Investing in Regenerative Agriculture and Food
Investing in Regenerative Agriculture and Food
279 Martin Reiter - Why regen hasn’t produced a Steve Jobs yet and how to build a modern Nestlé
A conversation with Martin Reiter, former senior manager at Airbnb and Wayfair, and prior to this at McKinsey and Groupon, about what excites him about regeneration, where are the Steve Jobs and Elon Musk of regeneration going to build their companies, and how can we help more talent flow into the space?
Why did Martin, after he grew Wayfair's European Business by 100x over 8 years and led Airbnb's International Expansion, read more than 50 agriculture books and all the papers he could get his hands on, plus he is doing Create with Nicole Masters, one of the most deep regenerative agronomy courses?
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What does a former senior executive at Airbnb and Wayfair, and prior to that at McKinsey and Groupon, do in regent agriculture? Why did he read more than 50 agriculture books and all the papers he could get his hands on, plus doing create with Nicole Masters, which is one of the deepest Regen Agronomy courses you can find? What did he learn? What excites him about regeneration now, and where are the Steve Jobs and Elon Musk's of the Regen going to build their companies and how can we help more talent flowing into the space? Join me for a wide-ranging interview. This is the investing in Regenerative Agriculture and Food Podcast investing as if the planet mattered, where we 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 and our sea, grow our food, what we eat, where and consume, 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, to make it easy for fans to support our work. We launched our membership community and so many of you have joined us as a member. Thank you. If our work created value for you and if you have the means and only if you have the means consider joining us. Find out more on gumroadcom slash investing in Regen Ag. That is, gumroadcom slash investing in Regen Ag, or find the link below.
Speaker 1:Welcome to another episode. Our guest of today at a career as a senior executive at Airbnb in Wayfair and prior to that at McKinsey and Groupon, but now he's devoting his time, skills and resources to regenerative agriculture. Welcome, martin. Hi, I'm really looking forward to unpacking an endless amount of rabbit holes here, because I think I've yet to meet someone else that went deeper into, let's say, the Regen rabbit hole without being a farmer or own a farm.
Speaker 1:I think you read over 50 books. You're doing create now with Nicole Masters I think it's the only non-farmer in that group. So you're going deep and are sort of resurfacing, or maybe better than you think when we had the prequel. A better way to say is that you're still falling down the rabbit hole and you're reporting, as you're falling, what you're seeing, what you're not seeing, the opportunities, what excites you as an entrepreneur and as an executive at the technology side. I mean, there's a lot to cover here, so I'm really looking forward to doing that. But I would love to start with a personal question we always like to ask. In this case it's even more relevant because I don't think you grew up on a farm. Like how did you get bitten by the soil bug? Like what was the trigger, if you remember, or were the triggers, if that's more appropriate?
Speaker 2:I got into it via food and via a sense of purpose, I think. So I was always an avid chef and I think it was a great creative outlet for my more nerdy analytical and managerial work. So I was cooking all my life and through that developed a strong passion for food and through that, through going to good restaurants and through the restaurants, understanding the value of produce and, from the value of produce, understanding that in the end it all starts with the farm, the soil, the growing conditions, the genetics. So that was the first arc. The second one was that, after a successful career in running businesses and complex businesses, I really felt like the world is changing a lot.
Speaker 2:I have four daughters. I don't want them to grow up and look at me and say what did you do? You were capable and resourceful. You were just standing by or telling me about it and I didn't want that. And so I then looked more broadly and said how could I help in a realistic and non-naive way? And then I understood actually a little bit through coincidences that to grow outstanding food you need outstanding soil and to have outstanding soil you need a lot of carbon in the soil. And that started seemingly too good to be true, because I felt like, wow, there's so many things that you can do.
Speaker 1:Why is nobody else doing it or telling you exactly?
Speaker 2:about it and that made me both skeptical and excited. Think about it if a lot of the solutions to climate change that we are faced with are hard trade-offs, we need to retire billions in assets of cement factories or repurpose them. We just built several new coal plants, I think, in Eastern Europe. We basically need to hard shut them down in a way and just write off those very big investments. Those are all very difficult decisions and now suddenly you uncover that you could bring a massive amount like a third to. Some people think all of men released carbon back into soils and through that, actually make it productive and grow better food. That sounds like really crazy.
Speaker 1:And you remember the step from going to really good restaurants and maybe talking to the chefs and they say, yeah, of course we're the artists, but it really starts with the ingredients and it starts with the farm. And still, sometimes it feels like maybe that's changing a bit, but it often we put the chef on in the spotlight and not necessarily the soil. Do you remember when that word soil and the essence or the nutrients and the quality and the flavor come from soil? Do you remember when that started to pop up, maybe in conversations with chefs or something? Because when you go to Chef's table you see, you go to these restaurants. I don't think all the time. Now it's changing a bit, but mostly it's still. Oh yeah, we get amazing food in and that's sort of where it ends. It doesn't start talking about flavor and carbon, let's say, at the dinner table. Has that changed? Or you remember when that came into the conversation?
