Let’s talk about building out a sales capability within a startup. This is so tricky because, by definition, you are building the sales process & capability from a blank piece of paper. Just straight up building the machine as you fly it.

Below is a laundry list of things I’ve learned about building out a sales capability from my own experience as a sales rep, as a founder (early sales can’t be outsourced), and as head of commercial scaling up a SaaS sales org…and from great mentors and other resources.

Some of the below is from my playbook, and admittedly a lot of this is what I wish had been in my playbook sooner….aka things I’ve learned by making all.the.mistakes. And the thing about the art & science of sales is that the more you learn the more you realize how little you know.

The caveat to the list below is that everything in sales is contextual; none of these will work all of the time but most of them will work some of the time, depending on the context.

Building a sales organization is about building a capability, a machine that will repeatedly produce predictable results. A constantly evolving machine that needs constant refining.

My overarching goal in building a sales machine is to build in ways to accelerate learning velocity – as individuals, as a team, and as an organization.

You can get as complex as your heart desires, but sales does not have to be complicated. Basic frameworks can be super helpful. These range from hiring to training to sales meeting structure to sales process.

(1) “Tell me about something you’ve recently geeked out about learning.”

I will forever and always believe that curiosity is the single best predictor of success in a salesperson. I want to know that a salesperson is intellectually curious about…anything. I always ask this question in the hiring process. If they aren’t curious about non-customer things, they are unlikely to be curious about their customers.

(2) “Tell me about a recent example where you received feedback, implemented it, and what the outcome was.”

This is another interview question. I will forever and always believe that the appetite to seek feedback, hear feedback, and implement feedback is another predictor of success in a salesperson. Too arrogant or set in their ways or closed-minded to change? Hard pass. The ability to take feedback is a proxy for the rate of learning. And by taking feedback, I don’t just mean from their manager, I mean from their peers and much more importantly, from the market.

(3) Red flag if customer facing candidates don’t negotiate their own comp.

If I’m hiring someone for a commercial role in which they are responsible for selling value to customers in exchange for dollars, I fully expect them to negotiate their own comp package. Why would I expect them to be able to ask customers for more money on behalf of the company if they can’t ask for more money on behalf of themselves?

(4) Hire salespeople in pairs.

Especially early in the commercialization of a new product or service, if you hire 1 person and they don’t make progress then you don’t really know if it’s the person or if it’s the product, the pricing model, etc. But if you hire 2 people at the same time and 1 is successful and the other is not, then you have a better idea. (Though if you hire 2 reps and neither is successful, you need to take a good look at the product & go to market because maybe it’s not ready for prime time!)

(5) Be very very clear whether your company needs farmers or hunters.

Farmers are the sales reps that have the crucial skills of maintaining relationships, over years or sometimes decades. Hunters are the sales reps that take you from 0 customers in a market or region to your first 10 customers. If you are an upstart, by definition you need hunters first. Of course, there are exceptions, but in general, farmers don’t make very good hunters and hunters don’t make very good farmers. Resource accordingly.

(6) Don’t over-index for someone that looks/sounds/acts like your customer.

This is common in agtech companies, particularly with founders who are not from ag and have maybe struggled a bit to build credibility with early customers. You want your customers to accept your salespeople so you hire people who look and act and sound like your typical customer. The problem is this only works if those people have the capabilities to go with the persona. If not, you could be burning valuable dollars and time in a mis-hire.

(7) Practice like you play; sales role plays make everyone better.

Most anyone who’s been in sales has been forced to role-play sales scenarios and likely hates doing so. But sales role plays are really effective ways to practice how you’ll play in the big game moments, and create opportunities for peers to coach each other up…and since anytime we teach we learn more ourselves, there’s this powerful acceleration that happens for the entire team simultaneously.

Role plays don’t have to be extensive, it can be as simple as 10-minute drills in a team Zoom call where a prompt gets thrown out “You’re in the 2nd meeting with x prospect who has y objections, how do you handle those objections?” 5 minutes to role-play, 5 minutes of peer feedback and we’re on to the next person.

These are so valuable because they force you to go from ‘here’s what I would say’ to ‘let me practice saying it’….which is way harder. And maybe it leads to a team brainstorming about how to handle some scenario that continues to come up again and again…..its’s all about accelerating learning velocity. And it only works if the team is filled with relentlessly curious individuals who have the humble confidence to seek & accept feedback for the purpose of getting better faster.

(8) Planning matters, even for experienced teams. The best sales meetings are usually the best prepared.

Even if all you do is jot down at the top of a note page the 1-2 objectives of the meeting, and the 2-3 key questions you’d like to ask to accelerate the sales process. Its really easy to get lazy and skip this planning step, which often ends up being disrespectful to the prospective customer and disadvantageous for the salesperson. This is also one of those sales organization cultural things – either it’s expected that we as a team are planners or it’s accepted that we wing it.

(9) Respect your customer’s intelligence.

I reeeeeally hate it when sales people use superfluous adjectives to sell me on something. Don’t tell me what to think about your product. Present me the information or the data or the case. I can make up my own mind and reach my own conclusions, thank you very much. It’s as simple as reframing things from “x feature is so awesome because it lets you do y which is really fantastic” to “x feature allows you to y, how could you imagine that capability impacting your process?” Too many positive adjectives makes me cringe at best, distrustful at worst….I don’t think I’m alone in that.

(10) Be aware of how much time you talk in the conversation.

