S10E137 Max Knight and Eric Roth/Rooted Robotics - From Seed to Harvest: How Rooted Robotics is Transforming Small-Scale Farming

Harry Duran

0:00 - 0:06

So Max Knight and Eric Roth of rooted Robotics, thank you so much for joining me on the vertical Farming podcast.

Maximilian Knight

0:07 - 0:08

Thank you, Harry.

Eric Roth

0:08 - 0:09

Thanks for having us.

Maximilian Knight

0:09 - 0:14

Yeah, I really appreciate it. I've been listening for many years, so it's a pleasure to be on.

Harry Duran

0:15 - 0:31

So it's not often we get to chat with two co founders on the same. So I'll make sure we get enough screen time for you both. But where are you calling in from? We're in Boulder, Colorado, and I'll start with Eric. If you could kind of tell the story of how you guys both met for the first time.

Eric Roth

0:32 - 1:03

Sure. Max and I met along with the other team members about two years ago or so when I was the head grower at Calera, a large scale vertical farm in Aurora, so just outside Denver. And a couple of weeks after that, Max reached out to me, asking if he knew anybody I could recommend that could sort of help guide the business from a horticultural and operations perspective. And, you know, I really took to them, and I thought we had a really great idea and a great team, and I decided to join them.

Harry Duran

1:03 - 1:12

That's great. Max, when you first connected with Eric, where were you at with the business? You know, what had you done up to that point?

Maximilian Knight

1:13 - 2:18

Yeah, so when we met Eric at Cholera, we were still pretty early on in the company, and at that time, we were building our own vertical farm, so we were in a much smaller, dingier office, and we had a lot of ideas, and. But, you know, things were still really early. And we met the folks at Calera through a couple of our advisors who had done some work with them in the past, and one of them was really friendly with Jim Layton, the CEO of Clara. And so through them, we arranged a tour, and they're out here in Colorado as well. So it was. Yeah, it was really. That was the first time I'd ever seen one of these facilities up close, even though I had been, you know, interested in the industry for many years at that point. But, yeah, it was really amazing to see the scope and the scale of what they're doing. And since all of that happened, we've actually done a couple of projects with them and discussing more projects with them. So it's been a really good relationship.

Harry Duran

2:19 - 2:26

Max, can you talk a little bit about the origins of rooted robotics, like, where the concept came from and how you first got involved?

Maximilian Knight

2:26 - 4:32

first started the company in: 2021

Harry Duran

4:33 - 4:48

Eric, I'm interested in hearing your journey in the actech space. I know you've spent some time with agritecture as well, so if you can rewind the clock back as much as you like, but I'm curious how you first got your foot into the door of Agtech.

Eric Roth

4:49 - 5:54

y in Chicago with a friend in: 2011

Harry Duran

5:55 - 6:01

What were some of the highlights and maybe lowlights and just kind of lessons learned from the two years you spent at cholera?

Eric Roth

6:02 - 7:02

Well, we probably need an hour podcast for that alone, but cholera was great. You know, it was really the evolution of what I had been doing before, but still, there were, our biggest issue wasn't growing the product. It wasn't even selling the product. It was the labor associated with growing, packaging and selling those products. And it's very hard to build a facility of that scale, or of any scale, without thinking about what automation systems will be in place before you design your grow systems and design your farm in general. So the biggest lesson learned, especially when going on a scale like that of calera aero Farms Bowery, is understanding you might not have to automate your entire system on day one, but when it comes time and you have the funds to automate, how is that going to happen and with what equipment? So that was something that, you know, these companies are kind of going back and trying to figure out ways to automate after they've built the facility, which is a very challenging and costly process.

Harry Duran

7:03 - 7:12

And so if you had to do it over again and you had started that role, knowing what you now know, is there anything you would have done or approached differently?

Eric Roth

7:13 - 8:09

Oh, yes, absolutely. I mean, I would have early, as an early business, focused a lot more on unit economics. That's something we really talk to our customers about. And understanding how much it costs you to grow and package something and how much you need to sell it for, if there's distributors involved, what the price point needs to be on that. So that's a big part of the business, but it's the labor piece. And when I was, you know, bootstrapping my company, there was nothing available at the scale of the things we're producing now. I was doing a lot of microgreens. I was doing about 200 trays a week in that range. And the equipment that we've developed here at Ruder robotics would have greatly benefited me at that point, because something like seeding, while it might not be the most to anyone who's really in the business, it's not the most labor intensive point, but what it needs to be is extremely consistent and robotics can do, can get your seeds evenly spread every time the same way, as opposed to person having to shake it by hand.

Harry Duran

8:09 - 8:20

Yeah, that makes a lot of sense. So, on the topic of robotics, Max, how far back does that passion or that love of robotics go for you? Because it seems like it's something that you've dabbled in for a bit of your career.