Speaker 2:That is very true. It was quite a frustrating wild goose chase for me to understand Like. For a long time I thought the only way to get good producers to go to Naples and buy tomatoes there. I met a friend who told me actually Marcus from New Foundation Farms that it's actually the soil, much more than the sun, and then the genetics to work with that soil. It's kind of a it's very complex answer. I have not seen many chefs who know that, but I've seen many chefs who understand it intuitively just through their pellets Because they taste. And another big breakthrough was Dan Barber's third plate and his partner, Czech Algyr, who I was able to meet and talk through that a lot more. So it was step by step. I wish I would have had a fast trek into it, but now I don't.
Speaker 1:And basically one of the reasons we're talking is one of your hypothesis is if more key decision makers, both in companies and in government, would know what you know and what many listeners know as well, and if this would become a knowledge that there is a way to fix many things Not saying it's easy, not naive, but it doesn't require. I mean, it requires getting rid of some assets, but doesn't require super, extremely hard decisions, as we have to take in cement and in other sectors. And so you see this and you maybe read a book or two and you get curious what made you decide not to stop and think this is too good to be true. This is this sounds naive. Why is nobody else? Because around me getting excited about soil? Maybe it's not true. Because the notion of seeing something that other people don't see mainly triggers with many people like probably it's not true and it sounds too good to be true. Let's just focus on something else easy adoption with solar or something like that. Like what triggered you to kept digging, digging, digging and digging properly?
Speaker 2:I think it's like you know the chicken that has this line of corn and just follows it around wherever it goes. I just was lucky enough to find the corn always like not too far out. So think about you read the third plate from them. But first I read Cooked by Michael Pollan, then I read, which is like a very it's more of a foodie book than about a soil book.
Speaker 1:Yeah, there's some pieces of it in it. Yeah, there's some. He raises some questions on growing, like I think in the I think it's the pig meat piece or something that it really talks about price and why that? If I remember the, why these barbecue masters are using industrial pork, if I remember the line.
Speaker 2:So he's raising a few points. Then I found, like through that foodie part still I knew of them, barbara, third plate came out and then I just went to third plate. I went through the references. You know, like I just literally like I started, like you know I basically through that book. I then read Gabe Brown and then I started to see something very real there. I started to read the Montgomery books, I started to read Nicole Masters and then then basically there was. I had a smell like it was a gold digger. You know that there was a vein coming up Fascinating, yeah.
Speaker 1:then you went for the deep ones and then, because, just to give a reference, like we're talking beginning of 2024, and you you've read over 50 books. Like what are the the main? What surprised you the most? Sorry, let's, let's start there with with this, with this deep dive and all the farmers you talk to the deeper ground we work you're doing now, like what's your biggest surprise?
Speaker 2:that the current ecosystem is so entrenched that despite overwhelming evidence it's still quite anecdotal, but it's overwhelming there is still very little change. And that was motivating me as well to think can I help as a catalyst? But think about it like you. It's quite mainstream knowledge that farming isn't very profitable Because they're living in droves, big succession problems, big health concerns, like a lot of them, like we read a lot about glyphosphate. But there's a much bigger iceberg underneath that, like neonicity and all that stuff. The mainstream media hears about bees dying and stuff like that, but the toxicism that farmers are supposed to.
Speaker 2:Yeah, the suicide rate is insane. So basically, this is more like we're getting obese in the same amount. So the evidence that what we're doing right now is not working is absolutely refutable and at the same time, there is overwhelming evidence of pioneers that there is a better system, but it hasn't reached the mainstream at all, and I think that was the biggest surprise for me.
Speaker 1:And what do you then think of? So never going to unpack why and what to do about it? Because there's so many excitement, because every time we talk and you've been deeper I always ask, like, are you still excited about the opportunities or have you uncovered other things that we? Or maybe it just turns out to be a few lucky examples and that's it? But I feel also when, like in mainstream media or in the bigger climate space food and agriculture specifically region is not being taken very seriously, there's some very vocal opponents Jonathan Foley of Drawdown has been blocking people on LinkedIn, actually, and another opponent is like specifically on the ruminant part, but we'll get to that but it also feels like it's not been taken seriously even within the climate movement. Imagine outside that, where we have to get a lot of support, like why do you think that is compared to, maybe, evs, which also get pushed back, but sort of that seems to be settled or renewable energy, like why is the region movement not getting the love it?
Speaker 2:deserves EVs. Even within climate, evs would be dead like dead dead without the insane effort of Elon Musk. That's just. It's a one person changing it all in my opinion, and that has nothing to do with me assessing any of his other stuff. It's just like, literally, I don't think without him it would have happened now Might have happened?
Speaker 1:We haven't had the Elon Musk of region. Is that what you're saying?
