Ep #05: Leadership and Agricultural Innovation with Justin McMenamy
What does it take to lead through change and drive growth in a challenging industry? Justin McMenamy, host of the Grody & UnPrOfEsSiOnAL podcast and product-launch expert at Precision Agriculture, joins the show to answer that question and share key lessons he has learned throughout his career.
Listen in as Justin opens up about his journey from entering precision planting to mastering leadership and problem-solving. He reveals how to navigate transitions, solve tough problems, and lead with a vision that drives both growth and profitability. If you're looking to level up your leadership and decision-making skills, this episode is packed with actionable insights you won’t want to miss!
Listen to the Full Episode:
What You’ll Hear About in This Episode:
The adoption rate in agriculture and what that means for innovation and the industry as a whole.
How investors should navigate the ups and downs of agriculture.
The most important thing Justin learned in the ag industry.
Why he loves working with farmers and precision planting.
How he honed his leadership skills to equip himself and others to be ready for growth.
The transition stages from the founder phase to the builder and explorer phase.
The importance of understanding customers’ lives and values.
Ideas Worth Sharing:
“I’ve spent time at a lot of companies, and what I’ve observed is that there’s a lot of demand for leadership, but there’s not a lot of supply.” - Justin McMenamy
“I like working in environments in which not everything is known. I like working in environments where there’s creativity and where there’s room to operate.” - Justin McMenamy
“Growth is never smooth water.” - Justin McMenamy
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Read the Transcript:
Justin McMenamy: There is a different set of leadership skills in most organizations of who is able to work with the founder versus who is able to lead post-founder. That's not accusing anybody of anything, but when you're standing there right next to the prophet, you need to be comfortable being instructed and told and be good with it. And when the founder's gone, you kind of have to become a flag bearer yourself. You have to become a content creator yourself.
Welcome to The Land Ledger podcast, where investing in farmland meets the future of finance. I’m your host, Brian Kearney, here to guide you through the untapped potential of farmland as an asset.
Whether you’re already investing in farmland, want to invest in farmland, or you’re just curious about safe alternatives to stocks and bonds, this is your space to learn, explore, and be inspired.
Your journey to farmland investing starts now.
Brian Kearney: Welcome to The Land Ledger podcast. Today, I am interviewing Justin. Justin, I'm really excited to dive into your background. Not only are you a world class entrepreneur, but you're also a fellow podcast host. So I want to learn a little bit about your show. Dive in there. Before the audience, Justin has been lead on launching dozens of different products at Precision Ag, and we're going to get into that a little bit as well. But first, Justin, welcome to the show.
Justin McMenamy: Brian, it's so good to join you here on The Land Ledger podcast.
Brian Kearney: Thank you. Let's start with your show. I want to learn a little bit about your journey in podcasting, where that has, kind of where that seed came from and then what you're doing now with it.
Justin McMenamy: Yeah. So I've always enjoyed as far back as I can remember, I've enjoyed teaching. I've enjoyed taking information or experiences and formulating it and articulating it in a way that can inspire, educate, inform other people. I love learning lessons from others that helps me avoid problems in my life or helps me to get around obstacles in my life.
And so I view it as a means of giving back and sometimes it's giving back to people that are in the middle of an issue. And sometimes it's giving back to people in the hope that they can avoid an issue. And over my 20 year career, I've spent time at multiple companies. And what I've observed is that there is a lot of demand for leadership, but there's not a lot of supply.
There's a lot of need for people to be in leadership positions, but most of the people that are in those leadership positions ended up there because they'd been in the job for a while, they have tenure, they wanted a promotion, all of these different reasons. and my experience has been that there are good people that end up in leadership positions.
But they don't think about leadership as a different discipline. They went to school to be an architect. They went to school to be an accountant. They went to school to be an engineer. And for the first period of their career, that's what they did as an individual contributor. The day you walk into work as a leader of others, your career has changed at some level. You need to start to think about what it means to be a force multiplier, what it means to inspire others, what it means to communicate in a way that is clear and inspirational and drives action over and above, how many keys you can click in a day, how many calls you can make in a day.
But that mindset, no one is there to tell you that you've changed professions when you became a boss or became a supervisor. And so a lot of times what you end up with is people that in their leadership journey, that the tactic that they take, the approach that they take is the leadership approach that they most appreciated as an individual contributor.
I liked a boss that left me alone, so I'm going to leave everybody alone. That's not the best approach to a group of 40 or 50 people. Or I like a, when I was in high school, I had a boss that he was–or when I was in high school, I had a football coach that he really drove us and we won 12 games. So I'm going to drive my team. All of that to say, I've had probably 25 supervisors. I've observed hundreds of leaders across my life. And my experience was there's just not a lot of pragmatic down to earth conversations of lessons learned by a leader who's done some things right over time, but has done a lot more things wrong over time.
