S8E105: Michael Sichenzia / Go Global Advisors - The Deal and PR Blueprint for Launching Successful Vertical Farm Projects

:: 00:00

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:: 00:26

Attacking that and making sure that the city has that. There's a variance process. Whatever that process is, get it started sooner sooner rather than later and deal with that issue, because that issue will affect everything. The last thing you want to do is take delivery of your farm and deploy it and not be able to grow. I mean get a stop work order or have somebody come in and say you can't occupy this space anymore. So to me understanding the zoning, communicating with the city, what you're trying to do and really work that process effectively, you do a really good job of communicating the benefits of this program to your municipal leaders.

:: 01:09

Welcome to the Vertical Farming podcast Weekly conversations with fascinating CEOs, founders and ad tech visionaries. Join us every week as we dive deep into the world of vertical farming with your host, harry Duran.

:: 01:25

Vertical Farming podcast, season eight bonus episode. Thank you so much for joining me on this journey. Thank you so much for all the support you've provided over the years. If you are a regular listener, then I really truly appreciate all the support, all the comments, all the feedback, all the in-person hugs for the listeners I've met at conferences are really imbibing high off the response to the show and I really appreciate all the support. If this is your first time listening, then I really appreciate you coming to this show because I imagine you're looking for conversations with some fascinating CEOs and founders of the leading vertical farming companies from around the world and you are in the right place. If that's the case, this is a special bonus episode as we get ready for season eight.

What I did was actually look back in the archives for one of the most popular episodes of all time on the show, and it was a tough choice because there were definitely several that fell into that category. The one we're going to go with today is a conversation with Michael Cegienza. Interestingly enough, we just published episode 104, and this was exactly the halfway mark way back in season four, episode 52. This was a very popular episode and I think part of it was the topic that was covered. The episode was titled the Deal and PR Blueprint for Launching Successful Vertical Farm Projects and I think, in line with what's been happening recently in the news, with the closings specifically with AeroFarms and App Harvest, it's no surprise that folks are on edge about upcoming plans for projects, existing projects, and this is both the farming community and the investor community as well. So it felt like the right topic to revisit and I know you're going to get a lot of value out of this episode with Michael. As I mentioned, we're getting ready for season nine. We are actively looking for sponsorships for the show, so if you and or your company feels like this would be a fit for your marketing plan, please reach out. Harry at verticalfarmingpodcastcom. We'd love to partner with you and happy to make connections to past sponsors who have had really good experiences partnering with us as well. So if that's something that you're interested in, let me know and reach out.

Just a little preview in case you haven't had a chance to listen to this and are new to the podcast. Michael is going to be speaking about the intricacies of developing container farms, everything from getting zoning approval from the local and city government to what he looks for when building a project and a team. He's highly mission focused and he wants to leave a legacy of making the world a better place, or at least trying to, which is something that's near and dear to my heart. He talks about his involvement with the From Mary with Love project and his belief that the education about the vertical farm industry comes through empowerment. Lots here to take away, and I know you'll enjoy it. If you've been enjoying any of these episodes past, present or even a future one, leave me a rating on every view at ratethispodcastcom. Forward slash VFP. I'd love to read yours out next. I don't think I read one of the recent ones that came throughout. It's from Lita Kokini and she writes.

The vertical farming podcast has been an absolute delight to listen to. From the moment I tuned in, I was captivated by Harry's passion for vertical farming and the incredible stories shared by industry experts and pioneers. In every episode I learned something new and it leaves me eager to learn more. The vertical farming podcast feels like a journey and I can't recommend it enough. Thank you so much, lita, for those kind words. We're excited to be partnering with Lita and her team on the upcoming Hordi AgriNext conference coming up in Abu Dhabi, so expect to hear more in future episodes about that. Okay, before we get into this jam packed and informative conversation with Michael, here are a few words from the folks that support this show. So, michael Secenzia, founder and CEO of Fabulous Enterprises, thank you for joining me on the vertical farming podcast.

:: 05:13

Thanks for having me, Harry.

:: 05:15

Where's home for you now, as we connect today.

:: 05:18

Home now is Fort Lauderdale, Florida.

:: 05:21

Okay, and were you? Born, raised there, moved there, relocated?

:: 05:25

No, I'm a country boy from Brooklyn, New York.

:: 05:28

Okay, what part of Brooklyn? Brooklyn?

:: 05:30

Originally from the Red Hook section of Brooklyn.

:: 05:33

Okay, I grew up in Yonkers.

:: 05:35

Okay, so you're.

:: 05:37

Yeah, very familiar with New York. I've lived in East Village, Williamsburg and Upper East Side, so very familiar with the city.

:: 05:45

I definitely miss it All good neighborhoods but they're completely different from when I was growing up.

:: 05:50

Yeah, what are some fond memories of growing up in Red Hook?

