S10E125 Daniel Plant / Plant Dynamics - The Unconventional Path From the Armed Forces to AgTech Strategist

0:00:00 - Harry Duran

So Daniel Plant, founder and president of Plant Dynamics, thank you for joining me on the vertical farming podcast.

0:00:07 - Daniel Plant

Hey Harry, Thank you very much for having me on.

0:00:10 - Harry Duran

So for the benefit of the listener, where is home for you?

0:00:14 - Daniel Plant

I'm in Toronto, ontario, in southern Canada, and it's more like summer than it is winter these days. I'm looking at the weather in Iowa and then New York City with a little bit of envy. It's like winter has disappeared on us here in Canada.

0:00:29 - Harry Duran

Well, I'm in Minneapolis and, as I look at my Temperature here, we're at 10, which is actually warmer than it was the past couple days, but that's been dropping to minus seven over here.

0:00:42 - Daniel Plant

Oh nice, I never made it to Minneapolis. I'd love to get out there sometime.

0:00:46 - Harry Duran

Yeah.

0:00:47 - Daniel Plant

I tried to go there in 2020. We tried to cross the land border into the US on a road trip to Connecticut and and they weren't letting us through. There was no access through the land border, so unfortunately had to get to Toronto and fly, so never made it to Minneapolis that time.

0:01:05 - Harry Duran

Yeah, and the preponderance of lakes Doesn't seem to stop anyone here from actually driving on them when it gets cold enough, which has been interesting for me because I'm new to the Midwest. I got here in 2019. I grew up in New York and I lived in LA prior to this, so it's just it's a different culture here, for sure.

0:01:22 - Daniel Plant

Yeah, you got tired of being in cool places around cool people.

0:01:26 - Harry Duran

Something like that. Yeah, the short answer is always love. When you've asked what I'm doing here, so my girlfriend was, is from here and she grew up here, so it's been. You develop a different relationship to the seasons in a way that I've been Trying to wrap my head around and this forced idea of like slowing down and doing something, how you're during winter, you know it's this hibernation mindset and you sort of change where you're focused on, or the fact that you're in more Kind of lets you think more about, like what you want to do for the year and planning and things like that. And I think having that force upon you is something that's interesting that I've been looking at the past couple seasons.

0:02:05 - Daniel Plant

Absolutely. Geography determines everything, which I think is a topic we're going to discuss some more detail today. I'm just reading an interesting book about Russia. It's called Russia and the Russians, by a professor at the University of Oxford and important kind of element to understand in the world today what that thought process or worldview is like and the geographic history, the agricultural history it shapes so much of how humans in different areas in the world actually approach planning, as you mentioned, and one of the things that they didn't have in Russia was Seasons such that if you planted in one season you could come back in the next season or subsequent season and you would reap what you had sewed. There was always an element of Violence or catastrophe and it was unlikely that you were going to reap what you sowed. So it didn't instill in the peasant farmers in that part of the world this idea that you could plan and you would be rewarded for your planning. So that is not necessarily a skill that is universal across farmers in the world.

0:03:16 - Harry Duran

So has Toronto always been home for you, or where'd you grew up?

0:03:21 - Daniel Plant

I grew up in Halifax, nova Scotia, on Canada's east coast. This is now eight year in my life living in Toronto and I spent some time working in the technology sector and infrastructure, investing in, spent some time in Stockholm, in Paris and also in London, england, and then sometime in the US as well. I saw like you, just kind of going where the opportunity is.

0:03:46 - Harry Duran

I saw that you also spent some time with the Canadian Armed Forces.

0:03:50 - Daniel Plant

Yes, yeah, I would say that is One of the best university kind of part-time jobs out there. There's the structure, the pay is good, they feed you, you learn a lot of great skills. I wasn't a huge fan of the Weaponry and the firearms training. That aspect never really appealed to me personally. But the other stuff it's like team sports you get to travel, yeah, and you, you learn a lot about what it means to be successful within an organization.

0:04:22 - Harry Duran

Do you think your experience there Colored what you wanted to do once you left there and the type of work you wanted to go into, or is that something that you had set in mind during your more formative years?

0:04:35 - Daniel Plant

I played a lot of Rugby and hockey actually a lot more hockey than I played rugby and you know my whole life was just going from One team to the next, from one tournament to the next. So by the time I joined the military it wasn't like oh, here's this new kind of team dynamic that has entered into my life. I was very familiar with the concept of working in teams, but what did color my career path subsequent to my undergrad? I was just really pursuing ideas or training In how to analyze the world, for whatever reason. I was interested in energy at that time.

