S12E160 Oliver Rotko/Arctic Farming - Revolutionizing Restaurants: Herbie’s Innovative Indoor Farm Solution

Harry Duran 00:00:00:

So, Oliver Rotko, CEO of Plant TUI and CEO and co founder of Arctic Farming, thank you so much for joining me on the vertical Farming podcast.

Oliver Rotko 00:00:07:

Yeah, thanks so much for the invite. Looking forward to the discussion.

Harry Duran 00:00:11:

Yeah. And for those of you that are watching on YouTube, you'll notice high quality on Oliver's end and we'll get into why that is, in case you're curious. Yeah. You're going to have all these other CEOs now asking me, like, how can I get a setup like Oliver's.

Oliver Rotko 00:00:27:

Absolutely. We do consulting as well. That can be arranged.

Harry Duran 00:00:30:

Yeah. So, been seeing a lot of activity with Arctic Farming. I think we connected via LinkedIn. It's just, it's nice to see there's still so much happening in the space. I keep saying that when I started in 2020, I'm up to about 155 plus interviews. I thought I was going to cover the industry pretty quickly, but it's so exciting to see so many new companies doing so many new innovative things. And obviously we like to cover what's happening in the Scandinavian region as well. And it seems like you're well positioned to benef benefit from everything that's happening in vertical farming. But I want to just rewind the clock back a little bit. I noticed that you had spent some time getting started in B2B. So is this when you think about your track? I always like to ask this question to kick off, but when you think about your track, where you ended up now and what you started studying in university, how are things looking?

Oliver Rotko 00:01:18:

Yeah, so really quick tlr so I went to university in Finland, here in Helsinki or the Helsinki greater metropolitan area, studying business. So I did my bachelor's in accounting and business management and then went to do a master's in strategy and sustainable business management in between. I did all kinds of work, mostly B2B sales and growth marketing. But I've always been running my own firm on the side, basically as a side hustle, that kind of generation, I guess.

Harry Duran 00:01:49:

Yeah.

Oliver Rotko 00:01:50:

Then going to the end of my master's, my older brother Daniel, who's our cto, had for a long time been talking about indoor farming, the benefits. And I remember us having a discussion at our parents table more than 15 years ago about, you know, the future trend being that cars will be driven literally out of the city centers and you'll have free spaces, especially underground. In Finland, we're pretty famous for having a huge ton of bomb shelters in the metropolitan areas and those are usually used as car parking areas and those will be emptied. And this kind of sparked the idea at the end of my studies where I had this closing course, innovation course where we were supposed to set up a company, get an idea and impeach it at the end for a panel of experts and I asked my brother for advice on hydroponics and we started looking at the kind of very initial ideas and this is back in 2017 and that's especially when bright agrotech was growing and plenty in the background and a lot of the container fried farms were kind of getting there already. But the biggest bus in the industry hadn't really existed yet or hadn't come yet at that point. And we started looking at different models at container farming, scalable industrial farming, different consumer products. And when we found our first angel and our current chairman who's a ex top chef, he made a swore that we wouldn't go into the consumer products which is kind of ironic considering the current things updates. But we decided that hey, our dad has a background in hospitality and travel, has been running some of the best hospitality businesses in the Nordics. And with our chairman we thought that we know the hospitality sector and especially the clients incredibly well. We understand their processes. So that's kind of how we ended up in the B2B sector. And then over the past five years we've been developing our product, kind of seeing the ups and downs of the market and yeah, that's a very tldr. We've taken things very slow. We were students at the beginning. Now getting to the market with two products and really hope to get along the get to be a part of the second wave of the industry where things actually are becoming profitable.

Harry Duran 00:04:14:

Yeah, that makes sense. You've had such an interesting background. I was looking at all the places you've worked before you even spent some time. Slush, the event that I years ago when I was part of this, when I was living in la, they were promoting it a lot and I thought at one point I was going to try to make it out there. I came close one time because it seems like that flight from what is it from San Francisco I think is pretty to Helsinki.

Oliver Rotko 00:04:37:

I was actually in the original team conceptualizing the flight and selling it to companies. So as background the biggest startup event in Europe, if not in the world, happening in Helsing annually. Really great stuff. A lot of the original teams from Slush have been incredibly successful. For example Miki Kosi, who's the founder of Vault acquired by Doordash. Oh yeah, he was the original founder of Slush. So I come from that ecosystem of the Finnish startup ecosystem, basically.

Harry Duran 00:05:10:

You also had experience with your own startup with a watch company.

Oliver Rotko 00:05:13:

Yeah, yeah. So one of my best friends who I've known since kindergarten is a watchmaker by trade. We were always kind of dreaming about a Scandinavian designed, handmade, high quality watch and that became a hobby. One of the first companies that we set up during school, it stayed as a hobby. We sold a few. They were incredibly expensive to make no profit at all.

Harry Duran 00:05:37:

Yeah, yeah.