It’s hard to learn and uncover what’s important to your customer if you’re sucking up all the oxygen in the conversation. Pay attention to how much of the conversation are you talking or the prospect talking. Are you taking up 90% of the air time? 80%? If so, maybe don’t act surprised when the prospect ghosts you. Side note – maybe this is a good awareness exercise for personal relationships as well… Also, the caveat here is that it depends on the nature of the meeting, where you are in the process, how well you know the prospect, how much trust has been established, the prospect’s conversation style, etc. But the general principle still holds.

Sales Process:

I was trained in consultative selling skills as a brand new baby sales rep and I believe in it so wholeheartedly for almost any type of sales but especially for products and services that involve complexity and/or ambiguity and/or complex value propositions. It’s all about understanding the customer’s context to more effectively solve it, aka identifying the right customers and customer situations to create actual value.

The foundation of a sales process is how we run individual sales meetings which then gets layered into the larger sales strategy, and the skeleton of those meetings should usually be the same regardless of the content, beginning with a stated purpose of the meeting.

(1) “The purpose of this meeting is….”

Most meetings are a waste of time because the purpose is not clear, so state it up front. What are we all going to get out of this time, especially the prospective customer?

I love the framework of Purpose, Benefit, Check:

• Purpose – state the reason for the meeting
• Benefit – state the benefit to the other person(s)
• Check – confirm everyone is aligned about the use of time

So it sounds something like this, “The purpose of this meeting is to explore x so that we can make a decision about y. What else would you like to accomplish in our time today?”

My hypothesis is that 30% of meetings would become emails, and 70% of meetings would be more productive if every meeting started with “the purpose of this meeting is….”

Having a clear Purpose-Benefit-Check sets the tone of the entire meeting. Having this written down ahead of time increases the odds that it will come out how you want it to instead of a jumble of words.

(2) Advance the meeting on purpose.

You know what the purpose of the meeting is because you’ve stated it and everyone agreed to it. Now be thoughtful about how you might get there!

One part of advancing the meeting is asking smart, well-worded questions that expand & accelerate the conversation…

(3) Level up from close-ended to open-ended questions.

Only use yes/no questions rarely and on purpose. 99% of the time an open-ended question will be a higher-yielding question. There’s a big difference between “is your feed conversion where you want it to be?” and “what’s your philosophy for managing feed conversion?”

Exercise: have a peer join you in a meeting and keep count of how many yes/no questions you ask, and how many open-ended questions you ask. Chances are you’re asking more close-ended questions than you realize, or would like…most of us are. It takes awareness and practice to build the muscle of asking quality questions.

(4) Level up from open-ended to high gain questions.

There are open-ended questions that open up a conversation, and then there are high-gain questions that lead to magic. Here are some examples:

• What are your top 3 issues managing feed conversion today?
• If you had to choose 1 of those issues to solve, and you had an unlimited budget, how would you tackle it?
• If you could solve that issue, what would it mean for your business? Your budgeting? Your operations? Your board of directors?

The catch here is that you only get to ask so many high-gain questions in each meeting or else it feels like an interview. And in my experience, most people do not think of good high-gain questions on the fly. So this is REALLY a place to plan ahead.

(5) So much momentum gets lost in sales processes because the ball gets dropped in the follow-up.

Close the meeting with a summary and next steps. Then send an email with a summary and the next steps. Then do the next steps.

(6) In most B2B contexts, unpaid pilots = uncommitted customers that are hard to convert to paying customers.

It’s not about the revenue, it’s about the psychology of the user: what's free doesn't feel as valuable as what we've paid for.

(7) Quantify the pipeline as early as possible.

This lets you identify trends around bottlenecks and what’s working or not working. However rough the data is, however limited the systems are….even estimates are better than nothing. This can be as simple as:

• Leads
• Qualified Leads
• Demo
• Proposal submitted
• Contract signed

(8) Create shared language on the team.

Having 1-2 anchor books that every new hire reads and that we refer back to as a sales org can be really helpful in anchoring everyone to the same language and ideas…another way to accelerate learning velocity. Here are a few of my favorite resources:

• The Challenger Sale: Taking Control of the Customer Conversation
• The Challenger Customer: Selling to the Hidden Influencer Who Can Multiply Your Results
• How to sell at Higher Margins than Your Competitors
• Never Split the Difference (on negotiating)
• Jason Lemkin – either his blog or just follow him on Twitter

Ok that was a lot and it barely scratches the surface, but I hope you found at least 1 helpful nugget.

The rebuttal to some of this is that it sounds robotic and formulaic at first glance, but that’s why you practice and iterate and make it your own until it is completely natural and genuinely fits your approach.

Really effective sales people have really effective systems and processes, so do really effective sales organizations.

It’s like the James Clear quote:

“You do not rise to the level of your goals. You fall to the level of your systems. Your goal is your desired outcome. Your system is the collection of daily habits that will get you there.”

A huge part of the fun in building out a sales capability is stealing from existing playbooks what you can, modifying where you need to, and creating what’s missing for your specific customer/product/market….all part of building the sales machine as you fly 😉

What are your 1-2 favorite sales principles?

The content below is from one of my favorite Prime Future editions from 2021. In the coming months, we’ll build on the concept of the lunatic farmer and how they give us glimpses into the future.

But as you read about lunatic farmers & the idea of business model velocity, keep in mind these words from James Clear:

It is so easy to overestimate the importance of one defining moment and underestimate the value of making small improvements on a daily basis. Too often, we convince ourselves that massive success requires massive action.

Meanwhile, improving by 1 percent isn’t particularly notable—sometimes it isn’t even noticeable—but it can be far more meaningful, especially in the long run. The difference a tiny improvement can make over time is astounding. What starts as a small win or a minor setback accumulates into something much more.

