Interview with Devon Wright, CEO Lumo Ag
WT – I have with me Devon Wright, he’s the CEO of Lumo Agriculture and according to his website, Lumo is a smart irrigation system that helps growers save water, improve crop quality, and reduce costs. Thanks for doing this, Devon.
Devon Wright – Thanks so much for having me.
WT – First, can you explain what the company itself does, I see that there are different products you offer. Can you give us a quick explanation upfront of what these are?
Wright – We offer one product and really that’s a smart irrigation solution for farmers. So, the reason is, to take a step back, the big problem we are trying to solve is we are trying to help the world improve its freshwater efficiency.
We are very much of the belief that you’re not going to find much more fresh water, we kind of know where the freshwater is. So, you’re not just going to discover a new continent with another Colorado River on it, we’re kind of out of that (exploration option). We need to move from a strategy as a society of trying to find more water and just start getting more efficient with the water we have.
There are huge opportunities in our water systems to just make better use of the water we already capture.
When you think about that then the first question is, “where do you start?”
There are a lot of water users, there are farmers, residential users, people watering their lawns and brushing their teeth, there are industrial users. It turns out farmers are the biggest user of our freshwater, using about 70-80 percent of it depending on who you ask, so right away you kind of see where Lumo is focused.
Our focus is if we want to improve efficiency, we want to make the biggest impact possible, we're going to improve efficiency for farmers that are using water for irrigation. So that’s exactly what Lumo tries to do.
Our product is a smart valve, it’s got a built-in pressure sensor and a flow meter, and it’s connected to the cloud. Then we build out a cloud management platform – you can control that valve and monitor that valve in real-time and then we're building all sorts of AI and software in the background that’s trying to deliver the most efficient irrigation that you could possibly do through that valve. That’s in a nutshell the big why, and also how Lumo’s strategy and product strategy, how we’ve built strategy to make an impact.
WT – I wanted to use this interview to also demonstrate in the water machinery business, the water industry itself there are a lot of really good ideas out there. I get emails every day from people saying, “I have this idea, or I have that idea and I would like to get some financing and know how – can you help me?” So, one of the things I was hoping you would do is explain how you took this from an idea, through financing, and then got the product itself developed and eventually to market. Can you tell us about the process?
Wright – A really great book, people can read to maybe understand the process, I stole a lot of ideas from, is called “Build” by Tony Fadell, the fellow who built the iPhone and iPod, and ultimately Nest. He’s very inspiring to me because Nest helped what was a boring old thermostat on your wall, find the cloud and find some exciting technology to help optimize energy use. I see a lot of similarities in what we are doing here with irrigation. I’ve always been inspired by Nest and kept my eye on them and used them as an archetype of technology in a start-up that I was really inspired by and would love to emulate one day. Kind of walking around the world just kept them in the back of my mind as I looked at possible problems. I would say that is a key thing to be doing if you want to start a business, just always look at problems and make note of problems. Hundred times a month you probably come across something that frustrates you and when you do, don’t just move on, write it down - that could be an idea. After doing that many, many, many times, I finally stumbled into the problem of irrigation automation.
When I bought a piece of land up north here in California and started my orchard, we are a groundwater well-fed property, so you know in the middle of California during the largest drought in twelve hundred years it was pretty obvious that water was important, and it was hard to get. When you’re trying to use it to grow your own food, the stakes get raised quite a bit – you can’t make mistakes leaving your water on accidentally, or overwatering or underwatering your crops, you need to be precise. So, two big problems arose, one, how do you automate irrigation and make it reliable and precise because machines are pretty good at that, and people tend not to be. Two, how do you keep a record of how much you’ve watered so you get a sense of where the water has gone, and you can start to learn what water levels for each crop are best?
I had that problem with my own orchard, and I wrote it down. Not very good at doing this watering thing without a machine helping me because I made some mistakes, like leaving the water running and then going to see my daughter and forgetting about the water, coming back four hours later, and running out my groundwater well tank. Also, I was feeling like I didn’t have a very good sense of how much water I was using. This is crazy to think because water is very hard to come across here in this state, one of the largest agricultural regions in the world and technology like that wasn’t readily available at my fingertips.
