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Mar 25, 2020
Will is a food entrepreneurship and sustainability guru. He is the Faculty Director of the Sustainable Food Initiative at the Haas School of Business at U.C. Berkeley, a recently retired managing partner at Physic Ventures, the founding CEO of Republic of Tea, recipient of the Oslo peace award, and has been involved in leading and growing more than 30 entrepreneurial ventures over the past 30 years. This is part 2 of a 2 part series with Will.
This week in Agriculture Adapts
– Driving change in the food economy
– What does disruption look like for a food startup: brief case study of General Mills acquisition of Annie’s Homegrown
– Business model innovations for extracting more value out of your crop
– The institutionalization of venture capitalism
Borna (ClimateAi) 0:00
Quick note here before we jump in, this is the second episode in a two part series. If you want to hear more about Wills background, the company he founded as well as his views on triple bottom line, please check out the previous episode. Otherwise, feel free to just dive in here. Please enjoy. This is Agriculture Adapts by ClimateAi. Every week we speak with industry leading executives farmers and academics, to get a 360 view of how the agriculture sector is innovating to stay ahead of a changing climate. I’m your host Borna Poursheikhani and I am your co host Himanshu Gupta. We’re a team of climate scientists and agriculture entrepreneurs trying to make farming more resilient, profitable and equitable as we transition to a new age of agriculture. This podcast is our journey as we explore the hurdles and opportunities that lie ahead for the industry that feeds the world. So you’ve been extremely involved in the industry in a variety of ways for a while, would be curious to see how things have changed. In the world of food in the world of agriculture, ag tech, in the world of agriculture, venture capital, like, what are the biggest things that you’ve seen that have changed since since you got into this industry?
William Rosenzweig 1:12
Well, I’ve always participated in a number of fields simultaneously as a way to kind of better understand, you know, what, what’s going on and also kind of defeat my own curiosity. So in the venture capital world, in the mid 2000s, there like around 2000 678 2010, the size of investment funds swelled when I first got into venture capital back in around 2000 was still considered kind of an artisanal practice, a venture capital firm, you know, at $200 million was considered you know, the right size, invest series A investments were You know, a modest one or two $3 million at a time, organizations, investment organizations always invested or most of the time invested in syndicates to mitigate risk was very collaborative. Then venture capital started become institutionalized. And so a lot of the institutional money managers like pension funds, university endowments, they started to build pretty significant size practices and venture capital and asset allocations to venture capital. So all of a sudden funds went from you know, 200 million to 600 million to a billion dollars and to invest a billion dollars the average company you know, series A, I think it you know, went from, I don’t know, two or 3 million to substantially more, it’s not uncommon for me to look at, you know, the, the blogs these days and see series A rounds at, you know, 4050 $60 million and that was the total amount of money, we thought about going into a company to get it to be liquid. So the whole game of venture capital changed in a way that I frankly, don’t fully understand it. I was appeased slightly the other day, there’s an article in The New Yorker this week about, you know, will venture capitals sort of bring the end of, you know, our economy, as we know, it was a real dooms day kind of article. But so I’ve seen that industry change a lot, and in a way that I feel, personally that I’m no longer really well suited to, you know, participate in it. I’ve been phasing out of my investment activities. I still like to support early stage entrepreneurs that are doing, you know, interesting, grounded, integrated, responsible things. And I always try to get them connected to the sources of capital that can fuel them, you know, with technology and in recent years, there’s development This kind of business, which people think of is like the winner take all platform. So they’ve grown with, you know, just enormous investment like we work and Uber and Lyft. And Airbnb, you know, some of these companies that have created like whole new categories, but they, a lot of our Facebook, you know, was in an earlier time, a lot of these companies are creating unintended consequences with their adoption. I mean, the unintended consequences of safety, you know, with the car sharing companies, the the meddling in democratic institutions that come with social media, I’m very concerned about the unintended consequences of just sort of wholesale adoption of technology, which is often driven by enormous amounts of venture capital, which just sort of bully their way, you know, into markets. And I’ve seen this happen in food too. We’re