Speaker 1: Pushkin.
Speaker 2: There are at least two ways that you can frame
Speaker 2: today's show. One frame, climate change makes the weather more unpredictable,
Speaker 2: and the people who suffer most from this are the
Speaker 2: hundreds of millions of poor farmers in the developing world
Speaker 2: who rely on rain to irrigate their crops. The second
Speaker 2: frame is a little less familiar. Poor farmers in the
Speaker 2: developing world may be the world's biggest untapped consumer market,
Speaker 2: and a company that helps those farmers earn more money
Speaker 2: and move into the formal economy.
Speaker 1: Could be huge.
Speaker 2: Today's show is about a company that started out with
Speaker 2: that first problem, helping poor farmers deal with climate change,
Speaker 2: and now, after more than a decade, the company is
Speaker 2: addressing the second. They're helping poor farmers get richer and
Speaker 2: starting to sell them things they can now afford. I'm
Speaker 2: Jacob Goldstein, and this is What's Your Problem, the show
Speaker 2: where I talk to people who are trying to make
Speaker 2: technological progress. What's your name and your job?
Speaker 1: My name is.
Speaker 2: Starting easy, It's gonna get hard.
Speaker 1: My name is so funny. No one said no one's
Speaker 1: actually asking me what's your name and your job? Before?
Speaker 1: Just like that, bam, coming at you, coming at me hot.
Speaker 1: My name is Samir Ibrahim. I'm the CEO and a
Speaker 1: co founder at sun Culture.
Speaker 2: When Samir co founded sun Culture back in twenty twelve,
Speaker 2: he was trying to solve the problem of helping poor
Speaker 2: farmers irrigate their land. Wanted to sell them solar powered
Speaker 2: water pumps, but it soon became clear that selling pumps
Speaker 2: wasn't going to work on its own. To make solar
Speaker 2: irrigation work, sun Culture had to become a tech company,
Speaker 2: and a carbon credit company and a finance company. Ultimately,
Speaker 2: Samir realized that sun Culture really needed to solve a
Speaker 2: deeper problem. How do you help poor farmers get richer?
Speaker 1: A human sized solar panel on the roof of a
Speaker 1: household completely changes someone's and someone's family's life in a
Speaker 1: way that people who are living with disposable income may
Speaker 1: never experience that change. It's a huge change. It's like
Speaker 1: from someone going and saying like, I literally have nothing
Speaker 1: to like I can now pay school fees. I mean,
Speaker 1: it's just it's wild.
Speaker 2: Sun Culture is based in Kenya, which happens to be
Speaker 2: where Samir's parents grew up. Before he was born. They
Speaker 2: immigrated first to Canada and then to Florida, and Samir
Speaker 2: was working as a consultant at PwC in Manhattan in
Speaker 2: his early twenties when he and a friend decided to
Speaker 2: start sun Culture.
Speaker 1: It's no surprise that we weren't farmers. I didn't grow
Speaker 1: up in a farming household, so I didn't know anything
Speaker 1: about farming. So when we started thinking about how to
Speaker 1: solve this problem, we first started exploring where this problem
Speaker 1: was very big, and it just so happens that Africa
Speaker 1: is where this problem is really prevalent. It's really prevalent
Speaker 1: because two thirds of the workforce are farmers that live
Speaker 1: on one or two acres of land, and they live
Speaker 1: off grid, and they live in rural areas, so they're
Speaker 1: the most affected by this problem.
Speaker 2: And the problem narrowly is climate change makes it harder
Speaker 2: to grow food.
Speaker 1: That problem, yeah, exactly. Yeah, But then they're also potentially
Speaker 1: a big part of the solution to the second problem,
Speaker 1: which is we need to grow more food to feed
Speaker 1: it growing population. Yeah, Africa has sixty percent of the
Speaker 1: world's unused farmable land. It's the only continent with an
Speaker 1: economic water scarcity versus a physical water scarcity, So we
Speaker 1: have enough groundwater to use it for growing crops and
Speaker 1: keeping animals. Just people can afford to draw it, and
Speaker 1: you have a massive unemployed workforce that is also agrarian,
Speaker 1: so you have all the resources to sort of think
Speaker 1: this through. Because I'm not a farmer, I looked at
Speaker 1: farming as just an algorithm. You have a bunch of
Speaker 1: inputs and variables, then you have an output. So I
Speaker 1: looked at it and said, what are the variables that
Speaker 1: have the most outsized impact on the outcome? And when
Speaker 1: you look at all the farming inputs, it is very
Speaker 1: clear that water has the most outsized impact on the output.
Speaker 1: Having access to reliable water makes sense, makes sense. I
Speaker 1: might even have guessed that one not knowing anything, yeah, exactly,
Speaker 1: having reliable water can increase your yields, but up to
Speaker 1: five times, Like, it's pretty crazy. And it is coincidentally
Speaker 1: the variable that changes the most because water for agriculture
Speaker 1: in many parts of the world comes from the rain,
Speaker 1: which is increasingly more inconsistent and unreliable. So he said,
Speaker 1: great Africa water, that's where we have to start. Irrigation
Speaker 1: in Africa is a sixty five billion dollars opportunity because
Speaker 1: only four percent of African farmers irrigate versus close to
Speaker 1: forty percent in Asia.
Speaker 2: So the other ninety six percent are just relying on rain.