:: 05:53

My dad was a lifeguard and a competitive swimmer in the Red Hook pools and my fondest memories are playing softball in Coffee Park off of Van Brunstreet in that area. And I still have family that live in the hook and I visit them occasionally when I'm in New York. I said I visited them last I was there for the blizzard. Unfortunately I didn't plan that to happen, but I go back to New York as often as I can. Obviously I still have family there, but I try to get back. I don't want to lose my tan, so I get back as fast as I can.

:: 06:25

The whole point is to I'm assuming you're in Florida to escape the winter and so you actually managed to make it back for the winter there.

:: 06:33

I came to Florida 17 years ago for a work opportunity and I loved it, and there's no getting me back. Although I travel to the snow often, my projects take me to places generally where it's cold, so I try to go there at least the amount of time as possible.

:: 06:49

And, when you Can, you talk a little bit for folks that may not be familiar with the projects that you're working on, a little bit of your background, and no need to do the long version, but we'll get caught up as it relates to what we're talking about on this show.

:: 07:02

So I'm generally a person who had no experience in farming whatsoever five years ago primarily a real estate background and the pandemic about four years ago, I discovered that the food space was a space that needed a different approach.

So, having owned and operated restaurants in my past, I saw that that was an area that I wanted to get back to and I saw that my real estate experience would play into that because I could. I knew how to put together deal structure and I felt that farming, and urban farming in particular, had a tremendous opportunity with the right deal structure. And that's how I got into it and I met a group of fellows who started Frey Farms in Boston and I visited there and once I visited that and walked through a shipping container set up to do a farm, it was the ultimate science project for me and it had me hooked and at that point I said this is the space I want to be in, this is the future of farming and that's been my primary focus since then. So the projects that I do are primarily based on really the hyperlocalization of food and procurement, production, delivery and on a hyperlocal level, because I think that localization is the key to taking back our food system.

:: 08:16

What was it about the space that attracted you to? And you mentioned you did have the real estate background, but was it something that you were looking into studying, or just what you were seeing was happening around you at the time?

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Land is the biggest issue for food and there's a lot of underutilized space in inner cities and I saw inner city warehousing and industrial space as an opportunity. If we could get into the right technology and we could get to commercialized production and commercialized yield, then that space would be ideally suited. And I also saw it from a capital perspective, because the capital perspective is the key. You can do good work if you have a checkbook with money in it. And I looked at the hydroponic space and said it's really a play on storage. Public storage facilities and the way those deals are structured are ideally suited for modular containerized hydroponic space in an urban setting. And that's how I that was the connection for me.

:: 09:17

Did you start to connect with folks that were in the space or anyone in the industry at the time, or how are you educating yourself?

:: 09:23

I met a fellow up in Canada who had a company called Locally Grown Salads and we started talking. I couldn't make a deal with him because his technology was just too expensive for me, but he had this modularized concept of hydroponics in grow units, much like freight farms had. Only his concept was to put them in 10 to 20 of them in a building, build a clean package room in the facility and then go out and do this. What happened is back in 2017 or 18, I'm not exactly sure the exact year but when the Trump administration changed the tax code and brought in this whole concept of opportunity zone for tax deferment. That changed the space dramatically and I saw that as a way of attracting dollars into the space and to me that was critical to making this work.

:: 10:13

Given your background in real estate, how do you think about the viability? Do you think about what are the conditions you're looking for in a project when you decide to take something on like this being new in the space? Do you look at things like long-term viability, profitability, implementation, things about thoughts about building the team?

:: 10:31

Because I'm not a farmer. Quote, unquote right, the first thing I'm looking for. My whole concept is there are many really well-run not-for-profits who have funding sources, who have boots on the ground, infrastructure in the community, and what they really lack is programming. So I look at hydroponic farming as a programming component and I search for inner city non-profits who need programming, who don't have the ability to go out there and put all the necessary components together, don't have the expertise to put the deal structure together, and then I go out there and I try to team up with them.

So the first thing I'm looking for is a non-profit that has boots on the ground in a particular area. The second thing that I look for is is it based in a designated opportunities zone, because that's how I know we're going to get the money that we need. And then I start to look at the enterprise aspect of it. Is there a need? What's the demographic? Are we going to be able to get this out to X number of people and derive a return on that investment over a five-year period of time, because that's usually the criteria for an opportunity zone investment. So when we put all those things together, there are tremendous opportunities. It's wide open field.

:: 11:46

When you look at the non-for-profit team, I'm curious what specifically your looking for in the team. Is it the makeup, their experience, their success with previous projects? What's the criteria? Just diving specifically in that aspect of it that you look for?

:: 11:59

I look primarily to operations that are small in nature, because they tend to be less centralized, and I think centralization is the enemy of actually of all of the things that we're trying to do. I want a group of people that are more of hands-on, small team that is really looking to get into a project and really make this their signature project. And food today, because of the pandemic, has become a very important aspect of these discussions, and there isn't a community that I talk to that doesn't want a food-growing component to what they're trying to do, and that's what's going on here. So, to me, I'm looking for a small team, a team that's the decision-making process is more streamlined, and a team that needs what I offer, and what I'm essentially offering is and I hate to use this, no pun intended but a project in a box, a form in a box, where we can deliver it, deploy it quickly and get the crop growing. That's really what this is all about.