Speaker 2:I don't think that this is how it will work in region. I think there is going to be a much more concerted group effort. But yes, I think that is a big. That is part of it. The other thing is like. I studied philosophy a long time ago and I was quite enthralled by the structure of scientific revolutions by Thomas Kuhn. It's about how paradigms change in the scientific world, and I mean not to spoil it, but in the end the takeaway from the book is that the old generation needs to die off and make place for the new world. So it takes a very, very long time. Einstein did not like quantum physics at all. You know, like God doesn't play dice or something like that, and that was Einstein. So it is absolutely normal that there is massive resistance from incumbents. And also there's this psychological dilemma. If you have been doing something for 30 years, but even if you feel that this is not really right, changing would also admit that you waste the 30 years of your life. You know, for most people that's an insurmountable obstacle.
Speaker 1:So why is now different? Like because with some of the masters you literally need goal, but others as well have been in this for 10, 20 years, some even more. But as an investor, as an entrepreneur interested in this space, wanting to do something, you don't want to be going against the tide, or at least not having the tide with you. A bit like, why is now the moment apart from the super urgency which I mean you only have to look outside and see that why is now the time for regeneration and for Regeneg?
Speaker 2:I think that there is two. There is, and the scientific base is more and more now put together. We understand the soil food, why. We understand the second order effects of fertilizers. We understand the potential to make carbon effective, and which is really terrible is how much we ignored the work of Mia and Mia, who was in your podcast about that. A lot of the weather phenomenons wildfires in California, extreme drought and flooding in Germany or in northern Italy are actually manmade, and not through carbon but through barren soil and sealing off coastal areas, which is actually great news. It would be very reversible quite fast, but so the scientific understanding of what went wrong is now in place. That wasn't the case 10 years ago, and I think the second one is just sheer desperation, like time is running out and a lot of the levers to stop global warming are just plainly not there yet. So what can we do now to buy us time? It's agriculture.
Speaker 1:And so what within agriculture, like, do you now see that the changes over time as well, as you learn more and go deeper and deeper? But let's say now, at the beginning of 2024, what are the main levers that excite you, that you're like whoa, that are neglected partly, but also like create that saying the Tesla moment, or but create huge potential opportunities for entrepreneurs and executives like yourself and your friends, because I know you're talking to a lot of your friends and trying to get them excited about agriculture and food and you need some, some stick or something or some some carrot to to to get them excited. What are the main ones you focus on now?
Speaker 2:As I'm more of a financial person I would probably lead with that. When you think of a like revenue top line of a farm, let's say you make like a hundred thousand in revenue, typically 30,000 goes to inputs, which is particularly chemical inputs like fertilizer, pesticides, for besides fungicides, anti-parasital agents or medication for livestock. We now know that you basically can get that to more or less zero. So, and without like any like losses, really an output like there's a little bit of output loss depending on the quality of your soil, which is often degraded after all this use, but over time you're quite good. So if I tell you I have an alternative business model that saves you 30% of cost, suddenly that flips an industry absolutely. I think that's quite compelling.
Speaker 1:And so what do you need? What do farmers need to? Like you say, as we know now, or we know now like this is relatively or this could be common knowledge, like you can Google, you can YouTube yourself, you can to to this knowledge, and yet we see many farmers logically not taking that jump. Is that a you let the question with I'm a finance guys at a finance answer to that to massively transition 100,000, 2 million, whatever farms and like, but sort of travel them over time to get them through that, that, that transition period. Is that mainly a quite like a finance question? Or do you also see a lot of agronomy needed to get people?
Speaker 2:I think it's. I think there's a finance solution, but the underlying problem is industry specific. I think that it has to do with cycle times when you think about industries. Each industry has their own characteristics. Some industries are very manufacturing heavy, others are very research and development heavy. Others are high in risk. You know, in farmer you bet on one or two molecules and they could literally make or break your company.
Speaker 2:Farming is characterized by extremely slow cycle times, like if you're a chef. Your cycle time is about five minutes. You make a steak five minutes later it's done. If you screw it up, you do another one, another five minutes. It's very hard not to make a good steak if you have 20 steaks lying next to you raw and you have enough time. Think about that and contrast that with farming. You plant and then you harvest a year later. So in your whole life as a farmer you might see 40 harvest. A chef can make 40 steaks in half an evening. So think about what that does with your cycle. It makes you risk a worse because if you screw it up, one of your 40 shots is gone.
Speaker 2:I think we need to understand that in order to understand why agriculture is not an industry where it's likely that they don't change very easily. And so this brings me to I think there's a fine and solve. If we think that the risk is manageable of transitioning, then we can underwrite that risk and share that risk with the farmers. So I think there is a fine and solve. I think there's also a. A gronomy can reduce your learning cost quite dramatically and I think that helps with the underwriting. But I think one of the solves is underwriting.
