The growth of analytics and data science in the grain business will be a trend to watch over the next decade. And it won’t be us vs. machines. It will be us + machines. Because tech will need to prioritize human relationships for it to succeed in the buying and selling of crops. Hear why from Mark Johnson, CEO of GrainBridge.
TRANSCRIPT
Rodney Connor: Really excited today to have Mark Johnson, CEO of GrainBridge, join the show as well. Mark, thanks for taking the time.
Mark Johnson: It's my pleasure.
Rodney Connor: Yeah. Just for anyone listening to the podcast that doesn't know who you are, Mark if you could just take a few minutes to tell us a little bit about your role in the industry and how you got to where you are today.
Mark Johnson: Sure. I always feel obligated to say that I did not grow up on a farm. I actually grew up in Buffalo, New York. Spent a good chunk of my career in San Francisco working on search and AI applications. And then I ended up founding a company called Descartes Labs, which was a spin-out of Los Alamos National Laboratory. And our focus was on trying to drive value out of satellite imagery. Trying to understand the planet better through the pixels and other data that we get from the sky. And that's how it has led to agriculture. One of the first projects that we worked on was a corn and soy forecast for the United States. We tried to use satellite imagery and weather and other large data sets to try to predict how much corn was going to be produced that year. Actually, funny story is we released before the USDA's WASDE report in April and we actually moved the price of corn 3% one day.
It bounced back after our announcement, but that's kind of how we got on the radar. I was CEO of Descartes Labs for about five years. Also worked in a lot of other areas like oil and gas, metals and mining sustainability. I did that for five years and then I became CEO of GrainBridge in April of last year. April of 2020, right during the middle of the pandemic, I guess the beginning of the pandemic. And GrainBridge is a joint venture between ADM and Cargill, and we're focused on building better grain marketing software for farmers, especially focused on the data sets that we have from ADM and Cargill, understanding those transactions between the farmers and the grain buyers to encourage farmers to make better grain marketing decisions.
Rodney Connor: Yeah, that's great. Appreciate that. Sounds a little bit like what we're doing here at Indigo, right? I know there's some crossover between the types of things we're trying to do. If you could tell me, has anything shifted at your current company since you became CEO? Did that change the direction at all? Or have they been plugging along that same path?
Mark Johnson: Yeah, interestingly, GrainBridge is over a decade old, and our original piece of software we now call GrainBridge Advisor, a spreadsheet on steroids. It helps you to manage your grain position and is primarily used now by grain marketing advisors. We were originally bought by ADM. I believe it was 2015, I always get the dates wrong. Then Cargill joined the joint venture in late 2018. And at that point, the vision shifted a little bit. It wasn't about building this complex spreadsheet anymore. The belief was that there's been a lot of grain marketing software that's been built over the decades. And a lot of it does look like spreadsheet on steroids. And the reality is that most farmers don't use that software. Most farmers still use their own spreadsheets perhaps to record their grain contracts and their grain positions, but we wanted to do something for the digital age.
And I think there's two big points there. One is ease of use. How do we use some of the modern UX paradigms to encourage the use of the software? And then second was how do we give farmers unbiased objective opinions on their grain marketing based on the massive amounts of data we have. And I think those are two trends that have happened sort of in the secular non-Ag software world that needed to be transferred over to the world of grain marketing. If you think about what changed when I got here, I'm a data guy, I'm an AI guy, that's been my entire career and really refocusing the team on thinking about ourselves, not just as a database application, where you can go access your transactional documents, your contracts, your scale tickets, and your settlements, but rather taking that data and trying to drive insights out of it to make farmers better grain marketers. I look at the past year and I see us shifting from a company in agriculture that built some software to becoming a software company that works in the Ag space. And to me, there's a big difference there.
Aline Pezente: No, I totally agree with you and I see what you're trying to build with Mark, but let me do a question. It sounds as what you're doing is it's quite innovative for this industry. What are the hurdles that you're expecting, or let me put that way, what are the challenges that you're expecting on farmers adopting this kind of software, and what requires them to trust your software? Because, how do you see a world that farmers, they are going to utilize this cool technology in order to make their merchandising hedging strategies other than trusting their instincts and or their GMAs? How you see that?
