Show 146 – Unicorn Interviews – Erez Galonska, Infarm
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The 23rd in our series of episodes of the csuite podcast that we’re recording in partnership with the European PR Agency Tyto and their own Without Borders podcast, where we are interviewing leaders of unicorn companies to find out about the key issues, pain points and challenges that start-ups face and how they can address them with a strategic approach to marketing and communications.
Russell Goldsmith and co-host, Tyto’s Senior Partner, Holly Justice were joined online, by Erez Galonska, CEO and Founder of Infarm, a company whose smart modular farming system allows distribution of farms throughout the urban environment, growing fresh produce in any available space and fulfilling any market demand. The company reached unicorn status in December 2021, after raising $200million in Series D funding, taking the total to more than $500million raised from world leading investors.
Erez began by giving an overview of Infarm, which he described as an urban farming company specialising in indoor vertical farming or controlled environment agriculture, on a mission to transform cities self-sufficient when it comes to food production. By providing more premium and diverse products, they help consumers have access to premium products at affordable prices. He said that see themselves as a catalyst for change, and demonstrating that creating businesses for profit and purpose, is possible. They’re doing this in a few different ways:
- having a strong customer base of retailers
- bringing their farms close to where consumption takes place
- cutting the lengthy supply chain.
Working with 50% of the leading retailers worldwide, they are also operational in 11 countries, with more than 1,000 purpose-driven employees working alongside them on this mission. They’re very proud of what they’ve managed to achieve so far, he added.
A Broken Food System
Erez explained that to understand the food system, it’s important to zone in on the food supply chain. Particularly, focusing on the fact we will need to increase production by 70% in the next few decades, or alternatively find two extra planets in order to feed the growing population. Knowing that 70-80% of the population will live in cities, usually very far from where food is produced, makes them aware that 30-50% of food produce today is wasted before even arriving on our plates. The food that survives the long journey, usually lacks vitamins, freshness, taste, flavour and in most cases is contaminated with chemicals. Therefore, the end consumers are wanting to have healthier produce, reduce waste and have their food produced more efficiently, highlighting that this is both from a resource perspective and an affordability perspective, basically growing more and delivering higher quality produce to the end consumer, at affordable prices. Infarm’s mission is to solve the ever-growing issue of feeding the growing population in the decades to come, in a more sustainable yet efficient way, whilst also helping retailers’ source better ingredients for their customers.
Erez went on to give an overview of the retailers they work with. He said 99% came from inbound sales, it’s evident how strong the brand they’ve built is, especially in the ecosystem of food or retail, in which they’ve made an impact. They started with the first farm in 2017, and now have more than 1,000 farms for those various retailers that they work with. With the first farm, the idea was that they could cultivate food right there in the fruit and vegetable department, where people work, bringing them ultra-fresh and more diverse products. That notion was very impactful, he said, which lead to retailers getting in touch and asking “Can you do the same for us? Can you grow the food right in front of our customers?”. Today, they have more than 1,800 locations worldwide, not including e-commerce, which is massively growing. These inbound sales show that there is a real need for their solutions, for companies wanting to solve those dilemmas of trying to bring in fresh, local and pesticide-free produce, while also grown sustainably, with less transportation, food miles, and water. They are capitalising on this need and providing those retailers with farming as a service, as they call it. For retailers, like Edeka, the largest in Germany, will usually have a farm, and Infarm will provide the farming services, and ask simple questions such as “What would you like us to grow for you?” “When do you want us to harvest, in the peak of the day or during the weekend?” “Who are your customers? and “How can we fit what we’ve got to their demand”. So, the whole thing is a personalised way of looking at farming, while utilising technology to deliver the best value.
He described the farms as modular, having 75 sensors that allow them to track any parameters of the growing conditions inside the units. They like to say the farming units are like climate machines, because they bring the Mediterranean climate into every corner of the farm, as it would be in the northern hemisphere.