Oliver Rotko 00:05:37:

But it really introduced me to hardware and procurement and product development and the scale of the problems that you have and that has really served me well in with the vertical farming.

Harry Duran 00:05:48:

Yeah.

Oliver Rotko 00:05:49:

Probably most of the listeners will know it is not easy.

Harry Duran 00:05:53:

No. But it's interesting how your past experience, when you're looking back, maybe at the time you didn't maybe see where it was going, but when you start to put the pieces together, you're like, oh, whatever. I learned during my time at Imara Watches was now helpful because you think about high quality. And when you look at some of the units that you guys have developed, both with Arctic Farming and both with Plantui, it's this aesthetic that I see that's consistent and we'll talk about that in a little bit as well. But then you decided that you wanted to get some, I guess, practice your marketing chops and you created a YouTube channel.

Oliver Rotko 00:06:25:

Yeah. So funny background there as well. During my studies, I was in Munich to do my exchange there for a semester. And in our university we had a mandatory report that we had to do either as a blog during the studies or a larger written report at the end. And at that time I really sucked at writing. Didn't like writing long essays. Great for academics, by the way. Asked the university if it would be okay to do a video blog because the kind of vlogs were up and growing and different video podcasts were coming up as well. And I did a video blog from my studies in Munich in Germany. And then when I came back to Finland, I had some traction and I thought, hey, okay, it doesn't make sense to talk about Germany anymore or studying there, so how about Finland? But if I start sharing information about studying in Finland and that actually became a business, I worked two years full time as a YouTuber helping international students and expats find Finland. Literally find Finland. Some of them had never heard of it.

Harry Duran 00:07:23:

Never heard of it.

Oliver Rotko 00:07:24:

And what's really, really funny, and again, a very happy accident is without understanding what I was doing, I've created an incredible recruitment source for our Company. We're actually operating from my university alma mater campus at Aalto University. And pretty much every single day that I walk the campus, someone will stop me and say, oh my God, Oliver, it's you. It's awesome. I came to Finland because of you and I came here with a full scholarship to do a master's in computer science or machine learning. And we've actually started hiring people from those followers, which is pretty incredible. And just this organic influencer type or employer branding type of work that I've been doing accidentally over the years has really helped.

Harry Duran 00:08:12:

Yeah. So it's been interesting. It sounds like your video marketing strategy at the company is going to be pretty dialed in given the experience you've had with the YouTube channel.

Oliver Rotko 00:08:21:

It takes quite a bit of time. So we are not that active anymore. But if something for especially CEOs and founders, especially within our industry where it's nowadays it's pretty difficult to pitch the business. You really need to get your pitch and your presentation in order. And just having 10 plus years experience presenting on video, looking at the mirror, trying to learn how to smile or, you know, enunciate properly.

Harry Duran 00:08:51:

Yeah, yeah, yeah.

Oliver Rotko 00:08:52:

It really helps on the stage, especially when you're nervous and we can see it in the results.

Harry Duran 00:08:58:

Yeah. What was most surprising for you during that time, because you even had one of your videos go viral. You had thousands of followers. And so was it a gradual process over time or were there things that when you look back, you can see how the repetitions and the commitment to your craft actually paid off?

Oliver Rotko 00:09:15:

Oh, yeah, definitely. So I started it as a hobby. It became incredibly intentional over time. And I also, While doing the YouTube business, I was actually working for an HR company as their head of B2B marketing. And we actually set up the first based on kind of the learnings from my own YouTube growth and then kind of all the thousands of hours of research that went into it. For example, set up the first video podcast in Finland based on. And this is nowadays a bit of a touchy topic, but based on Joe Rogan's framework.

Harry Duran 00:09:52:

Okay.

Oliver Rotko 00:09:52:

And my old boss, who used to be the host and this is the podcast, was ended closer to five years ago. She still gets invites to talk and inbound leads to her own business nowadays, consultancy business, based on that video podcast. Because we were incredibly intentional on the generation aspect of it. And all of that has basically come into our business. And most of our business comes from inbound organic leads, people finding us on the web.

Harry Duran 00:10:24:

That makes so much sense. I started my first podcast in 2014, I interview other podcasters. It's called Podcast junkies. And that's 350 episodes. So, you know, 500 episodes across both, you know, now in my 11th year and I just really, to your point, it's the repetitions help. And your tenth sounds better than your first and your hundredth sounds better than your tenth or looks better than your tenth.

Oliver Rotko 00:10:45:

Yeah.

Harry Duran 00:10:46:

But I think people get too scared about this idea of having to put in the reps. Right. As they say, like and just, you just gotta iterate and 1% better every day.

Oliver Rotko 00:10:54:

And it's the same with everything you. Something that I've learned, I think many who go to video production learn is it's not about the gear, it's about intentionality and just, you know, repetition. There are a lot of people who say quantity trumps quality at first, especially because you get the reps in.

Harry Duran 00:11:13:

Yeah, yeah.

