Andrew Carter is the co-founder and CEO at Smallhold the first, and only, organic farm in NYC. Andrew is a greenhouse and vertical farming specialist, with extensive experience with baby cut greens, lettuce, basil, tomatoes, and mushroom production. Join Harry Duran, host of Vertical Farming Podcast, as he and Andrew discuss the intricate nature of mushroom farming, challenges that Smallhold has overcome in the wake of Covid-19 and myths and preconceived notions about mushrooms as a crop.

Special thanks to our Season 1 Sponsor

IGS – https://intelligentgrowthsolutions.com/

Key Takeaways

02:35 – Andrew expounds on his education and background in ecological design and environmental science, how he got involved in AgTech and the origin story of Smallhold

16:44 – Andrew speaks to the extent he needed to educate himself on mushrooms as a crop and early challenges he worked through with Smallhold

23:36 – Andrew discusses how he strategically expanded his container farms and the technology involved with Smallhold’s units  

29:13 – Andrew breaks down Smallhold’s business model and client feedback he’s received

37:07 – Andrew debunks some of the myths and preconceived notions about mushrooms

41:15 – Andrew speaks to the growth strategy for the future of Smallhold and overcoming the challenges posed by Covid-19

49:04 – What is something that Andrew has changed his mind about recently

50:44 – Harry thanks Andrew for joining the show and let’s listeners know where they can follow and connect with Andrew and Smallhold

Tweetables:

“I think it’s an issue in the indoor Ag space – and just food in general – is people think that you can have the same solutions for every city. But I think that you need a mix of solutions because every city is different.” (14:38)

“Anyway, I was like ‘Ok, three thousand dollars to play a song while walk down the aisle.’ And they’re like, ‘Yeah, great.’ So, I played Daft Punk at their wedding on the cello, they gave me three thousand dollars and, the following week, bought a shipping container and planted in Williamsburg. That was definitely the first money into the indoor company. And we were like, ‘Let’s definitely try to grow some mushrooms in there.’” (19:48)

“We work with businesses and businesses don’t want to deal with this stuff. They like the idea and they love the quality. They want to deal with it in a sense that it’s there and they can sell the stuff. But they don’t want to be mushroom farmers, even if they tell you they do.” (31:02)

“What’s so cool about these people [Smallhold’s partners] is not only that they’re really good at cooking and being creative, but they really believe in what we’re trying to do. And they understand it so well that they can help tell our story and help feed other people our product.” (36:05)

“We’re seeing that we’re settling out with way higher numbers, like five to six times what we thought we would be at before Covid. So, we’re in a good position and we think that this can exist in all sorts of other places. And we’re getting that kind of response from all these big partners, and so we’re going for it. I don’t think that Covid is really going to stop us at this point.” (47:11)

Links Mentioned:

Andrew’s LinkedIn

Smallhold Website

Food + Tech Connect Website

Intelligent Growth Solutions

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Mentioned in this episode:

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Anyway, I was like, okay, $3,000 to play

a song while you walk down the aisle. And they're like, yeah,

great. And so I played Daft Punk at their wedding.

They paid me $3,000, hot chello looping it. And the

following week bought a shipping container and planted it at

Williamsburg at the North Brooklyn Farms. That was the start. That was definitely the

first money into our company, you know? And we were like, let's try to grow

some mushrooms in there.

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, welcome back, episode 9. If

you're new to the show, this is the podcast where we interview fascinating CEOs and

founders of some of the leading vertical farming companies from around the world.

In case you missed last week's episode, I had a great conversation with

Virginia Emery of Beta Hatch. If you haven't listened to it,

it's a fascinating look into the world of insect

farming, and Virginia and I had such an amazing and fun conversation.

This week, I'd also like to call out a special announcement from our friends

at Agritecture. Last year, with their partner Autogrow, they conducted the

first ever global census on controlled environment agriculture and

published a 52-page report free of charge with over

300 respondents from 54 countries. For the 2020 Global

CEA Census, they aim to reach even more farm operators to gain an

increasingly accurate picture of the industry. With

COVID-19 heavily impacting agriculture, they'd be interested to know how it

has affected your operations. You can fill it out at

agritecture.com/census. We'll also be

including a link to that in our show notes as well. And they've asked that

the questionnaire be completed by August 10th, 2020. What's

more, by answering this year's census, you'll have a chance to win multiple prizes,

including a free ticket to their virtual conference, Agritecture Exchange.

So make sure you check that out. This week I have the privilege of speaking

with Andrew Carter of Smallhold. Another new for the show, it's

a different crop this time. and it's a fascinating trip through the world

of mushrooms. Remember, if you're enjoying this show or past

episodes, I'd love it if you leave a rating and a review at ratethispodcast.com/vfp.

Let's jump into this conversation with Andrew. So Andrew Carter,

co-founder and CEO of Smallhold, thank you for joining us on the Vertical Farming

Podcast. Yeah, thanks for having me. So, uh, I thought,

uh, as a way of breaking the ice, uh, it might be helpful

for you to explain what a park tree care coordinator

does? Whoa. Okay. Yeah. Flashback.

Um, so man, so when,

when I got out of school, I went to, I went to college for ecological

design and environmental sciences, which is a long way of

explaining it was very science-heavy background,

trying to figure out how to use ecology to solve

engineering issues. And so I was very much focused on water filtration.

Honestly, a lot of stuff that's, it's very similar to aquaponic technology, but it was

never for food production. It was for filtering out wastewater

from huge residential waste

management systems. Very cool stuff. No work doing this back in

2007. And so I moved back home to LA where I'm

from and got a job as an arborist for a

nonprofit called TreePeople. And they're like an iconic LA

nonprofit. They, I don't even know how many millions of trees they've planted at this

point, but what I did was, managed all of the

trees that the nonprofit planted in different parks.

