Episode Summary

Join Harry Duran, host of Vertical Farming Podcast, as he welcomes to the show Niko Kivioja. Niko is the CEO of Netled, an organization that designs and builds the high-tech platform for the world's smartest vertical farms. Niko spent the first part of his career in controlled-environment-agriculture as a grower and has spent the last decade in high-tech closed-environment and vertical farming technology development. In this episode, Harry and Niko discuss the Niko’s familial history of entrepreneurship and the inspiration to start Netled. Niko speaks to the proprietary Vera vertical farming platform development that he’s recently been managing, how the global pandemic impacted the food supply chain and what excites him the most about the future of Netled and the vertical farming industry as a whole.

Episode Sponsor

CULTIVATD

Key Takeaways

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• 05:49 – Harry welcomes to the show Niko Kivioja, CEO of Netled, who talks about his educational background and the work he’s doing at Netled
• 
  
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• 12:59 – Niko speaks to his family’s history of entrepreneurship
• 
  
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• 16:30 – The inspiration to launch Netled and how vertical farming changed the traditional idea of greenhouses
• 
  
• 
  
• 21:28 – Niko expounds on Vera Instore solutions
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• 24:23 – Companies that expressed early interest in Netled
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• 26:03 – Niko talks about expanding and building their first vertical farm in North America and how the pandemic has impacted his business
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• 30:40 – Netled’s partnership with Vertigo Farms
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• 35:59 – Shifting trends in demand that Niko has noticed
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• 38:04 – Niko speaks to Netled’s growth and his own personal growth as a leader
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• 40:58 – Niko discusses challenges and opportunities for growing his team
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• 44:32 – A difficult question Niko has had to ask himself recently
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• 47:26 – What excites Niko the most about the future of vertical farming
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• 48:54 – Harry thanks Niko for joining the show and let’s listeners know where they can learn more about Netled and connect with Niko
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Tweetable Quotes

“The climate conditions are, of course, quite challenging part is what’s challenging. If you look at the map of where Finland is located, we are the northern-most agricultural country in the world. That means that even though he have mild weather thanks to the gulf stream, still the light conditions are challenging during the winter.” (09:09)

“If you come from an entrepreneurial family, it’s really difficult not to go there yourself as well.” (15:17)

“I think that the best advantage of closed environment growing and vertical farming is the fact that you can actually control the conditions perfectly.” (20:55)

“It has been quite rewarding to actually see that our solutions have pulled through. We’ve learned a lot along the way and we’ve seen how the technology environment has developed, which has allowed us to offer better products.” (38:50)

“That leads into this dilemma that there are a lot of companies who start as farmers but then they find out that they have to become technology companies as well in order to get financed.” (45:43)

Links Mentioned

Niko’s LinkedIn

Netled Website

Netled Twitter

Netled YouTube Channel

Netled Facebook

Vertigo Farms Website

Sponsor Info:

Cultivatd Website

Cultivatd Instagram

Cultivatd’s Twitter

Cultivatd’s Facebook

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Mentioned in this episode:

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or click the link in the show notes. The climate conditions are of

course quite challenging. So if you look at the map

where Finland is located, so we are the northernmost

agricultural country in the world. And that means that

even though we have quite mild weather thanks to Gulf Stream,

but still the light conditions are really

challenging during the winter period. And that was probably the

reason that Finland was one of the first countries to start artificial

lighting in greenhouses.

Welcome to the Vertical Farming Podcast. Weekly conversations with

fascinating CEOs, founders, and agtech visionaries.

Join us every week as we dive deep into the world of vertical

farming with your host, Harry Duran.

Vertical Farming Podcast, Season 3. Welcome back. If this is your first time listening, I'm

positive you're in the right place. This is the show where we interview fascinating

CEOs and founders of the leading vertical farming companies from around the

world. I'm your host, Harry Duran. In case you missed last week's

episode, we had a great conversation with Eric Levesque, co-founder of

Cultivated. You may recognize the name from the intro at the

beginning of the episode. We're honored to be partnering with Cultivated as

our title sponsor for season 3. This week, I have the pleasure of

speaking with Niko Kivioha, CEO of NetLed.

NetLed is an organization that designs and builds the high-tech platform for the

world's smartest vertical farms. Niko spent the first part of his career in

controlled environment agriculture as a grower and has spent the last decade in

high-tech closed environment and vertical farming technology development.