This unit is cloud connected, meaning they can monitor the growing techniques and the situation of the unit. They are able to listen to different parts of the unit and be alerted if a pump needs replacing, whilst understanding how to connect this demand to the market. Having full control, from an operational and growing conditions perspective, means they can constantly develop their own research, to perfect the growing recipes. This incredibly unique version of farming also enables them to collect a significant amount of data, with their latest milestone being at four billion data points a month. It’s argued that they’re already one of the biggest research companies for plants and have future plans to partner with big universities, including a recently announced partnership with Wageningen University, in the Netherlands, which the prospect of has already created an atmosphere of excitement for them. This knowledge about plants and how they grow, allows them to both constantly create better efficiencies and increase the yield on the sqm of the growing on the farm itself. In essence they are incessantly increasing the yield, quality, nutritional value, with less resources, which is why they like to promote the concept of premium products at affordable prices, and this is the power of software and technology, he added.
Erez went on to explain that looking at their modular farms, they have different types of models for the various demand, which is reversed into the farm, that the unique modularity allows them to do. This means they can then grow with the demand, whether its retail or supermarkets, they regularly add more categories and varieties, which is down to their ability to create different environments under one roof. It’s a unique concept in the world of agriculture, as big greenhouses and vertical farms are commonly used, but with plant factories, there is one homogenous big climate. They can decentralise climate and create those units next to each other, like grow strawberries next to salad and herbs for example, and perfect each individual growing recipe for the produce inside those farms.
He thinks from a client perspective, it’s brilliant, because they can grow with their demand, and continuously add more categories as demand rises. But on the flip side, for them it means they can use capital more efficiently. Behind each model, there is a client, it could be a chef, a retail owner, an e-commerce company, and this gives them huge scope to personalise and create better value for their customers.
When talking about whether the farms put an end to seasons, Erez said that they aren’t replacing the outside climate or agriculture as a whole, but they can start to standardise the climate. This also imposes the chance, for example to bring the same quality strawberries all year round in the UK, with no fluctuation in cost, as it’s fixed based on the demand of the market. So, this inevitably creates a more resilient farming network while making it more sustainable. In terms of modularity, the interesting part beside growing differently and creating climates incongruously, is the notion of designing diversified categories for their clients. Along with, the infinite scale they can farm on, as each unit can be deployed in between six to eight weeks, and once the unit is in place, after six to eight weeks they’ve already begun to farm. Making it a reliable year-round production. Their systems are consistent in terms of output, and they’re endlessly optimising them within their growing recipes. So, while they increase the output and quality, the cost of production is naturally declining. They can produce those units like manufacturing a car, with their own supplies, and bringing them all together, the units can be produced in hundreds, and hopefully thousands in the next couple of years. But with all these partnerships aligned, they can simultaneously start to rapidly deploy these units internationally, once the product has a place in the market, everybody wants to know how fast you can bring it everywhere.
Evolution of Agriculture
Erez said, vertical farming is still agriculture, and agriculture is a long-term game. He wouldn’t just look at what could happen in the next 12 months, but at the forecast for the next decade, particularly in technology and software. His predictions focus on precision agriculture techniques, that would enter and change the industry, through personalising the demand and bringing supply and demand closer together. This may be farming based on what people really need to eat and not eat, and less attention on products that are unable to survive the long and lengthy supply chain. So, for example, in the UK, a specific strawberry might be chosen, because people really want to have access to it. The landscape will start to pivot towards what people want to eat, ranging from the nutritional perspective, along from the taste aspect. On the commercial side, there will be an influx of personalisation and from the efficiency stance, farms will become ultra-efficient. As they learn more about plants, they will inescapably start to learn more about what kinds of seeds they want to bring into those environments. From there, they will start to think about the kind of climate they desire for certain seeds, in order to maximise their full potential. By summarising he said that the future trends will be tasty, ultra-efficient, and personalised, and they are very much living by that intention and continuing to make that happen.