So I was just looking for an institution, a team, you might say, harry where I could Really develop those skills and how to analyze. You know, where is the world going to go long term and how should you think about the infrastructure that's required to advance civilization, advanced society? So I was just always interested in these kind of fundamental but Boring things, but important things that determine quality of life and how to analyze those things. So, yeah, there's never really oh, how do I continue? My experience in the military it was more how do I get my hands on some empirical data that I can use to actually inform Decisions and in whatever way that I could at that time, about where the world is going and how economies are evolving.

0:06:12 - Harry Duran

What's interesting for me as you talk through that is this interest you have in World view and things that are happening on a global scale. I'm curious how far back you can trace that to, or is that just an influence from your parents or your upbringing? Where does that drive or that impulse come from?

0:06:31 - Daniel Plant

My wife has been asking me the same thing and we were just. My parents came to visit a few months ago and they moved house recently. They dropped off a lot of things that they no longer want around anymore. They want me to do something with. We're flipping through, you know, old newspaper clippings about my various exploits in rugby and hockey and Emails I had sent to teachers, and you know it was a bit of a time capsule, that I didn't even know this stuff existed.

We're flipping through various things, but one of the themes that came up in this record of my life, it was just a desire to get out of where I was. You know I was Interested in rugby as an opportunity to see the world. You know, it was one way that I framed it to one a journalist in the local newspaper. So it wasn't so much that I had some grand thesis about how the world was going to evolve, I was just looking to acquire those tools that would help me Be productive and be instrumental to. You know, what is determining Quality of life?

Let's say I probably wouldn't have put it in those terms at that point in time, but I was keenly aware, for whatever reason this is not a great answer to your question but I was aware where it came from, I don't know. I was aware that what we invest in and how we use our natural resources and how we maintain our infrastructure that this is what determines quality of life. And so if you can make a difference in quality of life, you are, by definition, adding value. And so I was just keen to get my hands on whatever education I could, such that I could add value using my skills.

0:08:19 - Harry Duran

And as you started to think about you're coming out of the armed forces and you're starting to work in the corporate world, I figure out what type of jobs you want are most attractive to you. Were there certain things, or certain companies that were doing things, that pulled you in that direction more?

0:08:34 - Daniel Plant

Yeah, I was. I applied, coming out of my training in economics. My academic training first was writing my thesis on the impact of Canada's oil and gas sector on the economy, and then I transitioned to do something more related to the impact of debt and how we use debt to invest in the economy and what we invest in, how that determines growth. But as I came out of that training, you know I had skills in using data basically to explain cause and effect patterns in the world. And, again, going back to my previous comment, energy and natural resources and infrastructure. These were things that I could understand and so I was interested in them and I was looking around. You know, I applied for jobs at Glencore and let's see, yeah, glencore, the Bung Group I'm not sure if that's how you pronounce their name properly Louis Dreyfus. You know these big agricultural commodities trading houses was one area.

I was exploring, and I also explored jobs with Total, a French oil major, shell companies like that. But Brookfield was a company that hired me. They're a big Canadian, global diversified infrastructure investor and asset manager and there was just a perfect synergy between their business model and their worldview and the kind of work that I was looking to do. So I found my way onto this kind of internal think tank for Brookfield. They're working under the chief economist and we were just getting all kinds of crazy questions from the mergers and acquisitions teams for all kinds of assets, asset classes. We would get asked about timberlands, toll roads, airports, pipelines, and so we would have to scramble as the economics team to say you know, how much value does this asset have potentially, depending on you know, different changes that we might make or different factors in the macroeconomic environment.

So that was really the perfect home for me to start my career, because we had a very comprehensive process for taking a particular asset or a portfolio of assets in some far flung corner of the earth, whether it's like Chile or Australia, whatever. You know you're not gonna go visit there. You need to develop a picture that you can present to investment committee, and so you need to make use of whatever data you can you know among the team at your computer to put together a macro thesis and then understand you know what is going on at that facility level. So that was a really great skill to develop because it got me out of these more esoteric applications of statistical economics and really into analyzing investment opportunities and putting together a story that someone can understand. So it's simplified but it's also sophisticated enough that you can understand where is your competitive advantage and where is our value proposition.

0:11:43 - Harry Duran

Did those experiences color your view or any perception you've had of you? Know how things work in the world.

