#082 Finding Triple Win Scenarios

Show Notes

With a growing population and climate change, it’s more important than ever for farmers to be able to grow as much food as possible as efficiently as possible. Fortunately, there are startups like Hydrosat that are trying to make that job a little easier for them. As its name implies, Hydrosat uses satellite data to help farmers, agribusinesses, and government agencies with important insights that can lead to more food being produced with less water while also cutting down on electricity and climate change contributors.

Hydrosat CEO and co-founder Pieter Fossel recently joined startup coach Roland Siebelink on the Midstage Startup Momentum Podcast. Pieter explained the positive impact Hydrosat can potentially have on the world and a variety of other topics about Hydrosat’s startup journey:

• How Hydrosat is able to address food security and climate change at the same time.

• The importance of solving a customer’s problem while building a product over time.

• Being able to find short-term success while maintaining a long-term vision.

• How to work with big distributors without giving up leverage.

• How Hydrosat has given both distributors and end users something new.

Transcript

Roland Siebelink: Hello and welcome to the Midstage Startup Momentum Podcast. My name is Roland Siebelink and I'm a coach, ally, and advisor to many of the fastest-growing mid-stage startups in the world. I have today with me, Pieter Fossel, who is the co-founder and CEO of Hydrosat. Hello, Pieter. How are you today? 

Pieter Fossel: Hi. Great, Roland. How are you? 

Roland Siebelink: Very good. We're talking across the continent here. I'm in San Francisco today and Peter is in DC. What's the weather like there? 

Pieter Fossel: Well, it's a beautiful spring day in DC. We get one perfect month of weather per year and then it gets really hot. We're in that wonderful Spring zone. 

Roland Siebelink: And you're choosing to spend it sitting inside doing podcast interviews. 

Pieter Fossel: That's right. But there's no place I'd rather be than talking to you. 

Roland Siebelink: It's a great honor to have you, Pieter. As always, the first question is, what does Hydrosat do? Who does it serve? And what impact are you making in the world? 

Pieter Fossel: Just real quick, upfront - Hydrosat, we are a geospatial analytics company focused on food security, environment and agriculture. We take satellite data temperature of the earth from satellites and provide value-added insights to farmers, agribusiness companies, government agencies, all related to water stress and agriculture. 

Us humans, we've always been pretty good at figuring things out, mostly by trial and error. And there was some really smart group of people in Mesopotamia about 8,000 years ago that figured out if you harness water to cultivate crops, you could actually grow food, and you could stay in one place, and you didn't have to move around following wildlife - this hunter-gatherer societies that we had previously. 

Irrigation entered the scene in human history about 8,000 years ago. Unfortunately, there were no podcasts back then. We were probably writing on stone tablets, but some anthropologists will call me foul on that one. We don't have those early entrepreneurs - those early irrigation entrepreneurs - on record. But what they did was extraordinary, and it changed the course of human history and those impacts are being felt reverberating today for all of us because what it allowed us to do as a species was settle from villages into towns and grow cities, all because we were able to produce more food, a surplus of food on a more limited amount of land by harnessing water, by harnessing irrigation. 

And we fast forward to today, we're left as a society - we're much bigger now, 8 billion people is the population of the planet and growing quite rapidly. But we have the same amount of land on earth as we did 8,000 years ago. We have the same amount of fresh water as we did 8,000 years ago. But we have 8 billion people to feed. And so, the same problem persists today as it did then, which is how can we grow more food more efficiently? How can we grow more food on the same amount of land given our freshwater resources?

And that's a big challenge. It's one of the biggest challenges of the 21st century. It's a fundamental enabler for growth. And it intersects with one of the other biggest challenges of the 21st century, which is climate change. Because the supply of fresh water and arable land is under threat from extreme weather events such as drought, major storm systems that are having a bigger impact and a more frequent impact than they ever have before. We have on the demand side, a growing population on the supply side, we have constraints around climate change that are making this equation really tough to solve. What we are doing - in a very small but we hope to have a large impact - what we're doing in our own way at Hydrosat is we're providing better information. We're providing better insights so that more food can be grown with less water, empowered by satellite data. 

How we do that is we use the temperature of the surface of the Earth. We measure the surface temperature of crops, fields, and forests from space. And from there we get the moisture content. How healthy and happy these plants are. And we use that as the basis for our field management insights that we deliver to growers to help empower them with the best possible information to grow more food with less water. In many cases, less water means less pumping, which is a big electrical cost. 

And it turns out, around the world, most pumps in agriculture and most center pivot irrigation systems are often run on diesel generators. Less water means less electricity and less electricity means less diesel fuel, which is a major cost driver in a lot of places for food production and obviously also a contributor to climate change. With better data, we're helping farmers to make better decisions about their food production. And it's really those decisions that add up over millions of hectares across the world into a big impact and also a big market opportunity for Hydrosat.

Roland Siebelink: Excellent. Okay. Let's move back a little bit into the history of just the company now. What made you guys start Hydrosat? What was your context? Were you educated in this field? Was this a family thing? How did you land in this? 