Mark Johnson: Yeah. That is the million-dollar question here is, how do you build trust with farmers over time? And the way we've looked at it is that we need to look for features in the short term that I call it simple and necessary. What are things that every farmer needs to do and how do we make that as simple as possible? For example, last year, one of the very simple things we did was add alerts for scale tickets. As those come in, you get an alert on your phone, you can come back to GrainBridge. That has nothing to do actually with grain marketing, but those are the kinds of features that increase usage and start to build trust with the application. I look at... I think you could look at the world of financial applications and see a lot of parallels here.
I have a long-standing relationship with Fidelity because that's where my IRA sits. I trust Fidelity a lot more than I would trust some random app. You could use something like Wealthfront. Now that's, Fidelity is, me managing my account. Perhaps you talk to an advisor at Fidelity and you move your money around. Wealthfront is an AI for that. I just put money in and Wealthfront and its clever computers decide where to invest my money. Ultimately I think that's where grain marketing goes, right? That computers in the long-term are going to make better decisions than human beings as respect to financial matters. In the short term... Well. Oh. What?
Aline Pezente: No, continue.
Mark Johnson: But that got a reaction out of you. I'm really curious about that. That's a long-term vision, right? And that could be 10 years. It could be 20 years. It could be 50 years, but that's where we're headed. What do you get in the interim? And I think one way to think about it is that we're kind of digitizing some of the signals that you see in market and try to nudge farmers into better behavior where we're not making the same kind of recommendations, the market outlook kind of recommendations that our grain marketing advisor might give a farmer. We're really trying to look at objective data farmers around you are selling right now. That's a kind of market signal that we would have exactly because we're sitting on this data from ADM and Cargill that doesn't say the... It's not market outlook data.
Mark Johnson: It's market data around you that might suggest that you want to sell right now. And I think that that's really... In AI, they often call this the uncanny valley where you're not quite to full AI yet, but you're not at the old world of just a database application. I think finding those features, finding those killer features that are going to encourage behavior, that's the million-dollar question. How do we get there? It's not quite well [inaudible 00:08:25], it's not just looking at your contracts, it's somewhere in between where we're pushing farmers towards making better decisions.
Aline Pezente: No, absolutely, Mark. The question I'm curious to hear, this type of product as they're going to get better, they get better as much as data that they can access to, right? And to your point to data, one of the things that we always debate here and which we observe within the industry is that, that concern that farmers they have, right? How do you bridge the gap of this kind of innovation in their hands? When some people in the industry would like to have the benefits, but to have the benefits of this product, you really need to share some of your data in order to help the machines to make more intelligent decisions. How do you describe that, or do you think this is a problem on your world?
Mark Johnson: I think data privacy is always an issue and we take it very, very seriously. If you think about it, our owners are two competitors longstanding, rivals in the industry. We've taken great pains to make sure that the data is secure, that neither of our owners can see each other's data. An implication of that, an outcome of that is that that means that there's a lot of data privacy for farmers. In that sense, that's level-zero of data privacy. I think the next level up then is how do you aggregate a bunch of different data sets to create insights? I think an important point here is that there's a lot of data that's publicly available that's very useful. What are local yield forecasts? Local bids are something that is generally publicly available now. Now we have an interesting set of data and that we can see contractual data between the buyer and the seller for many years.
Mark Johnson: And that gives us a particular insight into when grain is being sold and when grain is being delivered. And there's some interesting insights from that. I don't think that that's going to rankle the firmer in terms of scaring them about data privacy, because I think that those are derived insights from a larger data set that's not going to expose anything about an individual farmer. I think that's okay. But another important point is when you get to the next level up, basically the contract doesn't tell you anything about the decision drivers, right?
Aline Pezente: True.
Mark Johnson: So you know what happens at the point of execution, but I think there's a lot of data before that, that ultimately as farmers interact with software more frequently, we're going to learn a lot about those decision drivers. And then I think you get a whole nother level of data. And I think that for companies like yours, companies like ours, it's really about kind of maintaining that trust, first of all, and making sure that the metrics that we release are always useful, and make sure that those metrics always obfuscate the farmer's underlying data. And then I think we're in a really safe place. And I think that farmers ultimately will trust us.
Rodney Connor: Do you get much negative feedback on aggregated data? I feel like the commercial side probably understands those terms and those processes a little better. When you're sitting across the table, assuming you do from an individual farmer, what's the reaction to big hairy problems like that?