Now imagine how this 1% compounds over a 40-year career or over 5 generations of a family business or over 100+ years of industry evolution…so much lunacy.

Oh and if the context clues so far weren’t enough, “lunatic farmer” is my highest and best praise, a term of endearing admiration and total respect.

The owner of a dairy was lamenting the rise of mega dairy systems and the risks they pose to small dairies like hers. How many cows does her dairy milk?

7,000

It’s a laughable story except that this dairy farmer & her family have grown the herd from a few hundred to several thousand over the course of their career. They’ve struggled and strived, taken risk after risk to get where they are. And yet in their minds, they still identify as small, scrappy, insurgent producers trying to survive.

There’s a dynamic that plays out across the ecosystem of food production where size matters. To everyone. A lot. There’s an awareness (obsession?) about the size of suppliers, customers, processors, and neighboring operations:

• Big retailers want to deal with big food brands, not small insurgents. There are tangible costs to dealing with more suppliers, it smaller suppliers, inexperienced suppliers with unproven track records, etc.
• Some consumers want to buy food produced on a ‘small family farm’, whatever that means. (Why does ‘family’ have to imply a modest-sized business? And who decides what size is the right size? And don’t *all* small businesses either evolve, grow, or die? I digress…)
• Some (most?) producers would like to sell livestock to small(er) processors who have less pricing power than processors in an oligopoly have. (What if the packers got Standard Oil’d?)
• Many producers fantasize about having more acres, or head of cattle, or poultry & hog barns.

There’s a special irony in the tendency among farmers to want to be bigger than neighboring operations. It’s almost a tendency to criticize the operators who run more acres or head than they do. (But is it criticism or envy? Sometimes the two look eerily similar.) It’s like a Russian nesting doll situation where the 700 acre farmer judges the 2,000 acre farmer who criticizes the 15,000 acre farmer as too big. I’ve heard this lament from midsize farmers a few times recently and it raises some questions…How many acres is too big? How much profit per acre is too much? How much revenue per year is deemed over the top? These sound like questions that supporters of alternative economic structures would ask, not those who enjoy the benefits of a capitalistic economy….

The primary counter to the notion that small business > big is the idea of available resources. Who is in a position to commit more resources to ensuring appropriate nutrition – the backyard poultry farmer or the large integrator? Who is in a position to invest in technology that reduces deboning costs in the plant – the custom processor killing 50 head/day or the large plant killing 5,000 head/day?

The primary counter to the notion big business > small is, well, we just know this isn’t always true, right?

Big business can be good, small business can be bad. Vice versa. Some small businesses are amazing employers, some are terrible. Some small businesses are terrible suppliers, some big businesses are amazing customers. Vice versa.

I’m less intrigued by the external voices extolling or incriminating business size. I’m more intrigued by the view of producers, and what causes some producers to maintain status quo and some to find a model that allows them to scale.

Sometimes bigger is better, sometimes smaller is better…size is not the indicator of success and it’s definitely not the goal.

A recent Reddit thread on personal finance included a comment by a couple making $500,000/year who un-ironically identified themselves as a middle class family with middle class money concerns. It’s a similar dynamic with the large producer who still has the mentality of scrappy insurgent, maybe (likely?) that mentality is what helped them get where they are – what helped them do things their peers weren’t doing, to get different outcomes than ‘average’ producers.

Can we just admit that the obsession with farm business size is….kinda odd? Or at a minimum, it’s not very helpful.

My hypothesis is that scale is a lagging indicator; velocity of business model innovation is the leading indicator of success.

The more commoditized the business, the stronger the pull to scale to reduce cost per unit.  The more value oriented the business, the stronger the pull to create incrementally more value per unit. There’s no clever analysis in those statements – those are natural forces that are a function of capitalism and a mature agriculture industry.

I think the successful producers (or packers or xyz business) who will thrive come-what-may are the ones who don’t think of their business based solely in terms of the output (corn, soy, weaned calves, whatever), but rather view their business as a business model that is in continual refinement mode. They constantly ask what’s the process that most effectively generates the output. They think in systems that can optimized.

(This is a great article on the founders of Premium Standard Farms, the ‘inventors’ of the mega farm / consolidation model in pig production and the mental models they put to work…some worked, some didn’t. Btw I’m still waiting for a good book about this phenomenon in poultry – can somebody write that plz? 🙂)

It seems that the really successful producers are the ones that have a vision of where they are going and how they will get there. There's no doing it this way because that's how we've done it, there's no growth for the sake of the growth. There is only relentless learning and improvement.

The great producers realize that they aren’t selling just a commodity output, they are selling their business model.

Size is not the determinant of success. It’s about business discipline, management, relationships, processes, team, leadership, ambition. Successful producers have a vision for the future that they rally the team around, there’s an ever-evolving plan for increasing revenue per unit produced or decreasing cost per unit produced, or both.

I recently asked a really large operator how they grew their business over the last 20 years from something not at all uncommon to something truly extraordinary. Did they have access to capital that others didn’t have? Some other advantage not available to similar producers? “I don’t think so, I think we just do things in a different way than most people are interested in doing. We do a lot of things that aren’t uncommon for most growing businesses, they are just uncommon for production ag businesses. We have a yearning for learning. "

Let’s call a spade a spade – capital is abundant and cheap in 2021, as it has been the last several years. Ideas are a dime a dozen. It’s everything else that separates the aggressive producers from the rest. (The rebuttal I’m expecting is what about the market, the weather, etc etc etc…..luck and timing play huge roles in ag, I’ll never downplay that. But there’s more to this phenomenon than that.)

