Jack McCarthy welcome to acquiring minds thanks for having me jack what you are doing is different than my typical guest in that you are focused on farms rather than businesses of course Farms really are businesses so as we'll tease out over the next hour or so there are tons of parallels between you and a typical Searcher but let's start at the end for context Jack and then we'll go back get your story and work forward please tell us what is gold leaf farming so we own and operate U Alman pistachio and mul date Farms today on behalf of our partners who are all you know individuals and and families that want exposure to a but don't have a good way to get it great and give us a sense of age of the business and and size by whatever metric you use yeah so we started uh six or seven years ago when I was in Business School and today uh we own about 12,000 Acres of of farms uh you know Central Park is a little less than a th000 Acres so we're you know decent size acreage it's about $350 million of asset value and we've got a great team of 80 people that uh you know are are mostly unlike me driving tractors every day and and operating the the Farms excellent um well we're going to return to that 350 Mill ion um to understand what it what it means cuz I suspect it means something a little different than if we were talking $350 million worth of hfac businesses maybe not we'll we we'll return to it but on the physical size to give people a visual that was helpful so Central Park's a th000 acres and you own 12,000 so 12 Central Parks give or take yeah and and and for a for a modern business person in farming is that is that a lot cuz Central Park is in the middle of Manhattan so so the the scales a little different here exactly yeah it's a little different you know we we're a decently large grower today we got about 6,000 Acres of almonds and 6,000 of pistachios our our mle day business is Tiny so um you know we're a decently large grower in those crops probably top 25 globally okay most of our business is a a mom and popop Industry I think the average almond grower has 100 or 200 Acres so um you know it's a pretty you know small um and pop business there's about 7,000 almond Growers for example and uh while there are some some large ones like us uh mainly it's a small family family business well you've just hit on Parallel number one between uh your industry and the industry of many of my guests all right let's let's go back to business school or even earlier if you want wherever relevant please give us the backstory yeah so you know I'm from uh the Midwest originally grew up in Indiana and um you know after going to Indiana University for undergrad um I worked at McKenzie I did a stint in in politics in Chicago I worked for the mayor in Chicago and then I worked at a private Equity Firm uh that took me out to California called tpg and through all that stuff I think partially like my my Dad ran a construction company growing up um I was from Indiana I was working at places like tpg and I think they just sort of assumed this guy must know about you know farming manufacturing heavy industry so I got always staffed on those types of things and and really grew to grew to like those types of more overlooked businesses so I was in business school um at Stanford and was really um sort of hey I'm either going to I I really like tpg I'm either going to kind of work my way up that uh that firm or I'm going to do something very very different much more entrepreneurial and I you know had the Good Fortune to be able to spend business school mostly kind of finding that Breakaway opportunity so I I spent a fair amount of my first year looking at different Tech ideas I was at Stanford after all and and a lot of my classmates were looking at Tech I was looking at agriculture Tech with a a buddy whose dad was a was an almond farmer tell us a little bit about where you how you guys arrived on that potential opportunity and started pulling the threat my friend and I both wanted to do something more entrepreneurial after business school and we're spending our kind of free time um you know we had Wednesdays off most of our classmates play golf we would drive out to Chowchilla California and see an almond processor so his dad was a was a almond grower he was getting ready to go to school and was sort of like Dad how did how do you sell your crop must be you know on an exchange or something right and um his D was like no well I give it to this processor Steve Steve calls this guy Bob who uh sets up a contract then he calls somebody in in Dubai who's going to buy it they put it on a boat so was very kind of opaque old school phone-based industry yeah and we thought that was intriguing um we thought there were other problems related to that that that technology could solve and so we went down that path like with the general concept of kind of specialty agriculture is is traded in an old school way and um unfortunately we couldn't find anything that would really improve it like it kind of just works you know and I'm sure your audience um knows that in their businesses like no matter how much Tech and stuff you add to it stuff generally works pretty well how it's how it's functioning today so we didn't find anything that we were excited to build a business around but we met you know dozens and dozens of people in California Agriculture which tends to be more specialty crops like what we grow today and realize there was this massive amount of of land in the US there's like3 trillion dollar of land in the US um it's very uh limited um institutional type of money that's in the space it's it's really very mom and pop and there's a big problem in that the the folks that own the land the farmers that own the land if they were successful a lot of times their kids went to college and they're a doctor in La now and they don't have a good succession plan there's also a lot of young talent that studied plant Sciences they know how to operate the Farms but they don't have 10 million to buy a buy a uh you know sort of scale farm and so that was the The Genesis of of what we do today is realizing there was this big uh asset class that was very attractive but a big mismatch between the owners today and who needed to operate it tomorrow awesome that was phenomenal all right jack but a lot of follow-up questions before we proceed yeah um personally you said you grew while you were at tpg you grew to like the overlooked businesses what did you what did you grow to like why did you grow to like them yeah like at McKenzie and tpg I worked on a variety of things from uh you know more like manufacturing businesses uh Construction mining um I worked uh I looked at businesses that did you know distri Tire Distribution and uh all that one of my businesses at tpg was Chobani yogurt and I thought like finally I have a consumer facing company they have an office in Manhattan it's going to be fun I get to go to a big city and they're like no no you're going to the plant in Upstate New York in Twin Falls Idaho and so I was helping them with procurement and operational issues and uh you know know just really liked that sort of like Hands-On aspect of the business and like how the real world operates is is so sometimes distant I think from um you know the end consumer and what we see as sort of consumers so yeah I just grew to like that business a lot and and saw from my dad's experience um in construction that um the same sort of principles that apply in you know the tech world where you really want a bunch of smart people in one uh room you know in one company uh rowing in the same direction like that stuff works in heavy Industries too but it's not as common so um you know something I've been uh really proud of and and appreciative of is we've tried to you know really bring a lot of smart people into agriculture all focused on things like organic conversions and saving water um and that's just really paying dividends is sort of concent trting a a very high Talent team in a space that doesn't have as many companies that have done that and your friend that you were exploring possible Venture ideas with his name was what Larson Larsson Larson and larsson's dad was the Almond grower was he was larsson's Dad what you described as kind of the typical 100 to 200 acre farmer yeah maybe a little bit bigger than that but you know Larson was a Olympian and Navy SEAL and went to Stanford Business School so you know his dad was a successful farmer but he he wasn't necessarily back in back in Wasco shaer taking care of his dad's operation um so you know I think that was a a great example and um you know uh kind of showcases what what we see every day in the acquisition side of the business and and we're going to we're going to really get to that and your your and larsson's exploration looking for kind of tech ideas applying Tech to the supply chain at least that was kind of your F the first thread you started pulling on why I assume the first idea you had was some sort of Clearing House or Marketplace for the supply chain why doesn't why why doesn't that exist and why did you also conclude that it wasn't a good opportunity yeah I think we did a lot of the classes that I think are you know common in in entrepreneurial places like uh lean startup type methodology where we're interviewing people trying to find where the pain is like who really feels the pain and I would say there's certainly problems to the way that uh the business works today but it it's not especially painful for any one participant the the grower the processor the trader the end consumer like nobody feels the pain um and so no one needs to do things differently like badly and therefore it's very hard to get get people to do things differently because it kind of just works it works at least okay and so I think one of the lessons from that that you know I'm not in in technology at all today really but I think seeing that you got to be pretty different you know 10 times better 10 times cheaper uh to to get somebody to do things really differently and um I think that was a really great lesson yeah and by the way isn't that 10 times better uh right out a zero to one from Peter teal I think that that's where I first ex yeah yeah exactly and you keep referring to Specialty crops what do you mean by specialty crop so in in a we we talk about you know row crops which would be like corn and and soybeans um we especially crops would be stuff that you know is smaller markets um you know maybe grown in only a few places so um we grow almonds they're growing 80% in California globally 7% in Australia 5% in Spain so they need very specific weather to grow and that doesn't exist for many places other types of specialty crops would be you know fruit uh like like in California we grow uh berries on the coast and and lettuce on the coast we grow uh things like citrus in the Central Valley like near where we farm and those tend to be crops that can't grow everywhere and uh the markets are a little small a little more Niche and and that's um you know create some good opportunities for for Growers and and so when you say specialty really