And so I took the approach of really having a leadership podcast that's meant to be approachable. It's meant to be story based. It's meant to be a little bit funny and a little bit embarrassing and not just my experiences but with people that I've worked with over the years.
Brian Kearney: And everyone needs to check it out. It's called Grody & UnPrOfEsSiOnAL. That's a fantastic name. One of the best podcast names I've heard in a long time. And I resonate a lot with what you're saying, because I am the former, the first type of leader that you were talking about. I like being left alone when I was an individual contributor.
And I'm like, you know what? That's how I'm going to run my company. We did our first performance reviews and I reviewed the employees. We also had every employee interview or review me. And multiple times they're like, “Well, we'd actually kind of just like for you to know what we should do this week on Monday.” Just tell us exactly what you want. And I'm like, right. That makes sense.
Justin McMenamy: Because every person goes through an arc, right? On the first day of your job, no matter what job it is, you're super excited to be there, but you know nothing. And if on that first day, your boss says, “Hey, just figure it out.”
And just, “I trust you to find out what to do.” That is like the most stressful thing you can do on that first day. If that boss says, “Welcome to the team. We're so glad to have you do A, B, C, and D, and then check in at lunch, and we'll talk about what we're going to do after lunch.” You may be a mid-career person, but on that very first day, that gives you fulfillment.
That gives you a purpose. Now, if that boss is still doing that two years in, you're probably going to be gone, but there is this arc that of following of how do you as a leader present your information to them in a way that's motivating, inspiring, and gives them the direction and the autonomy in the appropriate balance.
Brian Kearney: Oh yeah, absolutely. And that I think is an even bigger issue in startups. Startups never, in my, I shouldn't say never, don't use superlatives, but very rarely do startups have an actual onboarding plan for their employees.
Justin McMenamy: Of course. Because everything's on fire.
Brian Kearney: Particularly in the first 30. Yeah. You don't have time to put together a training plan, but I think there probably is a lot of value in that even for the first 5, 10, 15 employees before you have someone hiring. That makes sense. I'm going to have to put some thought into that and we'll see. But what initially got you into the ag industry?
Justin McMenamy: Yeah, I worked at a large multinational Dow 30 construction and mining company here in central Illinois for about 10 years. And I worked in the development area, the product development. I worked in product research and I worked in production support. And what I learned over those 10 years is that my personality is one that appreciates freedom to operate. It appreciates environments that don't have all of the answers prescribed. It appreciates the creativity, use a word like innovation, the open ended problems.
And large organizations really, as they get to scale, the most often method that they use to maintain that scale is through rigorous structured process, approvals, gates, stages. After about 10 years, it became really clear to me that good people, good product, but not the environment that I was going to best fit within.
And oddly enough, I'm not, so I'm not from the Peoria area. I moved to Peoria from St. Louis. So I was not aware of the entrepreneurial kind of startup ecosystem here in central Illinois. I thought I was going to have to relocate out of Peoria to find my next job. And it was really through networking in the community that I found and discovered that precision planting in Tremont, Illinois existed. It really had a low profile here in central Illinois because it was an agriculture, there's a really tight knit group of society that's very well connected to agriculture, but the broader society isn't thinking about the crops that they drive by every day here in the Midwest.
And so it was through a connection that as precision planting moved from its founder phase and the founder divested and sold the business to Monsanto, Monsanto was really starting to look and invest in precision and scale precision at a faster rate than it could have been previously. That's where an opportunity came up that I could move into the agri, not just agriculture, but precision planting.
And the thing that drew me to precision planting was, I remember sitting in the interview and they said, “Why agriculture? Why precision planting?” And for me, it was, I want to work with a group of people that I enjoy the people I work with. I enjoy the mission that we're on and I enjoy the customer that we're serving.
And agriculture, very, I can't speak for every industry and every business out there, but agriculture is such an awesome customer to serve because they are businesses in a very real sense, but they are people in just as real of a sense. It is it B2C or is it B2B? Well, it really isn't one definitively or the other when you're interacting with a given farm or when you're interacting with a given family.
And I loved the personal layer to interacting with agriculture and interacting with growers across the United States, and then ultimately later across the globe.
Brian Kearney: Yes, that is very true. And that's what attracts me to the industry as well. Farmers are awesome customers. And it kind of drives me crazy because in the ag tech world, you hear a lot of people complaining about having to sell to farmers.
I think part of it is that startups, what's the quote I'm looking for? I can't remember, but it's something along the lines of not quite fake it till you make it, but a little bit more, little bit more sinister than that. And that happens a lot in the startup world. And man, farmers can smell that immediately.
Have one of the best BS meters you'll ever see. So I think, yeah, it can be hard to sell to them if you're selling a product that's not good for them, but they're going to tell you that pretty quickly if you're actually talking to them. They'll let you know and they're not going to BS you.