I’ve referenced Allen Nation’s book before, but germane to this conversation is a chapter on how farmers approach innovation with insights pulled from a 1962 book “Diffusion of Innovation” that studied extension efforts to get farmers to switch from open pollinated to hybrid corn post WW2.

“The innovative farmer is seen by his farm neighbors as a lunatic farmer. And a lunatic is not seen as a role model. As a result, what the innovator does on his/her farm is literally invisible to the neighbors. This is true even if the innovation is producing visible wealth. The normal reaction to unconventional success is the old it-might-work-there-but-not-here syndrome. The sad truth is that the vast majority of farmers prefer to fail conventionally rather than to succeed unconventionally. It is very, very difficult to be more innovative than the community in which you live.

Here’s the really germane part: “No farmer referenced what a farmer smaller in acreage than themselves was doing as applicable or worthy of study. Everyone preferred to learn from someone larger than themselves.” Isn’t that fascinating?

There’s irony in that if you’ve made it this far, then there’s a huge chance that you are in the groups referenced in this last quote from Allen Nation:

“The innovators and the early adopters form approximately 15% of the total farming community. Interestingly this percentage is almost exactly the same as the number of farmers who earn an upper class income from agriculture.”

I’ve recently observed some markers that lunatic farmers seem to have that indicate high velocity of business model innovation:

• They ask questions. A lot of questions. They find smart people to ask questions. They find smart people in non-traditional places to ask questions.
• They read. Not just industry magazines, they look outside.
• They have a sense that what they are saying sounds half crazy, dare I say they know it might make them sound like a lunatic farmer.
• They surround themselves with high quality people, high quality teammates.
• They have a system they are building/running, a flywheel they are looking to spin faster.
• They have some insight that most of their peers don’t, some belief that isn’t widely held.
• They know new practices & ideas take time to implement correctly, so they allow margin (time, energy, $) to experiment.

I’ll wrap up today with something I saw on Twitter:

My friends. I have resisted writing this for a while but alas, here we are.

I recently saw a tweet that said:

The American farmer wakes up every day, and goes to bed every night thinking “How do I compete and leverage technology to feed 9B people by 2050”.

I’m not picking on that tweet, this sentiment is errrrywhere in ag. Founders love to pitch their startups under this context as proof that their startup will be a multi-billion dollar business. Venture funds raise capital based on this. Agribusiness loves to use this framing to recruit talent and rally the troops. Trade associations love to use it to make their members feel good about themselves.

It’s the nebulous & lofty industry rah rah. Need a cheer to lead? Feed the world is the golden standby. Old Faithful.

But let’s talk about why this mantra is irrelevant and flawed…and why that matters.

Why we started Feeding the World in the first place

In 2009 the Food and Agriculture Organization of the United Nations released it’s report saying:

According to the latest UN projections, world population will rise from 6.8 billion today to 9.1 billion in 2050 – a third more mouths to feed than there are today. (Creating the need to) produce 70 percent more food for an additional 2.3 billion people by 2050.

What else did the report say though? It talked about the complexity of accomplishing this from considerations for production (water & land use & availability) to considerations for lifting more people out of poverty (from investment in rural infrastructure across Africa to increase access to food to the prediction that 70% of people will live in urban areas by 2050 up from 49% today). Not to mention the changes in demand for different types of food as incomes rise, and the role of policies around biofuels and how that will impact commodity prices.

Oof, that’s a lot of complexity and competing dynamics among really really hard problems.

If you think about the scale and complexity and geopolitics and cultural trends involved in the global food industry, it’s almost intellectually insulting that we’ve boiled it all down to ‘feed the world’.

7 flaws with dumbing it all down to Feed the World

1. The market’s job is to solve for m-o-r-e through price. Markets have 1 job, and this is it. Nobody needs to suggest producing more, the market will do that.
2. Supply is more than just production. Producing enough food for x billion people is one part of the supply side of the equation. There’s also the question of distribution & getting the right food to the right markets at the right time. And then there’s the question of how to minimize food waste, whether in field/barn, in transit, in grocery store/restaurant, or in the home. But talking about reducing waste isn’t nearly as fun as talking about increasing production so here we are.
3. Demand is a moving thing. On the other side of the price equation is demand. What do people want? What are they willing to pay for? What do they have access to? Food tastes and preferences change over time and chances are pretty doggone strong that preferences will look differently in 2050 than they do today.
4. Other things matter besides quantity. Feeding the world is a commodity message. Higher yield. More throughput. Yield at any cost. Feed the world assumes you can high yield your way to profitability which isn’t always the case. But it also misses what’s happening in the real world where yes, the underlying market incentive is always for quantity of production but there’s increasingly market opportunities & incentives for producers who are optimizing for quality, and/or specific attributes.
5. Feed the world has also been weaponized to defend certain production practices. “If we can’t do xyz or use abc then we can’t feed the world!” But it’s usually not true, is it? Producers figure it out and the market sorts it out. As one cattle feeder recently said ‘my entire career people have been saying this or that is going to put this industry out of business, but it never does.’
6. The World is neither a market nor a customer. Even the most mega of mega farms aren’t feeding the world; they are supplying some percentage of some raw materials to some specific supply chains for some specific food items for some specific customers. Not to mention that you could milk tens of thousands of cows and yet still only supply an itty bitty fraction of a percent of global demand for dairy products. Feeding the world? Nope. Feeding this customer segment with this thing? Yes.
7. Birth rates have slowed in many countries which raises the question, is global population still even on track to hit 9 Billion by 2050? I would love to see an updated population forecast. But whether global population hits 8, 9, or 10 billion by 2050 is irrelevant. Why? See #1 above.