In this episode, we discuss Niko's familial history of entrepreneurship

and the inspiration to start NetLed. Niko speaks to the proprietary

Vera vertical farming platform that he's recently been managing,

how the global pandemic impacted the food supply chain, and what excites him

the most about the future of NetLed and and the vertical farming industry as a

whole. This episode's also brought to you by the Vertical Farming Weekly

newsletter. Each week, our team member Daniel Dre scours the ends of the earth

to bring you the latest and greatest in the world of vertical farming. Sign up

today at verticalfarmingweekly.com. Don't forget, if you

enjoyed this episode or past episodes, I'd love it if you leave a rating and

review at ratethispodcast.com/vfp.

I'd love to read yours out next. Okay, I know you're chomping at the bit

to get into this conversation with Niko, so let's get to it. So

Niko Kivioa, CEO of NetLed, thank you for joining

me on the Vertical Farming Podcast. Thank you, Harry.

So Niko, for the benefit of the listener, can you let us know where home

is for you now? Well, home is in Finland,

about center— not center, I would say a few

hundred kilometers north from Helsinki. And I bet

Helsinki is the most popular place here in Finland. So

it's a Tampere region, a lot of lakes. Beautiful nature,

nice place. And what was the impact for

you last year? Was it helpful to have access to that nature

while everyone was going through their version of the shutdown?

I have to say yes. My house is close to a forest

and it's easy to go walk in the forests and enjoy the nature. So

yeah, I think you're right about that. It's good, helpful at

least. Yeah. Therapeutic especially, I would

imagine, being around nature. Yeah. Is that something for you? Do you

consider yourself— where do you find yourself? You're more at home in big cities or

in more like urban environments? I mean, country

environments, nature? I would say I like both.

City environment is nice, but sometimes it's good to go

back to nature and get the connection back. Yeah, if I

may. So, so that's nice. And I think that

in this line, line of business that we are doing, there's more

connection to nature in the business itself than there is, let's say, in

some other field of technology. And, uh,

where did you go to university? It was actually here in Tampere

University of Technology. Yeah, it's quite

popular university here in Finland. Did you know

when you went enrolled and you had an idea of what you wanted to study

and what your focus was going to be, how much of that changed by the

time you graduated? Well, basically, I did

know that I will probably work in something

related to horticulture or commercial production of vegetables

because my family business actually goes to

horticulture in Back in the day, 1987,

my father started a greenhouse operation producing 1

million kilos of tomatoes annually and

year-round with artificial lighting and everything. So it was actually during the

wintertime, pretty close to vertical farming already in the '80s,

early '90s. So growing there, and actually

I felt that I have picked enough tomatoes for one

lifetime. growing in greenhouse. So,

so then I decided to go for technology, but I knew that I will

probably work with something related to that business in my professional

career as well. It must have been interesting for you because, I mean,

greenhouses obviously have been around forever, but in the '80s,

the technology is so much more advanced now. And obviously

we're going to get into a little bit of the work you're doing at Netlid.

But did you understand or realize how

important it was to have the ability to grow indoors?

And is that something that is naturally something top of mind for you when you're

in a climate like the climate you experience in Finland? I would

say yes. The climate conditions are, of course, quite

challenging. So if you look at the map where

Finland is located, so we are the northernmost agricultural country

in the world. And that means that even though we have quite

mild weather thanks to Gulf Stream, but

still the light conditions are really challenging

during the winter period. And that was probably the reason

that Finland was one of the first countries to start artificial lighting

in greenhouses. And that's the

funny thing about that is that most of the professional greenhouse

producers actually switched all the way to

winter producing and didn't do the summer producing at all

anymore because there was so much more money available when you can

actually produce at the time that nobody else can produce. Mm-hmm.

So that actually drove the artificial lighting. Well, I would

say back then when you only had high-pressure sodium lights for

greenhouses, so it drove the business to develop

methods of how you can grow better better, faster with this

greenhouse environment and with this artificial lighting.

When you take the midwinter conditions, when you can have

maybe -30 degrees Celsius— I'm sorry, I'm bad

with the Fahrenheit— but anyways, it's really cold.

And if you take that temperature outside and you take

25 degrees inside and you have single layer of glass in between,

so it tells you that there's a lot of energy involved and

everything you can do about that energy takes you closer

to better profits and more successful business.

But I would say that it's not all about the money. If you look at

Finnish consumers, they are very well trained

to buy domestic produce.

So for example, in Sweden, as far as I know, they are— there is much

more import coming into Sweden, even though if They are quite

close to us, but in Finland, very high percent,

I would say probably about 85, 90% of

the vegetables consumed are produced locally.

That's interesting. Is that a mindset or a way of thinking

in Finnish culture generally to just support

locally grown foods and produce? Well, I

think the growers union have done outstanding work to promote that,

so they have done that. But yeah, I think it's more of a marketing than

mindset of people here. But that's good for our, first

of all, for the growers so they can actually get paid for their work.