Speaker 1:And within agriculture, what pieces of the puzzle excite you the most? What is it? The ruminant side, is it the grain side, Like? Where do you see the most potential, the short term potential of buying us time?
Speaker 2:Maybe first, I think, a good frame of references. You are made the autocratic emperor of, let's say, europe or the US. The caveat is you need to do it for a thousand years and if your people are not happy they might still topple you over. So if you do it for a thousand years like saying, like oh, I put a little bit more fertilizer in, but you know that your land will degrade and in 30, 40 years your top soil might be gone, it's not a really smart thing to do. So you need to find a solution. Many ancient civilizations, we believe, perished because they couldn't feed themselves, because they were heavily reliant on annual crops and they degraded their soils. There's quite a lot of evidence on that. So if you learn from history as the autocratic cune of Europe for a thousand years, that wouldn't be a good solve. So you need to think very carefully about which land do you put best to which use, and we actually do know quite a lot about that. It's just a little hard to implement it in practice, even though in Britain with some subsidy schemes recent ones they're moving ahead like some land is best to rewild and there's very little argument about that. It's just you need to jump over the cliff and start doing it.
Speaker 2:Some other land should just be pasture, or basically a lot of land should be silver pasture, where you just build oaks and have a loose canopy of trees Underneath. You have pasture and then and ruminants and pork grazing or whatever Like. So we kind of have a lot of these answers. That's the foundation of Mount. So the second thing is what? What excites you knows, I think what's the fastest. Potential is, I think, instead of feeding cows corn in concentrated feeding operations, ensure that all cows are grass fed, and grass fed only, and put them out on pasture. We can do that. It's quite straightforward. We have enough land.
Speaker 1:All those thesis that that's not true is, I think, just bogus and not, not, not really set, because you get a lot of pushback on that, saying, yeah, but we don't have the land and we have to put them inside to do to feed them because we have more than we had before. And you're saying that just bad, bad math.
Speaker 2:Yes, there's two things to consider. First, a lot of our land is still used to produce ethanol and non food products. But, like in a world where we want which we want to decarbonize, I'm not so sure we should grow food, and agriculture is best to burn fuel or like that's. First, I think that's quite a lot of land. The second, there's quite a lot of agricultural surplus. The third one is that if we run proper pasture, this is actually very productive if we do proper accounting.
Speaker 2:And the fourth one is, you know, even if all of that doesn't suffice and we need to eat a little bit less meat, I don't think that's the end of the world either, you know, because the meat that we're eating right now, which I think one of the things that is often not mentioned when you go full cycle, if you feed corn to cattle, it's so high in omega six that it clocks up your arteries like crazy Red meat. The way we raise it is incredibly unhealthy Red meat. If it eats what it's evolutionary purposes, which is grass and nutrients psych as our pastures, it's actually very healthy and very energy dense for human consumption.
Speaker 1:And that gets us to the health bees, which you find extremely important and relevant as well. One side, I think, on the urgency, as we're literally eating ourselves into obesity, and the other side as a lever as well. Do you see the potential for food as medicine or the quality focus, not just in fancy style restaurants but, let's say, for normal daily consumption? And what are your thoughts on getting serious consumer demand through quality and health and not through oh, this is better for the soil and better for the world and better for the small water cycle.
Speaker 2:Can you look into the few of the top nutrients that feed us? So maybe let's separate first. I am an avid believer we should not have ultra processed foods. There's incredibly overwhelming evidence how and in which ways they are very bad for us. There's a very good recent book, ultra processed people, that I can highly recommend. Particularly the last chapter summarizes it like it's irrefutable that this is making us very, very sick. This said, if we don't eat ultra processed foods, we still have the problem that the meat that we're eating is very high in omega six, which is just because we feed it the wrong stuff.
Speaker 2:There's this other wonderful book about our food aid from Montgomery and Piccale, and it's actually that what our food eats is what we eat. If our plants don't get a lot of nutrients and we eat those plants we don't get a lot of nutrients If we feed our animals stuff that we shouldn't eat, we eat what, in the end, we shouldn't eat and omega six is clogged our arteries up very fast. So eating meat from cows that eat predominantly grains is just not healthy. And if we start fixing that and we start using population grains and more ancient grains, all the problems of gluten intolerance will fade away very fast. Think about it Gluten intolerance is like a 10 or 20 year old phenomenon, so that should make you think already.
Speaker 1:I think there's a lot of research coming out now it's mostly it's not the gluten, but the glyphosate, or the spray is on top, that trigger a lot of the reactions and so, but do you think that's going to be a pool from like the consumer or a customer that is looking for that hopefully reads the book, ultra person's people and other things, or it's going to be more from like institution, that an insurance that is starting to wake up for the immense cost we're all paying for? Only the health side of things not even the environment, but only the health side of things is is like crippling our economies where, almost wherever you are.
