Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food podcast features the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Hosted by Koen van Seijen.
Investing in Regenerative Agriculture and Food
98 Frank Wooten on how virtual fencing unlocks the potential of carbon positive grazing at scale
An episode with Frank Wooten, CEO and founder of Vence, a reinvented livestock production that centers in virtual fencing and autonomous animal control. Vence’s mission is to lower the price and to increase the availability of sustainable animal protein around the world.
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How did an investment banker move into the interest of livestock grazing? How did he and his team end up updating a 10,000 year old technology, the humble fence? These are the questions that we will be answering in today’s episode of Investing in Regenerative Agriculture with our special guest Frank Wooten.
More about this episode on: https://investinginregenerativeagriculture.com/2020/12/08/frank-wooten.
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Welcome to another episode of Investing in Regenerative Agriculture. Investing as if the planet mattered. Podcast show where I talk to the pioneers in the regenerative food and agriculture space to learn more on how to put our money to work to regenerate soil, people, local communities and ecosystems while making an appropriate and fair return. Why my focus on soil and regeneration? Because so many of the pressing issues we face today have their roots in how we treat our land, grow our food and what we eat. And it's time that we as investors, big and small and consumers start paying much more attention to the dirt slash soil underneath our feet. In March last year, we launched our membership community to make it easy for fans to support our work. And so many of you have joined as a member. We've launched different types of benefits, exclusive content, Q&A webinars with former guests, Ask Me Anything sessions, plus so much more to come in the future. For more information on the different tiers, benefits and how to become a member, check gumroad.com slash investingbridgeandegg or find the link below. Thank you. Welcome to another episode today with Frank Wooten, founder of Fence, livestock production reinvented, virtual fencing and autonomous animal control. And then they have an amazing subline, which is double your profit with Fence. Welcome, Frank.
SPEAKER_01:How's it going this morning?
SPEAKER_00:Very good. We have a lot to unpack there. I'm very interested in the double your profit, obviously, but also the autonomous animal control. But let's start with your story first. You didn't start in soil. How did you end up going after farmer's profit, soil building and even carbon in the last few years?
SPEAKER_01:Yeah, like most people's entrepreneurial path, it's a bit circuitous. So I actually, my first career, first life was in finance. And so I was one of those people that everybody loves to hate. Worked on Wall Street for six years and then actually was on the investment side for another six years. Always focused on small companies. And when I kind of started looking around for my next four or next entree and what it wanted to do, I ended up looking for something that actually, like most people do, felt like it had more purpose and felt like it was one of these things that had more meaning. I ended up landing at a startup. Actually, I was in Brazil at the time. I was focused on health insurance tech. And I was approached via my now co-founder with this idea for an angel investment in this crazy idea of putting a collar on cattle and removing the need for fences. At the time, I just said, well, I've got no insight into ag. I've got no background into any of these things, but it sounds intriguing at a minimum. Let me just dig in, so to speak. The more time that I spent on it, the more interest that I got. Being in Brazil at the time and working down there, you have access to one of the largest beef markets in the world, so you can get out on farms fairly easily and see the magnitude of the problem. direct response to how to get into soil is actually, it started with the size of the opportunity. It started with kind of like there's a billion head of cattle out there on the planet and there's three plus billion total livestock. And it's like this massive opportunity space. And fencing is what was the control mechanism for all of those animals. And so the magnitude of the opportunity is what really sucked me in. And that fencing was this sense of control and sense of enhanced profitability, which I certainly understood from my background, right? It was this financial lens that I was looking at it through. And then what happened over time is that I really started to understand that soil was the mechanism, which it was the translation mechanism for increased productivity on a farm. And that fencing was just one of the tools in the toolkit, animals being another one, that really helping this kind of translation mechanism. And so it's been an indirect path, but I'm squarely there now. And
SPEAKER_00:when was Brazil for you? When are we talking? When was this?
SPEAKER_01:So this was 2015, 2016. So we started the business. I took a while. It took me about six months. And at that point in time, I'd gone from like skeptical angel investor to like, no, okay, I want to take this thing and run with it. Like, it's just this really amazing opportunity. And that was in mid to late October and mid to late 20s. Yeah, October is 2016 that we formed the company.
SPEAKER_00:So there was a company already that you ended up investing in or there was just an idea.
SPEAKER_01:There was no company. So so I kind of invested and launched the company at the same time.