So, I guess to answer your first question, how did I come across the idea, that’s how I came across the idea, firsthand. Writing down problems all the time was a big problem. The second thing was I was trying to be clear with myself, like well what do I value? You can’t work on every idea; you need to have a filter. As I said, I think Nest inspired me because of a couple of things. I really value tinkering with hardware, I value getting my hands on physical products, and I really like physical problems and hardware problems. So that was a filter I used for thinking about what would be another business I would actually want to work on.
Another problem was the sustainability problem. I just had kids in the last couple of years and that really shifted my priorities from how I was thinking about my start-up when I was 25. When I was 25 it was all very self-centred, what can I learn, what can I make for money, what can I do?
Now that I’ve grown up a bit and had my kids, I think a lot about, what am I going to do for them, what am I going to do for this next generation, and what am I going to do for the community. What kind of a leader am I going to be for my community? Like I said, living where I live, climate and water in particular are just right in your face all the time. So, I thought that’s an important filter, making sure any idea I want to work on is related to sustainability. The third thing is, just to make sure it has a big market and a big opportunity. With those three things in mind seeing this problem around kind of irrigation efficiency and water waste, agriculture and physical valves and systems, I was like, “Wow! This water thing fits all those boxes.”
This is a really interesting opportunity to touch the hardware, touch these physical systems, to impact a really large global-spanning industry that touches everyone. With agriculture -- we all need food, we all kind of touch that every day. Then something around sustainability and climate, so using those filters I threw out a lot of ideas that I didn’t like, I thought they were good ideas but maybe they didn’t fit all those boxes, and this irrigation water efficiency one kind of touched all three. So that was an “A-ha!” moment where I thought maybe I should lean into this.
I would say the third and final thing is how to take it to market. I might think it’s a good idea and it might check all my three boxes, but that’s just the beginning. You need to start going out and asking other people. I mean, maybe I just don’t have good information, maybe I’m just a small-time guy, or I don’t have access to the big players and the big industries. If I go to the big players, have they solved this water management problem, maybe they would say ‘oh yeah, we all have tools for that’, and then it would say ‘Okay, not a real big opportunity here’.
So, me and Ben, VP of Marketing, I called him up he was my partner in my first start up and I said I think I got an idea, I think it checks all the boxes but I need help talking to growers here to see if they have the same problems, to see if there is an opportunity to do a better job and build a better system for maybe the Nest of irrigation. Is something like that attractive out there, or is someone already doing that? So, Ben and I put on our customer discovery hats and we called every farmer we could in a hundred-mile radius of me and we just started asking a handful of prepared questions, about how important is water to you. How well do you think you manage it today, what systems do you use, if any? We were really surprised by a lot of growers still manually irrigating and making a lot of mistakes I’ve made on my orchard. A lot have tried certain technologies that are out there but didn’t go far enough to really be reliable and be easy to use, be cost-effective and I would say the final thing is to provide accountability and visibility. How is my system actually working? Am I optimal? Am I using the least amount of power to get irrigation done, am I using the least amount of water, am I being efficient with my labour? They didn’t feel anything was really going far enough, so that’s the final point for us, “There is an opportunity here, we should probably go put our back into this.”
WT – One of the things that I find interesting about this interview, being from the 90’s technology start-ups, you sound more like a geek than you do a farmer. How do you go from “I got the questionnaire stacked up in front of me here, it checks the boxes”, how do you go from a stack of paper to “this is a thing”?
Wright - Great question and honestly there’s a lot of urgency around that. If you just stack paper you’re not going to get anywhere, you got to try and make it for real. So, I don’t know enough about firmware or hardware to be the guy you want doing that for very long, but I know enough about it to be dangerous and it’s for exactly the reason you’re talking about. I never want to be the guy just writing ideas down, I think you very much need to go get something built, even if it’s crap, but something that works enough to prove what you’re talking about so you can show it to people for two reasons. One is customers can actually react, especially if you build a bad thing, customers will say I can see that this is bad, but it’s still kind of good enough that I would even try it, I would try it even though it’s bad right now. Then you have a good idea because imagine what would happen for uptake for someone who actually knows what they are doing shows up and makes it good – that’s awesome. I purposely try to build prototypes way too early, prototypes that were not that great but frankly they ran on my field and saved me some water, and I could march them around town and see what people had to say. When we saw some positive responses to that crappy thing I had built, it was a good sign if we had invested in this and brought on the right technical partners this thing could actually get some legs, so that’s one reason to do it.