But second, it's also good for the tech development because when we

have domestic production systems, we have growers, very

highly trained growers who are actually growing highest

yields of cucumbers, for example, per square meter in the world. At the

time, over 200 kilograms, some way over 200

kilograms per square meter. So that's really good because

it also pushes the technology to develop here. It's

always more difficult to work on technologies that

you have to work in foreign countries or long distance

away, but when we have a good community of growers and

technology suppliers, so we are, we can really work together and find the best

solutions. And have the growing know-how as

well embedded into this technology know-how.

And it's really difficult to go to growing technologies

by just having an idea that this sounds a nice thing.

But then when you actually approach the growers, they have probably

thought that through already. And that's the challenge we're working with.

But I think that's something that had driven the technology development here in

Finland. Just coming back for a second to your father with

the greenhouse, is that something that was common in your

family, or this idea of this— here I would call it the

entrepreneurial bug, and, you know, this idea of building your own business,

making your own way— is that something that was always

common with your father or, you know, previous generations?

I would say that the generations before

my grandfather, they were farmers, but with

traditional open field farmers, some cows, and I think whatever you

had at the farm back in the '50s, '40s.

But they did do a lot of work with the boards of

companies back then, like the dairy production and things like that.

So that's, yeah, maybe there was something entrepreneurial back then as well.

The main reason or driving force for my father to start this greenhouse was

actually the there was a factory, or it's still there, this

industrial factory in this region where he started the

greenhouse. And this factory was producing excess amount

of heat. And in Finland, you need quite some

heat to make that, let's say, through the winter.

So this company was incentivizing

other companies to come to that region and buy the heat.

to the greenhouses and, or whatever you want to use that for, but in

this case, greenhouses. And they were successful. So there was actually

7, about 7 hectares of greenhouses, that area of which

2 hectares was my father's business.

So that was the driving force. And the second was the crazy,

let's say, economical atmosphere of the '80s. So

a lot of, a lot of low-cost money available for starting businesses. Yeah. Do you

think that that had an influence on you

later on as you started to think about, you know, what you witnessed,

the challenges, the ups and downs of owning your own business? There's obviously

freedom there, but as any business owner knows, there's also

challenges and struggles day to day, some high highs and some low

lows sometimes. Well, I think that's, um, I think I

haven't thought through that well, but I think that

there's something that if you come from entrepreneurial family,

it's really difficult not to go there yourself as well.

So there's something there. There's the feeling of success when you

succeed on something. And of course there's the

low times as well, but then again, the

success wouldn't taste that good if there is not the bad times.

Is there a big or supportive entrepreneurial community

in the town where you're at and just in Finland in general? Well,

yeah, there's surprisingly a lot of entrepreneurial companies

in this region, but of course, the Tampere region where I am at,

there is a lot of big industries as well. For example, Nokia, where the Nokia

cell phones comes, is right next door here. And it's actually a

municipality called Nokia where that name comes from. So, I

drove through that every day to my work. So there's also origins

of big companies, but there is some quite

thriving startup scene as well going through here. And

there is a lot of interesting companies coming up. But yeah, so

yes, there is a lot of peer support for building your businesses.

So that's a good thing, definitely. So tell me about the

idea for NetLed, when that started,

when you came up with it, or, you know, what was the inspiration? The

original idea for NetLed started

with our own needs in that greenhouse environment. So we

started to— well, if we look at early

2000, when we installed that second hectare with

hypersodium to increase the productivity

of tomatoes, that was really good years. We made a lot of

money with that organic tomato sales in midwinter.

But in a few years later, like 2005 and so on,

the energy prices started to climb very fast. And

when the energy prices start to climb, we have to look into the

one thing that is eating a lot of energy, and that's

the lighting. And back then, 40% of

our revenues were the electricity cost

of our greenhouses. And you know that

if there is even a slight increase in energy consumption or energy

price, it will ruin your profits. Yeah. So we have to

do something about that. And we started to study LEDs. And that's the

initial, let's say, reason why NetLED was

originally started, to study LEDs. But then we

moved on to vertical farms, turnkey systems in

2004. Originally, we started to study vertical farms. as a whole thing.

And that's something that nowadays is taking a lot of our time.

When did you notice that there was a shift in

interest or availability or creation

of a vertical farming model different than what you had

historically seen in greenhouses? That is

a good question because there

has been talks about vertical farms forever. Yeah,

actually, I know a guy in Finland who started working

with vertical farms in the '60s already, but it was just

small things and trials with mercury lamps that are

forbidden already. But anyways, nowadays—

but I would say that of course, when we started to look into the LEDs,

we found out that in greenhouses, one of the

biggest issues, for example, with leafy greens and

lettuces is the quality challenges when

you are going from a midwinter where you have

maybe 1 mole per day light, and when you're going

to February where you suddenly have 5 moles or

8 moles per day, and then the plants

cannot really take that change in the light conditions

and they start producing quality issues.