SPEAKER_00:And what is fence? Let's because you talked about a color and then fencing. And I think some people are wondering this autonomous animal control thing that Kun said at the beginning. What is fence? And walk us through and make it as visual as possible, because we're in audio,
SPEAKER_01:obviously. Yeah. So most people have some concept of an invisible fence for dogs. You know, a lot of people kind of have this visual where the dog has a collar and there's generally a wire in the ground. And if that dog walks up to near where that wire is, they hear a sound. And if they go over that wire, they'll get an electric stimulus. We've done that, except there is no wire in the ground. It's It's obviously, you need to magnify, increase the size of that for cattle. So we've built this kind of end-to-end system where you can hop on your computer browser, draw up a fence line. That fence line gets sent down to a collar in the middle of your pasture, and you can program it to turn on, turn off, or move animals from one place to another via the utilization of sound. So cattle are much smarter than most people give them credit for. They learn really quickly to respond to sound. And so the only visuals that I have for you are really the collar that you can kind of envision.
SPEAKER_00:Just to imagine for people. So you see this herd of cows that have a collar around their neck and the farmer is basically programmed a virtual fence. There's no real fence. So it's just an enormous open space, potentially with trees, potentially out, depending on the field. And the farmer decides today I'm moving the cows to the next virtual field to the right, or I'm wanting to move them to the right draws that's square and the sound in the collar is basically, it starts buzzing or starts making a sound that at some point the cow moves to the right direction and stops when the cow is at the new place we like them to be. But without any fencing, without any dogs, without any helicopters, without any person or something pushing them there, they move by themselves.
SPEAKER_01:It's somewhat romantic when you get to see it actually out in the field, right? Because you're like, I want the animals to be here, but I don't want to have the fence line there. I don't want to have all of this occurring and you can see animals just move from one one space to another without the need for any physical intervention as it relates to you
SPEAKER_00:because now often they they will touch the fence line which is electric if you are doing adaptive grazing rotational grazing etc and of course they get they get some electric stimulus as you call that and they know okay we're not going past here we're moving to the right or to the left or wherever you want to go so it's they're moving by themselves to ask the third question immediately how annoying is it for the animal
SPEAKER_01:yeah it's uh All cattle learn, the way that they learn electric fence is actually they put their nose on it.
SPEAKER_00:Which seems pretty annoying.
SPEAKER_01:Yeah, it's very annoying. Annoying would be a mild word, right? It's training them via aversive Pavlovian training. You're basically saying you now have a visual stimulus that you're correlating to that and stay away from this. What our order of magnitude, so an electric fence will generally be somewhere in the order of magnitude of 3,000 to 8,000 volts, depending if you're running cows versus bulls versus steers, etc.
SPEAKER_00:Bisons.
SPEAKER_01:Yeah, bison, you're up at the top end there. And then we're about 800 volts is what the stimulus is. And we've done a bunch of different cortisol tests on animals and looked at kind of changing behavioral patterns. And there are a number of studies that are out there that have been done on this. And there's actually no differentiation in terms of kind of stress on animals. How annoying is it? I mean, it's annoying, right? Like if you got a hundred volt stimulus, you'd avoid that sound. But the reality is that's how animals are trained right now.
SPEAKER_00:It's not. So it's a shock or it's a sound or it's both.
SPEAKER_01:A sound and stimulus is what trains the animal. And then 95% of the time after that, it's just sound.
SPEAKER_00:Just sound.
SPEAKER_01:Okay. It's like the proverbial, a lot of kids put their hand on the stove before they learn that that's hot. And then they shouldn't anymore but you always have a couple kids who you know put their
SPEAKER_00:hand on the stove a couple times and then after it's the heat that makes you feel it
SPEAKER_01:exactly that's what happens for us it ends up being largely sound that controls animals
SPEAKER_00:so it saves an enormous amount of fencing I was gonna ask you you said a three billion heads of cattle in the world like have you ever done like do we know how much fencing there is
SPEAKER_01:there's one billion but three plus billion if you have 900 million sheep 400 million goats
SPEAKER_00:do we know how much fence line there is in the world
SPEAKER_01:I've spent a lot of time going down a Google
SPEAKER_00:rat hole. Okay. So if anybody has that data, it would be nice. Send it over. But so that we don't, but it's a lot for sure. It's a lot. It's
SPEAKER_01:a significant amount of fence
SPEAKER_00:line. And it's mostly this really nasty barbed wire. Like it's not just to keep livestock in, but also there's an enormous amount of wildlife that gets trapped in all of that.
SPEAKER_01:Yeah. So I think it's a, it's been since people really started this and you've got fence lines, fence line. I kind of like to joke around and say it's a 10,000 plus year old technology because you can go to throughout europe we absolutely we don't have as much of this like you know super steeped history and fencing in the u.s but like the domestication of wildlife and you go to you go in in ireland you'll see these old rock fences that have been up for thousands of years and the newest technology that happened and you had the barbed wire was invented in the 1800s which helped you know tame the american west and then The electric fence was invented in kind of the late 1930s, 1940s, but it's taken a while to get adopted as well.
SPEAKER_00:So you save a lot of fencing, but that's not why we're so excited about this. We're excited because of other reasons. Why is it so amazing for the farmer, apart from fencing, which is an enormous cost and enormous headaches, etc. But if you start to go to virtual fencing, you suddenly unlock an amount of opportunities that I at least never thought of until I started to think this through a bit. So talk us through what makes this possible for a farmer. or rancher.