Can we agree that feeding the world was a flawed oversimplification? Markets align incentives to meet demand. Technology enables increased production and/or improved efficiency. Policy and regulation either increases or removes barriers to both supply and demand. Geopolitics influence trade and access. Etc etc etc…

Maybe it seems petty to pick on an idea that sounds so noble at face value. But the nobility of feeding the world is an outcome of what happens at a micro and macro level, not a driver.

I’m calling this out because it confuses what we wish were true with what is actually true…and you know Prime Future isn’t about that mess. Particularly when it comes to those who are innovating and solving problems in agriculture, to confuse the context around the problem with the problem itself is to build around faulty assumptions.

In conversations with producers, here are a few examples of things that *actually* keep them up at night:

• Floods. Drought. Derechos. Late freezes. Early snows.
• Futures markets. Paying off the bank. Interest rates. Fuel prices.
• Finding great people to hire. Paying great people to stay.
• Good animal welfare, keeping bad actors and activist groups out of the farm gate. Keeping equipment running and fences standing and housing conditions just so for livestock.
• If demand for wheat goes up, what happens to corn supply? If more people eat chicken, what will happen to beef prices? If the price of corn keeps going up, what happens to cattle on feed and feeder cattle prices?

What keeps most producers up at night are the day in day out problems of operating in a wickedly complex environment, from the human to biological to weather to market risk to financials.

Feeding the world? Nowhere in the *vicinity* of the list.

Feeding the world is a fine idea. But practically speaking about the day to day, producers are in business to feed their own families. And practically speaking about the next 30-100 years, people gotta eat. No one needs any more conviction about being in a category that will always change but *literally* never go away. We know it.

In 2009 as a brand new baby sales rep in my first grown up job, I LOVED the sense of mission and purpose in the idea of feeding the world. It sounded grandiose and felt important. “I’m not slinging FDA approved drugs, I’m feeding the world” 💛

But it’s not 2009 anymore. We’re 13 years, 3 presidential administrations, 12 iphone versions, multiple regional wars, many percent inflation, and 1 global pandemic later.

Feed the world was a fantastic industry rally cry from 2009-2014. And then it got misapplied and way overused.

So maybe let’s stop claiming to be about feeding the world and be about the realities of unlocking measurable value for producers and consumers?

I started this project in the uncertainty & isolation of those early pandemic days. The stock market was in free fall and grocery stores couldn’t restock the meat case fast enough while dairies were dumping milk as the price plummeted when schools shut down. It was the weirdest of times.

I had two objectives in mind when I started Prime Future:

1. Find more of my people
2. Learn out loud about interesting stuff in animal protein

1-0-0 editions later, here we are. And in the spirit of learning out loud, here are 9 takeaways from the process of writing the first 100 editions of Prime Future:

(1) I wish I’d been bolder with my hypotheses by being specific.

There’s more risk in putting specific hypotheses into the world than general hypotheses because they’re more likely to be more wrong in hindsight. But there's waaaay more learning in documenting the specific assumptions…which is the whole point.

This takeaway has much broader application though. How often do we make investing/financial/business decisions without clearly documenting our assumptions at the time of the decision so we can come back later and evaluate & learn from those assumptions? I’d love to talk with someone who has a good process for this.

(2) I’m increasingly convinced that we better understand the future by understanding how the current state came to be.

And that we have a better chance of actually c-h-a-n-g-i-n-g the future when we understand why things are the way they are including the economic, social, psychological, and other drivers that got us here.

As always, Winston Churchill said it best, “The further backward you look, the further forward you can see.”

(3) The continual pursuit of learning to write more effectively is the visible side of the continual pursuit of learning to think more effectively.

(4) We're all making it up as we go.

(5) Getting in the game – and staying in the game – is the ultimate hack.

Get in the game, stay in the game.

(6) People are the absolute best.

I have a list of leaders I would work for, teammates I want to work with, investors I’d want backing my next startup, and organizations I would love as customers.

The list is titled ‘long term games with long term people.'

(7) I write for myself.

But I always come back to the idea that I am ultimately just following my own curiosities about the depth & breadth & complexity & scale & hints about the future of the vast global animal protein business. While my hope is that it’s valuable for people who are actioning the future of animal protein, I write for myself.

(8) There are 2 kinds of people who engage on the interwebs, including with an email newsletter:

1. Those who interact with thought provoking questions, comments, & counterpoints to the big ideas.
2. Those who comment only to point out grammatical errors or the misplaced decimal.

Be the first kind, my friends. Be the first kind.

(8) I’m bullish on the future of animal protein.

A friend who drew my name in a Secret Santa gift exchange got me a shirt that has the Prime Future logo and “I’m bullish on the future of animal protein”. (Best gift ever, right?!)

Apparently I say/write that sentence a lot. I say/write it a lot because y’all, I mean it. And now its on a shirt so imma stick with it.

(9) What a time to be alive.

Perhaps my highest conviction is about why somewhere along the way I started ending each Prime Future with ‘what a time to be alive’.

A couple of years ago a young cattle producer said he was considering selling his cows because alternative meats were going to put him out of business. I consider that question a reflection of the sheer amount of cynicism and negativity and fear mongering that encapsulates this industry; cynicism that is as much from insiders as it is from outsiders.

