48. “No sacred cows” for dairy farmer Carl Lippert
Edited and annotated version of our conversation
Hi, if you are new here, I am Rhishi Pethe and I am excited that you have elected to join the “Software is feeding the world” community. You will receive this free weekly newsletter at the intersection of technology and agriculture/food systems. I work as a product manager on Project Mineral at Alphabet X, focused on sustainable agriculture. The views expressed in this newsletter are my personal opinions.
This week’s newsletter is the “Roots” version (deep dive edition) with a conversation with Carl Lippert. Carl is a dairy farmer, the founder of an animal feed software startup called FeedX, Twitter expert, and in general a nerdy / weird guy. Here’s a brief summary of our conversation, followed by an edited and annotated version of our conversation.
Image provided by Carl Lippert
Summary of my conversation with Carl Lippert
A Techno-optimism: Carl is a dairy-farmer by birth, but he branched into software and tech due to his interests. He is a strong believer in the power of technology to create a better future. He believes that Fintech can solve a lot of problems in agriculture.
B Cultural problems in farming: Carl believes that most problems are culture problems. Tech people find it hard to empathize with farming due to a lack of context. He touches on the angst in middle America, which has dominated so much of the political discourse over the last few years. Farming is a "not opt out" culture whereas tech is an "opt-in" culture which makes it very different.
C The 280-character philosopher: Carl is a Twitter expert and he regularly asks questions like “What have you discovered lately?” and frames his learning journey. He is a strong believer in pushing for big innovation, cross-learning, and leap-frogging on the innovation curve, if possible based on others' experiences.
D Manifestos and definite futures: He believes in the power of manifestos, but does not have one written down. Peter Thiel’s “definite futures” philosophy guides him to imagine a specific future and to work towards it.
E Milk and Elon: He has tried weird flavored milks all over the world and calls out companies for putting too much sugar in their products. He is also a big fan of Elon’s optimism, imagination, and ambition.
Rhishi: Hey thank you for agreeing to talk with me, while you are in Colombia. Tell me about your background and how did you get to start your current company, FeedX?
Carl: I was born and raised a dairy farmer. I was tracked to become a farmer, raising registered Holstein cattle in Wisconsin. There's a book published in 1990. It's the breed history of the Holstein breed in our state. And I'm in it. So I'm very entrenched. I got a degree in dairy sciences, and did dairy judging, dairy bowl, dairy jeopardy!
Dairy jeopardy is a real thing. “Dairy Jeopardy is an exciting event that brings together youth interested in agriculture. Participants have the opportunity to gain knowledge about the dairy industry while making rewarding and lasting friendships along the way.”
I fed too many cows when I was younger. It is a repetitive human task and ideologically, I wish we could free ourselves from repetitive human tasks, unless it is some zen thing for you. But I was always a computer nerd and believed in the power of tech.
I did a study on technology adoption on dairy farms in Europe compared to the United States. I went to 12 countries, and visited farms in Germany, Normandy, organic farms etc. My study paper ended up being about subsidy structure, quota systems, its impact on markets etc. That trip broke me in all the right ways.
After I started a computer information systems degree, I wanted to learn how to build stuff myself. I know farming, can be a translation layer, and build things. I'm trying to build a new environment where innovation can flourish by making everything easily accessible.
Today, feed is the most expensive thing farmers buy. FeedX is best known for being a marketplace for animal feed, but really it’s an infrastructure as a service company for the animal feed industry.
Rhishi: You've called yourself a techno optimist / utopian. What do you mean by that?
Carl: I am an optimist and I think technology can get us to a better future. People in the farming community want to have a good life. They are building families. They are happy that they have what they need, but they don’t see a crazy bright future for themselves. There are some people describing some version of a bright future, but if there’s no market, distribution channel or known ROI, then it doesn’t really change the future that much. The first Intel processor was game-changing, but if we are at version 19 or 20, it didn’t really matter to society much. But I do believe we can do wild stuff and I'd dedicate my life to doing so.