They're going to say, “Hey, that's not going to work for me.” And if they say it's going to work for them, it will. their handshake really is their word still. Handshakes still used in the industry over contracts sometimes. And that's a cool industry to be in. Yeah, it's amazing. So with Precision, what was your initial role?
And what did the company and the product look at like at that time?
Justin McMenamy: Yeah. So I joined Precision Planting in 2013, which was one year after the founder had divested from the business. And it is Lawrence Miller in the book, Barbarians to Bureaucrats, that talks as an organization is growing, one of the most critical moments in its history is when the key decision maker leaves the business.
Most businesses that are started or started by what you could call a profit. A person that has a vision, a person that sees the future, a person that has a high risk tolerance, a person that is belief oriented, and the organization rallies behind that person. As an organization grows, however, that person's calendar, that person's capacity, that person's pocketbook, these components start to fill up and an organization can actually be throttled by needing to go through one single person for all decisions or for all approvals.
And so as I came into the business, not just me exclusively, but as a group of us emerged into the business or came into the business in 2013, it really was a business that at every level wasn't sure how to make decisions in a post founder world. And the founder of precision planning is quite famous.
The industry thought that Precision Planting was going to be dead because the founder had sold the business. The customers thought that the business was going to wane because the founder was gone. The dealers thought that the business was going to wane, the competitors and even some of the employees. I mean, the founder was the face of the business and we had just launched three products in particular.
It was V Set, V Drive and Delta Force in 2013 that really moved precision planting from a component technology supplier into a platform technology supplier and platform’s a word that gets used so often in so many different ways. And if you're a startup entrepreneur, just use the word platform as often as you can.
It'll be fine. But it was that planter, the planter, essentially its heartbeat stayed of the original manufacturer before these technologies, but as these technologies came out, the grower was making this psychological decision. Though the paint stayed the same color on the planter, the heartbeat of the planter moved to Precision Planting.
And so we have this organization that's struggling to figure out, “Okay, how do we make decisions?” But we've launched really what is going to be the fastest selling product in the history of precision planting all while we're kind of under new ownership, that's figuring out who we are and what is the strategy within broader Monsanto.
And then there was the climate corporation era. So who are we within the climate corporation? And so as I led, I like working in environments, everything is known. I like working in environments where there's creativity and where there's room to operate. I would, I'm certain, if you interviewed me in 2013, I would have said, “Man, this is some of the most stressful times of my career.” But in hindsight, it was such an Awesome period in the career because the organization got to form its next chapter.
And the next chapter was that a group of about seven people emerged within the business as department leads of various departments that each had character traits of humble, hungry, and smart, and they were able to coordinate with one another and really lead a business that didn't have single approval processes, but was coordinated in its approach.
And we were able to accelerate the business. Yes, because of a capital infusion. Yes, because of employee, number of employee increases. Yes, because of a product that was selling really quickly, but also because we were able to emerge from the founder phase into a builder and explorer phase. And so really that next 10 years that I was there at Precision Planting was the experiment of how scalable is a autonomous collective, if we use that term, right?
There was no single decision maker in the business. How could a group of us, how big could a business get with a group of us working coordinatedly in a humble, hungry, and smart way where it wasn't one department against another department. It was departments working together to the good of the customer with the understanding that there was a watershed effect of profitability if you are serving the customer to a greater level than the competition, or even than you had been in the past.
Brian Kearney: How long did that take to start to smooth out? I imagine at the beginning there were probably a lot of waves, maybe it never smoothed out, and there were always a lot of waves, and that's part of the process. But how long did that take?
Justin McMenamy: Growth is never smooth water. It's never smooth water. I forget the author, but there's a quote that says you have to measure success in life by the ability to solve problems rather than success by the absence of problems. And so we regularly all, we always had four problems, whether they be employment, staffing, whether it be competition, whether it be globalization, whether it be supply chain, it just got to the point where the five, six leaders and the broader organization as well became comfortable with wrestling, not with each other, but with business challenges. And so there really was no smooth water. And there are some, there's some things that were in the news over the years, like the climate corporation and then being attempted to be acquired by John Deere and then the Department of Justice blocking that acquisition.
And then John Deere suing us for patent infringement and then us being acquired by Agco. And then, COVID followed by a chip shortage, followed by–there's some things that were in the news. It really was the health of a group of people that did not blame one another, accuse one another, make sure that I look like the best in this environment, but that the customer wins in these environments.
That really was, it was how do you navigate those rocky waters rather than trying to find smooth water as the case may be.
Brian Kearney: And this is a purely selfish question because I want to build that exact thing in the business we're building. How did those, you said seven leaders of the different, how did they emerge? Was this just a natural product of the environment? Was it a single person kind of working to find these people? What did that look like?