I’m over that mess.

We can listen to the pearl clutchers. Orrrrrrr we can spend time with the aggressively forward thinking lunatic farmers, the innovators who are solving actual problems, or the pioneers creating opportunity amongst the challenges. It’s virtually impossible to not be bullish on the future of animal protein when you’re surrounded by these people.

Thanks for being here.

What a time to be alive🙂

The first third of the book The Secret Life of Groceries by Benjamin Lorr is on the evolution & early innovations of the US food retail business. This book has crystallized my growing hypothesis that game recognize game, but scale recognize scale. And that has implications for the future of livestock, meat & dairy value chains.

Here’s my hypothesis:

• First, the rise of national food brands led to the rise of larger grocery stores.
• Then the rise of larger grocery stores, and larger grocery store chains, led to growth in meat packing plants.
• Then the growth in meat packing plants led to growth in cattle feeding/farrow to finish.

Of course drawing this direct linkage up the value chain might be wrong for any number of reasons, including potentially confusing correlation with causation and also that a million other dynamics were impacting each of these individuals segments.

But today we look at some of the innovations that sparked the early links in this chain, and the potential implications for the livestock industry.

Lorr describes four early grocery innovations that were game changers:

(1) Pre-cut boxes.

In the 1890s, pre-cut boxes began being manufactured. This allowed boxes to be covered with labels. The inexpensive individual container gave rise to the brand as the growth of cost effective and wide spread labeling led to the expansion of brands from just luxury items to suddenly include branded staples. Democratization of packaging led to democratization of branding. The packaged food fad allowed food to be differentiated by brand, which suddenly gave shoppers the power of choice.

(2) Self service grocery stores.

Brands grew quickly as they marketed the consistency of the product and stoked suspicion of the prior grocery model of a clerk behind a counter measuring unbranded products and helping each customer.

One innovator realized that if brands could speak for themselves, then there was no need for a customer to interact with a clerk in order to select a product. The grocery store could become an assembly machine with the customer acting as the conveyor belt.

This inverted assembly line would reduce labor costs and increase the speed of the shopping experience. Thus the first version of the supermarket was created when Piggly Wiggly was born, and a value proposition built on selection.

(3) The shopping cart.

(4) Rapid scale of self-service.

Kroger rejected the idea and the manager left to start the King Cullen, which proved his hypotheses incredibly accurate.

By 1965 every grocery store was a supermarket and the race was on to grow, at both the store level and at the chain level. In the 1930’s a 6k square foot store was a dizzying experience for customers but that grew to 18k feet on average by 1965 and now of course nobody bats an eye at the 200k square foot Costco experience.

When we think of scale as an advantage, we usually think in terms of economies of scale via reduced per unit costs.

But what if one of the key advantages of scale is greater market access?

National brands like Nabisco, Kellogg, Crisco, and Kraft came of age because these national brands could fill the growing shelves of national supermarket chains.

Large brands worked well with large chains. Customers like working with similar sized suppliers, and vice versa.

It reminds me of how McDonald’s suppliers grew at a similar pace to McDonald’s, like OSI.

Big companies like to deal with big companies. There's efficiency in big companies dealing with big companies. There's ease in it. There's reliability. There's predictability.

Maybe it’s as simple as game recognize game; scale recognize scale.

If this is anywhere near accurate, then there are three potential implications for livestock producers:

1. The fight against the packers is one sliver of a larger consolidation trend through the value chain. Packers consolidated because that was the path to growth, just as retailers (their customers) consolidate in the path to growth.
2. Is cow-calf the next sector to consolidate in order to more effectively work with large feedyards? Feedyards can only work directly with cow-calf producers above a certain size, who can send full truck loads of calves. Doesn’t that imply that we’ll continue to see growth of large cow-calf operators?
3. The increase in homogeneity at scale creates an opportunity for counter positioning…

Perhaps the most interesting thing about this story is how amidst that 1950-1970’s environment of mad dash to scale, the founder of Trader Joe’s zigged when everyone else was zagging at neck breaking speed.

Lorr tells a story about Joe’s local egg broker, who approached Joe with a deal on X-Large AA eggs because he couldn’t get rid of them. None of the other retailers wanted them, preferring instead Large A eggs. Why? Supply of X-Large AA eggs is limited since they were mainly laid by older hens. And big retail chains like Safeway wouldn’t go near them since Safeway’s value proposition was in always having product in stock. Safeway had no interest in advertising X-Large AA eggs and then selling out due to low supply, which would leaving customers unhappy.

This notion of a ‘discontinuous product’ that was actually better quality and priced lower gave Joe the idea that maybe there were more discontinuous products out there. That insight set Joe on the path to “commoditizing individuality” by “providing products that allowed customers to reflect an identity that rests in opposition to the homogenous mainstream.”

The rise of homogeneity in food simultaneously created a lack of uniqueness in food.

Trader Joe’s filled that gap. This is my new favorite example of counter-positioning, from the 7 powers by Hamilton Helmer who defines counter positioning as when “a newcomer adopts a new superior business model which the incumbent does not mimic due to anticipated damage to their existing business.”

Safeway didn’t care what Trader Joe’s did around egg merchandizing, because there was no way they would attempt to replicate it – it was completely at odds with the big chain’s business model. And that’s why it worked.

I’m increasingly convinced that in order to understand the future of something, we have to understand the evolution of the past – how we got here and why. The powers of economies of scale and counter-positioning played out in early grocery retail, and are playing out today in animal protein. The one creates room in the market for the other.