And so there are all these different parks throughout Los Angeles. I think— I don't

even know how many trees I managed, but would go around, check how

they're doing, and if there were a bunch of trees that needed

work, then I could host big volunteer events where I teach people

how to prune or replant or mulch, manage,

manage the trees essentially. Still one of the best jobs I've ever

had in my entire life. Took a lot of naps in parks, woke up really

early, drove a big truck around LA. It was amazing.

But eventually, I moved out to New York and kind of

got into the urban ag scene, which I'm very grateful for. But, I'm

always striving for those tree people days because that

was definitely a good time. Is that the same thing as a tree doctor?

Sort of. I mean, I, yeah, yeah, definitely. I would do

a lot of tree doctor stuff. And so I can do like root pruning and

all sorts of stuff like that. I wouldn't say I'm a pro, you know,

arborist. So there are way better arborists than me.

So I, if you asked me to do some really major tree surgery, I

would probably call on my friends. But, uh, when a lot of the trees

that we were planting were fairly young and so a little easier to manage, less

ropes, less climbing. And so. Very cool. A little safer, yeah. And

where's home for you now? In Brooklyn, in New York. Brooklyn, okay.

Yeah. So I was— I grew up in Yonkers, New York, just outside,

uh, Manhattan. Oh, cool. And I've lived there for most of my life. And then

2014, I moved to LA. So I, I lived in LA as well. Okay, cool.

I was there for about 4 years. Where in LA are you now? Uh, no,

actually, now I'm in Minneapolis. Okay, cool. Awesome. So I

was in Silver Lake for, um, most of my time there. Cool. Um, but yeah,

just— so I've got to experience 2 big cities and now experiencing the Midwest. So

it's a bit of a change Yeah, yeah.

I'm interested, when you said you first started getting into agtech, like,

what was your first foray into, um,

anything around hydroponics and then agtech?

Yeah, it was, it was kind of, it was kind of funny. So back, I

moved to New York in 2009. Okay. Um,

and I was very much

trying to get into the environmental world. When I was working

at TreePeople, I also was a landscaper, and so It

ranged in stuff that I would do. I would plant your sod, carry soil

around, but then I could also do plant selection and

different analyses of what you can actually plant. I knew CAD and stuff, and so

I could do all sorts of things. And, that was my job here when I

was in New York. But, I really wanted to start doing more of the stuff

I went to school for, more of this design work and just being

creative around the knowledge I had around ecology. Yeah. found a

project called the WaterPod, which was a—

this artist named Mary Mattingly made this floating barge

sustainable community that she towed

around to different areas of Manhattan. Wow. And, it grew its own food. It had

a geodesic dome. We had big parties on it. And, they had a

living machine, which is what I studied in school. I studied with a guy named

Dr. John Todd and he invented these things. And, It was not

working very well. They were peeing in this thing and it was—

it's a— it's an— it's an environment. And so if you, if you don't manage

it, especially a small environment, it can get really out of hand really quickly.

And so I was helping them out. I think it was kind of beyond, uh,

help, but like it kind of got me into this world of people doing different

ecology projects. And it was pretty early on, like in the

scene here in New York, like 2009, we had

obviously a bunch of, uh, a bunch of community gardens. Mm-hmm. That's a very— that's

always been a very active here in New York, but venture-backed indoor

ag was almost non-existent. We had New York

Sunworks doing nonprofit work, which was doing installations of

hydroponic stuff, and we had, uh, New York Sunworks did the Science

Barge, which had a little hydroponic greenhouse. It was also a barge.

It's all important to kind of understand this because what happened after that was

a project came out called Window Farms, which came out of

Brit O'Reilly's mind who came from ITP, which is another program.

And, it was a DIY hydroponic system made out of water bottles.

Hmm. And, it ended up being this really big thing. We were one of the

first projects funded on Kickstarter. We had, I don't even

remember, tens of thousands of people on our community helping us

design new hydroponic systems out of trash essentially. Wow.

And, I was their science guy. I was

hired really early on. I was employee number 3 or something to help

them figure that out. And we did that for a couple of

years. It was like we, we were— I

remember there's this thing called Food Tech Connect. I don't know if you get their

email or anything. No, I'll sign up. It's, it's a,

it's a very active meetup now. I mean, they have thousands of people that go

to these meetups all over the world. We helped them host their first

or second one and there were 4 of us. You know, it was like there

was no one doing this stuff here in New York City. Yeah.

after that was starting to happen, I was kind of in the scene as— and

I, and honestly, I was probably one of the only people around here that knew

how to do hydroponics, even at a base level. And so,

um, I kind of got sucked into a bunch of stuff. Eventually, I got pulled

into BrightFarms, which is a very young company at that point, and I was

their first head grower. We built a little pilot in Long Island, then we went

and built their big facility in Pennsylvania. Wow. And after that, I got a lot

of commercial hydroponic experience, and then kind of consulted on a bunch of different

projects, and that's sort of how I ended up getting like

deep into the, the urban ag world. Very cool. Did you ever connect with,

uh, Ben Flanner at Brooklyn Grange? Uh, and we know him very

well. Yeah, I was supposed to hang out with him last, last week, social

distance style, but we're all just kind of running around. Are you serious? Well, tell

him Harry Duran says hi. We worked together at E-Trade.

Oh, that's amazing. Yeah, so our, so our

office is on Carlton and Flushing near

the yards. We can see the Brooklyn Grange, their main

one, from our office. Like, we're, we're very close with them.