0:11:50 - Daniel Plant

Well, I think it's. Maybe in some ways I can be overly simplistic in how I think about cause and effect in the world. Like I see, people make a lot of claims about what determines the quality of life and I feel like I know maybe better. Sometimes I'm wrong, I'm sure, but there's a few principles that I always go back to, like one of the most fundamental things. Like people do all kinds of complicated research on what determines quality of life and so let's just use GDP per capita, real GDP per capita and purchasing power parity terms. So it's like adjusted for your cost of living wherever you're generating those earnings. So that's like people don't like that measure because it doesn't include, like nature and measures of joy and kind of other sources of value that people have. But it's a very important metric because GDP per capita is what pays for the roads and our schools and our hospitals. My wife works in a hospital and the quality of that hospital is determined by how much money the federal and provincial government allocate to the hospital budget and that money comes from taxes and those taxes come from people working and if people's incomes aren't rising and we have budgetary preferences, we have to raise taxes If they don't want to pay more taxes, we issue more debt. So it's a very complicated thing that people further complicate by maybe not I don't wanna say they don't respect, but they're not appreciating how things are actually paid for. They're paid for by the earnings of people.

You can go back to early economics thought from someone like David Hume. He was a very famous kind of founding father of economics from the University of Edinburgh. He wrote some really horrible stuff and he wrote some really fantastic stuff. And he wrote some great essays on where we get value or how we pay the bills for the nation. And you can plunder, you can like go overseas, take resources from another nation. That was a popular business model throughout history. You can issue public debt okay, that's great. But how do you repay that public debt? Ultimately, it has to come from the earnings of the people within the country. And so, going back to my first answer, first part of my answer to your question, after this little detour, what pays for the nation's bills is the earnings of the people.

And if you do all kinds of analysis on this question different places, different points of time what determines GDP per capita you will find that the most powerful explanatory variable is the cost of extracting energy.

Everything that we have products that we have a lot of them are made out of plastic how competitive our factories are. Just pick any productive resource or asset in the economy and it's going to be as efficient and competitive and create as much value as it does because of its cost of energy. So yeah, I was maybe getting a little bit off track of your question, but that's the first thing that's really fundamental to my worldview and it's maybe one of those things that I use too simplistically, but it is always my starting point for how I think about how a nation's economy is going to evolve, how quality of life is going to evolve and what's going to happen regionally around the world. So much is dependent on that one factor, and then from there, there's lots of things that you can do differently to define what is the country's business model. There's different things, but that's a very important thing, and I think we disregard the relationship between energy and GDP and quality of life at our great peril, frankly, Thank you for that context.

0:16:13 - Harry Duran

That was helpful. So after Brookfield you spent some time at a couple of startups and I imagine that planted several seeds for what was to become plant dynamics.

0:16:24 - Daniel Plant

Yeah, it was I kind of. Once I joined Brookfield I thought this was a pretty cool career trajectory. I really liked the chief economist I was working under at Brookfield. He's a really smart guy. He seemed to have an answer to any question. He was really articulate on very complex things.

Yeah, I was working for Brookfield. I was an analyst and two things happened. I was playing hockey Wednesday nights with guys who were active in the technology world. I was learning about their startups. They needed help with their pitch decks so I helped a few of them out and that seemed to be like enjoyable work. So I kind of got introduced to the technology world just haphazardly in that way.

And then I was also feeling so far removed from how our analysis was being presented to investment committee At Brookfield. I was looking to get closer to the transaction and closer to the action and actually get more hands on with the development of companies, commercialization of technologies. So an opportunity came up from one of the companies that I had helped raise some capital just on the side, putting their financials and their pitch deck together. Join them for a year in Houston. Met some other technology companies at that time. Join one of them in London for a couple of years kind of running that same process raising capital, productizing some algorithms, building a team. And then, after those two startups and my training at Brookfield, I kind of had this nice balance of macroeconomic analysis, a mind for understanding technology, and then also just philosophically predisposed to an understanding of how technology was understanding. So started to feel very comfortable, kind of moving into any new innovation space and being the economist but also thinking strategically about how to partner and how to actually bring your technology into the world.

0:18:24 - Harry Duran

So talk to me about the origin story for Plant Dynamics.

0:18:30 - Daniel Plant

Well, I was in London working for a satellite imaging analytics startup or making some progress. I'm kind of interested in moving back to Canada. At the time I had a few job offers from some management consulting firms. I was thinking about going back into the corporate world and I got a call out of the blue from a guy I used to play rugby with and he asked me if I was aware of vertical farming and I said I am not. He explained to me what it was. You know you can put up entire supply chain in a building. You can put contracts on your inputs, contracts on your outputs. You have weekly, monthly predictability on what's going to happen. It's agriculture, but with concepts that institutional investors are looking for.

