How An Unlikely Farmer Is Plotting The Future of Food
By: Dan Morrell; photographed by Scott Nobles
In a nondescript former root beer plant, tucked behind the Curtain & Bath Outlet off Main Street in Millis, Massachusetts, FreshBox Farms is growing the future of food.
The FreshBox facility bears no resemblance to our cultural renderings of a farm; not only is there no soil, but every attempt is made to contain the risk that such outside organic matter could introduce. Visitors are asked to dip the soles of their shoes into a shallow plastic water bath, so as to limit contamination by pathogens and insects. Entry into one of the facility’s 15 growing units—8' x 40' metal boxes resembling shipping containers—necessitates a white cap and a lab coat. The units feature a double-door protocol that requires the exterior door to be closed before a second internal door can be opened. In the far corner of the building, a larger-scale model of the growing unit features an entry foyer with a ventilation system that cycles the air every few seconds and a secondary system designed to blow out any pathogens or insects that might have snuck past earlier garrisons.
All of this security is in place to protect—sans pesticides—the racks of Styrofoam-like growing beds inside the units, which are filled with leafy greens and fed by precisely tuned LED lights. An intricate digital system measures the room’s temperature and the CO2 levels inside the units every 30 seconds, adjusting as necessary; another delivers computer-calculated nutrients and water through the plant beds. These precision systems allow the facility to use about 1 percent of the water required by traditional farming counterparts while producing the equivalent of a 400-acre farm in just 27,000 square feet of space. It’s as if nature has been stripped of its variability and cranked all the way up.
Which is exactly the kind of tech upgrade the world food system needs to be given our increasingly insecure ecosystem, says Sonia Lo (MBA 1994), CEO of Crop One Holdings, which owns and operates the FreshBox brand. Sitting in FreshBox’s makeshift conference room—a long table, chairs, and a monitor, surrounded by four very high stacks of the white foam growing racks—she lays out the challenge. Climate change and its progenies, drought and flooding, are threatening traditional agricultural systems. And even when those systems work, they still rely on carbon-intensive shipping supply chains that move food thousands of miles from where it is grown to the tables where it is consumed. The global population is rising, with the United Nations projecting it to swell to 9.7 billion from its current 7.7 billion by 2050. “We also have to solve the calorie deficiency that we’re going to confront by 2050 on this planet,” she says. “We have to produce 70 percent more calories than we produce today to feed that population.”
Addressing a problem with that kind of span requires scaling beyond the 8' x 40' units—and beyond Millis. “The modular unit that’s going into Dubai will be three times the size of this,” says Lo, motioning to the larger-scale model in the back left corner of the facility. In June 2018, Crop One won a bid to provide leafy greens to Emirates Airlines’ flight catering company, and it is in the midst of building a 130,000-square-foot facility in Dubai that they expect to produce three tons of greens a day. It’s an almost unfathomable amount of daily production, but Lo puts it in perspective. “A single fast-food restaurant chain uses 300 million pounds a year of leafy greens alone,” she says. “A one-ton-a-day farm produces 740,000 pounds a year. So even if we built a 50-ton-a-day farm, you’re still only producing 240 million pounds a year. You would serve one customer.”
That 50-ton-a-day mark is a real goal, says Lo, and the Dubai farm will be a big proof of concept. And while any company’s world-saving ambitions can resemble Silicon Valley–like hype, Lo stresses that there’s a path, and the first step was figuring out how to most effectively grow lettuce in climate-controlled shipping containers in this former root beer plant. “We’re doing this in a very logical, road-mapping way. We’re not trying to bend the laws of physics. We are trying to enhance control. We’re trying to grow 365 days a year. We’ve been growing every day since February of 2015, which is pretty remarkable for any farmer to be able to say. We have not stopped growing even one day, you know?”
“We’re not trying to bend the laws of physics. We are trying to enhance control. We’re trying to grow 365 days a year.”
Lo is an admittedly unlikely farmer. She grew up as the daughter of Korean diplomats, a life that provided her with a multitude of international addresses and seven languages. And while growing up in fully staffed ambassadorial residences and being transported in limousines with darkened windows and little flags on the hood seems strange in retrospect, the multicultural upbringing had an impact that Lo has only recently come to realize.