So it's so wild. You got to interview him on this. I

mean, their whole thing is so insane. Yeah. It's like, it's

not, you know, it's not the indoor control. They

do have some controlled environments now in-house. But,

but, but yeah, they're, they're, they're really doing it. It's

amazing. It's so funny because I remember we were working at E-Trade at the time

and he He said, I'm going to go. I'm leaving

finance. And we were in the marketing department. He's like, I'm going to go start

this rooftop garden in Brooklyn. And we're like, what are you

doing? What? And he was always a bit eclectic. And

so, he's a really interesting guy. Sure. And

so, it's so fascinating. I might have lost touch with him. And then, as I

was starting to do research for the podcast and just digging in, I was like,

wow, Ben. And I think I pinged him on LinkedIn for a bit.

I don't know, I gotta figure out— I got— maybe you can afterwards give me

his email. I'll connect you. Yeah, I don't know how active he is on LinkedIn.

He's definitely a— yeah, email, text kind of guy. Very

nice to see him. So yeah, what's interesting about all those—

that route that you took, it's almost like each step, yeah, in the

jobs you were taking and, and the businesses you were helped, uh, start, I

feel like every one of those positions and every one of those

opportunities sort of like gave you like the pieces that

you were starting to put in place for what was to become Smallhold.

Definitely. Yeah, absolutely. And I help

a lot of— I'm still learning a lot. I would never

say I'm done learning or anything like that, but I talk to a

lot of people trying to get into the space, and

I think that there's a lot of ways to do it. I definitely

think that I was definitely in the right place at the right time. I

think that there's other ways of doing that, like New York, is

right now, it's probably also the right place at the right time in a different

way. But like, there were— I think that there was a

lack of expertise on hydroponics, and so people

were willing to take a risk initially, and

it paid off, I think, for everyone. Like, I figured stuff out, and now, now

I feel very confident in it. But it definitely— all

of the experience kind of added together has made it so, so we can

kind of do this. Sort of a lot of the growth happened after BrightFarms.

I dealt with some family stuff, but then went out and started

consulting on different projects. And that was when a lot of the vertical farming

activity really started happening and had the opportunity to

travel around and visit all sorts of facilities. And so seeing,

seeing all kinds of different kinds of operations and people trying to do it in

different ways. Can you talk a little bit about the— or tell the story about

how you started to get the idea for what is now Smallhold? And,

you know, where that came from. Yeah, it came from a few different places.

So, we grow mushrooms. We have the main

thing, if you look up Smallhold and you look up what we do right now,

we have these in-store installations that you can see in grocery stores

and some restaurants. We have way more ambitious plans than that. We're building

out larger spaces. We're working on expansion across the

country. It's way bigger than just in-store

sort of growing, that's just one piece of the puzzle, which in our opinion is

distributed farming. Yeah. And there's a lot of people that kind of

throw that word around or that term. Um, there are different ways that you could

approach it. What we think, and especially with mushrooms and certain

crops, is it makes sense to centralize certain aspects of your

growing operation, but then distribute the final stage or different

aspects of it. And so we can, we can,

in New York, we have all these little units all over the place that make

a larger footprint of our farm, and so we can actually have

a commercial operation and have the same cost-benefit that a large

operation would have. In Whole Foods' Goanis, they were an isolated

operation. That crop would be way too expensive to sell at a competitive

price, but since it's fed into our network, it can make a lot

more sense. And so, that will change

for different regions. Some regions make sense to grow on-site, Some

don't. Yeah. Some places have, you know, there's— I think

it's an issue in the indoor ag space and just food in

general is people think that you can have the same solution

for every city. I think that you need a mix of solutions because

every city is different. They interact with food different. People expect different things from

their products. And so, it's important to be able to kind of

modify for each city. And, that's okay. If you're modular, you can

scale. But, it's not as simple as just popping a

warehouse up and expecting people to buy it. Yeah. And so, that's

what we're mainly developing, but it comes from a lot of different spaces.

So, I used to grow leafy greens and herbs. That was my main thing. We

were doing all these analyses for people and realized that there's

a great opportunity in mushrooms. Mushrooms have really good margins generally.

There are all sorts of varieties that people aren't really paying attention to, the specialty

and exotic varieties. And there's just this, this amazing growth

that's happening. And it was kind of happening before, but we were taking a guess

back in 2016, 2017, that this was going to be

way bigger. People becoming vegetarian, a lot of fad diets,

uh, just people being creative. And it ended up paying off

because it's what— it's the fastest growing

produce in the produce aisle. And so we're, we're excited to be part of that.

The other part of it is just the concept of distributing farm—

distributed farming isn't new. Like, I have built out tomato

farms before, big commercial operations, most of these

people don't plant tomato seeds. Like, they, they will be

working with a nursery and accepting seedlings from somewhere

else that grafts the right fruit, like the right top to

the right rootstock, and sending it to your facility. That

exists in agriculture. Um, and so we're like, how about we

try to learn about that and to understand that and apply different

aspects of that to other kinds of crops that they weren't actually growing

like that. And so, there are different parts of ag that we're

looking at to inspire us, and

it all kind of came to fruition with

Smallhold. How much did you have to educate yourself

on mushrooms as a crop? A lot. I mean,

tons. I thought that

it would be similar to plants. And, I think a lot

of people think it is, but they're very different. The

main crossover is that it's a very large climate

control problem. The problem you're trying to solve generally with mushrooms

are climate control, in my opinion. I'm sure some other mushroom

farmers might be listening to this and be like, you're totally wrong, but it's our

opinion is that climate control is the big thing. Yeah. And, the

rest of it is just so different.

I mean, Fungi in general, it's its own kingdom.

Yeah. So, just functionally, a lot of people think that they're actually

more similar to animals than to plants. And, the more I grow them,

the more I realize that that's very true.