seeing it with plant based protein, you know, there’s some burgers Companies that are making burgers out of plants and they want to do away with, you know, animal agriculture. But certainly people that care about soil health appreciate that there’s a role for animals on farms. So it gets to be very complex. And this is why it’s incumbent upon people to fight the tendency of being distracted and overwhelmed with information to be rigorous and curious about Systems and how they work and get to the bottom of things and look for trusted sources of independent information that are not skewed or shaped by opaque sources of money or or influence that you would use with us. There’s oil in food, I think civil eats is the absolute go to resource for learning about what’s happening in food and Farming from social and environmental perspective. I mean, Environmental Working Group does have some good science, you know, as it relates to chemicals, you know, whenever it’s it’s hard for organizations to sort of stay, you know, they want to be activist, and they also need to be research, you know, focused, and they also need to retain their independence. And we don’t really have business models for that, you know, we’ve privatized so much of our world that the need for social benefit institutions, research organizations, if you will, you know, an attached independent research is just being forced left and right to figure out how do I monetize my audience. So it gets harder and harder to know who to trust right now. You know, it used to be that whole foods, which I now refer to as Amazon had a pretty deep connection and commitment to conscious capitalism, which one of its founders kind of put forth, and, you know, commitment to local agriculture and local suppliers. In the early days when I was affiliated very deeply with Whole Foods, it was, you know, affecting an ethos of trust among its patrons and, you know, now it’s owned by a different company with a different set of values. That’s very much focused on from my perspective, commodification transaction, convenience, efficiency, it’s not so much now about where’s the food coming from and how is it grown? It’s how fast does it get to your house, and does the person delivering it have access through their, you know, ring key to actually put it in your living room or kitchen, so you know, the values of the business and these vary Very large businesses that have enormous power now power to capture people’s attention to buy ad words and to influence public policy. Through their lobbying efforts. It’s just amazing. So it’s something that we can’t necessarily just sit back and passively think somebody’s going to take care of us. Yeah. And that’s why again, that’s why I’m teaching now, rather than investing, you know, I’m teaching because I hope that I can, every semester wake up, you know, a couple of hundred or 1000 young people who care about food or intrigued about food, they might right now just be using, you know, Instagram to capture their food experiences, but they’re curious about what’s behind all of it.
Borna (ClimateAi) 8:48
Invest in their mind their wallets. Yeah.
William Rosenzweig 8:49
You know, how do we wake up to become enlightened eaters, you know, what are the step by step practices that you can do each day to kind of reorient your own conscious habits so that you can live a life of integrity and then influence others to do that, and then hopefully, empower your own entrepreneurial spirits and agency to go out and, you know, change the system in a way and in time that, you know, we can turn this around and you know that back to your earlier question that that’s what I like about the word regenerative. The word sustainable now that we’re in the mess that we’re in, you know, being sustainable with the amount of temperature rise we’re experiencing every year is not sustainable. So for businesses to promote sustainability is just kind of feels like a fool’s errand. That’s why I think this word regenerative has caught on regenerative meanings. Let’s use practices that can actually reverse you know, or regenerate the resources that we have. It’s a it’s an aspirational word. It’s a it’s a call to action word. And it’s a problematic word because it means nothing. Officially. Yeah. So I’m hoping tonight Actually, this won’t air tonight. But tonight in my class or tomorrow night in my class at Berkeley, we’ll have Kathleen merrigan, who was the deputy secretary of agriculture during the Obama administration, really one of the most knowledgeable people about food systems and relation of food systems to climate and health. And she’ll be talking really about this topic, the interdependencies and I’ve talked to her a little bit about this word regenerative and, you know, it’s it’s the kind of word that makes scientists and academics and and policy makers and, and government officials just cringe a little bit because it doesn’t have a formal meaning.
Borna (ClimateAi) 10:55
And it’s gonna be hard to apply a formal meaning because it’s different for different areas and for different different places have different needs, it’s gonna be hard to apply rigidity to something that needs to be so dynamic.
