The Blockbuster's of AgTech

August 4th, 2022 - 14th edition of Easy Observations in Ag

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Opening Thoughts:

Ooff, did I cause some swirls around the industry last week. It was quite interesting to see the reactions to my “Theranos’ of AgTech” article and I’ll be honest, most were very positive. I actually got quite a few messages and calls from former and even current employees at those places and well they confirmed pretty much what I stated and then some. Now at the same time I know the comparisons with Granular and Climate weren’t exactly Theranos like but I think most saw where I was going with that. With that said, no cease and desists letters in the mail yet.

On to this weeks article I decided to follow pretty much the same thing as last week with the other missing groups that were mentioned in the same newsletter of Rhishi’s here, but focus on the Blockbusters or “Groups that didn’t quite make it or went bankrupt” in AgTech. Now this isn’t to say they completely failed or didn’t do good work at time. Basically these are some groups that just had a lot going on and raised a bunch of money, but couldn’t make it work the way they planned.

I’ll naturally put some criticism on each of these groups or sectors, but overall why I want to write about these specific groups is almost to showcase a cautionary tale of how an AgTech company can overpromise, underdeliver, and more or less not pan out. Also, this is really just the tip of the iceberg and as of late. I’m sure many out there can name some others of the past too, but these are the ones that catch my eye I guess. Time to walk the plank…

Blockbuster like groups in AgTech

Now these groups are ones that either failed or let’s say got “bought” by someone else in some deal that makes them look like a success even though they were bought for pennies on the dollar sort of. They usually and actually had half decent products too at times, but as always something either didn’t quite fit or they just didn’t do a good job of delivering the product. In some cases you could say leadership also didn’t quite help the process either or they bit off more than they could chew. In any realm, these groups could’ve done better, but sometimes shit happens.

1. Farmlogs - I’ll be digging into these guys a little more than the rest. With them it really was an interesting story. At one point they were almost the poster child for AgTech. The founder came from the Y Combinator, was in Forbes 30 under 30, and they were plastered everywhere and at some point valued at something like 200m. Of course, there is more to the story than this and while I can’t remember everything I’ll try and paint a picture of where they went right, but also very wrong.

   • The App: These guys were really the first group to create a popular farm management app for smart phones. It wasn’t necessarily anything revolutionary as they just put together basic features of field management tools and put them in an app. What they got right was timing at first. Everyone was buying smart phones and apps and they hit the mark plus it was free. So far so good and with that timing it garnered a lot of attention, money, and users. I’ll give them that. The problem is it didn’t make money as it was free. That is clearly a popular thing with many apps these days but finding a path to revenue in Ag is a little different compared to how others do it. This was the start to the demise.

   • Pay to Play: Of course eventually anytime an app becomes popular and is free there is also a time where investors want some return on investment. At the time money in Ag was good and groups were thinking they could charge big for agronomic based tools. Climate and Farmlogs went head first into this using weather data to create products around rainfall prediction and Nitrogen loss recommendations while trying to charge around $10/ac for some of the services. On paper it sounded good and I’m sure the financial projections were awesome. The issue was the results were far from great and many growers became very skeptical of the recommendations and numbers. Cleary some used it and thought it was useful but it just wasn’t enough.

   • The Conference: I’ll keep this one short but more or less they put together a big user conference and wined and dined a bunch of people in Florida one year. I can’t imagine that was cheap and while it was the cool thing to do at the time it really didn’t serve a practical purpose beyond try to convince people that they were some special group. It’s one thing when a multi-billion dollar corporate does it as they usually have the money. Doing it as a startup is dangerous.

   • Imagery debacle: This one gives me headaches to this day. Basically, they needed to get more activity to their app and create some new products and using imagery was their answer. It started very close to home for me actually as they were talking to us (Satshot) to be the backend system to help them show and deliver imagery in their system so they didn’t have to build it. Talks got pretty far until they stopped as with many companies raising tons of money they decided they could do it themselves. Fine, that wasn’t the issue though. What they did still has negative impacts on the industry and EO world in Ag today. They ended up going around us with our main imagery provider at the time in Rapid Eye, bought the data directly themselves (double what we paid so around 1.4m/yr) for North America, and then created their own tools (very spendy). The worst part was that they gave it away for free for the first year to try and entice more users to the system and usage while building tools they’d eventually charge for. It didn’t work and worse of all is that it created the perception that imagery data is free for growers. This is still an issue today and it killed the value prop of higher end imagery for many in Ag. Still pisses me and others off.

   • Financial planning I guess?: After the failures by Farmlogs to create a product that people actually wanted to pay for they seemed to switch gears as others were doing going after tools for financial record keeping. All the cool kids like Granular, Conservis, and Harvest Profit were doing it and it seemed to work for them in raising money and/or having success. A big reason for this was the money in Ag was drying up and when that happens growers start thinking of managing their money better. Could’ve been a perfect storm for them as they had a ton of users and name recognition. The problem though is they were sort of late to the party and were burning way too much money. Also, people were leaving the company in droves and the direction of development was sloppy to say the least. If you go to Glassdoor and their page you can read some of the reviews and issues former employees brought up. Regardless, things were starting to sink and this latest product ploy came a little short too late into the game.

