a16z Podcast - a16z Podcast: Data Down on the Farm

Episode Date: November 24, 2015

Farmers are among the best hackers in the business. They can fix anything, and are endlessly tweaking their approach to a business that is up against the strongest force on the planet: nature. As adopters of technology, the agriculture industry is both forward-thinking and, at the same time, hard to convince to make a change. For good reason -- you can’t A/B-test an almond orchard. You get one shot a year to grow a crop and make a profit. So whatever technology makes its way into the fields had better work. U.C. Santa Barbara computer science professor Chandra Krintz, Granular CEO and co-founder Sid Gorham, and Fruition Sciences co-founder Thibaut Scholasch join this segment of the a16z Podcast to discuss technologies working down on the farm. Including how sensors monitoring soil elements, water flow in plants, and fertilizer schedules are yielding fruitful data. Given the high stakes -- a planet in the midst of climate change -- what we can all learn from how technology is accepted and implemented in the agriculture industry? The views expressed here are those of the individual AH Capital Management, L.L.C. (“a16z”) personnel quoted and are not the views of a16z or its affiliates. Certain information contained in here has been obtained from third-party sources, including from portfolio companies of funds managed by a16z. While taken from sources believed to be reliable, a16z has not independently verified such information and makes no representations about the enduring accuracy of the information or its appropriateness for a given situation. This content is provided for informational purposes only, and should not be relied upon as legal, business, investment, or tax advice. You should consult your own advisers as to those matters. References to any securities or digital assets are for illustrative purposes only, and do not constitute an investment recommendation or offer to provide investment advisory services. Furthermore, this content is not directed at nor intended for use by any investors or prospective investors, and may not under any circumstances be relied upon when making a decision to invest in any fund managed by a16z. (An offering to invest in an a16z fund will be made only by the private placement memorandum, subscription agreement, and other relevant documentation of any such fund and should be read in their entirety.) Any investments or portfolio companies mentioned, referred to, or described are not representative of all investments in vehicles managed by a16z, and there can be no assurance that the investments will be profitable or that other investments made in the future will have similar characteristics or results. A list of investments made by funds managed by Andreessen Horowitz (excluding investments and certain publicly traded cryptocurrencies/ digital assets for which the issuer has not provided permission for a16z to disclose publicly) is available at https://a16z.com/investments/. Charts and graphs provided within are for informational purposes solely and should not be relied upon when making any investment decision. Past performance is not indicative of future results. The content speaks only as of the date indicated. Any projections, estimates, forecasts, targets, prospects, and/or opinions expressed in these materials are subject to change without notice and may differ or be contrary to opinions expressed by others. Please see https://a16z.com/disclosures for additional important information.

The content here is for informational purposes only, should not be taken as legal business tax or investment advice or be used to evaluate any investment or security and is not directed at any investors or potential investors in any A16Z fund. For more details, please see A16Z.com slash disclosures. Welcome to the A16Z podcast. I'm Michael Copeland. And this is sort of our holiday special. We're going to talk about food and technology. And to help us do this, we have three people who are perfectly suited. On the line, or on Skype, I should say, is UC Santa Barbara Professor Shandra Krince.

And with us also here at Granular in San Francisco is the CEO of Granular, Sid Gorham, and Tebow Scola, she was the co-founder and CTO of fruition science. Gentlemen, Shandra, welcome. Thank you. Thanks for having us. So we have a thesis at the firm

that software is eating the world, and this is where puns could start coming fast and thick, which we'll try not to make. But in agriculture, I want to talk about how technology is making inroads. And each of you are working toward that in sort of overlapping but different ways. Shandra, we can start with you. You've got this concept of smart farm. But where has agriculture been or where is it at present in terms of its adoption of technology,

what kinds of things? And then what are you trying to get moving faster than it might otherwise? Sure, that's a great question. So we believe that agriculture is tremendously underserved by technology. It's been left behind in both software and hardware, although hardware has done a little bit better than software. So we think it's a prime area that we can contribute to both on the research side and working with startups and industry,

on the industry side. We see there being increasingly open minds to trying technologies in order to make farms and the farm processes more efficient. And so there's been a lot of movement in the device realm, in the hardware realm, where sensors, very low-cost sensors have been developed. They are connected via radio and cellular networks on the farms to collect information, to collect data. Turns out that these sensors, however, are proprietary,