Mark Johnson: Well, I think this is the building of trust. also is that right now the application allows you to see an aggregated view of your transactional data from both ADM and Cargill on a single location. So in some sense that's your data that you're accessing thanks to your accounts with ADM and Cargill. So at that first level there's really no issue. I think that's just something that we're just going to have to test the market with and whenever we think about a data feature, we're going to test it with farmers and get their reaction to it. I think the first level really is like not, does this scare you but is it useful? Because I think this is true for a lot of different data applications across the web. There's a lot of things that if you look at it first from a creepiness level, it's creepy, like Amazon's recommended products. But when you look at it from a utility perspective, those are so useful to me that I'm willing to bypass the creepiness.
Actually for me, even worse is Instagram ads. I have bought so much stuff off of Instagram. I want a new knife, the best place to go is Instagram, because I'll find the coolest, newest knife vendors from the advertisement. So really, I think utility is where you have to start with any of this. Frankly, we have only aggregated the full data sets in the past six months. So that was step one. We're in the process right now, we're building this data refinery that can pull in data, both the transactional data, outside data sets. So we're really at the point now where we're going to start testing those boundaries and understanding what makes a farmer uncomfortable? What makes a farmer excited about seeing these different data analytics. So we've got a ton of ideas, but my guess is a year from now, we're going to have a really interesting conversation about what we learned.
Rodney Connor: So Mark, I think for whatever reason, the consumer is more comfortable buying a knife on Instagram. For whatever reason everyone has gotten over the creepiness and are really comfortable with that. The thing I'm met with all the time in agriculture and I think is true, is that relationships are super important. That data, that intelligence is just not going to replace that relationship. I'm curious your thoughts on that or how you think about that?
Mark Johnson: Absolutely. Actually I've just had a little a tweet storm about this. Marketplace is a bad word in green buying and part of the reason it's a bad word is I don't think that you can really build one in the same way that you could build an Amazon marketplace.
There are only so many buyers you can sell to and the relationship between you and your buyers is very different than your relationship to the person at Walmart who helps you find the socks. So I think that one of the things that our software has to do is improve that relationship between buyer and seller. So if you look at how we're rolling out to farmers right now, we're going to sunset ADM farm view, which is an app that we built for ADM and move those farmers over to green bridge and that's happening right now. Green bridge is a great time for the merchandiser to sit down with a farmer that they have a relationship with and go through the app with them. As we put in more metrics into the app, I expect it that those derived metrics are going to be really useful to facilitate a conversation with the merchandiser and the farmer or brown their grain marketing plan.
Mark Johnson: We're going to start to build some of those features into the software, help a farmer plan out when they're going to sell at what price, again that's going to facilitate a conversation. So I think that one of the things that's really important, especially me coming from a very highly digital world is this is a world where digital enhances the personal relationship, doesn't replace it. I think that everybody in this space needs to remember pretty deeply that relationships do matter in agriculture. But I think on the flip side, people in agriculture need to remember that digital information can actually improve relationships between people and it's incumbent upon us to figure out what is the value that we can create, not just for the farmer in making a decision, but enhancing that relationship between buyer and seller.
Aline Pezente: It's interesting. Mark, I see what you're saying, this type of technology in the hands of merchant and a grower does this facilitated discussions, their thoughts, and also for the merchandiser to tailor whatever they offer that they can do for that customer. But what about the grain marketing advisors? Because those, those are the guys and girls, talking about women here as well, representation, but those are the people that they are normally prepare or they normally give these insights for the growers to sit and have those thoughts with the buyers. Do you see that this kind of technology does affect their jobs or improve their relation or actually substitute their relations? Just like what financial markets has changed with us, some financial advisors and brokers in the past.
Mark Johnson: Yeah. Again, I think you see a lot of analogies here that we can borrow from the financial world. As stocks began to be traded online, in some ways that empowered the end user to make their own decisions. You've already seen that to a certain extent in grain marketing with things like podcasts and Twitter. I follow a ton of people on Twitter and I feel like I get more market outlook information on corn on Twitter than you can anywhere else. So I think already, you see the farmers using tools where they're trying to build their own view of grain marketing. That being said, there's always going to be a place for advisors. You've seen this in the financial space where sure, I go into my fidelity account and play with it myself. But ultimately sometimes they have to get on the phone with someone from fidelity and make sure that I'm doing all the right things for retirement because yeah, I've read a lot of stuff online, but sometimes you need another human being at the other end of the phone.