And that really resonated with me because I knew from my time at Brookfield, having worked on their global agriculture thesis, that institutional money was trying to find a way into agriculture but didn't like the dynamics. You know you couldn't control it, you couldn't predict the cash flows. Basically is a big hurdle. But I knew that there were giant pools of capital that were trying to find their way into agriculture. So right away I thought this is something we should work on because in 10 years, if we can scale up portfolios of these facilities. We can sell them to institutional investors. We haven't really made a huge amount of progress in 10 years, but we're getting there. One of the first facilities I came across in our research was Sun Drop Farm. It's a big high tech greenhouse in Australia backed by KKR, a big US private equity firm. Okay, there's a positive signal that private equity is getting into the space. So what arrow farms that done with Prudential and basically decided to move from London, england, to Calgary, alberta, and build a vertical farm and the story plays out from there.

0:20:29 - Harry Duran

Being new to the industry and you talked to the, based on your research, what it was that attracted you to it. Where did you see and for folks that may not know what the core business model is for plant dynamics Like, can you just kind of bridge those two together and talk a little bit about the work that you do there, who an ideal customer is and what types of projects you're looking to work on?

0:20:54 - Daniel Plant

Yeah, we have. So I told you how plant dynamics got germinated. I came across the idea of vertical farming. We built a little pilot vertical farm and in those days the company was called MVP Farms and the idea was that we were going to build facilities. Now I had two other partners in that company. They decided to go back to corporate banking and I didn't have capital to actually do that at the time. So I started, I just kind of evolved, or pivoted, as they say, the company into a consultancy.

So the last few years MVP Farms became plant dynamics and we help really poor types of customers. We help technology companies, as I said, really understand the economics that apply to their technology so they can communicate in terms of efficiency and productivity and commercialize their technology. We help infrastructure investors kind of avoid mistakes by understanding the market and understanding technologies based off of specific business problems or challenges rather than, you know, narrative. We help venture investors do a similar thing, kind of move beyond those concepts and kind of understand how these technologies fit together. And we work, you know, increasingly with operators or growers to actually optimize their facilities and adopt new technology. So we're really sitting at this intersection of agricultural technology, specifically in the controlled environment, space and, you know, the fresh produce market, and we work with technology companies, established or new investors, venture or private equity and the operators that are actually in the business of applying this technology. So we've done all kinds of projects within that intersection.

0:22:55 - Harry Duran

What has been your experience? Because since you started the company, obviously you shifted and you moved from operating a farm to providing the consultancy. But obviously a lot has happened since you started the company COVID, supply chain disruptions, a bit of a hype cycle within vertical farming itself in terms of investments, bankruptcies, closures and so I'm curious what your take on it and what your perspective on how the industry is shifting from your, from what you've seen over the past couple of years.

0:23:24 - Daniel Plant

Oh, Harry, that's a big question, so much I think you could probably write a book on that question. At this point, I mean so many things. I mean, first thing, very, very simply there's been a big ship from. I mean it was this vertical farm versus conventional farming, then it was vertical farming versus conventional greenhouses, and then vertical farming versus greenhouses, and now we're just seeing that the technology gradient is now like less binary, less categorical.

And there's the gradient of operations and designs out there from your most extreme vertical farm, which might be something pretty niche at the very end of the supply chain, I'm all the way back to your 10,000 acre lettuce farm. We're seeing everything in between, but more and more use of greenhouses and kind of integrating the vertical farming concept into whichever application is going to achieve the best unit economics. Less driven if I could restate that answer I would say less driven by the technological concepts and increasingly driven by specific business problems, and then working your way through the process of identifying which technologies and which concepts are best suited to solve a particular problem in this particular location.

0:24:52 - Harry Duran

Do you find that the conversations you're having present day have shifted in terms of what potential clients see as important or pain points to solve?

0:25:03 - Daniel Plant

Yes and no. I think there's before it was so many things again. That's such a tough question. The first thing is that before the last question you asked me, I was just thinking about projects that were coming up in 2020 and 2021. And it was so much about. I don't know if you ever saw one of the original 20 pitch decks. It's just scale right away. We're going to have 100 farms in all these locations in months and we're going to get like 2-3% of global fresh produce. It's so much was very superficial in a way. I don't doubt that those plans were real and they were intentional, but kind of superficial in that it was prioritizing scale and these were projects that were primarily being marketed to venture partners who are not well positioned to actually underwrite the project but nevertheless wanted exposure to agtech until we're willing to invest.

