criteria that we look at is can each of these inventions make a significant impact on our carbon footprint? So not only does it touch something that’s relevant to Amazon, but does it touch it in a really big way? Or can it make a big dent? And I think this is where you see that leadership principle at Amazon around think big, come into really sharp focus, which is we see a wealth of incredible ideas on a weekly basis here at the Fund. But the challenge usually is could it potentially reduce our footprint by 3% or 5% or 15% or 20%. That’s a very high bar to hit. But where we see those two things that relevance and that high degree of impact. That’s where we lean in, and we’d like to make investments and support these founders.
Sean Ammirati 15:00
Yeah, that’s amazing. And how much of it would you say that is sort of outbound like this is an area we should look into. Versus how much of it is more inbound wherein people are aware of what you’re doing and they reaching out to you that kind of thing.
Nick Ellis 15:15
Yeah, it’s certainly changing over time, when we first did up the Fund two years ago, it was a lot of shoe leather and hard work just by our team to get out there and meet these companies and let people know, we have the capital, we were serious about it, and we wanted to be a good partner to them. I’d say that dynamic has changed dramatically in the last two and a half years, as some of the success with Rivian or Infinium, or Hippo Harvest that hit the street. And now we get quite a bit of inbound in those areas as a result. And so I think we’re seeing the fruits of that labor, where we really earn the credibility and the respect of the founders and the investment community. And hopefully now, what we’re starting to see is that folks really value our participation. And they come to us and specifically seek us out first, because we know neutrally, if there’s a real fit here, it’s going to be one of those transformational moments in both of our corporate lives that we really want to double down on.
Sean Ammirati 16:07
Let’s get to Infinium. So that one was in early 2021, I believe you guys first invested in them, right. And so you’ve been working with them for a little while. And it’s this this meaningful play in the transportation space. So talk a little bit about how you guys are working together to decarbonize your transportation fleet.
Nick Ellis 16:25
I love that question, Sean. Infinium, I think is one of the happier stories that we’ve been able to share with the world at the fun. So just for quick context for listeners, Infinium, is an electro fuel producer, which is essentially someone who is creating a drop-in replacement, where instead of putting diesel into your truck, you can put this electrofuel and get about 90% to 95% fewer emissions from that vehicle as a result. So a really transformative technology in a way because it’s so immediately ready for use right now. And indeed, that’s just what we’re doing. Late last year, we announced a commitment within Infinium to be an off taker of their initial pilot plants, we are going to use that fuel to power about 5 million miles of deliveries by our trucks down in the Southern California area, and really demonstrate for the first time for Infinium that they can meet an enterprise customer requirements like Amazon, and that we can run our trucks reliably make deliveries on time, and hopefully serve as a powerful reference for other fleets that are out there thinking about doing the same thing. So that’s the win and we still need to deliver more of that. We’re just beginning to start to uptake some of that fuel and think about doing more and 2024-25. But the hope will be that that relationship will go through this crawl, walk, run evolution where that investment has helped us think about how to do this the right way, we’ve now found a small proving ground in Southern California. And assuming we can find success like we anticipate there. My hope is that we’ll be talking about deploying that fuel nationwide and eventually replicating that success in other territories with Infinium.
Sean Ammirati 17:56
Yeah, fantastic. Great. So I think it’s obvious what’s in it for Infinium. There, right? Like that’s an incredible reference customer. It’s an incredible path to scale. It’s huge validation for them. I suspect there are lots of good ideas coming at you every day. When you heard the pitch about what they were trying to do, what really resonated with you about this and kind of made you lean in and pick them over other companies. There’s only so many hours in a day. So you can only work with so many of these companies.