So I think one of the things that the industry hasn't quite figured out yet is what is going to be that software relationship among those three parties. So you've got a farmer, they potentially have a grain marketing advisor and they potentially sell to a few grain buyers. How can you actually use software to facilitate those relationships a little bit better? I even look at us with green bridge advisor and a conversation we have internally is how do we use the more modern software that we're building with green bridge to go connect into that green bridge advisor to improve the relationship between the advisor and the farmer. When they're making a sell recommendation, could that be done in software and sure you might want to pick up the phone at some point, but if that conversation has already had between the advisor and the farmer, maybe the farmer's ready to make a decision, maybe they're ready to, well, not by now, but I suppose the sell now button. So I think there's a lot of opportunity here. Frankly this space has not really been explored as much as I think it will in the next two years.
Aline Pezente: I agree Mark. Honestly, and again, this is my personal perspective in view of this. In fact, the way that I see software and tools like yours and as they are getting adopted, I think that's what will make these industry to also become more sophisticated. If you think about pricing tools for an example, there is a huge population of farmers and not talking only about US, globally, that they don't touch this kind of a product in which helps them because it is complex. The data, the decision tree in their hand to make a derivative hiring is something that is for some of them is overwhelming, which I believe this kind of technology facilitates that. In fact, I do believe that the roles of the advisors merchandisers, they are going to evolve as well in this industry and that's going to lead us to have even more higher liquidity because farmers, also they're not farmers, but they are the greatest risk managers and also portfolio managers if you think about how they manage commodities in the world. I don't know, what do you think?
For sure, if you think about it, better grain marketing helps everybody in the industry. So if you're managing a facility you want better visibility into when grain is being delivered. If you are a farmer, you should be forward selling your grain when the market tells you to forward sell your grain, not selling off the combine in October. So this has huge implications for supply chain visibility to the industry and to for the financial stability of the farmers. So, absolutely, I think that we're really at the cusp of this. Especially coming in from the outside, because I spent a lot of time more with the agronomy side on software and that was pretty sophisticated. You've got satellite imagery, you've got all this soil data, you have aggregated data across many years now of yields. There's just a lot going on over there.
It is absolutely shocking when you sit down with a number of farmers and you say, "How do you manage your grain position?" They pull out a notebook. It's not even disruption, it's just moving into the digital era and then that unlocks all these opportunities. Frankly, most of the farmers that we've talked to, they want some help in grain marketing. This is not their favorite part of the job. They understand usually that's not what they're best at typically. So I think as we can use software to help them become better grain marketers and give them some more confidence about their decisions. I think we'll do a lot of good for the industry.
Rodney Connor: I understand your point on marketplaces, Mark. I think for sure, an agricultural marketplace is going to be unique. You can not go into an agricultural marketplace and treat it as walmart.com. It just is not going to work. What I worry about the farmer is that lack of an agricultural marketplace has led to a thousand different data points to try to make a decision. So man Twitter to me, I know you're big on Twitter, I'd love to talk about that. I hate Twitter. It is just a puke of information at me and I just don't like the way it comes to me. So if I'm going to make this bridge back to Amazon, which I don't like comparing us to Amazon, but for now, let's just say, "Hey, Amazon." The one thing Amazon is really good at is making it really efficient to spend money.
Rodney Connor: So to your point earlier, when I go into Amazon, it tells me, "Hey, this is what you want today. It's 90% right." I have the opportunity to say, "Yeah, I want that," or I don't. I have the opportunity to do some due diligence and say, "Hey, is that really the best brand for me?" But man, nine times out of 10, I'm just like, "Yep. Click that button." I personally, being a grain originator for as long as I have, I think where the farmer does himself a disservice is by not reacting to that information in the place that they can. So the more efficient we can allow that farmer to, I'm doing air quotes here, "spend that money," right? Which, in this parallel is making that sale. I think the better off the farmer is I want to make that as efficient as possible.
Mark Johnson: Yeah. No, I think Marketplace is a complex word here, right? Because I think that when people hear Marketplace, they imagine this global bazaar like Amazon, and that just... Grain is an inherently physical industry. Corn is pretty heavy, you can't fly it around via FedEx.
Rodney Connor: Right.
Mark Johnson: That creates some limitations on what a marketplace looks like. But I think what you're getting at is there's a kind of transparency that's required for the modern grain industry, but that does create challenges on the farmer side. Even though they want that transparency, if you throw a million data points at them you end up with information overload instead of driving them towards a decision. And this is a conversation that we have all the time internally is that on one hand, you want to give the farmer as much information as possible, on the other hand, we want to avoid exactly what you were talking about, which is the Twitter fire hose. And it's, "Okay, I just saw a million tweets about corn. Do I sell today or not? I don't know."
