Category: Animal AgTech

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Animal AgTech Processing

Tyson’s Moonshot: what the new CEO’s resume really tells us about the future of Tyson Foods

This week Tyson Foods named Dean Banks as its next Chief Executive Officer.

Dean Banks was named president of Tyson Foods last December, but the media references his experience as a “ tech executive” and his time at Alphabet. Curious about this experience, I went to his LinkedIn profile.  

Was he a C-level executive at Alphabet? Division President?

At Alphabet’s X (Moonshot Factory) he was, umm, a Project Lead. Oh. 

According to LinkedIn, beyond his project management experience, he’s done some consulting, some angel investing. His CEO experience includes a brief stint at what appears to be <50 person company and an even shorter stint at a company with <10 employees. The assumption that he’s probably managed a maximum of $50 million P&L is likely generous.

Meanwhile Tyson Foods employees 122,000 people across the globe to generate ~$40 Billion in annual revenue.

Unless I’m missing something, this guy has the perfect pedigree to be a partner in a venture fund, run a scaling startup, or lead a newly created tech division of Tyson Foods.

It is not obvious from his resume that he is capable of being the CEO of a company of this size, scale, and complexity. 

Tyson Foods is the opposite of Alphabet & its Moonshot Factory in almost every way.

Moonshot Factory makes long term plays that may not deliver results for years or even decades. (its in the name…moonshot)

Tyson Foods faces the earnings music with Wall Street every quarter.

Moonshot Factory is funded by Alphabet, a $1.02 Trillion market cap company with $18 Billion cash on hand. 

Tyson Foods is a low margin, commodity business clawing its way to higher value through further processing, product innovation, and branding. This is a ‘grind it out and strengthen your balance sheet to prepare for the inevitable lean times that come with a volatile, cyclical industry’ kinda business. This is ‘hope that you are diversified sufficiently across proteins, sales channels, regions of the world to weather a black swan better than your competitors’. 

But, there is one scenario under which this stretchiest of stretch hires makes sense: 

Tyson doesn’t want to be a user of tech and a customer of tech companies. 

Tyson doesn’t want to be an early adopter of solutions created by tech companies.

Tyson Foods intends to be a tech company.

Tyson’s biggest problem is labor, specifically plant labor. This has been their biggest problem for some time, and COVID shined the spot light on the many risks associated with labor intensive processing including access to labor, contingency plans when labor is unavailable, health & safety, and liability. Labor represents 50-60% of processing costs, a huge opportunity to drive margin by reducing these costs.

Equipment suppliers were not solving Tyson’s biggest problem in a timely manner, so Tyson Foods is taking matters into its own hands.

Over the past three years, Tyson has invested about $500 million in technology and automation including the Tyson Manufacturing Automation Center opened in 2019. Banks’ work at Moonshot Factory was in automation and robotics. Rumor has it they’ve brought in similar profiles from General Motors and similar companies.

Hiring people with tech/automation pedigrees raises the question, what’s the internal mandate as it relates to plant automation??

Is it, reduce processing costs by x% to improve competitive position? Or  is it, reduce processing costs by x% and generate $y revenue in automation solutions such that tech becomes the growth business? 

If it were merely a competitive advantage play, Banks would have been made head of the tech division. So it must be a bigger play in which Tyson leverages its knowledge of problems to be solved with the leadership expertise to bring about new products and an entirely new business direction.

Perhaps even a new business model for Tyson Foods. 

Does Tyson Foods start selling plant robots to competitors or do they launch a Processing-As-A-Service business? Maybe they launch the processing plant equivalent of a Ghost Kitchen in which they effectively become a contract processor for other companies because their costs are 30-50% lower? That might be bit outrageous, but you get the idea – this initiative must be central to the very fabric of Tyson Foods in order to make Banks CEO of the entire company.

In 5 years, what % of Tyson Foods revenue will come from technology sales?

How will this impact operations? 

How will this impact returns?

How will this impact culture?   

How will this impact Tyson’s venture activity?

So many questions & only time will tell.

What a company says about their future is mildly interesting, the tell is in who they hire. And the largest meat company in the world just hired an automation tech project manager as their next CEO. Which can only mean 1 thing:

Tyson is betting the farm on its future as a tech company.

