Episode Summary

Join Harry Duran, host of Vertical Farming Podcast, as he welcomes to the show, co-founder and CEO at Oishii, Hiroki Koga. Oishii grows the best fruit in the world by deploying ground-breaking vertical farming technology that pushes the boundaries of agriculture. Today, Harry and Hiroki talk about the origin story of Oishii and how they became the first in the world to grow fruit in an indoor vertical farm at commercial scale. Hiroki reflects on lessons he’s learned throughout his entrepreneurial journey, speaks to those who have influenced and inspired him and expounds on the importance he places on living up to the quality and standards of the Oishii brand. Finally, Hiroki shares his excitement for future expansion of his business and what excites him the most about the future of Oishii.

Episode Sponsor

CULTIVATD

Key Takeaways

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• 02:45 – Harry welcomes to the show Hiroki Koga, who talks about his experience living in Europe as a child, the decision to go into consulting and finding his passion
• 
  
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• 07:52 – Hiroki recalls the culture shock he encountered the first time he came to the U.S.
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• 
  
• 09:36 – Hiroki’s vertical farming origin story
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• 
  
• 15:41 – Hiroki speaks to what inspired him to launch Oishii
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• 23:24 – Hiroki expounds on why he embraces tough challenges
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• 25:12 – Harry and Hiroki talk about some of the more popular brands of fruit in Japan
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• 28:00 – When Hiroki realized there was an opportunity in the vertical farming industry
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• 32:36 – Hiroki recalls some of the early days of Oishii and what his marketing strategy was
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• 38:19 – Hiroki describes the Omakase Berry to the audience and shares his plans for growth
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• 43:03 – Hiroki reflects on lessons and takeaways from his journey thus far
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• 45:41 – Who Hiroki looks to for inspiration and a tough question Hiroki has had to ask himself recently
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• 50:52 – Harry thanks Hiroki for joining the show and let’s listeners know where they can learn more about Oishii and connect with Hiroki
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Tweetable Quotes

“I was always trying to look for what my passion in life was. And I kinda struggled to find what I was truly passionate about when I graduated from college. And I went into consulting to try to find my passion.” (05:29)

“When we think about ten or twenty years out, who’s going to succeed in the leafy green space is the company who can raise the most amount of money and who can produce a head of lettuce one cent cheaper than their competitors.” (17:11)

“And that’s really when I started thinking that maybe if I started with a different crop that can overcome all of these hurdles that the leafy green companies have faced, maybe there’s a viable business model, a company, an interesting business model that’s not just about being a cent cheaper than competitors but something more exciting.” (19:11)

“I think [Japan] has a very interesting culture when it comes to fruits. Instead of gifting wines, people will gift fruits.” (27:08)

“I think the most important thing for us was not the early revenue, but making sure that we lived up to the quality and standards of the brand that we wanted to build.” (35:46)

“The only thing that I have confidence in is my passion for this industry and my xperience in this industry and my knowledge and how I think this industry is going to trend. That’s my strength.” (47:22)

Links Mentioned

Hiroki’s LinkedIn

Oishii Website

Oishii Instagram

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. And that's really when it got me,

you know, started thinking that, you know, maybe if I start

with a different crop that can overcome all of these hurdles

that the leafy green companies have faced, you know, maybe there is a

viable business model, a company, an interesting

business model that's not just about you know, being a cent cheaper than

competitors, but, you know, something more exciting.

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. First-time listeners,

you are in the right place if you're looking for conversations with fascinating CEOs and

founders of the leading vertical farming companies from around the world,

or might I say controlled indoor agriculture.

The names keep changing, but the mission stays the same

fine stories from folks who are doing great things in this

industry that I'm learning more about each and every day. So I appreciate you taking

the journey with me. In case you missed last week's episode, we had a great

and fun conversation with Charlie Guy. He's the CEO and co-founder of

Let Us Grow, and having connected with Charlie in the early days of

the podcast, it was great to finally get some time on the calendar with him.

Make sure you check that out. This week is a long-anticipated interview

with the CEO and co-founder at Oishi Berry,

Hiroki Koga. Oishi's been making a lot of waves recently, and

it's no surprise to anyone in the vertical farm industry that they're doing something really

interesting, specifically with strawberries and their Omakase

variety. Currently, a pack of 8 large

Omakase berries is going for $50

on the Oishi website, and it's only limited to New York City. So talk

about supply and demand. and scarcity and

confidence in building a quality product. This

ticks off all of those. And as you listen to this interview, you'll discover

why. It's really, really interesting conversation with Hiroki. What they do at Oshi

is grow the best fruit in the world by deploying groundbreaking vertical farming

technology that is pushing the bounds of agriculture. Today,

Oshi and I talk about the origin story, naturally, I'm always curious about that,

and how they became the first in the world to grow strawberries in indoor vertical

farm at commercial scale. Hiroki reflects on the lessons he's learned throughout his

entrepreneurial journey, with a shout out to those who have influenced and inspired him, and

talks about the importance he places on living up to the quality and standards of

the Oishi brand. And more specifically, as you hear the conversation,

it's also a reference and a reverence for the Japanese

culture and the craftsmanship that goes into

growing a strawberry, which I found fascinating. And finally, Hiroki shares his

excitement for future expansion of the business and what excites him most about the future

of Oishi and the industry. This episode is also brought to you by Indoor

AgCon. Whether you're starting up or scaling up, Indoor AgCon can help you grow your

vertical farming business. Live and in person this year, the premier trade show

conference for vertical farming and controlled environment agriculture heads to

Hilton Orlando from October 4th through 5th. You can explore an expo

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VFPOD2021. And

we'll have those links in the show notes as well. Don't forget to sign up

for our Vertical Farming Weekly newsletter at verticalfarmingweekly.com.

