Earlier this month, AGD’s Founder/Managing Director, Michael DeSa sat down, virtually, with Tim and Tyler Nuss from The Modern Acre podcast. They covered a range of topics from the impacts and opportunities within ag from COVID, starting a consulting firm, Michael’s take on agtech, and much more!
Every week on The Modern Acre, Tim and Tyler Nuss, brothers and fifth generation farmers and entrepreneurs, put a spotlight on the entrepreneurs, innovators and leaders that are changing the food and agricultural industry on and off the farm.
Enjoy the transcript from their conversation below!
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Tyler: Hey guys, you’re listening to episode 126 of The Modern Acre, presented by FarmTogether.
Tim: We have a really great episode this week with Mike whose the Founder/Managing Director at AGD Consulting.
Tyler: Well, guys, super, super thankful you guys are tuning in. Really appreciate you listening, excited to really kick off this sponsorship with FarmTogether, and I appreciate their support. But today we have an awesome episode with Mike DeSa, he’s the Founder and Managing Director of AGD Consulting, and we just have an awesome conversation about his background and what he’s built in the consulting space. I think it’s very unique, and he focuses a lot in South America and overseas investments, which I think is really interesting.
Tim: Yeah, Mike’s a veteran, so we talk a little bit about his experiences there and the carry-overs into agriculture, which I thought was really cool, and we also talk about his thoughts on COVID and how he sees that impacting the agtech space.
Tyler: Yeah, there’s a ton of nuggets, as I like to say, in this episode, Mike just has a ton of value to shares about starting his own business, but how he’s thinking about the industry as a whole. So without further ado, let’s jump in.
Tyler: Hey, Mike, welcome to the show. Great to have you here.
Mike: A pleasure to be here, guys. Thanks for having me.
Tim: Yeah, we’re super excited to talk to you about what you’re building at AGD, but before do you were sharing a little bit about your perspective on how COVID is impacting the small producer space? Maybe talk to us a little bit about that.
Mike: Yeah, I think that it’s no surprise that traditional supply chains have been disrupted. I think that consumers are concerned about empty grocery store shelves, and so we wanted to sort of take a look at this as an opportunity in some ways for both tech and localized production to kind of re-shape some of the supply chain, and so we put out something not too long ago, an expert round-up of forms, if you will, where we interviewed several experts from across the value chain, representatives from the US Grains Council, The Yield Lab Institute, Bonnefield, Texas Farm Credit, to kinda gather some insights as to how COVID was impacting subsistence, hobby, smallholder type farmers here in North America, and what we found interestingly, was both anecdotal and concrete evidence of the increasing number of consumers really beginning to care more about where that food is coming from, and that it was coming from somewhere local, and in some ways raising it or producing it themselves. And this sort of rise and interest in locally grown food with shorter supply chains, we think may be beginning to propagate down into the sector with the shortest supply chain.
Your own backyard.
Some of that anecdotal evidence includes an increase in purchasing for laying hands, locally sourced protein for consumption and rearing, etc. Obviously more people jumping into backyard gardening and hobby farming with more time, and we think this may be the beginning of or signal and accelerated shift in our supply chain towards not only resiliency and sustainability of which tech can play a role in.
I think that historically, smallholder farmers have not been the target market for agtech startups for a number of reasons: disaggregation, lacking in scale, often lacking in discretionary income and spending for that kind of adoption is not there, but what if this was a way to aggregate this class of growers in a meaningful way that could increase adoption? What if animal processing was done in a decentralized way with smaller processors all over the world? What if a CSA type models that set up more purchasing power for producers, lower barriers to entry? What if these were the beginnings of momentum to bring together what has been historically a separated market to one that could be taken advantage of with technology. Certainly this trend is still in its infancy and will continue to evolve as consumer preferences sort of settle into a new normal. The longevity, I think of the hobby or subsistence or backyard farmer remains somewhat to be seen, but what I think is really clear is that today can present an opportunity for this kind of grower to adapt technology solutions and in some cases, sustainable farming practices or the right grower with a bias for, I think, change in innovation.