William Rosenzweig 11:05
Yeah, you made such a good point earlier about, you know, these labels this way, I kind of feel like if you are so privileged to be living in a place where there’s a farmers market, and you know, the number of farmers markets around the world is growing dramatically. And if you can befriend that farmer and go visit them on their farm and ask them, How do they farm, what do they spray, like you mentioned, some farmers actually farm with organic practices, but find that getting the organic certification poses too much of a burden on them economically and labor wise, given the small scale of their operation. So they farm in a way that doesn’t rely on chemicals that maybe, you know, relies on on systems that they use a lot of compost, but they’re not organically certified, so they can’t put that on there. product label. So the first thing to do is just to try to as much as possible. And it’s certainly difficult even if you could just do it one day a week, sort of tried to detach yourself from the organized industrial food system. Different writers, activists, thought leaders, you know, have indented different things to change habits. You know, Meatless Monday. Yeah. Jonathan Safran flowers says, Why not just leave meat out of breakfast, just do one little thing, just don’t eat any meat at breakfast, you know? In that drop down book, reducing the amount of meat all human beings consume on the planet will have a major impact on climate change. So how do we eat more plants? How do we, you know, as you can hear from talking to me, I am more of a middle way person. I’m not radical, you know, like, yeah, become a vegan. I think people should eat The way they want, they should just eat mindfully they should know what the consequences of their decisions are going to be. Not just in this week, this month, this lifetime but in the lifetimes of the people who will hopefully Follow us on this planet, this, this beautiful planet and, and again just to close with gardening, gardening is a great source of getting in touch with with the beauty and the wonder and and just the extraordinary diversity of nature. And seeing it breathing it touching it feeling it. When you garden you are you enter in a constant cycle of birth, Bloom and decay and death, you know and dormancy and regeneration and you see this firsthand. And then When you get the benefit of sort of the the fruits of your labor, so to speak, when you, you pick that Apple or that orange or that plum and you eat it and even more powerfully, you share it with somebody else, your family, your friends, your neighbors, or even beyond that the food bank for people that are less privileged, you get a kind of return on investment that no stock portfolio will ever give you. Yeah. And it’s called wealth. You know, that’s richness and wealth. And the Greeks had a word for this it they called it eudaimonia eudaimonia was a state of human flourishing. And so I like to try to stay optimistic that it’s possible to create a state of human flourishing, we have to take care of ourselves. First. We have to make sure that enterprises and organizations and businesses that we design and create and lead and serve They’ll attend to those values. And then we have to be able to go out and tell our story because we live in an era of sort of the narrative. How do you capture the limited and, you know, bifurcated attention of people in a way that is full of integrity and transparency and truth?
Borna (ClimateAi) 15:21
Yeah, totally agree. wanted to go back to dig into this question of regenerative agriculture just a little bit further. So, for something that is so ambiguously defined, how do we promote that kind of, of practice, like regenerative agriculture has the potential to be huge from a climate resilience perspective? It means that soils will be able to withstand floods better it’ll be they’ll be able to withstand droughts better, means we’ll have less fertilizer running off into our rivers. But there’s also not really any form of compensation right now. A lot of people who are doing regenerative say that, you know, after two or three years you start seeing the fruits of your labor, you start seeing a really productive crop. But a lot of people are asking for Okay, can we get some sort of incentives? Can we get some some money for stealing the carbon? Can we get a premium on regenerative? What is your view on the right path for what’s what’s the right lever for us to pull to get this going?
William Rosenzweig 16:11
There will be multiple levers, so if you start with yourself as an eater, the first thing would be to wherever possible, support the farmers who are doing that? Yeah, talk to them, buy their products eat their products. For the companies. There are some large companies that are experimenting with products that are sourced from regenerative Li grown crops and grains like Annie’s the macaroni and cheese company that’s now owned by General Mills. They created a line of you know mac and cheese products that came from regenerative Li farmed products, you could support those, you know, again, as an eater that would be one way that you can start to participate in the system. Again, if you are a food innovator, and entrepreneur go out and try to create more products and supply chains. If you are a public policy person, go out and try to figure out how to create laws incentives, figure out how to move subsidies and agricultural incentives from a conventional manner to a more progressive and regenerative manner. So those are three levels right there. One is, you know, at the personal level, another is kind of at a leadership level, and another would be at a policy level. And then finally, if you’re a farmer, be open to embracing and studying and sharing engage with other farmers and networks to share data. I’m involved with one farm right now that has a group of researchers who are rigorously measuring carbon in the soil on this 400 acre farm. They’re also trying to measure nutrient density Because soil health also equates to more nutrient dense food. So maybe we could grow. We don’t have to grow more food, but we could just grow better food, healthier food, more nutrient dense food. So if you are interested in botany or plant science or Mike the microbiome, you know, that would be an area where you could contribute is to advance the science and the integrity of the information around these methodologies to have them work effectively.