We'll bring you the latest and greatest in the world of vertical farming, brought to

you by our awesome editor, Daniel. Okay, just a little bit more housekeeping before we

get into the interview. If you enjoyed this episode or past episodes, I

know I sound like a broken record, but I'd love it if you leave a

rating and a review at ratethispodcast.com/vfp.

If you've been listening for past seasons or just are new to this

season, it's a great way to let me know what you think about the show

and anything I could improve or anything you're looking forward to or

guests you'd like to hear on this show as well. All right, enough of that.

Let's get into this conversation with Hiroki. So Hiroki Koga,

co-founder and CEO at Oishi, thank you so much for joining me on the

Vertical Farming Podcast. Thank you for inviting me. I'm a big

fan of this podcast, and, you know, I think you guys are doing a great

job really, you know, educating people who's in this industry

but also outside of the industry. And I've been able to personally learn a lot,

you know, just being able to hear opinions from leaders in the same

space. So, um, thank you. I'm really grateful. I appreciate that. And it's

always valuable as a podcaster when you can speak to someone who's actually

listened to your show, because as you might imagine, as a creator, you know, you're

always wondering— you're creating content, putting it out into the ether, and you're wondering,

you know, is anyone listening to it? I'm, you know, painters, artists, writers, you know,

we all want to know, like, we're creating something, is it adding value to anyone,

or should I keep doing this? So sure. Is it for you in

early days, is there anything that you would call a

hobby or passion that you remember from like your youth

that puts you in the creator category? In the creator category,

you know what, I grew up in a normal family in Japan,

and, you know, none of my family members were engineers nor really

artists. So I don't specifically recall, you know,

any scenes where I would see myself as a very creative person. But,

um, you know, one thing in my childhood that really affected my career

path was my experience of living in Europe for a few years

when I was a kid. And, um, you know, other than that, I spent most

of my time in Japan. But during those few years, I had the chance

to, you know, go outside of Japan and kind of see Japan

from the outside and, you know, really think about my

identity as a Japanese. And, you know, when you think about,

you know, other students who are in that international school coming from all over, you

know, all different countries, and Japan kind of had this unique

position of having, you know, companies like Toyota,

Sony, and then like things like Pokémon or Dragon Ball in my

generation. So we had a lot of unique assets. And so as,

you know, as a kid, I kind of grew up thinking, you know, wow, I

know my country has lots of cool things that I can be

proud of. And, you know, this idea of, you know, being able

to share something that Japan is good at with the rest of the world was

kind of something that always, you know, stuck at the back of my head. And

so I didn't know specifically what it was going to be, but, um, you know,

obviously I didn't think it was going to be, you know, strawberries at that

time. But, um, I think that was the biggest impact from my childhood to, you

know, what I'm doing right now today. It seems like from your—

what I've seen on like your early schooling, that you had a

passion for, you know, business, economics. You know, you've got

your MBA at Berkeley. What was it about those topics that was

attractive to you? Well, so, you know, I guess

I was always trying to look for what my passion in

life was. And because I did— I didn't major in

engineering or, you know, bioscience or anything like

that, I kind of struggled to find what I was

truly passionate about when I graduated from college. And, you know,

I went into consulting to try to find my passion. 'Cause, you

know, when you're in consulting, you get to experience a lot of different industries,

a lot of different services. So I thought, you know, if I go into consulting,

maybe I can find my passion. And, you know, and it actually

worked out for me. And so during my 6 years of consulting life at

Deloitte in Japan, I came across, you know,

agriculture-related projects. And one of them was

vertical farming projects in the early 2000s. So this was when it

first took off in Japan. before it took off anywhere else in the

world. And then that kind of became a passion. And then I had the chance

to, you know, come to the US to do my MBA. I,

you know, I didn't plan to become an entrepreneur, but, you know, a lot

of things just happened at the right time. And, you know, I was an expert

in the industry and this industry was taking off here in the US at the

right time. So, you know, I decided to take that opportunity and start

this company. Are you familiar with— its origins come from Japan, but the

concept of ikigai? Yes, purpose of life.

And it's something that I've been thinking about recently because I think it's— I'm gonna

butcher this and I'll probably have to look it up, but like what you, what

you're good at, what you're passionate about, and it's a convergence of all those

things. And so as you were speaking about that, it's something that I've been

thinking of recently myself because I think there's things that we love and things that

we're good at and things that people will pay us for, but I think when

you find the convergence of all those together, it really lights you up and it

gives you a purpose in life. So I'm wondering if those are some of sort

of like the questions you were struggling with as you were having those

internal conversations with yourself. Exactly. Because, you know, I

know until I came into this industry, I didn't know what my

ikigai was. And I had a good sense that

maybe, you know, agriculture and vertical farming is something that I'm interested in

when I first came into consulting and, you know, did one of those projects,

but it really became you know, something that I was really sure

about after I spent more years here in the US during my MBA,

you know, looking at this industry closely as an investor and also as a

consultant. What was your initial

thoughts, impact, experience coming to the US for the first time?

That's a very interesting question. So a lot of cultural

shocks for sure. I could speak English,

but You know, I only spent a few years in elementary school in American

school. So that was all I knew about the US. And this was not even

in the US. It was in an American school in Paris, in France.

So I had no idea what, you know, the US would

be like. But, you know, one of the biggest things that I realized when I

first came to— when I first arrived to the Bay Area

was the difference in the quality of produce in

general. compared to what I was used to eating in Japan. Because as a

kid growing up in Japan, you know, everyone is taught that United

States is the world's largest agriculture producer.