Speaker 1: Rain. That's why African farmers are some of the ports
Speaker 1: in the world because imagine you don't know when the
Speaker 1: rain's gonna come. So we were like, okay, why do you,
Speaker 1: Sophie farmers irrigate and we're like, oh, duh. You'll probably
Speaker 1: guess the answer as well. It's just too expensive. Not
Speaker 1: only is the water pump too expensive, but the recurring
Speaker 1: cost for fuel, which is forty to eighty bucks a month,
Speaker 1: is too expensive for a farmer that's making one thousand
Speaker 1: or fifteen hundred dollars a year.
Speaker 2: And so the fuel is this like a deep diesel generator,
Speaker 2: I mean, is that the.
Speaker 1: Way of petrol exactly a diesel generator of diesel powered
Speaker 1: or petrol powered water pump to move the water to
Speaker 1: give to their crops was a problem because irrigation is
Speaker 1: just moving water from one place to the other.
Speaker 2: Yeah, so like there's a river over there, not that
Speaker 2: far away, but the farmer doesn't have can't afford to
Speaker 2: buy the gas to run the generator to move the
Speaker 2: water from the river, and by the way, if they
Speaker 2: could buy the gas to run the generator, then you're
Speaker 2: making climate change worse again.
Speaker 1: But we don't exactly worry about that. We don't have
Speaker 1: to worry about that. That's not even, that's not even.
Speaker 1: That's just like they're just like, we need to be
Speaker 1: able to afford something, right, yeah, right, sure? Or then
Speaker 1: what happens is they just take buckets and they fill
Speaker 1: up those buckets with twenty liters of water, which is
Speaker 1: forty five pounds, which is those big weight plates in
Speaker 1: the gym, and then they walk to their farm or
Speaker 1: they pull it up from the well and just is
Speaker 1: super inefficient. So we said, okay, we need to figure
Speaker 1: out a way to first make irrigation affordable, then we
Speaker 1: need to figure out a way to get it to people.
Speaker 1: So from an affordability standpoint.
Speaker 2: Do you ever stop and think like this is too
Speaker 2: much Like as you're like at the talking about these things,
Speaker 2: you're just like a college kid.
Speaker 1: Right we were twenty three, And I think that was
Speaker 1: the advantage.
Speaker 2: You had basically never had a job. It wasn't like
Speaker 2: you had like run some company or done some big thing, right.
Speaker 1: I think that was the advantage. I think that's why
Speaker 1: we probably didn't stop and say this is going to
Speaker 1: be really hard. I think, I think really that.
Speaker 2: Was it the dumb kid advantage.
Speaker 1: Yeah, yeah, I call it, what did I call it?
Speaker 1: Sort of naive confidence or just yeah, one of those,
Speaker 1: but I like the dumb kid confidence is probably more accurate. Yeah.
Speaker 1: So we're just sitting there, We're like, oh, yeah, obviously
Speaker 1: we're just gonna make irrigation cheaper, no problem. So okay
Speaker 1: to do that. That is like twenty eleven ish, right,
Speaker 1: this is what twenty eleven, twenty twelve, Yeah, exactly. Yeah.
Speaker 1: What's really interesting about that time is we reached grid
Speaker 1: parody in a number of African countries. So the cost
Speaker 1: to connect your power to power your your household with
Speaker 1: solar became cheaper than the grid. So you have you
Speaker 1: have these like tailwinds in terms of cost reductions kind
Speaker 1: of happening. So let's figure out to make the fixed
Speaker 1: cost reasonable and a fixed cost, and then let's finance it.
Speaker 1: So we spread that fixed cost over time, because no
Speaker 1: matter what, the upfront cost is still too expensive, which
Speaker 1: is why only four percent of African farmers irrigate with
Speaker 1: diesel petrol pumps. So we said, let's take an old
Speaker 1: technology water pumps irrigation, decarbonize it, figure out how to
Speaker 1: make it solar powered, and then deployed in a resource
Speaker 1: rich environment like Africa. That's like the summary framework. So
Speaker 1: we went and developed and made Africa's first solar irrigation company,
Speaker 1: and we the original price of the system. If you
Speaker 1: were to go and try to buy one of these
Speaker 1: before from like an NGO, it would cost twenty five grand.
Speaker 1: We managed to get it down to five grand, okay, twenty.
Speaker 2: Five thousand dollars, So that's like that, so twenty five
Speaker 2: thousand dollars is completely out of the question, presumably for
Speaker 2: really out of the small farmer who can't afford to
Speaker 2: diesel the generator.
Speaker 1: Yeah, when we started, we managed to without really any
Speaker 1: technical innovation, just buying the right things from the right
Speaker 1: places and putting it together for our pilot project. We
Speaker 1: got it down to five thousand dollars. And at that
Speaker 1: point we're like, you know what, I'm sure over time
Speaker 1: we can get this to be cheaper. Like, let's just
Speaker 1: accept we can do that, and let's figure out the
Speaker 1: other things I need to go around this, okay. And
Speaker 1: that's that's when we learned that affordability was one part,
Speaker 1: but availability was the other part, because huh, and that's
Speaker 1: the harder part. And it's because because small, older farmers
Speaker 1: don't have disposable income, no one's really selling them a
Speaker 1: bunch of stuff, which means the infrastructure to be able
Speaker 1: to get them things doesn't.
Speaker 2: Exist, like to some significant degree. They're not in the
Speaker 2: kind of monetized, financialized economy, right exactly, they're growing food
Speaker 2: for themselves, they're treading some amount of food whatever at
Speaker 2: the market, but they're just not in the cash economy
Speaker 2: the way we think of it.