SPEAKER_01:Yeah, I think one of the things that people who aren't on the farm don't necessarily think about is like with fencing creating a static solution to actually a dynamic problem and as we know everywhere else in our lives that doesn't work particularly well it's a you know and what i mean by that is like even over the course of a year if everything is exactly the same in terms of precipitation and climate patterns over the course of the year during that year you need different fencing based on what the growth is in your pastures because you've got springtime you've got winter and And... Yet, since people make a$10,000 a mile physical fence investment in it, they just kind of say, okay, well, we're going to use this. It's the solution that we have. This is what we're going to use. And so the ability to adapt, which is like, you know, amp grazing, you know, but like the ability to adapt to what the climate is telling you, to what the season is
SPEAKER_00:telling you, and to what your animals are. Just amp grazing is adaptive multi-paddock grazing, just for the... Got it. Sorry, I apologize. No worries. But the ability to adapt, observe is very different if you have no fencing.
SPEAKER_01:Exactly. And then what that allows you to do, like if you think about... why farmers utilize fencing. And we're going to get, you know, I'll start diving into this a little bit here, but like livestock farmers are grass farmers. It's a grass factory. And their goal is how to optimally translate solar energy into grass growth is kind of the equation that they need for maximum productivity. And the cattle are the worker bees that are a taking that grass and translating into a consumable product, whether that's meat or milk, but they're also optimizing what its growth patterns look like. So they're grooming it. And if you think about grass, so like you get into why fencing is needed, it's about your grass growth patterns and how grass optimally translates into a solar panel. You go dig a little bit further and you say, okay, well, yeah, it kind of makes sense. If grass is at stubble, it has no solar panel. If grass actually gets to this past its peak growth, you can actually see it in a field where it starts to bend over and it starts to have dead leaves on the end and its growth pattern is reduced. And so all of that means there is an optimal growth period at which you should have animals be grooming that grass. And that's what fencing is for. You are unable to optimally manage your property for productivity. So from our customers' perspective, it's really a productivity and yield question as it relates to fencing. And what we enable customers to do is really dynamically, really quickly fix that and have the ability to change that without the need for infrastructure or labor. So it's a tool that's in their toolbox that previously was just completely unfathomable. Talk
SPEAKER_00:us through like an example, one of your customers, what does that mean for the farmer, the bottom line, the company, the family, like what does this enable somebody to do in an interesting, I mean, you have many, obviously, but in an interesting example, what is one that's like sticks out when somebody asks you, okay, tell me about a real life example.
SPEAKER_01:A great example is, is one of our customers who we love, like he's all of our customers are kind of really interesting and cool individuals. And Leo This guy, Leo Barthelmus, up in Montana on Barthelmus Farm. He's up in northern Montana, and he's owned his property for now almost 60 years. And over the course of that, so he bought the farm. It was 35,000 acres, basically, and it was four pastures. At that time, he's got a couple hundred animals on that piece of property. He's kind of looking at it, and over the course of 50 years, he went from Four pastures to 30. And the reason it took so long to do that is because of how much money and how much labor is required to set up that fencing, as well as you're just not having the ability to manage those animals between one area and another, right? So you have to move the animals from paddock to paddock. You have to be able to get in there and monitor. There's so many other things that he had to do. He just didn't have resources to increase the intensity of management on that property. In an actual basis over those years, he put up the equivalent of, call it 10 miles of fencing, a little bit more than that. We put our product out on his property last November.
SPEAKER_00:So one year ago.
SPEAKER_01:Yeah, so one year ago, actually, exactly right now. We actually just went up there and shot some video with him just on his property because it's now snowing. We've got cattle out grazing in the snow. And the first six months of putting our product in his pasture Wow. his property and he's looking at like what his feed reserves are. Okay, it's winter time in Montana and we've got to either go buy feed or we have to have feed on the ground that exists or we need to have baled hay. he would historically go out and have to spend hundreds of thousands of dollars over the coming months to support his animal's growth and weight. And he's actually not 100% there, but he is almost to the point where that's all produced on his farm. And we think that like all regenerative ag products, there's a little bit of time that it takes nature to adapt to changes in productivity. So this isn't something that's going to happen 100% overnight, but that over the course of the next year he's going to be at a self-sustaining entity which for him on the bottom line means that we've paid for ourselves seven to ten times over in a very short period and then we'll continue to pay for ourselves over each year and subsequently
SPEAKER_00:and this brings up a nice question how does the business model work like i rent the colors does every animal need one and does i just rent one per year or something per animal or how does it practically work
SPEAKER_01:yeah so we leased the callers or to customers, we view, I call it the iPhone issue that you face with technology on farms is that like everybody knows there's going to be a new version of your product at some point in the future. And since we're replacing a 10,000 year old technology, you know, people are kind of like, oh, well I can wait, you know, till generation two or maybe even generation three. And so to short circuit that kind of as a business
SPEAKER_00:challenge, what we did. And rightfully so. because they've probably seen a million other technologies come and disappear very, very quickly.