Yeah. And so, I'd assume everything would be cheaper and better.

And, you know, even though now that I know that California has

one of the freshest and the most high-quality produce in the country, but, you know,

I didn't even know that. And, you know, I still thought that the quality

was surprisingly different from what I was used to eating in Japan, because in

Japan, we have extremely high-quality produce and

a very sophisticated distribution channel. And the country itself is, you know, just

the size of California. For sure. So, you know, most produce can go

from farm to table in a day. And so, it's always fresh and it's

always high quality. And so, you know, that was just one thing

that really kind of caught me off guard, but, you know,

it was a good insight. that really

got me thinking, you know, maybe there is something that I can do here in

the US using my experience. What were some of the

things you were discovering when you were at Deloitte and you started this,

you know, your introduction into the vertical farming industry, seeing

what work had been done up until that point? And then, you know, I would

imagine having your consultant hat on, figuring out where are there gaps,

where are there rooms for improvement, and And, you know, what

was your vision of what, what's— what could be possible at that time?

Sure, sure. So, I think the vertical farming industry itself— well,

first of all, there were no such term as vertical farming back then. People called

it, you know, plant factories, indoor agriculture. It's very inconsistent.

But, so, the whole idea of growing crops in a— using

LEDs in a completely closed and controlled environment, I think,

took off in Japan in the late '90s and, like, early 2000s. And,

these were mostly led by large Japanese electronics companies like

Panasonic, Sharp, Toshiba, who had all of the equipments and the

devices to make this happen, right? So it wasn't really

driven by the market demand, but it was driven more on the

technology side of things. And, you know, these companies wanted to

do something cool and new, right? And, but what happened

was, even though they figured out how to grow lettuces

and, you know, other types of leafy greens in a vertical farm setup, they quickly

came to realize that it's not a viable model because they were just spending

too much money upfront on the CapEx. And the end product was,

you know, fresh and good, but fresh and quality vegetable is

always available in Japan. So no one would pay any premium for

these vertically farmed lettuces. So every

time I worked with a client, the problem was

always about how do we reduce cost? Because you cannot

demand much of a higher premium. And the more I

looked into different projects, I've seen probably 30, 40

companies, their BS and their P&L, and everyone

had a very similar business structure. And I just

struggled so much as a consultant because I just couldn't find a

way to really justify this business to be a profitable

one. And so what really happened was after 10 years, the first

few years, people are really fascinated about the technology because 'Cause it was so

futuristic and sci-fi and, oh, this is so cool. The

robots. Exactly. But then, you know, after a

lot of companies got into this space, they said, okay, this doesn't

make sense. We're gonna get out of the space. So what happened was it

was known as an industry that was cool, but that just didn't make sense

as a business. And so that's kind of when I

left Japan and then went to the US to

do my MBA in about 2015. And

so, you know, I had spent enough time in the vertical farm space to

really know about the business in depth, but I hadn't really developed

a perfect thesis on where this industry was going.

And it was kind of like lingering in the back of my head as I

moved to the US. But then in

2015, as you probably remember, I think

a lot of startups started raising money here in the US.

outside of Japan. And it was really driven by a completely different

force. And it was more around demand for

fresh produce, but also demand for a more sustainable

way to grow crops. And so I

think, you know, people started thinking that the environment

that's surrounding agriculture is changing very quickly and all of the resources

that used to be almost free are now no longer free.

And, you know, the weather is very unstable. So it became a general consensus

that, you know, something had to happen in agriculture, just like how, you know, people

are seeing the shift from traditional cars to electric

vehicles. And so a lot of investment started going into this

field. And what happened was, because it was such an emerging

industry, and there was almost no one in the US who has been doing this

for many years, you know, somehow people found me on LinkedIn, and

a lot of VCs and consultants asked me if I

could help them conduct due diligences on the financial models and

also the business model. And even to the extent of technology

assessment, because I'd been to so many vertical farms in Japan that were a

few years ahead of what these people are trying to do here in the US.

And so I kind of got to see both the Japanese

market that kind of failed, and then the emerging market in the

US that was driven by a completely different type of force, but they were all,

you know, using relatively similar technology. And that

really helped me, you know, think through where this whole industry

was going and what it takes to succeed in this

industry. So around 2015, 2016,

you also began to work with the folks at AgFunder

as well. Is that right? Yes. So I was an MBA intern at

AgFunder. I also interned at several other

VCs who are looking into this space. Do you feel like the

time at AgFunder gave you sort of another perspective, another front seat

to seeing what was happening in the industry? Because obviously, like, they're closely

tied to, you know, what's happening in controlled environment agriculture,

and maybe you just got to see more of what was happening?

Yeah, so, like, to be honest, I think at that point, AgFunder was much

smaller than what they are today. And I think,

you know, they were also trying to figure out, you know, where their sweet spot

was. So there wasn't a lot of structure to it.

And they basically just, you know, assigned me to multiple

deals around, you know, for what it was, you know, vertical

farming operators, but it were— there were also equipment

companies, LED companies, all of these random deals that were coming through their

platform. So, you know, I could kind of see You know, that there is

definitely an increasing amount of interest

in the space, and I could feel that firsthand because until then it was

really just Japan who was doing this. So now that brings us to

the idea for Oshi. So this is like now late

2016. Talk to me about

what's going through your mind at this time because you're seeing all these experiences,

you know what's happened in Japan, You've seen the money coming in.

So it feels like all these Lego blocks are starting to be formed.