:: 13:00

How much of it is related to for lack of a better term personality of the founders or the founding team? Are there certain traits or characteristics when you start these initial discussions with some of these founders that you're looking for?

:: 13:13

The BIPOC community has been particularly affected by food sovereignty issues and food injustice issues and I'm looking for people who have a personal experience and have a long-term background in the neighborhood. So the reason I picked the Wilson brothers are a perfect example who run the From Mary with Love organization in Chicago. Their brother was one of the top-rated basketball players in the country back in the 80s, a fellow by the name of Ben Wilson, ben G Wilson. He was the Michael Jordan before there was a Michael Jordan, believe it or not and he was tragically killed. He was tragically killed from a gun incident and when I started to talk to the Wilson brothers I got a feeling that they really cared because their mother had instilled upon them Mary Wilson, the late Mary Wilson. She became a community activist. She was very much involved in the community after the death of her son and that was her legacy and they wanted to continue that legacy and the legacy revolved around food. Mary came from Mississippi. Her family picked cotton and food and the Wilson brothers related to that.

Tony Wilson, the director, had a background of urban farming and starting some urban farms in Chicago and it was a natural fit. There was a passion there and that shared passion was enabled us to really pull off the first phase of the project. As you know, these things are not a straight line. They were ups and downs. You think you have enough money, then the money is not there. I can't tell you the number of false thoughts that we had with that project over the last year and a half. And finally they've able to get our box delivered was a big, big moment and I have to say we would never have pulled that off if it wasn't for a benefactor that made that happen, a company called Synergistic Solutions. They put up all the money and they made it happen for us. So passion, stick-to-ed-ness, we're going to make this work, no matter what the obstacle is. That's very important in any entrepreneurial venture.

:: 15:06

Yeah, that's one of the projects that we first connected on the From Mary with Love project, and so I'm wondering now, looking back, because that project, since it's been started and the work that your team has put in it's completed, have you moved on from that? Are you still working?

:: 15:20

with them. Our role is finished. Our role was to put the deal structure together In that particular location. We had to help rewrite the zoning code and that's another issue. That's a big issue when you're talking about these things because the zoning doesn't allow for these permanent shipping containers to be deployed. We had to help draft they re-rided a code which is now working its way through that municipality's ordinance process. But our goal was to get the box delivered, get the infrastructure necessary so that they could plant the crop, train their boots on the ground, project manager and then liaison between them and freight forms to get to where we are. So today they are in the process of planting their first crop.

:: 16:00

Looking back at that project, michael, if you were to think about tackling something of that same size, with that same type of team, with the same type of zoning challenges, is there anything you would do differently?

:: 16:12

Absolutely. I would go public much sooner, get more community support much sooner in the process and line up the distribution of the end product much sooner in the process, because you have to be able to sell this stuff as soon as it's ready to be harvested. So not having those things in place made it much more difficult to put the money in place to get the deal done. So it was a huge learning curve there.

:: 16:35

At what point did you start working with the team at Freight Farms? And I know they've got some. You know they provide a lot of help with their projects as well, so what type of relationship are you building with them?

:: 16:46

Let me just say the relationship with Freight Farms has been a blessing. They've been extremely helpful to me. Many times they should have pulled the plug and said sorry, we're going to sell the box to somebody else. They hung in there with us and they're still helping out and telling us the technical expertise and whatnot. But I met Freight Farms about three years ago and I originally signed the contract to buy these boxes. It's a two box deal but we only took delivery of one. We just couldn't come up with enough money to do both of them about 13 months ago 14 months ago and so it was a long process and it took quite a bit of time. We lost our first location. We had to go find another location Just a typical start up problem that one encounters. But they've been extremely helpful. They helped us in the process of the business plan, all the way from beginning to where we sit today Absolutely pleasure to work with.

:: 17:38

It's interesting you talked about the zoning issues because I think a lot of first time farmers, first time container farmers they may not think about those things because they think, well, if I have access to land or if I have someplace I can put the box on, then that's all I need and then I can figure out. There's a lot of moving parts. There's a tiny thing in the crop, harvesting it, and then the marketing and distributing it, which I think a lot of first time founders may not be thinking of. But the zoning issues is interesting. I'm wondering how you think about those issues going forward and any advice for folks that are looking to work in this space, specifically with container farms. Granted, the bigger box factories they've got a whole team that handles all that zoning for them, but I think for the one off folks it'd be helpful to think about those things or maybe think about questions they should be asking themselves when it comes to zoning.

:: 18:27

Absolutely, because that's it could be a very expensive proposition If you don't have a person on your team that is used to doing zoning work. I happen to have that experience simply because of my real estate background. I've been in front of city councils and planning boards and zoning commissions and it's part of what I do, but it's an extremely important aspect. The benefit of a freight farm or a containerized farming scenario modularized if you would is that it's low cost, quick deployment. But the thing that will stop the deployment is if the zoning doesn't line up with where you're putting this farm. So if the site doesn't have an urban farming in the zoning code, your box is only good for 30 days and then the city is going to come and tell you to move that box. So what do you do then? So attacking that and making sure that the city has that. There's a variance process. Whatever that process is, get it started sooner rather than later and deal with that issue, because that issue will affect everything.