Erez explained that reaching unicorn status has changed the perception of the business externally. With every round of finance they’re raising, it’s important for them to show that they’re heavily capitalising to meet the terms of the contract they’ve signed. It’s about confidence for their customers, but also now, it’s a signal for the entire agriculture industry, with it being a meaningful point for any company to reach that milestone. Plus, it exhibited the notion that they are transformational for the food system, and there are more and more players that need premium products at affordable prices, while cultivating nearby the consumption points. They are immensely proud, being the first one in Europe for reaching that milestone.
Their focus is not on valuation, but on execution, and PR communication helps them to bring confidence to the entire ecosystem. They can continue to do what they do best and pursue amazing plans to bring consumers a better experience around food. In terms of the client perspective, with each round they raise, they are filled with more confidence around their clients. With those retail clients being some of the biggest companies in the world, it’s important that they have a company on board that is heavily capitalised and can fulfil the contracts against expectations. Their constant focus is customers, customers, customers, and execution against what they sign and promise.
Erez said, from a brand perspective, their strategy in the beginning was predominantly focused on putting the farms in front of the end of the consumers. Linking to their radical transparent approach to farming, over the next few years, they want to showcase more of their supply chain; from the way they produce food, to why they’re doing what they do and reveal more about the sustainability impact of their farms. He insisted that people can count on them to be transparent, which is a big part of building a trustworthy brand. “In the end, this is food – you want to know the people that are producing your food, you want to know who is behind this food, where it’s coming from, what is its content and what is its taste, who else is eating it and maybe how they’re using the ingredients and what recipes they do with it.” He hopes it will inspire others to explore the same path, and that the food industry will become more honest, reliable, resilient, sustainable, and of course, tasty. This was his initial problem, he said 10 years ago, he would say to his friends and family that he wanted to grow his own food on the top of the mountain, and they thought he was crazy, but he said: “it actually came from that feeling of wanting to control what you put inside your body” and wanting it to be healthy. He didn’t have access to amazing, fresh, diverse, sustainable, healthy products, so he just grew it himself, and now his focus is, how can he share that with others? The magic of growing as a business is discovering how they can share it? How can they standardise it, so everyone has access to that experience? If they manage to do that, the hope is that consumers will feel healthier while knowing they’re doing something which is better for the environment. If they achieve that then he thinks they will have managed to build a brand.
He emphasised that when building a brand, it’s crucial to look within, so they’ve been focused on bringing purpose driven experts into the business. Their goals aren’t just related to growing or scaling, but about demonstrating the impact they have on the supply chain, and their people and culture. Admitting they have made mistakes during challenging periods, including some that resulted in people leaving, was that it was all part of a wider learning curve. Which resulted them bringing the philosophies behind their products, to within their organisation. So, when asking someone from Infarm, “what do you think about the company?”, everybody will say it’s amazing, because those people back the product, which is number one in creating culture. From an organisational perspective, they feel that they’re growing rapidly, with currently the right people, but they wouldn’t want to lose that talent from the surge in growth. Every half a year, the business undergoes reorganisation to create additional clarity and ownership, making sure there’s a general feeling of contentment. While also coherent on what the next 6-12months looks like, in terms of what needs to be completed. In the beginning, people found the reorganisation stressful, and thought it meant total restructuring throughout, including dismissals. But the company’s focus was around ownership, and helping people progress in the role they’d been hired for. He added, they’re very proud of all the Infarmers that are out there, and that he takes the time to go round and speak with them. Even regardless of location, with some of them being based in different cities, he meets with them remotely to take questions and explain why they do what they do, both from a mission and a day-to-day perspective, like for example why they’ve decided to postpone moving on with the next generation next month. He said that the small decisions impact the daily lives of people, and so they’re focusing time on trying to build and solidify this culture, while being mission orientated, to build a better farming network.