Speaker 1: Right exactly, They're in the informal economy and it's very
Speaker 1: isolated and acute, so very village level, et cetera. So
Speaker 1: we went from thinking we could drop ship these products
Speaker 1: from China and just like Johnny Appleseed, get a bunch
Speaker 1: of these things out really quickly. So then realizing we
Speaker 1: had to figure out how to manage our own supply chain,
Speaker 1: we had to first wait to do a bunch of
Speaker 1: innovation on the power electronics.
Speaker 2: Well wait, why didn't your first idea work? So your
Speaker 2: idea is like, we can make these things at you
Speaker 2: know whatever, eighty percent cheaper than they exist now they'll
Speaker 2: be a good deal for farmers, like you know, we'll
Speaker 2: order parts from China like everybody does. Why didn't that work.
Speaker 1: Because financing wasn't part of the original idea. It was
Speaker 1: we thought we'd be able to do with banks, and
Speaker 1: we thought we'd be able to work with banks to finance,
Speaker 1: and banks in Africa will ask farmers for two things.
Speaker 1: One is a pay slip and they're like, well, I'm
Speaker 1: a farmer. I don't have a pay slip, job or collateral.
Speaker 1: And banks aren't willing to take irrigation or a cow
Speaker 1: as collateral because they don't know how to repossess and
Speaker 1: resell them, so farmers can't get access to loans. We
Speaker 1: realize we have to figure our financing. We're like, okay,
Speaker 1: that's interesting, and then we figured out. We realized we
Speaker 1: had to figure out the installation because there's no third
Speaker 1: party installers, the maintenance, the ongoing after sales support. We
Speaker 1: had to figure out the digital engagement. We had to
Speaker 1: figure out supply chain, We had to figure out R
Speaker 1: and D from the power electronics side, we had to
Speaker 1: figure out how to monetize carbon credits to give them
Speaker 1: further discounts boomom boom bom bom bom bom bom. So
Speaker 1: what we thought was going to be just a drop
Speaker 1: shipping company ended up being a company that has to
Speaker 1: build this entire physical and digital infrastructure to get these
Speaker 1: irrigation systems to farmers. And that's where the journey started.
Speaker 2: Why didn't you give up when you realized that?
Speaker 1: Because we only realized it over time. It wasn't all
Speaker 1: in one wa bam, thank you, ma'am kind of thing.
Speaker 2: Do you kept being like, oh, we just got to
Speaker 2: solve this one thing.
Speaker 1: Yeah, truly, And that's and we kept uncovering the next
Speaker 1: step over and over and over again until finally, a
Speaker 1: few in twenty twenty one, this is almost ten years later,
Speaker 1: we've figured out one of the last remaining pieces in
Speaker 1: terms of making this truly affordable and locked in for
Speaker 1: a large group of people, which is monetizing carbon credits
Speaker 1: and giving our customers discounts with those revenues. And at
Speaker 1: that point, we have a business that has shown that
Speaker 1: you can collect repayments from farmers. We have a ninety
Speaker 1: percent collection rate from the quote unquote worst unbankable people
Speaker 1: in the world. We have ninety percent digital engagement from
Speaker 1: people who most of the world writes off as not
Speaker 1: being technologically literate.
Speaker 2: But via text message or something, what does it mean?
Speaker 1: They're checking their balance through our app? How much do
Speaker 1: I have left? They're asking, they're asking questions, raising tickets,
Speaker 1: they're referring friends. If you're a mobile app, They're like,
Speaker 1: really like engaging. And we get to this point where
Speaker 1: finally we said, okay, in order to make this affordable
Speaker 1: to the mass market, not just at that point, I
Speaker 1: don't know, some tens of thousands of farmers we worked with.
Speaker 2: So it was this sort of like better off farmers.
Speaker 2: Presumably five thousand dollars where you started, it's still very
Speaker 2: expensive for a farmer who's farming a few acres and
Speaker 2: can't afford irrigation.
Speaker 1: Yeah, and even even getting down to seven hundred dollars,
Speaker 1: which is where we got to, and even if we
Speaker 1: spread that cost over over a finance period of two
Speaker 1: or three years, even paying something like sixty bucks a
Speaker 1: month or fifty bucks a month is too expensive for
Speaker 1: most people. Huh. And we have to keep figuring out
Speaker 1: how do you make this more affordable.
Speaker 2: So the price has gone from five thousand dollars to
Speaker 2: three hundred and fifty dollars, and those are nominal prices, right,
Speaker 2: and real prices it will have fallen even more. How
Speaker 2: much of that decline in price is the decline in
Speaker 2: the price of solar panels?
Speaker 1: Some of it some? Yeah, most of it half no,
Speaker 1: less way less, way interesting, interesting, way less.
Speaker 2: Tell me all the things you did to make it cheaper.
Speaker 2: Tell me some of the things you did to me.
Speaker 1: A lot of it was working on the power electronics,
Speaker 1: so figuring out how to take a small amount of
Speaker 1: power to power a high powered appliance, So we need
Speaker 1: less solar to power a water pump.
Speaker 2: I read and I think it was a Bloomberg News
Speaker 2: article that your pumps use something like three hundred or
Speaker 2: four hundred watts. Yeah, she's crazy, right, Like that's like
Speaker 2: four incandescent light bulbs.