Borna (ClimateAi) 18:33
You mentioned Annie’s and I, first of all I love and my mom used to always buy me their gummy bears when I was younger before my for my water polo games. But it kind of brings up an interesting question like as a food entrepreneur, if you are starting a food company, if you’re selling a food brand that you want to be some sort of trusted entity in the marketplace, what is the end impact that you make, like Annie’s was acquired by General Mills is like the biggest impact that you make, that you can become part of a larger An organization that can then learn from your practices, or as the goal like for you to sort of like displace these entities is the goal for you, as a small brand to sort of do what you can and then incrementally if we have enough of these small brands will begin to make a dent in the larger problem. Like what is what is the end impact that we’re trying to make by starting these food companies in these food startups?
William Rosenzweig 19:22
Well, your your Annie’s example is very close to home. For me. I just co authored a new case study in the Harvard case series and the Berkeley case series. That’s all about Annie’s and Annie’s being acquired by General Mills, and how the General Mills organic and natural unit which accounts for, like I would say 1 billion or more in sales of a $16 billion company, how they managed to get General Mills to commit to a million acres of regenerative Li farmed agriculture for their support. Chain. So it’s a wonderful story about how an entrepreneurial company becomes part of a bigger company. And then that bigger company takes the lead and uses that knowledge and know how and market leadership to influence longer term the entire company. That’s kind of a systems change story. Very excited to have that case get out in the world. You know, an interesting way you kind of teed up exactly that sort of transition that the food business you know, the global food business still is operating at scale, you know, certainly supply chains, you know, machinery, transport, logistics, you know, all of those things people achieve companies achieve economies of scale, which translate into better pricing and better margins and better market power and better policy, power, all of those things. So, historically, it’s hard for small food companies. To stay independent at once they get to a certain size because the competitive landscape of of traditional food is, is what it is. Yeah. So that is kind of the general trajectory is that they end up getting acquired for a package food company. I mean, I think it’s interesting that most of the packaged food businesses now are restructuring their portfolios to move toward healthier and more sustainably produced products, all of them. All of them have venture capital activities now that are investing in early stage companies to get a jump. I mean, Tyson Foods, just Tyson which, you know, historically was a meat company is now you know, leading a national consortium around protein, because there’s a famous case study about the railroad industry back in the early 19 hundred’s and how it was displaced by cars because as the story goes the railroad industry thought that they were in the railroad business, not the transportation business. And now Tyson isn’t going to make the mistake thinking that they’re in the meat business. They’re actually in the protein business. Yeah. So protein can come in many forms. So they’ve been very actively diversifying their, their expertise, their supply, and their relevance just they have worked. They have gotten on board, at least from what I can tell, I don’t know that much about their practices or where they fit on the spectrum of being a good actor, but they definitely have pivoted to reposition themselves as a, you know, primarily like a chicken grower and processor of chickens and other meat products to a protein company. Again, I haven’t looked at their numbers. So I don’t know how much plant protein is represented in their portfolio but, but they’re part of that transition is happening.
Borna (ClimateAi) 22:57
Oil and gas companies, a lot of them are becoming energy Companies because they, they’re basically trying to position themselves to not get totally displaced when the transition ends up kind of nearing its completion there.