Tyler: Yeah, I totally agree. Tim and I have had multiple conversations about this exact topic about how COVID is really opening up some of these conversations about how do you have a more distributed supply chain and open the doors to local producers and connecting them with markets and so I think you’re spot on. And I think to your point, we are in the infancy of these concepts and local resiliencies and distributed supply chains and how all this plays out. I think we’re watching closely, but I think to your point, there is a big opportunity for agtech companies that wanna jump into this space. A lot of times, we see the agtech companies focusing on the vertically integrated supply chains, the highest volume crops versus what some of what you mentioned. So I think it is time that we start seeing some of the investment and the companies focused on this.
Mike: And that by no means me, it will be an easy challenge for that path to be paved, and it’s unfortunate that it took a pandemic to perhaps serve as that tipping point, but I certainly think we’re there.
Tyler: Totally
Mike: The momentum is behind us now.
Tyler: Totally, yeah, I think to your point, there was already a lot of interest from the consumer about where their food was coming, and then the fact the pandemic hit at that time, I think really did, potentially will prove as the tipping point. But, Mike, let’s jump into a little bit more of your background. Tell us about where you grew up and your early career.
Mike: Absolutely. I am originally from San Antonio, Texas, and while not a farm kid, we always did have some kind of backyard garden growing up. My technical background is in Ag Engineering with an emphasis on power and machinery from Texas A&M. I was a member of the Corps of Cadets there. I was on scholarship actually with the US Marine Corps, and so when I graduated, I then spent the next seven years in the Marines on the infantry side. Had the chance and opportunity to do some disaster relief work in Central America. We did some small unit training and program development work in parts of Eastern Africa as well as the Middle East, and then a combat deployment to Afghanistan in 2010. A very decentralized, to our points earlier, partnered mission that was across a 200+ square mile battlespace while we were trying to track nearly $40M worth gear and an enemy that utilized anonymity at every opportunity. And in that role, was second in command for that 250 personnel group. It really was an experience in learning how to deal with fluid, interconnected environments and people. We learned the benefits of putting a local face on a solution, the ability to triage problems and then sometimes and instances people themselves to solve and render aid to the most pressing ones first. We learned to pool and then task resources, use data and intelligence, human intelligence, to drive operations, and I think a lot of the same learned skill sets have a unique applicability to the agricultural sector. I was fortunate enough to bring everybody home Christmas time of that year to where I then transitioned my last two years in the service in instructional capacity. Got selected to teach it a couple of the Marine Corps’ more rigorous schools. And in that capacity, formally lectured class sizes from 80 to 250, etc. The unique thing, I think, is that in the final school I was at, it was very infantry-specific, but at its foundation, was rooted in how to train and evaluate leadership skills in uncertain and dynamic environments. Not that dissimilar in many ways to what we just., or are currently going through.
And so I think a lot of these skill sets are and will be applicable within the private agricultural sector as we as a firm or aiming to try to transfer some of these skills to investment funds, accelerators, private equity groups, to help them build out the objective measures they need to evaluate, for example, leadership or unity or cohesiveness.
A couple of years before I left, so I left in the summer of 2014, but a couple of years before I left, our family felt like we were being kind of called to maybe walk a different path, one that was more entrepreneurial in nature and separate from military service. Coincidentally, this was also at a time in our lives where we were looking to invest in something tangible, uncorrelated that had appreciative value and was also geographically diversified outside the US. So we had previously and successfully invested and exited a more raw land type development project in the region in Latin America in 2010- 201 time frame. So we understood the region, but we had never really considered the production side of agriculture before as an investable asset class. So this sort of epiphany set us off on what would best be described as a couple of years’ worth of desktop research into all regions of the world that could support long-term demand requirements on ag and had under-valued potential. What we found through that research was that Latin America, at least foundationally, met many of these criteria, but having invested in it before we understood the challenges of putting capital to work in a foreign country without boots on the ground experience and a network, and the regionally-specific support. So we said we need to go see us for ourselves, and in the early part of 2015, my wife and our three boys, who at the time were four years old, two years old, and six months old, executed a six-month, six-country due diligence strip down in the Latin America. I think total, we spent traveled about 15,000 miles. Ecuador, Peru, Chile, Argentina, Uruguay, and then finally finished in Panama in August of that same year. We looked at over 100 different assets across the value chain, and we ultimately ended up investing in something, a mixed ag project in the Southern Cone, which we still manage today.