Speaker 1: Yeah, it's like you can't see me, but it's like
Speaker 1: a human size.
Speaker 2: Like the idea that that can be transformational for a farmer, Yeah,
Speaker 2: is really something to think about.
Speaker 1: Yeah, it's like there was one of our one of
Speaker 1: the stories are so incredible. One of our customers give
Speaker 1: a ted talk, and in that talk she talks about
Speaker 1: like talking to her plants and promising them water is
Speaker 1: going to come because they're dying, and literally not like
Speaker 1: just going to everything she can think of and bring
Speaker 1: in her being to try to convince her plants to
Speaker 1: stay alive. You go from that to her saying my
Speaker 1: cow didn't die. I expanded my farm and making kombucha.
Speaker 1: Like I mean, it's really transformational stuff. And there's one
Speaker 1: story that will always stick with me that that summarizes
Speaker 1: and really humanizes this. We went to see a farmer
Speaker 1: who is getting an installation. I love visiting installations when
Speaker 1: they're happening, especially for those who are using the manual
Speaker 1: buckets before, because once they realize that they don't have
Speaker 1: to spend three or four hours a day physically pulling
Speaker 1: a bucket of water from underground to the surface, whether
Speaker 1: it's one hundred feet down or beyond, and they can
Speaker 1: do that with a flick of a button, the look
Speaker 1: on their face will change your life. It is unreal.
Speaker 1: And when we ask this customer in particular, so now
Speaker 1: what are you gonna do. You're not gonna use your
Speaker 1: muscles to pull this bucket up, and she looked at
Speaker 1: me in the face and she said, I'm going to
Speaker 1: get fat with a huge grin on her face. She
Speaker 1: was just like, that's what I'm gonna do. I was like,
Speaker 1: that's right, it's amazing.
Speaker 2: So okay, so let's go back to you know, you
Speaker 2: got more than ninety percent out of the price of
Speaker 2: this thing, right, which seems like the fundamental thing you did.
Speaker 1: Right.
Speaker 2: Well, so one of the things you did to get
Speaker 2: the price down was start using carbon credits? Yes, and
Speaker 2: I don't I kind I mean, I can sort of
Speaker 2: guess at that, but I also have some questions about that.
Speaker 2: So tell me about how carbon credits work in your business.
Speaker 1: Okay, So there is a there are official verification bodies
Speaker 1: that create methodologies that count how carbon credits are avoided
Speaker 1: or removed from the atmosphere. And it just so happens
Speaker 1: that there's an exis existing methodology under the UN framework
Speaker 1: that talks about a displacement of diesel or petrol pumps. Okay, So,
Speaker 1: because solar is an alternate to diesel and petrol, we
Speaker 1: generate carbon credits for the systems that we install.
Speaker 2: So how much do you get paid in carbon credit
Speaker 2: credits for you know, the sort of median pump that
Speaker 2: you sell.
Speaker 1: So the way to think about this is we generate
Speaker 1: carbon credits. The system generates carbon credits for seven years.
Speaker 1: We give customers a discount upfront, and we sell those
Speaker 1: carbon credits over the remaining years, so we raise debt
Speaker 1: to be able to do that. We're able to give
Speaker 1: our farmers about a twenty percent discount at minimum on
Speaker 1: the monthly cost because we're able to sell carbon. Now.
Speaker 1: It might sound like a little bit of just a
Speaker 1: small discount, but we ran a pilot when we were
Speaker 1: launching our carbon business and we reduce the price of
Speaker 1: our system by ten percent and our sales went up
Speaker 1: by something like I think it was like two times
Speaker 1: something like that. Where we do st our price by
Speaker 1: twenty eight percent, our sales went up by four and
Speaker 1: a half times. Wow. So small adjustments in the monthly
Speaker 1: price make a huge difference. So we use those carbon
Speaker 1: revenues to directly subsidize our farmers. We're not a carbon business,
Speaker 1: so it's a pass through to our customers, which has
Speaker 1: enabled us now to grow more. You know, half of
Speaker 1: our customer base was added in the last two years
Speaker 1: because of that.
Speaker 2: So you're you know, lending the farmer's money to buy
Speaker 2: the pump. Obviously you're borrowing against seven years of carbon
Speaker 2: credits and passing that through Like you're a finance company
Speaker 2: to some significant degree, Like you're in the finance business.
Speaker 1: Yeah, we're sort of an everything company. And that's just
Speaker 1: it's just it's funny. It's like, it's really hard to
Speaker 1: describe what type of company we are to many people
Speaker 1: because we have to do so many things in order
Speaker 1: to give people access to these products.
Speaker 2: And it's I guess it goes back to what you
Speaker 2: were saying, which is your customers, these small farmers are
Speaker 2: just not in a market economy the way we are
Speaker 2: so used to thinking of being in a market economy. Right,
Speaker 2: there's not access to capital or to financing. Obviously, what
Speaker 2: else is there not that we might take for granted,
Speaker 2: Like what else do you have to provide that you
Speaker 2: might not have thought?