They respire, they breathe in oxygen, they release CO2,

they digest, they release digestate. So, that's how they're getting

their energy and creating their carbohydrates and everything.

In reality, functionally, they're not really at all like plants. But,

when you're in the produce world, you have to be able to kind of make

comparisons because that's what people are usually used to thinking about.

Is it a mycologist? Someone who's— the study

of mushrooms? Yeah, mycologist would be that. I always

call myself more of a farmer and now I'm very much a CEO. I know

a lot about tech and I run product at Smallhold and stuff with our product

team. We have a head of product, Jordy, who really runs product, but I help

him. But,

I have always kind of considered myself more of a farmer. I love

science and I love looking at what we're doing under a

microscope, but there are people who have PhDs in this and I

consider them the mycologists. And, I

just work on creating food for people

because that's what I really believe in. So, can you talk about those early

days, those first couple of years? What were some of the challenges

that you were working through with the business? Yeah. So,

I mean, there were so many. So, and there are always, I mean, it's still

a young company. Like we incorporated in 2017, so it's not too old,

man. In 2017, what we had was a shipping

container in Williamsburg. Okay. That

how I got this was I used to play, I grew up playing cello

and I had these, a couple of YouTube videos of me covering

different bands on my cello, doing looping and stuff. Yeah.

And someone asked me if I could play a Daft

Punk song at their wedding. And I

was friends— this is in 2016. And so, and I have

friends that are these DJs, and I was like, hey, what should I

charge? I don't even know these people, and I don't really want to do it.

And they're like, oh, you don't want to do it? So there's the— I

can't probably say it on the air, but there's the fuck-off price, you know, that's

the price that you have to charge. And hopefully these people aren't listening to us

because anyway, I was like, okay,

$3,000 to play a song while you walk down the aisle.

Sure. And they're like, yeah, great.

And, um, so I played Daft Punk at their wedding,

uh, on a cello, on a cello looping it. Whoa. That's super

cool. The following week, bought a shipping container and planted

it at Williamsburg at the North Brooklyn Farms. And that was the start. That was

definitely the first money into our company, you know? That's—

and that's what happened. That's why we're like, let's try

to grow some mushrooms in there. And it took a while to build that out

because I was consulting on the side and just kind of— it was like I

would have money at different times and it wasn't— it was very much not like

it wasn't an official startup or anything. It was like kind of a project,

but started talking to different people. My co-founder Adam, who's my old

friend from college, he came in and we're like, let's just turn this into a

real business. Like, there's big opportunity. Investors kind of want to talk to us. Yeah.

have the network to do this. And so, we went through,

we got into the Techstars program, which is an accelerator program. Yeah.

Invest some more money in the company, and then it kind of sent us on

our way to like create a real business out of it. I know you,

I think Freight Farms is actually a Techstars company. Yeah, we just published the

episode with John. So, yeah. Cool. Yeah. And so,

in those days, the big issue, which honestly created the start of Smallhold, was

that this container was planted at a in an

urban farm at a construction site. And so,

okay, in Williamsburg, there's this big sugar factory that they're converting to like big

offices. Yeah, I used to live in Greenpoint. Yeah. Okay,

cool. So the Domino factory and all the plant lots

around it were bought by Two Trees, which is a big development company. They built

Dumbo. They do all these things. And, and so now it

looks insane. But they— I mean, did you ever see the farm there?

They had— I don't think I ever saw the farm there. I mean, I know

the factory well because, I mean, when you would go over the bridge, I mean,

it's, it's, it's an iconic Yeah. And so,

next door to that, I guess it would be south of the big brick

building, there was a lot. And, Two Trees opened it up,

did an RFP for people who wanted to use the lot while they

were still doing construction. And, some friends of ours wanted to build an urban

farm and a BMX bike path. And, they were

friends of ours and I was like, we had a couple beers and I was

like, I want to plant the shipping container there and grow some mushrooms. And, they're

like, sweet, let's do this thing. Cool. And, it was very cool,

but the power was like, everything was kind of what

you'd expect in a temporary lot. Like, power would shut off

randomly. Like, we'd have some party and something

would happen. And so, we had to create— like, I had to make a bunch

of alerts and alarms for the shipping container. Wow.

And I kind of knew some software and hardware stuff, but I was very much

into commercial hydroponics and the stuff that I wanted. It was very

expensive, like, you know, $20K+, you know, to

even start, you know. Yeah. And some of the stuff you're buying are way more

money than that to build out a greenhouse. And what I wanted just didn't

really exist. And so, we had to build these sensors and then started making

it smaller and smaller and started talking to different people and realizing that

what we were building could be applied to all sorts of different solutions. And so,

it was like kind of the first version of our sensor

and remote control system was, was very much

solving our biggest issues, which was like

hot sticky mushrooms when the power would go out or frozen mushrooms

if it was in the winter. So many aspects of that story

which like make me smile. The fact that, I mean, like I said,

I grew up DJing. So the fact that you're playing Daft Punk is

super cool. But when did you start to think

about creating these

other units that you'd have, and they're beautiful looking units. I mean, if you go

on the website, you know, that you can tell a lot of effort and

thought went into the design of them. So, um, talk a little bit

about the transition, um, as you started, you know, you're testing

out ideas obviously with the container farm, but when you were starting to make that

move. Yeah, so we had the container

farm and we eventually got a,

a spot like an office, um, over in Bushwick. at 99

Scott. We're not there anymore, but that was very much like where we started our

business, um, after the container thing. And

we had some friends there, uh, at Bunker Vietnamese,

which is a Vietnamese restaurant, which is an amazing Vietnamese restaurant.

If you guys, uh, they're still doing everything through COVID and everything, so

everyone should go and order from them. Yeah. And Jimmy, the owner,

is, is amazing and loves urban ag and tries to support it wherever he can.