Oliver Rotko 00:11:14:

If I were to give One advice for CEOs, especially CMOs in our industry is get onto YouTube. It's not too late. It's the best time to do it. No matter what any kind of inbound lead generation consultants tell you, YouTube is still the best and is period, the best inbound lead source there is. If you do it correctly and if you put in the time, people give up too early and they don't realize it's that it's a marathon. So it's not comparable to Facebook ads or TikTok ads would be more relevant now.

Harry Duran 00:11:50:

I love how you also reference the intentionality of the lead gen aspect of it and understanding. I always say when I'm working with podcast clients, like, what's the one thing you want a listener to do as a result of having listened to the episode or having watched the episode? And I think too many times businesses are not thinking about how to take their viewer or their listener on a journey, educate them, and then show them that there's a way that they can help them as well. And it seems like that's something you've picked up pretty early.

Oliver Rotko 00:12:18:

It is. And again, it just takes time. And I understand that the threshold to start, especially with content creation is it's pretty high if you have a small team and you don't really know what you're doing. But at the same time, this is where I actually comes in. Our marketing guy, growth marketing specialist, who we hired last year, he's actually my colleague from the YouTube world.

Harry Duran 00:12:39:

Okay.

Oliver Rotko 00:12:40:

Absolutely incredible at using AI to cut our workload from. Let's say one podcast episode would be three, four hours. Normally of course, of work hours, he would actually cut that down to half an hour. Well, just using AI and we would be able to, within half an hour, 45 minutes, we would actually be able to generate content for social media for the next two, three weeks within just at 45 minutes. So it's. There are so many awesome productivity tools in marketing especially.

Harry Duran 00:13:11:

Yeah.

Oliver Rotko 00:13:12:

You just have to kind of know that they are there, otherwise you're not gonna find them. Yeah, but it's the one thing, great thing about AI that I found, at least for our business.

Harry Duran 00:13:24:

I'll have to connect with him afterwards to get some tips we can do to improve our YouTube presence as well.

Oliver Rotko 00:13:30:

You're going to be blown away.

Harry Duran 00:13:32:

No, but to your point, the AI tools, like, everyone knows they exist, everyone knows about ChatGPT, but you'd be surprised. And it could be a generational thing. I'll speak to people and I'm like, have you. Do you know about this? Do you use it? They're like, I've heard of it. I tried it out. But it is a game changer when you understand the magic of building a prompt that like, gets you the output that you need and realizing that if you don't know what the prompt is, you can ask ChatGPT to write the prompt for itself. That's wild.

Oliver Rotko 00:13:57:

It's insane. I actually saw this video for the first time today where two AI assistants were talking to each other.

Harry Duran 00:14:04:

Yeah.

Oliver Rotko 00:14:05:

It's Terminator movie is becoming reality faster than we thought. And that's why it's very important to do your own food production, because you are going to need it in the bunker when we move there.

Harry Duran 00:14:17:

That's a great point. I always said that once I started becoming aware of the power, I said one of the biggest skills anyone could learn is how to talk to robots, you know, because basically, in some form or another, like, you need to figure this out. It's the way it's transforming the landscape. And you mentioned like four or five hours of production getting done in an hour and marketing.

Oliver Rotko 00:14:39:

Yeah.

Harry Duran 00:14:39:

I think people are, are going to find out the hard way in terms of like really figuring out what you're good at, what your skill set is and honing in on that genius. Because all those other things that, you know, we used to be able to like, pay consultants for. Yeah, I can't. I mean, just personally speaking, I just research, assist, copywriting, all these things. I'm just pushing ChatGPT to its limits and, and even some of these other tools, these visual tools, it's like it's pretty earth shaking in terms of what's happening in the space.

Oliver Rotko 00:15:05:

Absolutely. And maybe as a single warning to especially those who are not that familiar with content creation and especially blogs. Blogs are still great by the way. You just have to know how to combine them with visual material, pictures, video.

Harry Duran 00:15:21:

Yeah.

Oliver Rotko 00:15:22:

As a warning, it should be noted that Google and Bing both, well, Google, they have tools to recognize fully AI generated content and they are going to push them down in Google results. So you still do need that human touch to it, which is great because then we're not just, you know, we don't have an avalanche of AI generated BS that no one fact checks.

Harry Duran 00:15:48:

Yeah, exactly.

Oliver Rotko 00:15:50:

So that's good to know. So you can just go to ChatGPT and tell it to generate 100 different blogs and just spray them there and hopefully that it works. But it's an awesome tool.

Harry Duran 00:16:02:

Yeah. So talk to me about the story behind you. Had studied indoor farming, but now the process of actually incorporating getting arctic farming off the ground. I'm curious what those conversations look like in those early days of late 2019.