The second reason related to the kind of who you pointed to from an investment perspective, is I think investors, I am definitely more a geek than a farmer, 100% you’ve nailed it probably like 95/5 would be the cut, but I don think investors are only thinking, well does this person have market founder-fit or not, cause if they don’t, I’m out, it doesn’t matter any other traits they might have. That’s one thing they are looking at, and if I was a farmer, I would be benefiting from that. You look at guys from CODA Farm Technologies, you look at David, their founders are farmers through and through. They grew up on these farms and they are solving similar problems. That’s where you are looking, founder-market fit, there you go, good for them and they are awesome people and going to do great because they have that. But that’s not the only thing you look at. As an investor you look at are these people obsessed with this thing, whether are they going to work relentlessly on this, whether are they going to throw themselves in no matter what and try to make this work, are passionate about other elements related to this, like sustainability and other things? Have they run a large organization before, have they managed capital before, are they trustworthy, can they shepherd my dollars with transparency and reliability? Those are big questions especially today when you see the FTX collapse, so I think we checked a lot of those boxes and having candid chants with Fall Line Capital, our investor, they said look we would be a great partner for you because we can bring the ag expertise that you don’t necessarily have, we could give you a crash course pretty quick and get you ramped up pretty quick, we can get you on some planes, we can walk you through some fields we own, we can show you the systems, we can tell you where it works and doesn’t work fast, we can be that filter and we can complement you where you don’t have that founder-market fit with necessarily with deep ag expertise because they have it. So that was why, you nailed it, that’s why they were the great investment partner for us because they bring that and that’s what when you don’t have founder-market fit necessarily, you better have a good advisory board, so that was the second thing right away.
Our best advisor here today, Jay Wright, he’s been an incredible advisor. This guy is 30 years of work in the wine industry and in the specialty crop industry as a senior executive, finishing his career as a Chief Operating Officer of Constellation Brands, and then the CEO of Arterra, Canada’s largest wine company. So, I mean, you bring someone like that in, we bring in Kurt and Rob, some of these great hands-on wine managers, we bring on the oldest operating winery in America, you give them a little equity, you work with them every day, you support filling that (founder-market) gap and that was our strategy.
WT – So let me stop you there and let’s recap. Good idea on paper, market says ok that is a good idea your market survey gives good numbers, go to prototype everybody throws in 5 bucks or what they have, and a prototype is built that kind of works. Then we go to people in the industry that know what they are doing and go, “here’s our thing”, and they go “ok this thing kind of works”, so what you need is something that works 24/7 kind of thing and then it’s got to be able to produce this thing and we got some finance people on the phone, were going to go to prototype. Then you got your prototype. Then I noticed on your website that it was saying you had a preferred customer client kind of gig, and the idea was I think that you had your prototype and then the preferred customers or the people that got into your program got the first production runs out the doors, is that accurate, do I have it right?
Wright – Yeah you nailed it, exactly.
WT – Ok now you’ve got people that are expecting a prototype, have you delivered that prototype, and has the production run yet?
Wright – That’s the phase we’re at today, so this summer we had a prototype live in the field that was more akin to the way you just described it, something that has some bugs and some problems so these better be friendly users, and they were. They helped us squash a lot of bugs and so on. Another thing we did was we brought on an incredibly experienced head of R&D, again you see what I’m doing here, very little of this company is about me, its about here’s the problem I have today that’s critical, can we find someone amazing to help me there; and over time you’re building a team and a capability set, and an advisor set and an investment set that together make a team team to be able to deliver this thing. So that’s what we did with Henry Holimi, an incredibly prolific water inventor.
WT So you bring on a sharp production guy, right?
Wright - Yeah, he’s watching failures and successes throughout the summer, and watching what’s happening with the prototypes and he’s leaning in and saying here’s what I would do to fix that, and here’s what I would do to double down on that, and over time coming up with a final product spec, and we have a firmware person doing the same thing. These folks by the end of the growing season came up with the final specs of what is our final smart valve going to look like, what’s the design, what’s the CAD file, what was inside of it, what’s the computer design like, what chips have we chosen, what protocol are we using for communication, what battery capacity and solar boards do we need. Then you take it to production, and that’s the phase we're at now.