Mark Johnson: I think that's the real challenge for us is that absolutely the transparency aspect of Marketplace is really important, right, for both the buyer and seller. On the flip side, if you throw too much information at the farmer, they're just going to be potentially stymied and not make a decision. Again, these are problems that it's not just a software problem per se, in a lot of ways it's a UX problem-
Rodney Connor: Yeah.
Mark Johnson: ... that is how do you take all this-
Aline Pezente: Yeah.
Mark Johnson: ... information and present it in a way that actually drives the decision at the end of the day?
Rodney Connor: Well, and a trust issue, because we have some artificial intelligence guys that would be very comfortable servicing over, "Hey, Mr. Farmer, this is what you should do today, right, because this black box told me what to do." I think we all know that's not the approach you can take to the Ag industry, right? That's not going to build trust.
Mark Johnson: Absolutely not.
Rodney Connor: Yeah.
Mark Johnson: I think that AI at best is going to be your buddy here. Right?
Rodney Connor: Yeah.
Mark Johnson: I think this is one of those places where man plus machine is greater than man or machine or woman, I suppose. Where, imagine the AI is more of a helper tool. In some sense, what we're digitizing is not the farmers' mind, where digitizing is a grain marketing advisor. Someone trying to understand market outlook, someone trying to understand grain buying patterns. And that helper can give the farmer higher-level information than just price information but doesn't go all the way to just making decisions for them. When I put on my crazy futurist hat, I imagine ultimately this turns into something like a chatbot where you're actually having a conversation with this AI, rather than the AI doing the work for you. You build a relationship, frankly with the software, the underlying software, much like you would build a relationship with a human being and that's a human-computer interaction and an AI problem that people like me and Aline really want to go tackle.
Aline Pezente: Oh yeah. I'm super passionate and I agree. And I think that this industry would have so much benefit of that, I think to your point, I have found very interesting. We're not trying to digitize the minds, right? And I guess that's a process, which I always also explain on Indigo Marketplace. We are not trying to digitize the relationship and moving that away, we're trying to digitize the process you get through this relationship, which is quite analog. There is a nuance here, which I think you and us, we are always navigating this industry to explain and also to build trust and adopt the software, right? Not everybody is doing and building. I think this is a... I think, honestly, I am super anxious to see our journeys in the next three and five years, Mark.
Aline Pezente: I really like having your senior product, where it goes, what we are building exciting. It goes well, where it goes and all this adoption. I think we are just... I feel that we leave at the hype in this industry over the past eight to 10 years, a lot of applications is also being actually most focused on-farm management systems and technology for biotech for this industry. Just see the past two years, which I'm observing, companies like ours and other cool players, focusing the merchandising and data aspects of it. On that segue, what is your perspectives? What do you think is going to change this industry in the next year? How do you believe? What are the big bets on top of the one that you're already pursuing that you're doing overall for the agriculture sector? Yeah.
Mark Johnson: If I look at the biggest thing that's going to affect us over the next decade, it's, call it mechanization, call it robotics, call it self-driving cars, right. It hits a lot of different areas. But if you look at most industrial sectors, there has been an enormous amount of automation. Look at mining, right? You go to Western Australia, they're literally mines that are basically controlled by programmers right now. The trains are automated, the carts are automated, almost everything is automated. That's not true in agriculture yet, but it is very, very possible. Cart mines already drive themselves largely. And as you start extending that to transportation, I think as you start extending that to the elevator or mining facility, and then really when you extend to the growing process, whether that's a fully robotic farm growing strawberries or ultimately some of that with row crops, to me it's very fuzzy as to when and what, but that's what I would look at as a major change in the industry.
Mark Johnson: Because as you start to take people and put them in their highest and best use, rather than sort of like the physical process, I think that's just going to change a lot of things across the supply chain. I think that this, it's looming probably further in the future than me as a futurist would like, but it's coming. And when it comes, it's going to be real interesting.
Aline Pezente: Interesting.
Rodney Connor: Any negatives to that, Mark? Anything we should be worried about in that future?
