This interview details hexafarms, an indoor farming company based in Germany. The interview is with David Ahmed, Founder & CEO of hexafarms.
What is the origin story of hexafarms?
We came from different backgrounds. We were machine learning researchers who saw the potential of AI and machine learning in agriculture. However, the current state of AI and machine learning in Ag-Tech is not where it needs to be.
So we were kind of working on this and we participated in TechStars Berlin as one of the 30 startups selected from a pool of 7000 applicants. Our focus was on indoor farming, which we saw as a solution to the inefficiencies in traditional food production that had been causing market disruptions. Our passion for this approach began when we successfully cultivated crops in an indoor farm in our NYU dorm room using artificial light, demonstrating the feasibility of indoor farming as a profitable means of food production.
We have always been interested in artificial intelligence (AI). While we were doing our master's degrees, people would often tell us, "You always talk about AI. Why don't you build it?"
So we decided to do that. We got a grant and started a company together. Today, our product is used by six customers in five European countries.
What are some of the biggest challenges facing your team in the future?
Our customers are a diverse group. We started out working with indoor farms, but we have since expanded to greenhouses. Within the greenhouse and indoor farming space, there are many different types of growers. Some growers grow microgreens, while others grow lettuce. We even have one customer who grows flowers.
This diversity of customers presents a challenge for us. Our AI system is designed to help all types of growers, but we are a small team. We have to add new modules to our AI system all the time to meet the needs of our customers. This is a lot of work, and we are not always able to keep up with the demand.
We have received requests for features that we are not yet able to deliver. As a result, we are sometimes unable to meet market expectations.
The second one is: it's a challenge across all the startups that we are trying to get our first big institutional investor.
I just started my journey this week, so I can't complain too much. However, the biggest challenge is the technology. Another challenge is convincing people. Some of the big players in the industry are not open to the idea that a smaller company can do things better than they can.
I'm also facing the challenge of finding investors. It's not easy to convince people to invest in a new company, especially when the market is so fragmented. Customers are requesting a lot of different features, and they may be growing different things. This makes it difficult to develop a product that will appeal to everyone.
Finding investors and institutional groups to invest in our company is a challenge, especially for a small team.
Talking to institutional groups can be challenging. When we talk to institutional groups, we need to be aware that they may not be willing to accept a small startup, as this could be a risky investment. They don't want to work with a small startup company. The experience was emotionally draining, and that's why we decided to focus on a different segment: bootstrap work on indoor farms. These farms were looking for immediate efficiency.
What is unique about hexafarms compared to competitors?
We use our knowledge of plant biology to grow plants quickly and efficiently. Some research papers have shown that lettuce can be grown in 24 days with a certain light setting, but other papers have reported different results. We have developed our own production process that takes 40 days to grow lettuce.
Company X has a lot of venture capital backing, but they are taking two years to get to market. This is not ideal. Additionally, it is not ideal that every indoor farm has to figure out its own way to grow food. Not everyone has access to the same resources and talent. So, why not provide a solution that is already proven and ready to use? Our existing customers use our technology, which consists of sensors that are installed on their farms. We then connect these sensors to our software, which provides the farmers with the data and insights they need to grow food more efficiently.
We see plants as algorithms. These algorithms are affected by different variables, such as fertilizer components, CO2 levels, temperature, and light settings. We believe that we can figure out the right combination of these variables for a given plant in a given location based on its history. This is a complex problem, and many people have been scammed by false promises. That's why we offer our customers a service that tracks their plants from baby to harvest. We use sensors to collect data on the plants' biological health and growth. This data is then fed into our software, which helps us to optimize the plants' environment and maximize their yield.
It's growing efficiency, resources it took, and stuff like that without costing a lot of money. It's literally a fraction of the cost of a top-level lab setup. Organizations use Jumpstart to reduce operating costs and quickly discover the best recipes for success. They don't want to spend years figuring things out on their own, so they outsource the entire process of technology, sensing, automation, and more.
How do you measure the impact of your company so far? (Revenue, Employees, Customer Quantity, Production Volume) etc?
I am extremely passionate about customer happiness and satisfaction. I am using new vocabulary because we are building a vertical SaaS company, which means we are a software company that will be able to serve any and all indoor growers who use LED lights.
Our key performance indicator (KPI) is to quantify the amount of money our customers save by using our product or service compared to the status quo.
The second one will be the team size. We are just four people. It's always good when you have more customers than people on your team and that's a good sign. It's also another rule that I've heard is “It's better to have more revenue than the amount of money fundraised”, which most startups have the opposite.
We are currently in the valley of death. The fact that some indoor farms are not doing well is hurting us, even though we are a software provider that provides services to both indoor farms and greenhouses. We saw other indoor farms fail, and we don't want to be one of them. However, this experience has made us more prepared. We have focused on building something that people want, and we were able to get our first customer even without a polished product.
Our product was not very good, but our customers still wanted it. I asked them privately, why did they actually commit to signing a product transaction with us, knowing that it was not going to perform well in the first quarter? And their answer was that it is much cheaper and easier for them. It is much better for them to have it in case it works. It's still fine for them because there is nothing else in the market.
What are the key learnings so far since the origin of hexafarms?
I have learned some contrarian facts about the market. The more I am involved in the market, the more I see that outsiders are becoming afraid of indoor farming. However, the more I am involved in the market, the more I like it, and the more faith I have in it. This is because we are working with some customers who have no online presence. They are constantly growing by doing the same thing.
The other thing I learned is that the field of agriculture technology, or indoor farming, is nowhere near as saturated with technology as other sectors. Coming from a computer science background, I've seen how much software and technology is used in medicine, natural language processing, and consumer banking. But when it comes to agriculture, there's still a lot of room for improvement.
Growers generally don't have a deep understanding of plant biology. This is evident in the fact that big organizations still don't use basic biomarkers to improve plant health and productivity, even though they know it would be beneficial.
How can people connect or learn more about hexafarms?
To reach us, people can visit our website at https://www.hexafarms.com and interact with our chatbot, which is always available to help. We've integrated the chatbot with our internal Slack email system, so whenever someone sends a message to email@example.com, we respond promptly. You can also call us directly using the phone number listed on our website. In fact, that's how we acquired our second customer: they stumbled upon our website and called us.
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