Listen to Nate Laurell’s Interview

Jim: Good morning. Welcome to Grow Forward TV. I’m Jim Murphy here with Nate Laurell from Here Holdings, and we’re going to talk today – we’re inside Local Foods space, this beautiful space which happens to be the offices of MightyVine Tomatoes, a product that Nate’s company uses. So we’re going to talk to him about his farming, his history, his entrepreneurial spirit. Nate, welcome.

Nate: Thanks for having me Jim.

Jim: You know, let’s just start. Tell us about where you’re from, what you did in school, where’d you go, what got you going in this direction.

Nate: So I’m from the midwest. I grew up in a little town called Fox Lake about an hour north of Chicago. And I went to school in Champaign, so I went downstate and did a bachelors and masters in computer engineering and I spent two summers at Motorola up here in the suburbs and that was two summers enough to know I didn’t want to go into corporate America and so I started a software company in college which kind of got me interested in technology and eventually here in the city and into a bunch of other startups.

Jim: So that technology background somehow landed you – did you start towards the trading world or did you do something in between?

Nate: Yeah, so I started a software company. We put some of the first classes online at the University of Illinois, did a lot of consulting, basically wrote code for years, and then my partner and I in that business met two traders from the Board of Trade. So Chicago Board of Trade, options traders in the soybean pit, who really had the foresight to see that things were going to change and that they needed kind of younger technical people around to help with that transition and the four of us ultimately started a trading firm and over period of eight, nine years the industry really changed.

Jim: So you were one of the code writers that put the floor guys out of business?

Nate: (laughs) We helped transition them to trade electronically, so yeah in the early days of our last offer, and then eventually managed and traded and I kind of did all the different jobs within the firm.

Jim: So at some point in time, Cranes decided to pick you for 40 Under 40, how does that work? How do they do that?

Nate: Yeah, I think there’s a nomination process so somewhere along the line somebody nominated me and I was lucky enough to get it and it was – it’s  a neat group of people because its 40 people, cohorts, roughly the same age from a bunch of different backgrounds and they do events where you kind of get to build a network and I still have relationships with some of those people today.

Jim: Even after all these years?

Nate: (laughing) Yeah.

Jim: Okay, after your working in the software and technology stuff, you did some energy things outside of just trading but you started your own energy company.

Nate: Yeah, so one of the last things I did in trading was I traded energy, so  I traded crude oil and natural gas and nine backs in New York. And around that time it was an interesting time in markets in that there was some –

Jim: And what were the years, what are we talking about here?

Nate: It would have been… 2009, 10, 11. I left finance in 2010.  One of the last things I did – and we didn’t cross paths, but I was across the hall from you and got involved in the Chicago Climate Exchange and kind of got interested in energy and there was talk of a carbon market in the US and kind of got interested in doing something kind of in the real world as opposed to finance. Through that process, I actually met a large dairy farmer and we put together a project which takes agricultural waste and turns it into energy.

Jim: Sure.

 

Nate: We did that down in Indiana. Giant digester. And we did one of the first projects in the country to convert basically agricultural waste into methane, and then we used that methane to power fleets. So trucks that actually run off natural gas instead of diesel. And that project went well and we thought there was an opportunity to build a company around it so we started a company called AMP, CNG for Compressed Natural Gas.

Jim: And you were developing the voluntary credits at that time?

Nate: We were the first project in the country to qualify for a renewable fuel standard under RFS to generator in from waste to methane, basically.

Jim: One of the first things we did there was generate credit from an ethanol producer.

Nate: Yep.

Jim: It was an exciting project. It was exciting times. And in my opinion, this is not about me but I thought it was a really good solution to solving some of the issues we have in climate change.

Nate: It felt like it was gonna go but it’s unfortunate that it didn’t happen.

Jim: Powerful opposition, we’ll just say that. Powerful opposition. So you got that energy, did you do another energy company?

Nate: We started a retail electricity supplier that marketed electricity called Energy.Me, probably in 2012.

Jim: So does that involve trading recs?

Nate: It did, so there’s a marketer of electricity and a member of the ISOs across the country who had a responsibility to basically market and deliver renewable power in addition to traditional. So we traded recs, traded energy, traded power.

Jim: There was a good piece last night on WTTW Chicago Tonight about renewable power being created by the Chicago waste system and you can see there’s actually a lot of value in the waste we create here in the city. A lot of value. And I think it was in Pontiac where they have their power system creating methane from the landfill and creating electricity for… I think they said 10,000 homes.

Nate: Yeah.

Jim: So I saw an interview once where you were talking to another person about trading, it was all about trading trading trading and now you don’t trade anymore, really, you’re trying to build these companies, trying to do something a little more tangible so you moved into farming. Seems like a big step lets talk about that. What happened there, did you lose your mind?