Mark Johnson: I don't think so. I think it could change the dynamics of the industry in very odd ways. Effectively robotics means you are producing more with less human labor and you run that out and you let that run its course, and it could have some really interesting applications for the future of agriculture. Again, where I'm hesitating is, I'm not saying that firms aren't going to require people in the next decade.
Rodney Connor: Yeah. Right.
Mark Johnson: I think that that's clearly not the case. That being said, even if you automate parts of the value chain between the farmer planting seed and going to the market, imagine just self-driving trucks. Imagine the efficiencies you could create when you understand delivery dates, farmers are forward selling, I've got sort of a matrix of when grain is coming and that trucking is completely automated. Right? Like that's the kind of dynamic that I think is really going to shift in the market and also electrify it, right? You talked about sustainability. Fuel is still a huge factor. As you kind of automate that and make it more sustainable, I think that that could have some really interesting effects. Again, not talking about necessarily eliminating human beings from the farm, I'm just talking about parts of that process being automated and having huge efficiency gains on the backend.
Aline Pezente: To your point Mark, just the fact you can have technology that enable you to have schedules in the country elevators. Like just the process that when the truck is arriving and automatizing as much as you can the dump time, man this is a huge gain. All this facilities that they are... Sometimes people they put over capacity on those elevators, because to deal with the peak, right. Imagine how much of that you're unblocking that cascaded onto the chain.
Mark Johnson: Yeah. We have wait times in our application. That's not the solution. That's a band-aid, right?
Rodney Connor: Right.
Aline Pezente: Yes. Correct.
Mark Johnson: You really want efficiency and delivery and that's not like telling the farmer "Now it's not a good time to come because there's a three hour wait time."
Rodney Connor: Yeah.
Aline Pezente: Yeah. Guys, I'm curious about their perspective because one of the things we try... It also became something in my radar because a lot of people in the industry, which I'm talking. And again, I'm putting your futurist head here, Mark is about those technologies if they are going to unlock a new, different type of model, which is farming-as-a-service, I had been having this interesting discussions with some colleagues in the industry and some farmers in fact, that they are starting to see that all this technology and automation, in fact, is going to enable people. People that seats see wall street, they buy a farm and they come with all this package that people that is going to farm it, and they're going to do it. And they're just going to trade the assets, taking that and you have a fixed cost for your inputs, for your planting, and it's a whole different model. Do you think that this kind of model is going to happen in this industry. Do you think that this type of technology is going to start to unlock this new ways to do farming as well?
Mark Johnson: Yeah. Again, I see a future here, right? Where specialty crops are grown largely automatically and close to the consumer. Row crops are... Robotics become a more and more important part of the equation. That being said, if you look at the big shift in manufacturing, you talked about just-in-time manufacturing, you have access locally to some raw supplies. Someone wants to build you a widget. You order a thousand widgets when you need them. Farming is not just-in-time, right?
Rodney Connor: Right.
Mark Johnson: You have... Corn takes a while to grow, and no amount of genetic engineering to corn is going to cause corn to grow in a day, rather than over the growing season. Also weather, right? Like the reality is that you can grow some crops in a warehouse, but a lot of crops require being outside and I think that will be true for the foreseeable future. Again, I think you have these variables in agriculture that I think that someone coming in from Wall Street or frankly, someone like me coming in from Silicon Valley has to come in with a lot of humility because agriculture is the foundation of society. We have thousands of years of doing this and there are a lot of quirks in agriculture that aren't the same in traditional industrial manufacturing. So yes, I do think that you'll probably see some changes as more people want to participate in this market. That being said, there's just the reality of Mother Nature and the real world that you're not going to be able to change.
Rodney Connor: Mark, when I have trouble sleeping at night, I think one day it'll be about, hey, I'm afraid we're too far ahead. We're out in front of where technology is in the ag industry and then the next night, the very next night, I'll think we're too far behind. We're not going to catch up to where it's at.
Aline Pezente: Oh yeah.
Rodney Connor: So I'm curious, what do you think will be the tipping point? What do we have to see to say yes, "this fire has started in and we're going to transform this industry overnight." I'm not talking Indigo. I'm just talking in general.
