In this week’s podcast, I’m excited to be speaking to Matt Barnard, the CEO of Plenty, a vertical farming group on the West Coast of the US. If you’re in the agrifood tech space, you will have had to have been living under a rock not to have heard of the record-breaking $200 million investment that Japan’s SoftBank made into Plenty over the summer along with other investors. It was actually the first time that Plenty really came out of stealth to tell the world who they were and what they were up to.
I speak to Matt today to find out a little bit more about the last few years and how they’ve been building the company. I hope you enjoy our conversation – there’s an abridged transcription below too.
Louisa B-T: Matt, we first met a couple of years ago at the Indoor Ag-Con in New York back when you were called See Jane Farm, and I didn’t really know much about you other than having seen your name on a few investor presentations, but you were in stealth. We did talk about doing an interview at some point, but the timing sort of was never right. The next thing happens, and you’ve raised the largest ever farm tech funding round with SoftBank. That was quite the entrance into the public domain! Maybe you can start by telling us, why was it important for you to be in stealth until that point?
Matt Barnard: Well, I don’t know that it was important for us to be in stealth so much as it was to make sure that we didn’t take up air time when we weren’t yet ready with something to talk about. What we try to do is we try to be ahead of the story if you will, and try not to talk about ourselves too much because no one likes to sit in a room with someone who talks about themselves!
Louisa B-T: Right! I think there are quite a few companies in agtech and indoor ag that actually do speak very early about plans and things. You’re saying that your idea is you wanted to have something of substance to talk about before you told everyone who you were?
Matt Barnard: Right. We also, at that point in time, though we were growing amazing produce and getting it into the lives of a lot of people here in Silicon Valley, we weren’t really ready to capitalize on anything that would come from talking about ourselves. We didn’t want to give the impression to people that we were ready to execute on something that we weren’t really ready for. We just decided to wait.
Louisa B-T: What was with the name change from See Jane Farm to Plenty?
Matt Barnard: We are a company that has global ambitions. We see a lot of problems and a lot of demand to serve around the world. As we thought about having a name that was appropriate for a global, multicultural company, we wanted to make sure that we did that. When you step outside of the US borders, people haven’t seen those reading primaries that were popular in the ’50s, ’60s, ’70s, and a little bit in the ’80s here in the United States that involved Dick and Jane, Spot the Dog, and Puff the Cat. They didn’t know that we were referring to a simpler time with better food that was more nutritious. What we decided to move to the name “Plenty”, which was better able to communicate to cultures around the world and set us up more for success that way.
Louisa B-T: Fair enough. Now, before we talk about the business, I just want to talk a little bit about your background. LinkedIn tells me, and correct me if I’m wrong, that you’ve been a private equity and debt investor, and you’ve built at least one business. Is that right? How would you sum up your resume?
Matt Barnard: Yeah, I’ve built several. A big portion of my career was in the wireless telecommunications industry. I was in that industry for about a decade and helped to build and, ultimately, ran a company that engineered, designed, and deployed the networks for the world’s largest telecommunications companies; so Verizon, AT&T, Sirius XM, Comcast, Rogers in Canada. We designed their networks; we engineered them, we deployed them. They relied on us to make their networks better quality and to cover evermore things, if you will, add capacity, add quality, add coverage. I spent 10 years doing that and helping to build amazing teams of people that were the top in the industry.
After that, I was in the private equity industry for a bit, mainly looking for ways to invest in water technology because a driving passion of mine is to help to fix the water industry, the water system rather.
Louisa B-T: Where does that passion come from?
Matt Barnard: Well, there are a few things essential in life. I don’t know if there’s anything more essential than water. We need water, we need energy, we need food, we need caring human relationships. That’s about it. The water system is severely stressed, and it is one where due to some societal choices a century or two ago, we hide the cost of acquiring cleaning and delivering water to people. The cost isn’t associated with the price, or the price isn’t associated with the cost and, therefore, we’re kind of over consuming. I liken it to a batter that’s draining, where if you have a remote control car or any device powered by a battery, the battery is draining in the background, you don’t necessary know how fast it’s draining and how low it is because the car is still performing exactly as you would expect it to. Ultimately, at some point, it crosses a threshold, and it stops performing. Our water battery, the battery of our water system is severely drained, and we are in danger of crossing that threshold with the largest aquifer in North America slated to be dry in a couple of decades.
