Bill Kerr: Agriculture is ripe for a second green revolution, but what are the key benchmarks? Land use, energy and water inputs, food miles? What about worker conditions and community impact?

Welcome to the Managing the Future of Work podcast from Harvard Business School. I’m your host, Bill Kerr. I’m joined today by Jonathan Webb, Founder and CEO of AppHarvest, an ag tech company in Eastern Kentucky. Established in 2017, AppHarvest has ambitions on par with its monumental indoor farms. The firm has garnered widespread attention for its mission of revolutionizing indoor agriculture, increasing the domestic produce harvest, and boosting the Appalachian economy. We’ll talk about AppHarvest beginnings, its Dutch inspiration, and Webb’s approach to leadership and business partnerships. We’ll also discuss the company’s efforts to foster a modern agricultural workforce in Webb’s native Kentucky. Welcome to the podcast, Jonathan.

Jonathan Webb: Thank you for having me.

Kerr: Jonathan, you have spent your life devoted to bringing quality jobs to rural parts of Kentucky. Let’s sketch a little bit your home region, its needs, what you’re trying to fulfill there.

Webb: I grew up in Kentucky, went to public schools, the public university there. And much of that economy in the eastern part of the state was built on the coal industry. The U.S. today would not be where it’s at without low-cost, reliable electricity. I was a part of leaving Kentucky and building a career in renewable energy, built large solar projects around the U.S., and saw the collapse of the coal industry. And we, as a country, never really thought about the impacts that would have on the communities that frankly powered this country. So you have an incredibly talented workforce that had the rug pulled out from under them when the coal industry shut down. When AppHarvest, when we were starting, it was, okay, we’re going to solve this problem. It’s not just a U.S. problem, it’s a global problem. But where we want to solve it is a place that’s special to a lot of us. I’m from there. But there’s a lot of other reasons why we ended up picking Kentucky, and it has to do with rainfall, it has to do with access to distribution and being able to get to major markets in a day drive. But a lot of it has to do with the people. And at the end of the day, people drive organizations. We’ve built nearly 7 million to 8 million square feet of stuff in the middle of Covid, and I think that’s a testament to the region and a testament to the people of that region that helped carry us through the start of this business.

Kerr: Your hunger to help the people is something that is admirable and also an obvious resource that you’re going to be taking full opportunity of in this. It takes you a little bit of time, though, to settle on agriculture—indoor agriculture—as the key to this. So tell us a little bit about, you have finished university, you are going out, and you’re looking for something that you can bring back to the state to help catalyze this change.

Webb: Yeah. So I feel like I was in a pretty unique situation in 2008. You have the complete collapse of the coal industry, where I think Kentucky, we were doing maybe 140 million tons of coal annually, down to, I don’t know, maybe call it 30 million tons now, within a 10- to 12-year timeframe. I was seeing this decline. I actually got offered a job in coal sales to go work for a coal company selling coal. I did not elect to go that route but kept hearing about renewable energy and how it was taking off around the country, and had no background in it, no education in it, but doggedly just got into, how can I help project developers—whether that’s go scout land or just do all the nitty-gritty work of early-stage project development. And that complete meteoric rise of renewable energy and collapse of coal for me has been something that has really framed AppHarvest. When people talk about trends—and then you look at food. As an average observer, you just see, okay, well, water conditions aren’t great this year. The Colorado River is low, or maybe Lake Mead, Lake Powell are low. Our reservoirs in California are continuing to decline. We now import 70 percent of our fruits and vegetables from Mexico. So a lot of these headlines grabbed my attention. And for me, wanting to be a part of businesses that are at the core of root problems—so being in energy, a transformation from fossil fuels to renewables, and then looking at food—that for me was the “aha” of, “Wait a second!” This could be worse than what we’re talking about in energy, and we’re not doing anything about it. It’s par for the course. We’ve continued to farm and farm and farm year over year like we have for decades, and we haven’t radically shifted the industry forward. Kentucky ended up being the place we decided to start the business.

Kerr: And you’re going to take some inspiration from Europe. So how did you see the Netherlands and say, “They’re doing something right over there that Kentucky can learn from and, with modification, apply locally”?