Questions for you:

1. Do you agree or disagree with the hypothesis?
2. Have you seen this dynamic play out in other areas of animal protein or broader agriculture?
3. I want to learn about food retail in other parts of the world, any good books/podcasts/articles?

Aside: it’s wild to think about how much the post-WW2 war change for Americans from spending 30% of income on food to 10% had on other developments of the century. We on the agriculture side claim much of the credit for the relative cheapening of food, but I’d love to see some data on the role of the above grocery innovations and distribution.

I love wandering the aisles of a boujee grocery store. HEB, Whole Foods, Wegman’s…here for them all. Naturally a highlight is walking the produce aisle, letting your eyes take in the color explosion and the magic of plant genetic creativity brought to life: fizzy grapes, plucots, strawberries with more shelf life, sweet peppers with more flavor. Or, the crown jewel of the entire produce aisle: the Honeycrisp apple….pure magic. (I’m honestly not convinced they aren’t laced with something highly addictive.)

The produce industry has produced countless examples of product development / innovations that are visible to us as consumers, that we can see & taste & feel. Yes, genetic progress has been made on traits that improve the crop for the farmer like higher yielding, hardier, etc. But seed companies have been laser focused on outcomes consumers care about: flavor, shelf life, color, etc.

Another case study is the plant based meat category. While the explosive growth is new, let’s not act like the category is. It’s the veggie burger product line that’s been updated, expanded and reinvented to be a trendy  growth category. Veggie burgers weren’t a threat. The packaging was sad and tired, and one can only assume they tasted as disgusting as they looked & sounded. But rethink veggie burger to plant based meat, throw in ~$750M per quarter in venture capital for marketing and product development, create compelling brands tied to a bigger story and …voila!

While plant based burgers aren’t my thing, objectively the product itself has completely transformed – and continues improving – as a result of innovation and R&D investment. Pat Brown, CEO of Impossible Foods, has been vocal about his strategy: bring about a world without livestock for meat by offering a plant based meat product to the world that meets consumer’s objectives on taste, cost, and nutrition so they do not have to make a values based tradeoff.

Which is a smart strategy! It’s the Tesla strategy. It’s ‘product first’ which inherently means high investment in product development. Here is that same mentality applied to other examples:

Now let’s go to the retail fresh meat case where things have remained unchanged for, um, a while. That steak or pork chop or chicken breast is basically the same as it has been for the last 30 years. Why is that?

Most genetic progress in livestock centers around live performance, not end product outcomes.

We talk about genetics in terms of live performance metrics: Feed conversion. Growth rates. Calving ease. Hatchability. None of these are attributes you can see at the meat case.

Improved live performance is producer language, not meat case language.

We all know the amazing genetic progress over the last 50 years across livestock. Drastically improved feed conversions and growth rates have led to much lower production costs per pound of meat/poultry/milk. Great for producer, beneficial for consumer. I’m not taking anything away from the economic or environmental impact of that live progress….but I am saying, maybe it’s not enough?

Like it or not, we live in a what-have-you-done-for-me-lately world….so where are the product development innovations in meat that are noticeable to the consumer?

Where’s the meat case equivalent of the Honeycrisp apple?

To dig into this question, I talked with Kerryann Kocher, CEO of Vytelle. Here’s how she framed the dynamic in beef:

“There are 30 Million mating selection and reproduction method decisions made each year in the US by over 800K cattle producers.  These decisions are influenced by not only what is important for that individual producer but also how that producer gets paid.  For a large % of the US herd, the producers making breeding decisions cannot hear the market signals from downstream. Producers select for calving ease or maternal traits – he doesn’t get paid if those calves grade or not. He’ll never know if those animals grade or not! However there are an increasing number of pockets where coordinated supply chains are connecting end product outcomes with breeding decisions and what traits get selected for. They will sell bulls to “contract growers” and buy all the calves back and feed them out. These are examples in beef of pockets of genetic control to drive outcomes that are aligned with a customer profile.”

Is the lack of focus on end product outcomes just a beef industry thing that’s more structural than anything else? Set aside the highly fragmented nature of beef, and look at highly integrated pork and poultry. Although some advancements have been made in pork tenderness, even pork and poultry producers are generally not selecting genetics primarily based on outcomes like tenderness or flavor because those outcomes are not what producers are incentivized to select for.

Why do we not see livestock genetics decisions prioritize more traits that the end meat eater will see, taste, or feel as is the case in fruits & vegetables or plant based meat?

It always comes back to incentives.

Although there are increasingly pockets of laser like targeting to improve end product outcomes, a lot (most?) of meat and poultry is largely still a commodity. Which means the primary driver is reducing cost of production, so that is where innovation focuses.

Producers will produce what processors will buy…processors will buy what their customers demand which is what they expect consumers to pay for. So, somehow the market signals from downstream to drive upstream genetic decisions that prioritize end product quality improvements are either non-existent (unlikely) or not breaking through the value chain. But innovation and the creation of a competitive advantage doesn’t happen at a value chain level, it happens at a supply chain level.

I recently heard a seasoned elder of the swine business say “the concept of vertical integration is a bit of a myth – you generally just have separate live production and processing capabilities that happen to be owned by the same company, but they aren’t integrated in a way that drives value”. That rings true with what I’ve seen in poultry as well. It also sounds like a compelling opportunity for those integrators doing things differently, doesn’t it?

My hypothesis is that a growing mega trend will be around the opportunity for increased alignment or coordination of beef, pork, and poultry supply chains to leverage the market gap around end product innovation.