And I was I swear I don't drink too much beer, but we were also

having beer one time and had a couple beers and we're

like, and we were talking about all the stuff that I kind of

wanted to do. And he's like, let's, let's do this in the store. Let's talk

about this. Like, let's figure this out, how to put it in my restaurant.

And we're like, that's a pretty good idea, you know, thinking through all these different

ways of doing it and started kind of fielding it with different

restaurant owners and then eventually grocery store owners and realized

that it is something that they're very much into. which seems

counterintuitive in New York with the lack of space and everything. But

nonetheless, like, people are very excited about the opportunity to do this.

And so, we knew that if we were going to be doing it, we would

want it to represent— like, we know the big thing is

that they work. Like, they grow a lot of mushrooms. They are very

advanced. You know, like, we're controlling these things remotely. They have— each shelf is

independently controlled using specific spectrum of lights. And we can go into

the tech if you want, but— Yeah, yeah. They work. They're crazy

tech that goes into those things, but we wanted— we knew that they were going

to be in front of people eventually, and so we wanted them to

look like that. And, what all of our team, but especially Adam and

I as co-founders, are very into kind of futurism, especially

retrofuturism, and love this idea of

controlled environments as a window to the future and

a window into the fresh produce that you can be eating right there. And so—

Yeah, yeah. All that really impacted how we Yeah,

when you look at them, they really— I grew up on— I'm dating myself— I

grew up with The Jetsons. Cool, yeah, totally.

So there's this aspect of like future forward and

thinking like how life would be. I mean, a lot of the things seem silly

now, but there is some aspect of like really not just having

access to fresh food, but the ability to have these almost

microclimates within your own home and to have

You can't get any fresher than picking the

mushrooms in there with restaurants and you're starting to see some of those.

I forgot the name of the company that's doing it for leafy greens now also.

It's like these beautifully designed units that

can exist in homes as well. Totally.

Talk a little bit about the tech because there's a lot of moving parts and

the fact that they're remotely monitored I think would be really interesting.

to hear about. Yeah, so if you see one of our units in the

field, they— there's different footprints. And so there's a

couple custom installations that will be hanging or above a bar

or anything. Those are usually one climate, but if there are 3

or 4 climates, each of those are independently controlled.

They can cool down to 45 degrees and up

to 85 degrees. Mushrooms We grow

11 different varieties of mushrooms and so they have different climates

that they require. Most are around in the 60s and 70s,

but some like it a little cooler and some like it hotter. And then,

I'm sure as you talk to different people talking about different plant stuff,

the similar stuff happens with mushrooms. Yeah. You can alter the climate in

different ways to completely change the shape or

the nutritional value of some of these mushrooms. So, it's very cool stuff that you

can do with that control. Additionally, with mushrooms, they respire, and

so you have to be managing their CO2 and oxygen really well. And so, they

have a bunch of ventilation and filtration to make sure that they're

not having issues with their airflow. And then, it has

a specific spectrum lighting. And so, mushrooms, they don't do

photosynthesis. And so, with plants, a lot of people

argue that plants need full-spectrum light for different stages of their growth.

Most of the vegetative growth would happen with

kind of that bluish-reddish spectrum. And so, that's why you see that pinkish-purple light.

With mushrooms, they're not doing photosynthesis, so they don't transfer light

into energy, but they do look at the

light as a response to tell it to fruit. And

so, what we're doing is creating the perfect environment to fruit and

the light is part of that. And, the blue light in particular

stimulates the fruit body formation a little better than full

spectrum. Additionally, there's a little bit of UV in there because UV produces

vitamin D in the mushrooms. It's a very interesting aspect. We don't

totally push that. We're not doctors. And so, I'm not going to go sit here

telling you guys that you can get all your vitamin D from our mushrooms, but

I like the aspect of that. And so, that's another thing that we're kind of

looking into here. And so, when a

restaurant or a building or anywhere wants to order

one of these, what's the process? And, What do they get

on day 1 and how long do they have to wait for to

start to see their first crop of mushrooms? Yeah, so it's very

quick. So how we work is a subscription system and we

work with businesses. So we're not really selling the unit

outright and we don't really work with homes. That's honestly

not really in our plan here. We want to go bigger before we would

ever go smaller. And so when you get a unit, you

sign on to a contract with us, which is mainly around buying mushrooms, to be

completely honest. We sell mushrooms whether it's through one of our facilities

or through one of our mini farms which are installed. It gets

rolled in, it gets plugged in, there's a little

microtube that connects to your water supply, and then we put

blocks in and then it's ready to harvest within a week. Wow. And then, we

provide a service to harvest or the customer harvests. It depends kind of

on the relationship what you want to do, but we're constantly resupplying

it with the blocks. And that's pretty much it.

We're capturing about 60,000 data points per day from

each of those units. And so, if we want to

modify the recipe for each variety that you're getting, let's say, hey, I

want to grow lion's mane next week in shelf 1, then we can

modify that remotely if necessary. It's pretty much automated,

honestly. You click, we say yes, we put this thing in there and it happens.

But what's cool about the data is that we, on our end, we can constantly

be analyzing and understanding what the best way of growing is and

just help people keep up with the times and make sure that they're growing as

much as possible out of that real estate that they let us grow in.

Because the big thing is like, we, we work with businesses and businesses don't

want to deal with this stuff. Yeah. Like, they like the idea and they

love the quality and they love it. Like, they want to deal with it in

a sense that it's there and they can sell the stuff. But they don't want

to be mushroom farmers, even if they tell you they do. And so we don't

want them to be mushroom farmers. We want them to have the best experiences possible.