Webb: Eighty percent of the water out West is used by agriculture; 20 percent is used by cities. And you break that out and, okay, you could shut down golf courses, shower once a week, all these other, don’t water your lawn. That’s fine. Maybe some of those things are good. Maybe others are a little questionable. But if you don’t tackle the 80 percent, it’s irrelevant. And we’re not talking about it. And we’re not talking about it because no politician in their right mind is going to take that on or they will not get reelected. I could put all of the Netherlands in Eastern Kentucky. They have the second most agricultural exports in the world, only behind the U.S. And they’re doing it with technology, they’re doing it with infrastructure, they’re doing it with precision agriculture. Is it rocket science? Yeah, maybe. In some ways, it’s high tech, but we’re not going to Mars. And the solutions are available today to solve these problems that we have. The question is, how do you pull those solutions into a business model, into a system that’s deeply transforming? And the U.S. is not a free market; it is the furthest thing from it. It’s a heavily subsidized trillion-dollar farm bill that will be worked on this year. How do you take a solution and plug it into a system and disrupt that? That’s what we’re working on. It’s very difficult. But for us, yes, we found the Dutch, the Netherlands, the way they’re doing it, the world premier leader that, if the world can simply catch up to where the Netherlands is at, we would solve much of our water and food problems overnight. So we can grow fruits and vegetables with 90 percent less water, 90 percent less water. Unfortunately, our politicians are unwilling to give tools and technology to our farmers, because we have a deeply entrenched system the way it’s currently laid out. And it’s going to take a lot of work and a lot of retooling. But I am cautiously optimistic. But the solutions are right in front of us.

Kerr: Well, we’re going to try to break down the business that you’ve been creating in Eastern Kentucky. And you’re going to take this inspiration from the Netherlands. You’re going to come back home. And in launching AppHarvest, you decide to go big, really big. Your indoor farm in Morehead covers 60 acres, which is among the largest buildings in the world. A lot of entrepreneurs are going to start small, refine, try to really think about how to perfect the model, and then scale it. And you’re, instead, going to come in a different tact. You’re going to start at scale and say, “We’re going to make course corrections as we need to.” And I’d like for you to maybe just start with that choice or decision.

Webb: Well, for me, it is how do we move the needle, not inch it, but dramatically? And whatever ends up happening, ends up happening. But we’re all in this thing. If Covid hasn’t taught us we’re all interconnected, I don’t know what will. So for me, it was, one, we’re going to take it big. Secondly, agriculture, there’s no way around it. It is a massive industry. The one thing we all do every single day is eat. We all eat. So you can’t disrupt it on the margin. And I was telling you about the political will–or the lack thereof–in the U.S. to move agriculture forward, which is very infuriating. We could have a 1960’s style, “We’re going to put a man on the moon” with agriculture, where we could incentivize the private sector and bring in capital and revolutionize farming and give tools to hardworking farmers. But we have no political will in D.C. to actually do that. In Kentucky, because we saw the decline of the coal industry, we have people that have seen the collapse of an industry and an uptick of another. And going big galvanized everybody. So we have political leaders on the left and on the right. People nationally and internationally, they know of Senator Mitch McConnell in Kentucky. They might think, okay, he’s a Republican. Well, what would he think of this? Very supportive. He and Elaine Chao have been to our farm. He’s been very supportive. We have on the other side a very pretty progressive Democrat governor, incredibly supportive. He’s been to all the farms. He called us in the middle of Covid asking, “How do we, as Kentucky, use our position to be a better player in the national stage on food security?” Who’s to say California is going to be the predominant agriculture leader? Why? Can somebody explain to me why California today—because in the 1880s, we built a railroad that could take leafy greens from California to New York? That is why. Do we need to do that today—when they don’t have water, when their celebrities are fighting over their bath water? We’re taking that water. We’re packaging it up into a fruit and vegetable, and we’re shipping it across the country. And so the bigger we went with this, the more people we could get. We got five university presidents. We got a governor. We got senators from both sides of the aisle. We’ve got mayors, church leaders, anyone and everyone that said, “Let’s grab the agriculture industry together.” And yes, we AppHarvest are one company that’s really important as part of that. But I think if I got hit by a bus or whatever, wherever the trajectory of AppHarvest is, the region has really taken this on as, we are going to create curriculums. We’re going to be in high schools. We’re going to teach young people the future of farming. And going big has really galvanized stakeholders well beyond our company for this larger mission of revolutionizing American farming. So why go big? I don’t know that there’s just a choice in agriculture, but we thought of it as a strategy that was very intentional. Go big, go fast, and galvanize everybody together.