Rhishi: So do you believe incremental theory of innovation or that innovation happens in steps?
Carl: I think there's both. Nothing happens for some time and then it all happens. For example, even a few years ago, crypto was back-watery weird stuff. There will be a tipping point though. Using that infrastructure creates a whole bunch of new opportunities for businesses. I am building real physical things, but permission-less digital access to the entire financial industry globally is going to cause a big change. But the step function crescendos in some moments. So they both exist. Society is really good at the incremental stuff. So I don't need to worry about that.
Rhishi: You've talked about FinTech as a category for building startups that can benefit agriculture. Can you speak to that?
Carl: Using the financial system just sucks. For example, there are 5700 feed mills in the US. They are setting up bills with farmers. I am glad they have jobs, but we can change how billing and credit happens, and give them better jobs. Today it is hopeless to start a farm, as the upfront costs are so high. 30 years of debt is scary as hell. I don’t like to make commitments greater than 3 years, as I lose my optionality.
Let’s talk about co-ops in the Midwest, which culturally are a great idea. They are poorly implemented,, and incentive structures have misaligned. So I am excited and long for new legal structures, where the value proposition doesn’t need to pop. Today capital is commoditized but it is very hard to access. Let us say you wanted to start a small agroforestry operation. You shouldn't have to become an expert in meeting with high net worth individuals that happen to be interested in planting trees along the Mississippi river. Fintech can solve this problem and unleash innovation. We need to reduce barriers to entry.
B Cultural problems in farming
Rhishi: You're able to bring farming and tech together. But there are very few people who have both backgrounds. And so you have to bring people from other backgrounds. It creates a cultural challenge. How do you solve it?
Carl: Most problems are culture problems.The technologists don't know how to empathize with the farmers' needs because it's just so out of context. I hope we can build an organization where people have the ability to take those people who have no context and bring them to a farm.
In the US, about 1.3% of people are engaged in agriculture and farming.
Rhishi: What are some of the cultural problems that you see?
Carl: It's not specific to this industry, but it definitely affects it. I am not farming full-time anymore. I was interested in other things and not going after my dreams was ruining my optimism.
Farms eat lives. Farming is a really hard job. Farms often run zero margins. And the way they make money is by depleting human capital. The way you make margins on your business is by leveraging your personal capital for 40 years and ending up being a broken farmer.
Ag is a “not-opt-out” culture. You are only there if you did not opt out of it. Tech is an opt-in culture. In farming barriers to entry are massive. You become a farmer by not opting out because it was passed on by family lines. You don't want to be the one to give it up because you feel it's your duty. It could be a golden handcuff. But it's not a great place to be mentally. I was worried that my brother’s quality of life would go down, when I left the farm. You should go towards opportunity, whatever that is for you, and it shouldn't have to be the farm.
Almost 2 out of 3 farms (according to some old data from 2001), are multi-generational farms.
C The 280 character philosopher
Rhishi: Your Twitter is refreshing, it's not the same things that people normally put out. And one of the things you tweeted recently. What have YOU discovered in the last six months?
Carl: You start out a novice and you learn more. But the further you get the less you know. I’ve read almost everything about starting an ag tech company that's been published in the last 10 years. Does it mean I know all the things?
There's actually a lot of discovery there. Some of that is raising capital, hiring people, network access etc. I've recently discovered a lot about fundraising. It is a specific type of game and I am trying to figure out what the rules of that game are. So I'm discovering a lot about it.
I've been to 19 countries now and I only know English. I have what I call point-and-smile Spanish. So I know how to get to the beach, how to get to the bathroom and how to get a beer. So I am constantly learning and discovering.
Rhishi: Ha ha ha! So it's the three B's, the beach, the bathroom and the beer. Talking about discovery and learning, how do you balance the natural cadence of your industry versus the pace at which you want to learn?
