After building a software company to a multi-billion dollar exit, I made the jump to hardware. Now I’m working on carbon removal + steel at Charm Industrial, and electric long-haul trucking with Revoy. It’s epically fun to be building in the real world, but little did I expect that more than half the cost of building a hardware company would come from regulatory bottlenecks. Despite a huge push for climate fixes and the bipartisan geopolitical desire to bring industry back to the USA, I’ve been shocked to find that the single biggest barrier—by far—is over-regulation from the massive depth of bureaucracy.
Hardtech companies of all flavors are being forced to burn through limited capital while they wait for regulatory clarity and/or permits. This creates a constant cycle of cost increases that ultimately flows to consumers, it lowers investment in the US manufacturing and industrial base, it delays innovative new hardware getting into the hands of consumers and businesses, and at the end of the day, it leaves us all worse off, stuck with a quality of life pegged to technology developed decades ago.
Regulatory delays and bottlenecks have added millions of pounds of pollutants like PM2.5, NOₓ and CO₂ to our air from the continuation of business as usual, instead of the deployment of clean technologies from my two hardtech efforts alone. While CO₂ is a long-term climate issue, PM2.5 and NOₓ are immediate major drivers of asthma and excess morbidity. Both operations have high bipartisan appeal—and we’ve never been denied a permit—because we’re fundamentally cleaning up things that matter to everyone: dirty air, wildfires, orphaned oil wells. Revoy is also helping deflate the cost of long-haul freight. But none of that has made getting freedom to operate easy. For creative new technologies the default answer is “no” because there isn’t a clear path to permitting at all, and figuring out that path itself takes years — time that startups can’t afford to wait.
Regulation obviously has a critical role in protecting people and the environment, but the sheer volume, over-specificity and sometimes ambiguity of those same regulations is now actively working against those goals! We’re unintentionally blocking the very things that would improve our environment. We’ve become a society that blocks all things, and we need to be a society that builds great things every day. The rest of this article gets very specific about the astronomical costs regulations are imposing on us as a society, and the massive positive impact that could be unleashed by cutting back regulation that is working against new, cost-saving, creative technology that could also be making people and the environment healthy again.
To make it concrete: both Charm and Revoy are capital-efficient hardtech companies, but Charm will spend low hundreds of millions to get to breakeven, and Revoy will spend tens of millions. In both cases, more than half of the total cost of building each company has gone to counterproductive regulatory burden. I’m hellbent on pushing through these barriers, but the unspoken reality is that our regulatory morass is the deathbed of thousands of hardtech companies that could be drastically improving our lives. We must unleash them.
$300M in Societal Cost & $125M in Burden for Charm
Charm produces and delivers verified carbon removal to companies like Google, Microsoft and JPMorgan. Charm’s breakthrough was realizing that you could take CO₂ captured in farm & forestry plant residues, convert it into a carbon-rich, BBQ sauce-like liquid (it’s literally the smoke flavor in BBQ sauce), and inject it into old oil wells to permanently remove carbon from the atmosphere. This has all kinds of co-benefits like reducing the massive overburden of wildfire fuels, cleaning up & plugging nasty orphaned oil wells, and improving PM2.5 and NOₓ air quality by avoiding that biomass being burned instead.
And yet… there was a hangup: what kind of injection well is this? Should it be permitted as a Class I disposal, Class II oilfield disposal, or Class V experimental? This question on permitting path took four years to answer. Four years to decide which path to use, not even the actual permit! It took this long because regulators are structurally faced with no upside, only downside legal risk in taking a formal position on something new. Even when we’d done an enormous amount of lab and field work with bio-oil to understand its safety and behavior at surface and subsurface conditions. A regulator faces little cost to moving incredibly cautiously, but a major cost if they approve something that triggers activist pushback.
In the end, we’re grateful that—eventually—a state regulator took the reins and reviewed, managed, and issued the first-ever Class V bio-oil sequestration permit, through what was still an incredibly complex and detailed 14-month review process.
Now imagine that, instead of the 5.5 years from first contact to issued permit, it had only taken the 6 months it actually required to get everyone across the regulatory establishment to agree on a Class V pathway, we would have had 5 additional years operating the well. That’s the equivalent, from our real supply chain, of sinking at least 30,000 tonnes of carbon per year at $600/tonne. Looking only at this one aspect, this delay came with a $90M price tag for Charm. We’ve also spent untold millions on regulatory affairs at all levels of government, not to mention the missed acceleration in sales, and other direct hard costs spent in R&D and processing bio-oil for inefficient and expensive injection into salt caverns instead.
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