And that's, that's how we, we've developed the whole entire project. And what's

been the experience for folks? If you think

about the restaurants who've had your units there for the longest

period of time, what's, what's been some of the feedback? And what have you

done, if any, if anything, to reiterate or change based on

that early feedback? Totally. I mean, there's a few different things.

So Bunker, for example, used to have— they were our first customer. They

had it in their basement and they thought our original

concept, which we didn't even talk about, was that people would probably want this back

of house. Like, this is a utility and yeah, people would think it's cool,

but hey, it's just we're growing mushrooms. That was

totally incorrect. Like, people want to look at this. And so we figured

that one out and iterated more to make sure that not

only it looked right, but then also, like, there's aspects of our supply chain and

how we manage it to make sure that it looks good for customers.

Because we can be more efficient if we didn't really care about how it looked,

obviously, but that's not how we roll. And so we wanted to make sure that

it's a good experience for the customers as well. Right now,

we're, you know, we're dealing with a bunch of different stuff,

like we're building out larger footprint kind of facilities.

Because we have customers that started with our units,

they like the unit, but they're selling a lot. And so they want to be

able to buy more, but maybe that excess produce

is more— has more— fluctuates a little bit

more. And so installing a unit might not be the best bet, but we

could sell them from a facility that we have near them. That's

the kind of the next phase of stuff that we're working on here. That's a

big development and there's definitely going to be more news about that over the

next couple of months. Yeah. But, uh, it's, it

includes packaging innovation and innovation around the

varieties and all of that kind of stuff. With mushrooms,

there's all sorts of different ways of growing. And so like you can grow,

we have these blocks, right? The substrate are in these big blocks and there's

different ways that you can fruit off of that block. And so some

customers might want really big king oysters, for example.

Yeah. And you can— we can grow these things out of the units that are

like a pound each, and you can make a mushroom for 2, and it's

amazing. But then some other people will want really tiny little

mushrooms and put them on skewers and then, you know, do whatever with

that. And so there's a lot of playing with like

innovating in how to make that scalable and how to make that not like a

huge issue on our end because The main goal is still, even if we're working

with people who want that kind of customization, is still to make this thing affordable

and make it make sense for everyone. Do you have, um, when they're in

restaurants, are the people who are their

customers, are they buying the mushrooms outright, or, or is it, do you see

restaurants being more creative in terms of how they're actually using the,

the mushrooms in, in their, in their dishes? Uh, what do you mean? So

do you have restaurants that are just kind of doing more,

or they're actually adjusting their menus to, to kind of become of they

have this wide variety of mushrooms? And are they doing like things

that wouldn't have been possible if they didn't have just that close access to that

wide variety? Definitely, yeah. I mean, the—

I think that it's not only the wide variety that we provide, but the freshness

that we provide. A lot of mushrooms, like,

you know, depending on your relationship with your local farmers, you could buy a pink

oyster mushroom, but they have horrible shelf life even if they're grown

in an amazing environment. these things last like 6 or 7

days after harvest, which is pretty bad. Like, it's— I mean, it's

great, you know, in a way, but it's, it's, it's compared to a lot of

other stuff that you can grow, it's very short. Yeah. And so, by

growing on-site or growing near a customer, then you have

stuff that people have literally never even had access to

because it goes bad before they actually get to buy it. And so,

yeah, I mean, people make All sorts of stuff. I mean, as I said, people—

there was, there was a group that made a mushroom for 2. That was probably

the funniest thing in the world instead of steak for 2.

And, you know, people do these like huge

clusters of oysters covered in egg yolk and— Oh, really?

I mean, the restaurant stuff is so wild. It's so cool.

And it's— and how we— what we really like to do is partner

with chefs and like mainly rising chefs and

people who are really innovating in their space. So we originally went with Angela Di

Maio, who was at Mission Chinese and eventually went to Standard,

and Danny Bowen from Mission Chinese, and the team at

Olmsted and Mei San Yaki, Greg Backstrom. What's so

cool about these people is that it's not only that they're really good

at cooking and being creative, but

they really believe in what we're trying to do, and they

understand it so well. that they can help tell our story and help feed

other people our product. And so we, we sell— like, our main goal is

to sell into retailers. Like, that's what we really want to be doing, and that's

what we're planning on doing. And we sell to, we sell to big retailers already

as well. Mm-hmm. But the more people we can have like that that are

preparing our food in such interesting ways and helping us tell our story, then

the more people will get creative with our products in the grocery store

and get and share it in different ways. And so it's, it's

It's just been— it's, it's been a very amazing experience, definitely,

working with all these different people. And honestly, we plan on doing it in, in

cities all over the place. So— I would imagine there's a lot of

preconceived notions when people think about mushrooms. And, uh, I

know there's probably a running joke about shiitakes as well because it's like the

most— one of the most commons. So when it comes to,

um, you know, either myths or, or

preconceived notions or, you know, just reeducating

people on mushrooms as a whole? What are some of the

common conversations you have with people? Yeah. I mean,

the biggest one is the psychedelic mushroom conversation, which

is— I mean, it's amazing what's happening in the industry there.

Obviously, we're not at all involved in that, but

I honestly think that the attention that that space is getting

only will help the rest of the mushroom industry. Yeah. 'Cause mushrooms are

mysterious and one might, you know, one in the wild

might actually make you really sick. One might change your life, um, or

one might just feed your family and it's very cool. Um, and so that's,

uh, I think that will benefit all of us. I think the biggest

thing that we have to educate people on are whether they like mushrooms or

not, 'cause there are people who love mushrooms. Like,

this is another thing that I've never experienced before in produce. Growing lettuce,

like, people like lettuce, but they don't wear like the lettuce

shirt and go lettuce foraging. Um, and it's like part of the

lettuce society. It exists. That's funny. It's not, it's not massive.