SPEAKER_01:They all have a shed of just technology that is now completely obsolete. And they're going, oh, yeah, you're going to sit next to XYZ's product that he sold my grandfather or whatever it happens to be. And so we tried to short circuit that in this kind of leasing rental model. So it's$35 per animal per year. That scales up and down a little bit based on the size of the farm. And then we will kind of upsell those customers on different features and functionality as well, if they're kind of relevant to their farm. We do put it on all animals. We view the kind of control of the entire herd is a critical part of how our system works. And it's necessary for customers to put it across the whole herd.
SPEAKER_00:You're saying upsell. I've seen, obviously, there are a lot of interesting things you can do with the data or how you can help the farms to optimize. It's not just replacing my... real fence with a virtual one and I can sort of adapt it a bit. Now there's a whole world of opportunities that you unlock as soon as you can just sit at your kitchen table and change your fencing in the morning. What are some of the exciting examples or things that you think may happen in the future? But let's say exciting examples you can do now that are completely impossible with real life fencing and what are things that probably that I think is very interesting because that's why I bring things like this on. What's the role of tech in regenerative agriculture? How can it help farmers to really fundamentally farm differently? And virtual fencing, I think, fits perfectly in that bucket. But I'm always curious to hear what are the crazy things possible with technology like this that we didn't even think about?
SPEAKER_01:Yeah, I think so. The reason we think virtual fencing is really the foundation of the product is that it generates this return that I've already described to you. And so that enables us to put a device on each animal. And there are a you can do with sensors and that have been shown to be that can be done with sensors and i'll talk about in a second here but most of those don't justify the application doesn't justify putting a device on each animal it's kind of like oh that's really cool but it generates x percent of return doesn't pay for doesn't pay for the device in the service each year and so that's the reason that actually i got super excited about virtual fencing is it's putting an eyewatch on your hand all of a sudden you've got your watch on your hand and it's really interesting and it's got some applications and serves a purpose as it relates to your phone and then all of a sudden apple comes out and they go hey by the way we can detect if you have heart arrhythmia because we've been looking at your data over the last year and and we have insight into it we're going to be able to do the same exact thing as it relates to fertility detection all of a sudden we can tell farmers hey this animal is not going through its fertility cycle or this animal stopped at this point in time so we actually know that it was impregnated in field at this point time via this bull. That level of insight right now doesn't exist. There's a physical preg check that happens on animals. There is DNA testing that can be done to look to see who the sire is of animals. You also just generally won't know until the end of your year if your cattle are no longer going through the fertility cycle on a beef farm. For lack of a better term, non-producing assets. And so it's an inefficient use for the land and it's an inefficient use of that farmer's resources to actually keep that animal eating grass. It's just sitting there eating grass and not producing a calf, which is the end product of a pasture-based livestock farm. And so when we look at kind of the opportunities that we have there, we view there being this really interesting kind of on-farm application where we're going, hey, we We can now look at health metrics for animals. We can look at targeted view, whether or not this animal has changed its behavioral pattern from this period of time to another, whether or not it's calving, all of these insights, which on the margin at a farm create some level of loss but wouldn't justify putting devices on all those animals but if you then all of a sudden you say oh yeah look we saved two percent of your herd last year via these detections that translates into a huge level of profitability for our customer base that otherwise they wouldn't have access to and then we think there's like this off-farm potential as well and this gets into where we think things may go but like
UNKNOWN:Thank you.
SPEAKER_01:You're in a world now, and this is happening already in Australia a bit, where people are looking at rotational grazing and the way that animals are managed and saying, this is actually better for the landscape, this is better for the planet, and it's sequestering carbon, yet there's no validation. There's no truthing of that other than somebody going out and sticking a tube in the ground and testing the soil right now, but really you can actually say, hey, if we build a model and we can actually demonstrate If these animals were managed in this particular way, then this person was sequestering carbon in the soil and they should get paid for that. And so we think that there's also this ability for us to be a objective ground truthing of the practices in which those animals were managed that will eventually create a lot of value for our customer base, as well as can be a kind of interesting source of, hey, was this meat sustainably raised in the future when you go to the supermarkets? for example.
SPEAKER_00:And in terms of the land management, like the grazing itself, how can you help the farmer there to optimize that? Because of course, removing the fencing, suddenly you come into a whole flexibility world that also could be overwhelming. But it definitely, I mean, you talked about the grazing and the optimal timing to when the cows need to be on the grass and when they shouldn't. How do you help on that side of things? Or how could you if you're not yet?