Oliver Rotko 00:16:19:

I actually checked out our first pitch deck that we had that we pitched to our current chairman and it has a picture of a container in it with a logo on its side. So that's kind of where we started. Basically the whole idea that we started with it was bringing food production as close to the end user as possible. So the idea that we had initially was not to do industrial farming because even though we saw the potential, and of course we've learned so much more of the pros and cons after the fact during the past five years, one of our gripes with industrial farming was that especially in Finland, we're very, very price driven. When we buy groceries, everyone says that it's cool to buy organic, but then when you actually see the price tag, you usually default to the lettuce from the greenhouse.

Harry Duran 00:17:13:

Yeah.

Oliver Rotko 00:17:14:

And the one thing that I've always kind of hated with industrial indoor farming is that is the question why should anyone pay a premium on a product that they claim to be grown with a more intelligent manner, sometimes even claim to be more sustainable, which it mostly isn't.

Harry Duran 00:17:34:

Yeah.

Oliver Rotko 00:17:37:

Especially if they can't see the production. So a lot of the industrial indoor farming companies, especially in the Scandinavian and Nordic region, they're very, very bad at storytelling. And a lot of them actually avoid having indoor farming in their product packaging, which is, I think completely insane because then you're basically competing against your traditional greenhouse product, which is locally produced.

Harry Duran 00:18:00:

Yeah.

Oliver Rotko 00:18:00:

With 30% margins on top, why would anyone pay that price? So we want to solve these kind of, I'd say general audience issue with the general audience of not understanding what inter farming is and what the benefits are. So from there we kind of thought, okay, how do we get next to the consumers? Okay, first of all, we swore that we wouldn't go to consumer products. Now we have, but we had seen way too many bankruptcies, but they were already even in Europe. And we thought that consumers are not ready for them, those kind of products yet. I think that market has matured significantly over the past five years. But then we thought, okay, hey, if we want to bring food production to the floor where the consumers are, but we want to do B2B so that would be then hotels, restaurants, where the food is actually consumed. And then again with our advisors, backgrounds in the hospitality sector, we had a discussion and thought, hey, okay, what's a standard form factor for restaurants that can be installed anywhere? What's the design language of the restaurant uses? What's the materials that they use? We thought, okay, great, a wine fridge with a glass that's dark, it kind of fits in the space. It has to be stainless steel because everyone knows how to clean it. It is food safe and it's relatively easy to manufacture, especially in low quantities. And that's kind of where we started. And we've gone through five, six different generations of prototypes. We have been piloting our prototypes in the field with paying customers for over two years. So we've taken it incredibly slow, gathering feedback, meanwhile seeing all these bankruptcies, for example, from infarm, learning from them, interviewing the insiders, interviewing their ex investors, interviewing their customer suppliers and so on, and kind of feeding all of that information and learnings from the customers, from the industry, from experts like you back into the product. I think we've been incredibly lucky of not going to market too early because I think that's one of the big reasons for some of these bankruptcies where again, your audience understands this. But for some reason I think people failed to understand five years ago. And I think Henry Gordon Smith also said this quite well. These kind of companies don't scale like SaaS or software as a service.

Harry Duran 00:20:35:

Yeah.

Oliver Rotko 00:20:36:

So the standard Silicon Valley model doesn't really work with VCs. Yeah, that's a problem because if you want to do this, you need money. VCs are usually the usual suspects. And in that way we have been incredibly lucky because all of our investors are very traditional businessmen and family offices who have been incredibly patient with us and now we are finally getting to market with five years of R and.

Harry Duran 00:21:02: D.

What's interesting is that you did hear that a lot. And a lot of the failures and bankruptcies that we saw early on were from, you know, people that looked at it as a SaaS model and are looking for that unicorn. Right. In vertical farming, everyone's hungry for the next unicorn, but I think less focus than it showed was placed on the actual farming, which is probably important when you're starting a farm then like, you know, figuring out how to scale this to a billion dollar company. And I think people learned their lesson the hard way. So it's interesting that you were able to see from those failures what was working, what was not. And also the diligence that you put into thinking about, if you're going to partner with a restaurant, how do you create something that's restaurant grade? And that's what we have as the current model. So for folks that aren't familiar with Arctic farming, you've got the Herbie product. Can you just walk through the product line and who the audience is?

Oliver Rotko 00:21:53: Sure.