what what we mean is basically just a smaller Market a the end product is just a smaller market and what and you also referred now to um I think corn and soy um what are the Giants I guess you call and you call it row agriculture what are the Giants of agriculture in the US you know I think the big businesses tend not to be Farmers themselves they tend to be more uh you know seed businesses uh chemical and fertilizer businesses that are selling to Farmers um you know some of the processing um and and more like Midstream businesses tend to be very large um you know the the farmers themselves still are fairly mom and pop and I think you know there's been more consolidation as you know the technology gets better uh you do want to be investing in um kind of the latest and greatest ways of farming more sustainably and some of that takes more Capital more uh concentration and um we're seeing the same types of consolidation happening in our Market is happening in in other parts of a too a couple things here are kind of counterintuitive to me as a lay person first we all I have the sense that there kind of there's this big a big Agriculture and that agriculture now is like run by the Monsanto of the world honestly all I know is Monsanto is a boogeyman I don't even know what Monsanto does to be honest so so maybe you can educate me but they're like those like seed and and chemicals businesses is is that's what you'd hear about as a consumer is people that are selling the farmer the seed or selling them the the Roundup uh that that's uh what you'd hear about more as the consumer and so those guys are actually not Giants yeah not Farmers yeah yeah and and so the Farmers themselves remain um pretty fragmented even in nons specialty crops even in say corn yeah although I think there's more consolidation in some of those bigger crops especially in land ownership um you know there's more of a liquid Market to to buy a piece of ground and then lease it to a a farmer in our business um you know almond trees Take 6 years to get mature pistachio trees take 9 years to get mature so you have have a piece of ground you're going to plant an orchard on it it's going to take half a decade or a decade to to mature and so a lot of the values in the trees and the irrigation uh that you've installed to run the orchard so it's almost more uh it's more challenging um for that market to have outside Capital because you have to have that amount of patience and a lot of the value is is not just in the dirt it's in the the trees and and other aspects of a a builtup Orchard but why is it that if if Farmers even nonsp specialty crop Farmers still are pretty fragmented you said not as much as on the specialty side but still pretty fragmented you know it used to be that like 50% of people were farmers or some there's some statistic and now it's like less than 2% or less so so square that Circle for me very few people today are farmers I I think you know you're in the world so you probably meet a tons of ton of farmers so this is all kind of perspective but we all have the sense that there are very few Farmers but it sounds like in fact there are thousands and thousands of mom and pop Farmers to this day yep and you know I think uh there's certainly a lot less than a long time ago but it's still very fragmented and and uh you know there doesn't need that much employment because the the process of this is is quite mechanized like in the midwest youve got big machines that can cover lots and lots of ground out here um you know our crops uh we have maybe one person one employee per 200 Acres so you know to my Central Park point maybe four or five guys covering Central Park um and so you know they're pretty mechanized Industries um doesn't necessarily employ tons and tons of people uh but that said like the ownership is still very fragmented and and uh you know you got a lot of small small business owners basically running um acreage in their little part of the world okay fascinating yeah um okay and so now let's return to where we were so the so the opportunity that you guys ended up kind of spotting wasn't in some SAS tool or Marketplace uh to to throw it to throw it at the supply chain but was in the fact that if there's maybe um a There's an opportunity for very hungry a talent talented new sets of eyes to come into this industry and maybe be more aggressive better operators perhaps and and a very fragmented market so that that was kind of a thesis yeah so so basically we realized um you know the average farmer is 60 or 70 uh you know everywhere in the US but in California uh they don't necessarily have a great succession plan um and uh on the other hand um you know I ended up U bringing in um my co-founder Brandon who's an agronomist and you know guys like him studied plant Sciences they grew up in the industry um maybe even worked uh in a family operation but uh to do this at scale you might need 10 or2 million to get to get into the business and so a lot of our team today and and Brandon um you know before we started this were really talented agronomist and Farmers but they don't have the capital to get into the business the way it's structured today and so there aren't there aren't kind of incubators or startup competitions at the schools where Agronomy Agronomy is taught to Target the brandons of the world to raise a few million bucks of capital and go farm go buy a farm no it's very difficult like the main capital is kind of Bank debt like Mortgage Debt and that can only get you you know 50 or 60% of what you need to buy a property so um you know it's very difficult to enter into farming if even if you have the talent and uh I think that's something that we're you know addressing pretty headon okay addressing this head-on what shape did that take yeah so the way we the way we operate is um we have a group of partners that want exposure to Farmland um our original Partners uh were Tech entrepreneurs that um had actually you know bought several Farms themselves directly because they couldn't find a way to get exposure to agriculture um they wanted exposure to Agriculture and farming they couldn't find a way to do it so they bought Farms directly and realized man this is actually a lot of work in every other asset class we we have someone who manages um that asset for us and you know that would work well here so um they helped us get started um I can get into this more but it was basically like a search fund concept where they gave us some money to go see if we could make a business of it for the first two years we ended up doing uh five Investments over that time and uh you know that became the starting point to then continuing to grow but you know our investors look like those guys they might be um individuals Tech entrepreneurs business owners um you know work in finance in most cases they don't work in agriculture they don't have exposure to that and um they they want it and so that's what we provide is is a way to get access to that and um you know then on the other hand we're hiring really talented young people um or talented Farm managers that you know uh know how to how to take care of the tree Drive really high yields but they don't uh have the capital to do it and um trying to create an environment where they really feel like they're running their own Farm running their own business and we're making that easier for them to do by giving them you know centralized procurement um you know hopefully uh access to other talented people um kind of giving them uh the keys to run their own farm and and we want it to feel more and more like they're running their own running their own and we're just helping them make that easier reminds me Jack something you said to me on the preall that it's it's hard to categorize what Gold Leaf is a little bit hold Co a little bit search a little bit real estate a little bit farming um elaborate on that yeah so I think we we borrow from lots of different um other Concepts because it is a little bit of a new model you know in some ways it's a new model where we're borrowing from search to get started like hey uh we had Capital to go look for a couple years and find the first set of farms to build a business around um in some sense we're we're doing what Searchers do which is uh bring High Talent people into a maybe overlooked U industry or business um we also own Farms so there is a real estate component to what we do but we need to operate them too we can't just sort of lease them out um so I think we're borrowing from those businesses but sometimes I I start down that path um and then I sort of realize like well the the big successful family Farmers that we look up to like uh we look up to driscolls the the berry company um they you know only do uh blueberries blackberries strawberries raspberries they do four berries but they do them really well they own the genetics the Farms Processing and then the marketing like you'd see them in the grocery store and so um you know we think about building towards that over the next you know many decades um and really like we don't look way different from them we just have maybe outside Capital but otherwise we we look pretty similar to those guys um and so I think we are borrowing from lots of different uh Industries um but at the same time we're really emulating these these great um a businesses that were built over certainly decades um but kind of family a bus businesses that have have built a dominant business over time well without knowing anything about driscolls um perhaps I mean were they as acquisitive as you I mean your your playbook here is starting by acquisition and then growing through acquisition and maybe in farming it has to be that way because there's no such thing as unowned land so you got to start by buying somebody's land yeah I think that's right like uh we're in an interesting moment in our business where um almond price has been low for about 3 and a half years uh interest rates are up and so uh you know we think there's going to be quite a bit of sales activity the next couple years where people are selling or having to sell and we're going to see some really quality assets for sale when we look at some of these these family businesses um there's a a great grower we know in the Sacramento area um they bought all of their farms in two two downturns so in the 1980s and in the early 2000s we had similar moments to where we are in almonds today and that's when they bought you know really all their Acres they didn't buy anything else in other periods so it is a growth by acquisition business to to buy and and uh buy more land to to grow but um I think the the smart folks are doing it in um you know the right moments and and um you know building a quality footprint sort of patiently but aggressively when there's when uh you know the ir's hot yeah but in fact to date you have been buying when the economics weren't as good as you think they're going to get now yeah I mean we've um had to start I guess done yeah we we started but I think like most of our um Acquisitions have been in um the last few years when you know prices have been low so I think we're