Maximilian Knight

-: 10:06

Yeah, I mean, I've always been interested in machines, and, you know, I studied engineering at the University of Colorado. I didn't study that type of engineering, to be honest. I studied water treatment and air pollution control, which is called environmental engineering, which is, you know, that's. It's good branding for the major, but ultimately, it's not exactly what I do these days. But, yeah, I really got into robotics because of my passion for this industry and that whole realization about the labor piece and how important that was. And at the time, you know, we were just a couple of guys in a dingy little office, like I said. But around that time is when I taught myself how to do computer aided design or CAD programming. And robotics is essentially, you know, at its core, it's programming, electrical engineering, and mechanical engineering all mixed together, and you're just manipulating things in space and using sensors to do that in most cases. And so before this company, I started another company called Hydrobot, and that company, we sold environmental control systems for small hydroponic folks that are growing in their home or their garage or something of that kind of scale. And so through that project, I learned a lot of how to work with sensors, how to build software on top of different hardware platforms. Through all of that, I kind of brought that into what we do here. But I've also hired a really great team that is much more technically savvy than I am. So I don't do that much of the robotics these days.

Harry Duran

-: 10:14

So talk a little bit about the makeup of the team, obviously, in addition to the experience that Eric provides, who makes it part of the team now.

Maximilian Knight

-: 12:29

Yeah. So the first person I hired was Christian Malgen, who's our mechanical engineer. He's out today. I'd bring him over, but he had a previous experience in designing steel structures specifically for, like, climbing walls and ropes courses and things like that. He worked at another company in Boulder doing that, and we met him by posting in a LinkedIn group about what we were doing, and he was really excited by the project and just the potential impact that we could have. And, yeah, he's just a really talented mechanical designer. He thinks about all of the. All the little things that go into building one of these machines and, you know, up to where do the bolts fit? And, like, how do you make sure you're going to be able to get your hands in there to screw things together when you're assembling the machine? And so, yeah, he's been an amazing partner to have on this journey. And then I. About a year after Christian joined one of my best friends from college, Sebastian Vasquez, he joined the company, and he had just finished his PhD in physics at Columbia University, New York. And, yeah, we've been close since freshman year of college. We used to kick the soccer ball across the hallway. That's how we met. And we connected really quickly because we both have a connection to the city of Granada in Spain, where his family is from there. And my parents met there in the eighties, so, yeah, so we've been close for a long time. But he. The reason I brought him onto the team is just, he's one of the smartest people I know. And even though, you know, he did his PhD in physics, not necessarily robotics, but he's extremely capable of just learning anything about anything, really. And he's, you know, he's really taken to it and picked up a million different skills along the way. And, yeah, he does an amazing job of just bringing in new technologies. He's working on a couple of different computer vision projects now as well, and just how we can integrate that with the products that we're selling, as well as building new lines of business. So, yeah, it's been a really great process.

Harry Duran

-: 12:54

Eric, what's it been like to integrate into a team like this? And obviously, having had the experience of working as a consultant independently, and working with some big organizations like cholera, this is a bit of a smaller team, I imagine, much more focused. You get to. You're probably talking to. Everyone is talking to each other every day, all day, about everything that's happening, and things are probably changing pretty dynamically. So what's that experience been like for you?

Eric Roth

-: 14:00

Yeah, I love that part of it. I love that we're very nimble and we can pivot on a dime, and we all can find. We all can end up agreeing on where we're going on any given project. We all have a passion and ownership in this business, so we all trust each other implicitly. And there's no bureaucratic red tape that I have to work through. Max and I, we have to look at the financials, understand if this is something we can afford and we can pursue, and then as a team, we make a decision so any one of our core four team members can speak about any number of the things that we work on, from the business model down to the design of the machines we're working on. So, you know, that's been really great, as opposed to in the larger companies I've worked at, we're typically working more in a silo, focused on your specific task and reporting to somebody who reports to somebody else. So I prefer this model. I'm an entrepreneur at heart. Obviously, we'd love to build a big business with many more employees, but this is the stage of a business I enjoy the most.

Harry Duran

-: 14:28

It's good to hear that you guys have a synergy and you seem to be all working well together. So, Max, I'm curious how that business model has changed, if at all, because obviously you started, it looks like around 2019, went through a challenging time with COVID and obviously that really determined how resilient companies were to make it through that stretch. So I'm curious, from the time you started, what you thought the business model was going to be and who you thought your core customers were going to be, how that's evolved to present day.