So if you're watching a YouTube, you can actually see one of our early prototypes behind me. This is one of our first stainless steel prototypes. It's a bit blurry, but basically what you have is a standard size cabinet that is the same size as a standard, slightly wider wine fridge. So they're different standard widths to these kind of products, with the exception that this is way thinner. So you can fit it very nicely against the wall without it extruding too much. So you can fit it almost anywhere. It also works as a divider for space. So what we have is originally an aeroponic design, but we've since a few years ago moved to a much more complex fog ponic irrigation system. So we basically use very fine water mist as a way to irrigate. And what we've done is instead of using layers or stacks, which would be more common, is we've inherited some of the design principles from Dr. Nate's Story of Plenty, formerly Bright Agrotech, who, yep, I would say is the father of an inverted vertical growing surface. And some of these arguments about especially about using vertically inverted growing surface, especially in small scale, when it comes to labor cost and the time spent on managing the product, we really fell in love with those and we took that design into our product. But basically other than that, it's just an hydroponic system. So we have a closed loop irrigation system with a number of sensors, specialized LEDs, and then we have A user interface that you can use to control the device. So maybe one thing different from many of the other applications that we see in our scale or niche is we have no app. So this is one of those things that came up in market research over the years. No one in the restaurant industry, hospitality industry, wants to download an app. First of all, there's apps for everything. So people are bored of downloading apps. Developing apps and especially upkeeping them is quite expensive. So you need to have a software team and if you have that outsourced, then you're going to have all kinds of problems. But most importantly, especially in the hospitality sector, there's a lot of turnover. People change. No one has a work phone except the hotel manager and they're not the one who, they're not the person managing this device. So again, one of those things. So we have all of the controls are in the ui, but as it comes to the user interface, no one in the restaurant wants to interface with the device, changing the lights or the timers or anything like this. So basically what our UI does is it shows a couple of basic data points, most importantly water level. That's it. All the nutrient sensors, bh ec, they're all hidden. For the maintenance team, you need a PIN code to access all the backend data. And this makes it as simple as possible, easy to approach. And I would say we've developed a market leading user experience where the time spent on maintenance and especially daily inspection is very close to that coveted half an hour per month that everyone is claiming. But we have over two years of data showing that we are very close to it.

Harry Duran 00:25:26:

Wow, it's so interesting. Again, just following up on how you took into account the environment in terms of the form and the design, but also this idea of the app, because normally like the default is like, yes, I was almost expecting you to say, and it has an app. And then you just quickly outlined why that doesn't make sense. I mean, restaurant workers are so busy, got so many other things on their mind and they just want to know that it's there, that it's fresh and they can get it right when they need it, is what, that's what chefs are thinking and sous chefs are thinking. That's priority for them.

Oliver Rotko 00:25:54:

That's the priority. And what's also very important is that of course we're talking small production numbers. So this is not a massive unit. It's less than 1 square meter, so less than 10 square feet in space, which is very small. Even this won't fit in many Restaurants, especially small independent ones.

Harry Duran 00:26:12:

Yeah.

Oliver Rotko 00:26:13:

Because these kind of units can never take a single customer seating away. I think this is one of the big mistakes a lot of stacked systems have done in the design because they're inherently larger by design, because of design restrictions. And with this, it's quality of product has to be exceptional. But to be honest, our customers are not paying for the high quality Thai basil that we grow. It's a part of it, but they are paying for the added value to their existing customer food experience. And it has a lot of different layers and the product that we produce is just a very small part of it. So that's, I think, something that again, many previous founders and even some grand ones don't really understand. And this is why we've taken so much time piloting and understanding our customer. Because if we had pushed this product out to market even a year and a half ago, we would have already failed. There have been so many oopsies, so many apologies given. Asked and given. But just great customer service. Quick reaction to oopsies with customers. It usually helps. And yeah, let's see what the future holds for Herbie.

Harry Duran 00:27:35:

What was the thought process behind switching from aeroponics to fogponics? Like, what did you see in there as an improvement?

Oliver Rotko 00:27:41:

Yeah, that's a great question. Obviously there are great biological benefits to using phonics compared to airponics. Neither of them are perfect. Both have their individual applications, of course, like Ebb and Flow systems and dwp. But actually a couple of the original reasons why we went to fogponics was they're very much customer based. So one of the downsides of having a stainless steel frame is that it resonates quite heavily. So we used to use work with small pumps and even if they would be dead silent in a bucket of plastic, bucket of water, no matter how we would insulate them, they would still make a huge racket inside the system. And it was just a noise issue. It just made too much noise. Especially in restaurants that had very low volume music in the background. Yeah, of course. Second is the more mechanical parts you have, like in pumps, you have different parts, they break. The life cycle of those products are. It's not great. And the problem is, of course, if your irrigation fails, you only have X amount of time to fix the problem before you lose a few months of work. And then you need hoses, you need sprinklers or some kind of nozzles, they clog up. There's a lot of maintenance there. So that was kind of where we Started from. And then over the duration of two and a half years of research on phonics, we found a lot of really, really good, great benefits that I think were not necessarily even known to the general market. And we've actually, we've applied for a patent on, on our particular system, which works incredibly well. There are a couple of tricks that you need to do in order to get fogponics to work, which I can't disclose, but again, a lot of oopsies. Yeah, trial and error.

Harry Duran 00:29:40:

Right.

Oliver Rotko 00:29:40:

And of course the problem is, as most of your listeners would know, is with especially hydroponics, you have hardware, you have software, and then you have the biology. So the whole triangle of, you know, this kind of product. And the problem is if the software fails, the plants die, then you kind of have to start over and debug. And if your hardware fails, none of the others matter again. And the problem is, especially with Fogbonics, there's a couple of tricks that you need to do correctly. But the issue is you notice those problems only after so much time of growing. And if you again push your product too early to the market, you're going to notice them once you launch and then you're screwed because you can't fix them after the fact.

