Q&A with John McMahon, Better Future Farms Co-Founder and COO (CEA Insight)
John McMahon, COO and co-founder of Better Future Farms, shares farm updates, BFF plans and his perspectives on CEA's present and future.
September 9, 2023
https://ceainsight.com/qa-john-mcmahon-better-future-farms/
John McMahon is co-founder and Chief Operating Officer of Better Future Farms (BFF), a Virginia controlled-environment agriculture (CEA) company that burst into the spotlight in early 2023, when Virginia Governor Glenn Youngkin announced BFF was building a high-tech hydroponic production facility on 61 acres of Louisa County land.
But that wasn’t all. Governor Youngkin’s announcement also revealed BFF had received funding from Generate Capital, one of the nation’s leading sustainable infrastructure investment and operating platforms. And, to add to the excitement, the BFF team had cinched an agreement with Taylor Farms, one of North America’s largest fresh produce companies, to provide year-round CEA lettuce to Taylor’s Mid-Atlantic customers under the massively popular Earthbound Farm brand.
A hands-on grower for the last decade, John is also founder and CEO of Schuyler Greens Company, a high-tech greenhouse he literally built from the ground up and grew into a facility known for premium-quality, year-round lettuce and early adoption of cutting-edge ag technology. CEA inSight spoke with John on August 22, 2023.
Q: For many people in CEA, Governor Youngkin’s announcement was the first they’d heard of Better Future Farms. But you and BFF co-founder and CEO David Drescher have been working under the radar for a while now. What brought you and David together, with this idea of a “better future”?
A: We were under the radar for quite a while, but we have been working on it pretty hard for about two years or so, putting all the puzzle pieces together. These projects and these companies are pretty complex. You have a big construction project, you have large capital deployment, you have to raise the capital, you have to have a market. It took a while to sync everything up.
David has been a serial entrepreneur and has built and sold multiple businesses. He ended up living outside of Charlottesville [Virginia], where I live. He had quite a bit of experience with sustainability, businesses and technology, and some of his private equity friends mentioned they were looking at CEA greenhouses.
He wasn’t familiar with CEA, but he has a farm, so the idea was innovative and interesting and checked a lot of boxes for him. He started asking people in the area if anyone knew anything about high-tech greenhouses, and everyone said, “Oh, you have to talk with John.” So, he called me.
I had kind of been realizing for my business [Schuyler Greens Company] and the CEA world, especially with lettuce, the industry has changed so much in my almost 10 years in the business. Tomatoes have been done since the 1950s; the systems and growing techniques are well established. … But lettuce is earlier on in the development of the lifecycle of the industry. There are a lot of different growing systems and growing styles, and not necessarily a clear-cut winner. The greenhouse styles and the size and capital and sophistication of the greenhouse have changed a lot.
So I was starting to realize, for better or worse, a lot of farming is economies of scale. You either want to be super-small where you’re selling at farmers markets, basically a sole proprietor, or you need to be very large. When you’re servicing wholesalers or retailers, they want scale. So, Schuyler Greens was always going to be kind of a very niche company. I realized over the years that I either need to get much bigger or I need to stay very, very small. Being in the middle is not a great spot to be in the greenhouse business.
Better Future Farms facility rendering
So David and I kind of teamed up to combine my experience with growing and operating and relationships with the industry, and then his business background and ability to scale businesses and raise capital, and do it on a much larger scale.
Then the last piece of that was from having my own brand, Schuyler Greens — I’ve supplied Whole Foods and other retailers and grocery stores — you go into a lettuce section and, with CEA, there’s like 20 different brands all fighting for two feet of shelf space.
So I said I prefer not to have a brand, I think we should team up with a larger company that has the distribution and has been doing it for 30 years, 50 years, however long. Let’s not reinvent the wheel. Let’s focus on building these facilities and operating. Because sales and marketing is also super complex, and it’s very hard to do everything well.
So we wanted to focus on what we can do very, very well and execute on developing the projects and operating them, and then team up with a partner that’s way better than us at marketing. We talked with several brands and it just seemed like we had the best relationship and were the best fit with Taylor.