And so I'm curious, like, how your— what your thought process is as you

start to think about what would eventually become the early days of

Oshi. So, you know, one interesting incident that happened

during my time at Berkeley was— so I was chatting with one of the investors

who wanted to invest in this space, and, you know, they were really trying to

figure out who— so they were trying to invest in a vertical farm operator.

Right. And they were talking to many different leafy green

companies and they just couldn't make a decision on who was

going to win in the space because the technology seemed very similar.

And everyone says, you know, they have something that is new, but, you know,

based on my experience, almost at that point, you know, almost

everything that went into the leafy green space was somewhat, you know,

commoditized technology. And it wasn't, you know, there was no

really secret sauce to growing these leafy greens. And

so, I couldn't recommend him,

you know, a single, you know, that this company was definitely going

to, you know, be better than the others. And so, where we

kind of ended up was, you know, when we think about 10

years, 20 years out, you know, who's going to succeed in

the leafy green space is the company who can raise the

most amount of money and who can produce a head of lettuce

1 cent cheaper than the competitors, because

it's really hard to create differences in the flavor and the

products were already pretty good. So, and

it's really hard to brand a head of lettuce in a supermarket. So it was

all about how efficiently and how quickly can you

scale. the business model, and it wasn't really about the technology

because at the end of the day, it's going to become a commoditized technology pretty

quickly. It's hard to convince the consumer of the differences.

I mean, they— the average consumer could probably tell you

3 or maybe 4 types of different lettuce. You know, there's romaine,

iceberg, bibb. I don't know, maybe. Yes. You know, at that point you start getting

into like the fancier varieties. But from a taste perspective, to your

point as well, there is a law of diminishing returns at some point where you're

just like, it's You know, as a consumer, they're thinking, well, it's going in a

salad anyway, so it's not like I'm like tasting each leaf of

lettuce as it's being eaten and I have a discerning— and you also have to

accommodate for people's palates. Like most people's palates

are not refined, so to speak. Exactly. So our conclusion was

that, you know, the winner of this space is going to be the person who's

going to be able to raise that kind of money. So, you know, that was

the interim solution. But then, so I started thinking, okay,

that was not a thesis that I was expecting or where I

wanted this answer to come out. And

so, I started thinking and took that question and

took it a little bit one step further and thought, okay, who is going to

become the largest vertical farm

player beyond leafy greens?

Let's assume that there's a way to grow crops beyond leafy greens.

Sure. And what does the endgame look like? And that's really when

it got me, you know, started thinking that, you know, maybe

if I start with a different crop that can overcome all

of these hurdles that the leafy green companies have faced, you know,

maybe there is a viable business model, a company, an

interesting business model that's not just about, you know, being a cent cheaper

than competitors, but, you know, something more exciting,

right? And so, when I thought about What did not go well

in Japan? There were 3 things. One was,

first of all, it was extremely hard to make profit

with, with these products in Japan, especially because the competing products or the

conventional products were already pretty good. And so

because people could not generate cash flow, positive cash flow, people had to

keep on raising equity financing. And it's really tough to

keep on building large facilities on equity finance. And

so, you know, until you generate positive cash flow, you

can't really quickly scale the business. So I thought that was one big

problem. So I thought, you know, if I'm starting this business, I need to start

with something that can generate positive cash flow from the first

facility so we can prove to investors and bring in more money and scale very

quickly. And the second thing was, you know, everyone is selling

leafy greens. So, you know, I need to start selling something

beyond leafy greens. And then also, let's start with something that is really

challenging, but if we unlock that crop, we

might be able to unlock a lot of different crops. So, that was the

second point. Let's start with something that's hard. And then, the

last point, which was really critical for me,

especially when I thought about the long-term game, like 10 years,

20 years out, it was really about something that could be

branded. Because at the end of the day, even beyond

leafy greens, I think the technology will become obsolete. So,

even strawberries and tomatoes, in 20, 30 years, I think

everyone's going to be— everyone in this space is going to be able to grow

these crops. And at that point, what's really going to

differentiate a successful company from the others is

brand. And this was very clear to me, especially as

we were seeing how Tesla was scaling their business.

And it was interesting because one of the articles that wrote about

us kind of used that analogy and, you know, compared

us to how we're expanding our business, banking

on branding, just like how Tesla successfully branded their

product. Because when you think about electric vehicles, you know, in

2010, I think besides Tesla, there were a few other companies who were in

this space. So like Nissan had Nissan LEAF. It's kind of funny that the

name is Leaf, but— I actually test drove a

Nissan Leaf a few years ago. Yeah. And, but the biggest difference

between those 2 products was that Nissan Leaf was a sustainable

product, but in terms of the quality of the product, it wasn't that

much better than what was already out there. It was cheaper, it was much

more affordable, but nothing really surprised people beyond the fact that it was running on

electricity. But what Tesla did was they blew

people's mind with a product that is sustainable, but

also much superior to what was available in the market. They were

faster than a Porsche, right? And even though they could only produce, I don't know

how many, maybe like 1,000 or 2,000 cars every year. And, you

know, most people couldn't even buy those cars and people went

crazy about it just because of the difference in the product quality.

And what's helping them today is that, you know,

amazing brand experience. And now, you know, they're coming down to

Model 3 and, you know, there are probably 20, 30 other automotive companies

that have similar products, but because Tesla built that very strong

brand and an image of a leader within that industry 10

years ago, that's why they're able to demand a premium

today. And I thought the exact same thing was going to happen in

this industry, you know, 5, 10 years ago. And so,

and that's why, you know, I thought we have to start with something that was

truly differentiated, something that we can build a strong brand with. And

my answer was strawberries, and in particular Japanese varietal

strawberries. Lots of things to unpack there. Something you said

was that you wanted to tackle this problem because it was hard.