and they all do a little bit something different and have different interfaces. And so it's really hard to go between vendors if you wanted to try lots of different sensors on your farm, whether ones that run on your tractor or that go on the ground and tell you how much water your soil needs or how your plants are doing. And so part of our initiative at UCSB from a research perspective and an open source community building perspective is to try to design systems, develop systems that are freely available and open source that start to bring data together from different vendors,

aggregate it, put it into a form that growers can control and access it and that interoperates with all the great technologies that are coming out of the public cloud in a more of a high, hybrid cloud fashion. So you can do some work on the farm, some work in the cloud, and get the benefits of both local and more cloud-based technologies. Timo, you guys have a lot of sensing equipment, both hardware, but then, you know, more importantly, you extract all this data from vineyards. How does your technology and your hardware and software sort of fit into this picture that Chandra is describing? So there is an opportunity from running analytics on

whatever information is on the cloud. The issue is what parameters is the most relevant to assess the specific plant needs and plant needs are different for different crops. So there is a lot of work that then needs to be done once you have uniformized access to all those crop parameters

or land parameters or environmental parameters to run the analysis. And that's where you need to enter with plant intelligence to then help the farmer who has so many other things to deal with getting fast to the best decision. Shandar, you were talking about how agriculture hasn't seen kind of the benefit of some technology like we've seen in other industries, let's say finance, for example. Granular is kind of a workflow for farmers.

And, you know, we all think of farms and we think of people on tractors or, you know, walking down rows, it's very kind of, you know, Proustian and pastoral, but can it be both that and also sort of up to date and utilizing the best of technology? Yeah, I mean, I think what's interesting in this transformation is that a lot of people assume that farmers are just kind of waking up to the modern world and saying, huh, maybe I can use technology. And I actually think they're early adopters of technologies and in many ways have kind of a hacker mindset. They're very remote businesses, self-reliant businesses. They're juggling a lot of different complexities. And I think really what's happened is that cloud and mobile have made it

possible to use technology on the farm. And the farmers are willing and ready to pick up whatever tool will help their business. So it isn't so much a story of sleepy businesses waking up to technology, as in my mind technology or the right technology arriving at the farm. Right. Well, and so it's got to work. And the kind of evidence is fairly clear, right? Yep. Yep. I mean, I think many different things have worked, both on the hardware side and on the analytics and software side. And I think granular's particular focus is on making farms better run businesses. We think it's critical that farms understand where their profit comes from, what resources generate a return for them so that they can be more careful about using those resources and make sure one of the

phrases we like to use is we want them focused on their dollar yield, not just on their bushel or pound or ton yield, because really you want farms to be very, very careful about how they use resources and make sure they're only using resources that generate profit for the business. Right. So all the inputs and the outputs at the end in terms of whatever profit that is too. So you guys have all, I think, sort of touched on resources. Tibu and Chandra, how do sensors and this data help utilize resources better? Tiber, you were talking about the right plant for the right job, sort of. But how does that kind of precision and that insight help change what farms do and how they act and at the end of the day what we eat or drink? So it's true that there is

an explosion of new sensing technologies and some are providing data that are just nice to have but not necessarily leading to actions. Some are mission critical. So if I take the example of the water flow inside a plant, it's a little bit like the blood flow inside a human body. By diagnosing the water flow, you can sense when the plant is actually in need of water and if the need gets to severely limiting the plant will underperform. But you can also see if the plant is not in need of water but still underperforms, you can then point your finger at other resources that are limiting and that in the past were misdiagnosed for water deficit.

So it exacerbates a little bit your ability to tease apart what the plant really needs and what the farmer really need to adjust in order to maximize the, the crop performances. So that's just one example by looking at the potential benefits from looking at a vital index such as the water flow. Shandra, what are you seeing then along those lines? Yes, we see a lot of opportunities and excitement around using the analytics like Tebow has been talking about to actually control a lot of the operations on the farm, like the irrigation scheduling, can be done automatically based on historical and current inputs.

Tebow referred to them as parameters. It's exactly right. We see a precision application of fertilizers and pesticides. You can even do this with robots, so completely eliminate the need for manual intervention there, and that allows you to direct the pesticides or the fertilizers, which are harsh on the environment to exactly where the problem is instead of more globally across a field. And that prevents runoff and all the other side effects that we have downstream from these applications. It saves farmers money if they're not, they're not, don't have to apply tons

of pesticides and fertilizers. And I also see it a lot in harvest. If you can control and guide irrigation and fertilization very precisely, you can ensure and control and control. and guide when the plants are producing and make it more consistent. They all produce it one time, say for almonds, you only need to do one shake of the trees to harvest them. That lowers farm costs that Sid was talking about, optimizing the business side. So it's really an end-to-end solution that can be applied in lots of different ways. No, and so just to be clear, because I've never been to an almond farm, but like the one shake