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Animal AgTech

A silver lining: how COVID could spark a fire in animal ag

Set aside the immediate pain in animal ag caused by COVID, and let’s talk about the silver lining of how post-COVID trends could mean great things for animal agtech, based on two assumptions about the world:

  • More people will work remotely
  • Tech adoption will continue to increase

Proximity. Tech giants like Twitter and Facebook are giving employees the option to be remote forever. Instead of an engineer making 180k and paying $3k/month for a studio apartment in San Francisco, that engineer can move to Denver or Kansas City or even smaller towns and do the same work remotely while lowering cost of living dramatically and, in some cases, maintaining their earning level. As evidence this is actually happening a mere 3 months into the pandemic, 1 bedroom rentals in San Francisco are down 10%. The exodus from urban centers like SF & NYC has begun. 

This likely means engineering talent will be closer to people who know animal agriculture. 

This likely means entrepreneurial talent will be closer to people in animal ag.

This likely means people solving problems will be closer to people who need problems solved. 

Which can only mean good things for the quality of solutions and rate of adoption.

Proximity means access to more prospective customers so entrepreneurs can avoid the “n of 1” problem, of building a solution for 1 customer that isn’t representative of the many. (A lot of folks attribute slow adoption in crop farming to the early assumptions made by entrepreneurs that all farmers are alike and all production systems are alike…a fatally flawed assumption.)

Proximity means the ability to actually get on farms, to gain direct visibility to the practical constraints of how a solution fits into a production system and a producer’s decision making process

Farmer Adoption. Satya Nadella, CEO of Microsoft, recently said “As COVID-19 impacts every aspect of work and life globally, Microsoft has seen two years’ worth of digital transformation in just two months.”

For example, many producers are getting a taste of new-to-them consumer technologies. The farmer who had never used Zoom just spent the last 12 weeks on Zoom for his/her Bible Study. Or the producer who always scoffed at urbanites ordering groceries online learned how to snag an elusive time slot for grocery pickup on Walmart’s website. Or they joined a Slack channel to access market intel from their risk management advisor. 

With tech merging into the heartland and producers increasingly using technology, this sets up a perfect storm. I really hate COVID-19 and its destruction, but these resulting trends should lead to good outcomes & new solutions in animal agriculture.

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Animal AgTech

What Lewis & Clark teach us about Expeditions & Startups

To find “the most direct and practicable water communication across this continent, for the purposes of commerce.” That was the mission of the grand expedition taken by Captains Meriwether Lewis & Wiliam Clark to explore the newly acquired land in the Louisiana Purchase in 1804. The expedition travelled two years and eight thousand miles through a land largely uncharted by citizens of the newly formed United States. They interacted with previously unknown Indian tribes, identified new plant and animal species, and can you even imagine the wonder of seeing the Rockies but then having to describe the majestic view with words only? 

I’ve recently been on a road trip through Idaho, Wyoming & Montana. All areas with rugged mountains, roaring rivers, and truly breathtaking views. I’m not doing the exact route of Lewis & Clark but trust me, I’m paying my respects to their expedition and the Native Americans who enabled them to make a successful journey. But let’s face it, “exploring” from the safety of my Ford Escape on a paved road with A/C and Spotify is hardly the same as getting in a canoe and pushing off the bank hoping that you’ll find enough bison to get the expedition through the winter or that the river runs where you hope it runs. But still, its exploration of its own kind.

Similarly, all startups are – by definition – an exploration, an exploration for the right product, the right business model, the right pricing model, the right market. In my mind there are two types of startups:

  1. The Navigating-the-Rockies-for-the-first-time kind
  2. The Off-the-beaten-path-but-navigating-with-Google-maps kind

In the first version you are creating the map as you go in every sense, while the second one has well defined routes but requires a navigator with the appetite to explore and good judgement to navigate the unexpected.

Let me be clear, both are valid. Not all innovation has to be groundbreaking. Not every startup has to have a mission to change the world. Farm management software, for example, is a very useful tool for producers to help them manage their business. Yet 20 years ago Salesforce created the pay-as-you-go business model, what we call SaaS, so farm management software providers have a business model playbook to run. It’s “simply” a matter of identifying the right use cases, workflows, etc. (Caveat: that wasn’t true several years ago, like when the Millers were developing CattleSoft. They were pioneering.)