Where does that mindset, that ethos,

that work ethic, like, where does that come from? So I

think the reason why I wanted to start with something hard

was because A lot of the companies that started

a business in the vertical farm space started with something that is easy that they

can sell tomorrow. And instead of focusing

on, you know, what comes beyond that. So I

really thought that, you know, we, if we had the chance to raise

significant amount of funding, it's probably the wisest thing

to do is to spend all of that money onto the

next thing. While other people are focusing on, you know, the more

immediate crops. And so that was kind of the thinking

behind everything. And, and then also, you know, growing up as a kid in

Japan, you know, strawberry is the king of crops in,

in Japan. And it's where all of the farmers want to end

up in their career. People start with leafy greens, you know, easier product.

Mm-hmm. But crops like tomatoes and strawberries are where, you know, you can

really put your all of the learnings that

you've learned as a farmer for 20, 30 years, and

really adjust all of the environment, adjust the way you grow them.

And everyone has their proprietary way to grow strawberries.

And they want to brag about the quality of their strawberries, how they're

superior to anything else that's available in the market.

So it's like a farmer's dream crop. And that's kind of

what inspired me and why I thought, You know, maybe if we can

start with this crop and really conquer this crop, everything else

should be much easier. Is it so in Japan? Is,

is it, are they recognized, you know, certain brands in terms of strawberries

or certain farms that, that, you know, that these taste different than the, than these

others? So this might be a little bit

unbelievable, but in Japan, so, you know, Japan has also

states, so we call them prefectures, but every prefecture

has their own strawberry breeding program and they're competing

against each other, right? And so Japan owns

more than 250 different varieties of strawberries. Wow. And this

is more than majority of the entire strawberry cultivars that's

available on this planet. But it's really a competitive

market. And, you know, if you have any Japanese friends, you know, I'd encourage you

to ask them if they can name certain brands of strawberries, and I

guarantee they can name at least 3 or 4 that they like.

So what are some of your favorites? I actually have so

many. So the most typical one is called

tochiotome. And so these are very popular because the patent is

already expired and any farmer can grow them. But one of the most popular

ones are called ama-ou, which is grown in the southern part of Japan, and

it's only grown in this, you know, specific prefecture in

Japan. And I think that's one of the people's favorite these days.

But, you know, if you go to supermarkets and what it says on the

package is not strawberries, it has the brand's name on

it. So I think in this country, you know, people recognize

Driscoll's and, you know, maybe one or two other brands.

But in Japan, you know, it's, it's, I think it's, it's much more

relevant to people when, you know, they talk about brands of

strawberries. It almost sounds like what wines

come to mind, like the Bordeaux region or champagne.

Like you're You're talking about where it was grown and everything that's

inherent in that culture makes up how that tastes.

Very, very similar. So, I think we have a very

interesting culture when it comes to fruits. So,

instead of gifting wines, people would gift fruits.

And, if you go to department stores, there will always be a section

where they have very expensive fruits. that is grown

in a certain way. And they'll have stories behind, you know, how

it was grown, who grew them, why it's so good. And,

you know, people would gift them to their friends and families. And, you know, if

you're the recipient of the gift, you would really, you know, read

everything that's in that box and try to understand what it is and

really appreciate where it came from. The more you talk about it,

the more it makes sense that this is where you would end up because, you

know, this is the culture where, you know, something like a fruit fruits and strawberries

was prized. So when did you realize that this

was an opportunity in this industry? And when— and

then that coupled with, with you being the person

that wants to bring this forward? Sure. So right after I came to the

US, you know, I clearly saw a huge opportunity in growing, you know,

quality vegetables and produce or fruits here in the US.

And, you know, strawberries was obviously, you know, one of the

top that was on my mind. And so, when I started

thinking about, you know, starting Oishi, the first thing that I did

was I got an importer license for strawberries.

And because I didn't have money to build a whole vertical farm here, I

decided to buy a bunch of, you know, high-quality strawberries in

Japan and basically pack my entire suitcase and

flew to New York. And so, at that point, it was just myself and my

co-founder, Brendan. So we filled our bags with

strawberries. We found a hotel that had a full-size

fridge in Manhattan. We filled the entire fridge with Japanese

strawberries, and then we spent the next 3 days, you know, literally

going from the bottom of Manhattan, walking all

the way up to, you know, around Central Park, just knocking on

doors of restaurants and supermarkets and people,

you know, who would be our future customer just to get their reaction. You know,

if we— were to sell these strawberries throughout the year

and you had access to these strawberries, how much would you pay? And, you know,

how many of these berries would you buy? And so,

and the reaction was just really overwhelmingly positive.

And so, that was really the moment we knew that this was

something that could take off if we could figure out how to grow them in

a vertical farm. How many strawberries are we talking about that you put on the

plane? I don't know, probably

a couple thousand or— Wow. Or a few thousand

strawberries. And I mean, yeah, we've probably

visited more than 40, 50

restaurants and hotels and retail buyers in a

matter of 3, 4 days. So yeah, we just

did cold calls on to all of these Michelin restaurants in Manhattan.

Yeah, I spoke to Rob Lang of Farm.One and he had a similar experience when—

because he went straight towards the high-end herbs and he

went straight to like the Michelin restaurants and that's where he was able to make

inroads early as well. Yes, I heard his episode and I was actually

impressed that he was able to bring those chefs to— convince those chefs to,

you know, come to his farm because when we first did our cold calls,

like no one was willing to. meet us. Like, we would

show up at the front desk and, you know, ask for the chef, and the

receptionist will ask us if we had an appointment. Reservation. And we said no.

