COMPANY:Blue River Technology
HEADQUARTERS: Sunnyvale, CA
YEAR FOUNDED: 2011
2016 REVENUE: Undisclosed
Blue River Technology isn't a typical Silicon Valley startup. The Sunnyvale, California-based company makes farming machines. "I bet we're the only startup with a tractor behind our offices," CEO Jorge Heraud says. Nevertheless, it is still very much a tech startup.
Blue River's machines are robots that help farmers manage their fields more efficiently. The old-school approach is to drench an entire field in weed-killing chemicals, but Blue River combines computer vision and sophisticated machine learning algorithms to spray selectively.
The machines are hooked up to tractors and are used to scan entire fields, only spraying the appropriate targets. As a result, farmers save money, with the side benefit of reducing the amount of herbicide that leaks into the environment. One of its models is called LettuceBot, and it can reduce herbicide use by a factor of 10.
Heraud has a grand vision for Blue River Technology, which raised a $17 million Series B in December 2015, primarily from agriculture-focused investors. He wants to build a global company that helps farmers everywhere manage their fields on a plant-by-plant level, mainstreaming artificial intelligence as an integral part of agriculture. A.I. is an area of much interest and investment in the tech industry, Heraud says, but it doesn't always have a mission behind it.
"A lot of the opportunities out there are for people to use artificial intelligence to market, to do app placement or spam filters--to do things that are not quite as meaningful" as improving how food is produced, he says. "The biggest mega-problem facing agriculture is how do we clean up our act, maintain scalability so that we can feed everybody--and even those who are to come--but do it in a sustainable way."
Going back to the roots
Heraud's grandfather was a farmer in Peru, where Heraud grew up, and his father was an entrepreneur. "I remember summers where I spent the first part of the summer helping out with farming," he tells Inc., and then came to California for the second half, "to work on my dad's startup, helping with whatever I could." Heraud inherited a taste for both agriculture and business, the latter of which was stoked by a master's degree in business administration at Stanford University.
Heraud and co-founder Lee Redden met at Stanford. They took a hands-on entrepreneurship class together, and Redden joined Heraud's working group, in which they hatched the first plans for Blue River. Redden, who once worked at NASA and has a background in robotics research, decided to put his PhD on hold. The pair started the company in a classically scrappy way. "If you go back a few years, we rented a little place that literally had a garage, and we were working out of there," Heraud says.
Heraud recalls that he and Redden asked themselves, "OK, what do we do first? What do we do next?" They started with lettuce, because it was a year-round crop, grown locally in California. Heraud and Redden devoted their energy to research and development and began to staff up. They built prototypes, dragged them into the fields to test, and then back to the lab to improve. Finally, they launched the LettuceBot in October 2014, which the company says was well received by early customers, such as the Salinas-based farm Tanimura & Antle. "We conquered lettuce," Heraud says. "We had a good product, and we started having revenue."
That led to more questions--primarily, what to do next? "We could have gone in 1,500 different directions," he says. In the end, Blue River decided to focus on cotton next, largely because the crop tends to have a lot of problems with weeds. "Our product is well-suited for that," Heraud says. The company is still working out the kinks in that machine, which is called See & Spray. It's being tested in Arkansas and Texas prior to a likely 2018 release, according to VP of business development Ben Chostner.
The race to bring tech to the farm
Nikhil Krishnan, an analyst with the tech and startup research firm CB Insights, wrote in March that the agtech category has grown quickly since 2013 and is already setting new highs in funding in 2017. The jury is still out on whether this will be a fruitful sector for venture capitalists like those backing Blue River Technology, since large exits have been thin on the ground since Monsanto's 2013 acquisition of the Climate Corporation for more than $1 billion.
Lawyer Roger Royse, whose California law firm specializes in representing agtech companies, tells Inc. that he thinks Blue River is a prime acquisition target, especially as the industry consolidates. Rather than looking to crush their younger competitors, the largest companies are "reaching out to make deals." Nevertheless, Royse says, "this is a field where the biggest company is not going to win. The fastest company will," providing a significant opening for startups. A couple of the rivals that Blue River will have to contend with are Ecorobotix, maker of a smart weeding machine, and Ramsay Highlander, which focuses on harvesting machines.
Contrary to popular perception, farmers are fairly tech-savvy, according to Chostner, and ready to embrace innovative solutions that will lower their costs. And yet there are downsides for startups trying to move fast in a heavily regulated industry like agriculture, especially when it comes to food production. "That's one of the things that technology companies really have to struggle with when they enter the world of agriculture," Royse says. Blue River itself has had some trouble with regulators, because of the rigidness of the law, despite endeavoring to help farmers pollute less.
Agricultural chemicals are labeled by the manufacturers, in collaboration with regulators, to specify the exact methods and purposes of use that are allowed. Heraud discovered that the labels accounted for traditional farming methods, but not for a cutting-edge machine like his. To get farmers on board, Blue River needed to have the labels changed so that LettuceBot could be used legally.
After going back and forth between the regulators and the manufacturers, Heraud found himself in the awkward position of needing to persuade chemical manufacturers to change their labels so that farmers effectively could use much less of the product they sold. "They're not very [motivated] to do this," he says, dryly. "It requires convincing--quite a bit of convincing--and I wish it was simpler, that there was a better path."
Still, Heraud is willing to slog through. He sees Blue River as part of agriculture's evolution toward greater sustainability, both financially and ecologically. Heraud tells Inc. that most of the established industry players he talks to also see the need for a lower-impact future. Using existing resources more effectively is a key part of that.
Ultimately, managing a complex future is what keeps Heraud up at night. "It's just so many choices that we have in front of us," he says. "As a startup, you don't get to make very many mistakes. You can make, I don't know, one or two. If you [make] too many, you don't survive."