The last thing you want to do is take delivery of your farm and deploy it and not be able to grow. I mean get a stop work order or have somebody come in and say you can't occupy this space anymore. But to me understanding the zoning, communicating with the city, what you're trying to do, for instance, in the project in Oak Forest we hired an architect to conceptualize what this would look like, draw it. We wrote a really good narrative and we expressed that to the community development agency so that they would be our liaison to the different city commissions and boards and really work that process effectively, do a really good job of communicating the benefits of this program to your municipal leaders and then, once they see those benefits, they jump on board.

There isn't a community that doesn't want this. They all want this. And if you're a young person or a new entrepreneur in this space, you're going to get help. But you got to know how to ask for it. You got to know what to do. You have to follow the rule. You can't just go in there and say you know we're just going to put it there and they're going to. It's not. If we build it, they'll love it. It doesn't usually work that way.

:: 20:29

What's helpful guidance for first time founders as they think through the community aspect of it, cause you did mention earlier this idea of community support, getting the buy-in from the community, probably some education, because if they've never had access to this sort of fresh produce locally, you know, I grew up in, like I mentioned earlier, in Yonkers. I've lived in New York city, so this idea of food deserts is something you know. That's an idea that I'm very familiar with and just, you know people who associate or may not even have access to anything fresh. You know, growing up they just have the bodega on the corner. So I'm curious, you know how, how you think about the challenges of educating community on the benefits of something of a project like this.

:: 21:12

I approach it from an empowerment perspective. I say you know, many community leaders talk the talk Sunday morning, monday morning, and then there's no further talk the rest of the week. So it's an empowerment play, and especially in inner city. There are three major components to inner city poverty lack of affordable housing, lack of job opportunity and then health lack of quality health. Well, you can't have any of those things if you don't start with a good diet. So if you take a generation of people and continue to shove poor food product into them, you're gonna get. The next reaction to that is lifelong disease, more ailment, more sickness, more of everything. It compounds everything. So we look at it from the perspective of empowerment. So when I talk to community leaders I say if you want to attack these problems, you have to start with a holistic mentality and then you have to attack it at its core. You start with these four components right that I just mentioned, and food is one of them. So food is easy. Food is easy.

You can get a young person in their 18, 19 years old and get them to grow a tomato or get them to grow some lettuce. They're hooked. And the beautiful thing about hydroponics is it really is the ultimate science project, when you can do that and you see this thing growing. And, harry, the first time I walked into a box and with the lights, you know, and I was like this is it for me. I was hooked. So I try to show and again, it's been very helpful because we have some great video that comes out of Free Farms. We've been able. You know, there's good marketing material. They have a track record of working with nonprofits and others in the community. So we take all that, package it together and when we make the presentation there isn't a person in the room that isn't shaking their head saying how do we get to become a part of that?

:: 23:01

Yeah, so interesting. Especially folks that have grown up in the city and you know their only interactions and thinking about farms has been the typical traditional. You know head out upstate, you know New Yorker head out to, you know somewhere outside of the city, and it's their first experience with dirt, with cows, with chickens, and it's a bit of a shock and I think we're so disconnected from understanding where our food comes from.

:: 23:28

And to your point.

:: 23:29

That experience that you had is something that is. What's exciting for me is that that's a feeling that can be replicated and I'm wondering as you know, the From Mary with Love project came online if you started to see some of that from the community members you know, as people were connecting with the project and people that may not have had this type of experience before if you got to see some of that.

:: 23:51

So the morning the box was delivered to the site. You know I'm a big believer in good PR and I'm a believer that you make things happen with good public relations and good communications. So you know, we had the video crew out there and we had the crane come in because we had to do a crane placement of the box and it was a showstopper. Everyone wanted to be out there, everybody wanted to take a picture. We bought a used unit from Furry Farms and it happened to have a logo on the side that said this is a farm and I had a picture of that bucolic farm scene that you're describing and people were just amazed. Everybody wanted to go in the box At this.

We delivered the box in early October and for Thanksgiving we did a turkey fun, a turkey giveaway, and we brought in a lot of the local food banks to basically introduce ourselves to what was going to go on there and the whole food concept. People just wanted to walk inside that thing. And that's the buy-in that you want, because you'll get city governments to do pretty much anything you want them to do if there's buy-in from the community, if the community says I don't want that ugly box sitting out in front of my, you know, in the parking lot, then no matter what you do, you're never going to get that buy-in. But community awareness, being a good neighbor, showing people that you're going to employ people in the community, especially disadvantaged people, this is, you know, what more could you ask for? Really, at a grassroots level, there's nothing like growing food. There's nothing like helping someone eat. It's a beautiful thing and I'm a big believer in the more local you can make that and maintain that, the better off you're going to be.