About six years ago, Lo met a neurologist who was fascinated by her early experience with languages. “I would love to study you because the way that your neural networks have been formed must be so different—because you were really substantively multilingual before you were seven,” the doctor told her. “The implications of that are problem-solving, so you’re probably going to be able to see two or three solutions around something in a way that other people don’t.” The other benefit, the neurologist noted, was creativity. While Lo never saw herself as a creative person, she did seem to have a knack for seeing overlooked connections between ideas and then visualizing and building maps to explain those correlations.
These cartography skills have proved vital to her career. In the late 1990s, Lo was working on innovation and ventures for a media company in London when she realized that the industry was due for disruption. In a meeting with the CEO, Lo drew him a network diagram of what the future infrastructure of TV distribution was going to look like. “It’s all going to be bits and bytes,” she told him. Lo would later help stitch together some 200 European internet cafés to build a digital media platform; when the entrepreneurial bug bit soon after, Lo built a Groupon-like platform that helped smaller companies get product discounts.
That startup, eZoka, was pulling in £1 million a month until outside investment was derailed by the attacks of September 11, 2001. She spent a year cleaning up the aftermath. Exhausted and bruised, she decided to step away from business, attending culinary school and becoming a private chef in London for two years. (Lo donated all her earnings to charity and coauthored a book during that time, Dining with Dictators, which was part political satire and part cookbook.)
Lo returned to business in 2004, starting Chalsys, an investment and advisory practice that helps large companies avoid the pitfalls of corporate venturing. And it was through this company that she met a German investor who would become an initial Chalsys coinvestor and, eventually, one of the firm’s partners. In 2012, Phil Strause (MBA 1967), a former boss from an early career stint at Deloitte, sent Lo a business plan for a vertical farming company. She forwarded it on to the German investor, whose family, it so happened, had major European agriculture holdings. “You know, this is really interesting,” he told Lo. “Because if the unit economics of this thing turns out to be even remotely true, it’s the future of food.”
Lo’s interest was piqued. She knew almost nothing about farming and had always just trusted that the Western world’s food supply was safe and reliable. But as she dug into the research, she began to realize how wasteful, unsafe, and unreliable it really was. Conventional agriculture was facing substantive infrastructure problems while the cost of the tech solutions to address these issues was declining rapidly. It was a recipe for revolution.
But what Crop One needed was one of Lo’s maps. After their initial investment in April of 2013, Lo describes the business as “failing to launch.” There was a leadership deficit and a business model that hadn’t accounted for returning investor capital—which included a significant investment from the Chalsys partner to whom she’d initially forwarded the business plan. “By the end of 2013, we reached the point where I confronted either writing it off and writing off my friend and benefactor’s money—or I was going to pull the nose up.”
Lo stepped in as CEO in July 2014. She built out the team, including hiring Chief Scientific Officer Deane Falcone, an expert plant biologist from the University of Massachusetts, to start defining the science side. “I was trying to figure out the technology road mapping for an industry that didn’t have a road map and, in fact, wasn’t an industry,” she says. But she also changed the mindset. “I was asking ‘Why is this an investable industry? Why is this a world-class company? How do we get it to be on the world stage?’ And that’s really the big fundamental shift.”
Lo focused on three factors for growing in her first few years at Crop One: lowering costs, enhancing yield, and segregating risk.
In her first 18 months, the company worked to reduce the cost of the growing units from $560,000 to $43,000. To boost production, they leaned heavily on Falcone’s expertise, allowing him time to test and tweak the inputs—temperature, CO2 levels, water, LED spectrums—to determine optimal growing conditions for the various greens. This focus on nailing the plant science, says Lo, was a differentiator, though one she didn’t immediately grasp. “I have enough experience in technology that I thought, ‘I totally see this hardware being commoditized.’ ” But she soon realized that it wasn’t the racks and tubs and trays that would separate them—anyone could buy those at their local hydroponics store. “But very few people can grow at the density and with the specificity that we can,” says Lo. The risk issue was addressed with what she refers to as the facility’s “triple defense system,” which includes the shoe bath, the growing units’ double-door protocol, and the lab coats. Better defenses mean decreased loss and, therefore, higher yields.