Justin McMenamy: Sure. I think it would be difficult to describe a single linear story that describes all of it. I think there are aspects in which many of the leaders existed in the business during the founder led period.
They were not department heads in that period. Bluntly speaking, there is a different set of leadership skills in most organizations of who is able to work with the founder versus who is able to lead post founder. That's not accusing anybody of anything, but when you're standing there right next to the prophet, you need to be comfortable being instructed and told and be good with it.
And when the founder's gone, you kind of have to become a flag bearer yourself. You have to become a content creator yourself. And so there was an emergence of some of these leaders within the organization that knew the legacy. They knew the history, they knew the culture, they had a mental model of what would we have done in the old era?
Not that you take a one to one approach to what do you do in the future, but they had an anchor on the past that they emerged in the organization. Some of it because candidly, there was a lot of divestiture and reorganization, and there was just some natural flow to that. There were also some that came from the outside that brought other thinking as well.
I remember my interview. This was the interview that really locked me in on knowing I wanted to be at precision planting. It was with the then head of R and D. And his comment was, “You've worked at the big multinational company for 10 years. You've seen all the processes, you've seen all their approvals, you've seen all of their steps that they take to develop products. Your job is to bring the ones to us that we need and fight like heck to keep the ones out of here that we don't need.” Now, the reality is between 40 million, the size of Precision, when we sold and 10 years later, when we're more than 10 times that size, the list of processes that are needed are different, but it was that challenge to be the curator of holding back processes that are going to be too constraining on the business if implemented today, and then candidly being an advocate for that process three years later when the business is twice the size. That emergence really, if I pull it back, it was a group of people that were highly belief oriented in the mission and were willing to step into the fray, even a fray that they didn't make.
You think about a large organization, I have a lot of experience where a product issue is in the field. The leadership team meets and they say, “Okay, Pete made the mistake.” The print was wrong or he didn't call the supplier or he didn't check this process or this or this. And everyone in the room is relieved that it's not them because their year end review isn't going to be affected.
The customer's affected, but their year end review isn't affected. And then we all cross our arms, and we look at Pete, and we say, “Pete, what are you going to do about it? You made the mess. You got to fix it.” That wasn't how we operated. It was to say, we didn't even really spend a ton of time in the heat of the issue trying to diagnose and lay blame as to who was Pete or Bob or Sally.
It was everybody jumping in and saying, “Okay, we have this issue, who has the greatest proximity and who has the greatest tools organizationally to solve this problem.” Yes, we're going to come in behind and we're going to try to understand and diagnose what happened, but not for the end of laying blame for the end of not repeating that is if it was a system error or if it was an architectural issue in how we do business, we want to sew that up.
But it was far less about blaming the person and far more about rushing to solve the problem. And so as the head of engineering, there's many times that a product is in the marketplace and there's an issue that emerges. And yes, it had one phone call happen five years ago. It might have not happened. We might not have seen the product make it to the field.
That doesn't mean that the engineering manager is the best place to solve the problem right now. It might be that sales needs to step in and reset expectations with the customer. It might be that product support needs to step in and put in the time. It was a leadership team that made sure the mission stayed the mission. That really, if I put it at the center, that was a key component.
Brian Kearney: That makes a lot of sense. That really does. What would you say during this time helped you develop and learn those things? You've already mentioned a few books, so I have a feeling that reading might be a part of it. I'd love to dive in there, but also are there, were there individuals within or without the company that were that kind of guide for you while you're learning this?
Because going from that Dow 30 to a startup, even if it's acquired by a large company is very different. So how did you personally kind of hone your, the razor and really learn how to do this?
Justin McMenamy: I think some of it is, and say it this bluntly would be bad if I was sitting in an interview in a certain company, but it is to say my personal DNA, the way I wake up is to invest and equip people.
And whether that's a person on my team, whether that's a customer, whether that's a supplier, it's to give them the information in an inspiring way, in a way that they can move forward, in a way that they can get out of their situation. And that was kind of the, if you play the check down receiver, a lot of people say, “Is it profitable?”
That's the first receiver. If I can throw the ball to profitability, I'm going to hit that receiver every single time. It wasn't that we ignored profitability. I don't want to in any way, shape or form think that say that we were running some just kind of Shangri La non profit environment, but was to say I firmly believe that with the right people on the team, if the first check down receiver is the person, the customer, the employee, the watershed effect, more often than not is profit.
That profit might not be measured this quarter. That profit might not be measured in this literal transaction. But, I mean, one example, there's so many times that the way that one of us as a leader interacted with an individual employee, it influenced 30 other employees, right? You had a one on one interaction in a meeting, but the organization hears about that meeting.
“What did Justin say when you told him that you made a mistake?” The answer to that question at the water cooler is your corporate culture. Whether he, whether it's written on your wall or not, the answer to, “What did he say when you made a mistake?” How that is conveyed and how that is portrayed is the corporate culture.