seeing better and better deals like the first couple years we invested 2 million the first year of equity uh we invested uh 8 million the second year I think we invested around 20 the third year and you know today we have about 250 million of equity and we're in year six so we we really started slow figured out uh our sweet spot of you know what were the types of farms that we wanted to own really forever and um once we knew that we started started acting and I think now we're ready to you know continue to grow because we have this great operating footprint we know what we're looking for and the the market timing is is feeling more and more right and yet you're already at 350 million so what exactly does that I mean talk to me like I'm eight what is that exactly does that mean that $350 million number Yeah so basically uh approximate value of the Farms that we own today and um you know we use a little bit of debt and and some equity in equity to to capitalize them so we have about $350 million of farms about uh 250 million of of that is equity value and and the rest is is debt so um you know fortunate to have a lot of partners that have have made that possible like uh you know people interested in getting this kind of Farmland exposure and um you know that's the uh what's enabled us to to buy um that size of portfolio so and let's let's um tease this out a little bit so 250 million of it is equity so that mean I you know that in the rest debt so 250 to 100 debt usually I'm used to hearing terms that are kind of the reverse or more where they're heavily levered so you're you're just the opposite I mean you you've bought these things mostly in cash right is that what you're saying yeah yeah I think um or you know we're either buying land and then developing it and drawing debt over time uh you know when we plant an orchard or we're buying usually with you know 40% 30% uh LTV debt and um you know I think over time we probably are moving in the direction of less debt a because interest rates have gone up so the debt is more expensive and then B um what we're finding is when you have a longer hold period the debt uh doesn't help the returns as much and so it um you know if you're doing private equity and you're going to buy something and sell it four years later the debt can help your IR quite a bit but in our case we're buying Farms hopefully hold for for a long long time and uh the debt doesn't help as much and we're in a commodity business so it does add to the risk to have to have more debt so i' say generally over time like I'm a reformed private Equity guy from using more debt to using less and less is the further we get into building this business but but but again Jack I mean I understand that the Dynamics are very different when you kind of have a permanent hold mentality but at the same time doesn't leverage always juice your irrs no matter what your hold period is so it does but I think if you if you um you know look at what going from 25 to 50% LTV does to your IR in a a a 4-year hold versus a you know 25 year hold M it matters uh Less on the on the irr and um you know it adds the same amount of risk so I think the further we get into this particularly with our LGH hold deals the less uh leverage we're trying to use and I think as we grow we think we'll use some debt but um less and less over time right so I guess yeah the longer the longer the hold is the less the debt helps the IR sorry you just said exactly that but I'm just making sure it Crystal yeah that's exactly right that's exactly and I think that's why you see like you know in these sort of older School businesses like uh in the SNB world like people not using as much debt because they built the business over 30 years or look at how like Berkshire Hathaway is capitalized like they have the float but they also have you know a little bit of debt but really like trying to use less and less debt over time and sure they could have used more and gotten more return for it but uh you know they were trying to build something over the long run not get every last uh you know basis point of ir well we are going to dive into this long-term hold philosophy in just a minute but before we do so Jack this $350 million in assets 250 million of which you've said is equity yeah that you've raised from your LPS so is that some Mega fund that gave you a quar billion dollars or or is it a bunch of million dollar checks what does the makeup of that look like what can you share all all our investors are high at worth in family office and um you know I think you know it's generally regular people that want exposure to a and and have you know enough Capital to do Alternatives but um you know people writing 100K checks uh into getting a little bit of a exposure up to you know we have family offices or multif family offices have done1 to10 million with us but I think uh the the bulk of our investors are subm million dollars and um really just looking for a little bit of diversifier in their in their portfolio so um you know that's our Capital today uh that kind of long-term taxpaying smart money we've really enjoyed partnering with and I think that's kind of how we plan to keep growing the business although I'm sure as we get bigger we'll have opportunities to take in um you know other other types of capital too so your average LP is a million dollars or less so so we're talking 200 250 individual checks that you've that you've raised yeah I I don't know the exact average but I'd say you know we have most of our LPS are less than a million dollars and you know in the couple hundred grand and uh we have you know friends and family that are in it it sort of expanded from there and you know you know today we have people that have done you know over millions of dollars with us that are uh more like a family office or ultra high net worth investor but um you know a lot of our partners are uh business owners entrepreneurs uh folks that have the capital to do some Alternatives but they're not uh you know uh uh multi-billionaire that's that's doing this it's just regular uh individuals so if people listening have a few 100 Grand laying around and they want some exposure to egg they should reach out yeah give us a call yeah and and uh you know we we have all credited investors there's various Securities rules and stuff but um yeah we uh you know have basically a a set of friends and family that expanded from there and that means that um you know we personally know most of our investors and met them through someone that we know well and and that's been a great group of Partners to have um over the last six years and I think we'll continue to to Target that kind of that kind of group but just so I understand if you've raised 250 million dollar is it common that you'd have so many investors dozens and dozens and dozens is that often how something like this can kind of over time or you guys unusual this way I think it's more common in in real estate but yeah I mean like if uh private Equity Firm had $250 million fund it would not be made up of this this kind of investor so I think it's something cool about our model is that it started kind of friends and family and expanded from there into you know their friends who did this kind of stuff and um I I feel we've been really really lucky with it it is more common in real estate because there's like tax and stuff to what we do and what exists in real estate that makes it more suitable for a taxpaying investor like an individual or a family but I uh I still think you know it was sort of organic that we just started that way and then it it grew over time now you've said multiple times that your investors want exposure to this they want access to the access to the asset class uh you've said it in a number of different ways um yeah why why has it been so hard for them to access before I guess because it's so fragmented yeah and you know I think there's a variety of reasons so um you mentioned earlier uh in the 1800s like 50% of people were farmers today it's very small and so the overlap between where there's capital and where there's uh talent in in agriculture is is pretty limited um you know in Silicon Valley uh the capitals on Sand Hill Road the talents at Stanford University down the block like it overlaps quite a bit and so I think in this business um that's one challenge I also think when people have tried to come into to agriculture to build businesses um with capital often they're you know in New York or San Francisco uh they don't have the operating experience to know what they're doing and uh one of the things we've tried really hard to build is that combination of my co-founders an agronomist I'm a private Equity guy uh really down the org chart we have that mix of younger uh Stanford alums but uh experienced Farm manager in Fresno and um that's what we're trying to combine so capital and the talent lining up there's also um institutional investors have have tried to come in our space um the average farm that we buy might be5 1015 million so if you're a Canadian pension trying to put out $500 million that's not easy to do it takes a long time and especially if you're going to have a very high bar for what you're buying so I think the talent Capital overlap um the lack of familiarity people have with with agriculture as a as a business and and then just the sort of size of acquisition that's available make it make it challenging for people to whether it's individuals or institutions to get exposure and then and why do they want exposure what what is the what is kind of the understanding of this asset class by these folks that make it appealing and and make them I I assume they think of it as a very long-term thing so it's kind of a place to not get irr but to park money for a very long time so so elaborate on that for us yeah so um us Farmland since you know World War II has done about the same returns as the S&P 500 but maybe half the volatility so it's done a low double digit return some driven by cash flow some driven by appreciation and the uh only down period in farmland and aggregate was in the 1980s so there's been one down period the S&P had probably 15 or 20 in that time period and so I think people think of it as a safe asset class that can get decent returns when you look at the types of specialy crops that we do the returns have been a little higher some more like 15 to 20% depending on when you entered and exited and compounding over 10 15 20 years that is very attractive I think Berkshire hathways compounded at 20% since the 60s so um you know pretty interesting long-term compounding um in this in this asset class really achieved by Mom and Pop farmers who are great Farmers but not necessarily um you know that like sophisticated in terms of using technology or having access to to lots of money they've just been in an attractive industry and done a good job with their with their farm so I think it's a fundamentally attractive asset class um that's that's performed well over a long time but it's just unfortunately hard to access and and that's what we uh try to do yeah well Jack where do I sign up you're you're