Carl: We're lucky enough that cows eat every single day! So as long as we get products in the hands of people, and they continue to use it, technically we get an at-bat every day. (For non baseball folks, at-bat is a baseball reference which means that you get a chance) A year ago, I didn’t need to send an email every week. It sounds silly, but getting good at email is a barrier. Last year I was part of the state dairy board. They are debating if the state’s official stance would support a quota. It’s me staying deeply in the loop on how dairy is working specifically in my state. I need to learn different skills to be effective.
So being a generalist can be a slower approach. If you're trying to build something abstract, being a generalist and having your finger in many streams of information is very valuable. Idea sex is wonderful! We're not inventing. You take the idea from one industry and you find out how we can apply it. We look at logistics, B2B, healthcare etc.
Rhishi: You wrote a medium post on how we should jump steps. You had an m-Pesa example (M-Pesa (M for mobile, pesa is Swahili for money) is a mobile phone-based money transfer service, payments and micro-financing service.) People can get a beer with a text message. I saw the same thing transpire in India. People got mobile phones before they got landlines (and will never get a landline now). They said, we don’t need to do this. We can skip three steps.
Carl: We should skip as many steps as we can. If you can see it and society can accept what the next step is, let's go there. There's a huge drum beat in the United States about fixing rural broadband. And I'm pro internet. I believe that caffeine and the internet should be a human right. I would say let's stop digging lines at all, because Starlink is close enough. Let us go straight there, because we want the output, not the input. The market doesn't care how you feel. I think most people have the ability to perceive what a good future could look like and build some of it.
I enjoy looking at data from multiple places. I'm excited about alt-protein, but that's not super popular because I own a dairy farm. If that's successful, we're out of business.
With all questions you should definitely kill your baby. If you own a dairy farm, what's the future look like with no dairy farms? If you own a restaurant, what does the future look like without restaurants? What does the future look like with no banks? I spend a lot of my time thinking about it and I want to hear what people have to say.
Rhishi: Maybe we should look at two extreme outcomes and see how we feel about the pros and cons.
Carl: It would be totally okay, on a human level, if farm animals became zoo animals. On the other side, dairy, beef, and poultry can get vastly more creative. Most farming problems are margin problems. People talk about animal agriculture being unsustainable. And I usually go, well, if you give me a billion dollars, I could probably triple our agriculture output and drastically reduce our effect on the environment.
We would take every acre and eliminate runoff with vegetation buffers everywhere. We would change the cropping rotations. We would apply capital in the ways that we know can boost yields, but lessen the effect on the environment. We do not have to rely on the fact that some people just really suck at farming.
When I think about human evolution it is about discovery and we need to have all the options put out there. We often need to be running in all directions all at once, rather than let’s get all our ducks in a line and go in one direction all at once. When we do this we make progress but we also find big things we were wrong about.
D Manifestos and “definite futures”
Rhishi: Steve Sprieser ranted about the Chicago tech scene and talked about writing a manifesto. You have called yourself a techno-optimist. Do you have your own manifesto? How would you describe it?
Tim Grace @tmgrace@EzraMoGee Holy cow that’s a manifesto, not a thread. #SteveForMayor
Carl: I don't have it written down, but that would be amazing and fun. I follow strong opinions, weakly held principles. It's the only path to get to the next step. One of my favorite movies is Tron. It is a story about building a super optimistic future where we solve all the problems, using open source technology and just freedom of information.
I am an optimist. I have an opinion about what the future should be. I want to try to make it happen. The main thing I need to do is to keep trying and find the resources.
I love Peter Thiel.
His thinking is wonderful. One of the best things that he has ever said is having a belief in a specific future versus a non-specific future. A non-specific optimist believes the future will be great and it will happen. But the specific optimist says, this is specifically what the future should look like, and I'm going to build it. And that to me is the person or organization that writes a manifesto.
Peter Thiel says that the distinction between two views of the future: the “definite” and the “indefinite” is that the definite future is one in which we choose one future worldview and allocate resources against it.
Rhishi: Talking about a specific type of future, you've talked about virtual reality in agriculture. Can you talk about that and also carbon markets?