Q: It had to help that you had Generate Capital behind you. Better Future Farms is their first deal in the CEA space and certainly, with your focus on sustainability at Schuyler and your aspirations for BFF, it seems like another great fit. What attracted you to them and vice versa?
A: Yeah, we’re their first. It was interesting because they’ve actually been looking at this space for a long time, from very early on. But they were kind of sitting back and waiting and keeping their options open. They liked David and my complementary skill sets. Usually, you have a business guy but no one that’s ever been in a greenhouse.
I also have a pretty good network around the world, and we can leverage a lot of that, plus my own business experience of operating a business — spending money and deploying capital and managing people. So we kind of have a unique fit. We talked to different groups, and we got traction with some others, but Generate was just the best fit for us.
Q: You have a unique skill set for a lettuce grower: MBA in finance, extensive international corporate experience, entrepreneur, AgTech consultant. At Schuyler Greens, you were an early adopter of cutting-edge technology remarkable for a grower of any size. Now you have a blank slate with the new BFF facility. What are some of the things you’ll be able to do at this scale that you couldn’t or didn’t do with Schuyler?
A: (Laughing) It’s just like necessity is the mother of all invention. Since Schuyler Greens was small, I had to survive, evolve, adapt. Maybe I’m stubborn or crazy, I just didn’t want to give up. Even with COVID and all that. I just work hard, and I always like learning or getting better. So, I think that kind of drives it. But, yeah, this one is a much larger project.
The 61 acres, that’s just the land. The total facility is about 14.5 acres; then the production area is about 10 acres. But we have a monster packaging warehouse, tons of automation, a very sophisticated line, and all cold storage, so it’s a big facility for sure.
A lot of it was trying to make the best investments. It’s very technically advanced. But at the same time, anything that we’re investing in technology, it’s only to grow lettuce. Definitely, our goal is to be a lettuce grower, not a technology company. That’s a clear delineation for us. We’re not some proprietary black box. Everything we’ve done on our technology is to try to grow lettuce as competitively as possible.
Q: Sustainability has always been a priority for you at Schuyler. The same with food safety — that’s been huge for you. What are some of your goals in those areas with BFF?
A: Food safety is super huge, and I think it needs to be. It’s interesting because there’s been more stories of recalls from CEA growers. And, yes, CEA has a lot of benefits, but it doesn’t mean that you can ignore food safety.
It’s not even cutting corners — I think some of the logic has been if we grow under a roof, we have no risk. Yes, you get some level of protection because you’re indoors, but there are also other risk factors. You can’t just rest easy and say, “Hey, we’re a greenhouse or vertical farm, so it’s not our problem.”
So, we’re investing a lot, and our automated packing line and the level of care of our packing will be like a processing facility, very high level and a lot more sophisticated than the typical run-of-the-mill greenhouse.
Also, with a 14.5-acre roof, we’re going to capture about 14 million gallons of water a year. We built a large 2.5-acre retention pond, where all the gutters from the roof will go. Then we’ll pull that into a large kind of water treatment part of the greenhouse, like a filter array. That’s part of the system and one of the sustainability measures. So, we will basically be using rainwater for irrigation water.
A lot of the water mainly goes just to the lettuce for growing, for uptake. We don’t have the same issues in Virginia as out West in Arizona or parts where they’re having issues around the Colorado River. But we thought it would be good practice. We have this large surface area, why not take advantage of it?
It is pretty cool. I wish I had the capital to do something like that at Schuyler. That just makes this more exciting or more fun — and better, too, for the long-term of the facility.
Q: You’re speaking at CEA Summit East, happening September 19 and 20. There you’ll be talking about a different kind of sustainability: financial sustainability. How critical is that topic to CEA growers?
A: I have an MBA in finance and I do a lot of modeling for our project. One thing I’ve seen percolating more in the industry is greenhouses and vertical farms need to be profitable. They need to look at unit economics or their costs to operate or their cost competitiveness with other products. I have a lot of experience doing that and using that experience to raise a lot of capital — and I use that experience to operate Schuyler Greens.
I think the industry will consolidate. … There’ll be kind of a bifurcation between successful operations that can raise more capital and expand, and then ones that either from growing or management or market haven’t been able to realize their objectives.
