WEBVTT - Gotham Greens CEO on Transforming Fresh Produce 0:00:00.120 --> 0:00:05.120 This is Bloomberg Business Week with Carol Messer from Bloomberg Radio. Well, 0:00:05.120 --> 0:00:08.119 just yesterday the indoor agg and tech company Gotham Green's. 0:00:08.160 --> 0:00:10.360 They announced a new equity and debt capital raise some 0:00:10.520 --> 0:00:13.320 eighty seven million. So let's find out what they're up 0:00:13.360 --> 0:00:15.600 to and what their growth plans are and how the 0:00:15.680 --> 0:00:18.720 pandemic has really been impacting them. Great to be talking 0:00:18.760 --> 0:00:21.320 once again with Vage Pury. He's co founder and CE 0:00:21.360 --> 0:00:24.640 of Gotham Green's Full transparency. I've reported on them from 0:00:24.640 --> 0:00:27.520 Bloomberg TV and Bloomberg Radio audiences. I am a satisfied 0:00:27.560 --> 0:00:31.080 customer also, and Varage joins us on the phone in Brooklyn. Verage. 0:00:31.160 --> 0:00:34.240 Nice to have you back. Great to be back, Carrol. 0:00:34.240 --> 0:00:36.360 How are you. I'm doing really well. Um. I do 0:00:36.400 --> 0:00:39.680 want to talk about the the equity and debt rays 0:00:39.720 --> 0:00:41.919 in just a moment, but tell me about how you 0:00:41.960 --> 0:00:44.720 are doing and what life has been like under COVID. 0:00:46.159 --> 0:00:48.640 It's been a whirlwind year, no doubt, as it has 0:00:48.720 --> 0:00:52.640 been for many many people, if not everybody, but doing well. 0:00:52.760 --> 0:00:57.000 Keeping healthy, keeping keeping our staff are team members around 0:00:57.000 --> 0:00:59.920 the country, almost four hundred of them. Healthy and safe 0:01:00.000 --> 0:01:02.800 has been really our top priority and We've been able 0:01:02.840 --> 0:01:05.480 to keep our business fully operational, and for that, I 0:01:05.480 --> 0:01:08.120 am extremely grateful. We are fortunate to be in the 0:01:08.160 --> 0:01:12.839 food system. We are fortunate to be UM considered essential employees, 0:01:12.880 --> 0:01:15.720 and we work hard to keep our supermarket customers fresh 0:01:15.800 --> 0:01:19.480 with stock, healthy, fresh produce. What was the toughest part 0:01:19.480 --> 0:01:25.120 of staying fully operational during the pandemic, So look, we 0:01:25.120 --> 0:01:27.920 we saw the writing on the wall. Our team put 0:01:27.920 --> 0:01:31.800 a crisis management plan into place in early February, so 0:01:31.840 --> 0:01:34.880 we worked really hard to secure our supply chain, work 0:01:34.959 --> 0:01:37.600 on shifting our shift schedules around so we could enforce 0:01:37.640 --> 0:01:40.160 more social distancing, and and even sort of got on 0:01:40.200 --> 0:01:42.520 the temperature checks and things a little bit early on. 0:01:42.560 --> 0:01:44.600 So I feel incredibly fortunate that we were able to 0:01:44.680 --> 0:01:47.080 do that, and we've certainly had to modify how we 0:01:47.160 --> 0:01:51.760 run our facilities. But very early on god confirmation from 0:01:51.760 --> 0:01:54.320 the federal government UM that that we would in fact 0:01:54.360 --> 0:01:57.760 be considered an essential industry, So we informed our employees 0:01:57.800 --> 0:02:01.560 that we could stay operational, and literally the day that 0:02:01.640 --> 0:02:06.280 the pandemic was declared, we received a surge in in 0:02:06.360 --> 0:02:10.000 request from our supermarket customers to run extra trucks on 0:02:10.000 --> 0:02:12.799 the road and deliver more product. Uh, you know, since 0:02:12.800 --> 0:02:15.000 there was such a run on grocery store, So it 0:02:15.080 --> 