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There's gonna be two types of companies. Those were graded AI, and those that went out of business because they weren't. How do we build a future that is human-centered? I run at El Cauuby, and on my podcast, Pioneers of AI, we answered that question and so many more.
As an AI scientist, entrepreneur, and investor, I know what it takes to build AI that works for everyone. Every week, I sit down with the pioneers shaping our future, and we take you behind the scenes of the AI that's transforming our lives. Find Pioneers of AI wherever you tune in. They knew they were in the ice region.
They were keeping their eyes peeled for ice. But unfortunately, the conditions of visibility that night were in fact so clear that it actually created a slight haze on the horizon. So the irony is, because they could see so far, and so clearly, it actually made, they saw the iceberg a few seconds later than they would normally have done. And of course, it was those few seconds that proved fatal for the Titanic.
That's Tim Molten, and he's telling us the story of the most famous shipwreck in modern times. As a Titanic expert, for the past 30 years, he can take us deep in a one of history's most lopsided battles. Titanic was 46,000 tons. She was the largest moving object made by man.
She could have a collision with another vessel and still survive. But of course, the Titanic's collision wasn't with another ship. The iceberg was 100 feet high. And that's above the surface of the water and 400 feet long.
And ice, as you know, is many times bigger underneath the water. So in fact, the iceberg probably weighed about one and a half million tons. Right, the iceberg. Icebergs are famous for two things.
One is this story. The other is at most other mass, exists below the water surface. We say that's just the tip of the iceberg when we mean there's a lot more than meets the eye. In that Titanic's case, there was a lot more actual iceberg than what met the eye.
And because of how light bent across the clear night sky, the iceberg itself was closer than it appeared. So once the ship got too close, a collision was inevitable. Titanic was made out of plates of steel that were riveted together. So rather like a patchwork quilt, whereas instead of using wool and cotton, you're actually using plates of steel bound together by steel rivets.
But that quilt of steel was doomed. No matter how big they had built the Titanic, it was never a match for the immovable ice. The thing is, when a ship, no matter how big the ship is, even if it's the largest moving object made by man. When it meets a giant iceberg in the dark, it's that elemental, awesome power of nature.
It's that weight of millions and millions of tons of the iceberg. And no matter how clever people are to make a strong ship, that ice is always going to win. The Titanic's visible scale, however grand, was no match for the hidden scale of the iceberg. And with companies, we too often focus on scale that's visible.
Massive campuses, thousands of workers, offices around the globe. But this familiar picture of growth isn't the only kind there is. There are less conspicuous ways to scale, giving your business not just raw size, but structural integrity. That's why I believe when it comes to growing your business, don't be afraid to be the iceberg.
Scaling beneath the surface gives you ballast to help keep you afloat. You gotta have incredible talent at every position. It's like a huge push. There are fires burning and you're going off.
You have such an idiot. And when you go back to, this is totally going to be amazing. There are so many easy ways. So I have no idea what it is.
Sorry, you made a mistake. But you have the time of life. This is where we have a free vegetable market. It's not just seen absolutely in the fall, 10 years later.
What's the thing to do is we have a bait just to try to do it. This is Masters of Scale. I'm Reid Hoffman, co-founder of LinkedIn, partner at Graylock, and your host. And I believe that when it comes to growing your business, don't be afraid to be the iceberg.
Scaling beneath the surface gives you ballast to help keep you afloat. I was asked recently whether startups should aim to scale horizontally first or vertically. That is, should you focus on making a broad market grab or start looking to control more of your supply chain? And the truth is, I don't believe in a hard and fast rule about which direction to grow.
Because the way you really want to grow is strategically. Icebergs, as it happens, aren't all one shape either. Some look like mountains, others more like wide, flat tables. They're little ones and big ones.
But no matter what the shape, the ice below an iceberg surface provides a very strategic function. Far from dragging it down, the ice below the surface is providing ballast and stability. Ballast gives a scaling company stability too. It can also provide opportunities to beat the competition.
I wanted to talk to Beth Ford about this because a CEO of the Heritage Grand Lando Lakes, Beth has worked hard to build that ballast and scale operation strategically. Often, far beneath the surface of what the average customer knows. She's been at the company since 2012 and CEO since 2018. Before that, she managed to apply chains for a host of scale businesses from Hepzico to Scholastic.
Now, when I say Lando Lakes, you probably think butter. And Beth says that's fine by her. We like to say we sneak up on people. We love that everybody loves our butter.
Thank you. Thank you. We love it too. But as well, it's a bigger, broader business.