Speaker 2:I think there's a. It's a very good question and has to answer. The first one is switching over cattle to grass fed and not spraying weed, and using more ancient and healthier seed varieties and population varieties. Using more a to heavy dairy milk, the cast in protein that's easier for digestion. Using grass fed theory, those things happen in the background. You don't need any behavior change. If we could flip a magic switch and all of the meat would be grass, fed.
Speaker 1:You need a lot of behavior change. Or farm or ranchers and far like to get out from the consumer.
Speaker 2:They can still eat all the same stuff, and they will not. That it will just taste better for them. You don't need to do the very complicated thing of changing people's eating behaviors, and I think that's where I would start. The second one is much, much, much harder, which is how do you cure them from this ultra processed food addiction that was manmade, I mean, this was created by the industry. That is, I think, an extremely intricate problem and I don't have such an easy answer to that one.
Speaker 1:I don't think taste is going to be enough to get us off. The weird substances were like food, like substances I think Michael Pollan calls it that were addicted to, because I think, yeah, how do you reprogram your tongue? Basically, and to go for flavor, but not ultra processed goo flavor that is very tasty because we've been trained to like that.
Speaker 2:I mean I can tell you that I hate it. It's disgusting. But I also acknowledge that you know, like if you're a smoker, after a year you're probably good, but that year is not really easy. I think that's a similar problem with ultra processed food you can retrain your taste and I think after a year of not eating it you'll probably think it's quite disgusting, but that year is just very hard the transition.
Speaker 1:Yeah, so that's not. It's important, but not one of the focus areas. So it's much more on the production side to switch. And where do you see, then, the biggest sort of resistance against getting animals out basically and having their proper role in landscapes? Like what's holding us back to do that? Is it science, is it common knowledge? Is it or like general knowledge, is it myths on? Are we going to produce a lot less or it's a lot more costly? Or like, what do you see as the biggest barriers there to get animals out of k-force basically?
Speaker 2:I think that there is. It's probably a little bit of all of the ones you said, which is like it's not the easiest, simplest answer. First, kfos co-evolved with very large industrial slaughterhouses and that lobby is surprisingly strong. I don't think we should be mad at them. They invested a lot of money. They run profitable big businesses. I think that this requires a specific intervention by governments or others and just help them to transition. This is an industry transition problem for KFOs. For smaller farms, I think there is a like that's a marketing and sales job, just educating them about it and also building some regional processing capacity. You need to rebuild local slaughtering facilities that actually specialize on no long animal transports, an animal-appropriate processing technology and also prices that reward that behavior of farmers.
Speaker 1:Do you think there's a role for the vegan movement that of course, shares a lot of the values, let's say on the transition of slaughterhouses and KFO operations as soon as possible preferably yesterday but then has a different set of goals or different underlying notion of the role of animals Do you see a role of? Because they're very loud, they're good at marketing and good at storytelling to a certain extent. What do you see there?
Speaker 2:I think that first, every person has to make a choice if they want to eat other animals or not. I think that's a deeply personal choice and we should absolutely respect that. I think that if we eat animals, we owe to eat them with gratitude and a lot of respect. I think we need to make a moral stance that if at all we eat animals and I've been toying with that question then we need to make sure that these animals were able to live a life in harmony with their evolutionary purpose. Right now that's clearly not the case. Fortunately, that could be the case quite easily. Think about it like you could argue like.
Speaker 2:I once had a small business to focus on old milk cow steaks, so I wanted to. In Spain, these actually gain a premium of the market price, which is the meat is delicious. So you could say we let cows do their work, we let them out on the fields for 10, 12 years. We take some of their milk, but not excessively. At the end of their lifetime, after they help to cycle a lot of carbon into the soils, you have a choice of either bury them or eat them. I think that this is an arguable choice that you could eat them. So that's first on the moral aspect of it. On your question about the marketing part, the challenge is that I think I've seen some proponents of veganism that start to refute science that we have about the impact of ruminance and the positive impact of ruminance on soil, just because they want to get rid of us eating animals. I don't think that this is helpful. I think that science is science and we need to just see it as it is and then take our own conclusions from it.
Speaker 1:But that leads us also to the debate. The debate say savory, alan's savory and George Monbiot and some other very loud again, jonathan Fooley, that say the science isn't there, the science of positive impact of animals isn't there. They should basically ruminate specifically and cows should disappear and there's no way they can be positive cyclists of nutrients and carbon etc. You're saying you're just not looking at the science.
Speaker 2:I have not seen any argument there that was based on science, and I've seen a lot of tapering with science that we have in order to fit their own mission, and I actually don't think it really fits anyone's mission to temper with evidence.
Speaker 1:And another thing you wrote in your primer, which you're going to publish just to push a bit of pressure, is that we're early on the talent inflow and it sort of reminds you of, or we can draw connections to, the early internet boom or the technology boom that we've been going through for the last 20, 30, 40 years. I can explain a bit where we're at, or where you see we're at in agriculture, and why so. Why is that an exciting time for people like you to get into this?