Nate: I’ve always been interested in… yeah, I traded agricultural commodities so I traded soybeans and corn and you have an understanding of commodities and commodity pricing and that side of it. And then my partner in the energy business is a big farmer, so he farms 15,000 acres, he manages a dairy with 20 or 30 thousand head of cow. And in that process I actually hung out with a lot of farmers and got to know them and I think if you spend any amount of time with farmers and you’ll realize that they’re among the smartest business people you’ll ever meet because they have to get everything right in the spring and hope that it goes right through the course of the summer and hopefully get paid in the fall. And they’re just interesting guys. And its an interesting business to me, having come from the commodity background, so I increasingly have spent more time looking at that space, having more time in that frontier, indoor farming, I actually bought a little farm in Wisconsin that eventually will turn into produce here and the products that we make.

Jim: So when you were a farmer, an indoor farmer, what did you grow?

Nate: We grew basically greens, so anything that we could grow quickly, so basil, micro-greens, arugula, basically lettuce mixes, anything you could grow in a couple weeks.

Jim: A while back we had Rob Bond here from Kopper Cress in the Netherlands. And he does – he’s got 15 acres under glass doing micro-greens. 65 different varieties from around the world and a lot of nutrition a lot of focus on health. What are your thoughts on growing and the movement in fresh local produce and health hand nutrition, what are your thoughts on that?

Nate: I think – what got me fascinated in this space, in the beginning, was really two things. One, I think the agricultural system in the US is going to change and it’s going to be much more distributed. Meaning it makes no sense that we buy all of our produce from California and Mexico when climate volatility is going to make that more and more difficult and transportation costs are a big part of that. Not just the expense, but the loss along the way, right? So I think food is going to be much more distributed and you have demonstrated that with tomatoes that I can buy year round. I had them this weekend, I can buy them in December, right? So you’re gonna see the food system get much more distributed around the country and it’s going to be because we’re getting smarter about controlling the environment either in greenhouses or indoor. On the other side of it, consumers keep voting and choosing to buy more and more local food. And I think they’re doing that because there’s trust broken in the food system and by buying local they can feel closer to the farm it came from and where it came from, and it feels more trusted than something they buy from halfway across the world. So I think for those two reasons, from the supply and the demand side, it leads to a food system where we’re going to grow things more basically closer to cities.

Jim: Both of our companies do business with a number of different retailers so we never want to single out one over the other, that’s risky. But I was just wondering your thoughts on the Amazon Whole Foods announcement last week and what do you see there as the main play or as a couple different layers of the play?

Nate: Yeah, still wrapping my head around it. I – Amazon effectively bought distribution centers around the country to distribute fresh food and then they bought 450 retail sites that they can be used to be a touchpoint with customers. That seems like a pretty smart way and cheap way to get into that business for them. What it ultimately means as Whole Foods as a brand or where those stores go or how that experience changes for the customer, I don’t know. It’s interesting, yeah.

Jim: I think both sides are probably going to learn a lot over the next few years and it’s hard to know. Certainly, the stores are not distribution centers, they’re not designed to be a distribution center. I’ve read some pieces that talked about it being a distribution center in the stores and urban areas and that’s just not gonna work because they’re not set up that way because they’re retail. But I think it’s interesting that they decided on Whole Foods which is a pretty good brand.

Nate: Right, I have heard that. And some of those high-end grocers, anywhere from 15 to as much as 30 percent of sales are not moving through Instacart. And if that’s the case, then they have become a point of distribution for those drivers to come in and pick and distribute out of, which is interesting. If you’re a retailer and a quarter of your sales is now being done on delivery, right? I mean that whole world’s changing pretty quickly.

Jim: It seems fairly inefficient for Amazon to do it that way, but maybe not. Maybe not, they’ve just kind of… they seem to be very… try to figure out the most efficient way to do things and they’ve got it down to a milliseconds and I just, to the point of, I think they’ve figured out it was just them or UPS that did a study that if they put a key to put the truck on the left-hand side, that they could put on the strap and turn the key on at the same time. They save like 4 million dollars a year.

Nate: They only make right turns, yeah, exactly.

Jim: So tell me about – is it Acumen? What – what is that, what do you do? What is that?

Nate: So Acumen Fund is a nonprofit that basically has a concept they call patient capital and patient capital is – so all the money comes into Acumen in the form of donations but then it is invested in companies so invested in for-profit companies trying to tackle poverty and trying to tackle poverty in some of the tougher places around the world. So in East Africa, West Africa, Pakistan, and India and then most recently in South America. And they invest in businesses than in agriculture, energy, and water health care and education. So people that have for-profit business models to try and tackle poverty at the base of the pyramid.

Jim: What seemed to me – well, I don’t know much about it – seemed to me that agriculture would have a big role in some of those countries in terms of trying to bring some type of investment into local agriculture.