So then we realized that actually that

it's much easier and better to build

vertical farm where you eliminate that biggest quality issue

called sunlight from the process.

And then when we studied this a little further, of course, back

then, 2010, 2008, back then the

energy efficiency of LEDs and the price for

outrageous. You cannot really think about building

feasible vertical farms, maybe research and things like that, but that's

all. But then when we started to look at these quality issues with the

sunlight and all other things related, like when

you are dehumidifying greenhouse in midwinter,

it means that you are putting heating on and you are opening the hatches

even if you have frost outside and you have huge columns

of steam coming out of the greenhouse because you're dehumidifying the greenhouse.

And you can imagine how much energy you're losing there. So

all of these aspects, when you take this into consideration, it only

makes sense that you build entirely closed

environment where you can perfectly control the conditions.

And I have to say that I think that the vertical

farm term is a little misleading because

it usually comes to the discussion that you can use so and so efficiently the

field area or the floor area or whatever because

you have so many layers in the vertical farm or vertical, these

gutters or whatever. But I think that the

best advantage of closed

environment growing and vertical farm is the fact that you can

actually control the conditions perfectly. And when you're

controlling the conditions perfectly, it means that you have to

eliminate the sunlight. And when you're eliminating the

sunlight, then it only makes sense to put them on top of each other

to save space. So it's a secondary benefit to use the space

more efficiently as far as I think about the subject.

So then you created the Vira line specifically for vertical farming

and you have different applications. There's the in-store, the

compact, and the industrial, which one Which one did you start with,

or did you know from the beginning that you would be tackling like these different

use cases? Well, yes, actually

the industrial, the driving idea behind

Vera system have industrial-scale production because I

believe that vertical farm should be competitive with

any other mean of production of the vegetables.

The main reason for that is that The methods of growing

that are not competitive with the traditional methods, they

may carry you around when it's trendy to buy vertical

farmed crops. But when that trend is over

and everybody's assuming that all things are grown efficiently

in vertical farms already, then you just have to be competitive.

It doesn't really matter anymore that it's vertical farm. It only means that lowest

prices. is the key. And what we have

calculated with the in-store cabinets, in-store designs, and

all of these, it's simply the fact, the economy of

scale, which is present in every industry.

So that's the original, let's say, thought behind VERA

system. And that's where we have the highest automation levels

that we've developed, best energy efficiencies and everything. But But

then again, there's huge demand, at least in this transition time to

vertical farming, in in-store designs and the

compact designs. They are easier to get financing

today. Then again, the, let's say, the consumer

impact of in-store designs, it's

outstanding. And if you think yourself

walking into supermarket and you see this

factory growing or producing your vegetables right there,

it's so easy to think that, okay, I really want to buy that. It doesn't

really matter what it costs. Yeah. Whatever is behind the

display with the purple lights, that looks cool. Yeah.

Yeah. So I think there's value to that. And I think there's

value to that, that you are showcasing to consumers that

this is the way how your plants and food is

produced and they get better understanding and they maybe value

a little higher, the fact that, okay, there's so much

minds and thinking and ideas behind of

how our food can be produced more efficiently and more

ecologically, less mileage for food and all these things.

But having said that, still, I believe that in long term, the industrial

solutions should be at least

being developed with the same pace because We need a

long-term solution for the issues that we see on the field.

As you started rolling out the product line, which

types of companies or who were the companies that were

expressing early interest in NetLED?

Well, of course, back in the days when we sold LEDs for greenhouses, so

we are quite well established in the Nordics,

at least with the LED field for greenhouses.

And of course, through that, we have some traction with the vertical farms

as well. But it seems that because the

capital intensity of vertical farming is so

high, so the CapEx side is high, so it seems

that it is more of startup greenfield type projects

that are going into vertical farming. The supermarket field

for in-stores, That definitely seems to be that there's a lot

of interest from supermarket chains in different countries

towards promoting their own or lifting their own tail about how

ecological we are by investing into these

cabinets or in-store type designs. But yeah,

I believe that the biggest breakthrough comes from the

corporate-style vegetable producers or

food industry for the industrial type of production. So when the food

industry, let's say ready-to-eat meal packages and things like that,

they consume huge amount of leaf green and basil

and all these standard herbs. So I believe that's the field that

will go fast in vertical farming once they see that it's

ready for big-scale investments. So those

are the biggest players that I think that affect the Can

you talk a little bit about the work leading up to launching the first

vertical farm in North America with RainBridge?