There's kind of a B2B component and it's a B2C component. We have to think more broadly than just at the acre. Thinking broadly is one of Beth's great talents. It's a skill she's honed from childhood growing up in Sioux City, Iowa.
I'm number five of eight children. We were very much a working class family. Rock us as you can imagine. I share a room with my three sisters.
I get one drawer that's mine as I say. I have to have a place to put the hand me downs because that's what's happening in my world. In a home with eight kids, there weren't many spare resources to go around. But Beth remembers the day she learned she had a lot more than she thought.
My mother always would go to a family that was in need during Thanksgiving. And we'd go bring a meal. It's not like we had done sex work. But she was like, we're bringing them to Turkey and the Fixans.
And so we went to this one particular home and maybe I'm 11. And it was this apartment. And these kids are running around in their underwear. It's kind of not a great location.
And we laughed and I said to her, why are those kids running around there? She just didn't you see? Their one pair of clothing was on the radiator drying. And then she looked at me and she said, do you see how much you have been given?
Do you understand your responsibility? And I think that that was formative for me. Beth's mother showed her how to notice when there's more to a situation than meets the eye. Suddenly Beth looked beyond the unruly circumstances in front of her to see the deep need underneath.
She also saw how many resources she actually had and how important it was to make use of them. Beth went on to college and before long she was thinking about resources full time. Mobile oil recruited her as a supply chain trainee. She wasn't their typical candidate, but to Beth, the work made sense.
I was there for nine and a half years. I had, I don't know, eight or nine different jobs, in line operations, managing tanger bars, trucking facilities, manufacturing facilities. I did a little time on the trading floor. And what I learned about myself is I like the businesses that touch people, that make things, that do things.
As Beth approached her 10th year at the company, she discovered she was more interested in the problems of supply chains than she was in becoming an oil executive. Supply chains consist of many individual points of contact that, when strung together, become a massive unseen force delivering the products and services we use every day. A customer can hold a happy meal in their hand and never see how many steps it took to get there. And Beth wanted to understand every point along that line.
So she took a series of positions running supply chain operations. She went from Pepsi to Scholastic. And each new company, Beth learned about the business end to end looking for new opportunities to drive ahead of competitors by building verticality and stability. She wanted to make sure her company was the iceberg, not the Titanic.
And Lando Lakes first reached out to her to come aboard the company. Beth's first reaction was swift. And at first I was like, no. On the surface, heading to Minnesota to run operations for a butter company did not make sense.
I received this call when I come to Lando Lakes. I was living in New York City. My wife was running this fund of hedge funds. We had three children and I'm like, you know, we're good here.
I'm not an Iowa anymore. Jill of my spouse is from Peoria, Illinois. We're like, look at us, we're in New York City. Isn't this fun?
It's cold there in Minnesota. And I'm feeling like I'm in New York now. Minnesota's 10,000 lakes, while indeed very cold at times, aren't home to any icebergs. But when Beth is at Lando Lakes operations there, she was surprised by the company's scale beneath the surface.
They started talking about the cooperative model, the challenge of feeding a growing world population. My predecessor, Chris Polsinski, spent quite a bit of time talking about this mission of feeding a growing world population set to go to 9.5 billion by 2050 and the need to double production during that time. On Beth's visit, she learned about the massive scope of Lando Lakes mission, feeding the world and doing it as a cooperative. I've worked in small private businesses, big corporations, you name it.
And this was really fascinating to me because really it's a collective that works together for a common good. You may already have a couple of questions. Like I didn't know Lando Lakes was a co-op. What does a co-op at scale even look like?
You're not alone. Many people don't know much about this structure. Myself included. So I asked Beth all about it.
People who are not familiar with this, and by the way, this is one of the things I'm going to ask you a bunch of questions about because I'm really curious to learn myself. We don't have anything like it within Silicon Valley in the tech industry. This company was founded in the 1920s by upper Midwest area farmers who were trying to get their sweet cream butter into the population centers in the East. So they formed this cooperative.
How can we do that? We can work together to invest to get our product into the East and the marketplace. This cooperative was sort of a marketing alliance where Midwestern farmers could work together to sell butter to Eastern states. And then they were successful.
So then they formed a supply cooperative, which means all the feed and all of the crop items to grow their animal feed, they're being supported by this supply cooperative. And so they had a feed business and they had a crop supply business. What those farmers were doing was creating ballasts for the cooperative in a way that gave them both opportunity and protection. Their marketing collective gave them access to this new Eastern market, which they could only break into by working together.
Their supply collective showed up stability around their supply chain back home. A hundred years later, this is still more or less how Lando Lakes Cooperative works today going on a much, much larger scale. Now, they're a Fortune 500 company with annual sales that have around $14 billion. The financial structure is that we hold back some of the earnings and we invested in equity or invested in technology.