Carl: I'm reading Ready Player Two now. Ready Player One is probably the most popular VR movie that exists currently. I lived on a farm in the middle of nowhere, so I've always been compelled by VR (virtual reality). I want to be fully immersed and we're not there yet. You talked about incremental versus step functions. We really haven't had a good one since mobile. It's been 20 years since the VR revolution is coming.
We build feeding software, which connects the scale on the feeding machine and you look at that scale. If I had AR (augmented reality)/VR you can do it anytime you want. When we can have a new paradigm, it can be super interesting.
For example, we do pregnancy checks on cattle. We use an ultrasound. It's me running around with syringes and a clipboard. It is expensive because the veterinarian is very expensive. So there is an element of tele-health. You have the opportunity to take low skilled labor to do the physical ultrasounds using AR headsets, automatically populate the digital systems, and reduce human error.
I've never been excited about carbon markets. I might have to see something different when I drive down the road. Did anything change? I think there's a different colored smoke stack on that paper mill, because they put in a filtration.
There's a brand problem. I don't represent all farmers by any means. There are farmers completely jacked about carbon sequestration. Culturally, most farmers that I'm used to, that's not the brand strategy to get them involved. I would prefer to leave it to capitalism. I generally don't make business bets on altruism. It doesn't mesh with my personality.
Let me give you an example of a new cultivar of hazelnuts. What if there was an organization that would plant this new cultivar. Let's figure out where the most runoff will happen using satellite data and we'll make a vegetative buffer strip, and plant it with hazelnuts. And it takes five years to grow nuts, and in that time the same organization will design the robots that are needed to harvest this. And they're providing all the capital. “You have given me the right to plant your land. I get to do it for 10 years, but the expectation is that I will do such a good job that in 10 years you will likely want us to keep doing the management for you.” This is a valuable crop that gets harvested in an automated fashion, and it's useful for the environment.
And it has the incentive structures to get the farmer a better income. It had no barriers to entry. If you didn't have the land, you could get a loan from a bank knowing that you had a contract for 10 years. It is de-risked. So anytime I can do that instead of coming in and trying to preach carbon capture it's better. That is what I mean by a branding and messaging problem.
E Milk and Elon
Rhishi: You like to try different milk drinks. What is your favorite and what’s the most weird that you have tried?
Carl: I remember one in Africa. It was bubble gum flavored milk. It was horrible. I'm pretty hard to displease on that level. I had some goat cheese chips in France. And I always have a problem when the food smells like the animal in real life.
I'm going to take a moment here to talk about sugar. Any of these products can be awesome when you pile sugar. Some of the alt milks are amazing. It’s better than anything you want to drink, and because it’s got 10 more grams of sugar. I have concerns about how dairy is marketed. I wish that we would rally against sugar. Sugar is also produced by farmers, but when it comes to the health of Americans it is something to think about.
Mixing alt-milk and dairy milk is also really good. II love human creativity. I love weird. I want more of that. The world is rich and wonderful.
Rhishi: And one last question: who are some of the people that inspire you?
Carl: I am a big fan of Anthony Bourdain. He had an unfiltered take on humanity and I need more of that. That's how I wish other people would express the world to me. And I'm in Colombia partially because I want to live a rich life.
I'm an unabashed Elon fan boy. He’s an easy target for people, when he's got problems. As humans we can be both astounding and failing at the same time. It's good that Elon is a human. He totally invented the future in some ways. And he's not perfect. But nobody's perfect. I'm totally cool with people being 90% shit in my opinion, but if your 10% is useful and I like it, I'll be proud of you.
Anthony Bourdain in Thailand (Bourdain is one of my heroes as well and Thailand is one of my favorite places to visit)
Rhishi: This was fantastic. Thank you for your time Carl.
Carl: Thank you!
Carl Lippert on AgTech So What podcast (Sept 2018)
FeedX is part of Techstar accelerators (Dec 2020)
The future of self driving cows by Carl Lippert (Oct 2018)
Book: Zero to One, How to build the future by Peter Theil (2014)
I want to thank my friend Shane Thomas, who encouraged me to have a conversation with Carl.
So, what do you think?
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