Maximilian Knight

-: 18:34

Yeah, changed pretty dramatically. But I think ultimately it's been. The journey itself has been really beneficial to us in terms of our growth and ability to ultimately help the types of customers we're working with today. So, like I said, originally we were a farm, and we've pivoted to focusing on the technology. And specifically within that, we do consulting, we do custom robotics projects or custom machines, but the real focus right now is three core machines. So over the last six months, we've been with Eric's experience and all the folks we've met before that, but we've talked to a lot of different stakeholders, mostly farmers, but also a lot of consultants in the space and other machine providers or system providers. And the three biggest overlapping pain points that we've seen that a lot of farm space, and this is both at the largest scale and at the smaller scale, but the biggest pain points are planting seeds, harvesting, and washing your, you know, your grow trays or your channels or whatever you're growing in. And so we decided to focus in on those. And within that, we're focused initially on microgreens. So we've come out with a machine that is a tabletop, microgreens, cedar. And so what that machine does is it sits on a table, it's about 6ft long when you extend it all the way, ships in a four foot box, because we've made the parts separable but basically what that machine does is you pour seeds into a hopper and it just casts the seeds onto a tray, on a ten by 20 tray that everyone uses to grow their microgreens. Really simple machine, but what the real innovation here is the price point and the simplicity of the machine. So ultimately, it's a much more affordable machine than others that we've found on the market, and it's easily fixed. So one of the things we've noticed in the larger farms especially is that they have these large pieces of equipment. They operate really well most of the time, but when they fail, you often have to wait for someone to come in from the Netherlands or Ohio or wherever like. And you know, they're ultimately going to take a few days. You usually have to pay them a few thousand dollars to do the maintenance. And of course, it's creating a bottleneck for the couple of days that it's down. So you have to do everything by hand in the meantime. And so what we're really focused on is for the larger farms, instead of buying one of those machines, the value proposition is buy two or three of these. When one of them breaks, a, first of all, shouldn't be too hard to fix. We're going to have videos on all of the different components that you can swap out. We're going to ship the machines with spare parts. And then in addition to that, if one of them fails, you still have two others or you have one other. And so your process isn't completely bottlenecked. And for the smaller farms, what we're really focused on is because of that price point, it's something that they can afford, especially with financing. We partnered with contain on that to allow the customers to pay over a couple of years if they need to. And what we really want to get to with those smaller farmers is that their monthly payment, if they're financing the item, is less than what the money that they're saving on labor or yield increase. And so that's really what we're focused on, is those three core products, the microgreen cedar is done. We're hoping to release the harvester and the tray washer by the end of the summer. And, yeah, and we're also doing a couple of projects on the side for individual companies that need very specific machines that are probably not, they don't have a mass market appeal. But, you know, we're at the stage where it really helps us to do projects like that. And we're going to be much more affordable than companies that have many layers of bureaucracy and just ultimately people that need to eat off of the project. Right.

Harry Duran

-: 18:34

I.

Maximilian Knight

-: 18:36

So there's only four of us.

Harry Duran

-: 18:49

So, Eric, how much has your day to day role changed from, obviously the time you spent the cholera? Obviously we keep talking about the small team here, but what's a typical day look like for you with a focus on operations?

Eric Roth

-: 19:33

Well, really our biggest focus at this point is selling our products. So most of my time is spent opening new sales channels. We're really excited to work with some channel partners as well, hopefully in this process that have a big market that we can, you know, access with our equipment. You know, when I was at Calera, I was the head grower, so my focus was horticulture. My focus was the operation. You know, here it's a little different. As you can see, we're not growing now. We were at one point, but our focus much more is on, you know, expanding the business, creating all the documentation we need for our equipment and, you know, having, you know, just moving the operation forward as in general here at our facility.

Harry Duran

-: 19:43

What was your experience, Eric, at indoor Agtech? Did you get to go to a lot of conferences before? And how is that different now wearing that co founder role? Is it just more.

Eric Roth

-: 21:14

It's great. I didn't go to as many when I was a grower, but being selling equipment now, we went to three conferences this year and it really bolstered our business model. It made us feel really good about the market we're looking to access. Because if you travel to any of these ag tech conferences, all of the equipment provider, all of the machinery is for large scale farms. And the small scale farm is. The small and medium sized farmer is essentially forgotten about and overlooked. A big part of this is that in Europe, there aren't as many small and medium sized farms because of the scale of automation and the scale that they have out there. Most of those smaller farms were swallowed up. But here in the states and Canada, in this part of the world, we have a good deal of small and medium sized farms. And in many ways, we feel that they're the backbone of this country and that we should be working to help their businesses succeed, because providing local produce is not only good for their company, selling it at a profit, but it's actually increasing the profitability of their economy as a whole. You know, there's the local economic multiplier, and that holds true with food, you know, so for every dollar somebody spends on locally sourced or locally produced food, they might be generating up to $4 for their local economy. So that's what excites me about being in this side of the industry and really having such an impact on a business. Just one piece of equipment can ultimately affect the bottom line from, you know, the red to the black.

Harry Duran

-: 21:42

Yeah, that's a good point. So Max, Eric alluded to it, you know, that distinguishing yourself as being the provider for the small and medium sized farms. So how much of that is an education process when you're having these conversations? Because, you know, there may be farms that, you know, start to think that all the equipment is, they're all commodities and, you know, it doesn't matter which one you go with as long as it gets the job done. So how much of that is education process as you're having these conversations to show them what it is that rooted robotics is doing? That's different.