Harry Duran 00:30:19:

Yeah.

Oliver Rotko 00:30:20:

So the product development cycles on these very small iterative developments have been. It's usually half a year at a time, and then you change something and then you get results in half a year. So hence you require patient money behind the companies.

Harry Duran 00:30:37:

Patient money and patient customers, I would imagine as well. You talked a little bit about like these oopsies. How important was the feedback over these years that, you know, you place this in a restaurant or another hospitality space and obviously you're getting feedback right away on what works and what doesn't, you know, and how much of that was helpful for this iteration.

Oliver Rotko 00:30:57:

Oh, it's everything. It's the small things. You have to remember that, especially with the hospitality sector, again, the customers, they're not tech wizards, they're not software developers, they're not biologists, they're none of this. They just know great product when they see it and experience it. And the problem is that the feedback that they give is usually something that you have to kind of decode. You need to filter out the noise and try to kind of get to the roots of the problem.

Harry Duran 00:31:26:

Yeah.

Oliver Rotko 00:31:27:

But at the same time, there are small things. So, for example, one of the first pieces of feedback that we got from, we've been working with technically the second best hotel in Finland for over Two years. We don't have an official ranking system, but it's the place where all the US Presidents stay when you visit. And their head bartender has been our cheerleader for over two years and he has been using.

Harry Duran 00:31:47:

Okay.

Oliver Rotko 00:31:48:

Just won the Finnish nationals, so at the top of his game. And the first piece of feedback when we brought in our very, very first prototype to the hotel was, ooh, ah, the lights are a bit bright. So we have a fireplace and we have a sky roof. So why don't we bring this to the back room for now? We can develop this together. Hence dark glass which cuts most of the light away.

Harry Duran 00:32:18:

Yeah.

Oliver Rotko 00:32:19:

And again you get these small iterative feedbacks over time about the noise, about the feel that the handle feels. Oh, by the way, we need an integrated lock in the handle. Awesome. Okay.

Harry Duran 00:32:34:

So yeah, you think about the refrigerators, right, that they work with or the familiar.

Oliver Rotko 00:32:38:

It's in a public space, you need to be able to lock it. But if you design the product without a handle that's lockable, well, you have to design the whole glass again or the frame again to actually incorporate it. So it's absolutely everything. And I think the biggest single mistake that companies in this industry or in any other industry to that matter can do is being self centered and thinking, we got a great product, people buy, good product, people buy. It just doesn't work like that. And the problem is you're again, you're going to see it after a while once the honeymoon period is over.

Harry Duran 00:33:18:

Yeah.

Oliver Rotko 00:33:20:

And I've spoken to quite a many of my colleagues and they've told me that, for example, in the US there's a bit of a problem with quote unquote, ghost machines or ghost devices, ghost farms, where a customer puts in a lot of money upfront into a farm that they buy, they receive, they love it for the first half a year. After a while they realize, ooh, it's a lot of work and we need to cut costs because, you know, margins are thin already.

Harry Duran 00:33:54:

Yeah.

Oliver Rotko 00:33:54:

Where do we cut or. Okay, we'll just absorb the cost of the device, the investment, we'll just push it away and once the leasing period or whatever is over, we'll just return it. So again, and you usually see this only after half a year. Even after a year.

Harry Duran 00:34:12:

Yeah.

Oliver Rotko 00:34:13:

And that's why I think some of these bankruptcies came a bit late after some companies had raised a lot of money because they were moving so fast they didn't really have the time to stop and actually analyze the situation.

Harry Duran 00:34:26: Makes a lot of sense Obviously a lot of folks are taking notice, including. Is it pronounced your primetime national news, was it?

Oliver Rotko 00:34:34:

Yeah, it's a very Finnish word. Ule Y L E. So the Finnish National Broadcasting Company were kind enough to interview me and my brother Daniel just before Christmas specifically about our ambitions towards space.

Harry Duran 00:34:51:

Yeah.

Oliver Rotko 00:34:53:

And there are many companies in the industry who are aiming for space, partially because it's sexy, partially because there's a lot of future potential there, especially considering what's happening right now with the industry in America. The key is to get the product right. And we've spoken to a lot of investors specifically specialized in space spin in technologies or technologies that are spun into space tech. And one of the problems is that a lot of these companies are space first, which means that they are designing their product purely for space applications. There's a bit of a problem there because you get to space maybe in 10, 15 years, maybe in the 2000 and 30s or something. And before that you need to generate some revenue because you can't last with the investor money because they're going to get bored at some point. And a lot of our colleagues in the industry, they're kind of stuck in this revolving door of government grants or NASA grants that they get. They're incredibly cumbersome to apply for, they take a lot of management and they require teams to report. So our approach is to do a Earth first, space second strategy where we have two terrestrial products, one for businesses, one for consumers. Both are generating revenue already and we are co developing the technologies, implementing the same systems into our microgravity compatible system that is already on the development cycle. We are not expecting anything major to happen within the next few years, but we have now taken the first steps toward that and that is also reflected in our team. So I have a very traditional business background. We have a colleague who is a marketing guy, but the rest of our team actually have their backgrounds in the space industry, Satellites, navigation, and then my brother who's one of the foremost experts in Finland in space food applications. And we are now basically working to open the right doors for the next few years.