And the rest of it goes out as a dividend, a patronage. We work with small producers, Amish farmers, where we literally go to the mailbox to give them their paper check, right? And large producers in our job is to advantage all of them. What I see in this co-op model is a network ecosystem.
The same way Airbnb is a network of independent homeowners and renters or Etsy is a network of independent craft sellers. When configured the right way, network ecosystems add both opportunity and stability. They can help you vault a great height of success. And if something fails, the network can help absorb the blow.
In our Titanic versus iceberg metaphor, think of a network ecosystem as the many layers of ice keeping your iceberg stabilized in the churning sea. But cooperatives take this network model one step further. An Etsy seller or an Airbnb renter don't automatically own slices of the company. They would need to go buy stock for that.
But Orlando Lakes member farmer does own part of the company. Even if their own farm is small, they not only get a cash dividend, they have all the leverage of a scaled organization. They have access to scale purchasing power, scale advertising, and scale supply chain investment. Remember, scaling vertically works best when it's strategic.
Acquiring companies just to get bigger is generally poor strategy. It adds complexity without purpose. And suddenly, you look more like the Titanic, with its hull made up of steel panels that are vulnerable to impact. No matter how strong the steel or how big the hull, if the rivets holding them together, fail the boat sinks.
To help us understand how Orlando Lakes is scaling beneath the surface, Beth agreed to give us a tour of what's going down at the famous Butter brand. You know the dairy business, our butter business, our cheese business. We own cozy shag for Mount Creamery. We pound a butter, we manufacture, it generates two pounds of dairy powder.
So that's a commodity, it goes on the international market. We sell it to Nestle, Carina, animal nutrition. We feed all the zoo animal. We feed the Olympic horses.
That's a big research farm outside of St. We're much into R&D tied to our animal nutrition business. The key partner of tractors is the Nutriblin, which is vitamin business that goes into feeds. And we have our Windfield Tech Owls' business, which is actually our biggest business.
It's probably about six to seven billion dollars. If all of this is starting to sound a bit overwhelming, here's the simple version. Not only does Lando Lakes span a range of dairy products like butter and cheese, they also feed the cows that make the milk for butter and cheese, and they make the vitamins that enrich the feed that feeds the cows. And they gather the data that protects the seeds that grow the crops that make the feed, that feed the cows that make the milk that makes the butter and cheese.
Okay, let's go back to Beth. With a tech-enabled data-enabled business coupled with expertise, we have applied research plots, we have a research center in Wisconsin, agronomists that work with growers to optimize production. We say farmer to fork because we see the entire continuum. One thing that speaks well about the longevity of this continuum is that developed, pardon the pun, organically.
The farmers who started the Lando Lakes Cooperative saw that working together to shore up their supply chain made them stronger and harder to disrupt. This is the same philosophy that led to Lando Lakes staggering vertical depth. It's an ecosystem. What we're doing is using agronomic advice.
Technology, we're partnered with a local retailer to work with a grower to optimize the profitability of their production. And we do this by leveraging our data analytics. This data-driven approach to farming isn't actually new. Farmers have long made it a regular practice to test the soil, rotate crops, and check the weather.
These high-tech innovations echo what they've been doing all along. The farmers, their original environmentalists, the original entrepreneurs, and they're constantly investing their land so they can hand it to their next generation. Investing back into the land is growing beneath the surface, literally, because the quality of what you put in the ground determines the quality of what grows out of it. That's not just a metaphor.
It's Lando Lakes business model, and that model keeps expanding into a myriad of unexpected places. The very best founders I know are brilliance at building systems. They connect teams, they remove bottlenecks, and they eliminate single points of failure. And yet, when it comes to their own wealth, most are running a disconnected stack.
A tax accountant here and a state attorney there, a wealth manager who doesn't talk to either one of them. Creative Planning was built to fix exactly that. One integrated team of tax professionals, state planners, investment specialists, all coordinated by a dedicated wealth manager who sees your full financial picture and keeps every piece working together. Proactive tax efficiency, state strategy, investments, all under one roof.
Creative Planning were wealth works together. Learn more at creativeplanning.com slash masters of scale. Hey listeners, Bob here. If you listen to Rapid Response on Masters of Scale, you may be missing half the show because every Friday we release a second Rapid Response exclusively in the Rapid Response feed.
The guests and topics are just as compelling and timely from Ford CEO to NASA's administrator to the lessons from the Devil Wears product. It takes about 10 seconds to find just search Rapid Response wherever you listen to podcasts and hit follow to make sure you never miss an episode. I hope to see you there. We're back with Beth Ford of Lando Lakes.