Speaker 1: I mean, you know, when you're if your cable breaks,
Speaker 1: you call a third party installer maintenance personally, you go
Speaker 1: on task grab it to find someone to do it
Speaker 1: that doesn't exist. So we do all of the installation ourselves,
Speaker 1: all the maintenance, all the ongoing after sales support. What's
Speaker 1: been really interesting now is and this will answer the
Speaker 1: question of what else might you know, think about our
Speaker 1: customers are making more money, like we talked about, and
Speaker 1: just like us, when they make money, they want to
Speaker 1: buy more stuff. They want to get fat, they want
Speaker 1: to get fat, but they also want to buy things
Speaker 1: like health insurance, and they want to buy things like
Speaker 1: weather insurance. They want to buy things like high quality
Speaker 1: seeds and fertilizer. So they're coming at us and they're saying, hey,
Speaker 1: you know i've been paying you. Well, I'm paying my
Speaker 1: twenty thirty bucks a month and do it I'm paying
Speaker 1: Can you just add a little bit more to my
Speaker 1: monthly and give me these other things? So we said okay.
Speaker 1: So about a year ago we started a pilot where
Speaker 1: we bundled in health insurance. So if someone gets sick
Speaker 1: and go to the hospital, if someone passes away, the
Speaker 1: family has insurance to be able to take care of
Speaker 1: that need.
Speaker 2: Now let me ask you are are there. You can't
Speaker 2: be a health insurance company too, right, presumably there's there
Speaker 2: are health insurance companies in these countries. You are just
Speaker 2: selling insurance and taking some weird bundle.
Speaker 1: We're starting to bundle it to the monthly because again,
Speaker 1: the reason they come to us is because they trust us,
Speaker 1: they get duped by not good products. They trust us.
Speaker 1: We can get them discounts because we're buying in bulk basically, right,
Speaker 1: because we just added to the monthly payments and then
Speaker 1: they don't have to go and try to figure out themselves, right.
Speaker 1: So we did that. We made an investment into a
Speaker 1: company that allows us to now finance agriculture inputs. So
Speaker 1: let's say you're Jacob as a farmer, you're paying well
Speaker 1: for ten months and you come to us and you're like,
Speaker 1: I want some seeds. We're like, cool, here's a voucher
Speaker 1: that we sent to your phone. You can go to
Speaker 1: any of these right now in Kenya one thousand to
Speaker 1: proof shops you can get your seeds and what is
Speaker 1: added to your monthly payments. And last month we started
Speaker 1: a pilot with Parametric Weather Insurance. If it floods in
Speaker 1: your area, you get paid out as well. So we're
Speaker 1: starting to think about, okay, how do we now provide
Speaker 1: access to services that helps people protect themselves from shocks
Speaker 1: and go back to the same thesis, right, how do
Speaker 1: you increase prosperity at a small, older farmer level and
Speaker 1: rural areas to increase food supply and reduce client migration.
Speaker 1: All of these things help farmers protect themselves against the
Speaker 1: risk of not paying for their irrigation system. Just good
Speaker 1: for your business, which is good for our business for sure,
Speaker 1: which is good for our business. And that's also just
Speaker 1: a bunch of things that will help them not have
Speaker 1: to worry about where they're going to spend money and
Speaker 1: figure that out. So's it's kind of all bundled together,
Speaker 1: and we're in the phase of thinking about how do
Speaker 1: we continue to provide services for our customers for things
Speaker 1: that they want. Does this become an ongoing subscription that
Speaker 1: they are able to access that they want to do
Speaker 1: they want extended warranty. So we're in this discovery phase
Speaker 1: where our customers are pulling us to offer more products
Speaker 1: and services because we have a credit relationship with them,
Speaker 1: because we have their location, because we have payment history,
Speaker 1: all these things. This digital engagement. We're now realizing that
Speaker 1: we can be the access point for people trying to
Speaker 1: get services and products to farmers, and access points for
Speaker 1: farmers who want to get access to high qualify, high quality,
Speaker 1: verified products and services versus going to go buying a
Speaker 1: bag of seeds that never actually sprout, which is often
Speaker 1: their experience.
Speaker 2: Will be back in just a minute. Part of the
Speaker 2: way agriculture has become profoundly more productive in the United
Speaker 2: States and other countries has been consolidation. Right, It used
Speaker 2: to be the case in this country that eighty percent
Speaker 2: of the people were farmers. That it was fifty percent,
Speaker 2: and now it's two percent.
Speaker 1: And that is.
Speaker 2: Because basically we have substituted capital and technology for labor
Speaker 2: and that has worked out great in many ways. And
Speaker 2: yes there are problems with like you know, monoculture, farming,
Speaker 2: et cetera.
Speaker 1: Et cetera.
Speaker 2: But fundamental the way we have grown so much food
Speaker 2: is with uh more and more machines and fewer and
Speaker 2: fewer people. How does that idea map to the places.
Speaker 1: Where you're working. I think about this a lot. And
Speaker 1: one of the big differences for the consolidation of land
Speaker 1: in the US and how mechanization took fifty percent down
Speaker 1: to two percent in terms of farmers is because at
Speaker 1: that time it wasn't profitable to mechanize a small farm.
Speaker 1: That's like one of the things now consolidation and economies
Speaker 1: of scales is a really good thing. So like that
Speaker 1: is one hundred percent part of the story. But also
Speaker 1: you couldn't mechanize a small farm profitably. What we're doing
Speaker 1: now you can mechanize an eighth of an acre profitably,
Speaker 1: which means that you don't require consolidation in order for
Speaker 1: your farm to be able to produce food. I don't
Speaker 1: think there's going to be one solution for the future
Speaker 1: of African farmers. I think there's going to be a
Speaker 1: mix of consolidation. I think there's going to small I
Speaker 1: think it's going to be a whole mix of it.
