Technology is Helping Growers Get Vital Data For The First Time

Eli Duffy of Grownetics

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Matthew: Hi, I’m Matthew Kind. Every Monday look for a fresh new episode where I’ll take you behind the scenes and interview the insiders that are shaping the rapidly evolving cannabis industry. Learn more at www(dot)cannainsider(dot)com. That’s www(dot)cannainsider(dot)com. Are you an accredited investor looking to get access to the best cannabis investing opportunities? Join me at the next ArcView Group event. The ArcView Group is the premier angel investor network focused exclusively on the cannabis industry. There is simply no other place where you can find this quality and diversity of cannabis industry investment opportunities months or even years before the general public. If that’s not enough, you will also be networking with the top investors, entrepreneurs and thought leaders in the cannabis space. I have personally made many of my best connections and lifelong friendships at ArcView events. If you are an accredited investor and would like to join me as an ArcView member, please email me at feedback(at)cannainsider(dot)com to get started. Now here’s your program.

A very interesting and exciting thing happens when prohibition ends. Entrepreneurs with skill sets outside of the cannabis industry start to turn their sights on cannabis and bring their talents to a field that did not exist before. One such company is called Grownetics. Grownetics is currently in the CanopyBoulder Accelerator program here in Boulder, Colorado and they’re merging together their technology and cultivation in fascinating ways. I am pleased to welcome Eli Duffy, Co-Founder of Grownetics to CannaInsider today. Welcome Eli.

Eli: Hey Matt, great to be here. I’m very excited.

Matthew: Eli to give us a sense of geography can you tell us where you are today?

Eli: Yeah we’re in powerful Boulder, Colorado. I know that’s getting a lot of mentions now, and we’re actually at the Impact Hub which is a co-working space for socially impactful companies that actually want to improve the world. So yeah I’m recent here, I’m sitting here in Boulder and I know you’re from Boulder Matt so that’s where Grownetics is and we plan to be here for a while.

Matthew: Great. Eli before we jump into all the exciting things you’re doing at Grownetics give us a little background on yourself. How did you get into the cannabis industry?

Eli: Yeah so I graduated from university in May of 2013 and when I was in college I had an app company. I sold a few apps. I had a promotions company but nothing that really got me out of bed in the morning and nothing that had the ability to improve the world and I had been involved with cannabis for a while and I knew it had medicinal benefits. So I moved out here about a year and a half and I learned to grow. I was a grower and it’ll be two years in February and while I was growing in the garden I noticed a tremendous amount of inefficiencies. It was like they’d never even heard of technology. They thought it was the 1800’s. So I developed an app and then I met; really quickly I realized that the best way to solve this problem was through hardware; agricultural and inefficiencies.

So I met my great Co-Founder Vince who spent six years in China launching home automation systems. A big hardware guy and then our other Co-Founder joined the team; Nick and he’s a full stock developer. He’s been programming since the fourth grade. Actually started getting paid in grade six so he’s a savant-like and just to put this in context for your listeners Matt I met Vince eight months ago and I met Nick in July. So we’re extremely fast moving. We’re very passionate, very smart tech guys who love growing and I couldn’t be happier with this company and moving out here. So everyday we’re excited and we are extremely excited and can’t wait to see where Grownetics is in a year.

Matthew: Yeah that’s the great thing about living in a place that is kind of cramped and everybody’s shoved in together like Boulder or Denver. You bump into people in ways you can’t if you’re living in a spread out city. You meet people more incidentally which is something I love.

Eli: Yeah it’s great. Just the conversations in the coffee shops are extremely high level which to me coming from the East Coast near D.C. where everyone’s mean and stuck up it’s actually nice. People say thank you. You wouldn’t think so it’s good.

Matthew: Okay. Now let’s tell us; let’s dig into what is Grownetics exactly? How should we be thinking about this?

Eli: So to simplify it we’re the future of grow technology. We create integrated software and hardware tools for optimized cultivation. So anything in your garden that has to do with optimization, analytics, data we can do. So if your lights are too low we can say raise this a meter and you’d increase yields. We can also add nutrients with the press of a button. It’s analogous the self driving car Matt for the grow room. So we automate everything and then we use that data that we’re collecting every five seconds to actually improve the grow and optimize it. So it’s very advanced not only within the cannabis industry but also with agriculture in general and we’ve had a lot of agricultural players and companies reach out to us because they’ve been very impressed in the full automation and optimization in what we’re doing within our gardens.

Matthew: Now Middleware is a big part of Grownetics value proposition. However that term is somewhat esoteric and techy. For a layman that is not familiar with that term Middleware how should they be thinking about it and how can that help their cultivation facility?

Eli: Yeah Middleware in general allows hardware to communicate with software but from our point of view and for us specifically what’s really proprietary about what we’re doing is our Middleware can connect to any hardware and pull that data into our analytics and optimization engine. Meaning that we’re always going to be using the best agricultural sensors and hardware’s on the market; meaning we’re always going to be at the forefront of optimization within grows. So we are the platform for optimization rather than a hardware company producing specific little parts.

Matthew: Okay so you’re hardware agnostic in a sense?

Eli: Correct. We can connect to any hardware’s so you don’t have to redo your garden if you would like to use us. Now we do recommend and actually implement hardware and that’s the easiest for us if it’s a new grow just because we can do it the way we like but growers who I know are very picky. I deal with them every day and every grower is the best grower that’s the old joke. It’s hard to tell them not to use a certain system and what we do that is very proprietary with our Middleware and it’s advanced not only within agriculture but within technology is this ability to connect with any hardware and use that data to actually improve the grow itself.