Kerr: And you’re maintaining in this an enormous number of public and private partnerships. The government you just mentioned, the universities, the high schools—we’ll talk about them a little bit later. You have the equipment manufacturers from Europe that are helping out in this, and so forth. Anything else that you would just say was important for getting all of these stakeholders across the finish line?

Webb: Yeah, the mission, the purpose. People want to go home at night, and they want to talk about the good that their work is doing. And we found that. I had people coming up that said, “I’ve worked 30 years in the coal industry.” They were working heavy machinery on our construction sites. And it was like, “I’ve never gone home at night, and my family has never been proud, so to speak, of my work or excited. I’m going home now.” They’re reading news clippings. That energy, you can’t put in an Excel file, and you can’t really ... it’s hard to quantify. But when teams start to galvanize around a mission, game on, let’s go! It’s about food security. It’s about everybody deserves to have access to good, healthy food. And let’s build that stuff right here at home that can be a part of that solution. So everybody—from somebody sweeping our floors as a janitor—feels like they’re a part of the mission of, “Well, I’m going to reduce waste. We have 40 percent of food waste in the U.S. I’m going to be a part of reducing waste.” So every single person is a part of that mission. We can’t do this without universities, without high schools, without us and everybody feeling on that team-oriented mentality. But yeah, the “go-big” is the consequence of going after the mission.

Kerr: I’d like to have us spend a few minutes on the technology of the buildings, because I think it’s important. And I’m going to read you a quote from when we worked on the case study. You said, “If two facilities at AppHarvest look the same, year over year, I should be fired.” And so maybe you’re still with us, so I’m sure there’s been some change. But talk to us a little bit about the technology platform that you built in there. You’ve acquired robotics companies. Give us a sense of the state of the art of indoor agriculture.

Webb: Yeah. Everything is innovate-or-die right now. And for food and agriculture, we have to dramatically reduce our footprint. We have to use less land. We have to use less water. We need to get rid of agricultural waste. And so for us, it’s how do we best design that facility, knowing that technologies are constantly evolving behind us? We have four facilities that will be open this year, and all four look different. They’re pretty similar in a lot of ways, but as you zoom in on them, there’s variations inside those facilities, and that will continue to evolve as we pressure test, what is the best way at scale to grow a fruit and vegetable. For us, the real technology is nature. You look at nature around us. You look at a seed. We’re unlocking that potential inside of the plant. We’re using man-made technology to try to optimize for what nature provides us. So we use sunlight. We use rainwater. But then, what are we doing to create that artificial environment to the plant to get it to fruit the most, give us the most yield, be the most consistent? And that’s going to evolve, as all these technologies, whether it’s building materials with diffused glass or whether it’s software and AI or hardware and robotics. And that comes to cost savings, too. We run completely on recycled rainwater, so we don’t pay for water. We use sunlight and we use lighting. But the more sunlight we use, the less electricity we buy for our artificial lights. We use bees to pollinate our plants. We use integrated pest management pests to kill the bad pest. If we can create a scenario where you’re using all the good things nature has and supplementing with technology, that lowers our cost.

Kerr: One of the backdrops for the Eastern Kentucky region has been the decline of the coal industry, and part of that is due to automation and technology taking over large chunks of the work there. Do you encounter resistance, either at maybe worker level or at the politician level, about having so much technology in these farms?

