Explore the transformative impact of artificial intelligence and automation on the produce and floral industries with host Vonnie Estes and guest Joe Don Zetzsche. With insights from Joe’s extensive experience, the episode delves into AI’s role in reshaping retail, revolutionizing floriculture breeding, and redefining supply chains. Discover strategies for growers and retailers to adapt and thrive amid rapid technological advancements. As AI models grow exponentially, understand how embracing these changes can unlock abundance and sustainability in everyday business practices.

Key Takeaways

•         Exponential Growth Understanding: Joe explains the concept of exponential tech growth and its implications on human understanding and industry evolution.

•         AI in Retail: AI is revolutionizing retail operations, with companies like Amazon and Walmart leading through data integration and automation.

•         Impact on Medium and Small Retailers: Smaller retailers may face challenges without strategic adoption of AI technologies, potentially paying other companies to fill those gaps.

•         AI’s Role in Floriculture: AI’s integration in breeding processes is leading to more resilient and higher-performing floral varieties, highlighting future potentials for genomics and CRISPR technologies.

•         Cultural and Economic Shifts: Consumer acceptance of AI-driven services, like delivery of perishables, signals a cultural shift towards automation-enhanced convenience.

Guest Resources

•         Joe Don Zetzsche: Currently supporting the floral and retail industries through consulting.

•         International Fresh Produce Association (IFPA): Fresh Produce

For more insights into how AI and technology are reshaping industries, listen to the full episode and stay tuned to “Fresh Takes on Tech” for more thought-provoking discussions.

Show Links

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Twitter - https://twitter.com/IntFreshProduce/

LinkedIn - https://www.linkedin.com/company/international-fresh-produce-association/

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0:00:24 Intro Speaker: Let’s get into it.

0:00:56 Vonnie: My guest today is Joe Don Zetzsche. It will be hard to tell everything that he has done in floral and retail. 35 years with H.E.B. past chair of PMA and he was very instrumental in forming IFPA. He’s now continuing to support the floral industry and retail through consulting. Joe has been closely following what he calls an explosive wave of exponential tech growth. Growth which we’ll talk more about. He’s here to help us understand where AI and robotics are making an impact today, where they’re headed next, and what growers, retailers, and floral professionals need to do to prepare.

0:01:52 Joe: It’s my pleasure.

0:02:03 Joe: You know, as human beings, we really have a challenge understanding what exponential growth means. The idea of something doubling at a regular pace. We just have a hard time understanding that we our lives are based in a linear fashion. Once second, second goes to the next and seconds become minutes and minutes become hours. Our entire experience as human beings is linear. But exponential things exist that have existed in the technology world for 70 years.

0:03:06 Joe: At the end of 30 days, you would have a stack of $1 bills. I got it written down. 73 miles high in 30 days. You can’t grasp it, but when things are doubling at a regular pace, every time doubling what just happened and then doubling again, the pace gets faster and faster and faster. And Moore’s law has been in effect with computers and computing technology since the 1950s. Every 18 months or so, compute has doubled for, by the way, half the cost.

0:04:08 Joe: How long it took to get to the World Wide Web. But how quickly we moved from the World Wide Web to companies that were digital only, right? Some of the two, first two companies to get websites were 1-800-Flowers and FTD. They both got their websites before Amazon got there.

0:04:27 Joe: They did, they were already selling flowers across telephone lines and they just adopted the World Wide Web. But then Amazon came along and we saw the growth of digital companies. But then you think about when that technology began to double and the impact was felt more rapidly. We went from pagers to smartphones to BlackBerrys to a true smartphone, sorry, a cell phone to a BlackBerry to a true smartphone.

0:05:31 Joe: It’s doubling every year. And the fact is it’s the AI world. As we moved from machine learning to deep learning to large language models, as the power of compute has continued to grow. There’s I’m hearing now that AI compute where right now over a billion dollars is being invested every single day. Another billion dollars in AI compute. I’m hearing that for the last two years, AI compute has grown at a rate of 10x every six months.

0:06:35 Joe: Loved it. Loved having a driverless taxi drive me around. There wasn’t music cranked up, I didn’t like there were 10 air fresheners in there. It wasn’t speeding. Loved it. But driverless technology is exponentially growing at the same pace. And so we are now in a place where this foundation of large language models and artificial intelligence is now empowering all the entrepreneurs in all other spaces. So you have automation, robotics, synthetic biology, recombinant DNA research using CRISPR and even new technologies that are doubling the skill sets of that.