0:02:19.720 really provided us with an opportunity to really improve our 0:02:19.800 --> 0:02:22.120 value proposition and the supply chain. You know, the supply 0:02:22.200 --> 0:02:25.840 chain is so reliant on California, the centralized production there, 0:02:26.160 --> 0:02:29.519 and we were able to really serve our customers. Well, yeah, 0:02:29.560 --> 0:02:31.720 that's pretty remarkable because you know, it's all been about 0:02:31.720 --> 0:02:34.880 supply chains. What what about what you learned during the pandemic, 0:02:35.760 --> 0:02:38.080 especially with this new you know, debt and cap you know, 0:02:38.360 --> 0:02:41.440 equity rays. I do wonder about there strategies that you 0:02:41.480 --> 0:02:44.560 were thinking about implementing. And I've seen you know, your 0:02:45.000 --> 0:02:47.640 greenhouses out there in Brooklyn. I mean it's pretty remarkable. 0:02:47.639 --> 0:02:50.800 It's very high tech. But there were strategies verage that 0:02:50.840 --> 0:02:53.040 you were thinking about putting in place, but taking your time, 0:02:53.080 --> 0:02:54.639 and all of a sudden you're like, okay, we're all 0:02:54.680 --> 0:02:59.520 in on this. Because speaking growth strategy and plan was 0:02:59.600 --> 0:03:03.080 already well in the works even prior to COVID, so 0:03:03.280 --> 0:03:08.120 in we almost doubled our capacity with new greenhouse facilities 0:03:08.160 --> 0:03:13.880 in Illinois, Maryland, Rhode Island, and Colorado. So we were 0:03:13.919 --> 0:03:16.760 able to really ramp up those facilities this year and 0:03:16.840 --> 0:03:19.200 double our growth year on year, and we already had 0:03:19.200 --> 0:03:23.040 a plan into place um to expand further further geographic 0:03:23.080 --> 0:03:27.919 market expansion within the US two. So this funding is 0:03:27.919 --> 0:03:30.560 going to enable us to do that while continuing to 0:03:30.560 --> 0:03:34.880 build operational capacity and just build our brand and continue 0:03:34.920 --> 0:03:36.880 to be a leader in this in this segment, in 0:03:36.960 --> 0:03:38.920 this category. To be fair, did you have to put 0:03:38.960 --> 0:03:41.400 some plans on hold because you were just making sure 0:03:41.480 --> 0:03:44.000 that your employees were, say, if your teams were safe, 0:03:44.000 --> 0:03:46.000 and that you were meeting all of that increased demand 0:03:46.000 --> 0:03:50.520 by your supermarket customers. Certainly we uh for for for 0:03:50.560 --> 0:03:52.560 a couple of months there in the spring. We were 0:03:52.640 --> 0:03:56.280 just focused on exactly that and didn't focus as much 0:03:56.360 --> 0:03:59.960 on on sort of the new site development and land acquisition, 0:04:00.000 --> 0:04:01.840 and so we certainly held our breath for a little bit. 0:04:01.920 --> 0:04:04.920 But then as as things stabilized a little bit in 0:04:04.960 --> 0:04:08.720 the summer, we um we we double down on those efforts. 0:04:08.880 --> 0:04:12.080 It really sounds like you guys have really been kind 0:04:12.080 --> 0:04:14.360 of in warp speed, if you will, so, tell me 0:04:14.640 --> 0:04:18.880 about the visibility you feel like you have in and 0:04:18.920 --> 0:04:21.200 how you see the year playing out as a as 0:04:21.200 --> 0:04:24.200 a CEO of someone who's running a company. How confident 0:04:24.240 --> 0:04:28.440 do you feel about the outlook given this sector that 0:04:28.480 --> 0:04:32.080 we're in, which is fresh food production. I think the 0:04:32.120 --> 0:04:35.240 outlook looks bright. I think the future is right for 0:04:35.279 --> 0:04:37.839 our company, but also for our sector as a whole. 