Mark Green: Can you give us a brief version of the AppHarvest origin story?
Jonathan Webb: Like many great companies in the U.S.—and we’re trying to be one of those— it begins with ‘the problem.’ What is the problem we’re working to solve and how big is that problem? The problem of global food security is very real; the problem of national food security in the U.S. is very real, as is the problem of water scarcity that you see out West where we currently grow our food. It’s real and gotten worse. Since we started the company, COVID highlighted the import issues we’re having with importing food from Mexico. The droughts that continue to happen out West are challenging farmers.
AppHarvest was formed by outlining the problem of food and ag and where we have to go not only in this country but around the world in order to ensure that our kids have a good healthy food supply. And then the company itself was formed by thinking: How do we build a business around the problem and how do we use technology?
MG: What was the time frame of that problem crystallizing for you?
JW: Early 2017 is when I was still pushing the concept of what was possible. We took our first funding in February 2018 and at the time it seemed like a lot of money. We raised $250,000 from Steve Case, the founder of AOL, and a couple others. Then fast forward just three years and we’ve raised tremendous amounts of capital. The reason we have accelerated and raised so many dollars is that the investors we’ve talked with understand that the problem is massive. Companies like ours are necessary to ensure we have good healthy food, not only today but 20 to 30 years from now.
MG: You decided to pursue making Appalachia the “Ag-Tech Capital of America” after learning about Dutch agriculture. What are the steps you’ve taken to reach that ambitious goal?
JW: In 2017, the United Nations reported food production would need to double by 2050 to meet the demands of a growing population. As a kid from Eastern Kentucky, I always knew the world needed more effective ways to combat hunger, especially in Appalachia where we face scarcity and food deserts at a significantly higher rate. But after reading the UN’s report, something just clicked. That same year, I returned to Kentucky from Washington with the intention to create a modern, future-forward method of farming that would prioritize sustainability without sacrificing production ability or yield.
Around this time, I began researching the Dutch model of agriculture. Despite being roughly the size of Eastern Kentucky, the Netherlands is the world’s second largest agriculture exporter behind the United States. That’s because Dutch horticulturists have taken controlled-environment agriculture best practices and implemented them. At AppHarvest, we replicate that model by using technology and infrastructure to grow fruits and vegetables with 90% less water and up to 30 times the yield per acre.
We’re incredibly thankful for our international and state partnerships. Our Dutch construction and operations partners have dedicated themselves to seeing this model of ag realized in Kentucky. Last summer we met with 16 partner organizations, including government representatives and university officials from the Kentucky and Dutch governments, to reaffirm our commitment to Kentucky’s ag-tech landscape. All parties, including Gov. Andy Beshear and five university presidents in Eastern Kentucky, signed on to support the establishment of a Dutch representative office in Eastern Kentucky, as well as a Kentucky Center of Agricultural Excellence and a series of ag-tech research programs. We have reached out to state and federal legislators and organizations like the Appalachian Regional Commission to share our aspirations for the ag-tech revolution to be part of the answer for how we revitalize Appalachia.
MG: For the past generation, most produce for eastern U.S. markets has been grown in Mexico or the southwest region of the U.S., picked unripe and trucked for several days. Does your picked-ripe produce tolerate its shorter transportation without damage?
JW: When you’re shipping within a few hours drive of your facility, produce arrives in better condition with better flavor and with a higher nutritional content. About 70% of the U.S. population is within a day’s drive of our flagship Morehead farm, where we are growing tomatoes. So, part of our success is the natural advantage of providing fresher fruits and veggies for consumers. Our location also reduces diesel emissions associated with days of longer transports.
We’ve also broken ground on additional facilities in Berea, Richmond, Somerset-Pulaski and a secondary Morehead location. With these additions, we’re branching into berry crops and leafy greens. We have offices in Lexington.
MG: You have some amazing mentors. Tell us about some of the folks who have advised you as you’ve pursued bringing AppHarvest to fruition.
JW: It has been unbelievable and humbling the people who have thrown their hat in the ring to be helpful, not only to me but to the entire organization. As somebody from Kentucky, who went to the University of Kentucky, I always had big hopes for what I could do here, but I never thought we would be attracting the caliber of people we have.
I’m shocked by our management team at AppHarvest: the talent we have internally, here in the state, tirelessly working every day to make this company better. My employees don’t work for me; I work for them. If you want to see the true inspiration of AppHarvest, just meet some of our employees and you’ll see why this thing is so magnetic. As for people outside of the state, far away, who are helpful … I’m going to be with Martha Stewart at her house in two weeks.