Now I am seeing big shift from scale to super detailed microeconomics and unit economics. So whereas before I was more about strategy and grand vision macro picture maybe didn't get into like a solid macro thesis, but certainly getting global macro data kind of more important and now you're seeing a focus on how much time is this specific worker doing this specific tab? I spent most of the last week working on the economics of strawberry farming for a robotics company. We're getting into very, very minute detail with the farm operation as it currently is versus what it could get to as robot performance improves. In addition, there's an understanding that just building a production facility is not a business. There's now, I think, full appreciation that you need to come in and have some kind of a corporate structure around your production facility, which includes sales and marketing and should include offtake agreements, such that you have a business plan that is more than just a design of a facility before you begin. So I would say those are some of the big shifts that come to mind on that question.

0:27:33 - Harry Duran

How prepared are your clients or prospects, people that want to work with you, or how much better prepared are they now than they were previously? Or do you find that in terms of an ideal customer? Where do you want to see an operator, for example, in terms of their business understanding, their model, understanding the unit economics? How far along do they need to be in order to have a productive session with you?

0:28:02 - Daniel Plant

The first thing is, if I showed you the table of all the projects that we've done, we've got like I don't know 12 different things that we do, and I was a long list of all the clients we've worked with. On the Y axis, the first column is market research, and every single project has a blue dot over the market research. We always start there, and so you don't necessarily need to come with data that I can have. I can do the market research for you. But that's always a starting point, because we need a solid basis in the macro picture. What is out there that we can actually sell into? Who are the buyers? What are they paying? What are our competitors doing? What is their cost structure? That's another very important aspect of the competitive analysis, so that we're not just comparing systems or vendors or technologies based off of qualitative concepts, but we're actually getting into the data and saying, oh, this is their cost of production, this is what's driving the difference in that cost of production. I can point to this engineering parameter. You can actually be informed by this. This can guide how you should innovate, because this is where they're beating you or this is where you're beating them. That's always where we start.

But the other thing where I haven't seen enough improvement is in. Investors are getting better at this, but when I think about the technology companies established vendors, startups and, but particularly, the operators, they might have great tools, harry, for generating data. Yeah, they might have a new camera platform or some nice ERP systems, some other nice sensors and there all kinds of sensors for collecting climate data, but their dashboards for actually using that data are very observational, they're not very predictive or prescriptive and they're not getting too much in the details on ratios, and so there's a disconnect between the data that's being collected, which is getting ever, you know, more improved there's so much better data and better sensors for collecting that data than we had a few years ago and then all the tools that we have for analyzing the data. Like there's some really cool startups out there that can make use of this data to help I hate this word but optimize your production facility and help you make better decisions within the production facility, but the data is not organized in a way that me, as an outside consultant, can actually analyze that data and tell you oh, this is where you need to increase your DLI, or this is where you can increase crop density or you know you're spending this too much on this substrate. Like we can get into those details if you have the data but no one can present that data to you because I shouldn't say no one, but it's rare that they can present that data to you in a like a readily digestible manner because they're not actually running their business. So that data is organized in that way for analysis and so that has two effects I can't and consultants it's more difficult for them to come into your business and point out areas for improvement, and you're not well situated to make use of new AI or machine learning tools that can passively extract new information out of that data. So I think people are getting better at understanding I mean, we've come so far on understanding the relationship between the genetic lighting and which automation and, let's say, robotics technologies are worth considering, which are not how you should design process flow so that it's ergonomic. It's a nice place to work, made a lot of progress on this stuff, mostly through trial and error, but the industry is pretty well educated on these aspects now. I also think people have gotten pretty good at consulting, chat, gpt and things to understand how to think about things before they go and talk to somebody. I think people are doing a lot more self consulting. So that's been a big improvement in the industry and I think in the world generally over the last year. I'm seeing a much higher quality of questions.

But to go back to your original point, how do people get started? I think you know we just go through that discovery process and I always start with what are some specific objectives that you're trying to achieve. Like we have indoor ag con coming up. I'm working with a handful of clients to say what are you trying to achieve specifically at indoor ag con? This is, if it's a new client, so still getting to know each other. They're still understanding how plant dynamics creates values.

So we just start with something very simple, very small. You know what are you trying to achieve, who are you trying to connect with? What are you trying to sell? What are your objectives? And then we can say, okay, then we can review what materials do you have and what is your plan for realizing those objectives, and then I can start speaking very specifically in concrete terms to how I can get some market data and we can go through our analytical process and I can give you better materials for how you communicate your value proposition.

So that's always an easy place to start, and not only to start, but also to educate people on how they can make market research and economic analysis actionable. Because I think when you talk about strategy and economics and market research, I think to most people that doesn't feel actionable, and that's something else that I'm always trying to achieve with plant dynamics and every interaction that I have. I want to make economics more actionable because it is very helpful. It can clarify strategy. But how you bridge that gap, to take something that feels so esoteric and far-flung from the immediate problems people are trying to address, and communicate it in a simple way that it can be adopted that's always a challenge, I think.