William Rosenzweig 23:08
You know, one thing I I’m disappointed about is, you know, like 12 years ago, we work very closely with Unilever to imagine what packaging would need to look like in the year 2020. And is there a, you know, putting a lot of stuff into bottles and packages in the marketplace? And they realize, well, we, you know, they basically said, we need to figure out how to make a package that can be made from co2 or co2, so like from a waste stream from the IAEA, and then have it be biodegradable. And we found a scientist at Cornell named Jeff coats, who was working on making catalysts to do exactly that, and he had recently become a father. And he woke up one day like throwing away a diaper, a disposable diaper. And he became, you know, immediately aware that he was putting something in his trashcan that was not gonna, you know, be biodegradable and it was gonna last for thousands of years in a landfill. And he didn’t feel good about that. He started working on that problem from a chemistry perspective, and he created catalysts and processes to actually be able to convert these renewable feedstocks into biodegradable plastic materials. This was about 14 years ago, 1214 years ago. Sadly, there’s been no global mandate for companies to get on board to make these kinds of products. The big oil and gas companies have dabbled with renewable products. They’ve done a lot of advertising and promotion. about their transition. But there’s no you know, global marketplace. There’s been no new taxes laws, tariffs put on the, you know, businesses usual products which are contributing dramatically to climate and temperature rise. So I i’ve been, I’m kind of heartbroken and I feel like a lot of my effort as a venture investor to try to get these new technologies to scale. It’s just taking a long, long time. It’s taking too long. And, you know, we just we do not have the political will. These big companies have huge influence on our elections. People are in denial. So, even though I think entrepreneurial agency and innovation has a lot to contribute, without the leadership at the government and policy level that also wants to advance a new paradigm. These small companies aren’t going to be able to break through there. They’re going to get squashed.
Borna (ClimateAi) 26:12
And I think some would say that it’s also due to a lack of motivation, just in the general public or maybe a lack of education, or a sense of, you know, urgency that people have. And what’s it. What’s your view on that? Do you think it’s fully on? Well, yeah, I mean,
William Rosenzweig 26:26
yeah, I mean, I think people are kind of apathetic, you know, they just look at the way you know, this growth in convenience and in ghost kitchens. And I don’t know, I think that, you know, again, there’s a lot of distraction. TS Eliot has a poem that says distracted from distraction by distraction. That’s kind of where we’re at these days distracted from distraction by distraction. That’s from the for cortex. But it’s, it’s also it’s our leaders. I mean, look at Washington. In this week, I mean, it’s just unbelievable. People are focused in another paradigm. People are, do not believe in science. This is a problem. So without an educated and kind of enlightened electorate, we are going to be held hostage by people that are hoping for a miracle. And I think those of us that are in committed to science based inquiry and some semblance of that there is truth at the end of the day. This is a difficult time. And that’s why I think we need to learn how to lead ethically we need our business institutions to be trustworthy, and, you know, grounded in values that are connected to human flourishing. And to your point we need to create the incentives. There’s plenty of money in the Department of Agriculture. It’s just What is it funding? Yeah, you know, it’s funding a lot of incumbent activities but Okay, let’s look on the bright side. Look what’s happened. I don’t know if this is the bright side for dairy farmers and certainly isn’t but look at what’s happening to conventional dairy right now. I mean, they’re going out of business. Right Left Dean Foods, one of the largest dairy producers and marketers in the US filed for bankruptcy. Because people’s tastes are changing. So the power of eaters is huge. And when you know and when these movements come, they can come pretty fast and I think plants are coming fast plant based eating, or plant forward eating is coming with great rigor now. We still need transparency. We still need food systems intelligent we don’t know. If a burger made from plants, using a lot of biochemistry, and agents and solvents is nutritious. We need to find out before we just, you know, adopted wholesale and say that, that these new products are going to be, you know, safe and healthy for us just because they’re made out of plants if they’re, if you have the chance to eat, these things that you can grow or other people can grow, there’s a lot to be said for those people that live in places proximate to growing regions to eat as locally. Yeah, as possible. And the other thing you know, we mentioned this before, but like, if you grow it yourself, you have such an appreciation of all the resources and time and attention that went into growing it that you’re less likely to waste it. So I think the biggest opportunity is for people, individuals to wake up. I think it’s most important for the people who are going to be the leaders in this next generation to wake up and embrace a whole logistic and responsible and effective manner of business design and business leadership that’s relational not transactional, that’s long term, not short term, so important to align investor expectations and interests around more than the five year, you know, venture capital funds cycle. To invest in food appropriately, we really need to have a 15 or 20 year horizon for these companies to have the kind of meaningful impact and scale and contribution that’s really going to make a difference in human you know, sustainability and, and health. Right.