30 people that hear that are now going to A, sandbag every transaction, every decision, every timeline, or they're going to tell you the honest truth with the knowledge that if 10, 20 percent of them don't come through, I'm not going to get eviscerated. I'm not going to get fired. I'm not going to get walked out.
The organization was built so much more. It gets used, trust is a word that gets used so often, but I think there were many of us that, that is our kind of belief in business. And I get it. There's a lot of environments. You talk about environments that are a hundred years old that have been massively optimized by, and they're just completely at the commodity phase.
And somebody that's in that business like that could listen to me and be like, “This is a bunch of psychological gobbledygook. It doesn't make any sense. I just need to make my widget at a nickel cheaper.” But the irony is the ag industry is the definition of a commodity market, right? When you are making field corn, when you are making soybeans that go to the elevator, that is by definition a commodity, but you've already said, and I've experienced, it's a highly relational industry.
It's not the way I experienced cutthroat and have heard about cutthroat in other industries, and it is by definition a commodity industry. To me, that's where my kind of DNA, how I stack the blocks in the morning, lined up with the customer, lined up with the dealer channel.
It lined up with the mission of what Precision Planting was, which the mission of Precision Planting was to serve the underserved customer. It was to say that every grower out there, whether he owns a hundred acres all in triangle shaped fields next to the interstate, or whether he owns 10,000 of the most flat black and beautiful acres in America, he deserves technology to turn a profit. And that was our focus.
Brian Kearney: Yeah, that is well said. With that being your focus, did you ever find that there was a bit of a disconnect with the overarching organization that invested? Or in your conversations with people in the industry, sometimes does that butt up against what maybe private equity or venture is pushing for in the industry? Is that something you've seen?
Justin McMenamy: Sure The approach that Precision Planting took, it does invariably, like I said, you're aiming for a different receiver on most plays. And so there are times I'll always, when you may be interacting even with a dealer that is thinking about their profit and loss as much or more than the customer. And so me as the manufacturer, I'm trying to work with the customer, also trying to work with the dealer. So there's always times where you have to talk through the why that something is happening. The other part that is just so real, I didn't have to deal with it in that startup world.
I mean, you have a burn rate and you have a balance and it's not necessarily that it's pure fake it till you make it. But it's like no, if I don't hit the receiver of revenue, I can be as I can mentor people as much as possible, but I'm going to be doing it from the unemployment line. And so I also recognize that as I was talking to founders, as I would talk to startups, their calculus, literally their capital Calculus was in a different place. And so it wasn't that I was this kind of mindless apostle of you have to do it this way or else. It was to say within the environment that we were within, which is we were in the post founder phase, we were in the scale phase in the builder and explorer phase.
You're seeking scale for your business, which is to say, I can't make all of the product decisions. When I started at Precision, I think there were something like 15 or 18 engineers. Recently, it was over a hundred. There were more projects in flight than any one person could approve and could think through and could rationalize and could justify.
And so the only way to do that is to create copies, not physical copies, not mental copies, but create cultural copies of yourself within the organization so that these prioritization decisions are being made sometimes by the individual contributor who's designing the product. They just know because they've talked to the leader for years, they just know, “Yeah, he would want me to spend this thousand dollars and try this thing by this afternoon rather than go find him in a conference room and get approval and do it tomorrow afternoon.”
It really became about kind of sharing the ethos, if you will, of how decisions get made far more than making the decisions or forcing decisions up. But again, that has to be an environment where leadership is not going to be fricasseed if one product issue makes it to the market. No engineering manager, that's two meetings away from getting fried by the general manager is going to entrust his individual contributors to make decisions about product.
‘Cause it's not your hiney on the line. It's my hiney on the line. And so the logical, rational outcome is a leader that doesn't act in a way that engenders trust. You can't have one without the other in a rational and logical environment.
Brian Kearney: Yeah. Yeah, that's very true. And I wonder though, in that early founder stage, it sounds like Precision Planting also had the kind of customer as the first receiver, not profit as the first receiver.
Justin McMenamy: 100%
Brian Kearney: So I don't know if it is different if you have the funding from a different company. I think you might, it might be harder, but I don't know if it's different.
Justin McMenamy: Two things come to mind there, Brian. Number one is there's a subsection of businesses in which the founder is the customer and that was Precision Planting.
The founder was a corn and bean farmer in central Illinois. And so that equips him to be head of product development, head of testing, head of sales, head of everything. There, there's a really, you watch shows like Shark Tank. I know it's not totally real, but I mean, when the founder is the customer, that puts a business in a certain category.
The other thing, Precision Planting, and it was entirely self funded. There was no capital raise at any point in Precision Planting's history. When the founder sold the business, he sold 100 percent of the shares from his book. Because it was profitable essentially from day one, it fell into a really creative product that had really high margins and everybody needed it and it didn't have a high price point.