0:07:12 Joe: All of that is now doubling together. But it’s the large language models that are building that. You know a couple quotes I’ve heard around AI or large language models as we know them today. One leader in the space said that AI was the same as electricity, the same impact on humans as electricity has been. But I heard a leader since then say, no, it’s more impactful than that. It’s actually the same impact on the human race as when we discovered fire.

0:08:14 Joe:

0:08:34 Joe: So retail has a lot of different scales in retail. I guess I’ll start to answer that question by talking about what Craig Boyan, who’s the president of H.E.B., he spoke at an FMI conference that’s a convention for the, for the supermarket retail channel. And he spoke, this is more than four years ago and he spoke and he said that in retail there’s a massive race occurring today. And the race is between digitally native companies learning to become great in person retailers while at the same time mass retailers are learning how to become digital companies.

0:09:44 Joe: Any portion of their revenue to Amazon. Amazon is in the lead, I would say. And they have over a million robots in their facilities today. They only have 1.5 million workers. And it’s projected in the next two years they’ll have more robots or automation tools than they have humans. The one that’s competing the hardest against them is Walmart. And you see changes at Walmart. You know, Doug McMillan, their CEO, has said recently, I wish we’d move faster.

0:10:43 Joe: It flows to a machine that palletizes them and then it gets loaded on a truck. But you see where they’re going. And it was just of course, first of all, I think it was announced that a month ago they have two C suite leaders at Walmart focus on integrating AI into all of their business. Two leaders at the senior level, chief officer level. And it was announced last week that ChatGPT or OpenAI is going to build a new certification learning model and their goal is to train 100 million people by 2030 on that model.

0:11:49 Joe: They have the data, I think in a more powerful way than many other retailers. And that data is going to enable them to rapidly move in, deploying more automation and more AI tools across everything they do to their business. I think they’re far in the lead.

0:12:54 Vonnie: So when you look at Amazon and Walmart are here and the amount of money they put into and we see where they’re going. What about more medium sized and smaller? How are people embracing the technology and is the divide going to get wider and wider between the big guys and the small guys?

0:14:03 Joe: But what you also have is just as we talked about, as you know, smartphones came on and apps came on. Entrepreneurs are currently building really smart tools with these platforms as a base.

0:14:16 Joe: And in some cases they’ll pick and choose. They’ll use, you know, Claude for some of the analytics, but they will be some of the extensions of website coding, but they’re using chat GPT for other pieces. But it’s a front page. And so some of the companies you’re seeing now are investing in technologies that are built on AI. Most recently last week I saw Schnutz announced that they were deploying an AI based recipe and production system in all their stores.

0:14:57 Joe: Right.

0:15:12 Joe: Right.

0:15:17 Joe: Right.

0:15:48 Joe: Many are looking at their supply chain roles, especially in center store that are more systematic. You’re buying from one CPG company, one group of items and you’re maximizing trucks based on your supply chain. They’re implementing AI faster there. But I do think, you know, we’re at a place because again, it’s exponential, it’s doubling, it’s doubling, you know, no slower than 18 months.

0:16:15 Joe: We every day we go, things are moving so fast now and realize things are moving as slow as they ever will.

0:16:26 Joe: Because the models are going to be twice as fast and twice as good between six months and 18 months from now, depending on who you talk about.

0:16:35 Joe: And Quantum computing, which five years ago people were saying it’s going to take 20 years. No, there are quantum computers happening right now.

0:16:43 Joe: Because again, it’s doubling, it’s doubling, it’s not linear. And so I worry that small retailers and medium sized retailers, especially those that have offloaded some of this work. Right. Somebody that used Instacart to do their e-commerce work, which means the customer data lives in Instacart, it doesn’t live company. Their corporate tools are still much more fractured. They couldn’t figure out how to do it, so they pay somebody to do it for them.

0:17:32 Vonnie: That’s fascinating. So what happens to Instacart in that scenario? If everyone says, okay, we don’t want them to have our data anymore and we’re going to develop our own systems, does Instacart go away or what happens to them?

0:18:11 Joe: But, but they’re able to stay in business because of it. I think that Instacart will likely, for a good while be the tool that enables smaller retailers to compete effectively. But just like with having technology again, I keep going back. This exponential change is going to affect everybody the way it did technology.

0:18:31 Joe: And think about computers. Remember when Apple II was the big gun? But remember Gateway computers?