Louisa, it takes 1,000 years to replenish that aquifer. It’s under the Great Plains states, which are responsible for much of our cereal production; Texas, Oklahoma, Colorado, Nebraska, Kansas. It covers a massive area. There are now entire areas of Nebraska who can no longer access the Ogallala Aquifer to feed their wheat fields. We have some sirens going off, and I’m motivated to help them fight that.
Louisa B-T: Yeah, those are terrifying stats, but not statistics that everyone necessarily knows in the U.S or globally. Was there any particular reason that you kind of delved into looking at that. Did you have any personal experience with water shortages?
Matt Barnard: I started looking at what was happening in the water systems around the world, in part because of my interest because I grew up on a farm in Wisconsin. I was aware of what had happened on that farm going back a generation when people knew less about how their actions affected the quality and quantity of the water supply. I was already a bit aware of it. I started to look into it in my early 20’s. As I read more and more about it, first in publications like The Economist and then in grabbing books about it, whether the Cadillac Desert or there are now many books and documentaries on it understanding more and more of what’s happening around the world.
Louisa B-T: Yeah. I guess that sort of segues nicely into how and why, my next question is, why indoor ag? Bearing in mind your previous experience, but I presume that that passion for solving the water crisis played a role there?
Matt Barnard: Yes. After I spent that time looking for ways to help alleviate stress in the water systems, I then went back into large-scale technology systems around resources. I was brought in to help scale a company that did cellular smart grids, so these are large technology systems to help electrical, water, and gas utilities damp down and spread demand. After that is when I worked to found Plenty because it is a way for me to pursue my desire to help fix the water systems. Growing up on the farm in Wisconsin, I became keenly aware of the fact that I loved the food that we grew on our farm. I did not enjoy the food that we bought at the grocery store, particularly fresh produce. I loved fresh produce on the farm and not the stuff we bought at the store.
In fact, in Wisconsin, there are a lot of crops you can’t grow. The crops we couldn’t grow on the farm, I didn’t even understand why people liked them. I couldn’t figure it out. It wasn’t until I moved to California that I learned that a couple of thousand miles and a week in a truck has a way of destroying, what is otherwise, some amazing fresh produce. That, and then I’ve had a couple of health incidents in my life, and the life of my family that has caused me to really delve deep into how we eat affects how healthy we are and increases or decreases our risk for various terminal diseases. All of those things together; my experience with food on the farm, my desire to help fix the stresses of the water systems, and family experiences that caused me to dive into what we know about our diet and how it affects our health are all what led me here to Plenty.
Louisa B-T: Fast forwarding to today or to this year and the big $200 million round that you raised with SoftBank and others, can you maybe tell me a little about what drew SoftBank to you compared to other indoor ag groups? How do you think you differentiate yourselves? At this point, a lot of the focus is around growing leafy greens. I know that you guys are growing cucumbers and strawberries too. What’s the Plenty difference that has enabled you to attract these big investors with these global ambitions?
Matt Barnard: Well, there are a lot of large global investors around the world, many of whom are now invested in Plenty, that have been looking for ways to invest in this industry for a number of years. They had been looking at, “Hey, what are the economics of this business? What does it take to succeed? What does a team need to look like if we want to build a global brand?” They saw in us the foundation of a technology system that could grow amazing food that fits into the budgets of people around the world. They saw a great balanced team across a lot of areas of domain expertise and are very excited the vision of being able to solve for what they knew to be the secular trend that got them in the industry in the first place.
They were already aware that the agricultural capacity is declining both absolutely and on a per person basis around the world. They knew that four percent of the world’s population is consuming roughly 30 percent of the fruits and vegetables of the world, which means that 96 percent of the world’s population did not have access to fruits and vegetables in the way that they would like. They were aware of all those secular trends; persistently rising in labor and land costs. They were looking to find ways to solve for it. Those were some of the things that got us to this place.
Louisa B-T: It seems to me that the big challenge ahead for indoor agriculture is scaling and is your business model. As I mentioned, leafy greens seem to be the main area of focus, and that’s not going to provide the nutritional needs of the world. Can you talk a bit about how you’re going to get into other food products that can answer those urgent issues that you’ve mentioned? At this point, it still seems like it’s a lot of potential; when is the reality that you’re going to be getting this nutritional food into the hands of those people globally?