Speaker 1: But the differences are that you can mechanize a small farm,
Speaker 1: and culturally, sometimes the only asset that families own is
Speaker 1: the farm, and it gets passed down generation after generation.
Speaker 1: So it's a challenge to culturally switch people from giving
Speaker 1: up their only asset that they have in their family
Speaker 1: to pass down as an inheritance to being able to
Speaker 1: sell that off. Now there are companies who are doing that.
Speaker 1: I think they're going to do a very good job.
Speaker 1: I think there's no one size fits all. I think
Speaker 1: there will be some consolidation. I think they'll be farming
Speaker 1: as a service. I think they'll be what we're doing.
Speaker 1: I think there's gonna be a whole mix of things.
Speaker 1: But it's not going to be because you can't mechanize
Speaker 1: a profitable and make a small farm profitable. It will
Speaker 1: be because people like to buy rent or lease cars.
Speaker 1: It's just going to be an option in the US
Speaker 1: always because you had to.
Speaker 2: Right, because there was no way to be a profitable
Speaker 2: small farmer. Yeah, I mean you're you're making profitable not profitable,
Speaker 2: this sort of binary thing, right, But it could be
Speaker 2: the case that you can make money as a small farmer,
Speaker 2: but that land would be would produce more food, let's say,
Speaker 2: with the same amount of inputs if it were consolidated, right.
Speaker 2: Like that seems very plausible to me. And so while
Speaker 2: at the level of the individual, and as you say,
Speaker 2: culturally people might want to keep their farms, you could
Speaker 2: imagine there being a pressure, you know, somebody might offer
Speaker 2: them a lot of money because it would be not
Speaker 2: because it's some there's some evil capitalists, but because like,
Speaker 2: their farm could be worth more if someone with more
Speaker 2: access to capital and more consolidation bought it and started
Speaker 2: growing food on it, right, And that doesn't seem like
Speaker 2: necessarily an unhappy story, although I take your point that
Speaker 2: culturally it might be complex.
Speaker 1: Not a bad thing at all. I think it's great.
Speaker 1: It's just it's an option, and it's I think I
Speaker 1: think it's going to be. I don't think there's a
Speaker 1: there's a better or worse here. I think there's it's
Speaker 1: just it's an option. Yeah, fair, I feel like it's
Speaker 1: gonna be. All these models have to exist at the
Speaker 1: same time in order to figure out how to solve
Speaker 1: the problems we're talking about. So I'm totally for it.
Speaker 1: It's just not our business, but I'm totally for it.
Speaker 2: So let's talk about the future of sun Culture. When
Speaker 2: you look out over the next few years, what do.
Speaker 1: You worry about. The biggest worry is we've added about
Speaker 1: forty percent of the people that we have today just
Speaker 1: in the last two years, and we're growing quite fast.
Speaker 1: And that's only started about two years ago. So two
Speaker 1: years ago we started growing quicker than we ever have.
Speaker 1: We went from you know, ten retail locations to thirty
Speaker 1: retail locations in Kenyans. It's really just like building all
Speaker 1: of the I hate the like figital like the physical
Speaker 1: digital infrastructure to support that scale.
Speaker 2: I never heard that before. I don't like it.
Speaker 1: You can't I'm so sorry that I put that in
Speaker 1: your life, but you're gonna thank me one day when
Speaker 1: you use it at a party and someone laughs. So
Speaker 1: it's all having all that in place. But we're growing faster,
Speaker 1: and it's just making sure that we continue to bring
Speaker 1: on people that align with our culture to make sure
Speaker 1: that we have the right people in place. And it's
Speaker 1: just like I think, I always think about it in
Speaker 1: terms of a sports team. I used to play a
Speaker 1: lot of soccer and you just got to sometimes change
Speaker 1: the formation based off of who your opponent is. And
Speaker 1: we just have to make sure we continue to iterate
Speaker 1: on our org structure, where people are, who we have
Speaker 1: in place to make sure we can continue to scale.
Speaker 1: And that is a big focus of mine.
Speaker 2: If things go well, where will the company be in
Speaker 2: five years?
Speaker 1: If things go well? There's there's different levels of well.
Speaker 1: So level one of well is we're at few hundred
Speaker 1: thousand farmers all paying us this dollar a day to
Speaker 1: get access to services that they need. They're happy, they're
Speaker 1: making more money. Our net promoter score for our customers
Speaker 1: is seventy eight. It's so high. Our customers are so happy,
Speaker 1: and that continues to stay there. Level two is we're
Speaker 1: able to then potentially move what we're doing into different
Speaker 1: farm sizes. So maybe we help with the folks who
Speaker 1: are operating larger plots of land to your point, maybe
Speaker 1: the tens of acres to become more efficient, to be
Speaker 1: able to produce more food, to be able to hire
Speaker 1: people and create jobs around them. And I think that's
Speaker 1: something we're really interested in. How do we take what
Speaker 1: we've learned around renewable energy and agriculture and financing and
Speaker 1: bring that to larger farms in different geographies. So can
Speaker 1: we take what we're doing and bring it elsewhere not
Speaker 1: only from a geographer perpective, but also from a size.
Speaker 2: Perspective Geographically, do you think you might grow the business
Speaker 2: outside of Africa?