Speaker 2:So when you look into an ecosystem, an ecosystem always starts with product innovation and we found out that we can build a graphical interface for computers. Before that and without a graphical interface. Basically what a graphical interface means is you have keys with letters and those keys and letters display on the screen. Before that you had basically very, very nerdy switchboards where you shifted bits around. That would in the end, give you a binary outcome that would do a multiplication for you. I'm simplifying the whole thing a little bit. So there was a product innovation of a graphical interface. That graphical interface was built by electrical engineers. It was built by scientists, by people, to basically live and breathe the product.
Speaker 2:This is a little bit where we are, I think, at Regenerator Agriculture the pioneers are actual farmers, Like some of them figured this out, not because they had a master plan, but because they went broke. They couldn't pay for the inputs anymore. So they went cold turkey and then they figured out that it actually brought positive change on their land and that yields recovered quite fast. So that's a little bit that story. But then the person that made the computer big was Steve Jobs, who was not per se an engineer. It was Wozniak who built it and Steve Jobs making it big. We have now a few Wozniaks in the regenerative agriculture space, but there are no Steve Jobs within.
Speaker 1:And so why is the moment now like when you talk about sheer desperation? I think is an argument there. But you see opportunities everywhere in the region space. Do you start to see others seeing that too? Do you see others showing up, like that famous video where there's one guy starting to dance on a hill, very interestingly, very fun, but the moment it starts to take off is when the second one shows up and joins this one. At the moment it feels a bit like in your circles, maybe the only one. Do you see others starting to show serious interest in food and ag, like you've been doing? Not to go through two years and 50 books and the super deep dive, but let's say enough to like oh, actually, my next career path, my next company, my next investments, my next, etc. Etc. Should be in this space because it's the most exciting one. Or are we not there yet that you get other people to join you?
Speaker 2:I do think that it started like Lucas Walton of the Walton family incubated a large fund. A close friend of mine, victor Friedbeck, is starting another big fund for sustainability. And then, with the focus of some food and agriculture, there is former, you know, what you would call typical top talent from the industry, like consulting or finance, going into farming, like Benedict Bösel in Germany. It is popping up. I'm clearly not the only one seeing it and I'm clearly not the first one seeing it. I hope that we are reaching a tipping point where this is really accelerating. I just want to make sure that I'm not just hoping, but I can play an active role in it.
Speaker 1:And what do you see as your active role there, except coming on this podcast? But here we're talking to the in crowd, so that's not the most relevant. It's super relevant, or your listeners, but not we're not going to reach 50,000, let's say, technology entrepreneurs that are looking for the next thing. So what do you see as your most relevant role now? Of course it could be shifting, but beginning of 2024, what do you see as your biggest lever that you have in your time? Resources, as you mentioned.
Speaker 2:I think the first one is to understand it all well. I think, like managing from above is not a good idea, like, so first understanding where we are at and looking at it with a like, let's say, neutralized I'm not just going to- buy a farm.
Speaker 2:We are lacking a lot of knowledge in some areas. We have a lot on others. I don't think me buying a farm is me having my highest impact. I think right now it is codifying a little bit what I've seen. I think not everybody has the time to spend two years on like doing that deep, but that doesn't mean that there's not a lot of people who can still be incredibly helpful. So maybe just building a little bit, helping with my eye and my background to shed light on what is going on here, to attract other people to join in, and then I think we can take it from there.
Speaker 1:And do you see, like the primary you wrote and what's the current state of agriculture, how we got into this and what are our opportunities and different narratives and pathways? Is that getting interest from the non-agriculture people like you see people reading at and is it opening their eyes, let's say, or having their moment of soil bitten bug thingy? Yes, yes, it is, which is fascinating because it's text only. I mean, I've seen a lot of people, of course, going through that journey, either through Plain Medicine or Documentary or very visual things, let's say. But it's interesting that we're at a point where a primer of a number of pages gets people to. I mean, they're already interested.
Speaker 1:Of course it's not that you come out of nothing, out of nowhere. And then what would you tell your investor, friends or people that manage either their resource or other people's resources, of course without giving investment advice. But let's say, if people have identified that their role is finance and their role is allocating resources, what would be the main seed you would like to plant in their mind? If we do this, live in a big theater and they walk out, of course they're super excited after, but if they remember one thing, and one thing only, what would you like them to remember from the evening we had?
Speaker 2:You can save the role, then make money.
Speaker 1:And how do you make sure that doesn't sound naive or too good to be true? Like you can have lunch, and you can have your lunch and share it Like what's the because, that's the narrative, that's super deep in us that, like no, no, no, but that's not possible. Like how do we counter that naivety of okay, that's the dreamers on stage?
