Industry Leaders Interview with Igino Cafiero , CEO and Co-Founder, Bear Flag Robotics

Interview

Bear Flag Robotics is looking to shake up the farming industry with its autonomous technology for farm tractors.

Bear Flag Robotics builds autonomous technology for farm tractors which helps improve farming yields.  Earlier this year, the AgTech startup announced a  $7.9m (£5.7m) fundraise, meaning the California-based firm has raised $12.5m (£9m) since it was founded by Igino Cafiero and Aubrey Donnellan in 2017.

In this interview with Future Food Finance,  Cafiero talks us through the provenance of the company and its ambitions. At one point during the interview, Cafiero says “there's this video game that's been out forever called Farm Sim and you basically control the farm from your computer. The goal of Bear Flag is to build that in real life. Being able to run your farming operation from your computer”.

During the intererview, Cafiero also talks about how he sees the business evolving, future funding, and the demands of being a founder of a startup.

Interview

Paul Cuatrecasas: Igino, can you give us a brief description of the company, perhaps one that you wouldn't find on the website? How would you describe Bear Flag Robotics?

Igino Cafiero: So the way to think about Bear Flag is we build autonomous technology for farm tractors. We don't build the tractors themselves. We rent the tractors either from rental fleets, or customers provide them themselves, bring them into our shop, and we add the sensors and computing necessary to make those machines autonomous, and then deploy them to growers as a service.

We work with some of the largest farms in the world, including the largest cotton growers, sugar growers, potato and onion growers, certainly in the country and in the world.

PC: So, you rent the vehicles from rental fleets mainly, and then you re-lease them?

IC: We have a partnership with Pacific AG Rentals, one of the largest rental fleets on the West Coast. We bring the vehicles in and put the sensors and computing on them and then deploy them and charge per acre.

A grower will know what their internal costs are, Bear Flag beats that every single day of the week. We come in, and not only can we provide them with the work that needs to be done, helping them with their crushing labor problem, which is a huge issue in the markets that we're in, but then we can also provide the data, analytics and insights about productivity and yield increases to them, making Bear Flag a much better option than manned tractors.

PC: So, you're getting closer to a one-stop shop of information of insights than just the equipment?

IC: That's exactly where we want to be, Paul. The first half of the story is adding certainty back to the operation and lowering costs, but the really exciting part of this story is how can we increase farming outcomes? How can we farm more productively?

How can we take the lessons that we're learning going through the field, 12 to 40 times per year, depending on the crop, and relay that back to how to increase the top-line for a farm?

PC: And how did you get started with this? What inspired the idea for the company?

IC: The story starts 20 years ago. I met my co-founder in engineering school at Carnegie Mellon. Aubrey went to go work in the space industry and then founded her first venture-backed company a number of years ago when she went to business school at Chicago Booth.

I went to Stanford for grad school; got my master's and I founded my first company as I was still enrolled in my last trimester there at Stanford, but had the great fortune of joining another company several years later.

We exited for close to a billion dollars in 2013, which was an incredible opportunity in my career to think about how I wanted to spend the rest of my professional life and the impact that I wanted to have. At that time, I also got my MBA at Wharton.

My wife is from rural Oregon and her family owns a multi-generational construction aggregates quarry in Willamette Valley. In the summer of 2017, we were spending time with them, and I started to talk to the family about the quarry. I learned about their operation and what their constraints were, and they run a tight ship up there.

They own their own land and equipment, they just can't find labour or wages that make sense for their operation.

So, I started connecting the dots and looking at other industries and saw that this is a common problem. Over time laws are increasing; minimum wage is increasing, immigration policies are making it more challenging to find good labourers that have experience running equipment.

And so, I started looking at construction, mining and transportation, but the story just kept coming back to agriculture. I had friends from business school that owned tree nut orchards in the Sacramento area, and I spent time with them.

In the summer of 2017, I just spent the whole summer talking to every type of grower. If there's a crop you can name, I've probably talked to someone who grows it. Then I started to put together a thesis around how autonomous can really be transformational in agriculture, and the idea developed from there.