:: 25:29

Yeah, I wholeheartedly agree. So I'm wondering what connection you maintain with the FromAry with Love team Now that the project is up and running. I imagine it presents a whole new set of challenges for them, because you know you've obviously articulated what was needed to get to where they are now and I'm just curious as they move forward because, as new farmers think about these, you know there's phases as to how these things happen. So I'm wondering to what extent you've been in contact with them and how they think about what they should be focused on going forward.

:: 25:57

So I'm playing more of a consulting role now and I try to defer all the technical aspects of the farm to the tech team at Freeforms. They're the ones that are best geared to deal with those issues, and there are many, because when you're starting these things up, you have connectivity issues, you have timing issues, there are all kinds of technical questions relative to the hydroponic process which are unique to Freeforms to a certain extent. I mean Freeforms has a you know, farmhand app which allows for remote monitoring, which is a beautiful thing. So my role is more of helping them now to look at the bigger picture, interact with state and government agencies, talk about different other relationships with food banks that they might be able to make arrangements with opportunities with drug rehab centers and transitional programs for job training, which I think is a huge, huge component here that is yet untapped. And it's those things. It's developing the big picture, the longer term. Where are we gonna be three or four harvest later?

This whole concept of prepackaging, the concept of cuisine concepts you know we started a company down here with a young entrepreneur called Badass Cuisine. We helped seed that with the idea of gourmet, wholesome, gourmet. You know, that can be delivered using good, fresh products. So these are all the offshoots that come with that empowerment process and I always circle back to that. This is not only a food generation process and a food production process, but it's also a job creation, it's a job training, it's an educational component and these are all the things that we need to change the paradigm about food and the sooner we start that. If we get that, it with younger people and younger people, if young people grow up with this education, they'll want that and they'll demand that from the business sector. We just haven't had that. In my generation we went to the store and we bought our food in the supermarket. That's all we knew about food period.

:: 28:00

So, having the experience from Mary, with love and understanding what worked and what didn't, where did you go next and how did you think about what were the characteristics you're looking for in the next project?

:: 28:12

So the project in Buffalo is 10 acres in an opportunity zone with an existing facility that's underutilized, and what we're doing there is we're trying to acquire. It happened to be an entity that went through a bankruptcy, so we're dealing with the trustee and the bankruptcy process affair. In that situation we are looking at it by a factor of 10. So not one box but 10 boxes, and it's a whole different return on investment. It's a whole different business model there. It's more of all right. What are we gonna grow? How can we get that out into the marketplace as a pre-packaged salad, pre-packaged whatever, and begin those distribution channels? It's also very close to several universities. So we're also looking at a company called Bike Technology with their smart vending machines. And how do we service those in that whole Northwestern section of New York and how do we deploy those machines? Because it's distribution right. Growing is one aspect, but the business model has to bring that return and has to bring the capital in. The way we do that is by getting the distribution channels established, so by owning your distribution, not being reliant upon restaurant tours or cafeteria or food service people, by owning your distribution. Now you're starting to get into the. How do we monetize. What's the revenue model here? And that's what I'm doing in Buffalo.

It's a different play utilizing the Opportunity Zone Enterprise aspect. That's an underutilized aspect of this whole conversation of capital. Many people who are in the Opportunity Zone space. The low-lying fruit has been picked. We do a hotel and we do multi-family and that's where you see most of the investment. The Enterprise aspect is where the future is. So if you set up an entity that's gonna do business in an Opportunity Zone, you get the same benefits as if you're doing the real estate. So there's much more reach that way and that's why we picked that site. It met all the criteria. We have an existing building. The retrofit costs are not as great as we were Building a new structure and we can house 10 freight farm containerized units in the facility and then have room for a clean package room, a clean packaging facility, and that's the goal there.

:: 30:25

Yeah, I was gonna ask you if you were working with freight farms and I guess you're happy with the relationship that you built up with them and see you like their model for especially going from one to 10, I'm wondering if there's any difference in that thinking process.

:: 30:37

There is. The biggest problem with freight farms is that they're so busy that the time to get a box is lengthy. That's the biggest issue. But when you look at the, I'm a big believer that in this space, go with the guys that have the proven track record and do what you do best and let the other people provide the hard way, which is what they do best. I've looked at a lot of different people, a lot of different manufacturing. I mean, someone would say, why can't you just hire somebody to re-engineer or reverse engineer what they do? And I'm like we don't have time for that. We have a house that's on fire. We need to put the fire out. So I'll go with the proven technology always and then I'll figure out how to make that work, and that's why I like that team there. And I have to tell you this was not a simple deployment with no issues. Having that relationship and having the feedback, that's what allows you to sleep at night.

:: 31:29

Is that a project that you can speak publicly about, or is that still in the beginning, early stages?

:: 31:34

It's very early. We're set to close on the property in the coming weeks and then, once that occurs, everybody there thinks we're doing some kind of cannabis play because New York just legalized the cannabis. You have a lot of people in the cannabis industry making big moves, and especially in a hydroponic space. But it's not. It's a purely a food's play. But in the coming weeks we'll go public about what we're gonna do there and we're just waiting for the transaction to close before we do that.