Speaker 2:I mean, as I mentioned in the beginning, you have an industry that is by some means the largest industry in the world, where the primary means of production means in order to make a hundred, you need to spend 30 on inputs, and I can tell you that you don't need to spend that 30. That's a lot of margin. And the second thing is that when you now look away from a supply angle and to a demand angle like you, just look around yourself I would tell them how many of you folks do like to eat shitty food and how many of you and your families care about what you eat. I think that a lot of hands will go up. So I said, like why don't you just start bringing both together? You know there is demand and you know we can produce supply that caters to that demand a lot more margin friendly than what we do today.
Speaker 1:And yet I think we were like, yeah, but that was also the case. Like, why haven't we seen the jobs, the Steve jobs, the Elon Musk's not in that super concentrated way but like big companies or bigger companies serving this? It's been mostly successful ones are relatively they're bigger farms but relatively small operations, not enormous amount of revenue and not enormous margins. Still struggling with it will harass on the podcast and they're surviving, they're fine. But because they haven't built that huge direct to consumer machine, every year is a challenge to get to the end of the year with enough revenue. Like, why haven't we seen big breakthrough companies yet serving and, let's say, being successful? Are we simply too early for that?
Speaker 2:I think that we are at a stage where this can happen. I think it's our job to make it happen?
Speaker 1:And what would you do if you had a billion dollars or a billion euros or a currency you want to invest in? But if you had a significant resources not as much as Lucas Walton but you had a significant pot of money to put to work. I'm not looking for exact dollar amounts. I'm looking for what would be the main X priorities you would like to tackle with. That could be very long term investment. It has to come back at some point. But what would you focus on?
Speaker 2:I would spend 5%. Let's say, let's use a billion. I would spend 5% of that on research and on lobbying, just making sure that we understand the actual cost of agriculture in a factual way. These arguments of, yeah, but like this hippie, agriculture cannot feed the world, it's too expensive, it drives me crazy because it's just plainly wrong If we would just do simple, proper accounting of what our societies in tax dollars, directly and indirectly spend on current agriculture they would like. Suit like this is insane. This is so expensive we cannot afford that. So that's the first part of that. You might need less than that amount. The second part is, as I love building companies, I would just build a company. I would build a fairly vertically integrated company of a network of farms that would follow a certain playbook with proper accounting, so that we can also open source the profitability change of those things. And then you build the regional processing and you build a few consumer brands out of it.
Speaker 2:Think of building a modern Nestle. Those companies, they had an origin in a very benevolent way. They tried to liberate women from cooking all day and they succeeded. Time changed and they went a little astray, I could argue. But we do have this impetus. Today we need to basically save our population from decay by eating like they're eating food that makes them infertile, obese and unproductive and unhappy and depressed. So it's a large impetus. There is a role to build a new company around that.
Speaker 1:And that could absorb the other 95%. And in terms of lobbying, what would you do? What would you target the most? I mean, there are so many policies to change, but what would be your main focus as a lobby?
Speaker 2:I want to use language that might look a little weird to you I would enforce capitalism. I've heard too many arguments from the regenerative crowd that the problem is capitalism. I would argue the exact opposite. The problem is no capitalism. What happens in farming is basically communism. It's terrible. Most of farmers are paid by the government in the US as much as in Europe. That's a fact. You can look it up. Crop insurance basically means no matter what you do, you're going to get paid. That's guaranteed. This is all absolute socialism. And then, at the same time, property rights are not enforced. A lot of those concentrated animal feeding operations are insanely polluting. Groundwater Groundwater is a common good. It belongs to us, but nobody enforces that. If I were to dump my toxic waste on your house, you would sue me, but nobody sues them for dumping it in our groundwater. So you cannot tell me that this is capitalism. Capitalism is property rights. Capitalism is pricing in externalities, no market failure. Capitalism is not paying you for no matter what you do and accepting that you're polluting our world.
Speaker 1:So enforcing would be your focus of lobbying and taking away a lot of the subsidies.
Speaker 2:I mean, it's just like you know, if I pollute your house, I cannot do that. So we should stop doing that. Just because groundwater is owned by the state doesn't mean you can just pollute it. And these subsidies and the government schemes that basically are underwriting no matter what you do. This has nothing to do with capitalism.
Speaker 1:You know, I like to ask the magic want question. If there was one thing you could change overnight, what would that be? Create a level playing field.
Speaker 2:Make current agriculture get rid of their subsidies and charge them for the pollution they cause. And then the transition will have a lot of success.
Speaker 1:But, how does that?
Speaker 2:It would stop them following practices that are unprofitable and highly polluting.
Speaker 1:Before you said we have to help. We shouldn't be mad at them and help them in the transition. Is this helping them in the transition or speeding up the transition with a stick relatively fast? I'm not saying we shouldn't, but how would that? Or are we too far down the line and we just have to bite the bullet?
Speaker 2:No, no, no, no. You asked me for the magic wand. That's what I would do, like then, very fast, we would need to build them plans to transition and there's plenty of money going around to help them. If we stop paying them massive subsidies for the wrong practices, we can use that money to help them during the transition.