Yeah, sure. So we've been looking ways to get

to North America for some time now. So we've

been contacting people, going into exhibitions and so on.

One main reason is that we see that the US especially is the

most dynamic market for for vertical farms.

So, and we can see that most of the biggest vertical farms are

built in the US already. So the market is more ready

for vertical farms than in Europe, as far as we can see.

So that's one thing. And we have a long-term good

cooperation with Rambridge and Bernd from there,

and it's outstanding people working there. And they saw an

opportunity to bring this technology available in North America

and also start to promote the technology there.

So they were interested to invest their own money into this technology

to make the first case available for

other people to see there and see that there's other

ways to think vertical farming. And, and at least for some

purposes, maybe it's, it's better than something else

that is available today. And yeah, so they decided to go for it, and we're

really happy that we can do that because we see that it's

quite challenging to get the US natives to travel all the way to

Finland to see things. It depends on the time of year. Yeah,

yeah, that's true. Do you see that as now

an opportunity to expand your footprint in North America? I

do. So of course, this whole thing with this

pandemic and everything. So it's really a little bit challenging to

see what is the next, let's say, episode with this,

with the pandemic, whether there's a new variant or something coming up. But

other than that, there is now the relief bill which was passed there

and a lot of money available for investments now. And

what we see is that the economy is going forward

fast in most places, at least. So

I think the pandemic, the bad thing of course is that it stalled everything for

a year at least. But then again, now we see that there is a

pressure to do investments and that probably

speeds up the further down this year we go. Yeah, I think

what it made obvious or exposed is

the challenges in the supply chain. That's, I think, became

very aware for people. And also here in the States,

people's access to fresh produce. It's, I think, something people

who live near a supermarket or a grocery or a farmer's market take for

granted. But I think, you know, there's low to moderate income

neighborhoods here in the States and all over the world, I'm sure.

But, you know, the only thing that's near them is fast food and junk food.

And I think what's been made more aware is more of these

opportunities to have that access. And I think that's expanding out because

companies see that they want to help solve that problem. And

looking to, and obviously when there's resources

and solutions like what NetLed provides, I think it

really opens up the market to you. I'm sure that's part of what you're speaking

to. Yeah, I think that's the case. And

even though, of course, the pandemic is the one on the top right now with

the discussions, but then again, we do see

the climate change-related things already affecting

in the background. So of course that cannot be seen by the consumers

directly, but for example, there are companies in

food industry that are buying these products that

can be produced in vertical farms as well. And they

have made huge losses in these episodes when there was, let's say

2017, there was a sudden snowstorm in

Spain. And the lettuce price went 10 times

higher for a brief period of time. And it meant

that these companies lost their entire year's profit because they still have to

buy that not to lose their market position. Wow.

So there's a lot of things happening in the background that doesn't come to the

surface in the media, that is not directly told to

consumers, but it affects the economy and everything behind.

And I think this is also driving the the industrial-scale production

to the food industry, to— they're willing to pay more

for the security of the supply chains for their producers.

Well, that's a perfect segue into your partnership with Vertical

Farms, because I think a lot of people don't think of

industries like pharmaceuticals and cosmetics when they think of vertical farming. So can

you speak a little bit about that as well? Yeah, sure. This Vertical

Farm, it was quite Let's say surprising for

us as well that we got approached by this David, great guy.

So he approached us and said that he wants to do a little bit

something different with vertical farms. And we said, okay, we supply technology

and are happy to do what you want. So,

but anyways, started to work with certain crops that he

asked to do tests with. So we started test trials with our

own farm. We produced 30 kilos of this stuff

and sent over for tests. And then they

extracted, they did a lab test of how much they can extract from this one,

and they were happy with the results and go forward with the investment for this

facility. Yeah, so I think

when you're making the technology available and the ideas, I

think technology is only one thing, but when you're making the ideas available

for people and these guys with entrepreneurial

spirit, then you are opening new opportunities that

you didn't even know that is there. And this was—

this really came clear to us with this thing that we cannot say

that it's only for herbs and lettuces and these food products.