:: 32:01

And obviously, when you're working at a project at that scale, did you bring in additional partners to work with you on that as well?

:: 32:08

Yes, so the primary issue here is the initial capital raise. So we're using skilled money, people who know how to put opportunity zone money together, because that's a component. My job there is to be the ring leader again the circus ring leader just keeping all of the component parts moving in the right direction deal structure. As far as the on the ground farmers, okay, we're interviewing people and the response has been phenomenal that I can tell you. I've got so many people that are interested in this project and wanting to be a part of this project that it's very exciting. So it's a good time.

:: 32:42

I'm curious as you start that there's again so many moving parts and you've 10 X the scale of what you did from Mary Flovenet and obviously I imagine there was a lot of lessons learned and what you should do, what you could do better in different zoning challenges. And so I'm curious, because of your background, when you start to structure these types of deals and you look for partners to work with I imagine that these are investors that have done previous deals in other industries how much of it is an education process into what's happening within vertical farming, the potential risks as well? How do you think about those things in terms of figuring out who would be a best fit for you to work with from an investment perspective?

:: 33:20

So early on I saw that the public storage space type of investor would be ideal for this situation and I'll give you the reasons why for that. Without getting too technical into the deal structure, you could theoretically make each individual container its own investment vehicle, housed under one management structure in one centralized location. So from a deal structure perspective it's beautiful. You can pretty much do a good pro forma on what the revenue model is from that one container and you just multiply that out. So I visited a farm in Paraguay doing this on a regular farm, a typical farm situation and I said, okay, that's the model. We have a better model because we don't have the environmental risk and the climate risk associated with growing. So if you're an investor and you want to be in a non-sexy space, this is the ideal space.

There's nothing sexy about this, it's just we're going to grow lettuce. Lettuce sells for X dollars a pound. There's so many pounds of lettuce that are eating every month. Got it? It's not sexy, just the numbers work. So you can replicate. If you can do it once, you can do it 100 times.

Then it's just a management issue and my job is to find the right managers. I'm not that manager. My job is to find that right now. My job is to build teams and give those teams what they need to succeed, and usually that means giving them a good deal structure, giving them enough working capital to get through the initial stages. And that's what makes any good enterprise work.

And I think that's part of the problem with food in general is that when we start to move it into the nonprofit sector, we have to remember that social enterprise is still an enterprise. The key word there is enterprise and we tend to forget that these have to be self-sustaining, otherwise they will fail. And the cannabis industry is a good corollary, because you look at the valuations that were given cannabis companies five years ago, especially in Canada, and look at the number of bankruptcies because the valuations and the performance they just didn't have any sense of reality to them when you started to look at the operation. And we're seeing it now in the California market, where we have a depressed market for pot, which they used to own the industry.

So then you look at what's going on in these industries, you can try to show the corollary to what goes on in food and you pay attention to those things and you can track them and you can say, ok, these are the pitfalls we need to avoid here from a deal perspective. So I'm not in this for the deal. I'm in this because I want to bring food to the community, and I think that there's probably never been a better time to marry good deal structure with delivery of food and production of food. We need it now more than ever. It really is the time to own our own food again. I really believe that.

:: 36:12

What do you think Michael has changed in you in terms of why you feel like this is something that's important? So the short version of that question is why you and why now?

:: 36:23

I've been a guy that's been in my own business since I was 20 years old. I'm 62 now. I have to tell you that I've done a lot of good things, a lot of bad things. I've been all around and up and down and you'll heal this from grandparents. All the time I had grandkids and I started to say, well, what kind of world. It sounds cliche, you know, but it really is it. It rang home to me and what are we doing here? And then the pandemic came.

And when the pandemic came and I started to see food shortages, which have not gone away, probably will get worse I really started to understand that. You know, eating is not. We can't take that for granted, can't take food for granted. And here we are now. So I feel an obligation to use whatever skill I have and use it to do something that's good, instead of just to do make money, because making money is not. That's the other issue here, harry, and that is that the whole concept of what is growth and what is capital is changing, and it's good. It's good that it's changing. This is a new kind of growth capital, pun intended, right.

:: 37:25

How much of it has it been an education process for you in terms of how you describe this to your colleagues? People you've grown up with, people you've done business with in the past, you know, are some of them like saying like Michael, what are you doing now?

:: 37:40

Absolutely. They think I'm crazy. So I didn't know that I could do this. I didn't know, I wasn't a believer in this hydroponic thing. So I decided to start growing some hydroponic vegetables on my balcony and my apartment here in downtown Fort Lauderdale just to see if it worked, sure, sure. And then posting pictures on Facebook to people would say, what are you doing? I'm like, well, I'm growing this stuff hydroponically. And I come my family is a family of engineers, so they're technical walks, you know and then they started to say, hey, what about this and what about that and what's your nutrients? And I'm like, once I got that, buy in, I said, you know what this thing is, this thing works. So yeah, it's been a big education process.