And they're like, well, like, you have to send an email, you have to call

us. But, you know, we only had 3 days and we didn't have that time.

So, you know, we kind of had to figure out a way to just get

into the kitchen. So eventually, you know what, Brandon and I kind of

figured out— I'm not sure if this is something that I should share on a

podcast, but, you know, we At one point, we had to

lie at the reception and say, yes, we have an appointment with the chef,

and he told me to come into the kitchen. So, that's

how we got into the kitchens. And then, when the chefs come out and they

see the strawberries, it's just visually,

it's just nothing like they've seen before. They're shining and

they're already smelling. The fragrance is already filling up the room.

So, even though if we didn't have an appointment, they'll be intrigued because they are

craftsmen and artisans. So, you know, they're like, okay, you know, just

give me one berry, I'll give you my opinion. And then, you

know, once they bite into the strawberry, their facial expression, like

you can tell that they're just blown away. And, you

know, so some people are like, you know, I want this from tomorrow, how many

can you bring? It was as easy as that, you know, once

you can get the berries into their mouths. Yeah, and it's very common, I

think it might be a cultural difference, but You know, just, um, you know,

salespeople know that sometimes you have to try any way you can to get—

because these people are just gatekeepers, gatekeepers at the front, and they're trying to

respect the chef's time. Exactly. But I think you knew in your

heart that what you were providing was something that they would find

interesting, valuable, and something as artisans, as creators

themselves, to your point, would appreciate as well in terms of

like something they haven't seen before. And, you know, I could probably ask a bunch

of other questions about how you packed them to make sure they didn't get damaged

and all that sort of stuff. But, but that's, that's a really, really fun

story. Thank you for sharing that. So now you've figured out you

have something here, people are interested. Uh, now talk

about formation of Oishi and then early days about what's the strategy,

because you could have gone the route as anyone else did. Here's our product,

begin offering it. But I think, you know, being in stealth for

so long, I'm assuming that was part of the strategy as well. So talk a

little bit about So in my second year of MBA, you know,

I decided to start this company. And so especially after I've

seen these reactions from the chefs, you know, I knew that, you know,

as long as I could figure out a way to grow these strawberries in a

vertical farm, I would have a pretty solid, you know, revenue and P&L

business model overall. So the next thing I did was,

you know, using all of my network during my time at Deloitte, I

contacted a lot of expert farmers in Japan, who's been

trying to do something similar in the indoor agriculture space. And then

also, we partnered with a lot of leading universities in Japan

who were mostly funded by these, thanks to these electronic

company giants, who's been basically dumping

money into these universities. So research was

going on, even though the industry didn't take off quite well. So

we did a lot of open innovation initiatives, And we brought

all of these bits and pieces from different universities and from different farms

together to really figure out end-to-end,

how can we grow strawberries from seedling all the way to

going through flowering stage, making sure that they produce enough flowers and the

flowers have enough pollens. And then we can operate bees

effectively to conduct pollination and the end product actually tastes

good, right? So there were so many different challenges. Each of these stages,

which you cannot see in a leafy green product because they have a much

shorter 30-day cycle. Whereas for strawberries, they have— if

you go from seed all the way to production, you're looking at a 10-month

growth cycle. And there are different, very distinct different

cycles of the plant where you have to change environments, you have to do

different things all the time. So, we had help

from the Japanese community. A lot. And, you know, we figured

out how to grow strawberries in the farm. In about, I would say,

a year after we incorporated in 2016, so in

2017, we raised a small seed round under

stealth mode. These were mostly angel investors from the US

and also back in Japan. And we built a very small prototype to

prove that we can grow strawberries in a vertical farm. It worked.

And the quality was phenomenal. And so now we started using

those to start talking to chefs and get

commitments for their sales if we were to expand our

facility. And then now, as you think, because you have to wear all the hats

as an entrepreneur, as you've very well experienced. So you've got to be thinking

about expenses, you got to think about marketing, you got to think about sales, you've

got to think about all the different things that as you grow, you can hire

people to do that. So putting on your marketing hat, You know,

what did you want to do different with Oishii than what you had seen

previously? Yes. So I think the most important thing

for us was not the early revenue,

but making sure that we live up to the quality and the

standards of the brand that we wanted to build. So

we didn't just, you know, go out and start selling the first harvest.

We really perfected the environment and we really made sure that

it's a strawberry that you can just not find in this

country. So that was the first thing that we really focused on, quality.

And then next, instead of, you know, going straight to the retailers,

we wanted to establish a strong brand. So we thought, you know, Michelin

restaurant chefs and, you know, these famous chefs, if they could be our

spokesperson, that would help us a lot in terms of boosting

the brand. And so what we did was we started

selling our first product at a restaurant called Chef's table at Brooklyn

Fare in Manhattan. They are one of the

5 3-star restaurants. And the chef there,

César Ramírez, is known to be a very, very— he's a creator,

right? He's a little bit stubborn and difficult person at times,

but his standard is really high. And he plates

everything onto every single plate by himself. I was just blown

away because, you know, at that type of restaurants, usually the head

chef is just someone who's creating the menu and you

let everyone else do the work. But he is just

so proud of what he's doing and he just cannot let other people handle

things. So he was plating everything on his own. And so we thought,

this is where we need to start. And people who dine at

those places have a very fine palate. And a lot of people have

been to Japan as well. And so they're familiar with You know, the quality of

the fruit. So we started there. And then, you know, even though we didn't

have a lot of supply, you know, we had just enough to start selling at

Chef's Table. And the word just spread really quickly.