A manager of a large feed yard recently told me that the worst consumer apps still represent better technology than software being marketed to feed yards. Meaning, there’s still room in this market. Or, launching a digital marketplace – might be needed in a market, but its a known technology and there’s a relatively known playbook to do so. 

Meanwhile startups like GoTerra (waste management via flies) or P&P Optica (sophisticated imaging for meat plants) are bringing breakthroughs to market. 

We’ll soon start looking at specific categories within animal protein value chains, and the innovation happening within those categories. I’ve been thinking about how to break down the big problems and below is my first attempt, but any framework has to establish producer profitability and consumer satisfaction as two equally important pillars. 

Value chain Profitability 

  • Live performance. Animal health, nutrition, genetics. Alternatives to antibiotics.
  • Precision health / Precision nutrition. Managing health & nutrition at granular levels. Improved feedback loops.
  • Labor / automation. Access to reliable labor sources. Access to automation alternatives where appropriate.
  • Channel diversification. If COVID has taught us anything it’s that diversification matters for producers & processors.
  • Market transparency. Price discovery. Improved workflows for transactions.

Customer satisfaction

  • Environmental footprint. Reducing GHG & the carbon footprint of livestock production. Waste management.
  • Quality. Product innovation – cuts, packaging, etc. Animal health, nutrition, genetics.
  • Food safety 
  • Channel diversification. If COVID has taught us anything its that diversification matters for consumers, e.g. consumers want options to buy how and when they want.
  • Price – speed – quality. The Harvard Business School model said that you could differentiate on up to 2 factors among price, speed, quality. Today’s consumers want all 3.

There are a lot of problems in search of solutions, and a lot of technology in search of problems. Some are version 1 startups, some are version 2. I’m excited to dig in and identify startups of each type that are creating value in animal protein. 

What are some interesting startups working throughout animal agriculture in any of these areas, or related? Send the names my way!

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Animal AgTech

Why?

10 weeks into writing the weekly Prime Future newsletter, I’ve been  wrestling with the where-are-we-going-with-this questions like, who am I really writing for and why?

The bleeding-edge livestock producer?

The soon-to-be founder?

The seasoned entrepreneur?

The investor considering the space?

The biz dev lead sourcing M&A targets?

For the last 3 months I’ve been quarantining at the farm where I grew up, working from the farm office. In addition to bass fish, (the perfect Zoom frame) on the walls are plaques for award-winning corn yields in 1984, my grandparents, and in 1949, my great-grandparents. There’s a 1964 announcement as my granddad began to sell a brand new financial product: crop-hail insurance. There’s a 1946 photo of my granddad and his brothers showing pigs at the Fort Worth Stock Show. In the last 3 months we’ve talked a lot about the stories of resilience in the face of hard times….not surprisingly, most of those stories involve the cattle market!

As I sit in this office thinking about what animal protein value chains could look like in 10 or 20 years, while surrounded by a family history of people who’ve built a life and a living raising livestock while building families and communities, I’m reminded how personal this is.

Agriculture is deeply personal. It’s personal for producers and for consumers.

And it’s a business. A business that has changed dramatically over the last 50 years, especially the last 10. Consolidation, volatile markets, changing consumer preference, increasing global demand, and more. An industry comparable in value to plant agriculture – highly valuable yet largely ignored by tech.

My desire to shape the future of animal agriculture stems directly from my desire to insure there *IS* a future of animal agriculture. 

…as someone who grew up on a farm.

…as someone who loves growth businesses and trajectory changing ideas.

….as someone who lives for a perfectly marbled Ribeye steak.

….as someone who knows firsthand how central livestock production is to rural communities.

For those of us who want to see a strong future for meat & poultry industries, here are three truths we must create:

  1. In order for animal agriculture to have a future, meat & poultry has to be relevant to consumers.
  2. In order for meat & poultry to remain relevant to consumers, we have to address The Big Issues like supply chain transparency, environmental impact & sustainability.
  3. In order for new technologies to be relevant to livestock producers, they have to fit into the practicalities of current production systems and practices while proving a demonstrable ROI.

The challenge will be threading the needle to increase relevance of business-improving solutions for producers while increasing the relevance of meat and poultry for consumers. 

It turns out, I’m writing Prime Future for anyone who shares an interest in accepting that challenge. 

Your turn. Why do you care about the trajectory of animal agriculture? 

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