So the— there's people who are obsessed, but then there are a

lot of people who just think that they hate mushrooms.

And what I think that is, is just that

they had some bad experience at one point, probably a

canned Button mushrooms. Button mushrooms. Yeah.

And it was slimy and it was gross. And I don't blame them for hating

mushrooms for the rest of their life for having that and thinking that all mushrooms

are like that. But fungi is a kingdom. Like,

it's like saying that you don't like plants when you had like

a strawberry versus lettuce, you know? Yeah. You're just like, that's a good

point. And it's, it doesn't— that, that usually is like a

big epiphany for people. And if we can get people to eat our stuff, then

usually we can change their mind. Which is a lot of fun. It's like

you get people trying— we'll go out and do

tabling. So, we'll go out and do demos and stuff in different

grocery stores. And, we've gone out and done

really intricate recipes, but the best stuff is when you just do a little bit

of avocado oil and a little bit of salt. Yeah. And, people are like, what

did you cook this thing in? And, you're like, nothing. You're just eating a

mushroom. And, they've never had it before. And so,

it's blowing people's mind every time. And, that's, I think,

probably the biggest education we have to make.

Yeah. I mean, there's a lot of medicinal benefits. We

talk about them. Again, I'm not a nutritionist by trade and

so I try not to get into that world too much as far

as how I communicate it, but it's very exciting, the

stuff that we're growing. Helps people manage cholesterol, a lot of

fiber, a lot of different fatty acids and

different nutrition that people need. And so, I think that it

definitely has a place in the— it has a place now,

but I think as more people become more health-conscious than they ever have been, I

think that it definitely has a stronger place in the

American diet than it has in the past. Yeah. And, I think it's just a

matter of educating people and even providing

recipes for people to try out with all the different, I mean, you mentioned 11

different varieties. I can't imagine like the combinations of

types of dishes you could make, especially as people think more and more about becoming

vegetarian. My partner and I, we're pescatarian, but it'd be nice to

start to move to becoming vegetarian. Yeah. And just thinking about

education about what's the difference between all those, I mean, just

the mushroom, the types that you've listed on the site, it just piques my

curiosity to think about like, what does that look like and what does that taste

like? What's the texture? And like, how would you cook that and what would you

have that with? And so I think to the extent that some of that

education is available, I think it'll open people up to the possibility of,

of giving it a try. Definitely. Yeah. So can you talk a bit about

the, the growth strategy now, as now that, um, you mentioned like

you're getting into, you know, whether that's what's happening locally and then what you're

looking to do nationwide? Yeah. So, um, I

can't get into like specific names and stuff, unfortunately, at this point.

Um, a lot of this stuff is has been developed and we're just

kind of deploying right now, which is, it's very exciting and you'll read a

lot more about it over the next few months. Yeah. We are working

on a series of, we're still installing these mini farms and we're

working on sort of larger footprint facilities that

grow mushrooms using our technology in different ways with different

partners. We're here in New York, we're hiring in New York. That's where we

plan on keeping our main team, but we're looking at new

regions as well within the year. And so, it's a very interesting

time to do this. We were kind of talking about it before COVID I don't

know how much you want to talk about COVID response and stuff. Yeah, definitely. I

don't know how timeless you want this podcast to be, but it's very interesting.

Yeah, let's talk about that because as of this recording, we're in

late June and dealing with what is

probably the second wave, although people thought we were going to have

a break. And I think just because of people's decisions on how

and when to social distance, it seems like it hasn't let So, I am curious

how that's impacted your plans.

Yeah. I mean, so, I could go through— do

you want me to just kind of go through the timeline of Smallholdings? Yeah, yeah.

That would be really helpful. So, in March—

so, I think in New York, it was like middle of March when

the shutdown, the pause happened. And so,

we were paying attention to a lot. We had already been working at home.

We've been always kind of following South Korea protocol.

That was sort of what we internally were like, okay, it seems like they're doing

it right. The CDC is not really providing information enough for us to

feel comfortable. Yeah. And so, we started sending people home early. And,

we're deemed an essential business. We're an agriculture business. We do production. And so,

we still had to farm. And so, we have GAP

certification. We have all this crazy food safety stuff anyway. And so, we had

PPE and all the isopropyl you could ever imagine. And

so we were set up to manage this, but

still, like, it was definitely a crazy experience. It still

is. Yeah. And essentially, like, overnight, all of our

restaurant customers shut down. Like, they're still businesses

and they're turning— they're actually turning on now, which is exciting in a way, but

we don't know, you know, how long that'll last. So what we did was,

we're B2B, like, we sell solely to restaurants and grocery stores.

Yeah. We thought like, hey, we actually have a bunch of

blocks that we're going to grow on site. And then we have some mushrooms that

we grew out for some other people and they're not buying it this week. And

so what are we going to do? And we put on Instagram that we were

going to do a pop-up at our— at the Meat Hook, which is like a

local meat shop in Williamsbury. They're friends of ours. And,

um, we sold out of everything within 3 hours. Wow.

And it was crazy. Social distance line around the corner. It was just

wild. And, we were like, okay, that was cool. Let's

do that again. And, we did that a couple weeks. We kept selling out really

quickly. I'm selling lots and lots of mushrooms

in our big reefer van. And then, we set up a

delivery system. So, if you're in New York right now, you can order from

our website and we'll go deliver you fresh mushrooms. Oh, great. And,

with that, we are selling so many

more mushrooms than we used to. And, I don't, and I want to—

there's a little asterisk on that where we're still confident in

the original plan, working with restaurants and retailers and B2B. And so, like,

we're not making a total pivot or anything to D2C. We just

look at it as another kind of lever that we can pull in

case there's another— there's more outbreak, or who

knows, like, something else kind of happens as we go and expand. Yeah.