JOHN MCMAHON, BETTER FUTURE FARMS COO
It’s really important to pay attention to your numbers. Sometimes it’s tough. Because farmers, you’d rather be out with your crops and doing what you love, which is farming or growing. Sometimes looking at a spreadsheet is not fun for a lot of people. But it’s super important to understand your costs. Like with Ukraine, fertilizer went way up. With COVID and the supply chain, packaging costs went way up because all of a sudden there was a shortage of clamshells or the plastic used in packaging.
That’s why you need to constantly pay attention to your input costs. They can change over time. You might need to change your pricing or packaging in order to account for that. Big companies are usually more successful doing it because they have a lot more resources and bigger teams than smaller growers.
It’s not necessarily fun, but it’s really good to pay attention to these numbers because you might think you’re making money, but you actually might be losing money.
Q: What do you see as some of the biggest opportunities and the biggest challenges facing CEA growers and the CEA industry as a whole right now?
A: We’ve seen some tough news of different companies filing for bankruptcy. AppHarvest, AeroFarms, Kalera. There’s been a bunch. Those recent struggles in CEA plus a high interest rate environment, or a much higher interest rate environment than a couple years ago, means that it’s probably going to be a lot more difficult for a couple years to get capital or it will be more expensive capital.
I definitely think that will slow down new entrants to the market. I think the industry will consolidate. Probably what will happen is the companies that are more successful or kind of moving to the front of the pack, there’ll be a couple companies that are the winners. Those companies, they’ll get more capital and expand on a larger scale.
So there’ll be kind of a bifurcation between successful operations that can raise more capital and expand, and then ones that either from growing or management or market haven’t been able to realize their objectives. Then they will either be bought by other people or cease to exist or who knows what.
It’s tough and it’s not ideal. But on the flip side, I think it’s healthy and good. It’s painful, but probably good because it tempers expectations. So, I guess the good thing about the challenging times is it makes people have to focus on more of the basics or fundamentals — like how do we grow profitably, how do we grow sustainably, and how do we scale or grow on a bigger level without imploding.
These builds are complex. They’re expensive. There are a lot of moving parts. And I think we’ve seen where it’s very hard to do everything well. It’s really hard to build these facilities on time, on budget without a ton of issues. Once they’re up there, it’s involved to operate them and then you’re also in a commodity market with things like vegetables.
But I think there’s a lot of opportunity. With weather and climate changing, it’s drier than ever in different parts of the world or it’s too wet or storms wipe out things. But people have to eat — a lot of people. So I think there’s going to be more of a push for more controlled agriculture and different crops.
It may seem counterintuitive. Some people say there’s more competition in Virginia because more people are coming here. But on the positive side of it, it’s actually helpful because it creates more of an ecosystem where more of these peripheral companies put locations here, which helps support our operations.
JOHN MCMAHON, BETTER FUTURE FARMS COO
I think there’s probably a scale or spectrum, where not everything needs to be in a high-tech operation. There’s probably going to be more controlled low-tech stuff, depending on the crop. So it’s trying to match the right level of investment and the right level of technology with the right crop in order to have a sustainable business.
Q: Being in Virginia for nearly a decade, you are right at the heart of this wonderful CEA explosion in the state, with lots of new companies moving in. How has this movement impacted your choices for Better Future Farms?
A: Selfishly, David and I both love Virginia and the area. We both have traveled a lot over the years for work. I know firsthand how involved you have to be with CEA. It’s not very easy to be an absentee landlord with a greenhouse. It just doesn’t work. You need to be there basically 24 hours a day, seven days a week. So selfishly, we wanted to be close to home, so that’s great.
Another thing that is great, it’s like the Westland in the Netherlands, where they have the highest concentration of high-tech greenhouses anywhere in the world. They have such a monster ecosystem. There are the greenhouse growers, but then there’s also all the suppliers, whether it’s technology, consumables like substrate or fertilizer, repair guys, specialized irrigation companies, shading companies. There’s just this huge ecosystem.
It may seem counterintuitive. Some people say there’s more competition in Virginia because more people are coming here. But on the positive side of it, it’s actually helpful because it creates more of an ecosystem where more of these peripheral companies put locations here, which helps support our operations.