Webb: No. For us, especially because, well, let’s frame it a little bit, zoom out. So we’re talking about an economy in Kentucky that doesn’t exist. We don’t produce fruits and vegetables at scale. So any job we add is a new job. And then, the layer on top of that is, as we build technology, as technology evolves, as manufacturers come in, people won’t just be doing, here’s the entry-level job you were doing today. Can you be building or maintenancing or be a part of the technology? The jobs will shift. Our team wants more technology, not the other way around. It’s like when the tractor was introduced in farming in the U.S. initially, people were incredibly startled. And then they realized you could just actually get on the tractor and drive it. So that’s the same thing with robotics. It’s the same thing with any technology that’s being implemented. Our team is eagerly wanting to use more technology, and I don’t think that’s a friction. We want to be an epicenter for agriculture technology and what the new wave of farming looks like. And our team is excited about that. I don’t think we see any friction there. And the political leaders, the same way.

Kerr: So Jonathan, where is AppHarvest in terms of its headcount?

Webb: As it stands right now, we have about 500 employees. About two years ago, we were at 20. And by the end of 2022, we’ll be at roughly 1,000 employees.

Kerr: And a feature of Kentucky’s geographic position, which hasn’t come up yet on this podcast, I think it’s 70 percent of the U.S. population is within a day’s drive of Kentucky. So you got lots of big cities and regions you can serve coming out of the base.

Webb: It’s why Amazon is building their largest Prime facility in the world in Northern Kentucky. I think they just opened the largest Prime facility in the world. And it’s because of that, the density to geography. I can get to Boston in less than a day drive or down to Tampa in a day drive and everywhere in between.

Kerr: I do want to open up one thing about skill development, which is a very big topic in our podcasts. And you made the rather remarkable move—and I still sometimes get pause when I think about this move—of spending $150,000 of your first $1.2 million in seed capital to help start training a workforce at a local high school. That seems remarkably prescient for where you’re going to go. It also seems like something that, when money is so scarce, to make that kind of investment, it has to be a gutsy call. So tell us about that and also where are you today in terms of the local talent supply chain?

Webb: At that time, as an early entrepreneur, I already had my credit cards maxed, my bank account drained. We had raised $1.2 million in seed funding, and we took over 10 percent of that to put into deploying technology for agriculture education in high schools. What we got from that was a signal that we are going to be a good community partner through thick and thin. At that time, we had designed a project to build on a reclaimed mine site in Pikeville, Kentucky. We found out we weren’t going to be able to build there. It was too difficult to engineer on. We’re on top of a mountain. We worked for a year to make it happen. We weren’t going to do it. So we’ve moved our first project from Pikeville to Morehead, Kentucky. At that time, that community had been incredibly supportive in so many ways—on engineering and thinking through how we would solve the problem to build. We opened our first high school education program there that has now catapulted into I think nearly 15 high schools across Eastern Kentucky. Our state is wanting to adopt it and take it countywide. If we’re not teaching young people that there is a possibility in some of these industries that are available, they’re not even going to pursue it. So for us, we’re losing our best and brightest in Kentucky to all these great cities—here, Boston, and many others. How do we keep them? Well, we have to show them that there are industries that are opening, and they can create pathways. So we’ve had, from the high school level to the university level, changing curriculums at universities in Kentucky to better think through the needs of indoor farming and creating a pathway for young people. But the early investment we made in that high school carried us in so many different ways. When we needed permits, we had a U.S. Army Corps of Engineer permit to build our first project in Morehead. I think UPS got it in two and a half or three years in Louisville. The average might be three years. We got it in 60 days. We had every community leader calling the United States Army Corps of Engineers. If you actually just go do the right thing, get face to face with community members, maybe put a little capital in the community, whether it’s schools or whatever, that aligns with what your business is, it came back to us in 500-fold. So the B Corp status and the benefit corporation thing, that all happened through just a byproduct of the way we operated. But I do question how we do business going forward. How can it be more efficient? How can we take our capital and string it out longer? And I think for us that high school program is a prime example of, yes, it was a risk early. We hadn’t even built our first facility yet. But we were going to need a lot of support to build that first facility. It could have taken us five years to build the Morehead project. We built the Morehead project in 18 months, and it’s because the community is around us, and it’s because we were in there way before we ever started building. Then by the time we needed the help, everybody was there ready to run through a brick wall for us.