really this is a compelling this is really a compelling opportunity you're you're presenting here there you go and and I actually I I I meant that half jokingly because we are going to also talk about if if if there's opportunity here for for the audience but let's let's put a pin in that um so let's let's get back to the plot a little bit so you said in year one you deployed 2 million year 2 8 million 320 and now 350 take us um take us back to the very beginning where you said you kind you had kind of a quasi search fund model just just give us a a couple minutes on how this thing really got rolling and these First Investors and was it you said it was kind of a search fund kind of not so if you would yeah yeah so uh you know I had spent the first year of business school doing this various Tech ideas uh the First Investors who I mentioned we had met through that process of like trying different Tech ideas meeting potential you know users and he called me at the end of the summer between my first and second year and said hey how's your how's your agtech thing going I was like terrible we're going to shut it down and he was like you know I really feel as you know we own Some Farms I feel that uh you know there's there's a business to be made around giving people that exposure but you guys you know running the operation and and kind of like doing what we do now so that was the original concept um the original guys um helped us get started and basically said you know they'll give us money to you know pay salaries pay for legal things like that for the first couple years and U beyond that we'd have to you know sink or swim and um that's kind of what ended up happening so we um got sort of seed capital from from these two investors um they they also became um in investors in the Farms themselves and um you know ended up over the course of my second year of business school setting that up I'm starting to look at farms to acquire and I I really met my co-founder Brandon during that period too he was an agronomist who helped one of the institutional investors in our space build a big portfolio and sell it to a Canadian pension and was looking for more of a like true farming company situation um he was thinking about doing farm management for for outside investors I was thinking about becoming an outside investor and we said why don't we do this all under one one roof um and so Brandon and I got that that seed capital from our First Investors Brian and Scott and then uh got started and the first year maybe maybe give us like a picture of what these these two these these first $2 million of capital deployed look like like what just just some story time like what were what were these Family Farms like where were they you know yeah so it was just one Farm you know we looked at many many many farms um we're pretty picky on for sure knew right out the gate that um having good access to water was important so in our business the the water rights are attached to the farm so the old Savvy Growers like have positioned themselves in in good areas with good water rights and um that was something that was important we also knew we want wanted uh a quality Orchard quality growing conditions so we looked a lot uh ultimately found a first deal that was $2 million of equity um the second deal is maybe more interesting to talk about because we um kind of knew uh you know it wasn't a 10 out of 10 bu window like it's kind of emerging to be today like now that price has been low for a little while and interest rates are up we're starting to see some more more frequently see very attractive situations so far we've looked at 11 or 1200 farms and bought 20 something so our hit rates 2 or 3% we're seeing that um attractiveness level go up but back when we started we knew we were in that kind of moment so we were looking for more off the beaten path opportunity too um we uh found an opportunity in Arizona which is not a traditionally a growing region for these high value crops um it had good the right weather some advantages over California like it had much colder Winters and then it had good access to to water and we thought hey let's see if we can't uh turn that into a pistachio region so that was our second deal which was mostly just buying land and then kind of over the next 5 years proving it out by planting some trees a small portion of it proving out the Water by drilling Wells and then as we got into it doubling down doubling down again to sort of uh once we knew it was working then really add more Capital so I think like philosophically that's how we try to operate is start small do more once we know it's working um and that's you know embodied in the first couple deals we did particularly our our second deal which was in in Kingman Arizona but but the second one you're basically starting from scratch I mean you're you're you're as you said buying land and planting a crop there for the first time or an orchard there for the first time and you have to wait 5 years so how did you why did why did you not why did the proof come earlier than 5 years that you deployed Capital much faster there well the the proof is is different things it can be um it can be just showing that there's water so we knew from the geology that there was water um from the from the diligence but but being able to access it for the first time adds a lot of value um seeing how the trees mature and and age as they uh get older and seeing that it's on Pace with California or better is helpful so we're sort of seeing different things um as we prove out this region and um you don't necessarily need to wait till year nine to have you know full proof we're sort of measuring the you know trunk circumference and and looking at how the um you know when they're coming out of dorcy and things like that to understand how they're um how they're how they're growing and maturing but a lot of its water a lot of its uh growing conditions and and kind of showing that slowly and steadily over time and then in the meantime you know to your question on like what it kind of looked and felt like I worked out of my closet my co-founder worked out of his truck um eventually we had our first kid so I got kicked out of the closet worked in my friend's uh you know startup um and you know we basically spend a few days a week um getting stuff done a couple days a week um out looking at farms and meeting meeting Farmers to to um look at opportunities so it's kind of a mix between um you know working out of your closet or a sort of startup feel and then uh working out of the the back the bed of my uh friends my co-founder's truck you know when we' meet up at a farm that we were looking at man that sounds like a lot of fun the the seriously meeting in the field not being in the closet yeah yeah there's a there's a Dollar General by our first property that we still talk about is like that was like our office you know for the first couple years cuz we always meet up at that that Dollar General and I you know I don't really uh I don't really um feel any uh negativity around this but like I drive a Subaru you know I live in the Bay Area um I'm very like overt about like I'm not a farmer but my co-founder is and so in the early days we would kind of jokingly not jokingly like Park my subar at the Dollar General hop in his F-150 and and drive over to drive over to meet people so we uh looked the part more than than I would by myself totally Jack they should have just left you in the closet hide you in the back room I know right hurting all the credibility the exactly but so so how many of your Farms are start from scratch Farms versus oper Farms it's about uh half and half or a third that we developed and 2/3 that we we bought um even the ones that we bought where they were already planted uh the trees might have been you know only 3 or four years old or we were going to take them uh from conventional and convert them to organic so still today uh we have you know quite a bit of of capital and development farms and then um of our mature portfolio uh 43% is is mature and at its like steady state production 57% of the acreage is either not yet mature or not yet uh certified organic well that leaves me feeling like this is more of a land play than anything because on from across your whole portfolio I don't know I I missed the math there but maybe 25% from the entire portfolio is actually operating mature Farms that you're just continuing on in the way that they were and and the rest is is kind of you're you're redeveloping or starting from scratch Orchards yeah and to your point on like where we are in the cycle you know it's going to change depending like I think our our belief is we want to be really expert at uh operating these these crops you know really good almond farmer really good pistachio farmer and then be flexible on what makes the most sense like most of our pistachios um are in a new region where we've developed because the valuations are really high in California and so you know if we can sell our Arizona stuff someday for California valuation great but we're certainly building it to at a much cheaper cost I see um where we are in almonds today I think buying mature Farms is is becoming more attractive uh than than building you know planting an orchard from scratch just because of uh you know the price being so low so I think um we're flexible on where we are most of our firm's existence um has been in a you know coming out of a boom period into a lower period And so we've done a lot more uh kind of value ad and development if you will in real estate lingo and and less like buying existing Orchards and and when you're doing value ad are you is it still the case that you're like buying from a family and it's kind of a small Mom and Pop I mean what what is on this land before that you then redevelop a farm just just sort of an inferior one yeah that's still uh still mostly the story so yeah it could be they were growing you know cotton or Al Alpha like a lower value crop and they didn't have the knoow or the the capital to to plant an orchard it does take fair amount of capital to get an orchard up and running um you know in some cases uh we've had Orchards that were uh yeah I think cotton alphalpha rice cattle sort of like lower value crops that um longterm more and more of the places with good water and good growing conditions in California go to that highest and best use which is like higher value permanent crops in California and um there's still a fair amount out there that's that's not yet made that transition and so how are these Farms valued that was something I spoke with your with your colleague Sawyer about and what a mess it is or how just kind of unpredictable it is so talk talk us through that yeah I think that's one of the interesting things about and I'm sure um folks more in the the search world or or the the SMB world like um you know are are familiar with this but um things are not necessarily priced on a multiple or cap rate type of basis like a cash flow type uh valuation um I'd say many farmers have in their head that an almond Farm is worth 30 or $35,000 an acre and um