Harry Duran 00:37:15:

Yeah, I mean, it's just by virtue of the team you built specifically with those skill sets. It definitely sounds like you're taking this aspect of the business very seriously.

Oliver Rotko 00:37:25:

Absolutely. And we actually have a very exciting announcement coming up in the next couple of weeks, depending on when this is published. And we are now literally officially entering the space industry. So that's very exciting.

Harry Duran 00:37:40:

Yeah, we'll keep you updated on the publish date and we'll make sure we get that site in there. Obviously working on timing on that. So you said no consumer products and then you acquire plantuies. Well, talk to me about that.

Oliver Rotko 00:37:52:

Yes. So plantoi IO is website. It's a beautiful design. In Finland, product has won the acclaimed red dot design award a few years ago, I would say almost fully automated hydroponic desktop system with just incredible technology behind it. So unlike some other or the majority of modern current desktop consumer products, BlandUI has some absolutely incredible science behind it. The product was originally developed by two Finnish gentlemen who I would say are, if not the top, the best and at minimum the top bio technology and agri technology developers in the Nordics. And by acquiring the company, we did not only acquire a consumer product and a brand, but we also were able to tap into the science and the technology and also the global patents that plantoi already had. And we are now incorporating them into Herbie and the space version of it. But yeah, plantoi beautiful product, awesome design, super simple to use. Uses your traditional rockwool plant capsules to grow anything from herbs to microgreens to flowers, but also tomatoes, chilies. And what's really, really cool is that there are, there's a very active community globally already using PlantUI. And we know that there are people in Singapore, for example, who are growing watermelons with plant oy. There is a gentleman in Italy who is growing banana tree saplings with Plant oi. So the science, and specifically the irrigation methodology as well as the especially the lighting technology that is implemented in this beautiful product makes it viable for so many different plants that we have some exciting stuff coming up as well, which we think will be world first in indoor farming. It's a bold claim, but stuff growing in the Arctic, there are not that many countries where you can do it now.

Harry Duran 00:40:18:

Yeah, a lot of conversations we've had with folks that are growing things in obviously the very harsh climates, especially the Arctics, there's a lot of focus on some of the opportunities in geothermal and other natural source power. Has that been something that's been, you've been thinking of in terms of like, you know, it's one of the biggest expenses, right, the electricity for these forms?

Oliver Rotko 00:40:39:

Not really, no. So plantoi, for example, or especially planto, is incredibly energy efficient. So it's one of the, I would say market leaders in this aspect. While this is a concern for most especially larger applications, our devices are small enough where their impact on the customers electricity bill doesn't really show. So for example, when we compare Herbie to their standard Restaurant grade fridges, freezers, wine fridges. We are not even close, so that's really not a concern to them.

Harry Duran 00:41:11:

Yeah, that makes sense.

Oliver Rotko 00:41:13:

Of course we would love to tap into the renewable sector and that would more so become relevant for us when it comes to manufacturing and how that energy is sourced. But that's a long way ahead.

Harry Duran 00:41:26:

Yeah, that's a lot. So obviously there's a lot on your plate now, both with the success of Arctic farming and now with plantui. But what is a tough question you've had to ask yourself recently?

Oliver Rotko 00:41:40:

Why do we do this? To be honest, I had a wonderful conversation with a colleague from the US where the standard greeting that we have is, how are you doing? Fine, thank you. And as well as you can do as an indoor farming startup or entrepreneur, it's. This is the most difficult industry that I can imagine getting into. It is still quite lonely because there are not that many of us in the market. And one of the most difficult questions that we still get asked is simply, okay, how do you scale this profitability? And while we have a model and we believe it wholeheartedly, the unfortunate situation is that the recent, or actually not even so recent bankruptcies a couple of years ago are still very much impacting investor negotiations. Um, and it requires one to be incredibly resourceful and careful with their money. And that also means that there are so many other things we could do where we could make more money, live luxurious lives, personally speaking. Yeah, that's a nice way to put it. But I think the mission is what moves us forward? And I think the question to everyone in this industry is, why are you doing it? And what kind of keeps you moving forward even when the times are tough?

Harry Duran 00:43:15:

What keeps you moving forward?

Oliver Rotko 00:43:18:

First of all, I love physical products. Most of my friends from school are in banking or consulting where they do PowerPoints and wear nice suits. I'm in a basement without windows with a hoodie on, looking at artificial light all day long. But just seeing the iterative progress with a product that you have designed from zero, literally scratch, is the most rewarding feeling that you have that you can have.