PC: When did you have that inflection point where you decided, "That's it. I have to actually start the company?" Presumably it started with coding hardware and software?

IC: Yes. I'm an engineer by trade, but I love being outside. I love the equipment side of the business. Fundamentally, the little boy in me still just loves running equipment, being outside, and just doing the actual work.

That was what I was drawn to. I don't know if there was a moment it clicked. I don't want to be corny, but it was just like coming home, I felt "this is what I want to do. I can't imagine wanting to do anything else more than this." I say this a lot.

I talk to a lot of other founders...startups are unimaginably hard. Agriculture is twice as hard as that. There are no easy days, but I love what I do. I can't say it's fun every moment to moment, but it's certainly enjoyable and very rewarding.

PC: And presumably you had some bumps along the way?

IC: Had bumps this morning Paul! No, that's not even just start-up life, that's just life. One of the earliest bits of advice I got a number of years ago... “the mark of a good founder is just how much bad stuff can land on your lap and then how quickly you can move it away and move forward”.

In sports, you call it next place speed. How can you extract the lessons from that? Don't get too bummed out, don't get too upset about it, extract the lessons and move on, and approach the next meeting with a clear head. When you figure out how to do that, let me know. I'm still working on it, but that's the goal.

PC: I'm with you there, never ending. Let's get back in the business a bit. Are you calling it “tractor-as-a-service”? Or what do you call the offering?

IC: I guess you could call it “tractor-as-a-service.” We consider ourselves a whole lot more than that. The obvious value is that "Hey, we're going to do the same operation that you're doing today at a lower cost." But there's so much more behind it than just the tilled field. It's your efficiency metrics; it's the compaction reports.

Once we're cultivating there, it's the reports about how the crops are growing over time and then relating that back to spring tillage and fall tillage before... It's the whole thing.

There's this video game that's been out forever called Farm Sim and you basically control the farm from your computer. The goal of Bear Flag is to build that in real life. Being able to run your farming operation from your computer.

PC: And do most of your customers already deploy other digital agriculture tools... drones and temperature sensors etc.?

IC: Sure. There's a misconception that we're still back in American Gothic, which is just laughable. The customers we work with are incredibly sophisticated. These are billion dollar companies that have full time engineers, software developers on staff, they have in-house counsel. The operations are incredible, it's how you get to that scale.

They see the writing on the wall. They know they see the trend lines probably more clearly than anyone else because, among other things, they're partially price setters too, but they see the writing on the wall. They know that they need to continually look at new ways to keep their costs under control and add certainty back to their operations, and that's what Bear Flag does.

PC: How would you articulate the differentiator if we're talking about competition? We know there are other companies developing automation when it comes to industrial equipment whether it's tractors or something similar. And also, the John Deere’s of the world. What is it that would give Bear Flag the edge when it comes to a grower or a farmer deciding on automating their equipment?

IC: Well, first, we're the ones out there doing it. We have [worked on] an incredible number of acres and an incredibly robust pipeline of existing and future customers too. If you want to do autonomous tillage in the markets that we're in, Bear Flag is your option.

We’ve the luxury of first mover advantage, which is a position we enjoy right now but it won't be that way for long. So, we're already building moats behind our company. As far as autonomous operations in our markets, Bear Flag is an option, and it's a really compelling option too.

The other way to think about it is that we're very close with all the Original Equipment Manufacturers (OEMs). These are sharp folks working at industry leading companies.

But if you agree with the thesis that agriculture will be autonomous in the future, and to follow up with that, that farmers’ interfaces with their machines will be through a pane of computer glass rather than a steering wheel and a throttle as it's traditionally been the case, I don't see the incumbents in a better position to win that business than anyone else.

And in fact, building a company around that premise (Bear Flag) seems like the most direct way to have a big success.

PC: What do you see as the greatest obstacle to growth? Or if you're well positioned now with the tractor play, what is it that prevents you from going faster now?

IC: We're just recruiting and building tractors as fast as we can. The company's young; we're three years old and we already have many tractors in production. What I say internally is what worked six months ago is not working today and what works today will not work in six months. We will need to reinvent our company every six months as we double in size every six months.