Pieter Fossel: That's a great question. Every founder has their own journey. I'd always been interested in water issues. I spent a lot of time growing up in the western United States, in the Rockies. This is an area without a lot of fresh water to put it quite simply. When you are driving around, on both sides of the road, you're going to see fields with center pivot irrigation systems growing hay or alfalfa or potatoes. But without irrigation, there's no food production, not at scale. That was always just part of the landscape when I was growing up. 

I went to school in Washington DC. Washington DC is a major hub for aerospace for probably pretty obvious reasons - NASA's here, the Pentagon is based down the road. And that added the sat to the hydro. I spent several years working in management consulting for space companies, for companies that built launch vehicles, that built satellites, that did remote sensing and earth observation work. That's the field that Hydrosat was really born out of. 

One of our clients was NASA. My co-founder and I were at NASA and we were talking to the engineer that developed this thermal infrared sensor that went on NASA's Landsat satellite. This is a $850 million satellite - really exquisite, very impressive, capable piece of human engineering that NASA put up. And it's still one of the best sources of data available to us when we're looking at the environment, when we're looking at water stress in the environment, it comes from this NASA system.

What the engineer showed us - he did a demo in the lab for us - he had one of these sensors in the lab and there were two house plants, and they both were identical. These are the kind of plants that your grandma might have. And they looked the same to me. They're both green, they've got leaves, it all checks out. But we could look at the screen and see what the thermal camera is seeing. And you could see that these plants were not the same at all. One was nice and cool and so it had this blue color to it. And the other one had all these red and yellow splotches all over it because it was significantly hotter. And it turns out that that was the plant that he had not been watering and the other plant he had been taking really good care of. 

These two plants that look identical to you and I from the naked eye are having a completely different life experience. And as a result, they're going to have a completely different trajectory in their growth. But you can't tell the difference unless you look at their temperature. And so, that was a real a-ha moment for us, for my co-founder, Royce and I. We said, "Okay, great." NASA's got this great satellite, almost a billion dollars. There's only a couple of them. They only pass over every spot on earth once, twice a month at best. What if we took this same sensor, put it on a fleet of commercial, small satellite platforms, and got the same data that NASA's getting but in higher resolution every single day. What kind of impact could we have for farmers, for agribusinesses, for insurance companies? And what kind of impact could we have for government users too? All of the groups that really care about water stress and agriculture care about irrigation, care about food security. Some of these really, really big issues that are issues for society but also have a huge economic impact as well. 

Roland Siebelink: How far is the product along? It's clear the vision is really compelling. Are you in the planning stage? Have you been launching this? Is the network up and running? Have you perfected the product? Where are we at this stage? 

Pieter Fossel: Great question. What we did was we realized at core we are an information company. We've got satellite in the name, and yes, we are launching satellites. We have the first two of our own satellites that are going to launch next year on SpaceX Falcon Nine rockets. 

In any event, our customers don't care that the data comes from satellites. They just want insights on their fields. They just want to be able to grow better. We actually started first with a software product. At core, we're an information company. We built over the last couple of years a software product that we have in the hands of commercial users, agribusiness companies, and farmers. And it leverages all of the existing satellite data that we have access to from NASA, from the European Space Agency, that's processed and analyzed in a unique way to provide insights to farmers. We've actually already been doing the thing without our own satellites, which is the reverse approach of a lot of space companies whereas, "Hey, let's go launch our satellite and then we'll go find customers." 

We started with the customer problem that we were looking to solve, which is irrigation management, water stress, and agriculture. And so, we built a tool that addressed and solved that problem. And then we're adding our own data to it, and that data will make it work a lot better. It will make it a lot more scalable and will provide even more value to our customers.

If you want to build a car, you want to deliver transportation, you don't build a car that's got two wheels and then build one that's got three wheels. You start with a skateboard. You want to get from point A to point B, give them a skateboard, then give them a scooter, then give them a bicycle, a motorcycle, and finally give them a car. Solve the customer's needs, and that's what we've done with our software-first approach, which is we've been trying to solve the customer problem. We've continuously been improving that over the last several years. 

Roland Siebelink: And you've been able to attract customers already. You mentioned that you've had traction with agriculture companies and farmers as well. How have you decided on your core customer target group and has that changed over the years? 

Pieter Fossel: That's a great question. It has changed a bit just because every company, you have a long-term vision and you want to meet that vision. 

But you don't want to start by trying to sell to every farmer in the world. That's a very difficult business model. You can work up to it. We have I think a unique go-to-market strategy there. But we actually started with government customers. For us, they were the early adopters. Our very first customers - paying customers - were the US government and the European Space Agency. We were fortunate early - even before we closed our first seed round of funding - to have these government contracts where we were providing data to the government on these same issues -environmental monitoring, water stress, and agriculture. They were our early customers. 

Then we started working with agribusinesses. Companies that weren't farming directly, but they were buying potatoes from hundreds of different farms in their region where they were sourcing. And so, they cared a lot about the farm practices that were going on in the supply chain. That was the next phase of the evolution. 

Roland Siebelink: Can you talk a little bit about how you find your customers at this stage? It's probably still a little bit of an early stage for you guys. Is it primarily inbound? People showing an interest? What is the way in which you reach your customers? 