0:18:40 Joe: They don’t exist. But they created a model that was completely different than anybody else’s and they dominated home computers for five years. And then Dell came along and they kind of disrupted them in technology companies come along that no one’s heard of and completely disrupts and takes the business away from the previous tech person. I think we’re going to see more and more of that happen with digitally native companies that are based in AI, I think the big guns are going to be there. Microsoft is going to be there.

0:19:45 Joe: I think that somewhere between 90 and 95% of the things that I would buy at an H.E.B. store today, the best H.E.B. there is, including in store created things like hot tortillas, fresh made cakes, fresh produce chopped and cut, you know, ready to cook meals, I think if I could get all of that delivered to my home and put in my refrigerator by somebody else for 15 or 20% or even 40% cheaper than H.E.B. does it today, I would switch.

0:20:44 Joe: But today I buy something on Amazon and they start suggesting food to me. Would you also like you just bought a new part for your toilet, but do you also want to buy some cantaloupes on the same delivery delivered in the next four hours? Yeah, when that cantaloupe is fresher, but it’s also 40% cheaper than the cantaloupe in a traditional supply chain mass retailer. I’m probably going to say, yeah, give me that cantaloupe.

0:21:39 Joe: It’s happening today depends on the store. There are stores at H.E.B. that upwards of 40% of their volume is now delivery. Between curbside pickup and delivery, but mainly delivery. Think about urban Austin where you now have a super tall and you have more super tall skyscrapers coming in. Just getting to a store is hard and they order delivery. I think it depends on the item and how relevant is that item culturally to you and the use of that item.

0:22:39 Joe: But you know, one of the things that’s true is the best retailers, one of the reason they’re so good, if you look at H.E.B., if you look at Wegmans, if you look at Publix, when it comes to fresh, one of the reasons they’re so good is they have such velocity. They’re turning that product so fast. Their sales per foot in those fresh departments is so much more than everybody else that they’re fresher because they’re selling so much.

0:23:04 Joe: As long as they’re maintaining the cull.

0:23:06 Joe: We know in fresh produce you’ve got to cull that 4 or 5% quality defect. Not quality defect, but not condition defect, but quality. Right? So scarring, scuffing, misshape. The things a customer would look at and go, I don’t want that banana because that has little scars on it. There’s nothing wrong with that banana.

0:23:24 Joe: But American consumers buy with their eyes and especially if you get digitally, if there’s any imperfection at all. Oh, they screwed me.

0:23:32 Vonnie: Yeah.

0:23:59 Joe: I absolutely disagree. If you look at figure AI, they just had around C evaluation of 1 billion infused into their company this summer. And you take robots and they partner with folks who do film and have people wear glasses as they do work so that they can cut videos to then teach the AI built in their robots. There’s no reason why a humanoid robot who is built on our bodies, why we couldn’t teach it with the AI that’s coming to do anything that we do. I fully believe I will have a robot in my house for less than $30,000 by the end of this decade.

0:25:07 Vonnie: Let’s switch a little bit and talk about floral, another passion of yours. So you’ve written and spoken a lot about AI’s impact on floriculture. How has AI already influenced breeding and what might the next few years look like? In floriculture and AI?

0:26:16 Joe: And then through AI, look at the best parents that are like this one, that is beautiful, that they need to breed with in order to build that resistance. And over time using that, they can much more rapidly get to the pairing that grows that resistance, which enables us to be much more sustainable right. And have much more productivity because as they create varieties across an item type, like chrysanthemums that are resistant to all the different pests and all the different biological things that can cause damage, then that’s going to help. And then if you can also use that same technology to look at the ability to store it at colder temperatures with it still perform, which means now perhaps you could put it on ship containers and take two weeks to get to the retailer. Whereas today most of the flowers are flown every day from Bogota airport into Miami airport.

0:27:43 Joe: We have bred it through human focus, right, with a paintbrush, breeding to make these crossings to have such dense petal structures that a bee couldn’t pollinate naturally anyway, these bee varieties to create these ornamental flowers that we love. So if we could use CRISPR and we could find the right again genetic marker that adds fragrance back to roses, all roses genetic marker that allows flowers to stay in stasis at 34 degrees for three months and still come out of that in water and perform for two, three, four weeks in a home.

0:28:49 Vonnie: Wow. Yeah.

0:29:28 Joe: And again, that will translate to roses that last longer in the home, which makes people adopt them more. So as we look at the future of synthetic biology and using AI to control and think about genetic modification, there’s no question that floral could lead the way there even faster than food products.