Nate: Yeah, most people are – most people at the bottom of the pyramid are subsistent farmers, so anything you can do to increase income, give them a higher price for their crop, more predictable revenue, those things basically enable people to get out of poverty.

Jim: It seems better than just throwing free corn at them or free stuff that we can move you know in some subsidized way to actually develop a marketplace where they can grow something and bring it to market.

Nate: Right. Well if it’s going to be sustainable it has to be self-funded and its got to be an organization that can persist without funding eventually and to do that it effectively needs to become a business in some way shape or form.

Jim: Right so we’re kind of exporting American ingenuity instead of shipping over free stuff.

Nate: Yeah, what’s going to be interesting is that I actually think we’re going to import their ideas because they have a set of constraints. You look at just telecommunications, right? We all have these landlines, this infrastructure here. They just jumped over that and do everything on their mobile phone, right? So their pricing mechanism for agriculture happens on a mobile phone. There’s as much, if not more sophistication on mobile platforms in the developing world than there is in the US, I mean, some of those countries have better cellular networks than we do. I think it’s going to – I actually think the innovation is going to go the other way eventually, which is they’re going to be forced with the constraints that they have to come up with a really innovative solution which we may eventually adopt.

Jim: I think we may see that in mobile pay technologies, aren’t we? They’re kind of ahead of in a lot of third world countries.

Nate: Yes. So Ambesa in Kenya is probably the world leader in mobile payments.

Jim: Right, right. So indoor farming. Let’s go back to that for a second. We had Rob Baan here and on his card it says “metropolitan farmer.” And I said, well why is it metropolitan farming? And he said well it’s because I don’t believe in urban farming because it’s too hard. What would you say to somebody who asked you that question? You think in Chicago, we got all this acreage, we got all this stuff, do you think that most of our indoor farms are going to go outside of town and bring it in or do you think this concept of all these indoor farms and sides of buildings and different ways of doing it inside the city is going to become a major force in produce?

Nate: Yes, I think it’s going to be to some extent all of it, and I think it’s going to depend on the crop and what you want to grow. I do think its early for, it’s still early for pure indoor farming. But the economics of lighting and where things are going are on its side over the long term. That being said, to be successful as a farmer whether it’s in the field or under glass or indoor, you’re going to have to be big.

Jim: To scale.

Nate: You’re going to have to scale, right? So you know where is there huge amounts of land that you can get for cheap? It’s not going to be in the downtown – it would be silly to build it in the loop or the west loop, it’s going to have to be on the fringe of the cities for the economics to work or thats how far out that is, whether its Bedford Park like we were or farther out where you are, or it’s going to be tough – I think its going to be tough to make it work in the urban core in any way, just by the scale of what you need.

Jim: All indoor farms – ours, yours – have needs for electrical energy. WHat’s your prognosis on that? I think our energy costs were less than yours were, but you think we can stay at these levels for a while in terms of pricing from an electrical power situation in this state?

Nate: Yeah. I do. For two reasons. Lighting’s going to get more efficient so your load in your greenhouse is going to go down as you upgrade your lights, right? So the more efficient you get with your lighting, the less electricity load you’re going to have, right? So the dollars you spend on electricity are going to go down. And secondly, electricity demand in the US is just not growing that fast. This is not an economy that is growing at 8 or 10 percent a year where have to add a lot of generation. If anything, the economy tends to get more efficient, so the amount of GDP per unit of energy we spend is going down as the economy gets more efficient, that just means that power is going to be flat to cheaper from here on. I don’t think we’re in any kind of shortage or…

Jim: Does not appear even natural gas for heating continues to stay at a low level.

Nate: Yep. And the US has become the marginal producer of energy in the world. Both in methane and crude.

Jim: S0 now you’re into – what do we call these, consumer –

Nate: Yeah, CPG, consumer products, yeah. So this is the dips we made and dressing, so kind of is I mentioned these two big trends towards local food, create an opportunity for someone to build a brand around local food, so we launched here. We launched this here brand a couple months ago which can be found in retailers. And our idea is to partner with farmers where we can source unique ingredients from the Midwest, so like tomatoes from MightyVine, we’re getting beans through Michigan, actually through Local Foods, and we’re using that to make Value Ed products like this so we’re making these just west of the city and then distributing throughout the Midwest.

Jim: This is where I do an advertisement. These are both with MightyVine tomatoes as is this salad dressing.

Nate: Yeah, looks good.

Jim: Okay. Good. Just wanted to be clear. We’re both doing a little advertising today which is okay. So how’s it been received so far? You’ve just really started, right?

Nate: Yeah, we just started we’re a couple months in, and so far it’s gone great. The response from consumers has been good, the response from the farmers who make the products that go in here are really really excited. I was up in Michigan two weeks ago to meet with the bean farmer to watch them plant what we will buy from them in the fall to go into these dips. And they couldn’t have been more excited about their products going into these dips.