Matt Barnard: We have a lot of work to do. Building both a business and farms around the world does take a little bit of time. We are working on it quickly, but I think people at the end of the day, as they look back three, five, 10 years from now, they’re going to be stunned at the rate that which more and more people around the world have access to fresh fruits and vegetables and a nutrient-rich diet in a way that they do not in 2017. We are developing multiple farms, we have literally dozens of farms in different stages of development in different parts of the world right now. Several of those will open in 2018 and then the rest are slated for 2019 and beyond. We’re going to be working to get these farms out so that we can get food into the homes and hands and mouths of people as quickly as possible.
Louisa B-T: Just thinking about, you mentioned about the technology piece was something that was very appealing to investors and potentially a differentiator for you. You’re building some exciting stuff inside your vertical farms. I think I read somewhere that you have tiny seeding robots. Is that right? Is that technology that you’re actually developing in-house, or you’re working with other people on that?
Matt Barnard: We do seed in an automated way. That is technology that we have applied kind of wrapper that adapts it to what we do. The core of that is technology that was developed outside of Plenty. We are doing some very groundbreaking work in robotics to help get more food in the homes of more people. Not in seeding, it’s in other parts of the farming process.
Louisa B-T: How important is robotics and automation for indoor agriculture? Is it about a labor issue? I know it can be tough to find people to work in indoor farms that have the right expertise or is it about the precision aspect of it and avoiding any …
Matt Barnard: This isn’t actually an indoor agriculture problem, it’s a challenge for all of agriculture. As we look around the world, what we see is we see a global fruit and vegetable market of about 500 billion dollars. We think that if these crops were to be available to 7.3 billion people around the world, this would be a 2.5 trillion or three trillion dollar industry. We believe this to be an industry with a tremendous amount of suppressed demands. We view our job as getting more fresh fruits and vegetables into more people’s budgets, and automation is key to that because we actually have a better ability to do it inside than outside. It’s just much harder to make those processes automated when you’re outside.
Louisa B-T: That automation, I assume, is pretty essential for the business models to work? It sounds to me that there are some indoor farming groups that have really struggled with that cost component. That relates not just to labor, but also to electricity costs for lighting and so on. For making the business models work, that automation is pretty essential, is that right?
Matt Barnard: That’s right. Just like growing these crops outside, it’s essential to drive labor costs out and just as labor costs caused California strawberry industry out in the field to lose about 15% of its acreage last year because of labor costs, we deal with the same thing. We are working to find ways to get more of this into people’s homes.
Louisa B-T: Another challenge that we see, and I actually asked our CIO Michael Dean what he thought, he said that he had learned that fresh produce supply is very relationship driven with many relationships developed over decades and strong distribution networks in many markets between the producer and the retailer adds another level of complexity and a cost base for what is a low cost/high volume product for many of these crops. How do you plan to get over those challenges? If you have global plans to be in various different markets, it’s obviously going to be very different in each place that you go.
Matt Barnard: That’s right. It is. Growing a global business is very, very difficult. We’re very aware of that. It’s one of the reasons why we raised the financing we did so we could build the team necessary to do it. In order to feed the need of the people of Japan, and the people of China, and the people of Saudi Arabia, and the people of the UK and Ireland, and Canada, and all the people of the United States that we’re working to serve, you’re right, it absolutely requires a large team to be able to get this food out to as many people as possible. It’s one of the things that drove us to put that financing together.
Louisa B-T: Thinking about the venture capital investors from your earlier rounds, I’m wondering, if you’re raising $200 million at Series B, perhaps a Series C is going to be even bigger, how are those original VCs going to keep up with some of those larger, more mature investors? My question kind of feeds into how suitable is VC money for indoor agriculture, which is pretty infrastructural in its nature?
Matt Barnard: Sure. The answer to that question could stretch an hour, but I’m going to try to condense it into something that’s shorter because no one wants to listen to me talk for an hour. First of all, relative to our earlier stage investors and keeping up, they don’t necessarily expect to, they know that when a business that they invest in succeeds, that ultimately it’s going to move past them. Really, they want it to because what they know is that their capital is some of the most expensive investment funds on the Earth. For a company to keep using that means that really the company isn’t succeeding. The companies need to graduate out of that type of capital at some point in time. That’s one.