You know, we started getting lots of emails from people who dined

there because the way he used our strawberry was he actually didn't do

anything to it. So he just plated one of our

berries on a beautiful plate. Oh, really? at the end of his, I think, like

14-dish course. And at the end, it was just omakase

berries. And so, yeah, I think it was very

impactful. And we just started getting a lot of emails.

And, you know, that's kind of how we started in terms of selling our

product. Given this is only an audio podcast, we're going to

invite the listener to use their other senses. But for people who have not

experienced like an omakase berry, like how could you even come close

to describing what that— And who are just used to, you know,

obviously the regular strawberries we've had here in the States for years,

how would you compare— how would you describe it? So the way

the chefs describe our strawberries is, first of all,

they say that the aroma and the fragrance is just completely different. So

if you were to have one tray of our berries and leave it in a

room for, let's say, 5 to 10 minutes, anyone who would walk into

that room would realize that the room

is smelling like a strawberry farm, basically. Actually, even more

than a strawberry farm here that you can find in this country.

So the aroma is just exceptional. And considering

that 70% of your taste consists of the aroma,

that is extremely important. And the other thing is the sweetness. So

we have 2 to 3 times more sweetness in our strawberries

compared to what's available on the market. And I think the last thing is the

texture is very soft and creamy. So

it might be hard to imagine what a creamy strawberry is like, but

if you've had Kobe beef and people would say it's very creamy or buttery

compared to traditional steaks, it's a little bit similar to that.

It's very soft and it would not be able to withstand long-distance

transportation, but because we can grow it in a vertical farm right next to

consumers, it's full of soft And

now,

in terms of availability, is it still just in New York or are

you shipping to other locations now? So, right now, we're still

just in New York. Well, so precisely speaking,

Manhattan and parts of Brooklyn and parts of New

Jersey, but we're still, you know, limited to this area. But we

are getting a lot of inquiries and, you know, probably, you know, as we're

speaking right now, we're probably getting a couple emails from people who are interested in

trying this. From all over the world, like, when are you going to be expanding?

And that's really what we are working on right now. It really

hurts me that, you know, we have been advertising these things

online, but, you know, only people who live in New York have access

to this. So we have plans to expand into other cities in the

US and also outside of the US. I don't— I can't

share the exact timeline, but we're not talking about, you know, 5 years, 10 years

out. We're talking about a much So, to the

extent that you can share, what is the plan, you know, for

growth? And do you see these as satellites

operating in other major cities, or how have you thought about this expansion?

Yeah, so in terms of expansion, I think we'll take a relatively similar approach to

most of the other larger leafy green vertical farms, which is to

build large commercial-scale farms next to

each major city. cities around the world. And obviously, we will

start with strawberries. We've started with our Omakase berries, which

is truly an exceptional quality strawberry, but we are— we've

also succeeded in growing our everyday, you

know, more affordable strawberries as well. They are still, you know, 2

to 3 times sweeter than what's available. So they're far

superior to what's, you know, on the market today. Those will be

available relatively soon. So we will have multiple varieties within

strawberries. And if you think about, you know, how Tesla went from Roadster to Model

S and Model 3, right now we're still in that Roadster stage, but we

have, you know, figured out how to do Model S, and we are actually working

on the Model 3 right now. So we're looking at a much shorter timeline than,

you know, how Tesla went from Roadster to their Model 3. And, you know, even

beyond strawberries, we, we're working on, uh, multiple crops.

We're definitely going to try to focus on crops that, you know, people can

really feel and understand the difference in the quality and the

flavor. So we're looking at things like tomatoes, melons, and those kind of

fruits. I would imagine if you take the same care

and dedication to flavor and quality

that you did with strawberries and you're applying it now to things like tomatoes, because

again, that's another crop that when people think of it, it's just,

you know, they tend to— most people here tend to throw in the refrigerator, which

is the worst thing you can do to a tomato, and then they lose the

flavor. And you know that you get some of that heirlooms, but it'd be fascinating

to see if you apply that sort of craftsmanship

to— Exactly. Yeah, what's possible. Exactly. So, you know,

we've already seen results from our R&D facility that, you know, some

of the varieties of tomatoes that we're growing contain

3 times as much sweetness compared to

strawberries. Wow. So, they're sweeter than, you know, the strawberries

that you can find in the store. So yeah, I mean, so

you're officially out of stealth now because the whole world

knows about— Yes. What you guys now— so if you had to

look back from when you launched to where you are now, and you're now, you

know, starting to make the rounds talking to people about the story, what's been some

lessons and some takeaways for you over the past couple years?

Lessons and takeaways. Yeah, so

I think the biggest lesson that we learned, or, you know, I personally

learned as a management of this company, is that when we first

started, this industry was so small, and a lot of

people were casting doubts about, you know, whether this is even a feasible business.

And, you know, I had spent enough time and, you know, I

had enough confidence to sit— to believe in myself that this was

really going to happen. But, you know, But also a part of

me was also a little bit conservative. And because I

had seen a lot of companies, a lot of smart people fail in this

industry. And so when I was planning my

strategy, let's say my long-term strategy, 3, 4 years ago,

I did not have enough mind space to think about

what do I have to be doing now

that will save me in 5, 6, years later, because

I was, you know, really focusing on, you know, perfecting

the quality and doing what I can do today, right,

versus, you know, allocating that, the money and the resources to something

in the future. But, you know, running this company for 4 or 5

years now, what I'd really learned is, especially for crops like

strawberries that take a long time to conduct R&D, and then

also to breed new varieties, you really need to be,

you know, investing that extra, you know, resource into things

that will really change the game in 5, 6 years out. And so,

you know, if I had started our breeding program 4 years ago,

we would've been in a much better place than, you know, where we are today.