It can be cosmetics, it can be, I don't know,

algae, whatever. There is so much stuff that have that is

produced organically in the world. So we don't know

probably half of it. Yeah, I think once people see

what's possible and how vertical farms— and for the benefit of

listener, they're based out of Poland, I think, right? Yeah. And,

and they're using whatever they're growing as the basis

for their products, which speaking to earlier, like

disruptions in the supply chain, I think for companies that

rely on those Watching those margins closely, controlling

that in-house, I think is going to be top of mind for a lot of

these companies. Yeah, yeah, that's for sure. And I

think what comes to the pharmaceuticals, one of

the main things is the quality and the uniformity of the

quality. And if you think about the

entire greenhouse business and the financing of this

agriculture, the one big thing and the challenge is that In

greenhouse field, it is difficult to get financing. Not a lot of

investors are interested to look into

greenhouses and open field growing because there are so many risks about the

climate and the difficult years and years with

losses and storms and everything. And one main thing is

that with vertical farm, that you can actually eliminate that risk. And when you

eliminate risk, investors are happy and they want to pour more

money towards you. And this is especially true when

you go to pharmaceuticals that you can actually guarantee that, okay, in next

month you get this much stuff and in next year you get this much

stuff. And we can guarantee that it's the same quality throughout

the way. So this is probably one of the biggest problems for

these, let's say, big players with small margins

that have to make sure, of course, pharmaceuticals probably have big margins

as well, but still. They want their

suppliers to come through with their product, and that's key for the

continuity of the business. Given the success

you had with Vertigo, do the wheels start spinning? Do you

think that this is— there might be now an opportunity in other

industries that you might not have thought would be a good application

for NetLed? I think that we know technology, we know

quite a lot about growing stuff quite a lot about the

horticultural biological part as well. The fact

that we don't know is that what kinds of end products there is demand

for. And that's the

idea that if there's an idea that, okay, maybe this is a crazy

idea that we might be able to grow this in vertical farms, but

it's probably nonsense. But still, David

go through with that and now he has— perfectly functioning vertical farm in

Poland. So I think it's important to lay

out the ideas and it's important to approach

companies like us with the ideas so we can put our technical

and even the growing know-how from at least the

lettuce and herb field together.

Most of the plants, they're not so different, so most of the basic

principles can be worked with lot of crops. So I don't think there are

stupid ideas when there's such an emerging market that you can—

only sky's the limit what you can do with vertical farms. Of course,

money is a limit as well, but I think that comes through when you are

discussing and finding the best ways to do it and best technologies to do the

business. And nowadays, surprisingly, a lot of business

ideas actually are successful with vertical farming

because they The economy of vertical farming has gone through so

big changes in the last few years that it's really carrying

through a lot of business ideas already. And for the benefit of the

listener, I also want to remind them that you do have also turnkey

solutions, turnkey lighting solutions for greenhouses as well. So,

you know, that you do offer both. Do you see a shift in

demand percentage-wise between the greenhouse and vertical farm?

Well, that's a good question. I would say that vertical

farms are growing bigger and bigger in

our business, so the LED lighting is really important for us as well,

but it's a more challenging business to do the LED

lights than vertical farms. The main reason is that there's so many

suppliers, and for clients, what comes to

client perspective, it's difficult sometimes to say that.

Who is good supplier and who is bad supplier, and everybody

is somewhere in between usually. And when there

are so many companies shouting in that business, so it's difficult to get your

voice heard by the clients. So that's definitely—

the market entry to LED greenhouses is so low that there's

constantly coming companies and constantly going companies out from that business.

And that's definitely the challenge in that field. But still,

it's— we've been doing that for how long?

About, well, 16 years since we did our first LED

trials in greenhouses. Yeah. And we know the best

ways of doing that and what is the economy behind. And

one big thing about LED lighting in greenhouse is that

the price per micromole has gone down so much and

so rapidly that now The, for the last few years, the

LED lighting investment is actually making a lot of money for the

companies compared to high-pressure sodiums. However, high-pressure

sodiums are still the most sold equipment there is for lighting,

which is quite funny that it is, but it's just so cheap

to invest in, even though you lose the money in a couple of years already.

But, but still initial investment is so low. That's, let's say, easy way

to fix your lighting issues. Shifting gears a little bit,

you know, 16 years, NetLed has been in business, I think,

itself 12. How have you

grown and what changes have you seen in terms of your leadership style

in order to, you know, and things you think of year over year?

Leadership style. Well, of course, we

have been pushing a completely new business

throughout our history, actually. So LEDs, when we

started 2007, NetLED, and

2005 we did initial tests with the greenhouse company.

So of course that's been the challenge, sometimes very

frustrating to push a market that doesn't exist. But then

again, it has been quite rewarding to actually see that our

solutions have pulled through and we've

learned a lot along the way and we've seen how the technology,

let's say environment, have been developing so that it allows us to do

better products. And we just actually looked at

our oldest commercial

project and that have been running for

11, not 11, 9 years now.

oldest LED installation still running. And so yes, we've

seen, we've seen technologies, we've seen LED chips, really bad

and really good ones. We've seen suppliers, bad and

good ones. We've seen business models that are bad and good ones. So when you

look back the entire time, we've seen pretty

much everything there is to see in LED business. So, so

that's quite funny. But Of course, we are quite often

comparing to the general lighting field, the white LED

field, and it seems that greenhouse LED lights are

coming maybe 5 to 7 years behind that.