With respect to, “is venture capital appropriate”, it really just depends on the stage of the business. We expect in a few years to no longer be accessing that type of capital either. As you look at how infrastructure is built out around the world, once it is mature and proven over the course of years, people tend to use debt to finance the building of infrastructure in the financing of businesses. Just like field farmers raise a lot of financing from year to year from their banks in the form of debt, Plenty plans to finance the built out of its global finance network, or excuse me, global farm network. It all just depends on the size of the business, the stage of the business, and what’s the most appropriate of capital at each given point of the business. That answer changes over time, and if we’re successful, we absolutely won’t be accessing venture capital at some point in the future.
Louisa B-T: What is your ultimate route? What is the potential exit for your investors?
Matt Barnard: We’re focused not so much on that as we are in getting people the most amazing food that they have ever had, the best produce they’ve ever had, produce that’s better than ice cream, produce that’s better than chocolate, strawberries that are so amazing that people eat them before they get home from the grocery store and have to go back for a second trip. We’re focused on that, getting the people of the world more nutrient-rich food, fresh fruits and vegetables, and being able to live happier, healthier, longer lives. We’re working to build, to delight customers in that way as we work to build an amazing brand around lifestyle, health, food, and sustainability. Everything else will follow from that.
Louisa B-T: The focus is on building a stand-alone business at this point?
Matt Barnard: That’s right.
Louisa B-T: Looking ahead to next year, what can you tell us about what plans you have on the horizon? You mentioned that you have various different locations in development. The only ones we know about are obviously in California and in Seattle. Can you tell us, are they going to be based globally in Japan perhaps?
Matt Barnard: You will see us around the globe. We are not quite ready to talk about the specific market that we’re launching in. I’m going to be excited to talk to you about that very soon for a few of them, but we’re not releasing those yet. We do that in a very coordinated way. A farm launch [inaudible 00:22:43] is almost like a product launch, so we coordinate that with everyone involved there at launch. It ends up involving other companies and partners. We will be letting you know and there will be more farms in 2018. We will be an international company very soon.
Louisa B-T: Yeah, that’s great. Will you be opening up the farms to give us more of a sense of what technologies you’re building in-house or is that always going to be a little bit secretive?
Matt Barnard: You’ll find us not talking a lot about it in the next year or so, but as the years pass, we’re going to talk more and more about it. We’re actually at looking at building … We’re looking at some ways that we can bring the public in and show them how it is that we grow this food that’s so amazing that they can’t wait to have more of it.
What’s fun about working here at Plenty is that we have all of these different areas of domain expertise where we have people that are deep experts in computer science, and machine learning, and plant science, and farm operations, and mechanical engineering. It’s quite an exciting place to work just because of the richness of our team.
Louisa B-T: Yeah. It just seems to me that you’re going to have a lot of these indoor ag groups all building several systems from scratch when there’s probably a lot of knowledge out there that could be shared for the benefit of the industry overall. I’m just wondering when that kind of point will be that it will be more democratized some of this.
Matt Barnard: Yeah, we actually are already working on a plan to do this. I don’t expect it’s going to be in 2018, but I do expect it’s going to be sooner than people think.
Louisa B-T: Fabulous. What is your favorite fruit and vegetable? Just to finish off!
Matt Barnard: Out of a Plenty farm, I have to say our kale is stunning. One of my favorite quotes, and I’ve heard it in multiple ways because everybody has their own way of saying it, but people have our kale, and they say, “Gosh, you shouldn’t even call it kale because all I know is that I hate kale, but I love this.” It’s totally different, and there’s a little bit of sweetness to balance it out too, so it just has a much more balanced taste. It’s not tough and chewy; it’s velvety and soft. That’s a pretty exciting crop to me because we can make that super nutritious food. Instead of the food, you should eat, it’s the food that you can’t wait to eat.
We have kale. I love our strawberries. People are just going to be addicted to our strawberries. They’re going to have a hard time getting home from the grocery store without eating them all.
Louisa B-T: I can’t wait to try them. When will I be able to have my first taste?
Matt Barnard: You can come out to San Francisco and try them now, try the kale. We can probably arrange a tasting for you out of our Wyoming farm on the strawberries here in the next few months. In Seattle, you’ll be able to try some of these crops in Q2 of 2018. It’s happening soon.