is because, like, it's that precise moment where all the almonds are ready to go and ready to drop. And so you just give it a bump. A lot of times if you, part of the farm has less water than another part, certain trees will be ready for harvest before the others. And that's costly because you have to perform two harvests. What you want to do is manipulate both the fertilization and the watering process so that all the trees are ready for harvest, same time. So you put out one team, you get it done in a day, and you don't have to go back and do it again. Sid, from your perspective, when farms, whether it's small-scale, sort of adopt these kinds of technologies to run more efficiently as businesses, how do they

change? Well, I think one of the interesting things is most farms in America are family-run businesses, even the very biggest farms are typically family-run businesses. And as such, and because nobody, as often people spend their entire careers in farming, so they don't know how other businesses run, they run with a very informal management style. And so I think one of the sort of side effects of using products like granular or other software packages on the production side or on the business side, it sort of pushes them to be more organized and a little bit more regimented in how they think about the business. I think that's true in every industry.

Often what happens when you adopt software is it formalizes your process and makes you a little bit better run business above and beyond the impact of the software. And we see that in farming for sure. Tebow, you guys started in the wine industry. And is that because it's just such a high value? Like, why were they willing to do it? And you know, you said that, and I agree that farmers are these hackers who can fix a tractor and fix, you know, this and they run off the grid if they have to, et cetera.

But why the wine industry and how, because there's this weird kind of binary, maybe weird, it's not the right word, but like part of the wine industry is like plant the skull of the cow under a full moon and your wine will grapes will be great. And the other part maybe is just much more, you know, technology and data driven. So first is because clearly the wine is a high cash crop value. And then there is another thing is that historically vineyards were. were always left to grow in areas where we couldn't grow anything else. So the plant itself is a program to perform in otherwise very challenging and tough conditions. So it prefigures a little bit what could become the future of agriculture as land, aridity and global warming keeps making the land a bit more tough on the plant.

So for those two reasons, high cash crop and also because, because of the land, the nature of the plant itself makes it very suitable to push a little bit the boundaries of where we can still grow, it's a very good beachhead to start developing this approach. The plant is very good at resisting drought. The plant is very good, the divine plant, it's very good at performing even when there is not so much fertilizer or nutrient availability. So it helps you understand a little bit to which extent we can still make it profitable

to farm a parcel of land while still enhancing the production of a very profitable crop and so the market is good to test new technologies for that. You're saying that, you know, farmers are actually pretty

eager to go on this, but the wine industry seems fairly old school in some ways. I mean, did they embrace this immediately or do they need, I guess my question is, do you need, does everyone need evidence that this stuff works before they're willing to give it a try? It's highly varied. There are families and businesses that are very eager to improve their business processes and make more money because of efficiencies that come with technology. There are some that are highly resistant because exactly like you said, they need evidence. A crop life cycle is very long.

It's not like in software and SaaS where we produce something and it's out there tomorrow. You know, this is, we do something and it takes a year, you know, and it's a huge risk and their lives depend on it. So they're very resistant to risk in many cases. And so you have to have evidence, which means experimental farms and partnerships with universities and trying things and showing and proving to farm. that this stuff is actually going to make a difference in their lives. I have a really funny story that I was trying to help a farmer, actually a grape grower, identify leaks using a combination of electricity, sensors and water sensors on the irrigation system. And that's leaks with an A, not leaks with two E's, right?

A leak, a water leak in there, yes. And they said, and the farmer said, well, I know where there's, when there's a leak, I just look for the birds. And so, you know, they have all of these wonderful. because if the birds are around, that means they're thirsty. They go find the water underneath the ground and then they find the leak. So they have all these mechanisms to solve the problems already. They are geniuses at this. And so we have to come in and provide them with the evidence they need to take on something new. Tiber, how open were the arms of the wine industry to sort of get this done? Paradoxically, it's not so much the fact that they cope with

farming practices that are a little bit more obscure or hard to understand like you refer to biodiversity, it's more of a societal and psychological predisposition. So as a matter of fact, for us, it's much easier to develop our ideas in California, which has a culture of a young society ready to embrace new technologies compared to the old world like France or Italy or Portugal. So there is this societal footprint. And then the fact that you have always been farming with strong respect for tradition is not at all in opposition with adoption of new technologies. In fact, the main driver here is how critical it is for me to not mess up the next crop. As Chandra was saying, you only have one chance per year to make a profit.