I think in addition to showing the boys that there was this whole world out there that they could explore that had different people and cultures, and that there was more beyond what was in front of them, was really important to us as one portion of that trip. The second was to really build out a network of producers, land managers, financial relationships, which laid the groundwork for AGD Consulting, which I started in 2016. Today, we’re settled back in Northeast Texas. We live on a small subsistence farm ourselves, where we grow and raise most of what we consume: vegetables, leafy greens. We do a lot of what you guys do on the Nuss Farm – like tomatoes, although not to the same extent, obviously. Some fruit trees, we do work in greenhouse production, bees for honey and pollination, we’ve got laying hens ourselves, boilers for poultry, goats for milk and cheese production, pork, cattle for beef, and we really try to do as much of that in-house as we can. We butcher and process all of our own animal protein, store and can and manage all of land ourselves, and so it’s very much a way of life for us.
Tim: Wow, there’s so much to get into here. What an amazing background. And first off, thank you for your service. That’s incredible to hear your story and background there, and I guess to start, there’s so many things you brought up, which I think could be podcast episode in and of themselves, but maybe talk to us about this initial investment that got you started, maybe talk to us about how you got that in first investment going that led into AGD.
Mike: We had always kind of looked at the geographical, the benefits of geographical diversification, and we knew that we had some criteria that we had built: tangibly, un-correlation, the ability to appreciate, but we never really connected the dots before until we had started just reading about the region and looking around, and we made our first trip down into Ecuador in, like I said 2010/2011 timeframe, and said, “this is a phenomenal region, it’s a phenomenal culture, the people here are fantastic, there is underutilized, undervalued potential, etc. There’s a lot of opportunity here and so that first investment was more of a kind of “get your feet wet”, there were some other co-investors, there’s less production, more development, but we were able to navigate some of those initial challenges of bringing capital overseas, putting it to work in a foreign jurisdiction, it was easier because it’s the US Dollar in Ecuador like it is here. So we wanted to do that process incrementally, and when we had success in that and were able to repatriate some capital and knew that we wanted to put some more back to work, and all of these sort of things and situations, I think divinely kind of united with my time in service coming to an end and us looking to put money to work as a family as well, and this idea about Latin America, so all of these things kind of aligned and then we said, “let’s go check this out for ourselves.” That prompted this diligence trip, which led to the second investment in, its actually down in Argentina.
Tyler: Tell us about… You go on this diligence trip, you obviously have an incredible experience and a successful investment, so talk us through the origin of building that out into your own firm, AGD Consulting.
Mike: It originally started with this idea of offering two services, one being strategic or advisory work and diligence for expedition trips to begin to take investors to showcase them, some of the same opportunities that we found.
So we actually built several, five – seven day all-inclusive trips to Argentina, Uruguay, Ecuador, Chile, and Colombia to both support, showcase and guide retail, high net worth investors into the region to experience it for themselves, and if a client was interested, we then have the network in place already to perform secondary or diligence, help that investor negotiate terms, close, etc.
So we work both of those avenues for over a year, but what we found was that the investors who wanted to put that kind of capital to work themselves or in the region, were the kind of people that wanted to digest those asset themselves. So we had that real market feedback in hand, and at that point, pivoted full-time and exclusively to the advisory services. So today, we are still 100% veteran-owned, strategic advisory firm that services the food, agtech and ag investment sectors globally. Clients typically include asset managers, private equity groups, agtech startups and producers, to which we provide services such as independent due diligence, market access and business development support, strategic partnership, sourcing, and access to capital for early stage and later stage, more institutional type, capital. When we originally started, we were focused heavily on just Latin America as an emerging market, but through the last several years have expanded into other emerging markets, such as Sub-Saharan Africa, parts of Eastern Europe, as well as here in our own backyard in North America, Australia, New Zealand as well.
Tim: Mike, when you look at the industry, maybe talk to us about what trends you’re seeing. You have a pretty interesting perspective evaluating investment opportunities and looking at a lot of businesses besides the one that we started with with the decentralized supply chain. What are you seeing as the highlight this year?