Coming back to the growing pains and the bumps along the way, that's what it's about. It's a symptom of a successful company that's growing quickly. You can't just put down your laptop and talk across the table anymore like we could two years ago, but to some extent the pandemic has helped us with that a bit.

We've had to be very conscious about our communications with distributed remote teams, and that's helped us grow quite a bit. The fact that we have operations happening all over California right now, with folks all over the country working at Bear Flag and it's not a problem. We've we built that muscle, which is really exciting.

PC: Are you selling mainly U.S right now?

IC: Yes.

PC: And today are you tractor agnostic in terms of brand and make and model? Or will you be soon? How do you describe that?

IC: We have built our company around being make and model agnostic. Our thesis here is that the tractors that exist are already extremely good. Bear Flag's not going to build a better tractor than AGCO or Deere or CNH or Kubota, or any of the others that play in this space.

That's not where we add value. And even if we could, we're not going to beat them at their support networks, dealerships and parts networks. That's not where we win. Furthermore, if we thought we could, if we were optimistic, maybe we could rebuild that, and it'd be 20% better than what they have.

If we were delusional, we'd say we can do it twice as well as they could, but it would cost a tremendous amount of money.

And at the end of the day, what do we really have? The thesis here has been, "Let's take what already exists and add value on top of that." It overcomes so many things, Paul.

There's hundreds, if not thousands of configurations of tractors. It's like the wheel, the track, the engine power, the produce tractors, the row crop tractors, the vineyard tractors.

I can just go on and on. Bear Flag has no interest in picking a single tractor. We have built a platform, an independent system that can sit on top of just about any type of machine and add value to just about any farmer world.

PC: OK so what is the extent to which you need to retrofit a tractor today? What is the extent of the investment required on behalf of your customer, the grower, to do something with their machine? Or is it just the rental company? You have to do something to that machine beyond just integrating few sensors, presumably?

IC: Yes, it's really not invasive and that's by design. So, we get a tractor in the shop. We bolt on the roof rack, we bolt in the compute box, which is hefty, I think we have three or four computers in there.

We put on the bumper and all that stuff, and then we have some wires we splice in at some very specific points. It takes a handful of days. We've done it a day under a time crunch before, which was an accomplishment for the team.

If there was ever a need to take the technology off the tractor, that would take half a day. We're not fundamentally changing the tractor in any way.

PC: And you as Bear Flag, you will run that operation in central command center effectively?

IC: If we weren't just on voice, I'd love to show you the internal interface. So just sitting here at my desk, I have it open. It's a map of the country and we have our tractors dotted around it and you can click on any tractor and see what's going on. You can click on it, see the videos coming for the machine, and you can change everything you need to about it.

You can set the path; you can update the speeds; you can adjust the hydraulics. Everything you'd want to do you can do remotely through the web. Which is pretty cool.

PC: So is it really the grower, the farmer outsourcing the whole operation to Bear Flag and saying, "I want you guys to do it." Whatever that is, presumably starting from the planting or the seeding all the way through to the harvesting... Do it better, cheaper with analytics and keep me informed?

IC: Yes, I wouldn't want to undervalue the input the farmer has. The farmer knows how to farm that land. We know that we're not going to farm better than the grower, we don’t pretend that we do. The way we think about it is how can we increase the productivity of that grower and the folks on that farm.

We can get up to 11x more acres tilled per person using a Bear Flag system than they can using a traditional, manned tractor. That's insane. You'll get a customer like one of our largest, Central Valley, a thousand people on staff, and about half of them are equipment operators. Imagine giving them an 11x increase in productivity per worker. That's astounding. I mean, that's a couple of step functions, right?

PC: That's a game changer. Is it 24/7 operation?

IC: Oh, yes, you betcha. The important thing to call out is the machines still need diesel and things like that. The growers we work with already have infrastructure to support that and they'll have service trucks going around. So, if they want to run through the night, we run through the night.