Here’s to some Honeycrisp-esque innovation if the meat case.

I’d love to hear counterpoints to this analysis.

• What do you think?
• What pockets of genetic improvement that are impacting product outcomes do you see?
• What are the barriers here? opportunities?

I’m on the Merck Animal Health Ventures team. This newsletter is not representative of anyone’s views but my own. Sometimes it doesn’t even represent my views 🙂

Prime Future Summary

You can get the first 47 editions of Prime Future in 1 PDF here, check it out:

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Food Supply Chain Tech Adoption Curve (link)

If you don’t already follow them, Culterra Capital publishes a lot of great stuff. They recently published a piece looking at tech adoption through the value chain.

Related Prime Future content, ICYMI

Meat eaters don’t care about livestock genetics, could they? (link)

Chances are that when you think of green chilis you think of Hatch, New Mexico. Hatch and green chilis have become synonymous. Yet Hatch green chilis are grown from Arizona seed. But no one knows Curry Farms, the source of 90% of green chili pepper genetics in North America. They know Hatch as the source of all good and perfect pepper flavor.

That’s because chili growers in New Mexico decided about 30 years ago to begin branding peppers, to highlight the region. It worked. This is the power of a marketing strategy to build a brand & differentiate even in a market where differentiation is challenging.

And this “no one downstream from the farmer cares about the genetics source” is s a story that plays out similarly across all segments of ag. Could that be changing?

Turn up the volume on livestock market signals (link)

Since each poultry complex has its own business model, whether a big bird complex producing commodity meat for further processing where efficiency is the name of the game, or a small bird complex producing very tight specs for KFC where consistency & low variability are the name of the game, in theory, each business type should have aligned incentives back to contract growers around the specific metrics that drive profitability for the plant based on their sales channel & customer base.

And yet, curiously, contract growers tend to be paid on the same live performance metrics regardless of the plant’s business model. Why do market signals not break through?

“For startups, 2010 – 2020 was about disrupting, 2020 – 2030 will be about augmenting. Its saying here’s what you as incumbents do well, here’s what we as tech startups do well, here’s how we combine the two to provide a better customer experience.”

This is a quote from a financial technology (fintech) founder talking about how fintech startups have/will interact with incumbent banks. 

My bet is that we can apply that quote to the ag industry for the next decade also.

Over the last several years Farmers Business Network and Indigo Ag collectively raised over $1 billion dollars to “disrupt” ag incumbents. There’s so much Silicon Valley lore wrapped in the word “disrupt”, which can lead to the assumption that to build a big business you have to do what Uber did to the taxi industry. 

Upend, eliminate, replace.

But disruption in the traditional sense is not always necessary to drive innovation and create new value. Look at Visa’s recent $5B acquisition of Plaid, a financial infrastructure software – think of it as the pipes that connect our accounts where we want them to, or the pipes that connect incumbent financial institutions with fintech startups. Plaid didn’t disrupt the financial services industry by eliminating, they’re actually enabling growth of the pie.

This idea of innovating with and for incumbents makes even more sense when you look at the agriculture industry. Agribusinesses have grown and consolidated because these businesses are often enormously capital intensive and operate in wildly volatile markets so scale is a prerequisite. They may be hated by some almost as much as the taxi industry was, but there are legitimate reasons these companies have evolved as they have.

With that pragmatism in mind, what could the next 10 years of ag innovation that improves existing supply chains look like? 

On the row crop side, look at AgVend and Bushel, two startups with the express objective to AUGMENT the ag incumbents’ offerings. Ag input retailers looking to add an online buying channel? AgVend. Elevators looking to digitize communication processes with farmers? Bushel. 

Not disrupt, improve. 

Not eliminate, augment.

Or look at animal protein. Over the last several years a lot of money has been raised and invested in plant based or cell cultured meat companies. But recently, it seems there is increasing attention being turned to innovation that will help players throughout the supply chain improve the process of raising, harvesting, distributing and marketing animal protein.

What’s interesting about this type of worldview is that it unlocks….the world.

Not only will this likely lead to more innovation funded in more realistic ways (meaning, more realistic expectations on company outcomes) but it should also lead to better outcomes for customers and ultimately for consumers whether in the form of improved quality, traceability, etc.

But the really exciting thing is to think about how this type of approach grows the pie, grows the ecosystem.

Here’s an example from the world of insurance technology (insurtech) and fitness tech (umm FitTech?).

Axa Singapore is an online insurance company offering life and health insurance. ClassPass is a global company connecting ClassPass members to sign up for fitness classes across an entire network of fitness providers. (It’s Airbnb but for unused capacity in a fitness class instead of a spare bedroom…and its a genius customer experience, 10/10 recommend.) These two seemingly disparate companies just announced a partnership that would give Axa customers access to ClassPass studios. Absent ClassPass’s network of all kinds of fitness studios, how would you give a customer access to so many studios and options in one shot? You wouldn’t. The rationale of the partnership isn’t what’s interesting here, its the fact that a technology enabled businesses can aggregate market players in unique ways that unlock entirely new value. Which unlocks new alignments among companies to create new value.

This is an unrelated-to-ag example of how technology begets new business models which can beget new partnerships. And that’s what’s exciting about the potential of a decade defined by innovation that improves the agriculture ecosystem.

We’ll see more of this across all segments of agriculture as new business models are unlocked, now connectivity established among market segments, and more value chains align virtually. 

• What are some non-ag examples you’ve seen? 
• What are some problems in animal agriculture where you’d like to see an augmented approach to innovation?