Nick Ellis 18:31
Yeah, if you find a hack to put more hours in the day, let me know there, Sean. But I agree it’s it’s one of those difficult decisions you have to constantly work through of where to prioritize your time and your dollars. For us when we look at these investments, aside from the criteria that helps us prioritize how relevant and important could this be to Amazon, we look at a pretty conventional set of metrics in a way. We look at the quality of the team. We look at the differentiation and defensibility of the intellectual property that they’ve created. We look at that market maturity and really take into account is it a near term enough opportunity for us to be able to capitalize on this or are we going to have to wait 10 years in some cases? And I’ll just call out that there is no right answer for any one of those questions. You can be 10 years out with a great team and a weak product. And we might still think hey, this is one of the better bets we’ve seen. So we worked through that same equation with Infinium. I think one of the key things that really caught our attention, there was both the quality of the team and the time to market. And this confidence that if we give this team capital, they can execute and bring this innovation to market in a very short period of time, which gratefully has been exactly how it’s played out with Robert and the team there. But that made them stand out. Not everybody had that domain experience or that roadmap that can see them getting into market in a matter of just a few years. Most folks did think this would take 10 or more years. And so that gave us a greater degree of confidence and say look, let’s lean in here and participate and really we’re close sit together to try and find out when.
Sean Ammirati 20:02
Yeah, that’s amazing. Okay, as we start to move towards kind of wrapping this up. I want you to sort of put yourself in the shoes of Robert or other entrepreneurs like that, right? And they’re thinking about trying to partner with companies like Amazon. Now what advice would you offer to entrepreneurs who are thinking about engaging, not necessarily with Amazon specifically, but just with with large companies as a partner for them?
Nick Ellis 20:25
I’m going to parse the question there very closely, Sean, because I think it’s an important distinction, which is there’s potentially working with a large company like Amazon as an investor, and then more as a partner was the term you used. And I think that’s the right focus, actually, which is to say, my guidance to founders out there would be think first about how you can serve this company as a customer, and work backwards from that, that mental model.
Nick Ellis 20:51
So if the goal is we can deliver fuel onto your network that will reduce your carbon emissions by 95%. That should really be the first port of call in that conversation. And what I’ve seen is where you get conviction by the business unit, that we can accomplish this goal, it naturally leads to a corporate development or strategic development conversation around. Okay, well, how do we do that more quickly, would capital help with more expertise with greater partnership help, and we can try and unlock those things. But it really starts there, I think it’s hard to go the other way around. And I think that’s a common mistake that a lot of founders make is, hey, if I can get their dollars, then I’ll get their business. And it’s not to say it can’t work that way. But I think it’s a much harder way to push the conversation than having a business unit sponsor come in and say, hey, this is the best thing since sliced bread that I’ve seen for our fleet. And the moment you get that validation, if you’re sitting in a chair, where we sit over and corporate development, you’re starting to think, okay, this is worth our time and our money and we really need to dive deeper and figure out how to make the most of it. So I would say that’s a key first piece of the puzzle.
I think the second bit is be clear, and simple, and realistic about the timelines and the kind of value that you can deliver to these customers. Over selling and getting over your skis will erode your credibility very quickly. But demonstrating a credible path to commercialization that you can deliver on, it might take 6 or 12 or 18 months for some of those first steps, but you can start to build confidence. To me, that’s the key for good enterprise selling versus trying to go and promise the moon, you know, falling amongst the stars doesn’t count for much there.
Sean Ammirati 22:24
Yeah, fantastic. So actually, that the point about going out through the business unit is an interesting one. Out of your investments so far, what percentage of them were came in through the business unit, and then they they came to you guys, just roughly it doesn’t have to be to the to the decimal, but just roughly.
Nick Ellis 22:42
Yeah, I don’t know the exact number. But if I were to just do a quick back of the envelope in my head, I would bet close to about a quarter of these were known quantities to our business partners. And something when we either met the company or cross referenced quickly found, hey, there’s already a credible conversation here that we can piggyback off of, and something that we can really grow. And I would say again, that has changed with time now that more folks know that we are a good customer for these types of decarbonisation solutions. And they are doing exactly what we just discussed, which is approaching our business units to say we can help. And then those business units now know to turn to us to say, look, we can do more than just help, we can be a game changer for these companies if we play smart here. So it has changed, but it’s certainly growing.