Speaker 1:You also said because we're early in terms of, or very early actually in, financial inflows, there's a lot of money going around, because it seems to be very little money going into region. Why do you think that is? Is it missing the institutional capital? They start to use the word in a lot of their slides. I have yet to see billions flowing into the space, and the same in VC, same in private equity Land funds, maybe a bit more. But if we all add them up to series, ones in region, I think maybe we get to 10 billion or something, maybe less. What do you see on that financial inflow? What's holding that back? Is it the success, for example? What do you see? Mainly, the interest seems to be there because the financial people are starting to wake up to the issue of the current system and the potential, and yet somehow it sort of blocks and stays in London or in Amsterdam or in New York or in Delhi.
Speaker 2:Friends of mine, the Stuchtdais. They run a company called the Land Banking Group that is focused on solving that problem. How do you make nature investable, investable grade? What do you need in a non-naive way to tap into institutional money? Because what you see right now and they frame it very well is there is corporate like reinsurance companies saying look, we are picking up the bill anyway. Why don't we spend some of that money in advance to avoid that? The bill is that big, so there is interest out there, but there's nobody had built the bridge to allow them to invest in a way they can put on their corporate books. And so that is work that needs to be done, and I think once we do it we can actually increase the inflow of capital into the ecosystem quite dramatically.
Speaker 1:Because a deal flow is there or has to be developed, sort of alongside, in parallel.
Speaker 2:I think in parallel, I think you need to create the meta-vehicles, like the ones that can absorb billions and then they will not be the ones who can disperse that direct to farmers. That would not be a good model, but that's not a model that any other ecosystem has. So a lot of the VCs and the tech space get their money from institutional aggregators or institutional even partly government organizations that say we want to foster European entrepreneurship, so there's a fund for that. It's a meta-fund that then disperses money through venture capital companies and they are the ones actually putting it into actual corporations, startups.
Speaker 1:And we've had. We've yet to see that in. We see the few funds, very few, and it feels extremely early in that space to like. That's why we're hosting the podcast partly, but the flow of capital is still really drip irrigation and not a flood.
Speaker 2:You have small venture capital companies and few of them, and their problem is usually they need somebody to anchor their fund. It's basically they need one person who says I'll put in 20, 30% of the total number that you've raised and I'm the one who underwrites the key terms. This is often something that family offices are a little reluctant to do. Family offices would love to follow on, but they don't have the opportunities. They want to be the other 70. Yeah, they want to be part of the other 70. And even in traditional, like it's a European technology venture capital funds, often anchors are those meta investors like the European investment fund or others, you know, because they are specialized on that and they know that by us putting in some money with more effort for risk because basically they have a mission that says we want to foster the ecosystem they can anchor a fund and then, with that inquiry, the fund can go out and raise the bulk of its money on their own.
Speaker 1:So I think we just lack some of the key players of the ecosystem and do you see a growing interest in food and ag and a level of knowledge that like to really fully understand and not follow the next vertical farming hype or next, because that's what I see a lot of people like, even in climate funds they are. We also need to do food and ag and they have like a pillar and they end up doing nothing or very little or things that just basic engineering would probably say it doesn't work in terms of turning sunlight into something like like that. That level of knowledge I feel is missing a lot in the ivory towers of the financial sector and does nothing gets allocated to the stuff we've been discussing for the last hour.
Speaker 2:I think that's why we're talking. That's why I wrote the document that you referred to.
Speaker 1:How to get that into the European investment bank and the bigger allocators is crucial. And then, as a fine, I mean, you've met men. You mentioned a number of them, but I would love to know which one stands out the most. We both know John Kempf, and he likes to ask a question what do you believe to be true about agriculture in general? Actually, in this case, that's a good one. What do you believe to be true about agriculture that others don't Like? Where are you fundamentally contrary in the agriculture space? If you had to pick one, because we've heard a few.
Speaker 2:We can live alongside nature and promote animal welfare and our own health and make more money, not less.
Speaker 1:I think it's a perfect end to this conversation. I want to thank you so much, Martin, for the work you do, first of all, for going deep into the region rabbit hole actually different holes because there's so many different ones and reporting as you're folding down. I don't think this is the last time we have you here, because there's a lot developing, a lot of things moving and I think there will be so many other rabbit holes to go into and to explore together. So thank you so much for coming here, for sharing and for the work you do.
Speaker 2:Thank you, Kun, and thank you for all your work. I mean you and John Kemp's podcast were two of the big sources of both inspiration and knowledge. Thank you for that.
Speaker 1:That's why we record. Thank you so much for listening all the way to the end. For the show notes and links we discussed in this episode, check out our website investing in Regenerative Agriculturecom forward slash posts. If you liked this episode, why not share it with a friend or give us a rating on Apple Podcasts? That really helps. Thanks again and see you next time.