Speaker 1: Yeah, not for the next few years. But we've looked
Speaker 1: at We've looked actively at places in Central Asia, We've
Speaker 1: looked actively at places in South Asia, We've looked at
Speaker 1: places in Latin America. So it's not a now thing,
Speaker 1: it's not a twenty twenty seventh thing, but it's it's
Speaker 1: a thing. And it's just again going back to team.
Speaker 1: Do we have the right team in place to be
Speaker 1: able to do this and can we replicate this in
Speaker 1: other markets with the right people. It's less now about
Speaker 1: a viability thing. It's more can we manage it as
Speaker 1: a team. That's really the question. We don't necessarily want
Speaker 1: to spread ourselves too thin right now, but there there
Speaker 1: is a moral question of like, if you can do
Speaker 1: this in other places, why not just go balls to
Speaker 1: the wall right Like it's a necessary, needed thing. You
Speaker 1: can build your business much bigger. And there's this sort
Speaker 1: of how do you how do we make sure we
Speaker 1: do that sustainably? We don't want to run into the
Speaker 1: situation where we grow too fast and the wheels fall off.
Speaker 1: So it's this, it's this delicate balance of what that
Speaker 1: looks like, and it's it's it is a definite yes
Speaker 1: we will. It's just question is when, so your five
Speaker 1: year timeframe seems seems possible.
Speaker 2: Now, gaze off into the distance and give me your
Speaker 2: big injury thoughts.
Speaker 1: What I find really inspirational from a business perspective is
Speaker 1: that smaller farmers who are who are often written off
Speaker 1: as like very poor people, you can't sell to them,
Speaker 1: et cetera, are now becoming real consumers. And it's almost
Speaker 1: in Silicon Valley talk, we're almost increasing wallet size and
Speaker 1: taking a share of wallet. Like you get people to
Speaker 1: make more money and then you sell them stuff. It
Speaker 1: just so happens that the things we sell them are
Speaker 1: like insurances and access to inputs, but we're selling them
Speaker 1: more stuff. And when you start looking at smaller farmers
Speaker 1: as consumer market, there is a view that they're one
Speaker 1: of the largest untapped consumer markets in the world. We
Speaker 1: have all of this interesting data of who they are,
Speaker 1: what they're growing, how they use their irrigations, what their
Speaker 1: payments are like, and we can now start to layer
Speaker 1: on with the demographic and geographic and payment data, the
Speaker 1: types of the types of things they're asking for, and
Speaker 1: we now start to become sort of the entry point
Speaker 1: for an emerging consumer market. I think what we're doing
Speaker 1: is a way to do that. It's not the only way,
Speaker 1: but it is enabling the largest group of consumers or
Speaker 1: potential consumers to make more money, and I think that
Speaker 1: might be a transition. And instead of looking at this
Speaker 1: work only as impact and development work, but you think
Speaker 1: about it as sort of a way to build the
Speaker 1: consumer industry. Things get really interesting, especially if you look
Speaker 1: at the trajectory that East Asia had in Southeast Asia
Speaker 1: that Africa hasn't necessarily had because you have, like eighty
Speaker 1: percent of their jobs are informal, and by twenty fifty,
Speaker 1: one in four people on Earth will be African. One
Speaker 1: in three working people by twenty fifty will be African.
Speaker 1: Half of all new entrance into the global workforce will
Speaker 1: come from South sou in Africa. Like, it's just like
Speaker 1: really big consumer opportunity, but instead of starting with the
Speaker 1: ride sharing or a delivery app, I believe it needs
Speaker 1: to start with helping people increase incomes. And that's where
Speaker 1: the irrigation comes in.
Speaker 2: We'll be back in a minute with the lightning round.
Speaker 2: Let's finish with the lightning round. So your parents, is
Speaker 2: it right? Your parents are from East Africa. They moved
Speaker 2: first to Canada and then to the United States.
Speaker 1: That's right.
Speaker 2: Presumably I'm making a guess here, but it's sort of
Speaker 2: the classic immigrant story of wanting to give their family
Speaker 2: a better life. You moved back to East Africa. So
Speaker 2: was that like a disappointment to them? Were they like,
Speaker 2: come on, man.
Speaker 1: My parents are really good at not telling me when
Speaker 1: they're when things when they think it's going to put
Speaker 1: pressure or like put me down. So I didn't. I
Speaker 1: didn't find out that until a few years later that
Speaker 1: they were like, what the hell is this guy doing?
Speaker 1: They told me. They told me later that they were like,
Speaker 1: you know what, we're just going to think about it
Speaker 1: as an MBA. He's gonna go for a year or two.
Speaker 1: It's just like he's going to school, and that's fine.
Speaker 1: And then like later they're like you're still They're like,
Speaker 1: oh cool, now they're super proud and stuff. But you know,
Speaker 1: I was living in their immigrant dream. I was self
Speaker 1: sufficient in Manhattan. I just started working in PwC. They
Speaker 1: were like, we win. We left East Africa accounting account
Speaker 1: accounting firm. I was doing consulting there for them. They
Speaker 1: were like, we won, We won the game. We won
Speaker 1: the immigrant game. We left EDIOM and was causing problems.
Speaker 1: We left and like we won. And then I'm like,
Speaker 1: so I need to go to East Africa and I
Speaker 1: need to figure out how to borrow some money from people.