WT – So let’s stop there. That’s enough information for someone that’s thinking of getting into the water industry, that’s enough info for people to go ‘I’ve never thought of that’ and so they will add some of what you said to their start-up business plan and can go from there. Now let’s move to, this valve that you’ve made that goes right on the tractor or the sprayer that they have. I don’t know a lot about John Deer, but I did some basic research. Your system is a plug-and-play, so if I have a John Deere, or Lamborghini tractor, if I have a sprayer system, I can just plug your valve in somewhere here. How does that work?
Wright – So no, we don’t even mess with the tractors, the area we try to play in is with the actual value of the physical irrigation infrastructure. There’s a pump that’s pumping out of the river, reservoir, or ground and it’s feeding that water through a maze of PVC pipes plus flow meters, plus pressure sensors, plus valves, plus air leaks, and a bunch of other things all in that system, that’s the system we are attacking. Our valve, I hate calling it a valve, I like calling it a field unit, because it's not just a valve. We have a device that is a valve with a built-in pressure system and a built-in pressure sensor and flow meter. Where it goes is in, we call it the last mile, it goes on the block level. The valve you would open and close to release water onto a block of crops, that valve is what were reinventing the Nest of, and we particularly play in the specialty crop area where there are a lot of these valves scattered through a field.
WT – It’s a pretty sophisticated watering system already, I see you have wineries on your customer list, so they use pretty specialized water systems already.
Wright – Yeah, compared to what we’ve done for the last 5000 years and what some of the other people do like flood irrigation they are much more sophisticated. The reason is, in a lot of crops you want to be pretty precise on how much water gets to the crop. If you overwater by just flood irrigating you kill the crop and if you underwater obviously not very good, especially with something like wine where the flavor profile can actually really benefit from precision watering because the strategy with wine for example is to keep the plant in a state of stress, if you over water it comes out of that stress and you don’t get great grapes and if you underwater you get raisins. So, with certain crops, particularly specialty crops you see a lot of the irrigation systems I just described, where there’s a lot of PVC, there’s a lot of design for getting water to specific zones and doing customized watering. So, we’re seeing that more and more with people trying to conserve water because drip irrigation, for example, is the most efficient way you can water, and you can’t build a drip irrigation system unless you’re going to build it the way we just described with a lot of valves and breaking the field into blocks.
WT – Ok, so in these new systems that you have, they are deployed right now, and they are working right now, is everything going okay so far? Outside of millions of them, are you going to stick to vineyards, or is it going to move into canola growing or some broad acre farms, do you see it going there?
Wright – Our strategy is one of focus, so you will see us talk a lot of wine -- not because we think we can only help wine -- but because early stage you want your team to be focused on one group of customers. You want to have conviction; it can scale to other areas because you need to have a big enough market and growth path but trying to service all those places that could theoretically use you is a recipe for disaster.
Every customer set has a separate set of needs or nuances that if you try to meet all of them, you’re going to run out of money, and your engineers are probably going to hate you for running them all around on different features all the time. So, we try to be very focused on specialty crops, and even within the specialty crops this early in the game we're trying to be very focused on wine, that’s our entry point of the market. So, this summer you saw we only have 250 valves that’s all we’re making, that’s because we want to be very hyper-focused and make sure we're working with the best growers we can, growers that have hundreds of thousands of acres combined, so there’s an opportunity to scale within our initial customer set.
Should we have an amazing summer, should our 250 valves really nail it, we're hoping that these growers that we work with will say, “Wow! This made my farm better, now I want to apply it to the other 100 farms I own”. That would be ideal. So that’s how we think about our first stage of scaling. Should we get there and do that, then we will start to think about what the next crops are closest to wine that could use this product and that’s still going to be in the specialty crop segments. Think about the almonds, strawberries, grapes, and anything that’s irrigated with drip irrigation or sub, or sprinkler irrigation. Think about anything that is permanently planted, perennials that come back every year – these are going to be the crops we go to next. Canola, my guess is, maybe one day but that’s far down the line.
WT – I really enjoyed this, for me, it was a market lesson in niche product development, and also around water which by the minute is getting more precious. It was neat for me to have you explain to the viewers how you go from “A-ha!” to “we are actually doing this”. I think a lot of people that read Water Today, both the American media group and Canadian group, I think will really appreciate that you’ve done your homework and taken it to reality. Would it be alright if entrepreneurs who read this, could I give them your email if they ask?
Wright – Yeah for sure, I love to advise and help especially if they are trying to solve a big water problem or anything to do with sustainability, I’m happy to help.
WT – Have a good day thanks for doing this.
Wright - See you later.