what we know is some Farms Produce $2,000 of cash flow or $11,000 of cash flow some might produce 4,000 or 5,000 and so we're really sort of sifting through for great water and then uh valuing The Orchards more on what they're going to produce from a cash flow and returns perspective than um you know caring about the the comps um so yeah that's something unique about our Market that it is uh you know less institutional and so the the valuation framework is just pretty old school um you know whereas at tpg like every business was you know 50 different private Equity firms were looking at it and they were all bidding to the you know decimal point of eida multiple and that's just not at all how our business is there's no competition and uh you know usually the competition is the guy keeping it for another year he decides not to sell and uh you know the the valuation is done sort of based on what did my neighbor get or what did I hear almond Farms are worth well it also seems like another contrast between your valuation and and how Searchers will value an HVAC business is you're basically Pro foring what you guys will do with this land Y and and it's almost completely decoupled from what it has historically produced or or or the economics of the historical production whereas as in search you're encouraged strongly to to to look only at you know that HVAC business Whatever It produced for the last three or five years don't think that you're going to come in there and transform it and and and grow it assume that you're just going to steady state it if you grow it we all want to grow it that's the goal great but don't proor of that I mean I mean do have a you know have a have a good case or whatever have your cases but like um you're really you're really leaning on it on the recent historical Financial historic financials um it sounds like you guys are not it it depends like I'd say in California where there's good production history um we're typically looking at you know what does this area produce in terms of almond yield like we know uh where the high yielding areas are that have the right weather and soils and the right water and so we know what a highquality farm in a given area is going to produce or even often we know the actual production history of a farm so we try to mainly focus on that sort of hard facts and not be focused on can we do better than that can we save money on this or that um really the only case where we think we're um you know building in some upside is if we know we're going to take it organic uh that is something that we you know bake in if you will that we know we're going to do but um you know typically we're saying okay this guy's been averaging 3,000 lb and of almond yield this is what it would cost to farm in this area CU we Farm up the street and that that means we can pay X and um we might not have financials from from the the buyer we'd have like USDA production history but these are small businesses so they usually would have like a tax return but not necessarily a uh detailed Financial package and and we're really focused on what a week spend to farm what's his production history been or what's the USD average production history in this area so that we can be pretty certain of how we're going to do so tell us tell us more about this USDA um production history centralized database thing so this is kind of a a benchmark that exists that you can reference we We Gather yield data from all different places like there's County averages that the USDA publishes um we look at you know um other types of data that's out there we get um you know advice from uh agronomist and farmers and say you know where have they seen high yields and we have a basically a tool we've built like a GIS tool that has water districts you know what kind of uh opportunity Zone tax system it's in uh what have the yields been historically what do we think the cost of production is in this area based on the water and the yield and we sort of aggregate all that into like basically we know the areas where we'd want to buy and where we wouldn't and um we've gotten to the point now where I think when we see a new opportunity for sale in 5 minutes we know if it's probably going to be a fit for us or not um and um I think that the level of focus we have on the same types of assets has allowed us to really know what our strike zone is and what it isn't over the last five or six years well this tool sounds Mighty powerful is this um is this kind of emerging is some secret sauce for you guys I mean is do other players in the space to the extent you even have competition have tools like this I'm sure some of the you know there's a few more institutional investors in Farmland I'm sure some of them have it but typically um you know they're doing lots and lots of different crops we only do two crops which are grown in the Central Valley in California so we know the water really well we know the growing conditions really well and I think that's allowed us to be pretty focused on on what we want um and you know I think it is probably uh Secret Sauce that's a mix of this this tool and just what's in our our head from having done this for for quite a while now and and sorry how long has it been what year are we in uh 2017 we started so it's been six years six and a half years you just mentioned upside uh what about downside so of course on on the search let's and again bringing this home for the Searchers listening um one of the names of the game for Searchers is is really focusing on downside uh more if not as much if not more than the upside and because dilc is so hard there's so many unknowns the businesses are so small and messy and fragile etc etc um so really thinking it through is is the name of the game how do you guys think about downside protection when you're buying land and Farms yeah I mean I think the further we've gotten into this the more we're really looking for very high quality Farms like um almost like a barbell approach where most of our Acquisitions are going to be high yields senior water rights good climate position and that's going to be a farm we want to own for a long long time so we got to do our water diligence um make sure that the the quality of the uh the property is high like we do tissue samples uh water samples all sorts of sort of agronomic look at the at the farms and then uh we look at how is the weather likely to change over the next 20 or 30 years in this area um you know are we going to uh get so warm in the winter that the trees don't properly go dormant and then they don't set a good crop that's something we think about so um a lot of it is just doing really good diligence and making sure we're sort of buying you know the one or two% of farms that are kind of highest quality generally that means they're going to have very low cost of production um you know because they have high yields and and inexpensive operating cost and um that's really what what we're solving for is uh that sort of one end of the barbell very high quality Quality Farms we've talked about now a number of times kind of the the play here or the Playbook or the the thesis is is bringing this Talent who's this kind of who's studying at University Agronomy and so on and pairing them with kind of their own Farms to run um we also just talked about your fancy data tool um what about about going back again and trying to kind of intersect this with how Searchers think what about operational efficiencies um being more Tech forward you know out with the fax machine in with Gmail does any of that stuff play a role here uh just being you know yeah operational efficiencies or Andor tech forwardness for sure yeah so we um you know I think it all does start with the team so we we have to have a really great team because we're going to give them a lot of authority like we want it you know to borrow another concept from another business like we want it to feel like a franchise business where um our asset managers and farm managers are really running their own running their own property and we're just helping them um so we need really good people that can do that uh we have kind of a mix of like Farm managers that are that like young guy out of college that studied plant Sciences and you know knows how to do it but doesn't have the dough and then also some really experienced Farm managers who've been managing for a family or a larger operation but we're never given kind of the the full Reign uh to to run it themselves so I think we have a mix but it starts with that very high bar for talent and kind of concentrating great people in one place when you get that kind of talent you can do hard things so um the average Farm manager uh might not um you know want to give self-driving sprayers and tractors a try but like our guys do and um we use all sorts of different agtech um for a variety of efficiency reasons we use uh fieldin which is a tool that uh tracks our uh equipment as it moves around to look at like Optimal uh Pace as it goes through the orchard we use uh aerial Imaging to see the the tree health because it looks at the leaves to see how stressed or not they are and and we can spot um problems in the orchard if you've got Orchards the size of Central Park you need somebody to sort of look at that holistically and identify areas that are something's going wrong we use uh sensors in the soil that look at how hard the roots are pulling to to uh get the water they need and that allows us to really dial in the irrigation so we're super efficient with water which is important to us from a value standpoint and a and a cost standpoint so we use a lot of Technology but all that's really enabled by our team and there's no like Silver Bullet but it all adds up and makes us more and more efficient um so yeah the way we think about our businesses you know we invest a lot in our team that allows us to invest a lot in the Farms from a tech sustainability efficiency standpoint and then um that's ultimately going to drive more returns and creates this like virtuous cycle where you know know uh their sort of mission um embedded into the business model and that's something that's super motivating to me and and super important I think to the overall success of the company well we haven't even talked about Mission which we will but um before that Tech back to the teex so you know I I again as a complete Layman here I I think of you know one of the applications you'll hear of drones for example is is aerial photography for for agriculture and so I just think okay well this is a best practice that's been adopted by Across the agriculture industry but really it's probably it's probably just like you would see in an SMB that yes it's a best practice but in reality these small operations have not are have not adopted it in are indeed years from adopting it sort of thing yep yep yeah and like I think an example would be you know most farmers in in our crops use drip irrigation like micro irrigation U more and more that's becoming the norm to be just as efficient as possible um it's more rare to see people use the types of sensors that we use in the field