Kerr: That’s amazing. You see a number of organizations trying to rethink credentialing. And with the work you’ve been doing, both in the high school curriculums, possibly going statewide in terms of implementing this stuff, have you contemplated opening up some AppHarvest credentials or stuff that would be more portable across employers?

Webb: Our state is working on that. We are a public company now, went public very fast, and I have to just focus on the blocking and tackling of operations. We need education leaders to be education leaders, and that’s where in Kentucky, we’re getting that. The University of Kentucky, Morehead State University, I’ll be tomorrow at the University of Pikeville with their president, all the way up to the state, with the head of education for the state of Kentucky. We’re working very hard to figure out how do we create these credentials, pathways, whatever you want to call them, that are universal. There’s a couple of good schools doing it right, but very small in numbers. How do we create that certificate, that if they come to us, great. Otherwise, maybe they go start their own company. They use their credential to go raise seed money to go build something on their own.

Kerr: I think I’m going to have to darken the mood maybe a little bit here. We earlier mentioned a couple of points. One of the environmental factors that favors Kentucky is the abundant rainfall. And unfortunately, that’s recently been catastrophic at some level. I think in July of this year, 2022, you had a foot of rainfall in one day in some parts of the state, and I believe about 40 people died. So maybe share with us a little bit about that flood and also the community responses around it.

Webb: It’s incredibly tragic. We, about 18 months ago, had another flood. The company went public February of 2021, and there was a flood in March of ’21. We hosted a telethon in Kentucky, raised I think $1.5 million that would go out immediately to help and just really quick response ways. And then 18 months later, we’re sitting here with a flood that’s even exponentially worse than that one. And these 100-year floods are happening every year. This flood that just happened, it could be a one in a 300-year flood. It’s tragic. And we have to, as leaders of organizations–whether it’s thought leaders at universities or government or companies—we have to be thinking about, we cannot continue to kick off the discussion of climate disruption and what is the real impact it is going to have on people around the world. We’re sitting in the middle of the U.S. in Kentucky, and we had almost 50 people pass away because of historic flooding. We have to think of ways to mitigate that. On the other side, we’ve been ringing the alarm on this. It’s the reason why AppHarvest is building in Kentucky. Climate change is not treating every area of the world the same. So the way the West in California and Arizona are becoming a just dry desert, Kentucky is getting wetter. We’ve had our wettest decade in state history. We’ve had three or four of our wettest years in the last 10 years. This rainfall is predictable. And so we know Kentucky is getting wetter. That’s why we built infrastructure there to collect rainwater to run our facilities. But again, I go back to, where is D.C. on this? We’re the largest economy in the world, and we have a situation in the U.S. where all the food we’re growing in the Southwest is being completely ravaged by drought. And then we have, where we’re at, record amounts of rainfall. And all it would take is a little bit of political will and the private sector leading with capital, and we could shift that production, and we could build infrastructure. And that infrastructure might help the communities to prevent flooding. So the more water we’re diverting or soaking up or using is water that wouldn’t be flooding a community. There’s no long-term planning in the U.S. It’s incredibly frustrating. Everybody runs for their two-year political cycles and their quarterly earning calls, and there’s no one that’s putting long-term planning in place.

Kerr: Well, I hope your calls for actions are certainly heard. And we just want to also compliment that AppHarvest is not only helping with jobs and places where jobs are needed, it’s also helping on the climate change front. And to be able to go after both those things in one venture is great. It’s remarkable. I do want to ask, what’s next for AppHarvest? What are the plans that you have? You, six, five years ago, got started and have already built four or five of the world’s largest buildings and want to continue. And as you think about what’s next, what are some of the constraints that are top of mind that you’re working to overcome?