Jeff Ubben is on the board of Exxon Mobil and is on our board. Steve Case, the founder of AOL, was our first investor. These are people who, as I’ve gotten to know them, aren’t just big business names, they’re good, high-integrity, honest people. They deeply care about what we’re doing here in Kentucky, and the sole reason they’re involved is they want to see AppHarvest succeed. People can make money in a lot of different ways; all these investors involved with us have the opportunity to invest in anything around the world. They don’t need to spend their time with me and with the company trying to make us better.
The people we have surrounding the company are in it for the mission. They want to see us succeed. We have really talented people putting their time, energy and credibility on the line to try to help me and others inside the company.
MG: How did you connect with Steve Case? Can you connect some dots and give us a chain of succession for some of these mentor influencers?
JW: Hopefully the people who read this are entrepreneurs or innovators in Kentucky and find it inspiring, because my story is no different than many of the others I’ve met with, either in the state or out of the state, as people who start a company. I bootstrapped the company with credit cards and had a backpack and a laptop. How did I meet Steve Case? I got his office address in Washington, D.C. and I would stand outside of his office trying to figure out when he would come in and out. I ended up meeting with some of his team, who eventually got me to him.
How did I meet Martha Stewart? I got on a plane and flew to Utah because I heard she was speaking at a conference. I befriended a couple of people on her team, told them my story and said, ‘Can you just give me 30 seconds with Martha?’ That 30 seconds ended up a couple-minute conversation, and she said, ‘You know what, come to my office in New York. I’d love to sit down with you and hear more.’
Jeff Ubben, same way. Ubben is one of the most influential hedge-fund managers of our time, running a $16 billion fund. I tracked Jeff down at a conference in New York where he was speaking. I saw him in the lobby and said, ‘Jeff, you don’t know me but could I get a little time with you?’ Initially he said no. I said, ‘Jeff, I know what hotel you’re staying at tonight. Could I meet you in the lobby?’ It’s a little creepy, but as an entrepreneur you have to be willing to face rejection a hundred different times to get three yeses.
I’ve been fortunate that I got a couple of really smart people who are much smarter than me, and they agreed to be involved and not just invest their capital but their time.
I just tracked people down and didn’t take no for an answer. Eventually, the story sells itself: The facts are the facts and the data is the data. I knew it would if I could get them to just look at the agriculture layout. But here’s the thing: They all (already) knew it. Martha Stewart. Is there any bigger name in food and home than Martha? She’s been involved in food her whole life. When I sat down to talk to her about the vulnerabilities of the U.S. food supply, the difficulty of farmers out West, she already knew it.
Jeff Ubben had met with one of the largest tomato farmers in California, who said they were no longer going to be growing tomatoes because they’re running out of water. So Jeff already knew it.
And the same when I told Steve the next great agriculture company doesn’t need to be in Boston, in San Francisco or New York City. It can be headquartered here. We can have offices around the world, but it could be headquartered in Kentucky. Steve truly believes that the next great companies in the U.S. are not going to be headquartered in San Francisco. They’re going to be headquartered and in the middle part of the country.
Everybody had a different reason on why they believed AppHarvest was the right company; I was just fortunate that I got a couple of key people. Once I got Jeff, I got Martha. And then the dominoes just started falling and more and more people gravitated to what we were doing.
Steve’s Rise of the Rest was the fund that invested in AppHarvest. We were one of the first five companies that Rise of the Rest invested in. And then shortly thereafter, they came to Kentucky as part of their (Revolution Rise Of The Rest Road Trip) bus tour (in June 2018).
MG: Early this year the company raised $475 million in a ‘reverse merger’ that netted AppHarvest $435 million in unrestricted cash to fund growth. Tell us about the financing that has been involved in getting AppHarvest launched.
JW: Over time, our financing has evolved from venture backing to the equity raise you mention and now debt capital. One of the great things announced on our first quarterly earnings call was that we closed on a low-interest mortgage on our first farm in Morehead to help us keep building out our network of farms. Investors have supported us because they see great potential with our business.
MG: AppHarvest has recruited some of the top business talent in the nation. How did you recruit them?
JW: I love that you say “in the nation” because people ask me how our executive team compares to the rest of the companies in Kentucky. I say, forget just Kentucky, we have one of the best executive teams in the world. Yes, it’s incredibly dynamic. You look at our CTO (chief technology officer) Josh Lessing, our President David Lee, our management team top to bottom. How do we attract people? This story sells itself: The facts are the facts and the data is the data.