Additionally, at the same time, we grow out blocks. And so,

we were— there are certain varieties you can grow at home. And so

we were like, okay, if you babysit these things, you can

totally grow some oyster mushrooms. And we're like, why don't we just try

selling these things as well? Because people are at home sitting

around. Yeah. Wanting to inter— I think they really want to interact with smallhold, but

they also want to grow stuff. It's like a, just a thing people want to

do. And now at this point, we've

sold our blocks to every state in the country. There are people

growing our mushrooms everywhere at this point. And, these are the grow kits?

The grow kits, yeah, which is, again, certain

varieties work like that. We don't look at that like our

core business is shifting to that, but if you think about us

trying to distribute our farm and being creative around making our

footprint larger and larger and getting in the nooks and crannies of every city,

totally feeds into that. Yeah. We don't really want to

build a mini farm for a home because it's too expensive. If we can

grow on your counter and you're at home misting that thing, that's totally our mission.

And, we're trying to be— our blocks are still

extremely competitive compared to anyone else that's trying to sell blocks. And so,

if you do it right, you're getting really cheap mushrooms if you're buying our blocks

and growing them out. And so, in the end,

It's not that it's been easy at all, but

what we figured out is the customer still exists. They still really want our

mushrooms, if not more than they did before. It's

just getting to them, it just got complicated. Like, grocery stores

are still selling stuff, but here in New York, it's kind of weird.

Like, there's a lot of delivery stuff going on and lines. Yeah, it's everywhere. There

was a little bit of fear for a little bit, but then now it's

kind of settling out and we're seeing that we're settling out with

way higher numbers numbers, like 5 to 6 times what we thought

we were going to be at before COVID So, we're in

a good position. And we think that this can

exist in all sorts of other places, and we're getting that

kind of response from these big partners. And so,

we're going for it. I don't think that COVID is really going to stop

us at this point. Well, it's so exciting. And being an entrepreneur myself,

what's been interesting to see is how businesses have responded. And, you know, to your

point, some of them could not pivot accordingly and

will be going out of business. Some, you know, were able to like double or

10x their business because they somehow were able to build something that was relevant.

And some people were able to change for the short term, you know, maybe, you

know, making the hand sanitizer if you were like a vodka factory or something. There's

some examples of that happening. But I think, uh, speaking to your

idea of being resilient, you know, sometimes, you know, you were able to make the

lemonade out of the lemons and in a way educate people now,

a broader population of people now know who Smallhold is,

are educating themselves, and, and, you know, have this confidence now

that they can start at a small scale and have, you know, using the grow

kit to grow something at home. I'll definitely be ordering one. I think it's

fascinating. I love how you named it Blue Oyster Grow Kit. Yeah, yeah. So

hopefully people get that musical reference. Um, but yeah, it's

been really exciting, so I commend you on, you know, taking the

lay of the land and seeing and having a

team that could be resilient enough to sort of change gears. And, you know, what

you did with the pop-up is really, really good. So I think that bodes well.

And I think those types of skills for being able to think about

different ways on how to keep your business afloat is something that, you know, is

going to be very, very helpful for you as the company grows.

Thank you. A couple of questions as we wrap up. What's

something you've changed your mind about recently? Whoa, something I've

changed my mind about. Man, I'm trying to

think. That's a— this is a tough one. I change

my mind all the time, so that's where I'm at. Yes,

as we do. We all do. Yeah, there's no wrong answer either, so.

Yeah, yeah. I think

one big thing that we're always grappling with, if I think

solely about Smallhold, about You know, the answer here is

whether we want to be targeting the story around

fresh produce or the future of mushrooms in general.

There, you know, I think there's opportunities in

both. And I think that either way, you know, you're kind of playing in

both, but it really depends on kind of what story you want to tell. Yeah.

You know, when you're talking to produce buyers, you know, we focus on fresh

produce. And I've definitely been in that mindset for quite some time. But now

we're seeing issues in the meat industry. You're seeing

crazy stuff happening with the environment, a lot of

pollution. There's a lot of weird— the world's

changing. Some stuff I'm excited about the change and some stuff I'm

terrified about. Yeah. And I, I

think that as time goes on, as a

company that's trying to do this, I think that

What I'm changing is kind of how I think that we need to approach our

story and try to go a little bit bigger than just

selling mushrooms, essentially. Yeah, yeah. That's a great

answer. Thank you. Thanks. So, where's

the best place for folks to connect with you if they want to learn more

about Smallhold or engage with you and the team? Yeah.

So, our website, smallhold.com.

Our most active social media is on Instagram @smallhold. You

can message us or comment or follow us. We post a

lot of stuff there. And if you wanted to talk to me directly, probably the

best place is LinkedIn. If you look up Smallhold, I don't mind people adding me

and asking questions. Perfect. But those are the best ways to talk to us.

Well, Andrew, I appreciate you coming on, finding time

for this conversation. I was really excited to just learn more, educate myself,

and educate our listeners on the topic because we always— I always come at these

conversations from a place of just natural curiosity. And I think it's been very

helpful to learn about what you're doing with Smallhold and what you're doing

for the whole vertical farming ecosystem as well. And

I think it's piqued my interest more. Cool. So I'm going to be doing a

little bit more homework and probably ordering a couple of things

later this week. But I appreciate the work that you're doing and

just wish you and Smallhold a lot of success. I think

you've Really carved out a really interesting niche, and it's going to be

really fun to see where you guys take the company. Yeah, thank you.

Hopefully to, hopefully to Minneapolis soon. Yeah, yeah,

keep me updated on that. Cool. Thanks again. Yeah, of

course. 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

verticalfarmingpodcast.com. There, you can sign up

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