Webb: For us, it’s the thesis of controlled environment agriculture, CEA. It’s really the third wave of sustainable infrastructure. So what’s next for us? The same way most energy will eventually come from renewable resources, most cars will be powered by electricity and be electric vehicles, we believe most fruits and vegetables will be grown at scale in a controlled environment. So what’s next for us? Bringing all that open-field production around the world indoors. So it’s going to take a little while, but we’re a couple of years in and we’ve been able to build 8 million square feet of stuff to grow those fruits and vegetables. And in the backdrop of climate disruption, we use right now in the world 70 percent to 80 percent of the fresh water globally—70 percent to 80 percent of the fresh water globally used is for agriculture. The U.N. is saying we need 50 percent to 70 percent more food by 2050. Do the math on the back of the envelope, and tell me how that works. So we’re going to dramatically increase ... we can’t. We have to use technology to use way less water, way less land, grow food in the middle of climate disruption, and build climate-resilient infrastructure for food production. That’s it. It’s that simple. I was in Qatar a couple of months ago. I never thought I would go to the Middle East. I’m a guy that grew up in Kentucky and went to Florida for vacation, never left the country. Was at the Bloomberg Economic Forum. The same discussions in Qatar are the same discussions we’re having in the U.S. about California and Arizona. How do we grow food with less water? How do we grow it year round? How do we do it? We can. We can! So what’s next for us? Get the job right, execute on the ground in Kentucky, do everything we can to try to position Kentucky on being a world leader in food production. But at some point, there needs to be other stakeholders that want to take a priority of … electric vehicles would be nowhere without policy in D.C. Renewable energy would be nowhere without policy in D.C. So you’ve heard me mention a few times on here, we need our political leaders to wake up and understand that in the U.S., if we are unable to produce our own food, we are hamstrung. If right now this war with Russia and Ukraine has not woken up, slapped us in the face on how important food security is, the U.S. should not be reliant on any other country for food, period. And we can use technology to do that. So do we want to incentivize private-sector capital to come in? Do we want to incentivize executives to build businesses around the problem? Or do we just want to stand on the sideline and hope that it all plays out? So for me, what are the challenges? The challenges are trying to get political leaders in the country to take food security seriously, the way we talk about energy security. But if they don’t show up, we’re going to do it either way. What we’re doing in Kentucky should be happening in every state times 10. Give farmers technology. Give them tools. Let them build infrastructure to grow food. Revolutionize the whole way we farm across the country. Just incentivize investors to show up. That 30 percent federal investment tax credit that was put in place around 2008 for renewable energy, you saw just an avalanche of renewable energy built across the country. The incentives that went in place for electric vehicles. Tesla was nothing in 2010. They were nothing. There were an ant. Ten years later, every major automotive company is moving toward electric vehicles. If we have something like that to incentivize investors to put money into solving the problems in farming in the U.S., in five to 10 years, you’ll see a dramatically different way in which we farm in the U.S. But if we don’t, then we will keep moving, and we’ll push uphill no matter what. But we’re not going to stop.

Kerr: Okay. As you’ve noted a couple of points, most of our listeners are business executives and business managers and so forth. One final question, a piece of advice that you would like to give them based upon your journey.

Webb: I would assume anyone listening to this podcast is in some type of position of moderate privilege. What can we do every day to use that privilege for good? And if we do, the support we will get in our organizations, in our communities, the capital flow that we’ll be able to raise money, the consumers that are going to want to support you. How can you do stuff for good to help solve some of these problems we’re all talking about? You flip on the news, you see it, and then you turn it off and go, “Well, that doesn’t affect me. I’m going to go to my job now.” So how do we better integrate the private sector to solve these problems? I’m not sitting around waiting for D.C. to solve these problems. It’d be great if they show up with a little policy, but the private sector can lead on all these problems. Obviously, entrepreneurs can, but even executives inside a big Fortune 100 and 500, you have so much power inside those organizations. How can you wield that power to shift the arc to solve some of these problems? And yes, it might be a gamble at times, but the upside benefit to that is potentially exponential.

Kerr: Jonathan Webb is the Founder and CEO of AppHarvest. Jonathan, thanks so much for joining us today.

Webb: Thank you.

Kerr: We hope you enjoy the Managing the Future of Work podcast. If you haven’t already, please subscribe and rate the show wherever you get your podcasts. You can find out more about the Managing the Future of Work Project at our website hbs.edu/managingthefutureofwork. While you’re there, sign up for our newsletter.