because they're uh not cheap it's it's complicated uh you need to be able to you know look at your iPad or your computer in the morning and and dial things in further and um you know I think fortunately or unfortunately like that's not that common in the industry so I think we definitely use more technology than than the average uh the average farmer and I think you know there's no Silver Bullet like none of it's going to um add 50% to the bottom line but it it it all adds up and it makes us more efficient smarter kind of learning um machines and we're just you know getting something out of each at bat at bat we have each season uh getting better and better uh operators and so this hiring great talent being such a key part of your strategy do you guys have this like really well honed aggressive recruiting function are you I mean are you at the the schools where Agronomy the best Agronomy schools and you know recruiting from within them sort of thing we have some people straight out of school but mostly um you know we're hiring from um other farming companies other um you know family businesses uh kind of the Agronomy and like more like Plant Doctor type of uh businesses that are out there that give Farmers advice so we we hire from different parts of a I think we do have a very strong reputation we treat our people really well we have a you know very strong culture and I think um that's made it easier and easier to recruit good talent over time like recruiting now is is much easier than it was four or five years ago because we've just invested or like overinvestment you know I think when I talked to other business owners like just the the more you put into the culture the more you're going to get out of it and I think um we definitely feel the benefits of that and in an industry where you know small businesses can't necessarily do that large businesses tend to be more like stale and bureaucratic like are we're very thoughtful about the culture and the value system that we we operate within and and that's just paying big dividends in terms of getting fantastic people well elaborate on that that's perfect segue to to the mission what what is the culture the mission the values so our our nor Stars leave the world better than we found it which to us is like the test we you know apply to anything we do so we want our team to be better off than if they worked elsewhere we want our investors to be better off than if they invested something else uh we want the Farms to be better off than if somebody else owned them so it's sort of a a bar we hold ourselves to we hope that's going to lead to Farms families in a future we're proud of so a lot of what we're doing is you know hopefully showing the the a industry there's a better way to better way to do things sometimes and um you know the way we try to act is being really candid with each other uh putting Family First acting like owners and then leading by example so um we want to be really honest with each other we want to remember there's bigger things in life than than work which is the family first um I think what we're fantastic at is acting like owners we have this very like Dynamic uh team that ultimately you know feels more responsibility for the Farms than than if they own you know they own them themselves and all of our team has Equity so they really do own them but I think people act that way anyway and then lead by example to us is you know certainly doing the right thing but it's also um you know trying new things that uh the average grower might not do so we have a desalination system on one of our Farms where we can take water that couldn't be used uh clean it up uh so that it's suitable for the trees and we're basically using uh you know found water that um really uh is much more efficient and sustainable so that we don't know how well that's going to work but we're definitely going to try it and then if it works we're going to do more of it we're going into a new region uh doing organic conversions these things are not necessarily every day um activities but we're going to take some some calculated risk try new things and and try to you know double down on what's working and not be afraid to to try new things because that's kind of what the the industry needs so that's how we describe it to our our team I think it it sort of feels like uh we're really serious about what matters so culture results Financial uh sustainable otherwise we're really in formal about what doesn't we don't have a dress code uh we didn't get an office till like a year ago you know we were working out of closets and shared spaces and whatnot Dollar Generals um yeah Dollar Generals no fancy trucks um you know we just don't believe in that kind of and so we want to be really serious about the things that actually matter and and like extremely informal uh about the stuff that doesn't and kind of uh you know keep the sort of buau bureaucracy out and and the entrepreneurialism high you know it it hearing anything about um agriculture is going to is going to um invariably kind of make contact with the climate conversation both in terms of both in terms of doing right by the climate which I think you've kind of already addressed in trying to move or go organic and where you can but also in terms of your own prospects and how climate change may or may not fect uh the long especially if you're a long-term play here and you're not you're not thinking in 5year increments but in 50-year increments so I think you've already addressed the former but if there's more to say about how you guys are doing your best to respect the climate say more but then but then also address how you think about climate change in terms of in terms of mitigating risk yeah yeah I think you know we do a lot on sustainability on the farm so of course there's the things like organic conversions that are um you know more known to the consumer if you're in this sort of sustainable a world there's things that are part of organic farming that matter um you know we're not using pesticides in organic we're using like pheromone based disruption so we emit female pheromone that confuses the pest they don't mate the pest population is suppressed we don't have to kill them but that affects pollinators for example because we're not we're not killing the bad bugs we're also not cly killing the good um we use uh compost to deliver the nutrients our trees need and compost um uh generally improves the soil quality the soil health and is capturing carbon so almonds and pistachios generally are carbon negative whereas most types of protein is is pretty carbon intensive like you know uh beef uh pigs chicken like all that stuff is is carbon intensive so we're fortunate that we're carbon negative and then we like really lean into that when we're doing the organic so there's a lot we do that I think the end consumer doesn't know about today but I think is caring more about over time and and new types of certifications around pollinators and regenerative farming that I think will be something we participate in over time we're probably already doing and we'll just sort of take credit as those markets um and certifications become more uh clear and defined mhm and then you know the way we position ourselves is we we you know back to the original like Northstar we want to leave the world better than we found it we want to be doing this for a long time and so you know I think we're trying to protect ourselves by buying high quality water rights areas that really can long-term support these types of crops because there's some areas that they can't and um you know that means good water rights that are going to happen have water every year um it's uh climate position um meaning it's going to have the right weather now but the right weather in in 30 years and um you know that's challenging to do but it's something that we think is important given we're trying to build this business for the Long Haul we still got a few more questions here Jack I hope you're hope you're up for it uh and some in some media on too so okay so the let's talk about what the business looks like kind of kind of in terms of ownership and all of this Equity that you've taken on so yeah um super basic you are a business you are not a fund right yep okay we think about ourselves increasingly as you know a a investment firm with one portfolio company so it kind of I it in both seats a little bit but really it's a it's a business um not a not a fund m MH and and actually I despite the fact that I'm the one who asked the question C can you explain to folks like what the Nuance there is between the difference with the Nuance there the difference between those two kind of so things historically we had a you know manager entity that oversaw all the different Farm entities we pulled them all into one main business so now most of the farms are in one partnership uh our company manages that partnership kind of like um you might see in a private Equity context where there's uh you know tpg and then it's portfolio company they might have lots of portfolio companies we have one and we are deeply involved in in the operation of it so I think about it more and more like uh an operating business that um you know we have partners that come into the operating business um the the operating business the the goldie farming LP they you know pays a management fee in a carry for us uh overseeing it and and running the the business but ultimately it's one single partnership that that has uh our our investors in it that owns the Farms that that does the farming and um all that okay and as you so so you $350 million in in assets is that number set to just grow indefinitely is there a ceiling or as long as you can find deals you can keep growing that number I think our business is going to sometimes grow sometimes not you know uh depending on where we are in the the markets that we're in so um you know this is a particularly attractive uh buy opportunity in in almonds because price has been low for three and a half years these crops tend to have Cycles where um you know price gets high all the Growers make money they over plant five or six years later those those Orchards come online and create too much Supply price Falls in a time like this where price is low nobody's planting uh people are ripping out or abandoning Orchards and so supplies falling and demand will keep growing and cause that to Boom again as it outstrips Supply so there's going to be moments like today where we want to be acquisitive and then there's going to be moments where prices are pretty high valuations are pretty high and and we're going to be you know probably not growing quite as much in those periods so I guess and you referred to examples earlier where a couple of firms who have kind of done this Playbook over decades there were two big buying opportunities where they were very inquisitive and their intervening years just kind of sat on their capital or didn't deploy more Capital yeah yeah and I think you know we see that you know certainly if you read like you know Berkshire hathway letters you're going to read all about