Good Morning
What we’re reading this week:
Lab-grown chicken gets approved for sale. When will it hit Bay Area restaurants? (SFC)
Need a power line? That'll be $3B and 18 years. (P)
The Greendicator
Top Deals of the Week
![Video] Guardian Agriculture's Autonomous Electric Drone Sprayer Video] Guardian Agriculture's Autonomous Electric Drone Sprayer](https://substackcdn.com/image/fetch/w_1456,c_limit,f_auto,q_auto:good,fl_progressive:steep/https%3A%2F%2Fsubstack-post-media.s3.amazonaws.com%2Fpublic%2Fimages%2F20f08d26-7337-423c-8b9c-bf86440700ea_700x525.jpeg)
Eavor Technologies, a six-year-old, Calgary, Alberta-based closed-loop geothermal developer, has raised €34 million in Series B funding. OMV AG led (E)
Guardian Agriculture, the first and only eVTOL company with FAA approval to operate commercially nationwide, raised a $20M Series A led by Fall Line Capital (PRN)
Fero Labs, an eight-year-old New York startup that uses AI to reduce carbon emissions in manufacturing, raised a $15 million round led by Climate Investment (SA)
African solar pay-go startup Yellow raised a $14M Series B led by Convergence Partners (TC)
GreenPlaces, an all-in-one sustainability platform, raised a $13M Series A led by Redpoint Ventures, Felicis, Tishman Speyer Ventures, and Bull City Venture Partners (BW)
TreaTech, an eight-year-old startup based in Lausanne, Switzerland, that converts waste streams into fresh water for industrial and consumer use; minerals including phosphorus, nitrogen, and potassium; and methane-rich renewable gas, raised a $10 million Series A round co-led by Engie New Venture and Montrose Environmental Group (VL)
CleanHub, a four-year-old Berlin startup that aims to partner with brands to build a global network of sites to collect and process plastic waste, raised a $7 million round co-led by Integra Partners and Lakestar (DS)
Kubik, a two-year-old Nairobi startup that aims to turns hard-to-recycle plastic waste into affordable building materials, raised a $3.3 million seed round from Plug & Play and others (TC)
Green Theory
The Peacock’s Profits
Just as sexual selection strongly reproduces traits that have little to do with adaptiveness to the environment, short-termism prevents businesses from pursuing the best outcomes for themselves, and for society. How does sexual selection complicate the broad picture of evolution? What does it have to do with business decisions, especially in the age of the climate crisis?
Darwin’s Feathery Nightmare
On the surface, the idea that well-adapted survival traits would get passed down, and other traits would fade out, fit most of the evidence of evolution Charles Darwin had collected.
Still, even a year after releasing On the Origin of Species, Darwin couldn’t imagine how the peacock’s cumbersome tail could have survived the churn of nature’s brutality. Wouldn’t simpler-tailed peacocks outcompete their burdened, long-tailed cousins? he reasoned.
“The sight of a feather in a peacock’s tail, whenever I gaze at it, makes me sick.”
—Charles Darwin, 1860; reproduced in The Scout Mindset
Later on, Darwin formulated the theory of sexual selection to accompany natural selection as a key driver of evolution. In Julia Galef’s Scout Mindset, she outlines this episode as an example of following an objection to your argument until it ends up reinforcing your argument (1). But the finding itself transformed our understanding of evolution, biology, and more. Via sexual selection, intimate mating interactions within a species shaped gene pools, too, not just the species-external forces of Darwin’s original natural selection theory.
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You may be thinking, doesn't that big tail with all the “eyes” scare away predators? Knowing what we know about evolution, today, it may be easier to rationalize a survival reason for such extreme body parts. Regardless, sexual selection stands as one of the most powerful forces in evolution, even if the peacock’s tail is less troubling for modern naturalists than for Darwin. It complicates the story of evolution.
Dangerous attraction: short-term thinking in business
Our economic system demands that businesses decide how to allocate our resources. In the US, at least, it’s widely held that markets and competition yield the highest performing companies. But what if shareholder return wasn’t the variable we actually wanted to optimize?
Over time, firms have increasingly focused on shorter-term profits, employing tactics such as stock buybacks to inflate returns, while impoverishing the company’s long-term prospects (underinvesting in training, R&D, and more). These corporate activities make hedge funds and shareholders happy, now, which some argue is a firm’s legal obligation, even at the expense of communities’ wellbeing. As University of Minnesota business school’s Rick Hardcopf & colleagues reviewed in 2017, short-termism limits the long-run prospects of firms themselves, even if they outcompete other companies each quarter.
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Management responses to the increasing intensity of quarterly capitalism (where there’s more and more pressure on quarterly results) may serve as the most elegant example of runaway short-term thinking in business. Influential corporate theorist Peter Drucker clarified his perspective on short-termism in 1985 in the Wall Street Journal:
Everyone who has worked with American management can testify that the need to satisfy the pension fund manager’s quest for higher earnings next quarter, together with the panicky fear of the raider, constantly pushes top managements toward decisions they know to be costly, if not suicidal, mistakes —reproduced by Roger Martin, Harvard Business Review, 2015
Far from the fringes of society, Drucker (a mainstream business leader) shared this view in a mainstream paper. Martin, and researchers across various disciplines, worry that short-termism is eroding the theoretical safeguards that let markets serve society, even when regulation may lack. When corner-cutting gets rewarded, more socially aligned business get left behind.
If we want products with decent safety standards and quality control, produced by paid adults, rather than children and/or slaves (let alone causing pollution), we have to hold businesses more accountable for social recklessness, and reward longer-term strategies. For now, the short-term competition eliminates the long-term opportunities for human flourishing.
Short-termism’s mismatch with survival
In the same way convenience attracts business minds and consumers, at the cost of society’s long-term prospects, sexual selection empowers the slow, blind process of evolution to sometimes reproduce useless, or ultimately harmful traits. For this reason, we shouldn’t mistake the power and prominence of any business as proof of its operations serving society. There’s far more than social welfare on the minds of business elites, and corporations can earn a quick buck by a multitude of nefarious means. When the system privileges shareholders, and coldly considers consumers, it seems to blithely ignore the category of citizen. Who will redirect the economic system away from climate catastrophe, if every business is obliged to focus on the next quarter?
Luckily, humans designed the business ecosystem, and humans run our businesses. This distinction breaks the analogy of business short-termism and sexual selection across most species. If we can step outside the superficial attractiveness of perpetuating “quarterly capitalism,” or regulate it to better align with human flourishing, we have a chance. Unfortunately, we’re converting the planetary ecosystem’s long-term problems into short-term ones. By the time catastrophe is a fiscal quarter away, it will be too late. We shouldn’t rationalize the short-termist evolution of quarterly capitalism as well-adapted to serving society, and sexual selection can help us see why.