And the main reason is that the energy demand for greenhouse, for

growing plants, is so much higher compared to this general

lighting. One main reason is that the general lighting is

merely informatic, so you just need to see what's

around you and that's information. But when you go to the plants,

it's just energy and there is some information, but mainly it's energy.

And then it means that when you're doing energy with light, you have to

have a lot of light. And that's main reason. So

now when you see these 600 watts, we have

550-watt LEDs or the big LED

luminaire. So you can see that within last

maybe 3, 4 years, the LED size have

grown from 200 watts to 300, 400,

500, now 600 watts. And hopefully it doesn't

grow any bigger than that because then it doesn't make any sense anymore. But

that's where we are at. So tell me a little bit

about your thoughts around growing the team as business grows,

as the industry grows. What are some things you foresee could

be a challenge for you, or interested in how you're thinking

about where to grow the team for the

specific needs you see coming forward, coming ahead? Yes.

So we see the business, or let's say our purpose in

this market. I see it so that we, our

purpose is to enable the

vertical farms to be widely rolled out in

the market. And one main reason for that is

that we are a technology company and we prefer

to stay a technology company. Of course, we do some

trial growings and we are growing some small amounts for the

supermarkets, mainly to learn more about how to grow, but also

how the technology works together with the plants. But the main

reason is that The main purpose is to provide services for

the operators. We call them operators, the vertical farmers,

that you don't have to develop your own technology to

become vertical farmer. And I believe that this

is the way that the business is going. Initially, it's easy to

have own technologies with the companies. It's

easier to raise funds when you have proprietary technology, even though you're a farmer.

But still in the long run, we see that it's going to diversify into

technology, quite clear technology companies and farm companies.

And this development is something that we want to

speed up by offering the technologies, tested, verified

technologies for the operators, for the

risk management purposes, but also for easier to

finance the projects when there is tested technology available. for your

need. And this is a long, long way to

answering your question. So where to develop our team? The

challenge from technology perspective is that there's, of course, different

regulations in EU and in US and in Canada, even

Japan. Pretty much all the countries have a little slightly different

regulations and everything. So it's easier for us to

go to these new markets and establish technology support

team or engineering team locally. and start serving that market.

But of course, there needs to be traction in that market to justify

that service there. But

that's the future plan, is to have our own

support teams in the time zone of our client projects

for the ease for clients. That seems to make a lot of sense because to

your point, they have the on-the-ground expertise

in what's happening in those environments from a legal perspective

and can speak to that better. And I like that approach

because it makes you more nimble to react to market conditions

as well. Yes, that's definitely true. And it's

when you're talking about this expensive investment, so

usually the client, they prefer to have a

local guy supporting them and local same language speaking

guys. And the time zone

thing is actually, it sounds that it's

solved in modern world, but I think it's still quite important

that you have same time zone. It's much easier to reach people when you need

them, and it's surprisingly big factor

still. Yeah. What's a difficult question you have had

to ask yourself recently? Most difficult question. I

think I've been thinking a lot about this.

What is the main driving factor in

vertical farming? And it comes to my mind

that it's actually the financing

instruments. It's a little bit unfortunate that the financing is

having so big role in all these emerging

technologies. Venture capitalists. What is the right way to finance

vertical farming? It's like venture capital fund, or is

it like private equity, bank financing, leasing?

There's all of these are available, but it seems that it's

sort of venture capitalist emphasized financing. Yeah.

And that the good thing with venture capitalist is that it's risk

money. So it means that these new technologies may have financing even though

they are not fully established technology yet.

But the downside is that venture capitalists like

technology. And it means that if you're a farmer, it's very

difficult to get financing for the farm only.

And that leads into this dilemma that there are a lot of companies who

start as farmers, but then they found out that, okay, we have to be

technology companies as well to get financed. Hmm.

And, uh, Whether this is going to change or not, I'm not—

probably it's going to change when the technology is more established and there is

more bank financing and all these available. But when

that's going to happen, I'm not sure. Yeah. And when

you— and just thinking about it from an entrepreneurial perspective too, anytime there's VC

money invested in something, there's

a lot of pressure from day one to produce returns. And

these VCs want their money back and they want a timeline for when they're going

to make their money back and, you know, they usually look at things from a

10x, 100x perspective. And so, but I'm sure that applies

a lot of pressure, especially for early entrepreneurs and to your point,

farmers as well, who are navigating in this

ecosystem, maybe something that's new to them. Yeah, that's true.

And, but I, I have to say that it's really good to see that there

is so much money coming into this vertical farming.