If they run a 12 hour operation with their service trucks, we'll do that too. But the points to remember is we work for growers, not the other way around. When they need us to be working, we're working. And when they're not, we're not. We're here to serve them.

PC: And what about the ability to enable other types of equipment. I'm thinking bulldozers, tele-handlers... You can do ultimately, theoretically anyway, all of those types of equipment as well?

IC: Without a doubt. And that's always in our head. Now, as a startup we need to be focused, and we're really excited about the value we can add from an agronomic perspective. We think that's game changing. But there's opportunity to lock in other industries as well. Forestry, construction, mining...you name it.

PC: And when it comes to things like electric it doesn't really matter to you if that's the choice of your customer?

IC: Yes, right. I'm a huge fan of electric. I think it absolutely is the future. I think it's all little early against the energy density of diesel. When you're looking at heavy tillage or heavy equipment it's not practical yet, but that doesn't mean it won't be practical tomorrow.

So, we're intently interested in that. Oftentimes EVs and autonomous are sort of conflated. To us, the way we're building our company, those are discreet, different things.

PC: I'm just thinking here….it’s probably too early stage to be partnering with larger corporates? I can see them as suppliers, channel customers, but partnerships? How do you think about that? Partnering with larger corporates?

IC: We've made our business to work very closely with the OEMs and we enjoy and value those relationships. But as far as official partnerships, we've been a little bit hesitant.

Just because our ability to move quickly and our ability to work with multiple OEMs, different customers in different farms in different situations is one of the things that will enable us to continue to move quickly. And so, we've been pretty cautious about signing on the dotted line with anyone.

PC: Because it seems from everything you're saying, it's still so early stage as it takes so long in everything you do. You need to recruit and grow, the day or two it takes to retrofit or to add on your solution. Do you see the day or when do you see the day where effectively there's no point not to have automated tractors?

IC: That day is today. Our inbound is tremendous. From our perspective, we're disciplined about who we work with. And that's really driven our strategy. It would make sense for us, like I said, to go after the largest farms in the world and that's exactly what we're doing.

But that certainly doesn't mean that we can't add value to other places. And like I said, for us, it's about feeding the beast, raising the capital, building the team and continue to serve as many growers as we possibly can.

PC: And where do you see the company in 10 years’ time? I'm interested in your vision, even though you're feeding the beast and you're blocking and tackling and you're heading down the field, where do you see Bear Flag progressing?

IC: I think what good founders need to do is be able to link the vision to the tactical and toggle back and forth super quickly. It comes back to how can we be the platform that adds value on the farm? The insight here is that labor is the wedge.

Labour wins us the business farm, but by no means is that the most we can do. And so, when we’re saying, "Hey, we can help you with logistics and software solutions to help keep machines moving as quickly as possible and scheduling apps." We can look at productivity, fuel efficiency, input metrics.

We're already letting our growers know about more efficient ways that they can move through their fields more quickly and using less diesel. These are the insights that we're providing today.

It's about linking fall tillage to spring tillage, to planting, to cultivating, to spraying, to harvest. And how can we have synergies between those and reveal insights that are not possible today? This is the grand vision.

It's how can we interface with other pieces of equipment? It's how can your harvester talk to your plane? That's an unlikely pairing, but we're already talking about it. Those are cool synergies that are just not possible to unlock without Bear Flag.

PC: It feels like you're just constantly learning, absorbing like a sponge, everything, every day, from everyone you're working with to build this pool of knowledge, this grand data lake to leverage?

IC: That's exactly right. We're building the system of record in agriculture and, to your point, learning lessons every day. We play it very aggressively. We're out there all the time. We make mistakes every damn day, but we make good on them. We do right by our growers, and we dust ourselves off and keep going. That's exactly what we need to do.

PC: The last round of capital that was done January, you're putting it to work...when's the next round going to be?

IC: It's going to be here pretty soon. The company is doing well and we're getting a ton of interest, so we'll have another raise here soon.

PC: And how many employees or FTEs do you have on board today?

IC: We have 25 people now.

PC: Igino, thanks, I can talk to you all day. Love what you're doing, thanks for the time today.

IC: Thank you so much for the time.