I recently had a candid interview with Glenn Behrman, President of CEA Advisors and the mastermind behind The Growtainer®. We discussed the intricacies of indoor and vertical farming, which is an industry often exaggerated by hype and idealism. With over 50 years of global horticultural experience, Behrman shared his sobering perspective on the industry’s direction, challenges, and misconceptions.
The Genesis of Growtainers®
My career in horticulture began when I opened a small retail plant store in New Haven in the 70’s. Over the next 25 years, I built that business into a very successful chain of retail stores, wholesale foliage distribution centers, garden centers, and an import division stretching from NY to Philadelphia.
“When I first read about the early projects in indoor farming in Holland in 2010, I immediately understood the potential that indoor farming/vertical farming had. I spent the next year or so asking questions, researching, traveling to Holland often, visiting facilities, learning more about vertical farming, and speaking with the industry’s pioneers, Behrman recalls. His journey began with a vision but was grounded in practicality. Unlike many startups that rely on venture capital, Behrman bootstrapped his way, giving him a unique vantage point on the industry’s evolution.
“Today, we see that the companies that were built with sweat equity, self-funded, or relied on very little investment at the beginning are the ones that are resilient in these difficult economic times because their business model does not rely on external funding to succeed.”
The Silicon Valley Mirage
Behrman laments the role of Silicon Valley investors in shaping the industry’s narrative. “It’s a shame to see how Silicon Valley investors hijacked the entrepreneurs in an industry that was growing before the pandemic and encouraged all the false hype around it,” he says. According to him, the notion that indoor farming will “feed the world” is a misleading fantasy. It’s a method, not a panacea, and it exists alongside traditional farming—not as its replacement. “In my opinion, there was too much easy money being thrown at indoor farming by sophisticated investors that knew 9 out of 10 startups would fail. Agriculture is a long game and will never provide the returns the VCs require. Everybody knew that, but the VCs had to invest their capital, and unrealistic valuations blinded the entrepreneurs.”
The Produce Industry vs. Software Industry
“Regardless of how high-tech your solution is, you are a food producer and are not a software company,” Behrman warns. Startups often enter the space with a tech-centric mindset, assuming the value is in their tech. This is a grave mistake. “It’s about Unit Economics; for a commodity like lettuce, how can you justify that your product costs $3 to produce when your competitors retail it at $2?” he questions. The produce industry is driven by price competitiveness, and Indoor Farming’s “green” or “local” descriptions have not significantly altered consumer behavior, especially in an inflationary economy.
The Identity Crisis
Behrman observes that many startups suffer from an identity crisis. “They can’t decide whether they are a tech company or a food producer,” he says. This leads to operational inefficiencies, as companies over-hire and over-design, losing sight of their core business. “When I have a project, I don’t do everything myself; that’s impossible. I rely on the expertise of my network,” he advises. “I look at each project and ask myself who I need to collaborate with for the project to succeed. My first question is, what are you growing?
The Excel Sheet Paradigm
“It’s not rocket science, and you don’t need to invest millions of dollars at the beginning; you can start small and build your business,” Behrman states. He likens the success of an indoor farming project to an Excel spreadsheet. “The more lines you have in the left column, the more variables you identify, the easier it is to tweak and adjust until your values are optimized, and your chances of success increase.”
Glenn Behrman’s insights serve as a reality check for an industry often lost in its idealism. As we navigate the complexities of food security, sustainability, and technology, it’s crucial to remember that indoor farming is not a silver bullet. It’s a tool in the toolbox, and like any tool, its effectiveness depends on the skill and wisdom of the one wielding it.
Image provided by Growtainer