Mike: Domestically or abroad, or collectively
Tim: Maybe lets stick domestically in the US market
Mike: I think that the challenge is still the noise. There are so many new technology companies coming to market today and it is becoming more and more challenging for farmers to extrapolate out what’s the most unique and what would be the most applicable for them. Your discretionary incomes to be able to adopt that technology from a hardware standpoint, in today’s commodity cycle being towards the bottom with corn, wheat, soy, those kinds of crops, is challenging. So you tend to see, at least from our experience, broader adoption for hardware in sectors that have more margin in which to be able to deploy that capital, permanent crop space, for example, tree nuts, stone fruits, perennials, those kinds of crops are more able to adopt newer technology, at least hardware technologies, because they have a wider margin in their cost structure to be able to free up some of that cash. Farm management services and platforms, software as a service, data management, these kinds of models that have revenue basis around subscriptions or monthly participation; those tend to be in a little easier to adopt in smaller-margin producers just because they can execute it in a trial way and really kind of prove it out for themselves. Marketplaces are there, but there are some nuances depending on which kind of sub-sector with ag you want that marketplace to go in, but those are certainly at present nor do I think they’re going away any time soon. But in my mind, the biggest trend is still this somewhat of a disconnect between what the technology can do for the end user and which end user your targeting, and I think a lot of that message is lost because the economic, either economic value to the producer is not clearly articulated or the efficiencies that can be gained from that adoption aren’t readily apparent. You can’t just create a technology for the sake of creating a technology that doesn’t solve a real problem, and producers have real problems, but they want to know how that technology can either make them more efficient, save them money, or make them money. So, if technology companies can focus that economic and efficiency message to a specific target market in terms of what’s the return on this upfront investment in dollars or time, how quickly can they recoup that upfront cost if it’s a hardware adoption?
And so we still have to try to cut through some of this noise with a more clear message to the end user. It’s getting better, but I think we still have some work to do.
Tyler: 100%. I think you nailed it at the end there, about how it’s hard to find the sweet spot in terms of the technology that you provide and the value to the farmer, just because, to your point, I even think about my Dad right now, just how much he has going on on the farm, and it’s just a head down one day to the next, solving problems in real time, and it’s so hard to come in and convince someone like our Dad of technology, if there’s not that clear real-time feedback and value presented and you clarify it was either time or money.
So I think that’s so true, and I feel like there’s been probably the exception rather than the rule of companies that are able to really hit that sweet spot, so… I definitely agree.
Mike, maybe talk us through some of the challenges you’ve faced building this firm. You started this from scratch, and obviously you had some connections in the space, how have thing has been so far? And how have you scaled?
Mike: I would say those challenges have been many, but I would not say they have been unique to us. I think almost every start-up experiences these in some form or fashion, where you’ve got months of uncertainty about when that next client may come. You are trying to decide between spending revenue on growth of the business, putting some of that away for future uncertainties or just providing a living for your family, trying to stand out amongst other consultancies in our case, the Deloittes, the McKenseies and those kinds of groups, and trying to find the opportunity, and that’s really what I think it boils down to for us in terms of challenges, is just the opportunity to get in front of a potential client and communicate the story. It’s not even about at that point converting that prospect into a client, it’s just the opportunity to present the case, right? In some cases, that’s all you ask for. So that’s really been… I think if I had to sum it up would be one of our biggest challenges today, it’s just kind of that opportunity. If I’m going to look at scale from how we kind of built it, I would first maybe point out the marketing efforts that we tried originally. We did some targeted Facebook work early on, late 2016, early 2017, but that was at the point where we were still trying to reach two audiences, basically – groups that needed advisory services and people that wanted to take diligence trips. And so we were using Facebook to target retail and high net worth investors who were going to potentially do these kinds of trips, but it wasn’t the right audience. We should have been targeting the advisory side of things, and we should have been doing it on LinkedIn and not Facebook, it just wasn’t the right method of outreach for our group.
I’ve then just started writing to whomever would listen or read. It first started with me in the Marine Corps, I wrote an article on the way out about values and the underpinning of those values as a service, it’s a topic for a different conversation, but it really opened a door for me.
