Open-source and the environment ecosystem
If you are in the IT industry, you are probably familiar with the name Linus Torvalds. He is a Finnish engineer who created the computer operating system Linux. Linux is one of the most widely used operating systems in all areas of computing including internet servers, network devices, mobile devices, and edge computing devices, and its technology’s roots are as an open-source project. The concept of open-source projects is ubiquitous now, but early on the ideal open-source concept - an engineer community-based project where engineers from around the world voluntarily develop and contribute to the technology without expecting or receiving any monetary compensation – was difficult to imagine throughout the industry as a commercial technology, especially while competing with cutting-edge products from giant tech companies such as Sun Microsystems and Microsoft.
Successful open-source projects have not been limited to Linux. The latest cutting-edge software fields essentially originated from open-source projects, including relational DB software such as MySQL and PostgreSQL, web server project Apache, large-scale processing engine Hadoop, container-based technology Kubernetes, and Tensorflow, an AI field of which the original source code was released by Google. Infrastructure operated by large companies all utilize open-source technology. AWS's DB includes MySQL, Google's mobile OS Android is based on Linux, and macOS loaded on Apple's MacBook is also based on BSD-based Unix systems. The open-source ecosystem has become the core of IT industry development regardless of whether related to large companies or startups.
When a major innovation occurs in a given field, the spotlight tends to focus on the founder, the company, or a specific superstar because frankly it is good for storytelling. However, for that innovation or disruption to be ultimately accepted by the market, there are unseen elements in the ecosystem that require maturation over a long period of time and then result in the crossing of a threshold as market participants accept it at scale. For example, if the voluntary open-source community ecosystem itself had not matured, there would not have been core code for the ensuing numerous engineers to freely utilize, and thus the internet, AI, big data, mobile, robots, and smart factories would not be the same as they are today. This type of phenomenon is not limited to the IT industry. The Korean beauty industry’s boom over the past decade is a result of the maturation over time of the domestic cosmetics OEM infrastructure. Without the infrastructure of OEM heavyweights such as Cosmax and Kolmar, it may not have been possible to accommodate and execute at scale the complex delivery requirements and production capacity for various brands and companies around the world, and thus the golden age of K-beauty may never have occurred. Similarly, and regardless of the debate on the appropriateness of Korea's strenuous K-Pop trainee incubation methods, the K-Pop ecosystem and systematic nurturing methods required development over a long period such that the large entertainment companies today could produce and deliver the BTS’ or Blackpinks of the world.
On the other hand, Oculus, a startup that our team colleagues invested in at the US VC where I used to work in the past, meaningfully established the world's first VR device and app store platform. Thanks to this company, a new medium called virtual reality began to attract attention, and expectations for changes in the media market skyrocketed. Reflecting this situation, Facebook (now Meta) decided to acquire Oculus, which did not have any significant KPI to show, for an extraordinary value of nearly 2 billion USD. After the acquisition, Facebook provided significant financial and policy support to the Oculus team to create a VR ecosystem. However, even after nearly 10 years since then, the widespread adoption of VR has not occurred. Looking closely at the components of the VR ecosystem, video creators were not prepared for the grammar of the content, there were not enough points to convince IP owners to participate, and as a result, the public could not feel motivated enough to purchase VR devices and spend time on them. Also, there were many technical challenges to overcome in building a display environment that is close enough to the real world that humans do not feel dizzy. In other words, the ecosystem had not been sufficiently developed to cross the threshold.
In retrospect, it may seem clear, but it is really difficult to estimate the maturity of the ecosystem in advance, and there are difficulties in VC investment. As you have to anticipate and invest in future markets, it is essential to estimate not only the "direction" of whether these changes will actually occur, but also the "timing" of when the threshold of the ecosystem maturity in that field will be reached. Otherwise, you will be stuck waiting for a future that will never come, like a science fiction novel.
This is why our team created a climate and environment fund and has been actively investing in related companies for the past year. We believe that a tipping point is coming in the climate and environment-related ecosystem. The background of this judgment is, first of all, the Paris Climate Agreement in 2016. By agreeing on a plan to zero carbon emissions by 2050 and setting specific targets, most countries in the world have created realistic and achievable expectations. Large capitals such as BlackRock are also pressuring portfolio companies to include the use of renewable energy and carbon reduction in their business processes. Apple, BMW, Samsung Electronics, and Nike have declared RE100, which aims to use 100% renewable energy for corporate operations, and are quickly implementing it. As a result, suppliers and partners in their supply chains must also reflect carbon reduction in their processes in order to continue their business relationships. In addition, the United States and European countries have already visualized the introduction of a carbon border tax, which will be directly reflected in the price competitiveness of companies exporting products overseas. This will inevitably have a significant impact on the product competitiveness of companies with insufficient carbon reduction processes. Accordingly, the market and ecosystem related to this is growing rapidly. It is difficult to list all related areas, but a quickfire broad list includes those such as solar power, wind power, virtual power plants (VPPs), CDR (carbon dioxide removal), power grid, ESS and BMS (battery management technology), smart mobility, green hydrogen storage infrastructure, IoT / robots / AI-driven operation efficiency, building energy management, carbon accounting, micro-algae, biomass, biodiesel, eco-friendly fertilizers, food tech, agricultural technology innovation, recycling, and bioplastics.
But the most important change is that the public has begun to recognize the seriousness of the environment and make changes in their behavior. For example, customers who buy products from eco-friendly brands, eco-friendly materials, and eco-friendly foods are no longer considered to be a niche group of environmentalists. This change in public behavior is not surprising, considering that the world has suffered from the effects of climate change, such as floods, heavy rains, snowstorms, typhoons, and rising sea levels. However, this global movement towards environmental and carbon reduction is not simply driven by climate change.
Long before the broader masses consciously recognized the climate crisis, there were many individuals who received all kinds of criticism for their cries for attention for the environment. Some of these people include:
Yvon Chouinard, the founder of Patagonia, who deprioritized the company's massive growth to make environmentally friendly equipment and clothing and adhere to the corporate philosophy of environmental conservation.
Al Gore, the former US Vice President who dedicated his life to the environmental movement since the 1990s.
John Doerr, the VC from Kleiner Perkins who invested in Google, Amazon, and YouTube and spread OKR to Silicon Valley, but has been continuously investing in environmental innovation by forming an environmental fund way before investment profitability of the sector was proven.
Greta Thunberg, the Swedish environmental activist who took major issue with the indifference of the older generations to environmental issues and has angrily championed environmental conservation since the age of 15.
Mia Mottley, the Prime Minister of Barbados, threatened by rising sea levels, calling for responsible action from developed countries and proposing realistic solutions.
The motivation of these people may be political, emotional, personal, altruistic, or a combination of all. However, it is important that their actions have influenced changes in public behavior, even if it did not bring them any financial benefits.
Therefore, I hope to appeal to the entrepreneurs and investors in the environmental field, as well as those who work in related fields: After achieving unicorn status or great success in the future, please do not forget and remember that a huge debt is owed to those who have been working tirelessly to bring about environmental change, just as many successful tech companies, entrepreneurs, and VCs owe a huge debt to the open source community and its leaders like Linus Torvalds.