If you're enjoying this episode, you can share it using the link Masterscale.com slash Beth Ford. And to hear my complete interview with Beth, become a member at Masterscale.com slash membership. There's so much more to this interview from breaking down Lando Lakes board structure to Beth's story about how Lando Lakes eats Olympic courses. You won't want to miss it.
We're talking with Beth about creating ballast by growing strategically beneath the surface. Whether you're looking to control more of your supply chain or to build up new offerings to gain competitive advantage, both pursuits can help you keep your business afloat. In other words, don't be the Titanic. Be the iceberg.
For the past 100 years, Lando Lakes has been using their cooperative structure to create both stability and opportunity. Lately, that opportunity has come in the form of data analytics. And in 2016, they use this data to launch a sustainability program. We have Trutera, our sustainable production business, to help a farmer improve the sustainable production of the dollar.
So what will it mean if they use cover crops? What happens if it's a variable rate application of fertilizers? And we developed a model, this Trutera Insight engine. It's got over a trillion data points.
So a farmer can look at that and say, how can I use this information to improve my processes, my practices, to improve sustainable production, improve carbon capture? The member farms that participate in the Trutera program both drive this data engine and benefit from it. We talked to one of those farmers about it. I think the first job I ever had on the farm was chicken chores.
Every kid had to go through it. And that was water, feed on, gather the eggs. That's Lucas Fricki. He's a co-op member and sixth generation farmer on his family's farm near Ulysses, Nebraska.
Our family has always been a part of a cooperative. I was clean up my grandparents' house that I now live in. We were actually able to find, if I remember, my great great grandpa on my grandma's side, his membership certificate from the co-op just a couple miles away. Lucas's farm has been using Lando Lake's Trutera Insight engine for a while now.
So he can explain what it is and how it digs for insights beneath the surface. Their Insight engine takes all of our farming practices, puts it in here. It's a lot of smart coating. And it helps us create a baseline and tells us how much CO2 are we sucking out and putting in the soil.
What's our erosion impact? Where can we try new practices to get even better? One example of a new practice this Insight engine suggested is for farmers to change how they till their soil. Because tilling soil or turning it up with a big machine to prepare the ground for planting actually releases carbon into the atmosphere.
Through the Trutera Insight engine, it said, hey, on this farm, why don't you try strip till? So instead of taking a disk or a plow turning that soil over or a disk going over the top and mulching up the plant material, it said you're going to go through your field with a specialized machine and you're going to have a width about six inches wide and we're going to till up just that one spot. We're going to do it in strips all across the field. So we're reducing our tillage.
We're creating a better environment for that plant. By creating a better environment for the plant, we have the opportunity to be a more productive plant at the same point. And so because of that, we sequestered more carbon in addition to our original practices. But changing your towing strategy means new farm equipment, new machines, that's an investment.
And Lucas needs to know how to make that investment pay off. So with that, Trutera is like, hey, you have this great data. We have a very interested party. In this case, Microsoft.
You may remember that back in January 2020, Microsoft made a massive pledge to be carbon negative by 2030 and by 2050 to have removed enough carbon to make up for all of its emissions and electric use since the company's founding in 1975. That's a pretty tall order. And many past carbon sequestration programs have over promised and under delivered. It's well and good if you're trying to scale like an iceberg.
But when the planet warms, icebergs melt, we'll let Beth take it from here. More recently, we've come out with our true carbon offer, perspire was Microsoft, where we're working on carbon capture with soil and improved practices from that generating a carbon credit as an offset. Many carbon credit programs create offsets by planting trees. But trees take years and years to mature.
Crops on the other hand grow fast. Here, one of the biggest lovers, the quickest ones, is an agriculture landmass and the ability for it to be a carbon sink. But we need the right incentive structure. Right now, it's an ability to monetize the activities they're taking and pushing for so that they can improve not only their soil health, but water quality, all of those things that are a gird against climate change.
With true carbon, Lando Lakes is building both security and opportunity into their organization. And their mission. It's the ballast that keeps their member farmers thriving and stable. At the end of the day, we made both money off of the crop and the better bushels and the better productivity.
And then all of a sudden, we got to participate in a new carbon market. But true carbon is, as they say, just the tip of the iceberg. They're also working with city and state governments to capture the methane that comes off dairy farms in particular. In Central Valley, we partnered with our owners and with the government in California who wanted methane reduction.