By the fall of 2015, FreshBox had six production units and was distributing its leafy greens to the local Roche Bros. supermarket chain, filling plastic clamshells with kale and spring mix on-site. Originally occupying only 24,000 square feet of the warehouse, it expanded to take over the facility’s entire 43,000 square feet. “What surprised us was the take-up and the demand, the kind of hunger for the product,” says Lo. More than 90 percent of the country’s leafy greens are produced in Arizona or California, according to the states' Leafy Green Marketing Agreement, and transportation to New England can take weeks; FreshBox being able to offer Massachusetts consumers a locally grown product not subject to the region’s cruel winters has proved to be a boon to the brand.
The addition of more modular units also allowed the company to grow different types of greens, enhancing R&D and commercial growth. This diversity came into play when they were bidding for the Emirates contract. Up against a very capable Japanese company that was already producing some 1,700 pounds a day, Crop One boasted 24 plant varieties to the Japanese company’s 4.
The Emirates farm is scheduled to have its first harvests this year, and plans for national expansion are now underway. Crop One will only be a minority owner in these new farms, says Lo, noting that the farming aspect of the business is very capital intensive. But they’ve pursued a project financing model rather than venture financing. “Project financiers are not starry-eyed venture capitalists,” she says. “They’re not romantic at all.” They want to see cash flow and mitigated risk, not hockey-stick returns. “We believe that in every technological disruption you have to have hand-in-hand capital model disruption and business model disruption because you don’t reinvent an industry unless all of those things coalesce. This is the wholesale replacement of agricultural infrastructure, right?”
“Gigafarms we’re defining at 50 tons a day. We hope to build our first gigafarm in the next five years, which is pretty ambitious.”
Deciding on future locations, Lo says, will come down to costs—energy and labor, chief among them—and existing local sources. Meaning, on the latter, can they grow anything there outdoors? “So in the Middle East, definitively not, right? You really have to bend the laws of physics to grow stuff there. Northern Europe—doesn’t grow very much, good prices, high labor, reasonable green energy, right?” The US Midwest has solid energy options and population density. There’s great hydroelectric power in New York, so the Northeast could work. The Southeast too. “When we look out across the United States, we would map against the major retailers’ distribution center network,” says Lo, meaning they’d build a farm at these centralized locations—23 of them to be exact. “We see a minimum of 23 megafarms.”
A megafarm? “Somewhere between 1 and 10 tons [of production] a day,” says Lo. “Gigafarms we’re defining at 50 tons a day. We hope to build our first gigafarm in the next five years, which is pretty ambitious. That’s our sort of moonshot goal.”
But she can see it pretty clearly. Twelve megafarms in Northern Europe, maybe one or two gigafarms. Russia would make sense. The Middle East is almost there.
Another ultimate goal, says Lo, is carbon neutral—vertical farms set up next to, say, a giant solar field or a wind farm. “We look at the industry, and it’s pretty clear you can’t put a sustainable label on yourself unless you solve the energy piece of it—and we don’t see our competitors doing that,” she says.
Crop One is also exploring decarbonization models, pairing with power companies to feed its CO2 to their plants. “We have people who are rocket scientists”—literally—“who are looking at this for us and doing the energy analysis. I touch base with them every couple of months just to say, ‘So tell me, if we were to approach power plants about being their carbon sink, who would we go to?’ They know who we would go to.”
Lo has the coordinates; she sees the path. “I think it is a tangible, known goal in which we have known steps.”
Vertical farming is still far from mainstream, but Lo notes its profile began to rise a few years ago, thanks to a marquee investment: In July 2017, Softbank’s Vision Fund led a $200 million funding round into Plenty, a San Francisco–based vertical farming startup. “That really moved the needle,” she says.
Don Goodwin, the founder and president of produce consulting firm Golden Sun Marketing—and a longtime attendee of the School’s Agribusiness Seminar—has closely tracked the industry’s ascent. He estimates that there’s some $2 billion invested in the space right now, with money flowing in from VCs, sustainable private equity funds, and billionaires like Eric Schmidt and Jeff Bezos, who also contributed to that July 2017 Plenty funding round.
“We look at the industry, and it’s pretty clear you can’t put a sustainable label on yourself unless you solve the energy piece of it.”