Maximilian Knight

-: 23:58

Yeah, I'd say ultimately the biggest part of the education process that we need to really dial in on when we're talking to these folks is ultimately, how do they make their money back from this machine? What is the ROI and where does that come from? Because ultimately, like for the seeding machine, for example, if you look at just the labor piece of doing this with a cup of seeds compared to using our machine, because that's ultimately, that's all our machine does, right? It's just casting the seeds, it's not loading the media. You know, there's other things involved in that whole process. But if you just isolate that piece, the labor savings, not that much, but if you take into account these seeds are going to be perfectly distributed and you're going to get, let's just say arbitrarily, like 5% more yield over many, many trays over months, you know, you're able to sell more product and therefore, you know, you're able to get more revenue. And that's how your, that's where your ROI comes from for that product. Versus our harvester, for example, where if you're doing, if you're using just shears or scissors to harvest your microgreens can take you a minute or two to harvest one of those ten by 20 trays versus with our machine takes about 3 seconds. So it's, you know, it's really just about educating them that in convincing them that it makes sense that they're going to save money. And that's ultimately like what we want. We don't want to just sell these for the sake of it. It's really like, how can we move the needle for your business? Because ultimately a lot of these farmers, it's one or two person operation. And if we can help them delay having to hire, that's a big value add. If we, if they already have employees, if we can help them minimize that so that they can be more profitable and they can scale up their operations and really focus on what they need to do to grow their business, rather than just the actual, you know, it's the whole concept of working on your business versus in your business. Right. And that's really one of the big values that I think is behind that automation piece is it's obviously, it's the dollars and cents, but what do you get with that extra time that you do?

Eric Roth

-: 24:45

And I'll add to that, one of the other things we learned when we're out there is, you know, there's a real lack of industry standards when you go from farm to farm. And something that we like to talk to people about is if you want automation options, if you want affordability, you have to design your farm around industry standards. And the ten by 20 in this country is a very standard thing. You can buy them, bootstrap, farmer, others sell these products, and, you know, that sort of can flip a light on for people and saying, oh, if I'm using an industry standard, not only will I not have to pay extra to get something custom built, and it'll always be available. And, you know, with a company like rooted robotics, when it, when the time comes and when I can justify the cost, I have affordable automation solutions.

Harry Duran

-: 25:00

Yeah, that's a good point, and I'm sure it's a good distinction as you're having these conversations. So, Max, when you talk to these farmers, you know, is there concerns about their ability to scale an operation, or are they just really looking for a solution that fits their current environment?

Maximilian Knight

-: 25:49

I'd say it definitely varies. A lot of the farmers we're talking to, they're selling everything that they can grow and they're looking at expansion. And so in that case, obviously, they're interested in just how can they keep their operating expenses similar to what they are while still expanding. But in some cases, even at this, there's kind of a lower limit in which our machines, the ROI, doesn't make as much sense, where it's more of like a four or five year payback. And at that point, it's, we don't try to push too hard. But for those folks, the ones that we've seen interest from in that smaller camp, it's really just about how did they not have to hire? How do they have more time for themselves? And does that answer the question or maybe you want to add anything you.

Harry Duran

-: 25:50

Wanted to add to that, Eric?

Eric Roth

-: 25:52

Not really, no.

Harry Duran

-: 26:20

Yeah. So Eric, I'm curious from your perspective, when you think about the operations for new farmers getting involved and conversations you're having with new farmers, how much of it is really like an education process for them to understand what the technology offers and how much hand holding is provided for them. And then I guess the other part related to that is like who would be an ideal customer for rude robotics?

Eric Roth

-: 28:08

Sure. You know, our ideal customer where we kind of say if you're in the range of 100 trays per week, you're definitely going to have a fast ROI. And typically, you know, a machine like this, like Max said, it allows many of the customers we talked to, it's a husband and wife, it's one person, it's three people, and they may not even be paying themselves. And what our machine allows them to do is to get out of the farm quicker and or to, when they do hire, that training process is much easier and they know they're going to get consistency. You know, one of the things we've seen with some of the smaller farms, like Max said, is they're not willing to relinquish that seeding step because of how important it is to have the right amount of seeds in the right format on that tray, how much that matters to the final yield, to limiting mold, to increased yields, all those things and consistency and them hitting the targets, because if they don't hit their targets, they might not, you know, be able to provide for their customers, which is a big problem. So when I was a young farm owner, whatever could allow me to spend more time out of the farm and talking to my customers and getting the product to them, getting samples out, I was willing to invest in that. So whether that was creating smart production documents that informed the employees what they needed to do on what day, that's sort of step one. But after that it's thinking, how can we automate this process and get the employees out quicker? Because the labor piece, even at my scale, where I was at a 6000 square foot facility, labor was our most expensive cost every single month. And without automation, we were, we hit a sort of a floor of where we could get it down under. We had very well trained employees. They were working quickly, they weren't wasting time. And still we were really struggling to find profitability.

Harry Duran

-: 28:52

Max, it seems like you're probably in a better position to have these conversations with these small business owners, these small farm owners, because of the size of rooted robotics itself. So it's almost like they can relate to you, can relate to them. They can relate to you because you're going through kind of the same process. And so do they. Are they asking you for other advice on some of the other aspects of the business? You know, not just obviously what you can provide with rooted robotics, but like, you know, there's challenges in terms of, like, you know, figuring out the marketing plan, figuring out how they're gonna sell. You know, what Eric alluded to, like, all the different pieces that, you know, in an ideal world, if you're the head grower, all you're worried about is growing. But now, you know, you've actually got to run a business. And if you're a two person shop, you literally have got to wear all the hats, the accounting, the marketing, you know, and those are the things that keep owners up at night.