We, we are already breeding new cultivars, but it takes 3,

4 years, right? So I wish I started that a little bit

earlier so we could share more amazing strawberries with the rest of

the world. So I think the way I think about

R&D has changed a lot in the past 2 years. And now

I have much more confidence in what we're building.

And the whole, I think, investment ecosystem

is becoming more confident in this industry and there's more money coming into this

industry. So I feel like I can push the Excel

Who do you look to for inspiration as a leader,

given this new role that you've stepped in as, you know, at Oshi?

And who inspires you? And who do you look to for inspiration? Yeah, that's a

very good question because I, you know, I've— this was a question that I've

always asked myself the past, you know, 4 years because it's my first company.

And every day I'm dealing with an organization that I've— of a size that I've

never dealt with before. of an organization that I've never run before,

right? But the interesting thing is after

asking this question to myself and trying to mimic

the way other great leaders have kind

of steered their company, it really didn't help me

because at the end of the day, I realized that I'm a different person.

And it just really, I think,

puts unnecessary pressure on me when I think

that, you know, I have to act in a certain way. Like, do I have

to be like Elon Musk? Do I have to be like Jeff Bezos?

I think, you know, I come to realize that that's not a very healthy way.

And instead, and, you know, because when you're in that mindset, you really

try to kind of force yourself to be someone

else. Yeah. And it's, while it's important to improve your

skill set as a management I realized it's very unhealthy.

And what I found to be much more effective is to

admit what I'm capable of doing, what I'm good at, what I'm not good

at, and be very transparent about it with the team.

And I always tell my colleagues that I'm—

all of the people that we've hired recently, all of the management are much more

talented than me in everything that they do. And the only thing

that I have confidence in is my passion

for this industry and my experience in this

industry and my knowledge and how I think this

industry is going to trend. That's my strength,

right? So these days I try to be a little more relaxed

and just try to be myself, be a little more authentic. And instead of trying

to be this ideal leader that I think

people see as an ideal leader, but that's not

necessarily the case. That makes a lot of sense. What's a tough

question you've had to ask yourself recently? Recently? Well, so,

you know, if you call one year ago recent, I think

one of the biggest decisions we had to make as a management during COVID I

think very similar to other companies, was do we go

into, you know, a conservative, you know, shelter mode

to secure runway and, you know, size down the

organization, or do we, you know, try to keep on hitting all

the milestones? And it was really a difficult decision because

when COVID hit, we had no idea where this was going to go.

And so we discussed a lot, almost all

of our investors told us to size down the company and to

secure more runway because everyone was really scared.

that, you know, we might just run out of cash, right? But

the more we really started thinking about what does

COVID mean to our business,

and, you know, even though it was a very scary environment, we started to

learn that, you know, there's actually more opportunities

because, you know, people are spending more time and money at home

and they, you know, their awareness towards food And was

increasingly getting educated more and more.

And there was— we were experiencing much higher demand

from consumers who would be

dining at Michelin restaurants, but now that they can't dine at Michelin restaurants, they were

looking for other ways to spend their money. So instead of sizing

the company down, we've decided to basically keep all of

our employees. And we doubled down on all of the

milestones that we promised to our investors prior to COVID.

And, you know, we hit all of those milestones and that's how, you know, we

were able to raise the next round of funding, which we

announced, you know, this March. But that was, you know, maybe

we're just lucky. You know, if I were an experienced serial entrepreneur,

maybe the best decision I had to make at that point, given, you know, the

amount of information I had, was to size down the company. I don't know,

but, you know, it turned out to be that it was a good decision

that we made. And because of that, we made tremendous progress. And, you

know, as a matter of fact, our— the number of our employees tripled

in the past 12 months. Wow. And revenue, you know, more than tripled.

So— I think, uh, you know, hindsight is 20/20, but you can look

back and if you were able to navigate the company through what is arguably one

of the most challenging environments in a

century for most business owners. And the fact that you're able to

weather that and come out ahead, I think, gives you

resilience and shows you what's

possible and what you're capable of as a leadership team. So I

think it sort of gives you that boost of confidence that it almost like, if

you can make it, if you can make it through COVID, you know, then anything

else is probably not going to be as intense. So congratulations. I'd like to hope

so. Thank you. Well, Hiroki, I really appreciate your— you

sharing your story. It's really entertaining, and I was really looking forward to this

conversation, and I'm excited to be sharing it with my

audience. And so I appreciate you taking the time, and it's really fascinating to

hear what you've built and exciting to see what you have

planned for the future in terms of making Oishi a

standout company in this space. And I think it's going to be a model

that a lot of people are going to be looking at closely and trying to

emulate. I don't know how much success they'll have because it seems like you're definitely

a few steps ahead. I'd like to hope so.

Yeah. And so if people want to learn more, they can go to

oishii.com. That's

oishii.com. And the company and the marketing team's active on

socials as well. Yes, I think we make a lot of announcements on our

Instagram. So every time we expand our delivery zone or, you know, we

expand into a different region, I think that's where we're going to announce everything

first. So, you know, if you're interested in, you know, when your city

is going to be within our delivery zone, I think Instagram might

be the best place to, to follow. Okay, we'll make sure we have all those

links in the show notes as well. So thanks again for your time. I really

appreciate it. Thank you so much, Harry. That was so much fun. Such a great

conversation with Hiroki. Thanks again, Hiroki, for coming on the show, sharing

your story. I know that your time is in demand now,

now that you're out of stealth mode and a lot of people are starting to

experience what Oishi is all about. So grateful for that.

Full show notes available at verticalfarmingpodcast.com. Thanks to our season 3

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