Thursday, October 25, 2012

Indoor Harvest Interview

Welcome!  Today I am happy to be joined by Chad Sykes from the Indoor Harvest Kickstarter.  Thank you for joining us today Chad.  

I'm glad to be here James!
So you’ve got quite the project set-up here, what makes you think Kickstarter is the place to go for this kind of project?

Well to be honest, we decided on Kickstarter mainly for the exposure it might bring us more than anything else. I actually went into this with low expectations on raising any actual money on Kickstarter. We spent some time looking at similar projects like ours on Kickstarter and the success rate was rather low.

What I don't know however is if that was due to a lack of interest by the Kickstarter community in general for these kind of projects, or if the projects themselves just didn't do a good enough job selling their idea to the Kickstarter community.

Either way, if there are people on Kickstarter passionate about Vertical Farming we would consider our campaign a 100% success if all we did was connect with them.

Right now exposure is worth more than any money we could raise because as more and more people find out about our project, the greater the chance we have of connecting with people who can really help us achieve our goals.

What is “Vertical Harvesting?” Is it like hydroponics?  Or those little “as seen on TV” grow light boxes for herbs and such?  

Vertical Farming is basically the concept of growing produce in an manner that maximizes space. The most common method is stacking, or using tiered systems. Many of the people employing vertical farming methods are using some form of Hydroponics or Aquaponics. However there are people using other methods besides Hydroponics. For us, we have chosen Aeroponics because it makes the most sense.

Probably the most popular view of "Vertical Farming" is the one advocated by Dickson Despommier. The idea is that in the future we will need to build large Skyscraper like farms in order to provide adequate food to urban populations.

Agriculture as we know it today is simply unsustainable. Climate change, rising fuel costs, environmental impacts and the available amount of land are going to drive farming closer to the consumer. Since you are not going to find 100's of acres for farming in major cities, the concept of vertical  farming is to simply grow up.. vertically.

So your system doesn’t look like something I could just set-up in my bathroom, more like half my garage!  How many plants are we talking about growing here?  Who is your target audience?  

No our system isn't really designed for the average hobby grower. Each system can grow up to near 200 plants each depending on what you are growing. There are plenty of systems on the market already aimed at the hobbyist. Our intention is to provide a solution for smaller commercial growers who need a system design that works for them.

The problem we found is that there are really only two types of systems on the market today. You have the hobby systems that everyone is familiar with, like Bontanicare and General Hydroponics, and then you have the more complicated vertical farming systems from companies like Aerofarms and TerraSphere.

When you look at companies today that are successfully employing vertical farming techniques, what you find is that it's the smaller operator, the guy with less than 10,000 square feet that has a successful business model. These vertical farmers are mostly growing products for smaller markets, mostly local restaurants and quality conscious retail consumers.

The large vertical farming systems are simply too costly and don't make any sense for these growers. The hobby systems just don't do the job either so what you find is many of these growers simply build and design their own systems. What we have done is develop a platform that makes building systems easier and cheaper.

So say I rented an old commercial office space could I set that regular building up as my “farm?”  Isn’t that against zoning laws or something?

Zoning can be a potential short term problem, that's why my partner is someone who is an experienced lobbyist and commercial property investor. I know the word "lobbyist" can cause some people to cringe these days, so I want to clarify that my partner is a natural resource lobbyist.. he's one of the good guys in Washington.

But yes, zoning can be a problem moving forward but we are already seeing Urban Farming being embraced all across the Country. In places like Chicago, they are going out of their way to support the movement.

Depending on location and how local officials decide to embrace these new trends in urban farming will most likely depend on how influential special interest groups for large commercial agriculture are in those areas.

With the GMO labeling debate raging in California, should Prop 37 pass, I believe this debate will reach a national level. Honestly I'm not too concerned about the zoning issue. I think the pressure will be on local politicians to make changes to zoning laws and ordinances friendly to vertical farmers. If they resist.. pressure can always be applied. I believe the momentum is on our side here.