Erez said they have a team, focused purely on internal communication, and the screens they have within each hub act as channels in which they can constantly communicate digitally with the teams. He wants to pivot towards setting up webinars or in person meetings within the different regions. With their teams being distributed globally, he wants their leaders to spend time with the teams, whether that be in smaller groups to disseminate different information. So, it’s about developing communication, crucially through the time of Covid, and being hands on with the enhancement of this communication, is something coming naturally to Erez.
This interview was his first podcast, as he’s not always prioritised using time to build the business through enhanced communication, but this was his resolution for the first year. He also writes a report for the company and publishes it in the general chat, and now he wants to focus on moving it to a video format. Now he’s trying to make sure people are seeing him somehow with travel restrictions in place, because there are so many locations, and he wants to see the face of every person behind the mission, whilst inspiring employees with regards to the product and what they want to achieve. They can probably do it much better, he said, as they are constantly getting feedback from the team, trying to improve, both on a personal level and for the wider company perspective.
Erez noted that it’s a constant challenge trying to understand all the different perspectives in the organisation, from the people in the field, to their leadership team. There is plenty of room for mistakes, and every aspect of communication is challenge. They’ve now had an interesting transformational period where they’ve decided to give more ownership to the different countries they operate in, essentially a restructure of the company, setting it up for the next phase. It’s not just about him moving to London, or Guy [Galonska, Co Founder] moving to the Netherlands, or why they’re collaborating with Wageningen University. But about the benefits from that, how is ownership managed in each country, and how is this going to flow into one coherent organisation. They spend a lot of time trying to understand how to communicate, what to bring to the table and making sure people still trust in their path and destination with Infarm. They want to make sure there is an element of confidence and safety felt within, whilst making sure that life at Infarm is becoming better and better. He admits they still haven’t figured out how to create a balanced hybrid culture between people at home and people in the field, and this is the feedback they’re getting from the team, and therefore this is still a work in progress and a challenge. He jokingly asked if it’s possible to revisit in one year.
Erez explained that people are patient, but the company still needs to deliver, and do everything in their power to find the right balance, so people feel good working there. It’s also helping the culture and for people to feel comfortable at work, which is very basic, but they’re not there yet.
Erez confesses they made multiple mistakes, but honing in on the small ones, where the impact was big, particularly trying to bring senior people into the organisation in an early stage, which was a mistake, not due to the people, as those people were great but the missed opportunity of not giving the people at Infarm, the ones that really worked hard, the chance to prove themselves or help them to develop themselves. Also, the lack of honesty about considering bringing those people in, and that was within the early stages, but they fixed it quickly, and of course the senior people didn’t understand how a company like Infarm can even exist with the hecticness and miscommunication. So, the hands-on part and developing people within the organisation is key, which they continue to do. Even if they see there is a gap in experience and so, they are transparent and honest.
Erez said that in the beginning they thought they’d build themselves up as a farming service and as a tech provider, and were going to sell their know-how software, hardware and offer support to people and provide a farming service from a big tech-angle, which was a mistake to think. They pushed hard and succeeded and have been successful in selling their equipment and even have the first farming Metro, which is one of the biggest wholesalers in Europe. Once they had purchased one off them, they started listening to their customers feedback, and the responses were clear. Firstly, if you want to transform the food system, don’t lean on retailers, partner with the retailers, but don’t count on them to deploy hundreds of millions of fields to change the system. As it’s not their business to disrupt the market itself, the other feedback they got was “look, you are the new start-up, you’re bringing this new technology to the market, this value and you should talk about it because we can talk about it. But the end consumer won’t believe us, as they will believe you, you are the face behind this brand. So why won’t you tell the customers why you are you doing this?”. Once they started to do this, it was even more successful, and adopted a more operational service for urban farming.
Advice for Future Leaders
Erez recommends transparency, which is something he plans to be more rigorous with himself. He said, their focal point is around being radical and transparent, which he would have brought to the business in the earlier days, because it took them some time to understand the power of honesty. Along with confiding in those people on the journey with you about the general concerns and fears.
Finally, he said if he could go back in time and speak to his younger self, he would not just be a leader that holds a shield, but one that engages with people more.