And so if you have two or three years of bad crop performances in a row, you know the next year is the last one. you have on the line. And so if you don't maximize your chances to make it happen well, you're screwed. So there is also these money incentives regardless of the psychological or societal predisposition. And like, you know, in the software world, you can A-B-Test, but you can't A-B-Test a vineyard or an almond tree, right? Exactly right. So, Sid, what are people, how can they sort of turn the knobs, you know, from your perspective, on kind of managing this liver-dye, situation. Yeah, I mean, it is a tricky technology adoption challenge because, I mean, just

like in any other industry, all of us are creating a category, right? You're not replacing some on-premise vineyard software with your new thing. You're literally bringing the first software and analytics package they've used, and we're doing the same thing on corn farms in Iowa. So I think you have all the challenges that come along with that, but then you have this dynamic we just talked about, which is you get one chance or 40 chances in your whole career to produce a crop, and you're not going to just take a flyer on some guy with a shiny software package who says this can help. In my business, I can try a sales force, and if it doesn't work, I'll turn it off a month later

and no harm, no foul. But if I kill a crop or allow you to make some really big business mistake when you only have 40 cycles in your whole career. make money at. That's a really big deal. So it's, I mean, not unlike medicine or education or some other things where there's really good reasons for people being extra careful about adopting technology. What can we learn then from, I mean, you raise a really good point that there's a lot at stake here for farmers when they're when they're picking a technology and they're deciding to get behind it. It's their livelihood. But like you say, healthcare, education, other places that

that need to be careful in their adoption of technology and then sometimes we complain that they're oh my god they're so slow but yet they need to be careful what what can we learn from the agricultural adoption of technology or what you guys have learned in terms of like building things that could help other areas and other parts of other industries and and adopt technology well I guess it doesn't necessarily work for our product because we're a kind of whole farm business management product But I think what the classic way of adopting technology and farming is, I'm not going to put this on the whole farm. I'll try it on 10 of my 1,000 acres. Right.

And we'll sort of A-B test that way. That's been the traditional way that farmers have adopted new seeds or new, you know, fertilizers or new management techniques. So there is sort of a natural, you know, take a small part of the farm and try it out there approach that I think is pretty established. I also think that working with the universities and the extension systems that they've put into place is also how adoption happens in the ag sector. So there are experimental farms that have similar crops and similar soil types and that we can do these experiments on show that they work and farmers can then take confidence in that. And so it would be interesting to see if there would be these sort of forums for experimentation in these other areas that we could bring from the ag sector since extension's been so successful for so many decades. Right. That's a great point. I mean, you can't overstate how important that's been to the development of U.S. agriculture.

So we are like the runaway leaders in agriculture in many ways because of the extension process or the, extension infrastructure. And I think, you know, we need to keep that going. And I think it's under a lot of pressure from a funding perspective. And then some of the latest technology is sort of outside of the experience base of some of the faculty at the extensions. And so there's, I think we're at a really important crossroads where the extension, you know, university system needs to evolve and keep pace and support farming for the next hundred years. We have to, as a society, invest in that. And that will make a huge difference for ag and for just the technology industry in the ag sector. I see two main points that are going to benefit from adopting ag tech.

Number one in the context of global warming, the more data we learn and acquire and analyze today, the better prepare we will be when temperature will rise, will it be only half a degree Celsius on average. And the second point, if I again use the example of vineyards, we see a lot of mismatch between one specific varietal and the environment where this varietal is grown. In some instances, there are places where I can blatantly point that it makes no sense to grow one specific varietal or sometimes just grow period.

So it's only by using analytics and raw number that will be able to select. the places and situations where it makes sense from either an ecological, societal or business standpoint to grow. And that for the future will be very important as we can no longer take any chance with land use, given the growing population. That's right. And I think you're exactly right that it's both a science problem and a business problem.