0:34:26 - Harry Duran

I'm always got my marketing hat on and the phrase might be triggering for some, but you could make a hat that says make economics great again it's always been great to rediscover it please discover it it's out here for you help, help yourself the economics and you will be great and I think this idea of the analytics and the reporting and the metrics of what's happening on the ground and then communicating it in a way, not only to the operators themselves, but to people like you who need this information to make some informed decisions it feels like there's some opportunities for some standardization that other operators can leverage, so that you know everyone's looking at the same thing, because when it comes to metrics, you obviously you want to know that everyone's measuring the same thing, because when you're doing the apples apples comparison with this farm versus another farm, you want to know that, that every, everyone's reading from the same playbook.

So it seems like I've had a discussion before with net of a saggy. She's the CEO of a kind of called microclimates and they do some work in that space as well, but I think there's more opportunities for more growth there as well. Where are you seeing the most innovation happening or is there something that you're seeing? You did mention robotics. Obviously, ai is top of mind for folks. Is there anything that you're seeing an opportunity to move the needle significantly?

0:35:46 - Daniel Plant

definitely. But you just raised very important point. So I work with a handful of startups right now that have technologies that will drive a small but significant or meaningful productivity improvement or efficiency gain in all farms, let's say all CEA facilities. They have that prospect on average across the subset of startups that I'm working with. But the business model, technology is not the problem. The business model is very challenging. It's so hard to go into these facilities one at a time, sell different growers, different plant managers on changing their processes, and I think and this is coming to the answer to your question the big opportunity is not in trying to sell your marginally improving system into an existing install base but to use your technology as a tool to create a new platform, a new set of technologies for actually developing facilities. And the reason why that is well, I just mentioned kind of the sociological hindrances. You know it's just hard to convince people of these things. They like what they're doing in general and so the way to force change is to drive competitiveness in the industry. But there's a bigger kind of lesson here that the market is currently so underrepresented by CEA generally.

People will talk about market saturation. I got there's this guy down in the US, like Midwest, I guess you call it. His terrible facility is poorly designed, he didn't listen to people, his product quality is not good, he continues to sign up for bad deals and he puts all this stuff out into the media. That like there's no market. Well, no, you didn't build like the facility that you should have built and you didn't hire the right people. You also hear, like, I think, some folks around, like the app harvest fiasco. They talked about market saturation.

Don't pay attention to these anecdotes. The data shows that the marginal cost of production in a CEA facility it is below, let's say, for the purposes of the podcast today, let's say it's between 10 and 30% market share. Well, we currently have CEA in the North American context that's at like 1.5% market share, 2% maybe on a volume basis. Now there's plans to go to 4, 5, 6, 7%. We'll see how many of those plans are realized over the next couple of years. I know there's a lot of capital constraints on some of these businesses, but the point there, the only takeaway from that analysis, is that far too many facilities in the market than the market can handle. There's huge demand out there and it's underserved by CEA currently. So why is the market not growing at the rate that it should? Well, that's a whole other interview, I think, but there's a number of complicating factors.

It's just very hard to put together a facility speculatively. You have to build it before anyone will do business with you. And if you're an existing grower, why would you take the chance on a new technology which is very capital intensive, when you already have a business that's keeping you on your toes, let's say so there's a kind of a tricky dynamic to navigate there at who's actually going to take the plunge on building these new facilities, even though the market is dictating that additional infrastructure is required. So if you have a new technology, powerful technology driving productivity and efficiency in CEA, there's an opportunity to use your technology to get in the mix at actually consulting on project development and driving project development in some way.

So I would be encouraging some of the startups out there in the space to really start thinking carefully. Is it really in your best interest to keep banging on the doors of existing growers and pursuing partnerships with existing vendors, who have so many other priorities, or can you create a lot more value by actually playing a starring role, rather than a very marginal role, in the development of new facilities, which the market does require? So that's where we're starting to see a shift in the consulting work that we're doing is get a lot more involved in the full scope development and all the transactions that go into taking a project concept through shovel readiness and commissioning and cash flow stabilization. So that is where value is being created, more than these one, two percent efficiency gains in that particular facility.