SPEAKER_01:Yeah, I think that like one of the things and this is like intended to be pejorative, but like, I think that you want to take baby steps. You don't want to land somewhere and say, look, like, You need to go from zero to a hundred miles an hour in day one. You need to take customers along with you on your journey and they need to be ready and they will decide what their kind of risk tolerance is for different things. And so as it relates to your question, a lot of times, you know, we're coming into farms and we're with customers who already have an idea of what they want to do. And it's great. Like they know their lands better than we do going into a farm and trying to protect like I know better than somebody whose family has managed that land for hundreds of years would be the ultimate arrogance. But we do think that over time, there is the ability for us to start to incorporate other data sources and the ability to say, look, like from satellite imagery, we can now tell you that this is what's going on with the forage in this pasture. You've got X number of animals. We can kind of give you a pretty good insight of like these animals should be moved from here to here at this point in time.
SPEAKER_00:Do you see farmers already doing that? Yeah. they combine your set with some other sets they have or the drone images they use or their observation they obviously use daily as they go over the land?
SPEAKER_01:It's a completely analog process at this point in time. It's something that most farmers are out looking at the land, looking at their animals and observing, which I think is absolutely never going away. I think livestock farmers, part of why they're livestock farmers, they love the land. They want to be out there with the animals. It's a very peaceful kind of... Meditative, yeah. Meditative lifestyle. So it's absolutely wonderful to be out in pasture with animals. I think that what they do right now is they're the ones who are out there and they're saying, yep, kind of feels like we should move. And then the question is like... how much of a pain is it for them to do that? And do they have a place to move them that is actually better than where they are? Or do they deal with a kind of suboptimal scenario currently because they're not going to put up two miles of fencing to just hold animals for another couple of days or something along those lines?
SPEAKER_00:No, I see some people using these mobile fencing, like getting off a squat and basically relatively fast, but still very labor intensive, obviously getting some mobile electric fencing up and some even move. I mean, there's some of these systems that go up and down and move. Yeah.
SPEAKER_01:They're the tumbles. Yeah. That works in a perfectly groomed landscape. Yeah. Or like, you know, also like we look at the landscape, the
SPEAKER_00:customer, you can send them into a forest obviously as well.
SPEAKER_01:Exactly. And, and, or if you look into like, you look at the American West and you look at Montana or Idaho you've got these ditches and draws that'll go down 20 feet in a matter of three or four meters, right? It's just kind of massive change in landscape and putting fence line across that is actually really challenging and pretty impractical. And so what it enables our customers to do is just draw these imaginary lines and all of a sudden they become reality. So they don't deal with any of the kind of physical issues that are related to it. And so that's like when, when we think about what, like, I think that you've got to have a couple different legs to stand on as it relates to getting adoption for your product. And one of the legs that you have to stand on is like, you got to change your customer's lifestyle. Like you got to make, you have to make things better. Like it's got to be more profitable, but like our customers are overworked to begin with. And like, they don't have another couple hours in the day that they're just going to squeeze in something new and cool. It's like, how do we, do we improve their quality of life as well as their productivity at the same time and that's when we talk to our customers that's something that's also really apparent was they go oh man like I was never able to do this. It would have been a complete pain to do. And now I'm able to get in. I can do it and I can get out there and do the things that I actually like, which I go out, be with the animals, kind of take a look at what's going on in the field rather than constantly running to go repair the fence line that some bull ran through and tore down the fence line and the rest of the animals got out of the pasture. And I spent the whole day regathering them.
SPEAKER_00:Which is a lot of time spent. yeah
SPEAKER_01:and nobody puts that like into a spreadsheet and says oh 10
SPEAKER_00:hours
SPEAKER_01:lost my time is worth yeah is x and there was 10 hours lost but it happens you know daily or weekly on a livestock farm and it's just part of the unexpected nature of how things are managed and so i think that like one of the things that will happen with our system is we're going to enable this sense of predictability where you can say look like i wake up i know where my animals are even if one animal broke through the virtual fence line, I know where it is still because I'm tracking that animal.
SPEAKER_00:Yeah, because if the bull breaks through, it's not that the others follow like you normally have.
SPEAKER_01:Exactly. It doesn't ruin the fence line for the other animals. The other animals are still contained. So once customers kind of get insight into that, it starts to make the bells go off in their minds as well of like, oh, this is actually really going to be game-changing for us on a lifestyle perspective. perspective as well.
SPEAKER_00:I find it absolutely fascinating. And I always like to put the companies of the interviewees we have here onto the ITN framework, which is importance, tractability, and neglectfulness. And I think importance, we covered. There's a billion heads of cattle out there, plus probably another 1.52 billion of other livestock. And the importance on land, both from the destruction and the potential side, are just enormous. The tractability, you mentioned as well, I how solvable is this problem? Like how easy is it for the bull to get out or to just ignore it? Or how many of the colors don't work after a while or stop working? Or maybe what kind of reception do you need in the middle of nowhere where cell phone reception is already very tricky? I know many farms don't have broadband for that reason. Like how difficult is the technology and hardware piece in very challenging Montana, deep snow, et cetera, or very hot areas? How difficult is the tech part?