And so we went to help them invest and take loans against their equity in the business to put in place digesters that capture that methane, goes through a cleaning process. The government of California invested in a pipeline in a connection to a pipeline that clean energy is piped down to Los Angeles, can be used for city buses and things like that. Unless you actually work for Lando Lakes, I'm in a wager you didn't know Lando Lakes was capturing methane to help power LA's public transit system. It's yet another example of how the company is scaling beneath the surface.
It's kind of this virtuous circle. How do we think about the use of technology and the entrepreneurship of the American farmer and what is healthy for all of us in the environment and healthy for the nation protects us all food security, national security. And at the same time, make sure that that investment can be offset with some level of profitability because they need to make some money off of what they're doing to improve their operation. Lando Lakes has been patiently scaling systems around their business, which makes each part of their ecosystem more viable.
Investing in a carbon credit market is just one way to ensure that their member farmers stay in the game, which is important if we want to, well, keep eating. One and a half percent of the population is involved in agriculture. Okay, but everybody eats, all right? So if you care about eating, if you care about national security, and I think we all saw this during the pandemic and we can all agree, this should be an important area we should all pay attention to.
But even as Beth is trying to solve climate change, the global food supply and make life better for farmers, there's another insidious factor that threatens to melt all these gains away. If the tip of the iceberg is better, the part underneath is broadband. None of this will work if we don't have broadband access in rural America. Okay?
These are data-intensive models, technology and efficiency. This is like electricity and water forgiveness, and we need that investment in underserved communities and in rural America. This under-the-radar issue is one that Beth has been championing since becoming Lando Lakes CEO, and it's not just about getting farmers online. And then for farmers, lack access to broadband.
90 plus percent of farms are still family owned. There's been shutdowns of rural hospitals. There has been a lack of investment in roads and bridges and waterways, the educational outcomes, healthcare outcomes, 78 percent of counties in America that index as food insecure are in rural America. Part of taking control of your supply chain is trying to manage the ecosystem around the ecosystem of your business.
If it's unstable or unsustainable, your business is like an ill-fated iceberg drifting into warming waters. All of this is about investing for the future. Broadband can be a stabilizer there and is a stabilizer for a community. In terms of opportunity, job creation, in terms of access to healthcare, telemedicine, we have to think of this as the ecosystem it is.
Broadband access for rural communities is critical strategic ballast for every plan Lando Lakes has in the works. This isn't about let me write a check and then we're going to solve this, right? Rather, we're going to take some direct action, and so we started the American Connection Project. This project's mission is right in the name.
They're working to bring long-term digital inclusion to rural communities. The solutions are often scrappy. In some cases, it's as basic as standing up Wi-Fi in a parking lot. These have turned on 3,000 rural free Wi-Fi locations where you can pull up outside of a manufacturing plant, a bank, you can get access and you can finish your homework.
You can access a doctor. So, we're not about let me just advocate for policy. We want to take action right now, and that's what we did. In fact, this project is going to have direct impact on our farmer friend, Lucas Fricki.
Quick Beth Ford, shout out. I literally am going to get better internet from her in the next couple of months because of her American Connection Core Project. This interview that we're doing right now, I just had to drive 30 minutes so I could have a consistent Zoom connection to be able to talk with people. Lucas needs connectivity for more than just talking with nosy podcasters.
I'm in an area that uses irrigation. We need connectivity because I want to put soil moisture probes out my field. I have quite a distance between some of our farms. I think the longest one is about 25 some miles in between two fields and both are irrigated.
If I'm at one location, a storm could pass through, drop an inch of rain, all of a sudden my soil profile fills up and I'm running water. With better connectivity, Lucas could shut down his irrigation pivot remotely when it rains. That's the big, wide airplane-looking contraption that spins in a circle, spraying gallons and gallons of water onto a crop field. What does that do?
I reduce erosion so my pivot isn't running out there running water out because now that soil surface is full. I don't need to be using any more carbon in the end. We save environmentally, we save cost-wise and we save my time. That's where we need reliable connectivity out here and we need it a little bit quicker than what most people think.
It's a wild ride between butter and broadband, isn't it? But you can't sustain one without building the other. No matter what your industry, you're not obligated to scale just vertically or just horizontally. You need to scale strategically in a way that keeps you able to survive a head-on collision with the competition and able to protect the ecosystem around you.
I'm such a passionate advocate for this because it is in all of our best interests. We have a shared destiny, whether you're in rural or urban areas and it feels like we forget this. Entrepreneurship often feels like Titanic vs. iceberg.
Most of the time we strive to be the iceberg and sometimes you can't help but feel like the Titanic, sereneing towards your obstacle just a little too late. But the more ballast you give yourself, the better your chances for staying afloat. I'm Reid Hoffman, thanks for listening. Master of scale is a wake-up.
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