that kind of stuff like you know um buying in the opportune moments that only come around once every 10 or 15 years and then even like in a we see that with the the family Farmers we really respect um built their businesses that way like the one I mentioned yeah and but if you had to guess just to give us a sense of ceiling or potential here what do you think that $350 million number is after this buying window like after you've gone through this inquisitive period yeah you know I don't know I think there's about 1.5 million Acres of almonds in California and you know maybe that's $50 billion of of assets so it's a big Market uh as I Shar like a lot of that um is not of the quality that we'd want and so it's a smaller portion that we'd want to buy but I do think this is a a big Market with a lot of opportunity and um it's something like you know we're excited to keep keep building a business around so I don't know um and it it's definitely hard to say um how the growth will play out because we do want to be very flexible and grow when it makes sense not grow when it doesn't but I do think it's a big Market um in almonds and pistachios and then probably you know some other crops that over time uh you know would make sense to use a similar model to to get into as well the um structure of ownership so how does H like what is your equity look like to whatever extent you can share and your co-founder and then and then the and then the managers who you kind of really want to see thinking like owners um over their farms and and you said that they probably would anyway but you've also given them Equity to to juice it further yeah yeah so um we our investors are limited partners in a limited partnership so we have a you know limited partnership that they U come into um that uh capital allows us to acquire the farms and uh if we do well and the assets appreciated in cash flow we earn uh 20% of the profits a carry type of model or promote and so that's where my Equity comes from we also um Grant 5% of the profits off the Farms to our team so like a private Equity Firm would have an option pool for its management team teams um that's the same concept so we have 5% of if a farm makes $100 $5 are going to go to the asset manager the farm manager some of the farm operators uh the accountant Who's involved with that farm and usually I'd say uh the asset manager and farm manager are going to be some of the bigger investors in their in their properties via that program and really feel uh a lot of ownership over how the how the farm does over time and what I see is a strong incentive to um you know go the extra mile uh make tough decisions on um you know things that are working or not working um a good example I always share is uh our big property in Arizona um you know I go down and visit occasionally I was driving back to to Indiana during covid where I'm from originally uh from California all the way through the night ended up in Kingman Arizona at like 6:00 a.m. on a Saturday um pulling the gate you know let myself in um but of course this is a strange car pulling onto the property and I'm been there two minutes and I see a dust cloud coming at me you know 50 miles an hour it's our foreman Jerry who for whatever reason was like monitoring the gate at 6: a.m. on Saturday excuse me can I help you guys like Jerry it's me so you know that stuff you know sort of typical employee is not going to do that 6 a.m. on Saturday come check on who's who's pulling into my operation but our team really thinks of it as their Farms not like my Farms are our investor farms and I think that mindset is just uh the whole ball game really I wonder if they feel that way I mean you've you've developed a culture to to kind of facilitate enable them to feel that way but I wonder if there's also something in the nature of land kind of presiding over land that lends itself to to somebody feeling like they're a guardian a custodian uh of of a particular bounded space of you know land you know what I mean I think that helps yeah I think that's part of it but I I really think like you know um we we happen to be in a business that is very tangible and I think that that helps but we just have a very special group of people that you know whether they had Equity or not would really treat it like it was their own and think about it like it was their own and you know do the hard things negotiate the extra little bit to to kind of save money and and uh Drive the the maximum performance that that we want and I don't know we're just really lucky I think so you had said maybe in the future you you look at other crops to do kind of a similar Playbook um and and again kind of Define yeah key elements of this Playbook um but but but actually abstract it out because so basically um an older an industry that maybe uh where a lot of the kind of mom and pop uh it's very fragmented a lot of Mom and Pops they're not necessarily using the best practices or the latest Technologies and yet there are there are operators out there who um could basically run the businesses better let's let's call it uh but those those operators don't have access to Capital to go buy their own so you're in the you're building a business around kind of marrying Capital with these um businesses that can be improved with the operators to run them you know so the obvious question is like you know I didn't I don't think I said the word farming in that description once could could this model I wonder so this is just me yeah you know spitballing could this model be applied to a bunch of different in Industries um and and maybe this this is what private Equity does and I just don't realize it but uh how do you how do you react well I certainly think it's the search ecosystem you know like I think um whether it's formal searches or more informal that I know is a big part of who listens to this podcast like I I think that is what the the search ecosystem is and you know it's sort of taking High Talent people and giving them the keys to to run uh a business that has good potential so I I think um you know we happen to be pretty focused on agriculture and see a lot of opportunity for that mindset in agriculture but a lot of the companies we look up to like I mentioned franchise businesses if you look at like Chick-fil-A franchises they're extremely selective like how they you know hire the right people to go open up a new Chick-fil-A and it's a bonanza when a new Chick-fil-A opens up and you know those are well run operations we look at um you know Alpine investors a private Equity Firm that's really done this model of uh buying smaller businesses uh but bringing in high Talent people to the senior levels of those businesses and and really focusing on the people side of of the you know value creation so I think you're right that it it definitely applies to lots of different things we happen to be focused on agriculture and and I think there is a lot of opportunity in agriculture for this kind of model but um yeah I think you're right it it is search and other other places as well well and I guess I guess I I often just come at this not from in the investor mindset or the private Equity Firm fund mindset but as just the the Searcher mindset the person who's going to buy the business and many of those the vast majority are see themselves as the owner operator of a single business and yes they may then more and more and build something larger but I I just I wonder if rather than people in the audience thinking about one buying a single HVAC business they think about kind of your playbook where they're they set out to buy 10 HVAC businesses in Virginia and they focus their energy on finding great managers of those businesses instead of themselves being the op owner operator of an individual business and again as I hear myself talk I guess yeah this is a Playbook that that kind of maybe traditional search investors are effectively doing although they're doing it across multiple Industries and and maybe other and maybe private Equity industry focused private Equity Funds are kind of that that is the Playbook so so maybe it's not quite as novel as I think yeah I don't know I mean I just definitely have found um the the people is the whole the whole ball game and when you get the right person in the right seat uh which is like a we use a system called EOS which I'm sure a lot of people in this community use um that's you know from Jim Collins or from EOS but we it's so real and you really feel that like click of somebody being like wow this is just working and so we spend a lot of time on that because just we find that it works I find it to be really motivating I think our team does too and um yeah we're just super focused on that because I think it you know really matters people in the audience for Searchers in the audience the idea of buying a single farm so not doing what Jack and goldleaf are doing where there's this you know hundreds of millions of dollars of capital deployed but buying that that one pistachio Farm um and improving it and bringing best practices to bear on it is that something that you think a Searcher should consider or do they need like the level of expertise the agon you know your agronomist and so on people have really been educated in this uh is that really is that really who should think about doing this because as you well know many Searchers do buy businesses that are highly technical HVAC business that stand in that I keep using those are very technical businesses and so Searchers who have no HVAC experience will buy them and make a success of them can the same thing be thought of here for like single Farm Acquisitions I think possibly I mean I think we definitely occasionally see like a younger a younger guy that manages to raise raise Capital around you know buying a a farming operation um and I think that's that's awesome one thing I talk about in one of our letters a year or two ago is this isn't a win or take all business like in Tech where you need to scale it to survive like um you know we canit our current size and and do quite well over time if we operate well and and have the right Farms um so I think there is opportunity there um I think we get little bits of advantage over time as we get a little bit bigger but it's not so substantial that you can't imagine you know owning a couple Hundred Acre Farm and doing well with it m mhm you do need some amount of scale but um you know it doesn't need to be our size to to work mhm and and to be clear though you would have to part you a Searcher would have to partner with you'd have to have your manager I mean if you ain't doing the farming see is like somebody that yeah that is looks like one of our farm managers that kind of bootstrapped a farming operation over time um that's what we tend to see is but not necessarily like somebody from HBS or GSB going in going and buying a buying a farm because you know you do need the uh farming and Agronomy expertise and that's it takes a long time to learn because you only get one crop a year so you only have like one feedback loop per year so I think that's why the the industry is it's so