Speaker 1: So they went and borrowed money from two uncles, a
Speaker 1: grandparent themselves lent it. They never told me where they
Speaker 1: got it from, which would have also stressed about we
Speaker 1: paid it back. And I think after we paid it back,
Speaker 1: they're like, oh, wow, you're there, like, this is what
Speaker 1: you're doing? Cool? And now obviously they're really they're really
Speaker 1: happy and proud and yeah, do they have equity? They
Speaker 1: don't have the company? They don't.
Speaker 2: Oh you should give them some after all that.
Speaker 1: One of the big drivers for me is to I
Speaker 1: would like to retire them.
Speaker 2: So, oh that's very sweet. Yeah, I mean I didn't
Speaker 2: ask you about exiting. Like, is there some universe where
Speaker 2: you sell the company or sell part of the company.
Speaker 1: Yeah, there's a universe. There's for sure universe. I mean,
Speaker 1: my job as a CEO is to provide investors' returns. Technically,
Speaker 1: that doesn't necessarily mean that it all has to go right.
Speaker 1: So there's a world in which we sell it. There's
Speaker 1: a world in which you have to pride off of me.
Speaker 1: But there's a lot of different options going forward. The
Speaker 1: most important thing is how do you get to scale fastest? Yeah?
Speaker 2: What is the rate limiting step for you?
Speaker 1: Now? In scaling, there are two things that would change
Speaker 1: the game for us. One is in our control. One
Speaker 1: is not in our control. In our control, it's can
Speaker 1: we have a thousand times more sales agents in the field,
Speaker 1: and if that's the case, then we can almost think
Speaker 1: about scaling linearly, but just by adding people and can
Speaker 1: we manage that growth. So that's one thing that is
Speaker 1: in our control. The thing not in our control is
Speaker 1: does a multilateral institution come with a large subsidy and
Speaker 1: a time bound five year subsidy?
Speaker 2: Does that mean the World Bank?
Speaker 1: For you?
Speaker 2: Does that mean the World Bank?
Speaker 1: That does? Yeah, do we have a subsidy in Uganda
Speaker 1: through the World Bank? But is there a large is
Speaker 1: there a larger scale multi country subsidy for access to
Speaker 1: electricity and what people call productive use of energy? So
Speaker 1: what we're doing basically productivity.
Speaker 2: Turning water into food class.
Speaker 1: Water into product classic productivity, that would be that would
Speaker 1: be a huge that would be a huge game changer.
Speaker 1: If if that and and it looks like it will happen,
Speaker 1: it's just when. But that's that's the moment at which
Speaker 1: we then push a lot of capital into the system
Speaker 1: and really hire those agents skilled in new markets, et cetera.
Speaker 1: And that's that's the moment. So just making sure we're
Speaker 1: ready for that.
Speaker 2: Back to your parents, Yeah, living in East Africa helped
Speaker 2: you understand your parents better in any particular ways.
Speaker 1: Nobody has ever asked me that question, and it is
Speaker 1: part of what I think about most as a theme.
Speaker 1: And there's there's no question about why we started in
Speaker 1: East Africa versus anywhere else. I can tell you it's
Speaker 1: because Kenya is an English speaking country and because there's
Speaker 1: a port and blah blah blah, but it's because my
Speaker 1: family's from there, and like that's that's there's an affinity
Speaker 1: to it. So I learned a lot about my parents
Speaker 1: are tough and smart and like charismatic, and it's it's
Speaker 1: very East African vibe and kind of seeing how they
Speaker 1: grew up has helped me understand that.
Speaker 2: That last sentence was quite interesting when you say they're
Speaker 2: tough and smart and charismatic and that's an East African vibe,
Speaker 2: Like what do you mean by that.
Speaker 1: Tough? As in My mom's dad died when she was seven,
Speaker 1: and she had six older brothers and they moved from
Speaker 1: Belgium to Congo to them Kenya and there's this sort
Speaker 1: of and I you know, I've met my my one
Speaker 1: of my mom's cousins still lives in Kenya and his mom,
Speaker 1: who recons passed away raised was like raised my mom
Speaker 1: helped raise my mom for a few years. Meeting her
Speaker 1: and hearing the stories and seeing where my mom grew
Speaker 1: up helped me understand that toughness of her. But it's
Speaker 1: like you hear the stories, but then you see it
Speaker 1: and you see them in that place, and that really
Speaker 1: brings it together.
Speaker 2: Tell me about the Buffalo Ranch sub at publics?
Speaker 1: Where did you get this shitternet? What?
Speaker 2: Where?
Speaker 1: This is wild? That is so good. That's so good.
Speaker 1: Oh man, that's great. That is really good stuff. My
Speaker 1: wife's a journalist and I have a lot of respect
Speaker 1: for that.
Speaker 2: That was awesome.
Speaker 1: I mean, it's it is delicious. It is also something
Speaker 1: that will change your life. It's like, you know, I
Speaker 1: grew up in Orlando and Publix was the grocery store
Speaker 1: we went. It's a regional grocery store and it's just
Speaker 1: the Buffalo sub there is just so so delicious.
Speaker 2: Samir Ibrahim is the co founder and CEO at Sun Culture.
Speaker 2: Please email us at problem at Pushkin dot fm. We
Speaker 2: are always looking for new.
Speaker 1: Guests for the show.
Speaker 2: Today's show was produced by Trinomanino and Gabriel Hunter Chang.
Speaker 2: It was edited by Alexander Garreton and engineered.
Speaker 1: By Sarah Bruguero.
Speaker 2: I'm Jacob Goldstein and we'll be back next week with
Speaker 2: another episode of What's Your Problem.