Mark Johnson: I'm reading Lord of the Harvest right now, which is about seed genetics and the early days of that. I think that people often forget that agriculture in many ways has been on the cutting edge, exactly because food is foundational to society, farming has always been really innovative. When we talk about like the great inventors of all time, Eli Whitney always comes up. There's always been innovation in agriculture and I think that sometimes we do ourselves a disservice in agriculture in talking about how we're behind, and behind usually means digitally we're behind. That's true for sure, however, there's a lot of ways that, look at genetics, we were way ahead of everybody else. We were pushing the boundaries of what was possible of opening whole new debates and ethics exactly because of some of the incredible innovations that Monsanto and Pioneer. So yeah, I think digitization is going to open up a really interesting world to agriculture that no one really knows what it's going to look like, but I'm pretty excited about that but just want to remind ourselves that we're not behind, we're on the cutting edge in a lot of ways.
Rodney Connor: Yeah, no, that's right. One more question. This has been a lot of fun, and I'm not saying one more question, I guess, but this has been a lot of fun talking to you. Clearly the three of us are aligned generally of which direction this industry is headed, where we need to be I think for sure, the next 5 to 10 years. Curiously, Elon Musk is pretty famous for inviting others to compete against him. I think we can have a lot of discussion about where we compete, where we don't compete all those kinds of things. But I wanted your thoughts on competition in the market, how you think about that, is it good, is it bad? What does it do?
Mark Johnson: Competition is essential to getting the best product out there. Even if we shared our exact product roadmaps with each other, yeah, we might nudge our roadmap around a little bit, you might nudge your roadmap around a little bit, but we have different views of the world. We have different customer bases, different investor bases and all of that drives a company's strategy. Frankly, I want to see more people. I think about this as the digitization of the business side of the farm. We've digitized the agronomic side of the farm. Now, how do we do this on the business side? And that requires also sitting on the digitization that's happened with ERPs at the buyer. Now there's a layer of software that needs to built above that.
Mark Johnson: I want to see more people in this market, not fewer. I do believe there's going to be consolidation given the amount of capital that's been pumped into markets, you see the bushel raised last week. That being said, I think that's also going to drive more investment in this market because people see that there's more and more opportunity in this digitization process. So for me, I welcome competition mainly because I think this is a really big space and I think it's way bigger than people give it credit for right now, and even sometimes I'm guilty of this because you see the market as it exists today, you see how much money grain buyers are spending on software today and you assume that's always going to be the case. In every market that's been digitized, if you look at software spend, it goes up at a really high compound annual growth rate once you hit that inflection point, a product market fit, and I think that we are probably 12 to 24 months to finding some very serious product market fit across this industry. So let's go all innovate at once and see what comes out the other end, because I think the industry itself will benefit because of it.
Aline Pezente: Well, can I take the last question or last.
Rodney Connor: Yeah.
Aline Pezente: Mark, this is so very interesting and then we should do this more, but it's actually to you Rodney and Mark. What prevents an ERP company like SAP or AGRIS to do what we're doing guys, like what you are doing Mark, because they have also transactional data or starting to building a marketplace, a transaction platform. What are your thoughts about this since we are talking about competition.
Mark Johnson: You're asking both me and Rodney?
Aline Pezente: Yeah.
Mark Johnson: I was going to throw it to you. It's the innovator's dilemma, right? This is just classic, classic. When you have a market, it is really hard to innovate on top of it. The way I look at it is the relationship between the ERP and companies like ours is going to look exactly like Oracle and SAP did to Siebel. And frankly, ultimately how Salesforce then put ERP online and made it much easier. It's why PeopleSoft popped up even before all of that and making HR software much easier. The reality is that when you're in an incumbent position, it is very hard to disrupt yourself. And the kinds of software that we're talking about will really change the value of that underlying ERP. It becomes much more like a database, then a high value application. The margin is going to move upstream. And frankly, I don't think maybe SAP could do this, but I think most ERP companies are just not tuned from a product perspective, from a development perspective, from a market perspective, to be incentivized, to go build software that devalues what they're currently selling.
Rodney Connor: Yeah. I agree. Yeah. This isn't the Shannon at ERP systems by any means, but I just don't think they have the guts to do it. It's not in there. It's not their core of what they're excited about. It's not what they wake up to do every day. I think a good parallel is your thing on wait times at facilities, right? That's what I think ERP systems have done to digitize the ag industry in the past. Like, Hey, show me my contract, show me this online, give it to me in a way that I can see it, but it just wasn't compelling. You could tell their heart wasn't in doing that really well for the farmer. Their customer is different, I think.
Mark Johnson: For sure.
Rodney Connor: Yeah. Good. Well, Hey Mark. I want to thank you again. This has been a ton of fun, man. I appreciate you taking the time to come on.
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