Moving Atoms vs. Bits

March 29, 2022

A common framing for categorising startups and initiatives in climate tech is the “atoms vs. bits” idea - some organisations move atoms (ex. building batteries), and some move bits (building software). I’ve seen several thoughtful opinions recently on the relative importance of organisations that “move atoms” (the climate transition is an economic transition, meaning a lot of physical stuff needs to change) and those that “move bits” (software is eating the world, and is key to this transition).

Thinking in terms of atoms and bits is a useful way to categorise different initiatives, but I believe it’s a false dichotomy - not only are both distinct solution categories important, but we should be encouraging the development of organisations that are hybrid - they move atoms and bits.

A great example of this type of “hybrid” organisation is Tesla - aside from building vehicles and batteries, they’re building software to power a new driving experience and balance the grid. While one can find flaws in their physical and digital approaches, I’d argue their success lies at the intersection of moving atoms and moving bits.

Why is it important to blend physical and digital approaches? Software and compute have become so democratised, and the barriers to entry are so low, that there’s no reason every organisation can’t utilise the unique scalability and problem-solving abilities of software to their gain. And while outsourcing software competencies may be tempting for organisations that are focused on physical product innovation (and may be the right call in some instances), when you’re creating technology at the frontier of a field like climate tech, you may be in a far better position to understand the software needed to take your solution to the next level than any talented product manager or software engineer fresh off of a prestigious Silicon Valley job.

Take Moment Energy - a startup out of Canada repurposing end-of-life EV batteries to build energy storage solutions. Their work often sits in the physical world, but as part of their solution they’re also adapting battery management system software to create a proprietary solution in “bits” that fits the unique quirks of working with used EV batteries. If successful, they’ll have a solution solving a physical problem that works because of their digital competencies.

Not all companies can sit firmly in the digital and physical worlds - we all have our zones of competence. But we should be encouraging and celebrating organisations in climate tech that can leverage the intersection of physical and digital solutions to tackle climate change - the impact of this ambition can’t be understated.