I’ve heard of concepts being thrown around of taking old abandoned factories, office buildings, and strip malls, and turning them into working farms in urban environments.  Is that a “top end” kind of goal you’re heading for?  Maybe not you doing it directly but providing the way for others to do so?

Yes, we have plans right now to build a demonstration farm using our modular approach. In fact, what we are doing right now is the R&D phase to support just such an endeavor. But for this industry to grow, we need to make it easier for entrepreneurs to enter it. The market for this is plenty big for everyone to carve out their own piece. That's why we are not only conducting the R&D for our own use, but we want to share it and make it an open source concept. If you want to have a industry grow, you have to make it easy for everyone to participate.

The plan is to build urban indoor farms that not only generate income, but are platforms to advocate and promote the business model itself. As more consumers become aware of these kind of operations, the better chance we have of making the model succeed. One Company can't do this alone and if it did, I think that would defeat the entire point of urban farming.

Remember when microbreweries were all the rage? You would go, sit and have a beer and you could see the brewery operations through large windows. It gave you the feeling you were literally drinking beer straight from the tap, that you had a personal connection with the brewer and the product.. well that's because you were!

I think this same concept can work with vertical farms, but instead of selling beer, you are selling salads, instead of looking at large copper stills, you are looking at racks of produce. You could even offer other products that are sourced locally which could promote the concept of a true local economy. Maybe someone who is out of work could make soups that could be sold alongside the salads. The idea is to promote local economic growth by people for people.

This opens up more than one revenue stream. You can sell to local restaurants, consumers and have your own value added products. We hope to become a manufacturer, a developer, a retailer and operate our own farms. We want to build our own brand while helping others build theirs.

It all has to start somewhere, so it might as well be with the system design itself.

So what’s the advantage of using your system versus say a greenhouse or standard farmland?  

I don't think you can really compare the two because I don't think vertical farming will supplant current commercial farming, I think it will simply compliment it, at least for the next few decades.

This may ruffle some feathers within the vertical farming community, but I think large scale vertical farming, the kind that would produce the volume needed to support the food needs of a large population are pretty much science fiction at this point. It just doesn't make any sense from a business point of view.

I also think it raises the question of whether or not it's even economically a good idea. Who's going to build these mega vertical farms? Who's going to finance them? I mean when you think about it, isn't the problem with agriculture today the fact that large multi-national corporations have turned agriculture into the mess it is today? Do we really want vertical farming to create the next generation of Monsanto's? Technology can be a double edged sword and I'm not at all for turning farming into some computerized factory belching tons and tons of produce out.

Farming is the one means of production that we as humans can easily engage in. It was the foundation of how this Country was built. We've turned it into a monster though and I think we need to create a whole new generation of farmers. Farmers need to be real people, not some computer or robot.

So I don't think we will compete with traditional farming. I think we can however provide a product for a conscious consumer base. There are always going to be people who walk into a grocery store and buy the cheapest thing on the shelves. They don't consider the quality or nutritional value, and those won't be our customers.

It's a tough thing to say, but it's the reality we have to deal with. I think the future of vertical farming is going to be smaller, more niche and focused towards a smaller demographic. That's not to say that technologies won't emerge, or demand won't grow out of this industry that could in fact support large scale vertical farming in the future. I hope it does, but right now I just don't see it happening anytime soon.

I notice none of your backer levels actually gives out your system, why is that?  Do you think you’re going to have a hard time coming up with $30,000 with only T-shirts and hats?  

I just didn't think there would be much interest in offering a large plastic tray to people. I mean when you break it down, that's really all we are. We are a company that makes a big plastic tray.

That's because we still are conducting R&D. We can show proof of concept easily enough, but we are still making design changes as we go along. There is still a lot we can learn about things like nozzle placement, types of nozzles, lid designs etc. We still have a lot of prototyping that needs to be done in that regard. But before we can move forward, the first thing we need to do is re-tool our tray molds.

I also believe that maybe using the term "system" doesn't really explain well what we are doing. We are not developing a system as much as we are developing fixtures. Fixtures that would be open source much in the same way software developers write code that is open source.

