Amol Deshpande of Kleiner Perkins catches up with GrowthCap on his venture in the AgTech space, the Farmers Business Network.
RJ: It’s been some time since we last spoke, great to reconnect. As mentioned, we have been researching the AgTech space and noticed you founded the Farmers Business Network. Could you share with us what you’ve been up to recently and the work you’re undertaking with FBN?
Amol: We created FBN to help simplify data for farmers, and give them more power by providing a level of information that’s never been available. We were formed to serve farmers and be great business partners to them. We felt it was important for farmers to have an independent third party that they could trust and was acting in their best interest. Basically, what we do is we take data directly from farms and farm machinery; it’s an internet of things approach. We have a team of data scientists and others here who build a full data stack for a farm and we’ve developed systems that let us analyze these multiple layers of information within every field. Then we network that together field by field, farm by farm to create a highly unique data set that gives us an incredible level of insight and experimentation capabilities. It’s a level of information that’s really unheard of, and we exist unequivocally for the benefit of farmers. By the way, we do all of this with no acreage fees. We are one of the only businesses that doesn’t penalize farmers with acreage fees. Our model is a flat $500/yr membership, regardless of farm size.
RJ: That’s fantastic. It sounds like you have a lead position in being able to capture comprehensive data for each farmer out there. Is the data then readily available for each farmer so they can put it to use in real time?
Amol: Yes, we have both a web app and just launched our mobile app. We give the farmer comprehensive diagnostic benchmarking of their performance. Our technology can do control benchmarking, and not just by yield, but by farmers who use similar seed, farmers who have similar soil types, farms of similar sizes, whatever the case may be. So there are diagnostic capabilities and additional analytical capabilities around product selection like seed. Farmers can look at what we call a hybrid-seed by soil report where they can see what kind of seeds may be optimized for their soil type, and then from there we can do additional matching to make recommendations and also really just reveal information for them that helps them make a better decision.
Agriculture is an enormous industry, and the number of decisions we can help a farmer with is really incredible – seed, fertilizer, chemicals, soil management etc.. However, the key here is that anything that we do we want it to be unequivocally beneficial to the farmer. We’re completely independent and are not affiliated with any seed company, any equipment company, or anything like that. That’s very important to our members and our mission. There aren’t too many industries where your key vendors also own all the proprietary information about you and your operation.
RJ: I can see how that would be a distinct advantage being an independent third party providing this data. What are the major categories of crops you’re focusing on? I see corn, cotton, soy beans and wheat. Are those the big ones?
Amol: Correct, but only to start with. The vision of the business is to ultimately be in every crop and geography in the world including emerging markets. We’re starting with a dozen or so major row crops, mostly in the United States and Canada. That will be the market for us to start with an emphasis on corn, soy beans and wheat – but we can analyze a grower’s entire operation. It’s critical to us to be able to analyze multiple crops, so that we can look at how different crop rotations perform.
RJ: I am curious as to how big your addressable market is and other revenue streams you foresee.
Amol: Firstly, all our revenue opportunities will be for the benefit of the farmer. That is why we did away with acreage fees – we felt that was value sharing and punitive to farmers of all sizes. FBN is founded on being a platform where farmers participate for the benefit of farmers. The way we look at it is that there are numerous opportunities that become possible from building our capabilities to analyze a farmer’s operation, building the biggest database of agronomic information in the world, and networking those farmers together. What we will not do is sell this data to Wall Street or interests that do not benefit the farmer. We’re going to implement business models and revenue models that are beneficial to the growers in our network. There are a lot of ways to make money when you have a great relationship with your members.
RJ: You mentioned continuously rolling out additional functionality. Are there any additional features on the horizon in the near term?
Amol: We just launched our mobile app, focused on seed selection, which our members love. Now a grower can have access to unheard of level of insight into real world seed performance, wherever they are. We are going to be focusing on comprehensive mapping technology in the next few weeks. A lot of people, and farmers included, like to see their data in the form of a map. But basic yield maps only can help a grower so much. We’ve developed a system where you can actually overlay analytical, diagnostic maps onto your farm and operation so you can have another option for visualizing the same data.
We have new features coming out every few weeks at this point. Most exciting, Ed Rowe, who formerly was a senior engineering executive at Adobe and AppDynamics, has just joined our team as VP of Engineering. Building world class products starts with having a world class team.
RJ: Great, and is being able to more accurately predict how upcoming weather will impact crop yields a key focus of your system of data analytics?
Amol: Absolutely. We have our own climatology team and our own proprietary weather algorithms. We then present the weather field by field for a farmer, updated every hour. We literally look at like things like the curvature of the Earth, wind patterns and rain fall patterns for our estimates. Farmer’s can’t change the weather, so they need to know how to best manage in their environmental conditions.
RJ: Thinking about this model going forward, what do you think the overall impact will be to farmers? Is it mainly around increasing the yield and quality of the crops – how do you quantify what the impact will be?
Amol: Well, ultimately over time it will definitely result in a higher top line with yield, but it will also result in just a better return on their assets because farmers are able to make better and more well-informed decisions. A simple example would be discovering through the system’s massive network that one brand of seed that’s selling for cheaper will perform just as well as another so you can save 10% on your seed cost. Aiming to get a higher return on every dollar that you put in and helping farmers gain more profitability is the thing that we’re driving towards. Right now, farmers are stuck in the middle of all of these different vendors — the seed companies, the landlord, the insurance company, the fertilizer providers, the finance and trading businesses like Cargill. The farmer is currently in the middle of all of that and has the lowest return on assets of any of them.
RJ: And are the farmers quick to adopt your offering?
Amol: We’ve been amazed how quickly many of the most elite farmers in America have signed up with FBN. One of our farmers told us, and I’m paraphrasing here, “I collected records for 30 years, data for 16, and I’ve never shared it with anyone until FBN.” That’s the kind of trust we’ve developed with our growers. We have farms on the system ranging from a few hundred acres to over 40,000 acres and we’re processing hundreds of thousands of acres of data a week. We’ve now analyzed well over 4 million acres, growing every day. What’s also so exciting is that we have some farmers adopting precision ag equipment, simply because they saw what FBN could do with the data. That’s the best testament of the value farmers see that we could hope for.
Farmers of all sizes and types are realizing that they should have the same level of technology and information services as other enterprises, and arguably they should have even better technology because their operation is an even more sophisticated biological system with a lot of inputs. So the speed of adoption is picking up and we’re getting a lot of farmers signing up.
RJ: Congratulations on an incredible start. A good number of family offices in our network are increasingly paying more attention to the AgTech space so they will very interested to learn about FBN. Thanks again for taking the time.
Amol: You bet. Thanks, RJ.