Maximilian Knight

-: 30:27

No, for sure. Yeah, that actually, that's happened a couple of times where the customers that are selling machines to also become consulting customers. And so we have, you know, weekly or monthly conversations with some of these folks just checking in on, because that's one of the benefits of, you know, I built many financial models for when we were building our own farm. So I know that side of the business extremely well from the unit economic side. And then Eric knows, obviously, the horticulture, the growing, like, all of that and more because he ran his own farm. So the sales side, Eric really understands the different sales channels. Are you going wholesale? Are you going to the farmers market? Are you going retail? The different packaging needs for each of those markets, the different challenges, the margins that you'll see. Yeah. Bringing all of those pieces together can be a really big value add for the customer. I think that's one of the things that sets us apart, is we're not just, you know, we are mostly engineers, but we're not just a group of engineers who make machines. We really understand all sides of the farming business, and that really allows us to speak the same language of these folks and relate to them and understand their problems. And on our side of the business, I think that it really helps us not have to go through as many iterations when we're developing these products, because we have Eric over our shoulder. Just how is this going to be cleaned? How are you going to load this thing? All of the different little things that really amount to a machine being easy to use and ultimately really effective.

Harry Duran

-: 30:36

Yeah. Eric's keeping you guys honest by asking the right questions, I'm sure, having been in the trenches before, right?

Maximilian Knight

-: 30:37

Exactly.

Harry Duran

-: 31:01

And so, Eric, I'm curious. Max alluded to it all the different ways for growth when it comes to a small farmer. You mentioned the farmers markets, mentions going wholesale. When you speak to farmers and they think about these next steps in terms of how to grow, what's the best route for profitability? What are some of the things these small farmers need to be thinking about?

Eric Roth

-: 32:50

Well, you know, number one, and I mentioned it before, is unit economics and how to track it, how to understand it. You know, every time you put a seed into a cube or you seed a microgreens tray, you should know how much that is going to cost you to put in a package, whatever that package form factor might be. Put a label on it, put it in a box, deliver it, whatever. You know, putting all that together, the energy cost through h vac lights, everything down to the smallest unit you can get it to. So that's really where I start with people. But even before that, you have to understand your market, understand what customers you're going after. What do you want to grow? What do you have a passion for? Because ultimately, these people need to have a passion for this because this is a challenging business. It's low margins. I always tell people you're a manufacturer, manufacturer, something with a short shelf life, with stringent food safety standards, and with a lot of competition. So, you know, it's an uphill battle, and sometimes that scares people away. But I think some people need to be scared away from this business because it's not for the faint of heart. It's not necessarily a get rich quick type of business. So it's a long play as a business. And really starting with that is what's your market doing? The market research, going out talking to restaurants, talking to distributors, talking to grocers, going to the farmers market, seeing who's at the farmer's market, your local, what lacking at that place? Is that something that you can grow at your facility, really, the sales channels is that, and what are you going to be growing and how much do you need to charge for it, and at what scale can you lower those prices down, say, for a large distributor who's going to be taking a minimum order of, you know, say, 20 pounds of basil a week, you can give them a better price than you might be able to give someone who's buying 4oz at the.

Maximilian Knight

-: 33:23

You need to understand those numbers exactly. And something that, I mean, that's not just, that's not unique to the farming industry. But I think there's so many projects that we come across where people, you know, they see the purple lights and all the robot, and they get excited, and it is exciting, of course, and. But ultimately, you know, when they get into the details, they start to get a little worried. And that's one of the things we, we really emphasize early on, is you need to understand all of those different aspects of the business, and ultimately, how are you going to make money?

Eric Roth

-: 33:41

We always say everything has to be paid for with what you grow. So lettuce, basil, tomatoes, whatever it is, all the things, all the salaries and the rent and the robots, all that has to be paid for. So how do you make sure that every time a package goes out the door, you're making the margins you need to make?

Harry Duran

-: 33:54

And how do you have conversations with people who are farmers, who are kind of looking to see what maybe the next trendy crop is going to be and then trying to ride waves? You know, do you have them focus and stay with the tried and true?

Eric Roth

-: 34:12

Not necessarily. We tell them, you do your market reit. It's back to those two things. What can you sell it for and how much is it going to take to grow? And then does the market demand it? Is there a hole in the market that you can fill, or can you create a better value for the local chefs in your area?

Maximilian Knight

-: 34:45

Yeah, and I think with that, again, it comes back to the labor piece as well. Cause if you're doing some highly unique crop, there's probably not much equipment out there on the market that can help you, especially if you're doing it at a small scale. It's gonna be a very unique solution, and you can come to us and we'll design you a custom machine. But does it make sense? Is it gonna pay for itself by selling that product, especially if it's something trendy? Is that going to go away in six months, and then you're stuck with an expensive machine that doesn't help you anymore?