Have you ever remodeled your kitchen or bathroom? Did you go to the store and buy a "kitchen system" or a "bathroom system"? No, you probably picked out "fixtures" that appealed to you and then combined them to build exactly what you wanted.

That's what we are doing. We looked at what other companies were doing and we determined what was working and what wasn't working. One of the things that stood out to us was that many of these farmers that developed systems for their own use, then went on to try and market those systems. Those systems might have worked for the farmers using them, but that doesn't translate into something another farmer would want to use.

So to answer your question, we've really just begun. The trays are the starting point, but there is still more left to do.
What kind of media attention have you received with your project?  How are you spreading the word?  Facebook?  Twitter?  Google+? Youtube?  Advertising?  Are you using Kicktraq to help things along?

Seedstock, which is an organization that is promoting sustainable agriculture wrote a story on us recently. We are actually going to be presenting at their upcoming conference in the hopes of gaining more awareness for our business plans.

We've also been doing some online social networking and have been mentioned on a few agricultural related facebook blogs. We've also got some Facebook ads that we are using to drive traffic to our facebook page. We also have some Youtube videos out as well.

We really have just recently begun efforts at promoting awareness and our Kickstarter campaign is just one more way we are attempting to gain awareness. We are hoping someone notices us that can really help propel our reach so we can gain larger media coverage.

What we are really striving for right now is building a big enough social footprint to support a Direct Public Offering in early 2013. The end result would be us trading on a junior exchange so we could get the kind of exposure that would attract the kind of investment we need to move our business plan truly forward.

We have the experience to see such an endeavor through, so it's just a matter of gaining traction at this point.

One of the keys of a successful Kickstarter project is backer participation.  How are you engaging your backers?  What kinds of things do you have planned for updates?  Interviews?  Video walkthroughs?  Vegetable discussions?  Recipe books?  

I'm still evaluating how to do that honestly. We do have an active blog with our Facebook page. We've been regularly updating folks on our R&D efforts. I have plenty of experience in marketing to investors, but marketing to people on Kickstarter is a totally new concept to me.

We plan on doing some PR later this week to try and drive traffic. But as I mentioned before, I would consider this campaign a success even if all it did was broaden awareness for us.

We could use the money and it would certainly speed our development along, but if we don't succeed it's not going to set us back either.

So what tips/advice would you give to anyone looking to start a Kickstarter?  

Haha.. I'm still trying to figure that one out myself.  Maybe in a few weeks I can offer some advice, but right now I'm in a position where I'm the one who could use the advice.

I know we have the right idea and we have the means to see it through. Figuring out how to do that by using the crowd is still new to me. I come from a private equity background. I could easily go that route, but wanting to develop a business that is open source isn't really appealing to profit driven private equity.

I want to help an industry grow, I don't want to just profit from the trend and I think this is where the crowd can come in handy.

Thank you for spending your time with us Chad I know you’re a very busy man.  Do you have any final thoughts for our readers?

I only ask that people take the time to really look at what we are doing. We have an opportunity here to basically standardize vertical farming for smaller growers. The biggest barrier to entry isn't the systems or the technology, it's the R&D needed to know what produce grows best in what environments and how to scale that.

With so many different systems, that just means that the R&D for one system won't work on another. What we want to do is take a modular approach by developing fixtures instead of systems. Because in the end, the only thing that really is a system, is the plumbing system that connects everything together. By offering standardized fixtures, we can provide growers with the R&D to go along with it.

Having been a plumber for 11 years, if there is anything I understand.. it's plumbing, and that's pretty much all a hydroponic or Aeroponic system is. It's just a bunch of pipes.. So why is it that so many companies out there try and focus on something that is proprietary and patented?

The only thing we plan on patenting is the design of our tray. We want to encourage open source R&D but before that can happen, someone needs to come up with a standardized method. That's what we are hoping to accomplish with our design.

Thanks again and I hope to hear good things from your Kickstarter!  

Thank you for having us. It's been my pleasure!

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