When we were in Latin America, my wife and I both wrote about our travels for Huffington Post, they had a travel section. So we knew that it was a cost-effective way to get your name and brand out there. So after I started AGD, I focused exclusively on writing industry-specific pieces for as many recognizable publications as I could, Global AgInvesting, both their News feed and their print publication that they give it their conferences, New Ag International, who is one of the larger publication and event organizations in the world on high-tech ag, AgriInvestor – geared more towards PE groups behind a paid firewall, but still a very applicable source, AgFunder who you guys know well, AgTech Nexus. We just tried to get as much information out there about what was going on from our perspective as we could. To date, I think we’ve put out close to 20 different pieces across those platforms, ranging on anything from equity crowdfunding platforms within ag for AgFunder to variable make technology and a contributing author role in an eight-part series for Global Ag News with the investment group out of Canada – Bonnefield.
We’ve got another article that’s going live with a New Ag International later this month on cotton’s reputation as a high consumer of resources, we think making it an ideal candidate for sustainability practices and tech.
We recently started a digital marketing relationship with a group called AgSocial where we’ve addressed a number of SEO issues, we’ve looked at both on and off page link building, focused keyword targeting, and then we began to create our own original, evergreen content for our own News section. We learned that most people were searching for us by our name, so we knew that was something we wanted to capture and maintain, but we also recognized that we needed to do something to capture other parts of that market to begin to grow beyond that. I think that really led us to our two most recent pieces on small-scale farming, amidst COVID, and the veterans in ag piece that we just published.
Tim: Those are all really good insights, and I love the approach of just creating valuable content for ultimately, you’re in clients and getting you in front of more opportunities to continue to grow and scale the business case. Mike as we switch gears here to a section, we call quick takes – What’s your favorite business book and why?
Mike: Oh, let’s see. Tim Ferriss’s Tribe of Mentors is a pretty good. It’s a collection of over 100 different, mini interviews where people to share ideas and habits. There’s a particular lesson there about failure holding chances or having chances in it that if you look for; I think resonated with me a lot. You can control all of the outcomes for people’s response, so set high standards, maintain those and press on.
Tyler: What are you spending too much money on right now?
Mike: Yeah, we are actually in the process of building a house, but we are doing it somewhat unconventional in the sense that my father-in-law and I are doing much of it ourselves- framing electrical, plumbing, interior cabinets, etc. So I’m spending too much money right now on things like wrought iron spiral staircase spindles and pocket doors.
Tim: Yeah. That can definitely add up. I had a landscape architect out last week to give me some pricing on the backyard and it came up pretty high, so I think I’m gonna have to turn into a do-it-yourselfer as well, so I might reach out for some tips and pointers.
Mike: Absolutely.
Tim: What are you not spending enough on?
Mike: date night. Yeah, they are – date night with my wife. They’re piling up at this point, and so I think by the time that everything re-opens, we’re gonna have to go to go to Paris or something. I’m not sure, but not enough at this point on day night.
Tyler: That’s awesome. As we finish this section, what app or tech tool can you not live without?
Mike: Yeah, DeWalt actually makes a Mobile Pro calculator right now that’s been invaluable for me so far in adding and subtracting mixed numbers for length, area conversion, slopes, those kinds of things. I would be two weeks behind with pen and pencil math, or paper and pencil math, if it wasn’t for that calculator app.
Tim: I have not heard that one before, hahah. Mike it’s been an absolute pleasure having you on as we wrap up here, how can listeners get in touch and connect with you?
Mike: Our website is www.desaconsultingllc.com or you can shoot me an email at michael@desaconsultingllc.com.
Tyler: Awesome, this has been a ton of fun, Mike, really appreciate the time. Thanks for being with us.
Mike: My pleasure, guys. Anytime.
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Tyler: So, Time, what did you think?
Tim: It was a really fun episode with Mike. He’s got such an amazing background, I really loved hearing him talk about his military experience and how that translates into his day job with agriculture, and I think really looking at the trends around COVID, whether it’s the emergence of smaller farms and self-sustaining victory farms, and also how ag tech and must find a new niche with these smaller scale operations to go to market.
Tyler: Yeah, I think he’s just super smart guy. I loved his thoughts on that, and I also… I don’t know if you guys caught it, but he talked a lot about marketing and getting the word out, and I think he’s thinking about that really, really well in terms of doing guest posting, to link back to his website and just find these creative solutions to increase the awareness of what they’re doing with AGD Consulting. So hope you guys got a lot out of it. I know, I sure did. Really appreciate you guys listening.
Tim: So if that will wrap things up here and talk next week