Harry Duran

-: 35:05

So, speaking of trends, obviously, space that's moving fast is AI and robotics. Max. So how do you think about the need to continuously be innovating versus just having something that's really, like, as reliable as a fling line stapler when it comes to having equipment that people know and trust?

Maximilian Knight

-: 38:27

You know, I've been thinking a lot about this the last couple of weeks, and especially there's been a lot of criticism that I've seen around OpenAI just kind of doing things just to get press, and then they don't actually release the products. But ultimately, like all of these things, as cool as they are, it comes back to the bottom line, how is this helping you do a process that you have to do anyway more affordably? And if it's not able to do that, it's not necessarily, it just doesn't make sense. Right. And so one of the things that we've really learned over the years, developing various systems is robot arms, for example, are very flashy. In some cases, they can be the right thing. For one of the systems that we developed years ago, we had one robot arm that was doing six different types of tasks. And for that system, where you don't need things to move very quickly, it made sense. But in most cases, if you have something that's very repetitive, you don't need a six axis arm. It's overly complicated. You can get away with two or three axes of motion. And if you're just doing this all day, you don't need a six axis arm. And it's almost always going to be more expensive to do it that way, unless you're getting a low quality one. In each case, it's just going to break down. So there's other hidden costs associated with that. But generally, I think within our industry, I think it just comes back to the dollars and cents. So one of the things that we're looking at is how can we use computer vision in a way that's going to gather the type of data that is ultimately going to allow folks to plan their whole crop cycle more effectively? Because one of the things that Eric's learned over the years and that he's taught me is ultimately, especially when you're at a larger scale, but this also applies to the smaller scale, is that you don't necessarily know how much you need to sell until you're harvesting. And so demand planning can be kind of a mess. And you ultimately end up with a lot of waste in most cases, because you don't want to under produce and not be able to deliver on the orders that you have. And so we think that using a lot of different computer vision and machine learning, integrating all types of environmental data and just all the different metrics that we have on the different plants, that you would be able to achieve a pretty accurate assessment of based on this seedling right here that's five days old. In 40 days, I can expect the head of the lettuce to be this large, etcetera, with, let's say, a 95% level of confidence. And by doing that, theoretically, you can significantly reduce the waste. And of course, all of the. For every head of lettuce that you're not able to sell, you still had to buy the seeds, water them, pay the electricity bill, pay the people that move the plants around. And so that's a significant piece that we think definitely could use some help from those.

Eric Roth

-: 40:20

And one exciting part about the computer vision thing is, with one camera, we can accomplish multiple things. So we're talking with the customer about installing a camera to initially understand and record the downtime of a given machine. So essentially, we'll know when it's running, when it's not, and that just gives them labor data. But that same camera will be taking pictures of the plants themselves at that stage, measuring the leaf size and recording that and correlating it later to the yield data. So, like Mac said on so one of the points of, say, a lettuce production facility is they germinate their seeds. They typically will grow it in a nursery in a more dense format. And then at about day ten to 14, they're taking that and translating it into a wider growing format so it has more space. So in that usually those are robotic pieces of equipment. And something that happens with those equipment is they'll damage some leaves sometimes that, you know, they may miss one or two. And with that data, they can be more comfortable. Once they have several rounds of from transplant to harvest, they'll be more comfortable knowing, okay, after this harvest, based on the information we got today, we can expect that in 40 days, when we harvest, we'll have this yield. And that's very big for their sales channels, because they'll know earlier on how much they can expect. Because you might think, oh, well, I'm doing ten grow systems, and I'll have, you know, between this and this every month. But the larger scale you get, the more variance you'll have, whether it's for environmental reasons, mechanical issues, lights may have gone out, you may have had irrigation issues, any number of things could have gone wrong on any percentage of that harvest. So, you know, it's much data that can be collected along the way that can inform that sales team what they can expect really helps the communication of the company from sales to operations and back.

Harry Duran

-: 40:31

So, Eric, just to follow up on that, when you're having these conversations, is this information that maybe they didn't have at their disposal, or they just didn't have enough clarity around this aspect of their production?

Eric Roth

-: 41:31

I mean, I think they understood that there is data to be collected. They just don't necessarily have the capabilities to do that data collection. So they find comfort in us and our team. Sebastian, who, like Max said, can essentially figure out anything and can explain exactly how this is going to work, exactly how the data is going to be received and, you know, in what format. So one of the best friends of a large scale vertical farmer is accurate data that you can make informed decisions on. There's no shortage of data at any one of these large scale vertical farms. But how accurate is it and how well can it inform you to make a decision that'll have a pretty large effect? So something like that, as simple as a camera, it's a very inexpensive installation. And that data that they can be comfortable telling their sales team, okay, go ahead and sell 15% extra of romaine this week because we're expecting a higher yield.

Harry Duran

-: 41:34

That's pretty powerful data.

Eric Roth

-: 41:35

Yes.

Harry Duran

-: 42:04

So, Max, how do you think about where the growth of the company is headed? Like, what are the opportunities? Obviously, you've got your core team now. I imagine you're probably maybe some nights kept up by thinking, what's the next step, who's the next hire? You know, obviously you're attending these conferences now. You're having conversations with some of your colleagues in this space. So how are you thinking about the bigger picture, about, you know, where the growth opportunities lie and how you're thinking that through in terms of conversations with the team?