Jim: Tell us about that farmer, I think you might be launching a video soon with that visit, is that right?

Nate: Yeah, yeah. Exactly.

Jim: Tell me about that farmer. I’ve actually seen the video, so…

Nate: Have you? Yeah. We met through you, through the Local Foods distributor, you connected us, its a bean farmer called Carlson Aberghast, up in Michigan just north of Grand Rapids, and they made the decision to grow high-end beans. So white beans, black beans, as opposed to just commodity soybeans. And the family has been on that land for their fifth generation. So her son now farms it and they manage about 3000 acres of beans that we now hope in the future to buy a lot of beans from.

Jim: Wow.

Nate: That’s cool, yeah.

Jim: And how long would they make the transition? From commodity to…

Nate: It’s been a long time, so it’s probably been decades since they’ve been growing. That climate is particularly good for those beans so there’s a bit of a bean and potato belt in northern Michigan up there that grows that type of crop. So.

Jim: So what are some of your ideas for new products?

Nate: I think from here, everything is moving towards convenience. So if we want to enable customers and consumers to eat healthier kind of easier, to do that I think that means we move into ready-made salads, we may do fresh salsa, we may eventually do meal kits. Things we can basically pair with local producers and get their fresh food to consumers easier. So I – we’re going invest in basically the outside of the store, fresh not stable, and we’re going to invest in basically convenience. And so that’s the categories that people ask for.

Jim: It is. And it’s the category that Amazon certainly has the biggest problem with. Certainly fresh.

Nate: Yeah, well, maybe that’s why they bought Whole Foods.

Jim: Yeah. So you are a vegetarian.

Nate: Yeah. I’m vegan.

Jim: Vegan.

Nate: Yeah.

Jim: Did you have trouble walking by our butcher shop over there?

Nate: I did not, no. (laughing) It’s been a long time.

Jim: How long?

Nate: 12 or 13 years. A long time, yeah.

Jim: You preach it at all?

Nate: A little bit, yeah, I dunno.

Jim: Just a couple more questions I wanted to just kind of talk a little bit about your farm. Where’s it at? What are you gonna try to grow? Who’s running it for you – cuz you gotta be too busy to be fooling around on a farm.

Nate: We have 70 acres in Wisconsin, just west of Kenosha, which is currently just contracted and corn beans and wheat, which over the next three years, I will turn organic – slowly, just a couple of acres at a time – and we will start to grow inputs for the grow here products and I need to hire a farmer, so I’m going go out and post at the AG schools around the midwest to grab somebody young who basically wants to make a go at it and move up there and farm.

Jim: Well, you’ll have one more business to manage.

Nate: That’s okay. That’s a fun one.

Jim: You know, I find that these farmers – and you probably have too – that if you treat them properly, you have a good partner for life and you just gotta treat them there right way and they’ll give you respect for that and you’ll have a partner for life.

Nate: Yeah, for sure.

Jim: Well, this has been great, Nate. Really happy that you came into see us and happy to talk about your products which are really really good. And I’ve had some at home the last couple weeks and I’m really pleased with the results of where this is going and I think a lot of retailers are going to be looking to put your product on their shelves.

Nate: Yeah, I hope so and thank you for having me and I had your tomatoes over the weekend, so it’s reciprocated.

Jim: Alright, good. Thanks for coming in.

Nate: Yep.

A Hunger for Sustainability

In 2014, Nate Laurell was on Crain’s Chicago Business 40 Under 40 list, which recognizes the best of Chicago’s young businessmen and women.

After college, Nate began his own software company. He soon moved into residential real estate, in which he found wild success. Nate’s interests eventually moved to environmental issues, and he started Energy.me, which supplies power to the eastern United States.

Learn more about his unconventional journey through many sustainable ventures by watching, or listening to, this great interview.

Video Segments

Producing Products with Local Ingredients

Nate Laurell, CEO of Here.co, discusses how he pushes for local foods to be bought more and for these foods to be sold in stores. He makes the case for local products and to supporting local farmers whenever possible.

 

Nate Laurell on The Acumen Fund

Nate Laurell, CEO of Here.co, describes how the Acumen Fund works and further debriefs about the impact the Acumen fund has a positive effect on poverty around the world. The Acumen Fund helps strengthen businesses, agriculture, energy, water, healthcare, and education in regions such as: East Africa, West Africa, Pakistan, and India, with his goal is to empower and helping people get out of poverty.

This segment is part of the follwing blog post

Investing in Your Future

A Hunger for Sustainability In 2014, Nate Laurell was on Crain’s Chicago Business 40 Under 40 list, which recognizes the best of Chicago’s young businessmen and women. After college, Nate began his own software company. He soon moved into residential real estate, in which he found wild success. Nate’s interests eventually moved to environmental issues,