Sean Ammirati 23:28
Okay, last question before the wrap up, then I just want to build on that one more time. So now, one more place to give advice to the Robert or these entrepreneurs that are that are changing the world. What’s the best way for them to engage with those business units from your perspective?
Nick Ellis 23:42
Another great question, especially at a big company like Amazon, where there are multiple business units that may need your fuel or your PV solar cell or your packaging solution. So one of my first bits of advice would be, make sure you hit multiple points of contact inside that business unit. I always recommend that founders reach out serially to up to three or four different points of contact inside a company. So if it was Amazon, and you were selling a fuel, you might first go to one of the senior leaders you can identify on LinkedIn in our last mile or middle mile trucking segment. If you don’t get a response there after a few concerted outreaches deprioritize that person and move to another senior leader. And the reason to go in serial versus parallel is one it gives you a chance to learn along the way– is my call to action working or not. And then I think secondarily, it doesn’t necessarily spoil or look over eager when you make four approaches at once and everybody cross references behind the scenes to say, hey, did you all hear from Sean yesterday and everybody says yeah, and the message is sounds a little desperate. Versus geez, this person was really thoughtful about reaching out to me making a clear case about how they can help and either responded or didn’t. And as you work through those 1, 2, 3 or 4 points of contact, depending upon the size of the org, if you don’t get any purchase at that point in time. My guidance is always just deprioritize that conversation and revisit it in six months. Hopefully you have plenty of customer prospects out there to keep you busy elsewhere. And not everybody’s ready to buy all the time on your time. And so you need to recognize that and not take it personally, and just keep treating this as hey, I knocked and no one was home, I’ll come back and visit again and knock again and see if I catch him next time around in six months. And I think that persistence is really key to being able to eventually win the credibility and the commercial relationship that you want with a big customer like Amazon.
Sean Ammirati 25:29
Yeah, I always tell my portfolio companies pleasantly persistent is the key, right? You want to you want to be persistent, but in a pleasant way. And you’re right that the why now is is a key element of this, and I don’t want people to miss. So Nick’s drawing a distinction between reaching out in parallel and reaching out serially, right? So the best practice is, do this serially, not in parallel, ie, don’t spam five people all at the same time, with the only difference being the person’s name. That that tends to be fact checked behind the scenes internal. But if you do thoughtful outreaches, one at a time, that’s that’s really helpful. I think it’s excellent, excellent advice.
Nick, I think what you guys are doing is is so important. I do really appreciate you joining us today. For our listeners, I want to make sure that not only do they stay up to date on the Climate Pledge Fund social media stuff, but also, you’re fairly active on LinkedIn, as well. And on these social media platforms, what’s the best way for our audience to stay aware of the work that you’re doing?
Nick Ellis 26:26
But for asking, Sean, certainly, following on LinkedIn is an easy mechanism, as we say, at Amazon, and we’ll be publishing and sharing more about some of the stories through my personal profile and the Fund and certainly through Amazon. I think if you haven’t visited our website for the Climate Pledge Fund, please do. I would particularly encourage folks who are thinking about getting personally involved in making this an area for their career, to take a look at that website. We have a number of jobs posted across our whole portfolio. And if you’re a scientist or a finance person, or a sales professional, and you’re thinking now’s the time to make a change, it’s a great spot to go and get lost for 20 minutes and see what you see. You’re really looking at some of the cream of the crop for some of the best climate tech founders and businesses out there that I would argue any one of us would be lucky to work with. And it’s another easy way to stay abreast of who’s hiring, who’s in the portfolio what’s happening, and maybe personalizing get some benefit aside from just learning there.
Sean Ammirati 27:22
Awesome. We’ll make sure all those links are in the show notes for everybody. And you know, thanks so much again, Nick, for joining us today. Hope you have a great rest of your day.
Nick Ellis 27:29
Yeah, totally. My pleasure, Sean, thanks for having me.
Sean Ammirati 27:36
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