Because profitability was from day one that allowed, not that the founder wasn't already predisposed this way, but it allowed for a greater focus on the customer from day one, because one, he was a customer, and two, there wasn't this kind of beating down the door. “Hey, I gave you money. Where's my return?”
Now, maybe his wife was doing that. That's possible that maybe at the kitchen table that was happening, but it wasn't happening from a venture capitalist.
Brian Kearney: Yeah, do you think I don't even know how I want to broach this question because it might tick off some of the audience, but do you think in the ag space, more often than not, that's what's necessary?
Or very understanding VCs that know the industry, and there's not many of them, actually. But in, maybe when you look at the VCs, does it take a VC that doesn't have an LP? Is it better to have family offices? Is it better to be farmer funded? What's your view there?
Justin McMenamy: Yeah, it's really interesting. I think a couple things come to mind. One is the adoption rate in agriculture. Everybody knows how fast smartphones showed up after Steve Jobs, and you can give some credit to Blackberry on the front end. Everybody knows how quickly 4G, like these guys will cite these adoption curves.
The fastest technology, hardware technology, that's been adopted in agriculture and in the most recent generation, the mechanized generation, the technology generation of agriculture, is yield monitoring. And it was a 20 year adoption curve. Two and a half percent of the industry on average added yield monitoring to their farm for 20 years in a row.
That's a degree of patience that most coming into agriculture do not have. And so I sat across the table from dozens of founders that come from Silicon Valley, that come from healthcare, that come from aerospace,that they look at agriculture and they say, “Trillions of dollars.” And it's to say, yes, true.
Do you have the patience I mean truly from the day that Precision Planting was founded to the day that it sold to Monsanto was 20 years. It wasn't pump it up in five and the founder was not looking to rack up exits as his resume. He was looking to build a business and so many businesses, I believe, yes, they will continue if there's a path to continue, but yes, they're also in their mind there's an exit in three years. There's an exit in five years. “I'm looking to do three of these by the time I'm 45 and then I can do this.” So number one is the patience aspect of agriculture, because as you said, this is a prove it to me industry. These people are operating on, these growers are operating on literally commodity margins.
There isn't room for widespread luxury spending. Any company can find five growers to buy their thing. No question. There's a hundred thousand of them out there in corn and beans. You will find five, but there are not wide swaths of the industry that have the ability to spend in a luxury way.
It either has to deliver, it has to deliver value in some domain. That could be the time domain. That could be the confidence domain. It could be the yield domain. It could be any of these domains, but it has to deliver value and it has to really prove it over and over and over again. The other unique aspect of the agriculture industry, at least the corn and bean industry, the row crop industry that I served there, I would tell this to VCs and I would tell this to founders that would come and tell me about how, “Man, we've blown it up in the veggie Valley of California and the Rocky mountains are, they're just a bump to get to Iowa and we're going to kill it.” And I would say, “Hey, I just want you to understand in total, the entire industry is 100,000 decision makers. That is smaller than the city of Peoria.” That is smaller than–pick whatever, whatever small town that has a major, a minor league baseball team, that is smaller than most towns that have minor league baseball teams.
If you were designing shoes and you could only launch your shoe in Peoria, Illinois, is that an interesting market? Of course it's not. So there are only 100,000 of them. Another fun fact, their average age is 59 years old. Their average age is 59. And I love 59 year olds. I'm going to, I plan on being a 59 year old at some point, but it is to say they are not the ones who, they didn't buy an iPhone because they stood at Times Square Apple Store, the night that it came out, they bought an iPhone because while they were buying tires for their truck at the Walmart, they had iPhones that you could get and swap out the flip phone that broke.
And the kid behind the store, and that's not a negative thing, but it's to say the purchase decision is so much different. They don't know where Mountain View, California is. They don't know who Steve Jobs is. They don't know who Tim Cook is. They just know that I need a phone. And this is the phone that was recommended. 100,000 59 year olds.
And by definition, they live away from society. They live out in the middle of nowhere and they don't necessarily trust outsiders. And you guys can, the guys from Boston or the guys from Silicon Valley, they can have opinions about whether or not that's the right way to view the world, but that doesn't matter what your opinion is.
That's who they are. And you have to understand the customer and you have to understand the values that customers have. And you have to understand the life that customers lead, and you have to offer a product that is compelling inside of those values, inside of that structure. And so there was this kind of mindset of like, man, agriculture is this trillion dollar industry, and we're going to feed the world, and we're going to this, and there's this huge kind of very high brow mission, but at the ground level, it's dirt, it's soil, it's seed, it's commodity margins.
It's a hundred thousand people that they could be making more money doing almost anything else. They could be a banker in town. They could own the Casey's in town. They could own the grocery store in town. They could be probably making more money doing almost anything else. They're doing it because they believe in it because it's their heritage for all these amazing reasons.