long duration because you don't get uh to learn quite as fast as you would maybe in in other businesses sure sure yeah that is a interesting challenge of of Agriculture but but Jack just to be clear why wouldn't why couldn't uh an entrepreneur buy a business and and have a farm manager that already has a farm manager they hire a farm manager and so they're the you know they're the Jack uh of this of that particular business I think they could and I think um I think it's it's definitely possible um it just takes you know it takes time to get um basically the uh that relationship going and it's some of some of the things of like why is this space not been institutionalized like the overlap of talent and capital and stuff so I think it's possible um what we've seen more of is couple cases of like uh more of a younger farmer that that gets into the business themselves finds the capital to do it great Jack well one last kind of big topic I want to hear more about is just the long-term like a few elements of being a long-term business first of all um kind of a technical question is there going to be a moment where you return the capital or to to your investors or what does that look like how do they think about the return turn on deploying a quarter billion dollars uh into something that's indefinite how like just how do they think about that yeah I mean I think um when we were buying these as individual farms eventually we would sell the farm you know and I think uh now pistachio Farm lasts for like 50 plus years almond Farm lasts 25 years so that could be quite long term but that's how we originally thought of it now that we have it as one business we really think of it as um building the business over time and uh creating off-ramps for our partners if if they want that I think a lot of our partners want the long duration compounding some of them want um you know a shorter duration than that and so I think the next phase of the business is really focused on raising to take advantage of the Almond cycle where it is uh coming out of that and I think there will be opportunities to you know recapitalize let people uh cash out if they they so choose and I just really think about this as like one of my companies at tpg where maybe a different uh firm a different owner owned it before we did they took it through one phase of the business we were taking it through the next and um I do think we're going to be with the business for a long time but the the partnership group might stay pretty consistent it might turn over a little bit as we you know raise money in um offer chances for for liquidity but um we're definitely thinking about the business long term and I think a lot of our investors think that way too but not uh not all are planning to be 25 year hold Jack when you were thinking about how you wanted to um kind of model this as long term uh or not one of the other uh businesses that you mentioned earlier in this interview uh if forgive me if I'm butchering it but was I guess it was Brandon what Brandon worked on before where he he did kind of um acquire a portfolio of uh farms for the Canadian fund do do I have that right yeah they uh planted um uh developed a bunch of orchards and then sold that to a Canadian pension yeah thank you and so you you must have considered that yourself s is is what you know you would you jack would go do how did you decide to do something that is going to require Decades of your life what did you like about kind of truly long-term um commitment as opposed to something like what Brandon did yeah I think um there's some like personal aspects of it and then some more like industry aspects of it like when we look around our industry at who's been successful is just a very long-term industry so we look at companies like Carill or drals that I mentioned and those businesses were built over many decades if not centuries I think Cargill uh you know was was founded in the mid 1800s and is you know still around today and and that's um the type of businesses we really look up to and and really what worked in agriculture this is not a a business where you can sort of buy turn around and flip like in in real estate and so um you know it just doesn't work and the businesses that have been successful um in our our space are are very long-term oriented and so you know that's something that is sort of just foundational about the the industry we're in I think I also just admire those businesses a lot and uh you know I think I personally enjoy building something for the sort of Act of building it like trying to make a great company out of nothing is is very inspiring to me and something that gives me a lot of energy so like building our great team building a great portfolio learning every year and improving every year and that stuff doesn't happen overnight it it's not like a quick Mastery kind of industry where you can just come in do something and and have a great result um maybe like Tech or something so for us like I I think um it is a long-term compounding type industry and and that's um something I found really motivating and I think matches with my personality and my um you know just like what gets me excited about coming to work every day so I think it's the industry but it's also also personal yeah yeah well I I I too I just think business that are Century businesses are so cool it's so neat and and so and you really think about gold leaf in those terms like you you aren't going to be around in a 100 years but you you hope and expect that gold leaf might I I hope that's what we're building is like that level of kind of strength and durability is um you know I hope it lasts Beyond me and um I hope I do this for a long time but I hope it it lasts Beyond me and um you know I think we're going to have lot lots of different things we learn and lots of different iterations of how we we operate but I hope that what we're building is is pretty lasting and uh that's definitely how we we approach uh growing the company and building it and just again kind of on working with investors when you're thinking about something so indefinite you know permanent Equity is phrase that you hear about a lot but but I you know I've I've I've heard some people also be kind of skeptical of it because permanent Equity they'll say is well that just means you know rather than seven years it means 15 years or rather than seven years it means 20 years so it's it's a longer time Horizon but it's not really permanent uh or indefinite do you have any thoughts about that that you can educate the audience on how to think about that yeah I mean I think we don't seek to have like no accountability from our from our partners and that like they're they're stuck and you know to nothing they can do about like I think sometimes the the permanent in equity thing is like aspiring to have uh things that aren't good for the business you know like we want what do you mean the well I just mean um you know I think we uh like that our investors uh ask questions and get involved and and um are helpful to us as we as we grow and I think um we are hoping to build uh an investor base that is long-term oriented but still um like us has a high ambition level and high bar for what we're for what we're building so I don't know I think um we don't necessarily think of our Equity as permanent uh we think of it as you know partners that um want to be along for the ride but we have to keep earning their their trust every day and and demonstrating good performance every day so that's like a you know everyday month year commitment and um we we try really hard to do right by them and do a good job for them um even if the the vehicle is set up to be longer term than that and and sort of the legal docks are set up to be longer term than that so I guess that's what I mean okay but you know I think like you know not to my my team's going to laugh at this because I always use like so many Brookshire hathway analogies but they talk about their investor base as like carefully crafted over many many years and you know they were really reluctant to do the B shares that they eventually did um you know they basically felt they had an awesome group of people that were their partners and they they didn't want to change that up because they'd spent a long long time um telling them what they were building getting people who are on board for that and there is that aspect of hey here's what we're doing are you signed up for that and trying to get that more perfect kind of match between who are your partners and and what are you trying to build is everybody on the same page so anyway I think it's a constant uh work in progress but it's something that we think about a lot to have the right type of partners for what we're trying to do yeah well as you guys grow and become more successful and and better at what you do and your your reputation uh precedes you I imagined kind of a flywheel will kick in with respect to your investors the same way it does with your access now to the best farms and your access to the best talent all that stuff kind of gets easier as your reputation grows you can you rather than you know you you can kind of become selective with with who you hire what you buy and then also whose capital you take so exactly yep exactly right jack what didn't we talk about that you wanted to did we miss anything you know I don't think so um I think uh no it's been it's been fun to kind of share the story talk about the different aspects that are similar and different from you know the the typical U business that's that's on your program and no it's been awesome to to be here so thanks you mentioned uh well this is where I'll ask how people should reach out or connect with you but you did mention an annual letter is that something the public can can get yeah I think we have it on our website um you know I I try to put together thoughts on know what we've learned uh each year and and share that out with our investors and other people we're pretty open book so we have lots of information on our website which is just gold leaf. a gf. a and uh you know whether you're interested in you know learning more coming to coming to work with us uh investing with us um all that information is uh on our website and um you know contact info there um to to reach out so always love meeting people interested in a and and uh trying to get more involved in in food production and sustainable food production and so people want to reach you directly is still the best way via the contact form of the website or or can they hit you up on LinkedIn yeah my emails yeah Jack gold leaf. and uh you know our website has a has a variety of contact uh details too but yeah feel free to reach out and I'll get you the right person great Jack McCarthy thank you very much sir what a fascinating uh Venture you're working here working on here thanks for having me thank you I hope you enjoyed that interview make sure you subscribe to the acquiring minds Channel below we are now publishing twice a week so tons of new interviews and stories to come stories that will help you along your own path to acquiring a business