   • What now: Of course if you’ve been paying some attention you would have seen they got purchased by Bushel recently. Now I know founders of Bushel well and they are located in my backdoor of Fargo, ND. Them buying Farmlogs was a good buy, but what I find hilarious is what they ended up paying for them. Now I’ve heard this from varying sources but I’m pretty sure its accurate. Bushel paid around 1 million for Farmlogs. Yeah, you read that right. Maybe there were some other details in the deal but nonetheless, that is a blow to the once prominent Farmlogs. I guess they raised around 37m total and like I said were valued very high at one point so getting bought for that would be hard to swallow. Now going forward I do think Bushel can actually do some good stuff with their tech and they will easily pay for the purchase. Heck Bushel is one of the better highlights in AgTech to be honest. They probably already have paid for that purchase. So in the end while Farmlogs didn’t exactly fail or go bankrupt like Blockbuster, I’d argue they were damn close and maybe that’s worse in some sense for how it all went down.

2. Mavrx - Aerial imagery data in Ag is very hard to do and sell. I know this very well. This group tried to do that thing where they fly planes everywhere with their special camera and try to sell analytics from the data. They actually started in drones and atleast realized that wasn’t working well. While it doesn’t sound too complicated of a concept it actually is a logistical nightmare. Not everyone wants aerial imagery everywhere. Maybe in pockets here or there but in any realm flying a plane is expensive and time consuming. Each flight job can easy cost $10,000 so you can’t just go fly one field and land and make it pay. Now I’m not saying they did this but it does take a lot of fields to make it pay. What is probably the worst part of Mavrx isn’t what they were trying to do, but how they were marketing what they were capable of. They really oversold their capabilities. Also, when things were going south for them they did the same things Farmlogs did and promoted giving away satellite imagery for free be it atleast that imagery was Sentinel and was already free-ish. That was a desperation hail-mary if you ask me and it just grinded a lot of gears in my area of the world. Going forward, I can’t remember all the details of things that went awry with them though what I can remember is the arrogance from their founder. He basically made it sound like he knew it all and had the best of everything. Well, maybe he knew some things and maybe the massive amounts of money he lost for them was one of them. Maybe I just didn’t like the guy. Either way, they eventually got bought by Taranis in 2018. I do know they sold due to issues with money and bills needing to be paid in some form. Now while I can’t remember all the good ole rumors and numbers I heard back in 2018 about the sale, they didn’t make it. They spent more than they could sell and overpromised on their potential. Pretty straight forward.

3. Terravion - Another aerial imagery provider, but this one was different and they actually did go bankrupt like overnight. I have some good colleague friends that came from there and while I don’t have much issue with what they were trying to do I knew it would be hard for the company to make it. Like I said, Aerial is hard to make money in Ag unless you get some crazy big contracts. I actually didn’t really mind what they were trying to do. It was a needed product. They were really just trying to sell Aerial imagery data and not push analytics. I like that, but they got ahead of themselves with expenses and future promises while not reading the room as they say as good as they could have. What sucks though is they did have some good tech in distribution coming along. I think some of those assets did get sold but naturally that went to old debt. The biggest issue I think this group had wasn’t that the idea was sound but that really their timing wasn’t great. Sentinel came out and was free which was good enough for most and the Ag market was rebalancing itself with low prices after crazy high ones during their big push. There also was plenty of hopes around drones that harmed them and others in that arena. Overall timing and generally industry follies got to them. It’s sort of a sad story and they did go belly up and in short dramatic fashion. RIP

4. So many drone groups. - There are way too many of these to talk about and while some are doing okay that started in the field and shifted business models, some groups really had to change or they just went away. Precision Hawk and Ag Eagle come to mind. They exist still, but yeah. You can do your own research there but it seems Precision Hawk had weird financial things going on and Ag Eagle recently went through a weird pump and dumb stock process. AgEagle literally went public with less than a million in revenue a few years back then last year somehow had a valuation over 500 million. There’s been some legal weirdness there too. They are a joke, I’ll just say it. Anyway, countless of small others that promised the moon turned into nothing really quick a few years ago when people finally realized what drones were. What they were is small scale highly detailed tools. You can’t scale them and it took years for people to get it. It really set things back a lot in the EO space in Ag I’d say as it just confused clients with all the promises and hype. Satellite imagery got torn into this weird “not good enough” storyline while Aerial got the “why have someone fly a plane when you can fly it yourself” mantra. It was such a hype level event and so many just ate it up because it got press. Sad really. Overall though the drone space is getting better now and finding their niche, but yikes. Glad most of that is over now.

Final Thoughts:

Like I said before, these groups are more near and dear to me I guess but crap, they were either purely imagery based groups or imagery was a big factor to their demise. For me being directly in the EO in Ag space I can tell you groups that deal with it and fail hurt everyone. I actually wish these groups would have made it in some realm as it would’ve shown imagery can work in Ag. The reality is it can, but some groups just do a poor job of showcasing the power of it, creating product around it, and generally selling it. It is very hard to do okay at more or less.

I will say and as you can likely read I do have some bias around these groups too. Yes they harmed my families company and created some false narratives that my father, myself, and many others are still dealing with today. I know I’m not the only one, but yeah it sucks. This issue and the general way I write about Precision Ag and AgTech is grounded in the way some in this industry mess up the real potential which is out there. Sure, some mean well and are really just trying to make an idea work. Other really suck and try to lie their way out of it. They both suck. The problem is Ag takes failures in products very seriously and way more than any other industry. That causes long standing problems and it’s why I’m writing about things like this to showcase the reality to what happens and maybe how to avoid it if possible.

There also is many things I can’t speak to in how these companies didn’t work as well. I’ll write about my feelings on it, but at the end of the day much of what I say is what I experienced and what I heard in some form. Take it for what it is worth to you. All in all, I’ll call a spade a spade and that’s what I’ll continue to do. Thanks for reading.

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