And so I guess, I don't even remember your question at this point, Brian, but it is to say there was such a oversimplification of the nuances of technology in the industry that came from the outside in that I would try to share, but they're the experience set of the venture capitalists coming from another industry or coming from, even the veggie industry is not the same industry as row crops. There was a, if you get dole, if you get the big veggie companies, you're done. Like you can cashflow that forever. You got to go door to door across the land of row crops. And guess what it working in Indiana does not sell in Ohio. In fact, most likely it working in Indiana means that Ohio is going to say it won't work here because they do this and this and this.
You have to overcome these barriers at every stage of, at every step of the way. I think that's also why the customer founders do better because they are able to connect. They are able to say, “Man, when I'm struggling with this, when my tractor is down, when I am trying to figure out if my son is going to farm,” these aren't product centric discussions, but they are absolutely relatable to the customer in a way that somebody coming from the outside of the industry just doesn't have the opportunity. That does not mean that agriculture is an unbreachable moat. It's just to say, if you're, if truly the mission is ROI on capita, you got to do it uniquely. You got to do it differently. You have to have some different mindsets as you come into.
And again, most of my words, Brian, are about technology in row crop Midwest, and that would extend to bread baskets in Ukraine and bread baskets in Brazil. And there's uniqueness there, but really the commodities of row crop.
Brian Kearney: So true. And there's a couple of things I want to hit from that. And the first one is the farmers don't trust outsider side. It kind of goes both ways too, because the people in the city, their view, and I say the city, I'm sitting here in a little 2400 person town. So we often, when we're talking to people from the New York, Chicago's, LA's, Their view of farmers is that often they're not that intelligent and often they don't really care about the farm. They're just, they don't care about people's health. They're just destroying the land and that's their view. I think that's part of the disconnect there because farmers love their land.
Justin McMenamy: Because they want it to be there for their great grandchildren.
Brian Kearney: Exactly.
Justin McMenamy: It is greatly offensive to a grower to come and teach them about stewardship in many ways. They would say, my great grandfather, I mean, there are farms I've been on in New York that are in their 15th generation. Their 20th generation here in the Midwest, six generations, seven generations is more common. They would say, “Why are you preaching to the choir if you're coming here to teach me about stewardship? I want this land to be fruitful for my great grandchildren. And yes, I'm open to learning. I'm open to running tests and running experiments and running trials to be more fruitful, both in the financial domain, as well as in the agronomic domain, don't approach me as if I'm just here harvesting nutrients or harvesting cash out of this ground and don't have a care for what it looks like as I pass it to the next generation.”
Brian Kearney: Oh, exactly. And that goes to the slower adoption curve and the conservative nature of farmers and fiscally conservative both ways in all honesty, but fiscally conservative specifically. that you look at the largest companies that have come out of the Midwest and the majority of them are insurance companies and there's not a more conservative industry than insurance and that kind of bleeds out across the entire population and that slow adoption curve is also kind of what protects the industry in some ways because you can adopt too quickly and then you get major issues. Things like the Dust Bowl. That happened because maybe too quick of adoption for technologies that we didn't fully understand.
Justin McMenamy: I forget who shared it with me, but it was a grower and we were talking about adoption curves and why ag industry is the way it is. And his comment was there's a large percentage of the industry that could not tolerate one Definitely not two crop fails in a row.
Brian Kearney: Oh yeah.
Justin McMenamy: And so if you're never more than one crop from no longer being a grower, because you have a mortgage on the land or because–you have to move slowly because last year we were positive, we were profitable or the year before we were, doesn't ensure that we should just pick up everything and aim for a bigger profit, to your point, these insurance industries, like there's a lot of hedging against downside risk that takes place because of how much is on the table every single time. When you buy a cell phone, there's not your livelihood on the table, even when you buy a car, your livelihood is not on the table. And so as you come into the industry, and that's where I talked about, it's this very interesting blend of B2C and B2B. They aren't a pure B2C that just says, “Hey, the Samsung phone has these features and the Apple phone has these features and fix my gadget is this and this…”
And that's part of it, but it's not exclusively it, but it's also not a pure B2C that is, or B2B, it's not a pure B2B that is doing ROI tables or hurdle rate calculations that says, “I'm going to spend these hundred thousand dollars and have an IRR of 12 percent and that's going to go against cash price or cash returns.”
There are components of both that go into the calculus. And so I've seen companies go too heavily in either direction. And if you're missing either one of those ingredients, you're going to stall out. You're just really going to stall out.
Brian Kearney: Yeah. That is likely why you don't see the number of publicly traded ag companies either. When it's a one time a year, again, particularly for row crops, a one time a year cash infusion, it doesn't lend itself very well to quarterly reports. That's why the many of the biggest players in the industry are private companies. And they're slow growing private companies. They're behemoths, but they're 120 years old.