0:04:38.080 --> 0:04:40.839 I think the pandemic has really revealed a lot of 0:04:42.400 --> 0:04:45.800 should I say, sort of risks in the supply chain, right, 0:04:45.920 --> 0:04:50.640 and our entire model is built upon decentralizing the supply 0:04:50.720 --> 0:04:53.800 chain of highly perishable fresh produce and growing it in 0:04:53.920 --> 0:04:59.720 closer proximity to large supermarket retailers and institutional food service operators. 0:04:59.720 --> 0:05:02.600 So I from the B two B side, the outlook 0:05:02.640 --> 0:05:04.919 is strong. You know, there's a lot of headwinds in 0:05:04.920 --> 0:05:09.159 the incumbent supply chain, whether it's water related issues out west, 0:05:09.240 --> 0:05:14.279 whether it's climate related issues, the wildfires, farm labor issues. 0:05:14.839 --> 0:05:17.880 So I really do think that more and more fresh 0:05:17.920 --> 0:05:20.040 produce is going to be grown indoors. And then I 0:05:20.080 --> 0:05:23.480 think from the consumer standpoint, consumers are cooking at home 0:05:23.520 --> 0:05:26.200 a lot more. Although there are obviously all of us 0:05:26.240 --> 0:05:28.920 are anxious to get back into restaurants and being out again, 0:05:29.520 --> 0:05:31.279 people are cooking more at home and they want better 0:05:31.320 --> 0:05:34.320 quality ingredients, and they care more about where their produce 0:05:34.760 --> 0:05:36.880 is grown and is it hygienic, is it clean? Is 0:05:36.920 --> 0:05:41.080 it um sustainably grown? So I do think on balance, 0:05:41.200 --> 0:05:44.040 the prospects are certainly very promising. Listen. I think that's 0:05:44.040 --> 0:05:46.720 a really important aspect of its sustainability. I mean, talking 0:05:46.720 --> 0:05:49.920 with a lot of senior executives people running companies, I mean, 0:05:49.920 --> 0:05:53.080 this is what consumers want, This is what brands need 0:05:53.160 --> 0:05:55.160 to stand for. And I do think agg is one 0:05:55.160 --> 0:05:57.240 of those areas when we talk about the climate and 0:05:57.320 --> 0:06:01.120 water usage, that's a big deal. And and I'm curious 0:06:01.640 --> 0:06:04.279 you know what you're seeing in that area, and and 0:06:04.320 --> 0:06:08.280 the role that Gotham Green's can play and all of that. Absolutely. 0:06:08.320 --> 0:06:11.719 I mean, agriculture, like you're alluding to, is a huge 0:06:11.760 --> 0:06:15.239 consumer of natural resources, right, So it's the largest consumer 0:06:15.279 --> 0:06:17.919 of land on the planet. It's the largest consumer of 0:06:17.960 --> 0:06:21.080 fresh water in the planet, so around seventy of fresh 0:06:21.120 --> 0:06:24.800 water withdrawals go towards agriculture and farming. Um. It's the 0:06:24.920 --> 0:06:29.159 largest cause of global water pollution, It contributes of global 0:06:29.160 --> 0:06:30.880 carbon emissions. You know, the list goes on. So if 0:06:30.880 --> 0:06:33.920 we're really serious about sustainability and climate change, we need 0:06:33.960 --> 0:06:35.760 to be looking at AGG, and we're seeing a lot 0:06:35.800 --> 0:06:39.320 of innovation. We're seeing a lot of investment in research 0:06:39.360 --> 0:06:42.080 and development all throughout the AGG supply chain, from the 0:06:42.120 --> 0:06:45.599 tech side to the distribution side, to actual farming techniques, 0:06:45.960 --> 0:06:48.320 the use of big data. So we play a role 0:06:48.400 --> 0:06:51.760 within that in our form of farming specifically, which is 0:06:51.800 --> 0:06:55.920 broadly known as controlled