SPEAKER_01:It's a great question. I think that it's a double-edged sword because you want the problem to be really hard, but you want it to be solvable because if it's not really hard, then everybody's going to be able to do it and you don't have a great business.
SPEAKER_00:That's the next one. How neglected is it? How many others are looking at this from
SPEAKER_01:other... Exactly. And so for us, one of the things that we did that I think kind of really differentiates us in the space, we'll get to the neglected comment, but we looked at this as a communications platform and animal management and animal control is the application which sits on a communications platform. So when we went to go build the company and resource the company in terms of what we needed to execute this, it was actually a communications hardware team that was able to build and design a communications product that works in these extremely challenged environments over huge spaces or huge swaths of land. And we managed to I was kind of researching the product. This is kind of the problem statement is like we need to have a highly reliable, very low cost, extremely large range communication system that works in areas that are sometimes in the middle of what looks like Mars. And I managed to stumble across, for better or for worse, I call it stumbled across the a hardware solution when I was looking for that. It was a best-in-class solution. The problem was their business model was just way too expensive for what we're going to do. It just would have eaten up all of the margin for our customers. There would have been no... no real application, no real business model other than simply a communications platform. And the business model of that company was actually what drove that company to fail. But the team that was behind building that was available at the time. And so I was able to pick off-
SPEAKER_00:After the bankruptcy, yeah. After the failure, it was-
SPEAKER_01:Well, as the company was really kind of starting to go down, I was able to bring the leader of that team really over to Vence and he was able to bring a number of his colleagues with him. And so we were able to, in short order, really build a platform, which is what we built. And on that platform sits this animal communications application, this animal management application. I think thinking about it that way is actually our differentiation factor. I mean, it's our secret sauce as a company and the team, you know, and how we built that.
SPEAKER_00:When you say platform, does it mean there's more than the caller out there? Like I, as a farmer, have to install a poll or our something to make it work, or our platform is more a virtual term in this case?
SPEAKER_01:At this point in time, yeah, there's a poll. So he puts up a tower. What we do is any given customer will send us through what their farm map looks like, and we basically will create a RF propagation map over that. So we'll basically say, hey, here's what a network coverage will look like. We need to put a poll here, here, and here. And then we've built that system end-to-end to basically drop ship to that customer a solution set and tell them, hey, this needs to go here. And they're able to do that. And it's pretty impressive. Yeah, that the team, you know, it's my background is not in engineering. So it's really a testament to everybody at the company, except for me. That this actually works. Yeah, it actually works. And they're absolutely, they continue to impress me in terms of the things that they make and continue to do. But to your question, the other thing is the reason we call it a platform is because when we look at it animal management is one application but like you know water monitoring sensors soil sensors they all need a communication platform they all need to be able to plug into it and when you look at you know this goes back to my previous comment about like you know a lot of these things that you could previously do with sensors they don't justify the full deployment all of a sudden you've got a network there and it's like oh yeah we'll hook that into our network we'll dial that in and they generate multiples of value for our customer base, but they're cheap plugins for us to basically add onto the network. And so we certainly kind of expect to expand into those over the coming years as well.
SPEAKER_00:And in terms of neglectedness, how busy is the virtual fencing space?
SPEAKER_01:It's not very busy. You can count them
SPEAKER_00:on one hand.
SPEAKER_01:Yeah, you can count less than one hand. We've either is being, again, there are a lot of companies that have built cattle tracking sensors, and I don't actually view that as competition. This isn't a dig against those companies, but when you look at an IoT network and an IoT platform, the ability to have uplink versus downlink, it's actually, there's a complete imbalance. There's 16 times easier to report GPS data up to a network than it is to send information down to that device and control that device. And so when I dismiss those as non-competition, it's because they would have to build a completely different solution to get into the virtual fencing space. And so when you get into the virtual fencing space, there are really three competitors that we look at. There's Aggersons out of Australia, Halter out of New Zealand, and NoFence out of Norway. And each of them have built different solutions. None of them at this point in time is commercially available. So we're kind of all sprinting towards commercial availability. Everybody has their different benefits and drawbacks. We should, in our opinion, be out in the forefront over the coming year. We're expecting to put out 50,000 collars next year and cover two and a half million acres of land. And we think that that'll kind of squarely put us in the most commercially available solution there. But it It's, you know, it's a space that when you're talking about a billion potential users just in the cattle. 50,000 is nothing. 50,000 is just not even scratching the edge of the surface. And so, you know, it's extremely neglected as a space and people looking at.