I think that goes back to the patience you were talking about that if you're not trying to build something that is going to be around in minimum 20 or 30 years. And really in this industry, you shouldn't be shooting for 50, 60, 70 years. You might want to find a different industry if you're just wanting to build a company.
Justin McMenamy: And there's, because the industry is so large, there's these waves of money and these waves of founders that come in. I used to make the joke at the Louisville Farm Show, which is in February, right at the beginning of planting for North America, there were about 20 tables, 20 booths that over my decade in the industry have cycled what businesses sit at those exact same 20 tables, right?
So you have the climate corporation was one of the first unicorns in the industry. And for the next two or three years, those tables were packed with digital platform companies. Everybody was cashing and throwing money into a digital platform company. It turns out that really a digital platform is not something you can become a billionaire unless you sold the first one.
Everyone else is really following with it. And then we had the kind of the one year of hemp, right? Remember everybody was going to become billionaires selling hemp. And then we had a double bump on drones. The first drones that came through was the scout drones. And there was a huge wave of scout drones.
Now we're in the sprayer drones that are coming through. And I think the sprayer drones are going to stick the landing, not in the same way that everybody's projecting, but I think they're going to stick the landing. It was just, it's interesting that there's these waves and money races to what is the latest thing.
Carbon sequestration got really hot for a while. These things race into them. And over time, it's these companies that were essentially, honestly, I think they were built to attempt to be acquired. There's four main players. There's three main players. Every one of them's going to buy one of them.
So I better just get out there, be running around. “Well, number one bought one. Okay. Okay. Okay. Number two bought one. Okay. Number three bought one. All right. Let's close the doors and find the next wave.” I think that calculus is playing out in the industry every year or two sometimes.
Brian Kearney: Yeah, that does track with my much less extensive experience in the industry, so that does make sense.
Well, Justin, this has been an awesome conversation. We definitely going to have to do this again. We're running up on time though, so I want to be aware of your time. But the last question I like asking for the people in our audience, and you can either get both of these or one or the other, you can choose if you want.
But one question is, what would you recommend a young person looking at the ag industry looks into? What area in there do you think is most likely to get past that two year money wave and keep going? That's the first part. And the second part is for investors, how should they try to navigate that two year cycle of money coming in? How do they manage that? You're going to answer one or either up to you.
Justin McMenamy: So you're talking about how do you navigate these businesses as an investor? How do you navigate where do I place my money with the knowledge that there's these gold rushes, these fool's gold rushes that are happening over and over again?
One of the things if I forget, it was probably after 30 or 40 pitches from a lot of different places in a lot of different backgrounds. I think there's a couple aspects. Number one is if the pitch deck that you are listening to boils down to ag is big, tech is hard, and I am smart. Don't invest. Like it's very core level.
90 percent of the pitch decks that you're going to get are, well, ag is big. Tech is hard. There's going to be this implied that the current players in the industry can't solve the problem. AI, right? I mean, how many pitch decks have I gotten? Silicon Valley is where all the talent is. Boston, New York, that's where all the talent is.
And AI is so hard, there's no way those hicks in the Midwest are ever going to solve the problem. Ag is big, tech is hard, I am smart. If that's the underlying investment prospectus, that might work in other industries. I haven't yet seen it in this industry. Number two, does the pitchman, does the founder understand not just that there are a lot of farmers, not just that they've sold to one of them that happens to be associated to the university that they have funding with, or the one of them that is 20 miles, you know, their dad goes to church with.
That's fine. Just because you found one and I get it on the front end, you, everybody has to find one as their first, but to what extent are they extending the experience of the one to imply that a hundred thousand other ones are going to follow the same path? To what extent do they understand the nuance of the industry? And so many, there's a lot of them. I've mentioned the Veggie Valley multiple times. That seems to be a more corporate farm. Thousands of dollars, tens of thousands of dollars of yield are generated on a per acre basis. The cropping system moves at the speed of a human being carrying a box to and from a truck, like there's just so–the weather, how many growing days are there in a year, the soil nutrients, there's so many components that are built into that ecosystem. If it's just, “Hey,I just got to get across the Rockies and everything goes well.” That's not the person that I would look to, to invest in.
And so I do think there, for me, the customer founder is a really interesting proposition. Doesn't mean that the customer founder is great at all of the other aspects, but to me that checks the box. Not that I invest universally, but in the check down, that's an important check in the box.
Brian Kearney: That makes sense. That makes sense. Well, this has been a great conversation. Like I said, I do want to do this again. I appreciate you taking some time to jump on and anyone listening, be sure to go to Grody & UnPrOfEsSiOnAL on any of your podcast players. You'll like it a lot. Thanks Justin.
Justin McMenamy: I appreciate that, Brian.
And that’s a wrap on this episode of The Land Ledger.
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