Why Entrepreneurs Are Unique to Food Markets | Feeding 10 Billion Founder Paul Matteucci

Food markets are massive. We need 70% more food by 2050 than we have today, both because of population growth and changing diets. We talked about that. US food spending exceeds $1 trillion, and that's only about a tenth of it worldwide. Huge markets. Farm-raised seafood alone is a $13 billion market. As a venture capitalist, we look for billion-dollar markets. Farm-raised fish is a $13 billion market. Organic foods is a $35 billion market. Grass-fed beef alone, grass-fed beef, who eats, what percentage of people you know eat grass-fed beef? Probably not very many. Already a $4 billion market. Locally sourced food, $6 billion market. Amazingly huge markets. Even edible films, you know what edible films are? Listerine films and that sort of thing? That's already a half a billion dollar market. Yeah. So these markets are huge. So you don't have to change the world, you change a piece of the world, it's already a big impact. Why entrepreneurs are unique. First of all, entrepreneurs tend not to try to boil the ocean. They focus on specific problems and they learn about markets and customers in a specific area and they travel— solve a little piece of it. That's why you need 1,000, 10,000, 20,000 experiments. They think differently. Do we need to produce more food? Any idea there? You've heard me talk about this. Do we need to produce more food? No. No. See, nothing I've told you says anything about production, right? We need to consume more food by 2050. That is planet-wide, we need to feed 9 to 10 billion people. Maybe we're producing that food and wasting it. Maybe we're throwing it away. So an entrepreneur would think different. They'd say, gee, this isn't a production problem. I don't have to figure out necessarily How to increase yields or to produce more wheat or to produce more cotton to clothe people. Maybe I need to figure out first if we're already producing it, but it's not getting to the end user. Well, it turns out somewhere between 30% and 50% of it is never eaten. So there is a lot of food in the system. They understand sustainability times 2, what I call sustainability times 2. That means sustainability of the planet And it also means sustainability of the business, of the enterprise. So they understand the profit motive. They understand that a really good idea is one that eventually pays for itself. So I don't have to rely on figuring out how do I get some politician who this year might be motivated and next year might not to pay for it. I can figure out how to pay for it myself because I can generate positive cash flow. They challenge conventional wisdom. Are farm-raised fish bad? Are they? Anybody? Anybody? Let's not all see— sometimes, sometimes not, right? Depends how they're raised. There are technologies, there's a company called Clean Fish out there that only raises sustainably raised fish. Are GMOs terrible? I have one company in Palo Alto that has figured out How to make meat from plants. Not fake meat, meat from plants. I've tasted it. The red stuff that's coming out of it is not beet juice. It tastes like blood. The meat tastes like meat. If he's successful, he's a geneticist from Stanford, if he's successful, he could change the world. He could change the planet. By having— No, you know, so are GMOs terrible? It's like I had a debate with a guy from Monsanto a month or so ago, and he said, well, people just don't trust the science. I said, no, they don't trust you. That's the problem. They don't trust you because you've screwed us before. You screwed us with Roundup. You screwed us before, so why should we listen to you? Label the damn stuff so we can make our own decisions. And they keep asking them, is local sourcing always better? Well, better how? It turns out carbon footprint-wise, it's not necessarily better. In fact, it's rarely better. It turns out, well gee, it's nice to support local farmers, but if you're taking money out of the pocket of some subsistence farmer in Colombia, or Ecuador, or Argentina, you're really making the world a better place. That's a value judgment. That's not a fact. one way or the other. So the bottom line is the reason why entrepreneurs can do this is because they can attack the problem from many angles and ask themselves different questions and challenge their assumptions every day so that we can come up with more exciting experiments. The climate has changed for food investing. Since I started doing this in 2008, we have more agtech-centric funds, we have more agtech-focused incubators, Food has become part of the health debate and the climate debate change. Many big ag venture arms are in place. That is, that is, you know, many of the big ag companies now have venture capital funds. Mainstream VCs are dipping in their toe a little bit slowly, and students everywhere are beginning to view agtech as a career option. So a lot of what I do is I go around the country, I speak at universities, and I talk to entrepreneurs. And try to show them that this might be a place to look. And frankly, all the ideas about delivering great food to rich people don't interest me. So all of the munchery ideas and all that, well, great. I'm glad. I hope they're successful. But I don't care about those ideas. I care about ideas like figuring out a way— today we feed on fish farms. We have wiped out the top layer of the food chain. So we're raising them on farms, and we're feeding them the next layer of the food chain. Thank you. That's not sustainable. It's not going to work. So we've got to figure out something else to feed them, which means, frankly, we've got to figure out how to make fish eat vegetables. Odd. You know what I mean? Salmon munching on a carrot. But the fact is, is people have figured that out. One guy said, you know what? Here's what we can do. We can feed the vegetables to bacteria. You know those bacteria that we use to— well, actually, one guy said, we don't even have to do that. We can feed methane to bacteria. Because we use these bacteria to clean up oil spills and all that stuff. So we have these methane-eating bacterias. We have these petroleum-eating bacterias. If we can figure out— we throw all this methane into the environment when we process stuff and we can't use it all. So if we can figure out how to feed it to bacteria, the process of feeding it to bacteria turns it into animal food. The bacteria are animals. The fish tolerate them. You get the bacteria. And then you feed it to the fish. And you dry it and you scrape it and all of a sudden you put it into fish pellets and you have what is essentially a non-animal-based protein. Now you can argue that it was animals millions of years ago, but it wasn't. It was really probably plants millions of years ago. Entrepreneurs are showing up. These are some of the areas, I'm not going to read this all, but these are some of the areas where I have seen really exciting new deals in the past 3 years. I've only been doing this since 2007. 2009. And there are real 4 very strong areas, I think. One we talked about earlier is reducing and reusing waste, but the other ones, data, precision farming, robotics, and drones, so that when we have to use fertilizers, when we have to use pesticides, we can use 20% of what we're using now. Turns out in corn, for example, you can't get equipment in to the cornfields after a certain level of maturity of the corn because it's too tall. So what they end up doing is throwing all the fertilizer down on the thing, on the soil in the spring, and calculate what the runoff's going to be over time so that there's enough nitrogen for the corn in August when they harvest it. Incredibly wasteful. Incredibly wasteful. So some guy has discovered a— not discovered, invented a little robot that can maneuver between the corn stalks And fertilize all season long. And it's going to save farmers a ton of money. And he says, you know what? I'm not going to make farmers buy these things. I'm going to sell it as a service. Kind of a SaaS model, right? So I'm going to service so that guy calls me up on a Friday and says, you know, I need 150 acres done by Tuesday. Can you do it? And I march all my little robots out there. By the way, the company's called Rowbot, R-O-W-B-O-T. I march all my little robots out there and they They go through his field, and then they come back and get back in the truck, and he's taken care of it, and we're not wasting all this fertilizer that's getting into the groundwater eventually.