SPEAKER_00:I think that answers it nicely. I want to be conscious of your time and end with some, I think, fast questions. Let's see if we can manage. And otherwise we'll keep some for another episode. I
SPEAKER_01:apologize if I'm rambling. I get excited about some of these things.
SPEAKER_00:No, absolutely. Absolutely not. It's the first time we have virtual fencing. We've discussed it actually with Bert Clover once, but just scratching the surface again and never got into the real details. And so it's something I've been waiting for. So definitely want to ask about the details. But let's ask some questions I always like to ask. What if you would be in charge of$1 billion investment fund tomorrow morning? What would your portfolio look like if you had complete freedom to invest it, so not grant it? What would you put it to work and why?
SPEAKER_01:Oh,
SPEAKER_00:it's a good question.
SPEAKER_01:Since you have investors on this podcast, I'd obviously have to say, throw it all in Ben's. No. That's a lot of colors. Yeah. I think that I would, given how deep I am in the space that I'm in, like in the understanding that I have, like most people invest a lot, like they feel more comfort of investing in what they know. And so I think what I would probably do, and I've thought about this, is there are a bunch of countries in the world that are have really significantly agricultural producing assets, both on the livestock and on the farmland. Brazil's a great example where their currency has been devalued by 50% in the last year, right? So I would actually spend 80% of that buying assets in those lands that are non-regenerative and non kind of suboptimally producing. I'd probably spend 10% of it investing in ag tech. The tools, yeah. Yeah, tools to bring productivity up, you know, two to three times on those property. And then I'd probably spend the last 10% on like supply chain efficiencies in marketing to get those products into the higher value markets at a price point which captures their value. So I'd invest 80-10-10. Yeah, 80-10-10 is how I'd look at it.
SPEAKER_00:That is a very, very nice answer, actually. And what if you could change one thing overnight in the ag space? So you have a magic wand and you, Frank, have the great power to change one single thing in the ag and food space. What would you do?
SPEAKER_01:Oh, that's a risky question there. Being in the US, the immediate thing that popped subs i'm like would i get rid of just corn subsidies which people have
SPEAKER_00:said like take away all subsidies
SPEAKER_01:and let's
SPEAKER_00:figure it out but
SPEAKER_01:yeah i think i would actually enable a nutrient deficiency tax where you actually via a mechanism are charging like your bag of cheetos cost you what a pack of cigarettes costs because of it's like what's actually in that bag complete absence yeah yeah And so you'd get back to this sense that people are actually paying for what they're getting, not a false version of reality.
SPEAKER_00:I think it's a first, actually, in the podcast. Somebody mentioned that, but it's a very, I mean, policy has come back and forth and getting or getting the externality costs into it. I think a few people have mentioned that. And yeah, it's a false cheapness. We see it fall like it's empty calories. And we know it. Most people know it. And but it's still and most people like how do we give people the choice to actually switch? to go for the rich in density stuff. And it's going to be a carrot and a stick probably in mixed forms. But this is, yeah, it's going to be one of the big challenges. How do we make sure people get what they pay for? I
SPEAKER_01:think it has to be a carrot and a stick because we're so smart as humans that we've hacked the human taste bud. And we... Salt and fat, yeah. And we basically completely circumvented reality. And we're like, oh look we can hack the brain so like you know we'll just sell people this and they don't they don't have you know they don't have any insight into it so like the government like that that would be the optimal version of where the government comes in and says look this is actually what is best for society and like you're gonna get charged a tax for that you can still smoke cigarettes that's fine however like you just not indoors yeah yeah you're just not indoors and you gotta pay a tax for it that's just like reality
SPEAKER_00:and this is definitely inspired by John Kempf, but what do you believe to be true about Regina Ag that others don't believe to be true? Part from that virtual fencing is the future. But that's maybe because most people didn't think about that because they don't believe to be true. Do you have any strong feelings that others not share or the other way around?
SPEAKER_01:Yeah, well, I'm on a podcast with like people who are listening, spending an hour to listen about like regen ag investing. So to saying something that they don't already believe to be true is like you're asking me to stretch a little bit here. I mean, that's why I ask it, because I think if you talk about society at large, right, like it's that regen ag is actually cheaper. than commercial ag.
SPEAKER_00:We could definitely stretch the others. This is an interesting one because we have people listening that say you cannot make money with region ag or with ag in general. It's impossible because you'll be squeezing something, etc. You're saying it's cheaper. Explain.