Borna (ClimateAi) 30:41
Last question here before I let you go, we’re, we’re way over right now. And I appreciate your your time with your background and food and agriculture and entrepreneurship, and also you teach an entrepreneurship for farmers class. Have you seen any unique ways that farmers have tweaked their business models in order to extract more value from their operation? Farming is, it’s becoming more and more difficult task to do and a very difficult way to make a living. Nowadays some people are operating at a loss each year. Have you seen any unique ways for them to extract more value and to make more money with what they’re already doing?
William Rosenzweig 31:15
Well, I’ve seen some farmers, the ones that I’ve been working with are developing value added relationships with either directly with eaters like through year round CSA programs. It’s a community supported agriculture, this is where you get a box every week or every two weeks. And the farmers that I was working with just recently, many of them were thinking about ways that they could farm year round by using, you know, tunnels and greenhouses and so that they didn’t have to kind of in this accordion fashion, get bigger during the summer and then you know, scale way back at at winter. So, getting year round operation and doing that through partnerships through their CSS and also through really ships with institutional buyers like buying groups for school districts or relationships directly with restaurants and chefs. Chefs can do a lot working with a farmer to stabilize their business and pass more value to them by cooking what’s growing rather than, you know, bringing stuff from all over or not necessarily paying attention to the seasons. These are again, relatively small farmers, you know, maybe from a couple, you know, dozen acres to 1000 acres, that people that are growing you know, big row crops for export are in a completely different, different boat, but for the small farmers that are growing a lot of your nutritious products that you’re putting on your plate or that you’re getting, you know, at your neighborhood, fast, casual, sweet green restaurant, you know, just I think, trying to figure this is always a hard thing to say in it, and it’s it and it can be criticized but for the people that can afford it, to try to afford it, you know, to try to re proportion, your expenditures in a way that you’re actually paying the true cost of food. And that you’re participating in a in a food institution that’s paying a fair wage, to the people who grow the food and serve the food or clean up the food that you you eat. For those people that can’t afford or that it’s important for, I think those of us to try to participate in some way in reallocating food we at Berkeley, we have a big program and pantry and trying to get healthy local food, some of it that would otherwise go to waste, you know, into the hands of people who need it most and most communities have flourishing, you know, food access programs. So, if you if you can, you know, participate in that by volunteering By, you know, at least becoming aware of the challenges that many people have, who are working multiple jobs to get healthy food on the plate and just see again on an individual level where you can change your behavior one day a week to accommodate that make a big family meal with a with a community organization. Anyway, I don’t mean to brainstorm with you, but yeah I think we have to support our farmers we have to, we have to get out there. They’re kind of an endangered species. And there’s a lot of young people getting into farming now that that are attracted to it that are willing to live with challenges and some hardship, because they’re, they feel called to do this. It’s such a meaningful work to produce nutrient dense food in a manner that is going to restore the planet. They feel like that. That’s their greatest Calling and I think if you believe in, in the future, if you believe in eudaimonia, we just, we have to do our best to support those people. The best way would be to buy direct from them. Many of them are getting online, they’ve got more efficient ways to interact with them. Some of them are offering memberships beyond the CSA. Some of them are starting to enter into the realm of hospitality where you can go visit. But if you I think it’s life changing, you know, go go visit the farm.
Borna (ClimateAi) 35:32
All right, well, thank you so much. I learned a ton systems thinking my vocabulary expanded a little bit in this call here. And just before we sign off, wanted to see if there’s any way that people can support you and your work and the causes that you’re kind of like focusing on at this time.
William Rosenzweig 35:47
Well certainly tune in to our edible ad 101 class. It’s live streamed every Wednesday in the spring and the lectures are archived online. If you know of talented entrepreneurs and Food and Ag, who are desirous of support, that want to participate in different workshops or trainings or accelerators, please reach out to me. I’ll try to be of service to you. And just practice.
Borna (ClimateAi) 36:23
All right. Well, thank you so much. I really appreciate your time.
William Rosenzweig 36:25
Thanks, Borna. Take care.
Borna (ClimateAi) 36:28
Hey, everybody, thanks for listening if you have any feedback, or you’d like to add your own two cents on the topic discussed today, or if you’ve just got your own ideas about someone that we should discuss in the future, please feel free to shoot me an email at firstname.lastname@example.org. At its core, this podcast is just a way for us to learn and we want to share our learnings as we go. So we’re always open to building on these conversations and hearing new perspectives. Thanks for your support and see you next time.