Maximilian Knight

-: 44:05

Yeah, I mean, at this point, we're really focused on, we, you know, we just released our cedar about a month ago, and so we're really focused on sales. And how do we get those relationships with distributors, resellers, and those kind of partnerships with the folks that already have the same type of customer that we're already selling to? We will be doing direct sales, but we really want to just get really well established within those existing sales channels so we can build our brand that way and along those same lines. And our next hire, we're thinking, is probably going to be in the marketing sales role, but not someone, necessarily someone who ideally really knows the industry, because it's not the same type of sales role where you're just knocking on doors, cold calling. You really need to be able to speak the language. You need to understand the problems that these folks have. And so that's kind of the next phase of the company. But I think long term, what we really want to do is build interconnected systems. So right now we're building these pieces of the process to automate one part of that process. But long term, we really want to have machines that can interconnect each of these steps in the process so that you can, at the most advanced level, you can basically fill hoppers and walk away and lettuce comes out and it gets loaded into a truck. That's fairly long term. And we'll focus on what are the customers biggest pain points? How can we actually save the money? Because ultimately, for these smaller customers, those little intermediate steps, how do you get from one machine to the next? At a small scale, they're not that much of a problem. At a large scale, they become significant problem, where you start to invest in conveyor belts and things like that, to move things from one machine to another, or at least even just from one part of a warehouse to another.

Harry Duran

-: 44:44

Yeah. So, Eric, talking about how pieces work together in these conversations I have on the show, and there's a lot of talk about putting systems together and macgyvering them. So they work connecting disparate systems, sometimes from different, like, regions, EU and us stuff. And obviously, in your experiences at Clara and some of the consulting work you were doing as well, are you seeing any trends towards interoperability and at least conversations with some, with your peers in the space about trying to make sure all these kind of pieces can work together seamless? Not. Maybe not seamlessly, but hopefully in a way that makes more sense and it's cost efficient for the farmer.

Eric Roth

-: 46:42

Yeah, absolutely. 100%. The everyone that we talk to that's at a certain scale is citing labor as the biggest issue. So anything that can remove a human from the process, limit that time, they're willing to entertain it. It's all we have to go back to that ROI. How many weeks, months, or years is it going to take for that one element to that piece of equipment to pay for itself? So it's really thinking, that's why we started where we started. And the company I was working for, cholera, did the same thing. There were some automation, but it was piecemeal. They had a cedar, but a human was operating the cedar. They would put it in, they would take it out and stack it, put it in, take it out and stack it. So now they're considering other ways. They're them and many others are building more extensive and automated production lines with harvesters and separating the dirty from the clean, having filling machines, pro seal machines. So these are all the types of equipment that companies like cholera aero farms. The large ones can consider only once they get to a certain scale. And once they've developed those, you know, very important relationships with large distributors and grocers, because that's a large commitment. And that machinery combined to connect all those steps together will have a large ROI. But if it works, and it works for long periods of time. The ROI is within sight. So I'd say absolutely. The industry is pushing that way. We can see that in Europe. Holland's been doing that for years. Companies in Japan and all over Europe, really, there's much more. It's more defined in the greenhouse space and the single layer growing. It's a little more simple, obviously, to automate processes like that. There's no going up and down to retrieve things. But typically, you'll see very heavily automated packing lines with maybe 10% of the amount of humans on that line that the slightly less sophisticated line.

Harry Duran

-: 47:00

That makes sense. So a question I like to ask my guests is, what's a tough question you've had to ask yourself recently? So whoever feels like they've got a good answer for that, I'm sure that this happens on a daily basis, but I'm just curious in terms of what's top of mind for you lately.

Eric Roth

-: 48:37

Well, I think one thing for us is what should we focus on today and this week? So, with the custom projects that get brought in front of us, we really have to make a decision on whether it's a wise decision for us to take time and to take time and focus away from the development of our three core products, which we strongly believe have mass adoption potential throughout the industry. So we're sure that we're focused on those. But when we go to a customer and they say, hey, we have x amount of money to dedicate towards a custom plug popper, a custom tray separator, a tray lift, a cleaning machine, whatever it might be. We have to take into account the risk that, that we take to pull that time away from our core products. But also, you know, a sale is a sale, and we have to just, we have to do our own unit economics practice. And that's a little more complex when it comes to a piece of equipment, because you have to cad design it, you have to put it and send it to our manufacturers and get a quote to understand maybe the range of how this much this will cost, price on all the components, do research in that space, and then that comes before we even can prototype and work on the machine, because we know we'll have an early prototype of one of these custom machines and we'll make adjustments before we send it to market. So that's sort of what keeps Max and I focus on our team, because we want our engineers to engineer and stay focused. And the more as an engineer you bounce from project to project, the less you're kind of able to get in that flow state and really get a lot of effective work done. That's one thing that we're balancing week.

Harry Duran

-: 48:41

To week that makes sense. What about for you Max? What's on top of mind for you lately?

