An Interview with Varun Adibhatla, and His Plan for Building a "Decarbonization Stack"
|Aug 22, 2020||2|
In this week’s Yak Talk, we interview fellow Yak Varun Adibhatla.
Varun works as a deployment strategist at Urbint, and also founded ARGO(Advanced Research in Government Operations), with a mission to research and deliver data infrastructure to transform how basic public services are delivered.
Earlier this month, Varun teamed up with Alex Wagner(also the editor at Yak Talk) in response to VC Chamath Palihapitiya’s open call to create a proposal for decarbonization, sustainability, and climate change.
Alex and Varun created this seven-page proposal based on Varun’s preexisting ideas about how to create a decarbonization movement.
The essence of the proposal was Varun’s idea of a decarbonization “stack” which included several layers of programs, and a financial instrument called the Thunberg Bond, which would function much as a World War Two-era war bond, but would be sold by the United States government to fund large-scale decarbonization projects.
Alex interviewed Varun for Yak Talk a couple of weeks after the proposal was submitted. The following contains excerpts from that interview.
The audio recording of the interview in its entirety is available here.
1 .On Behavioral Economics, Government As the Source of Incentives and “Moving the Needle in the Wrong Direction”.
The first thing is, when you brought this [proposal] to my attention, I kind of forced myself to focus on Chamath’s prompt, to focus on these ideas. I think a call to innovate by a public figure is always a good thing.
What's interesting about that is I would say. OK, if I was given two minutes with a billionaire to kind of propose any idea, what would it kind of look like? And so I think the start of this was forcing all the thoughts I had, kind of forced them into a single slide.
Being interested in what I'm calling “incentive-centered design” is really accounting for the different incentive mechanisms on individual as well as the institutional level.
Some of the work that I've been tracking on behavioral economics, starting with, you know, the Nobel prize was won in 2017, by Richard Thaler. It was a recognition that behavioral economics kind of is the thing. As a layperson, who's not an economist, I needed to understand it.
It's really upended, I guess, conventional economics in many ways. It upended an era of “rational economics”, that human beings are not always rational.
As we were writing this together and I was starting to put thoughts on paper. I was asking myself what needs to happen to actually, meaningfully decarbonize the economy?
My bias has always been “government should be the answer”, and “government is the source of incentives”. So my bias has definitely been government being the source of how we will reach these decarbonized outcomes.
But this exercise gave me an opportunity to really throw those biases or challenge those biases, or at least suspend those biases and approach this from a purely private profit-making enterprise that can achieve the same outcomes or similar outcomes at scale.
As I was thinking about that, a lot of times we don’t think much about individual consumption when it comes to climate change. The big thing there is that I keep seeing the data and am always astounded that GHG emissions per-household level for a country like India or China is orders of magnitude lower than the US.
Not only are we not moving the needle with regards to consumption in this country – the needle in a, in a developing economy, is moving in the wrong direction.
2. On “Not Having the Time”, Consumer Demand Shock, and Creating “Good” Bubbles.
I think what's becoming rapidly clear is that we don't have the time. If there was one thing that we can do to meet these targets set out by the Paris 2015 agreement, it is really to “shock” consumer demand.
The approach is not to restrict the consumption, but it's to really shock the consumption, you know, have a step-change in consumption.
So those are the kind of, like, messy contours of what I set out to do with, this is what our submission would look like to Chamath.
We know how to create bubbles in the economy – it's been done before. Obviously bubbles are “bad things”. Economists want to detect bubbles and they want to address them and to make sure that all those don't get so big that it poses systemic risk.
But if you squint your eyes and kind of look at it a different way, it's precisely that kind of bubble mechanics and systemic risk and systemic disruption that you want to introduce [to create a decarbonization movement].
3. On Lessons Learned from the War Bonds of the 20th Century
[My interest in behavioral economics] triggered a very intense research into war bonds, which was the last time consumers were actually told to be irrational.
The messaging at the time was also fairly crazy, “If you can't fight in the war, hey, at least buy a bond”.
It was actually fairly old marketing mechanisms initiated in Germany in World War One, when Germany had to finance its rapid militarization. It did a lot of it through war bonds.
And at that point I was like, okay, well, you have war bonds, you have climate change, and you also have climate bonds – but why haven't climate bonds been filtered down to retail, or to the consumer?
And then you see climate bonds are these very wonky instruments that are really floated to fund these mega-solar farms, for example, or these, you know, long term investments. They tend to be fairly high dollar amounts to fund big, big, big projects that are only completed 10 years later.
And I was like, why aren’t there these war bond-looking things at the retail level, that you or me can purchase and actually participate in the climate movement?
4. On the “War-Like” Mechanics of Movements, and How They Go Viral
Alex: At this point, it seems like only private capital can solve [decarbonization] because it's almost like somebody needs to fund a bunch of small experiments to test what the right narratives are through the right channels with the right. You know, an ice bucket challenge mechanics and with the right financial instruments too, you know, it's really interesting.
I think for me, at least these viral funding campaigns started with Kony 2012. It went viral and it went viral pretty quickly. And the movement-makers were able to amass a large sum of money in a very small amount of time.
And it shows that people have this untapped, latent desire to be part of a movement. I mean, you see it for Kickstarter, you see it with Indiegogo. I think there are these proven things out there that you can finance through movements. But the thing is that a lot of these movements are geographically constrained.
and I think what's unique about the whole crypto movement and Bitcoin and Ethererum is that they're truly global funding mechanisms. You know, the first one was DAO the decentralized autonomous organization that aspired to be the world's first bitcoin-funded venture capital.
And they were able to amass a large amount of money before getting hacked. Unfortunately, that narrative bubble popped before they could do any good.
But you see these signals and you know, the signals are out there and it's almost like, okay, if they had sort of nurturing, if they had this sort of blessing from institutions without [the institutions] approaching them from a place of fear.
Sure, you have the whole story about Bitcoin being used to buy psychedelics and things like that, but why don't we have the story about Bitcoin being used to fund decarbonized outcomes?
And then the Thunberg motif, right? [She’s] a powerful symbol. Obviously there are other climate activists out there, doing this civic work.
Essentially, we want to choose a “hero”, or heroine, to symbolize the movement, to sort of symbolize our aspirations, our goals. We want to project that or do we a person or council,
And so you have all of these interesting signals that sort of came together in this paper.
5. AWS Marketplace Meets Alibaba – “The Atmospheric Stack”
Ali Baba really kind of showed that you can organize a community of merchants, right, like small businesses and merchants onto a single platform and have them do commerce. In so many ways, Ali Baba's is a lot bigger [than Amazon], and in the sheer commerce or transactions that it does.
And it's not about buying toothbrushes, it's about buying machinery. It scaled rapidly and it proved the success of that model of having B2B transactions on a platform.
So that's what this stack is. Really it’s an Ali Baba [model], and then you have these “referral rocket ships”, in which we’re, you know, capitalizing on these latent network effects in new and interesting ways.
These programs converge towards an Ali Baba platform to engage in decarbonized commerce, but through this lens of building equity. Because of course, when you're talking about climate justice, you have to address climate justice and understand that it can be hacked by rich people.
You need it to be a very inclusive tent and the tent should be appealing so that people can come to this tent and say, “Hey, you know what? This is something that I can kind of invest in for the long term”, and also do good working toward a virtuous goal. But as I'm doing that, they’re also making money.
[The idea is that] it kind of depolarizes the whole debate in many ways.
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