We all realize that at some point it’s not about money and how much you make or the job you take; it’s about what’s your purpose, what’s your legacy? What did you personally want to stand for? A lot of people inside of this company are here because they desperately believe in what we’re doing, they believe it’s going to work. They’re moving to Kentucky from all around the country and the world and we’re marrying that talent up with incredible talent in the region.
But how do we get people here? One: The company. Two: It’s a testament to Kentucky. From a pure aesthetic standpoint, when people put their feet on the ground and walk through Eastern Kentucky or go to some of the lakes or walk around Lexington, they are blown away. Last week I was in the Netherlands meeting with CEOs in Europe, and one of the CEOs told me he was just here and said how shocked he was when he landed in Lexington. He said, ‘My god, the hotels in downtown Lexington, the restaurants! And then I went east to see the mountains—talk about gorgeous!’
Especially in the world we’re in right now, it’s been a pretty easy place to attract people to and convince them to move their families here and create a life.
MG: There are other significant greenhouse produce growers in the U.S. What differentiates AppHarvest?
JW: It’s all about the technology. AppHarvest is a very data-driven operation. The humidity controls, the climate controls are a technology we’re using. Yes, it’s a glass facility, but what goes on inside of that glass facility is radically different and beyond that, the way in which we do it is, too.
We’re one of the only agriculture companies in the world where everyone makes a living wage, everyone has full health care, their premiums for their families are paid for, and everyone has equity stock in the company. There’s not any agriculture company at scale globally that does that. We are giving those technology tools to our people, creating a culture with our people.
Agriculture is hard work. There’s nothing easy about growing food, shipping food. But not only are we using advanced technology, we are the cutting edge. We are building our robotics. We’ve got a grower AI (artificial intelligence)—it is autonomous growing. We don’t use the harsh chemical pesticides, and we run completely on recycled rainwater.
A greenhouse is not a greenhouse is not a greenhouse. We’re radically different in how we’re operating. Part of that is technology, part of it is the people, and part of it is just how we do it. Ultimately, that combined is what makes us unique in the world.
MG: What prevents others from duplicating what you’re doing?
JW: We’re working on proprietary technology and we’re at the cutting edge of what’s possible. It’s a little controversial, but I don’t believe in protecting a business by patents. Innovate or die—any good company should be so far out front and should be innovating so much that your patents on the wall are old by the time you put them up. Yes, over time we’ll have some patents, and yes, we can wrap our technology with patents today. But that’s not what should protect a business. What should protect a business is innovation and staying out front. As a CEO, I fundamentally do not believe in the defensibility of patents and I don’t believe that’s ultimately the way you should try to solely build a business.
I would be thrilled if other people start doing it the way we’re doing it. I’ll be in back in Washington, D.C., later this month, and my challenge to others is if we’re using technology to grow with 90% less water and get 30 times the yields of before, we’re not using any harsh chemical pesticides, we’re running completely on recycled rainwater, everybody’s making a living wage, everybody has full health care and everyone has stock in the company … why doesn’t every company in agriculture do this? When others are shocked that people don’t want to go work agriculture, I say, ‘No, they don’t want to work for your company in agriculture.’
The legacy of AppHarvest is that we start to shift the mindset of what it means to be an operator in agriculture. And I would not see that as competition; I would see that as, we won. There’s no reason that every company growing fruits and vegetables at scale in North America isn’t moving in this direction. Our company would be thrilled if we wake up tomorrow and find the world of food and agriculture is coming in our direction, and Kentucky is at the forefront of what’s possible and agriculture that works.
MG: What does it mean that you are going to revolutionize the produce supply chain?
JW: It’s important that people in Kentucky understand there is no competition for fruits and vegetables at scale in Kentucky. We want to help the open-field farmer in Kentucky succeed. You’re our allies.
I think Kentucky last year did like 40,000 pounds of tomatoes. And 4 billion pounds of tomatoes came to the U.S. from Mexico. All of our leafy greens year-round are coming out of California.
So how do we revolutionize the supply chain? Well, we tell California and Mexico, ‘We appreciate everything you’ve sent this way. You can stop sending it. We got it from here.’ There is no good reason we’re shipping fruits and vegetables 2,000 miles. In building a network of facilities like ours, it will ultimately mean we’re bringing farming from Mexico back to the U.S. and putting it here in Kentucky. We’re trying to rebuild American farming to where U.S. fruit and vegetable production is on the store shelves.
From a safety standpoint, we have the highest level of food safety. Look at the E. coli outbreaks that have been happening with leafy greens. AppHarvest has much higher standards of food safety. Imagine what the food safety protocols are at an open-field farm in Mexico, right? Not quite what we’re doing inside of our facility.