Pieter Fossel: That's a great question. I'd say it's a combination of inbound. We obviously do marketing, we speak at conferences, we publish research, and Tweets, and we go on podcasts like this. People do find us and come and ask us about our products because it resonates with a lot of people. Certainly, inbound leads have led to some great business opportunities. But then also, we have a traditional B2B sales approach. In our industry, to have maximum impact in agriculture, there's a very known set of large multinational agribusiness companies that touch a lot of farmers all over the world. And so, we've targeted those companies. And we've been very fortunate to have started working with a handful of them. And it's those companies that have brought us to a lot of places. 

Roland Siebelink: Many founders - also the ones that have been on this podcast - mentioned that there's some hesitancy in their company around working with big distributors like some of these big agribusiness companies that you mentioned primarily because they fear being in a bad negotiation position and having to give up all their margin to work with these folks. Can you share something of your experience in that matter? Has that even come up yet? What is the model to make it interesting for distributors to work with you guys?

Pieter Fossel: Absolutely. That's a great question. I think that is probably at play for most technology companies selling B2B or through distributors in most places in the world. That's certainly a dynamic that we're all very familiar with. What we look for are what I call triple-win scenarios, where it's really a win-win-win and a no-brainer for everybody. Those scenarios are where the distributor has an opportunity to offer something their customer - to the end customer, in this case, the farmer - that otherwise is not part of their offering but gives them an opportunity to have more touch points with their customer, to provide a new level of value, differentiated value to their customer. 

And that helps the distributor compete because every company that we would conceivably work with, they have five to 10 major competitors globally. And these are big global companies, distributors of farm equipment, distributors of seed, of fertilizer, of crop protection. But a lot of them don't have software tools. They don't have geospatial insights to offer. We're giving them something new that they can bring to their customers - their farm customers - that add additional value. That's an attractive proposition for them. 

For the farm customer - the end user - they're getting something of value because they see the potential to increase their yield per hectare or per acre, which is more money in their pocket. It has an ROI for them while also reducing some of their input costs. Farming is not a high-margin business. It's a really tough business in a lot of places. If they see an opportunity to reduce their electricity bill because they're not pumping and running their pivots as much because they're not using as much water, and they're having a greater harvest at the end of the season, then that's a win for them. 

And so, what we look for are those triple win situations where Hydrosat is able to provide our insights, our product, the partner is able to provide something new to their end customer that adds value, and then that farmer gets a new tool in their pocket to allow them to essentially make more money, grow more food, have lower input costs. And all the while, our hope long-term at scale is that this also reduces water use, reduces electricity use in agriculture, which will ultimately be good for everybody. 

Roland Siebelink: For those listeners that have made it to the end of the podcast, thank you. Pieter, what can they help Hydrosat with? What are you looking for in terms of help from our listeners? Looking to hire, looking for new contacts, whatever it is. And where can they find out more? 

Pieter Fossel: Yeah. Absolutely. If you'd like to join us on our mission - whether you'd like to join our team or help us along our way to help the planet grow more food with less water - you can find us online: Hydrosat.com or on LinkedIn or Twitter. We're always looking to connect with people because I think a lot of people share our mission and I think we have a fun way of going about it that I think a lot of your listeners might be excited about. We'd love all the help we can get.

Roland Siebelink: Are there particular job profiles you're looking for at the moment? 

Pieter Fossel: Yeah, absolutely. We're always looking for software engineers, for data scientists. Increasingly for our satellite business, we're also looking for engineers with experience building satellite systems. But product marketing, sales; it really is a whole company effort. We recently announced our Series A funding round just a couple of weeks ago. All that means is we've got a whole new set of challenges that we're really excited to tackle, and the stakes are higher, and the opportunities are greater. We're looking to expand the team and continue to grow. 

Roland Siebelink: Is your hiring strategy primarily DC or are you also looking for remote workers? 

Pieter Fossel: Yeah, that's a great question. We actually have two centers of gravity. One in the US and then one in Europe. Half of our company is based in Europe. We primarily hire in Europe, in our offices. But then also distributed. 

Roland Siebelink: Where are the offices in Europe? 

Pieter Fossel: The main one is in Luxembourg. But we're also opening an office in the Netherlands as well, which is a great agriculture center of excellence. It's had a lot of experience with water and irrigation, moving water around. But in the US, we're based in DC. We have an office in San Diego. But we are hiring distributed as well. We're looking for the best possible people to join us. We have employees in Vancouver, Canada, in New Zealand, and of course, in DC and California and Europe. We are looking for the best people, wherever you are. 

Roland Siebelink: Just be aware that if you do apply for a remote position, they can see exactly what you're doing with their satellites, so be careful. 

Pieter Fossel: No, we just look at the plants. 

Roland Siebelink: If the plants are too green, you must not be spending enough time on work. We can keep it at that, I guess. 

Okay. Awesome. Well, this was an amazing interview. Pieter Fossel, the co-founder and CEO of Hydrosat. Thank you so much for your time.

Pieter Fossel: Great, Roland. Thank you very much. Appreciate having me on.