But the more I talk to people about this, the more I hear them really understanding that we got to do something with our food system. It's not working. And that's a good thing. And I think educating people and pointing something out to people that should be obvious. It wasn't obvious for me. Once I got that, the light bulb went off and I said, hey, this is something good, let's try to make a difference here and that's what it comes about. You're doing that with your show. You're educating people, even people that are seasoned veterans in vertical farming. You know this is a space that's changing. Look at light technology how much that's changed in the last three years. The biggest thing that I would get from people well, the electrical cost will be so high. It's not cost-effective. And look at how that's changed in three years time.

:: 39:03

So this is an exciting time to be in this space and I'm just thrilled to be a part of it frankly, have you had connections with other folks in the industry and how do you think about you know, conferences, marketing, networking, as it relates to what you're working on.

:: 39:20

I have to be honest with you. My experience in that has been people are very clote not all, but the people that I have been talking to are very protective. Companies and entrepreneurs that I've been talking to are very protective of their space and I can understand that, being an entrepreneur in a competitive world. But this is about decent. If we're going to take this and make this work as a country and as a world, frankly, we really have to be an open source scenario. We have to get less, we have to be hyper local, we have to educate people, we have to share and collaborate as much as possible. That teamwork really does work in this arena and the more we do that and the more we talk about it and the more we find ways to get this out to people, the better we'll be in three or four years, but this has to happen now.

We don't have 50 years to make this work. We have to do this in a hurry and it can be done. Yeah, I agree. And how many parking garages are there that you go? Nobody ever parks their car on the top floor of a parking garage, right? Well, there's, you know, a hundred acres.

:: 40:23

That's true. It's interesting because, when you think about, I'm just educating myself. I'm bringing my listeners along the journey with me because there's a lot that I don't know, but I always know that I'm learning as my listeners are learning, and I hopefully I'm asking the questions that my listeners would want to ask, as they're discovering all the different ways you can get involved in this industry. What's funny is that I used to work at E-Trade and one of my coworkers there, a guy named Ben. He left and this was in 2005, six. He's like I'm gonna go start a rooftop farm in Brooklyn and everyone was kind of like laughing, just like, what are you doing? That's kind of weird. And he was a bit of an eclectic kind of guy. And then you know as fast forward he runs. I think it's I forgot the name of the company, but it's Brooklyn Farms, it's a rooftop farm in Brooklyn, and then meaning to circle back with him.

But sometimes you know some people are ahead of the curve and they're you know, they're forward thinkers and they have to wait for everyone else to catch up with them. And this idea of like available space, like in big cities it's nothing new and all this unused real estate you know, a lot of companies are in for a bit of a shock, you know, because workers have had a taste of remote working, you know they're not really prepared to go back into offices. So now, what do you do with all this space? And I think to your point, and especially for people that have grown up in and around big cities, I think we're gonna have to rethink what can be done from a small scale to a big scale to make the most of that for the benefit of the community.

:: 41:47

I agree with you 100%. I think it's the commercial. I listened to every commercial real estate seminar and webinar that's out there and I can tell you that no one top guys in the industry have any idea what's gonna happen in the commercial office space. It's totally in flux and it represents an opportunity. And but what happens, harry, is you know, as you get older, you get lazier and you're not more, you're not as innovative as you used to be. That's the illness that takes over as you age.

Right, I've always tried to be a year ahead of the New York Times. My whole career was always about if I can be a year ahead of the New York Times, I'm gonna be doing something right? Well, the New York Times is writing stories all day long now about this. So, and the people that move money need to find a return on that money. So I'm not a big believer in centralized movements. I think that's a problem and we could just go from one centralized problem to another if we're not careful.

But this role of smaller producers tying into a network is gives you that same kind of scalability. I got involved right around pandemic with a group called Co-op Gardens and they've got, you know, 3,000 people, 157 seed hubs, you know all decentralized, non-hierarchal, just a beautiful group of people doing good things. Well, that's how this works, and the managers that we are the ones that have good managerial skills. We really wanna make a difference. Our job is to help promote that, and that's really what this is for me. It's a mission. I'm on a mission, okay, and that's how I describe it to my kids. You know, dad, what are you doing?

:: 43:24

You should be thinking about retiring and I'm like you know, I don't want to retire, I want to keep going yeah, I think people have a new understanding of how we can take care of ourselves to live longer and healthier lives. And because we're doing that, you know we're changing what we think is possible in our lifetimes. And you know, I remember it's so funny because I'm a child of the 80s, I'm 51. I remember watching that show 30 something in the and I was like, well, those guys are old, right, you think how funny that is. But now I mean I feel like like a 30 something now and I feel like I think about the potential of like living longer, healthier lives and From a health perspective that's great.

But then from a to your point mission perspective, you know you could typically get done. You know people were thinking 60s is like okay, retirement age, you know, find a good rocking chair. And I think I'm good. Now, you know, to your, to what you're doing, you're just like what's the next project? How can I, you know, leave an impact? And I'm wondering if you think about the term legacy at all.