0:40:54 - Harry Duran

That makes a lot of sense and I think it's gonna be eye opening or ear opening for anyone who's listening to this and is trying to understand where they're stuck or what they need to do to take the next step in the growth of their farm. So this will be out before indoor icon. So I think you may have some folks tapping you on the shoulder at the conference if you're gonna be there as well, based on what they're hearing from you here. So, yeah, it sounds like this is really much needed and bit of mental correction from an attitude standpoint, in terms of what's important and what are the levers that need to be moved that are gonna actually significantly move the business forward. And I think it sounds like you've done a lot of you do diligence and you've got the background to come into this with a fresh set of eyes. And I think for some folks, I imagine some of the conversations you're having are wake up calls for them, because it could be something that they weren't looking at it with the right metrics previously.

0:41:47 - Daniel Plant

Yeah, it's too hard to get started, harry. Like, where do you begin? Okay, you might have a site. So like, okay, what's my first step? Maybe someone told you that your first step should be climate analysis. So then you go, you hire a climate analysis consultant. They send you a project scope $10,000. So like, oh, I gotta get $10,000 before I even know, like, how much energy this project is going to need.

And you're really thinking about energy thing because everyone else is telling you that, oh, it's the most important cost. So if you don't have an energy strategy, you're not gonna be in business. So you're trying to navigate these things and anyone that would answer a question is either going to only tell you if you're gonna do a project with some, so they're gonna withhold a lot of information, and then, once you have the project up and going, then you'll discover some things, but their incentivize to sell you equipment and make a margin on that equipment. So they're only gonna tell you things that help the project to proceed, even if it's not the best idea or there's room for improvement. Or other people are gonna charge you a lot of money because they're paid based on their hourly work.

But these things like where you should build, what your climate analysis, which vendors you should work with, who you can hire to run your facility, all of this stuff it can be answered in hours. It doesn't need. If you hire the right people with the right incentives, it can go so fast and you don't need to spend that much money. But if you go around to conventional consultants and conventional vendors, you're gonna fall into conventional business models and it will take you two years before you even know what you should do and where you should do it, whereas that should take a month.

0:43:36 - Harry Duran

Yeah, that's very important. Thank you for sharing that. Yeah, so as you think about where you are with plant dynamics and obviously this can change depending on the day but what's a tough question you've had to ask yourself recently.

0:43:49 - Daniel Plant

CEA kind of is it worth it? Is it worth the effort? Because there's other, like anyone, that is going to invest in CEA, given the capital structure, the capital intensity of it relative to conventional greenhouses, conventional agriculture. It's infrastructure. So you need infrastructure investors and infrastructure investors they're not only looking at CEA, they're looking at real estate, they're looking at energy infrastructure. So the returns need to be compelling.

But the returns need to be compelling on a effort adjusted basis and when I work on or have in the past worked in, the energy industry, the transportation industry, you have rational and transparent actors and people don't change the definitions of things and when you ask a question of an engineer, you get a response, because people don't want to waste time on selling you on something, they just want to give you the answer so the project can move forward. So there is poor communication in the industry that makes it so much more difficult to execute a project than it should be. So this is something that I'm doing what I can to change. But I've had, just since the start of the year, I've probably had eight phone calls where someone has said to me oh, we've got projects, but the projects they can't get capital. I'm like okay, why don't you make an introduction or just set up a call and we can learn a little bit about the project and we'll help facilitate some capital If we can underwrite the project, introduce some investors, help the project move forward.

I don't hear from anyone. Why is that? Why would they say that? And then you don't hear anything.

There's a lot of this as well with startups. They'll say things like oh, it's state of the art and we're raising this much money and these are the investors that we're talking to. Okay, let's take a look at the data. What's helping you make this claim that it's state of the art? Where is the state of the art Cricket? So there's just there's too many conversations that people I think they don't have anything better to do. I'm not sure. They just want to be in the mix. Talking about the evolution of CEA, I'm not sure. But in other industries it's like okay, here's my value proposition. This is the problem I'm solving. This is the data we're looking for. This is our business plan we're ready to execute. I'm seeing that some of the more established firms are moving more in this direction. I think they will be very successful, but that just continues to be not the average experience is dragging on the growth of the industry a lot and making it very hard for people to take an analytical approach to the space, and it really requires an analytical approach.

0:46:54 - Harry Duran

Well, it sounds like you're definitely in the right place at the right time and I think to your point. It's important that people are clear about what their desired outcome is before they start having a conversation with you, but it sounds like there's no shortage of people who are curious about how someone like your firm could possibly help them. So I think I don't know where you stand in terms of, like, how business is lately, but it seems like there's a need for this, especially at where we are in the industry and where the challenges people have faced and what we've seen so far with people who didn't have these metrics lined up properly, and we saw what the outcome for that was. So I think you're well-primed and I think having the conversation and I imagine you'll be at indoor icon as well I think that's a good place for some of these conversations to continue.