environment agriculture, allows us to farm 0:06:56.080 --> 0:06:58.320 using land a lot more efficiently. So what we can 0:06:58.360 --> 0:07:02.280 grow in one acre require thirty acres out in the field, right, 0:07:02.279 --> 0:07:05.800 So we're much more land efficient, we use less water 0:07:05.880 --> 0:07:09.159 than conventional farming, and by growing the product in much 0:07:09.160 --> 0:07:12.840 closer proximity to the marketplace, we don't have to shift 0:07:12.880 --> 0:07:16.080 the product, you know, great distances, so there's less sort 0:07:16.080 --> 0:07:18.960 of fuel consumption and associated emissions, as well as less 0:07:19.000 --> 0:07:22.160 waste um. Less fresh produce gets thrown away this way. 0:07:22.200 --> 0:07:24.480 So yeah, I mean, look, we're not sort of saving 0:07:24.480 --> 0:07:28.120 the entire agricultural system by any means, but I definitely 0:07:28.120 --> 0:07:31.320 think we're playing a role in consumers are increasingly interested 0:07:31.560 --> 0:07:35.480 and want to spend their dollars with companies that that 0:07:35.600 --> 0:07:37.920 are rooted in those kinds of values. I was going 0:07:37.960 --> 0:07:40.840 to challenge you, why not say the whole agg system farage, 0:07:40.880 --> 0:07:43.640 because you know, I remember our conversation and it's been 0:07:43.680 --> 0:07:46.480 a few years, um when you guys, you know, when 0:07:46.480 --> 0:07:48.240 I was out there in Brooklyn with you a top 0:07:48.560 --> 0:07:51.440 the whole foods. But I do wonder, you know, I 0:07:51.480 --> 0:07:53.760 think we talked about kind of bigger, broader picture that 0:07:54.080 --> 0:07:57.440 could we ultimately should we ultimately see where we are 0:07:57.480 --> 0:08:01.560 really utilizing, especially in urban spaces. Why not use our 0:08:01.680 --> 0:08:05.080 rooftops to create farming and make it much more local 0:08:05.160 --> 0:08:10.000 and accessible for everyone and fresh produce for everyone. Yes, absolutely, 0:08:10.040 --> 0:08:12.400 we've seen a surge in interest in urban farming, whether 0:08:12.480 --> 0:08:15.200 it's on a commercial scale like what we're doing, or 0:08:15.200 --> 0:08:18.520 whether just folks are doing in their communities, on their 0:08:18.720 --> 0:08:22.360 in their kitchens, on their fire escapes. Right. And you're 0:08:22.360 --> 0:08:25.400 seeing a surge of interest in farming in school classrooms 0:08:25.440 --> 0:08:28.560 and um, you know, even prior to the pandemic. Right. 0:08:28.560 --> 0:08:31.080 So I think there is this growing consumer interest in 0:08:31.080 --> 0:08:33.359 in in growing food again, which I think is fantastic. 0:08:33.760 --> 0:08:35.880 I think to do things on a commercial scale and 0:08:35.960 --> 0:08:39.200 really make a dent in the meaningful dent in the 0:08:39.200 --> 0:08:42.920 overall supply chain. Um, these types of facilities have to 0:08:42.960 --> 0:08:45.920 be considerably larger to get the economies of scale. So 0:08:46.640 --> 0:08:49.800 we've sort of graduated, if you will, from these kind 0:08:49.800 --> 0:08:54.280 of smaller rooftop greenhouses to considerably larger facilities that are 0:08:54.320 --> 0:08:56.599 just on the edges of city. So our facility in 0:08:56.679 --> 0:08:59.720 Chicago hundred and fifty thousand square feet is within the 0:08:59.720 --> 0:09:01.640 city limits, but it's just on the edge of the city. 0:09:02.120 --> 0:09:06.640 Similar in Baltimore. So, um, yeah, we we're just scaling 0:09:06.679 --> 0:09:09.160 up a lot. This is like a total addressable market 0:09:09.320 --> 0:09:12.520 