0:29:50 Joe: People want a tomato that tastes like that vine ripened tomato in your garden. But are they willing to use a genetically modified tomato to do that? I think at some point they will. That’s my own personal opinion. But for flowers, I think that’s certainly an opportunity. So that will impact the entire supply chain. Just the way we can use AI in the breeding and selection and crafting of the genetics we use in the flowers that we sell.

0:30:25 Joe: Absolutely. So it’s happening right there at Chrysanthemum Week. There were some folks that went to another greenhouse that saw an automated planting machine that was planting the cuttings from the mother plants. And they said it was about, it might have been slightly slower than the best humans that do that work, which is very tedious work. I mean, you’re literally bent over and putting these plugs in the ground.

0:31:28 Joe: I had dinner with a good friend of mine that I believe is now the largest flower grower in the world. And we talked a lot about the automation that is already being deployed. I saw a warehouse in the floral space that was just as we described Amazon. You know, a much smaller footprint warehouse that’s much taller, that is entirely made up of a grid of one pallet in size and machines are moving those pallets around so that grower is already using that level of automation.

0:32:21 Vonnie: Oh, wow.

0:32:28 Joe: Right.

0:32:53 Joe: Running that. It’s about a five hour drive and they’re driving.

0:32:58 Joe: Yeah.

0:33:00 Joe: It’s running on the interstates right now. And again, these are still newer companies, but it’s going to double. And so that’s going to impact all of us. And so that’s where I think in the floral space, which is still made up of a lot of smaller growers as well, a little bit more fracturing between grower versus importer or versus distributor. If you’re a wholesaler. In the floral space, there’s a lot of room for integration, a lot of room for people to deploy automation and deploy AI at their work.

0:33:34 Vonnie: I think maybe we should do a series. Joe Don, there are so many other things to talk about. So I have one last question for you. So looking at the bigger picture, what excites you the most about the AI driven future and what are you worried about?

0:34:22 Vonnie: Wow.

0:34:27 D: Right.

0:34:35 Joe: Right?

0:34:56 Joe: Right.

0:35:22 Joe: Make things more available for us every day. They’re going to be more available for us, sadly, than other societies. We’ve got to be thinking about that. So that’s when we talk about the other side.

0:35:33 Joe: The biggest fears I have for the floral industry in particular. I grew up on a family farm, and my dad and my uncles all grew up in agriculture, like many Americans.

0:35:46 Joe: My mom’s side of the family still have all their land, but my dad lost the family farm. Him and my uncle and my grandfather broke out. It was part of the Xit ranch. It was pasture land. And dad and my uncle and my grandfather drilled seven wells, created the water pipes underground to do flood irrigation, and created a farm. In the late 70s, when things turned badly for American agriculture, some of the things that are in the wind right now, if you think about what’s happening in the soybean world today, he took out some loans at very high interest rates from the sba, from the government, and he wasn’t able to stay with the times.

0:36:57 Joe: A lot of things happened there, but he had to go through that and grow through that as a person. And I think we’re going to have some disruptions like that. And so I really just. I’m trying to proselytize and evangelize and try to help as any way I can to get people to really focus. If I was 20 years younger than I am now and a leader in a retailer the way I was 20 years ago, my suggestion would be to have very broad open eyes to what’s happening and to be very focused on helping bring that your knowledge as a leader to every single partner, employee, worker, associate that works with you to help them embrace this technology in their personal lives because it’ll help make them more effective in their home life, but help them understand and focus on how do we quickly enable ourselves to be better using these technologies and then how do we as organizations and companies create small groups to do the same so that the organizations that I love and the growers that I love will be able to continue to do what they love to do for as many people as they can employ with great jobs providing the things that, you know, that we all love in our lives.

0:38:34 Joe: Thank you to you and the association. I know you’ve had eight before me. I’ve watched all of them. I’m working for folks like you. You know, associations are important. So I appreciate what the IPA does to educate all of us and keep us all together having these conversations convenient to talk about. So we’re all better. So thank you for what you’re doing personally and what the IFPA is doing as well for, you know, for the produce in the Florida industries.

0:39:03 Intro Speaker: Thanks for tuning in to Fresh Takes on Tech, hosted by Vonnie Estes. If you enjoyed the conversation, please subscribe, rate and share it with your network. You can find more episodes and resources at freshproduce.com See you next time for another Fresh take.