0:47:38 - Daniel Plant

Yeah, definitely We'll be there. Yeah, it's painful sometimes to onboard a new client, but we have great track record and objectivity and really clear analysis. We get all kinds of positive feedback but, yeah, we're selling ideas and decisions and visualizations of data. It's not always something that people understand right away, but I can assure you that when people feel it, they experience it. They can't understand why they weren't doing it in the first place.

0:48:14 - Harry Duran

So thanks for sharing all that and I'm glad we were able to connect and I think you've had some insights into where we're headed as an industry that I think are gonna be really valuable for the listener. So I think there'll be I imagine there'll be several folks who might be rewinding some of these sections and taking down some notes about some important things they need to know before they pick up the phone and call you as well, which I think is great. But if people do wanna reach out and they wanna connect with you and have a further conversation, where's the best place for them to connect?

0:48:39 - Daniel Plant

I would really encourage people. We just started up, maybe three or four weeks ago. I started putting some representations of work that we've done. It's not like I'm sharing all the work we're doing for our clients it's nothing like that but I'm sharing representations of work that we have done, or some components and elements of some work on our LinkedIn page. So I would really encourage people to the feedback's been great so far. We just started it a few weeks ago, but I think that's a better entry point for understanding plant dynamics than going to our website, frankly, because I can just show you some of what we do. So you go on LinkedIn and search Plant Dynamics and follow the page and see some of the visualizations we're putting up. Feel free to comment on there, ask questions and then it's easy to start the discussion with whatever your project is and what your goals are and how we think about the world and how we would create value for your technology or your facility.

0:49:40 - Harry Duran

We'll make sure all those links are in the show notes as well. I have been leaving a couple of minutes at the end of these conversations for our guests. If they have a message for the CEA industry, for the work of our industry at large, given the audience for this podcast, there's a lot of the leadership in this space. Is there anything that comes to mind for you? If you had a closing thought?

0:50:00 - Daniel Plant

It's really important to keep in mind. Why do this? You asked me what's a tough question. I'm asking myself is it worth it?

Yes it's worth it. These challenges are worth overcoming and we can communicate better, we can engineer a better outcome. The market need is real and it's substantial and it's global and it's long-term. And the idea that a commodity is going from being heavily reliant on natural factors of production so you just throw a seed in a field and it doesn't really need much attention to it. It needs a lot of attention. It's in a facility of steel and glass and plastic and everything is controlled and can be optimized. That evolution from nature to engineering, that is the evolution of civilization, that will continue to happen. So saying, oh, it's this high tech versus a lower tech facility or this level of automation versus this other type of automation, missing the point that things are going from being less controlled to being more controlled. So if you have technology or you have ideas for how you can be useful to that natural evolution that's playing out in every industry, bet on it, because it's the easiest thing in the world to bet on.

And I sometimes go back to Robert Malthus, as one of the great economists came out of England in the 1700s and he wrote a lot of very interesting things about how the world was going to unfold. But the popular. It's not technically accurate, but the popular interpretation of what he said was that population growth would outstrip our ability to produce food. And he was kind of. It wasn't really what he said, but it's not true. It seems like that is false because he underestimated the ability of human engineers to go beyond the limits of nature, and CEA is one example of that.

What are you constrained by in a CEA facility? I mean, we're going to be getting pretty close to even doing away with the substrate, so you don't even need the peat anymore, or the wood or the soil. You might not need that. So what are the inputs? Okay, you have steel, glass, plastics, some concrete as your factors of production, and then the inputs are what?

Electricity and water and seeds, and maybe someday we'll do away with the plastic that's needed for packaging, but not yet, unfortunately. So that is where the world will evolve to, and that is something that is really worth pursuing because it allows us, like any such technology where we go beyond the limits of nature, it allows us going back to one of our earlier themes, harry to be more prosperous as a species. And I think lettuce is just the beginning and we haven't even scratched the surface on the genetic potential for strawberries in a CEA facility, and no one's really worked on that yet. So if you have a long-term perspective, I think if you love infrastructure, you love fresh produce, you have a mind for systems and systems engineering. I think this is a great challenge to take on Well, thank, you for your perspective.

0:53:35 - Harry Duran

Thanks for taking the time to come on. I really enjoyed this conversation. It was really eye-opening for me and I think it's going to be helpful for our listeners as well. So I appreciate your time, Daniel. I'm looking forward to share your story.

0:53:46 - Daniel Plant

I appreciate it very much too, Harry. Thank you very much.