If you talk to the grocer, they desperately want this type of product because they see it’s a much better product for around the same price. Grocers want U.S.-grown products from a controlled environment without the harsh chemical pesticides. We’re selling to Wendy’s, we’re at Kroger and Publix and many others. All the large fast food chains, all the larger retailers, they’re all drastically moving in this direction. A vast majority of food and vegetables are imported now from Mexico. Our estimation is that in the next 10 years, if half of this plays out the way we think it will, you’re going to see that flip. Fruit and vegetable production will come back into the U.S. and it’ll be in controlled environments and closer to markets on this side of the country.
MG: Can you tell us something about yourself that we might not know?
JW: People don’t understand how this company can lead to unlocking our talent inside of Kentucky. We have great universities, great high schools. I’m a graduate of public schools in Kentucky and the University of Kentucky. I’m no different than any other kid coming out of these universities or these high schools. I hope I can inspire our best and brightest young people to stay in the state and rebuild Kentucky.
I hope people in Kentucky who are able to invest can look at entrepreneurs in Kentucky and convince them to stay. The frustrating thing over the last 10 years is seeing all the smart young people who could have stayed in Kentucky to build great companies go to Austin, to Nashville, to San Francisco. It’s time to come home and build companies here. But we need to create an ecosystem that supports those young people to stay here.
Hopefully that inspires people to move back, or stay here, and inspires people to support those next companies and we find out who will be the next AppHarvest. There will be another one. Who is it here in the state? I look forward to helping find and figure out who that is.
MG: How many people do you employ right now? How many do you hope to employ in five or 10 years?
JW: Last summer we employed 20 people. Now we employ 550 people. By the end of next year we’ll be close to 2,000 people, and we’ll keep going at that exponential rate. It’s moving insanely fast here. It’s hard to put employment numbers on our goal five to 10 years from now, but our goal 10 years from now is that central Appalachia becomes the largest produce hub of the U.S. and we’ve ripped agriculture production out of Mexico and California and pulled it this direction. As far as job numbers? How do you put a number on that? That’s a lot of people.
MG: Do we have the infrastructure we need for you to get your product to market today?
JW: Today, yes. But to become the largest produce hub in the U.S.? Forget about just our company; there are 10,000 companies in the Netherlands that support and are part of this industry. If stuff starts to open up here, and if I read tomorrow that a Fortune 500 company moves in to develop lighting for this industry, great. Do we have the infrastructure? We have it today. People think we’re growing rapidly and moving fast today, but if it turns the corner and we become one of the largest produce hubs, we’re gonna have to fundamentally rethink the infrastructure of the region, from high-speed internet to roads to education, and what we need to do to build on top of that. That’s a really good problem to have. I’ve been spending quite a bit of time in D.C. with people on both sides of the aisle having this conversation with them on what this industry would need in order to scale rapidly.
MG: AppHarvest has 3-4 million-s.f. greenhouses, uses recycled rain water, is pesticide free, uses robotics and artificial intelligence. When building your advanced-technology facilities, did you have to bring in special construction companies?
JW: We’ve been working with great partners—Walker Construction, Thoroughbred Engineering. We’ve been flying in engineers from the Netherlands and around the world. We’re taking the best ideas from what we’ve seen in Singapore, the Middle East, Europe, and then marrying that up with local engineers to figure out how to build this thing locally. There have been some incredible success stories of companies in Kentucky that have supported us, and two of them are definitely Thoroughbred Engineering and Walker Construction.
When I first walked into Thoroughbred Engineering and rolled out this plan, they looked at me like I had four heads. But not one of them flinched and they weren’t scared. They rose to the challenge, and it really is a testament to some of the talent we have here in the region if we work together and set big, lofty goals. Thoroughbred Engineering was a fairly small, boutique engineering firm when we were first working with them, but they’ve seen rapid growth and success with our success. Because they’ve been a part of what we’re doing, they’re winning other work and working with other people and it’s been really good to see our partners grow with us.
We as AppHarvest are not successful on our own; we’re successful with our local partners, and a couple of those construction partners have been key in getting us where we are right now.
MG: Is Kentucky’s recent completion of a statewide gigabit backbone to every county of significance to AppHarvest?
JW: Absolutely. World-class broadband service in Kentucky is a significant benefit to AppHarvest, as our business relies on technology to help us manage our high-tech indoor farms to grow far more produce with far fewer resources. More importantly, though, this means every Kentuckian will have access to technology for their daily lives, whether that’s for work, school or business. That helps improve opportunities for all and makes us more competitive as a state to draw investment.