There’s tons of experience, and they’re also in the same time zone versus being in Europe six hours ahead or wherever. Even for spare parts if something breaks in the greenhouse; they’re pretty specialized. It’s not something that we could go to Lowe’s or Home Depot and buy off the shelf.
And then there are more people that are familiar with CEA, so from a recruiting or employee standpoint, more people are familiar with it and excited about it, and it gives us a bigger pool of labor and experience to draw on. So, I actually think it’s very positive.
Q: Your first Better Future Farms facility is now under construction in Louisa County with the goal to be in production early next year. How’s it going?
A: The steel is up. Next week, they’re starting to put the glass in. We still have a ways to go, but definitely the last month has been pretty cool to see. We broke ground back in February. After working on this for so long, it’s been pretty cool to see it go vertical. The site is great, but it’s a lot more exciting seeing steel go up and the building kind of take shape.
We’re constantly at the site and working hard on it. There’s a lot of motivation. Our goal is to start testing in early spring. We have a lot of really good people working on it. We have a good team of a lot of different people from various contractors and partners, so it’s a team effort.
Q: You recently started taking applications for Head Grower. The job posting said you and David started the company with a goal of becoming the largest CEA lettuce grower in America. But there was a qualifier: “… while building a company that treats everyone like part of the family.”
A: Yeah, we’re hiring a little earlier than we thought we were going to. Our investor group gave us a green light to bring someone on early. It should be a pretty cool opportunity — a state-of-the-art facility — and we’re going to try to send the person to different partners we have around the world to get training, too.
We don’t want to presume we have all the answers, and we really want to develop a team where we’re always getting better or improving. So we wanted to create a kind of knowledge share transfer with some people we have relationships with in different parts of the world, even things like packaging. There are a lot of other companies with way more experience in packaging than us, so it’s leveraging people we met along the way over the years.
We really want to create a kind of family, where everyone’s part of the same team and not afraid to get dirty and turn bolts. We don’t want to have a culture where, just because we’re the people that are launching the business, we’re in an office and aren’t rolling up our sleeves. It’s leading from the front.
I also give credit to Bruce Taylor, who founded Taylor Farms. We were in a meeting with him while we were working on this deal together. They have 26,000 employees, so they’re way larger than us, obviously, exponentially larger. But there was a comment: What is one thing you credit for your success and being able to build this really large, successful company? He said treating employees like family — they do tons of events, barbecues and celebrations and school scholarships — and knowing people’s names throughout the organization. I can’t imagine he knows all 26,000, but he’s a pretty sharp guy!
I think, and I think David would say the same thing, we care about people. We ultimately want to have fun and do something we enjoy. Yes, it’s a lot of work. But we’re passionate about it. And we’ll be much more successful — longer-term success — if we have a culture where people feel valued or respected. I think it’s really important. Because really, like food safety and quality, I want people to feel invested in our products. What you’re doing during the day can impact a lot of people. So, we definitely want to create that kind of environment.
Q: When you look down the road five or 10 years, how do you envision the future of BFF and the larger CEA industry?
A: We’re really excited about our partnership with Taylor. Taylor is the largest fresh produce company in North America. They see this as something that’s important to diversify some of their production and provide different value-added products to their portfolio. So I’m excited about the growth prospects with Taylor and becoming a really good partner.
In terms of Better Future Farms, I see building more larger facilities. We’re already looking at that. I can’t get into locations or specifications, but our goal is to keep pushing the industry forward, hopefully. That’s what I get excited about.
You know, I grew up on the land and my mom was from California, a part not very far away from where Taylor’s based. As a kid, I used to go out there every summer to visit my grandma, and I used to get strawberries five miles down the road from Taylor. So, for me, I feel — I won’t say spiritual — but it’s like my life is coming full circle. I’ve always loved farming, and I never would have thought 10 years ago, I’d be working with Taylor Farms. It’s a huge honor, and it’s cool to have those family connections.
I’m just so grateful that I get the opportunity to do what I love. Not everyone in the world gets to do what they love for work. I genuinely feel like I get to do what I love, which is farming and feeding people. I just happen to do it in greenhouses. But I love tractors, too.
This interview by Jolene Hansen was edited for length and clarity. Images courtesy of Better Future Farms.