Right now. So the capital investments in vertical farming, even though there's

a lot of companies with proprietary technology themselves, but it still

seems that there's a lot of money coming every year. It's doubling,

probably even tripling some years, the money that is pouring in. And this is

leading into this more established market,

which makes more, let's say, elegant

solutions available for maybe

farmers to focus on farming side and technology companies to focus on

technology side. And I believe that when this happens, everybody is

benefiting from that. To that point, as we wrap up, what's something that,

uh, has you excited as you look forward to the next few years

in the industry? It could be related to LED technology or it could be

related to the overall industry. What comes to mind? I

think the LED industry is something that there's so much development

have been happened already in recent years that

there is not that much new to achieve. So of

course, there's all the times better and lower-cost luminaires, but it's getting

more and more commodity market. So I'm

definitely excited about the vertical farming field. We see new

crops coming in. We've done already baby leaf, berries, head lettuces,

flowers. What I'm really looking into is the,

or looking forward to is the, let's say, protein plants, oil plants.

I believe that it will take time before they are,

you can grow them, but before it makes sense financially. And it's

quite simple because the amount of energy you have in plant

means the energy that you have to produce by technology into

the plant. And But I

think that once we reach that point that we can actually produce

financially viable way and producing these

protein plants, maybe even oil plants, then we are

actually making a difference in the, in the food

supply, food scarcity of the world. Well,

I want to thank you for taking the time to share the NetLed story. It's

always fascinating. You know, to your point, there's so many different

players in the vertical farming industry and people like you that have been

established and been doing it for over a decade, which in

vertical farming makes you an elder statesman

in terms of seeing, because I'm sure you've seen companies come and go and

technologies come and go. And so it's been interesting to get your

perspective and to see how excited you are for what's happening

in vertical farming, because it seems like, you know, to your point, as much

progress as we've made, there's a feeling that there's much more

progress to be made. And I think NetLed is going to play an

important part in that, introducing the technology

to other industries that may not realize the benefits of

entering this market. Yes, that's, I'm looking, really looking

forward to the future and seeing what we can do and what we

don't know about the business yet. So for people to learn more,

they can go to netled.fi. Is that

the best place to learn more about the technologies? Yeah, sure,

definitely. Okay. And if people want to reach out to you, is there

anywhere for people to connect with you? Is it just LinkedIn or any place

else you're active online? Yes. So we

are attending this Indoor Architect Summit coming

up in the summer. Yep. And LinkedIn is a

good way to reach out. And of course, email.

So whatever channels you can find, most of them are laid out in in

netlet.fi, so you can look there, but

also look at our social media accounts. So we have quite some

interesting stuff coming up. We are planning to put a series of

videos about vertical farming on Instagram in the spring.

So stay tuned to our channels and then you'll keep

updated. Yeah. And I think we were originally connected through

someone on your social marketing team because you do have an active

presence on Instagram. So whatever they're doing, it's working.

Yeah, that's good. Well, Nico, thanks again for

your time. I really appreciate you sharing your story. Yeah, thanks, Harry, for this

opportunity. So thanks again to Nico for

sharing his story. It was interesting because, as I alluded to

in the episode, I believe someone from the marketing team reached out. They've got a

pretty active presence on Instagram, and it was

fascinating to dig into what NetLiterate is doing,

how long they've been in the industry, and I was looking forward to this

conversation I think I have to check if this is the first conversation with

a company from Finland, but given their challenges and

growing in a controlled environment and their experience, I'm glad we were able to

chat. So I hope you got something out of that conversation. Would always

love to hear your feedback. You can send that to me at

[email protected]. Thanks again to Niko for

coming on the show and sharing his story. As always, full show notes available at

verticalfarmingpodcast.com. Thanks to our season 3 title

sponsor, Cultivated. If you're looking into a vertical farm and don't know where to

start or which technology would suit your needs, reach out to them today.

Best of all, their service is free because they work on behalf of their partners.

Learn more at cultivated.com, and that's spelled

C-U-L-T-I-V-A-T-E-D.com. Just leave

out that last E. Podcast production and marketing provided by

Fullcast. Soundproof for a free podcast brainstorm at fullcast.co/vfp15.

As a reminder, if you're enjoying this show, please leave us a rating and a

review at ratethispodcast.com/vfp. We'll be

sure to read those out on future episodes. Really excited to get back on

track with these interviews, and we've got several lined up, including

conversations with the teams at Vertical Harvest, Jackson,

Cubic Form Systems, Grove and let us grow. Until we

meet again, here's to your health. Thanks for listening. To read the full

show notes for this episode, which includes any links mentioned in the

episode, as well as a full show transcription, visit

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