Maximilian Knight

-: 49:30

Well, I think along those same lines, one of the things that sometimes comes up is people bring these projects in front of us, especially these sort of one off projects that don't have mass potential adoption. And one of the things that sometimes comes up is that is this even worth it? Not for us as a company, but is this really going to move the bottom line for the customer ultimately? Like it's like, all right, it makes this process slightly more efficient, seamless, et cetera. But how much does this actually affect your bottom line versus the cost of for us to produce a machine like this? And so that's something that we're always balancing because obviously on one hand we want to do well with our business and promote it, but we also don't want to sell something that's not really going to help our customer.

Harry Duran

-: 49:55

So as we wrap up, I've been leaving space at the end of these conversations for any messages you have for the industry. Just trying to foster a sense of, you know, collaboration, cooperation wherever possible to everyone that's working in the indoor space. So you know, what messages do you have for, you know, you've got a lot of your colleagues, CEO's as well, listening to the show. And you know, what's top of mind for you there?

Maximilian Knight

-: 51:19

I'd say we really want to focus more on collaboration and I think that's starting to happen for sure. When I was following the industry early on, I think there was a lot of people working in silos and everyone thought that they had the best idea. And you look behind the curtain and I think in a lot of cases we're making the same mistakes. And the more we talk about these things, the more we're open. It's better for the whole industry ultimately. And I think a rising tide lifts all ships. I think that's really our message, is that we need more collaboration, we need more openness. Obviously, in many cases IP needs to be protected and there's different ways to do that. But I think we need more of that collaboration and just that ability to work together to create systems that create more successful farms. Because I think that's one of the biggest things that we've seen. We're raising money ourselves. We know a lot of other folks in the space raising money. And when there's these big stories about a farm going through a bankruptcy or shutting down, it really hurts the whole industry. And we need to collectively, we need to create more positive stories about successful businesses that are able to scale or even just know, be profitable. And that's going to come through collaboration.

Harry Duran

-: 51:22

What comes to mind for you, Eric?

Eric Roth

-: 52:39

Well, if I'm speaking to growers getting into the industry, I'll certainly go back to that unit economics piece. Understand your unit economics, and for the more funded startups, don't go too big too fast. That's typically a very common way to get in over your head. Give yourself a chance to learn the ins and outs of the industry. Stand on the shoulders of giants. Talk to people who have done it, who have failed, people like me who have succeeded. You know, all there's information out there and you have to find it. And it's very easy to fall in love with this industry. But if you're going to come into this industry, let's work on being successful. Let's work on, you know, making a profitable business model. And nothing trying to take over the world, just help your local community build a farm that satiates that community. And if that works great, maybe it's time to move on to another community and redo it and do it better the second time. Because the more small ones you build, the better and better and better, the more informed decisions you'll make on your equipment, your automation, your lighting, your h vac, who you're working with building, you know, how you're sourcing your materials. There's so much to learn to. So making any of those mistakes on a smaller scale is the biggest advice I can give.

Maximilian Knight

-: 53:27

Yeah, and I think to add to that, one of the things that Eric always says is that things are going to go great the first six months and then things start to get dirty and it's, you know, I mean, you can talk about this, but it's when you're doing that slow scale up, make sure that you've done it for at least a year. I mean, two or three years is far better in terms of the lessons that you'll learn. But things, it's not as simple as building a machine and having it do a repetitive task over and over. Things change in these facilities over time and that doesn't get reflected on a spreadsheet when you're conceptualizing all of these things and building your business models. And you need to have that real world experience. So I think that's a big piece that gets overlooked a lot.

Harry Duran

-: 54:32

Yeah, that's extremely valuable advice. And like they say, success leaves clues, and I imagine failures leave some clues as well. So, you know, it's helpful to have that perspective. And I think you've got, you're building like a solid powerhouse team with, you know, tons of combined experience, you know, in terms of understanding the technology, but also understanding the markets. You know, having been, you know, through a couple of, you know, really tough cycles, I think it's really helpful to see what it is that the team is building and how you're having success. But also, just as importantly, helping farmers have success, too, because when they succeed, you succeed. And I think the industry does well because people see it from an outside perspective, and they're really seeing that there's some momentum here. So I really appreciate you guys taking the time to kind of give us a peek behind what's happening at root of robotics. And I think there's always people are looking to get involved, and they always maybe just kind of see the sexy side or they don't really do the numbers. They don't do the unit economics, as Eric had mentioned, it's refreshing. And a splash of cold water sometimes that's much needed in these conversations. I appreciate you guys being open and upfront with sharing what's happening.

Maximilian Knight

-: 54:33

Yeah, thank you.

Eric Roth

-: 54:35

Thanks for having us.

Harry Duran

-: 54:42

Yeah. So rooterrobotics.com will send people to the website and anywhere else you want to have folks connect with you or reach out if they want more information.

Maximilian Knight

-: 54:46

Yeah, we're most active on LinkedIn, and we also do Instagram.

Harry Duran

-: 54:50

Okay, sounds good. We'll make sure all those links are in the show notes as well. I appreciate your time, guys. Thank you.