:: 44:25

I do. You know I'm a lucky guy. I have a parents who my father was a world-renowned electrical engineer doing really you know great stuff and he's still to this day, is 83 and he's still working on state-of-the-art stuff. That you know. It's just amazing at 83. So age is just a number, it's a state of mind.

If your mind is, if you have the blessing of having a good mind and you know God gives you that, you know you can do great things if you choose to do that. You can also do bad things. You know I'm no saint. I've done a lot of bad things. I'd like to think that I've changed and I try to do. I try to make sure that I'm doing things from the right perspective and that's how I start my day. I look at my day and I I see my day is what's the highest and best vision of me, and then I try to put that out and that's how I start each day. Some days I win and I think I do a good job, and some days I fail, but at least I'll try it's helpful.

:: 45:17

Well, I'm glad you connected. I think it speaks to somewhat of your, your marketing Chops and you mentioned, like in with that first project, this always thinking from a PR perspective. I'm wondering if that's something you learned along the way as well, like it? You know this squeaky wheel gets to a little right. You got to talk about the project if you want to hear about some you have to self-promote, you know so.

:: 45:37

Some people will say that's arrogance, some people will say that's ego. Some people will say that's narcissism. I've never met a successful entrepreneur that there wasn't a bit of a narcissist. You have to self promote if you're not going to promote yourself. Who is right? So you got to get out there, you got to talk about your things. You got a. You're gonna fail. You know, I fail all the time. There's you know. That's saying if you want to succeed, double your failure rate. Well, I probably quadrupled my failure rate. Yeah, but that's part of the process. And is there a legacy to that? I want my grandkids to say my grandfather tried, he tried to make a difference. That's it. He may not have been successful, but at least he didn't sit around and complain about it.

:: 46:16

Make sense. Well, I appreciate you taking that initiative and reaching out, and you know we had some technical difficulties, so I feel like we got to work, work through those, but we made it happen. That's what's important. We prevailed.

:: 46:28

Yeah, I was in a straight line.

:: 46:30

Yeah, so hopefully you'll stay in contact with us and keep us updated on the project and we'll let you know, and we want to share the news of what's been happening and how that's progressing.

:: 46:40

I certainly will thank you for the time. I appreciate the opportunity to speak with you today.

:: 46:44

Where's the best place for folks to get connected with you if they want to learn more about what you're working on or maybe even, like I, look for opportunities department to your future projects.

:: 46:52

The best way to reach Val to me is on LinkedIn, michael Sakenze, or just look me on. I mean, yeah, everybody finds me on LinkedIn, yep, and you'll see all the projects that we're involved in. I always put post up as much as I can. Facebook. I do a lot on Facebook and Michael Sakenze, so you can find me there, okay.

:: 47:08

Yes, make sure you get those links so we'll put them in the show notes. So if you're listening to this, you can take those, look for those and show notes and connect with Michael. Again, michael appreciate connecting with a fellow New Yorker. It's always fun and Like wise. That's the luck with your future projects.

:: 47:22

Thank you, harry, have a great day Okay.

:: 47:24

Thanks again to Michael for sharing his valuable insights. This was a fantastic replay of episode 52 and, if past performance was any indication, there's gonna be a whole new way of folks that are gonna get value from this as well. So, remember, if you are interested in learning more and working with Michael, please make sure to reach out to him as well, or reach out to me and we can get you connected. Don't forget to leave us a rating in a review and rate this podcast, calm VFP, and I'll be sure to read that out on a future episode, as I did at the beginning of this episode. Thanks again to Lita for leaving her review.

As we wrap up season 8, I want to give a special thanks to our title sponsor, cultivated. If you are looking into a vertical form and don't know where to start or which technology would suit your needs, reach out to them today and, if you do, make sure you let them know that you heard about it on the vertical farming podcast. Best of all, their service is free because they work on behalf of their partners. Learn more at cultivated comm, and that's spelled CUL T I VATDcom. Just leave out that lastE Podcast production market provided by full cast. Head on over to full cast dot co to watch my free video the five key pillars of a successful podcast that every business owner needs to know prior to launching. As I mentioned at the top of the episode, we are getting ready for season 9 and we still have sponsorship opportunities available. Reach out to me directly, harry at vertical farming podcast calm for more details Really excited for the season 9 lineup.

Just to give you a sneak peek of what's coming in season 9, we've got conversations with Nick Bateman from Grope your a. Maricarton Scala from freight to plate, lotty van Rien from surthorn, robin Vincent from Kenobi right, ralph Ware from Zyndu, tina Pina from renewable, robin Stratten from Skytree and several others that are scheduled but haven't yet been recorded. So we've got a full plate. We almost have the entire roster full for season 9 and there's folks reaching out to make time on the podcast as well. So there's no shortage of conversations coming your way until we meet again. Here's to your health.

:: 49:20

Thanks for listening to read the full show notes for this episode, which includes any links mentioned in the episode as well as a full show transcription. Visit vertical farming podcast calm. There you can sign up for our email list to be notified when new episodes are published.