SPEAKER_01:I think it's like, why is harvesting corn so cheap? It's because of the tools that are used to harvest corn. You've got these massive combines that John Deere makes that cost you millions of dollars, but they enable you to have scale to do it. The thing that regen ag lacks is tools and so as soon as it has tools it's going to be cheaper in my opinion so that's that i mean i don't know that i'd imagine most people who are deep in regen ag already believe that and that's like yeah but like you know that that's my i think it has to be cheaper if you don't believe that then you probably shouldn't be in the space
SPEAKER_00:it has to be and it will be are two different things i mean it has to be i mean for a long time it was solar energy has to be cheaper now in many places it is but it took a while i mean took the tools to build it the factories and the financing schemes and of course the subsidies as well. This is different, but like we hope that it will be cheaper. And you're saying actually with many customers, we see that it is fundamentally cheaper already with even the first version of the tools, not even. I
SPEAKER_01:think solar is like such a great parallel, right? Like renewable energy is like, you look 20 years ago. Five
SPEAKER_00:years ago, honestly.
SPEAKER_01:Yeah, but like if you look 20 years ago, the whole focus was like, there was a boom about like, you know, who can build the panels and then they built the tools and they got to a point where now the boom's going to be in battery, right? You're already seeing it. The great thing about RegenAg is the battery is the soil. You don't need to build it. All we need to build is the tools, the primary tool, which is the solar panels already built for you, which is grass or- It's
SPEAKER_00:a
SPEAKER_01:plant
SPEAKER_00:or a tree or
SPEAKER_01:whatever. Yeah, exactly. The battery's already there. We just need to find the optimal ways to harvest it or to increase productivity of those And then you're going to have farms that are going to make a lot more money. It seems so much easier than the renewable energy thing where you have to build each of the components along the way because they're man-made versus nature's already spent millions of years A-B testing, you know, in the word of the tech. A-B-C-D-F testing probably, yeah. Exactly. And so now we've got the results of these millions of years of testing and all we need to do is
SPEAKER_00:just get out there and do biomem basically. Why do you see such a strong pushback then in articles on region ag will never be able and where are the peer-reviewed papers and adaptive grazing? I mean, savory is being harassed, I think, every day in the press or from university professors that they never found a peer-reviewed paper that it actually works. And then I always like to point out there are millions of farmers or hundreds of actually using it and it works like in their circumstances. Why is it so difficult to believe that you can actually build soil and eat from it and sort of have it have both of that like you can regenerate an asset you can regenerate soil and also grow food This is going to be a whole different podcast now, but yeah. Yeah,
SPEAKER_01:exactly. You're asking me in like the night.
SPEAKER_00:Do you have a short answer for that or should we keep it for another episode?
SPEAKER_01:You know, I don't know the answer to that. Like, I wish I did. If I did, I would be focused on hacking that answer. Like, you know, I think it's one that a lot of times people find answers to, you know, it's the confirmation bias, right? People want to believe something. And so they go out and try and find answers to confirm what they already believe. And trust me, both sides of the already, both sides of the fence do that for a lot of things, but it's the proverbial fence. The virtual one. Exactly. But I think that a lot of times when you look at kind of people attacking savory, look, the challenge on ag is that it exists everywhere on the planet. So no two farms are actually the same. They don't have the same soils. They aren't necessarily producing the same product. And so if you apply the exact same results and tests from one place to another place, you may not get the same answer with Which when it gets to a simplistic scientific method version of the world, all of a sudden you say, oh, that doesn't work because it didn't work. You know, I took this here and I translated this test from here to from A to Y and doesn't work. So that means it doesn't work. No, it doesn't mean that. It just means you're actually dealing with nuance and you need to take a holistic view of the problem that you're looking at and incorporate all the variables into your test. And so I think that that's like. That's what happens in a lot of these peer-reviewed papers that will attack Savory. Listen, Savory's method doesn't work exactly the same everywhere. Grazing doesn't work the same in New Zealand as it works in northern Queensland, which are not that far apart. The same methodology doesn't work in the US, exactly. It's tweaks. You need tools to enable customers to adapt to their landscape and to the climate. I think that the answer summarily is being able to take a holistic view on it and that our customers, the producers, are the ones who I would listen to. They don't go and spend money on practices that don't translate to their bottom line. They don't have the ability to go and risk their money on something that goes against social norms to begin with. If
SPEAKER_00:it doesn't make sense.
SPEAKER_01:If it doesn't make sense for them, it's not going to work for them. And so I think that's absolutely who I trust and what drives me and kind of our North Star is like, listen, are producers saying this works or are we telling them it works?
SPEAKER_00:What's reality? No, that's a big difference. And do they reorder? Look, Frank, I want to thank you so much for your time, for sharing. And I definitely don't think it's the last time we have you, hopefully on the podcast and wish you an absolute great day.
SPEAKER_01:Great. Thank you so much, Kevin.
SPEAKER_00:If you would like to learn more on how to put money to work in regenerative food and agriculture, find our video course on investinginregenerativeagriculture.com slash course. This course will teach you to understand the opportunities, to get to know the main players, to learn about the main trends and how to evaluate a new investment opportunity, like what kind of questions to ask. Find out more on investinginregenerativeagriculture.com slash course. If you found the Investing Thank you very much. Thank you so much and see you at the next podcast.