Harry Duran 00:43:47:

Yeah. So what's the future for Arctic farming? You've got so much progress and so much success that you've had and probably, I mean, it speaks to how you've taken your time and not rushed things to market. So. But if we're looking at having this conversation a year from now, you mentioned some things you might not be able to talk about, but what else is on the roadmap for Arctic farming Yeah.

Oliver Rotko 00:44:07:

So we launched Plantui under Arctic Farming last Christmas. We've already shipped to 23 countries within the past two months, so we are expecting to grow that even more. We are very much looking to the North American markets, especially with Plantui and with Herbie. The plan is to scale up carefully, starting in the Nordics. It's easy to cross scale here within the Scandinavian countries. And then we actually already have pretty good traction, especially in Asia. And we are lucky to have two of our five team members speak Japanese. So that helps quite a bit as it comes to market entry. And we actually have already some discussions going on with some people who have been in this industry in Japan before, and they're very excited to see our solution compared to some of the no longer existing solutions that were there originally.

Harry Duran 00:45:08:

Yeah. Well, sounds like you had a full plate ahead of you. I like to leave some time towards the end of these conversations for any feedback you had. I'm curious if you've been to conferences, if you started engaging with others in the industry and how that's been going.

Oliver Rotko 00:45:21:

Yeah, so actually we did start our own video podcast as well, the Arctic Farming YouTube channel. We have a bunch of interviews pending still, because we didn't have the time to edit them properly. But just engaging with our colleagues in the industry globally has been incredibly rewarding and I recommend it to all. We haven't had the chance to go to conferences because we've been focusing on different events. But just simply put, just having that peer support and even sometimes a shoulder to cry on. Yeah, has been really great. And I think these kind of formats are a great way to connect people because it's sometimes also pretty difficult to find the relevant people online. So I'm pretty grateful.

Harry Duran 00:46:11:

Yeah. And it speaks to that entrepreneur's journey as well. It can be pretty lonely, especially if you're speaking to someone who has not been there. I've been entrepreneur myself for going on 10 years, and it's lot of ups and downs and you have to be comfortable with failure. And then you just realize there's one more thing that doesn't work. So that way you know what does. So I can totally relate to that. But in the spirit of a collaboration, is there any message you have for your colleagues in this indoor farming space about other, you know, maybe different ways to work together?

Oliver Rotko 00:46:43:

Yeah, absolutely. First of all, it would be great to see more collaboration between the companies. I think we have, in our own part, been too secretive about everything. There has been very little collaboration, just generally speaking, between companies. And I think it's been negative for the industry developing. So just seeing those first collaborations, whether it's just initial discussions, sharing information, sharing experiences, the market is big enough. There's plenty of market for all of us. I think the dream would be that we have enough companies in this industry in different niches, in different markets, tapping into it, and that would help everyone else because we grow the. We spread the word with the general public.

Harry Duran 00:47:35:

Yeah.

Oliver Rotko 00:47:37:

But at the same time, I would just ask every single founder, every single marketing director to also be very careful as it comes to the ways that we promote this market. I think Henry Gordon Smith has been incredibly, a really positive mark on the industry because he has been calling out companies when they exaggerate some of the benefits of the industry. And I think the greenwashing. Yeah, the greenwashing has been quite bad, to be honest. And I think it's denigrating the whole industry quite a bit, or it did, especially previously. And I think just having those common basic rules of what is true, what is not, it would help quite a bit. And I think Henry has some great guidelines already for this. I would recommend highly, at least connecting with him and his team.

Harry Duran 00:48:34:

Yeah, we definitely follow him. And he's been on the show a couple of times already, so he's been a positive voice for this space. And glad to see that his influence is, you know, spreading to companies who. Who care about the experience and who care about vertical farming's visibility to someone outside of this industry. Right. Because people look at it and they're like, oh, they all. They just mentioned the failures and they said, is this sustainable and are you wasting your time? And I think there's more and more conversations like this are helpful. So I appreciate you coming on and sharing your very inspiring journey. I think it's going to be helpful for a lot of folks listening and watching to see everything that you've done and accomplished in a relatively short period of time. But because of your commitment and attention to detail.

Oliver Rotko 00:49:16:

Yeah. Appreciate it. Thank you.

Harry Duran 00:49:19:

So the ArcticFarming I.O. will have your contact information in the show notes. Anywhere else you want to send folks to connect with them.

Oliver Rotko 00:49:26:

Sure. So if you want to connect with me on LinkedIn, Oliver Rothko. I'm pretty easy to find. It's a pretty unique name and I would be more than happy to connect with any fellow founders in the industry. Just say hi.

Harry Duran 00:49:40:

Okay. And we'll make sure all those information is in the show notes.

Oliver Rotko 00:49:43:

Awesome.

Harry Duran 00:49:43:

I appreciate you coming on and taking your time to chat with us, Oliver.

Oliver Rotko 00:49:46:

Thank you.