The recipients of those funds vary, says Goodwin. “There’s a number of reasons people come into the space. We have the small local operator who has a vision and a past, and wants to change the way people eat,” he notes. “And then we have these ‘big idea’ guys like Crop One.” Those businesses, he notes, are “trying to create a sustainable investment strategy, not only from traditional economic terms but also from societal terms.”
Which means that growing locally in a vertical farm allows FreshBox to compete on price and mission. Here’s how that works, Goodwin explains: “If [the lettuce] is grown in Massachusetts, I can put it on [a grocery store’s] dock at the same price or lower than if you grow it in California and truck it across the country. And so I get all that benefit of the freight. I get the shelf life that you’ve given up—the seven or eight days to get there by truck. And I get the whole sustainability message because of food miles.”
While she gets the business model and consumer appeal, Mary Shelman (MBA 1987), former director of HBS’s Agribusiness Program, is slightly wary of the world-saving aspirations of vertical farming. She’s heard entrepreneurs discuss how they can manipulate the LED lighting to create arugula with different flavor profiles, for example, even varying the spiciness. “But at the end of the day, how much does arugula really help if we have to feed nearly 10 billion people?”
Which isn’t to say that Shelman thinks there is no value in it. “I think we can learn things from their systems—because they have the ability to do controlled experiments—that we can then take outside or in more traditional, controlled-environment agriculture,” she says, “and use that in those systems that are lower capital cost.”
Chief among vertical farming’s costs is energy. “It’s the industry’s dirty little secret,” says Lo. So noticeable is indoor farming’s drain on a local grid, she notes, that law enforcement used to monitor spikes in electricity demand to find illegal marijuana growers.
The energy costs are improving, plus Crop One is constantly refining its design to increase efficiency, adds Deane Falcone. Scaling up will be a big help. He contrasts the climate system they use for the larger model in the corner of the facility to the individual systems on the independent units. “It’s like if you had a 10-bedroom house: Would you have 15 window air conditioners, or would you have a central air-conditioning system?”
Driving down costs is important because Lo ultimately wants this model to be cheap enough to be a solution for the developing world. “I do not want to be in a carbon-intensive industry; I want to be producing a nutritionally relevant meal, and I do not want to only be in the business of feeding rich people,” she says.
But if vertical farming is going to feed the world, it will also need to expand beyond lettuce and kale. Wheat and corn are unlikely, says Lo, but rice could eventually be a possibility. “Two-thirds of the world population’s staple diet includes rice,” she notes. But there’s perhaps an even greater opening here: Andrew D. Ive (MBA 1997), former managing director of the Food-X accelerator and founder of Big Idea Ventures, says that the meat-production model that much of the world still relies on is wildly inefficient at producing protein. “It basically takes nine calories of energy or input to get one calorie out,” says Ive. “Whereas if you’re producing a plant-based material, it’s closer to one-to-one. It also doesn’t require the same land use, it doesn’t require the same water use, et cetera. So leafy greens are great, but if you’re thinking about how to supply food for the 9 billion, then you’re really, really focusing more on other protein sources and other kinds of plant-based sources.”
This plant-based protein movement is fast becoming mainstream. Even the McDonald’s in the shopping center across Main Street from FreshBox Farms could be offering meatless burgers soon: The fast-food chain recently announced a trial partnership with Beyond Meat, whose products are made in part from yellow peas. So, yes, says Lo, getting to the point where her farms could grow yellow peas and soybeans—a crucial ingredient of the plant-based Impossible Whopper, Burger King’s early market entrant—would be ideal. The ongoing food revolution needs a parallel farming revolution to succeed.
Lo is on it. Crop One, she says, is researching these and other high-protein plants and investigating how her farms can produce products that can provide the world with necessary subsistence while also absorbing carbon dioxide at a higher rate.
“That will cause an explosion of take-up,” says Lo. “Because, again, we can’t continue on the trajectory that we’ve been on. We just can’t.”
Someone has to do something, even if that someone is a first-time farmer trying to build a global revolution in an old root beer plant in small-town New England.
Topics: Agribusiness-Plant-Based AgribusinessInnovation-Disruptive InnovationLeadership-Leading Change