just in the categories we play. Like greens around fifteen 0:09:12.520 --> 0:09:16.480 billion dollars. The current category of indoor production is maybe 0:09:16.600 --> 0:09:19.560 one per cent of that fifteen billion, So there's enormous 0:09:19.559 --> 0:09:22.520 white space. Wow, exactly. All right, So listen, you said 0:09:22.520 --> 0:09:25.120 you've doubled capacity in the past twelve months, right, and 0:09:25.120 --> 0:09:28.720 you're still opening up new greenhouses. What do you expect 0:09:28.760 --> 0:09:33.720 to double capacity in one again? Close to it. I mean, 0:09:33.760 --> 0:09:35.520 we double capacity in the last year, We've doubled our 0:09:35.559 --> 0:09:40.199 revenue this year, um increased our unit sales by and 0:09:40.520 --> 0:09:43.800 over the next year we expect to keep up that 0:09:43.920 --> 0:09:47.559 level of growth, though some of the actual capacity increases 0:09:47.880 --> 0:09:54.160 will probably common early. What's what's the biggest challenge for 0:09:54.200 --> 0:09:58.840 you as you grow. It's uh, it's it's a capital 0:09:58.840 --> 0:10:01.640 intensive business. We have to secure land sites, we have 0:10:01.720 --> 0:10:04.840 to develop our own facilities, so we're building them from scratch. 0:10:04.880 --> 0:10:09.160 It's a highly specialized type of building, right. It's not 0:10:09.240 --> 0:10:11.800 a type of real estate asset class that we can 0:10:11.880 --> 0:10:15.200 just you know, call up a broker and and find something. Right. 0:10:15.240 --> 0:10:17.320 We actually have to build it from scratch, so it 0:10:17.360 --> 0:10:20.120 takes some it takes some time to build the facilities, 0:10:20.280 --> 0:10:23.000 and uh that's you know. So I think our biggest 0:10:23.080 --> 0:10:26.240 challenges is just getting getting the capacity built test enough 0:10:26.240 --> 0:10:28.880 because the market demand is certainly there. Hey wee last question, 0:10:29.080 --> 0:10:32.640 enough money out there in uh the capital markets or 0:10:32.679 --> 0:10:34.959 private markets that you guys can continue to stay a 0:10:35.040 --> 0:10:37.160 privately owned entity. Is that the goal for some time 0:10:37.280 --> 0:10:40.200 or are you thinking about going public just quickly? That 0:10:40.320 --> 0:10:42.160 is the goal for the time being, where we don't 0:10:42.160 --> 0:10:44.240 see the need to raise money from the public markets. 0:10:44.280 --> 0:10:45.880 We have a lot of investors who have backed us 0:10:45.880 --> 0:10:49.239 from day one, and we've been able to get increasing 0:10:49.880 --> 0:10:52.440 project finance and des financing as well, which is you know, 0:10:52.480 --> 0:10:55.080 on very attractive terms. So I think for the time 0:10:55.120 --> 0:10:58.160 being we're looking at the same private but all options 0:10:58.160 --> 0:11:00.199 are on the table as we grow. Well, let's send 0:11:00.240 --> 0:11:02.400 great to check in with you and please keep us 0:11:02.960 --> 0:11:04.920 up to date you on some of your new future 0:11:04.920 --> 0:11:06.920 plans and or as things happen. I'd love to check 0:11:06.920 --> 0:11:09.920 in with you once again. Varage Puri, thank you so much. 0:11:09.960 --> 0:11:12.959 Co founder, chief executive officer of Gotham Green's joining us 0:11:13.280 --> 0:11:15.840 on the phone from Brooklyn. As I mentioned, they did 0:11:16.360 --> 0:11:18.920 UH do an eighty seven million new equity and debt 0:11:18.960 --> 0:11:22.320 capital raise that was just yesterday and talking about some 0:11:22.360 --> 0:11:23.800 of their growth plans going forward.