If you look at Australia, that's a very hostile farmer. environment from a water perspective, and they have a fully developed trading system for water so that if Farmer A doesn't use all his water, he can sell it to Farmer B through this market. And I think for that kind of system to happen in America, you need farmers to really understand their economics and be able to say a gallon of water is worth exactly this much to me, and I would rather leave my field fallow and sell it if it crosses that. price and right now you can't well number one water is generally free but but i think the only way agriculture evolves with the the pressure of global warming is through those types of market-based

solutions and that that requires farmers know their business shandra you mentioned the farming for the next hundred years and i want you guys to sort of imagine what it's going to start to look like are drone's going to be out picking you know peaches in the in the trees and and are is it going to be self-driving tillers and, you know, harvesters. How do you imagine things? And, you know, in your smart farm, Chandra, it almost sounds like the internet of things might hit the farm before it hits our homes. But when you spin this forward, what does it start to look like? I think the biggest change is that instead of thinking about some of the things we've been talking about here, water resources, amount of land, soil quality, the research. The research,

resources that will all be talking about that are going to be the most valuable to the growers themselves is their own data. We're going to have to develop the markets and the controls and the ways of sharing data that benefit farmers because, in my opinion, data is their most valuable resource. And I think the future is all about that because there's so much intelligence and insights that can be drawn from that data locally and globally. And so that's going to be a huge game changer in the future. And secondly, I do believe that there'll be a lot of automation. It will be hand in hand with, you know, the domain experts, the farmers themselves, but they will be probably requiring much less manpower because drones and robots and ground robots

and can take pictures, can do all kinds of interesting things, can pick and harvest and fertilize, and they can do it around the clock, in the rain, in the dark. You know, they are not limited to what humans are limited to doing. And so I think that's going to change. And then the crop of life cycle is probably going to change with the changes in global warming. And so different plants are going to be need to be grown in different areas. And sharing that knowledge and intelligence is going to be vital. So I think it's a real combination of human intellect and drone and robotic technology and analytics and data management that are going to change everything. Shonda, can I just ask you, does, I mean, one of the things you hear about, and said you're talking about how many of the farms, or most of the farms in the United States are family farms by sort of unit, then there's massive industrial scale farms.

But what technology does a really good job of is lowering the cost of things. Does what you talk about change the scale of farming, or does it enable, you know, small-scale farms to even do a much, much better job? I think it's just that, that, I think it's the last. I think it's smaller farms are now, hopefully, economically, can be economically more viable now because they can be more efficient. Technology brings that. But the super scale of, you know, the field corn and the soybeans, you know, that scale is still an important factor to have many, many acres to succeed at.

So it's really going to be a balance between those two. Not to mention feed the world's population. That's right. Yeah, I mean, I think what I see going forward, in addition to all the things we've talked about, is just the continued professionalization of the industry, right, and the continued consolidation of it. I mean, I think you can't avoid, I mean, it used to be that 100% of the country farmed, and now 2% of the country farms, and it's going to be 1% before we know it, right? It is an industry in which people are moving out of these family businesses to go do other things.

So I think as a society, we need to accept that farms are going to get bigger. And that doesn't necessarily mean they can't be great stewards of the land and do all kinds of good things for society. In fact, I think the thing we as a society should care about is professional management of farms. And whether that's a small-scale farm or a big farm, it doesn't really matter. We just want these resources to be well-looked after and to get the healthiest product into the system. So I think to some extent we get a little distracted by, we love big farms or we love small farms but don't like big farms. And really what we should be focused on is the talent and management of the business and the use of technology. And I see that, you know, it's just going to continue to accelerate the witness by the fact that we're sitting in South of Market talking about farm technology.

Sitting in San Francisco talking about farm technology, yeah. Why the data are going to be more and more critical? I think it's easy to understand if you look at medicine, for instance. Everyone understands the value of monitoring biological indexes over as many people as possible to better diagnose trends and statistics and predict when you are at risk of heart disease, for instance. Well, in farming, I feel because we haven't really value the meaning of such data, it's a little bit like medicine in the 17th century where when you have a problem, you're going to get a bleeding and hopefully it's going to...

Cut it off. Yeah. Cut it off. And really in the future, it's only by pulling together data that we're going to increase our ability to diagnose the needs of plant as if they were individual. But your point, Seed about a farming unit getting ever a greater size, is also going to raise the problem of variability. Where do we get the data from and how do we extrapolate the data to diagnose?

the best way to to farm according to this intrinsic variability that can be seen at the plant level itself or at the unit of production itself. And it's it's posing a big problem on how we're going to extract the value of this data. So it's not only a matter of the meaning of the data. The data in itself has a lot of meaning for future use, but how do we get to that data and how do we make sure that this data is meaningful, which depends upon how do we deal with variability? That's right. Again, I think there's a lot that we can learn from agriculture as these questions start to get answered. And as technology seeps more and more into the fields and into the vineyards, and you guys are at the front of this.

And it'll be fascinating to see how it plays out on our plates and in our economy. So I just want to thank you all, Chandra, Tebow, and Sid. We will see you on the farmer in the vineyard. Thank you. Thank you very much. Thanks, guys.