Matthew: Okay so let’s say I’m a business owner looking at my Grownetics dashboard for the first time. What information is at their fingertips and what jumps out at them that they love to have?

Eli: Yeah so we’re really excited about this dashboard. When I was growing I would have an Excel sheet and it would say plant 57 or trey 57 rather and I’d count 1, 2, 3, 4, 5 until I got there. This is boring Matt and we don’t like this and we think growing should be fun and we do. I mean why not you only live once. So we want people excited about growing and there’s a lot of studies that show that people remember things visually and spatially much better than they do just data points. So we actually created a Sin City for your grow and I don’t know if you; I think you told me you’d played this Matt.

Matthew: Sure, sure I’ve gone to Sin City.

Eli: And many people have. Exactly so just as you would be geeking out and building your own city we want growers to be able to do that with their garden. So we have a drag and drop mapping system and any time after you create your garden that any plant needs any sort of maintenance the plant will actually buzz up on the screen and you can visually see where your garden is. Now another thing in terms of our dashboard that we’re doing and this is modeled off the very popular thermostat Nest is we’re showing growers real time how much money they’re saving, how much energy they’re saving, how much resources they’re cutting, and when we get the numbers in or when their harvest is done their overall quality in yields and how those have improved. So we want growers to get instant feedback in how their growth improving and that’s; because if you’re measuring things constantly and you see the results of using our system you’re not only going to be more engaged but it’s going to be much more beneficial to the end user.

Matthew: So Grownetics is proactively telling a cultivator this is what; this plant needs attention. This one hasn’t gotten this attention, this or that and it’s integrated with the environment of the grow space?

Eli: Correct and what’s really great about what we’re doing is we have; any plants have ranges. There’s a lot of things that growers measure to improve agriculture and improve their plants and when these things fall out of range it’s been scientifically shown that this isn’t the most beneficial for the plant. So nutrient levels for example or CO2 so what our system can do is we can either notify the grower that these ranges CO2, nutrient levels, PH whatever they are have fallen out of range or our system can actually automate itself so we can actually improve and put these metrics back in range. So you technically wouldn’t even have to be in the garden. You could be on some beach somewhere. I mean moving the plants from room to room we haven’t figured out yet but knowing our team it wouldn’t be too long before we have that as well.

Matthew: So in terms of ROI or return on investment how does Grownetics help cannabis growers. I mean you’re saying they’re telling them there’s certain data that’s coming in real time so you’re saying hey yields optimized 10% over last month or how does that work? How do they visually see how they’re improving?

Eli: Yeah so up top we have our metric system which shows how much labor hours, how much energy usage that we’ve cut based on our analytics and our optimization engine and we have a lot of numbers coming back from our first grow that are very, very beneficial in our favor and if you’d like those numbers in private you can contact me but in terms of actually releasing how much money growers are going to save we have our estimates and we have our first grow with the data coming in but we’ve chosen with a lot of backlash from other people to make these numbers public around February when we have three studies going because any good scientist knows that one case study is not enough. So we’re going to release these publicly in February but right now we do have some numbers coming back so if you’re interested in that please contact me directly and I can’t promise I’ll release them to you but.

Matthew: Okay.

Eli: Yeah. You Matt you can see them. You can see them Matt.

Matthew: Oh thank you.

Eli: Just not public. Yeah of course.

Matthew: A lot of cannabis growers are reasonably efficient and I see them making improvements from just being basement growers or garage growers or things like that in the past and they’re getting better but what are some simple ways that you can see someone going from let’s say a small basement grow to maybe a 5,000 square foot grower that can really have an impact? What kind of variables should they be looking at and dialing in?

Eli: So the most important thing I’ve found for growers which has nothing to do with Grownetics and its not beneficial at all for me to say this is the most important factor is the genetics. Where you’re getting your sources. So I could play basketball for the rest of my life. I could get done with this interview, go practice, and then practice tomorrow and I’m never going to make the NBA. That’s just the fact of it. I don’t have the genetics for it and it’s the same thing with cannabis. You need great genetics to have great yields but in terms of something that’s going to be the most immediate benefit for a grower is getting your nutrient schedule down right.

So there’s a lot of recommendations from a lot of good brands out there but that’s the easiest and quickest way to see an improvement if you’re not already doing that but when you talk to great growers they’ll tell you and this is some; what hippies have been saying for years is you actually have to pay attention to the plant by plant and give it care and listen to it. If it’s slumping you need to stake it so it stands up straight. So all these growers that I speak with on a weekly basis they always say that paying attention to the plant by plant is the best way.

If you can have that power and you have enough time and what Grownetics allows growers to do is to kind of ignore all the stuff that doesn’t really matter and the day to day things like checking nutrient levels yourself. We have machines do that and that way if you do have a problem in your grow and you want to actually dial into the plant by plant level Grownetics can help facilitate that.

Matthew: So when someone implements Grownetics right away they don’t have any data because it’s brand new but three or four months down the road after there’s some data that’s collected how does a cultivator look at the historical data versus the recent data and make intelligent insights that can help their grow?

Eli: So right now we are in a very exciting time at Grownetics and within the next six months we are going to implement and poise to implement machine learning which we already have the ability to do. So that’s what’s getting a lot of eyebrows raised and that’s really our vision within the next six months is to actually make effective machine learning where we’re going to have all this data; these proprietary optimization algorithms that we’re creating and we’re going to give this data to the machines where they’re going to make little adaptations that you and I can’t even see Matt and over time these machines; these machine learning algorithms are going to improve yields, they’re going to improve quality, they’re going to reduce energy, and this is on the forefront of technology.

Now to get back to your question in terms of before we get to that point is because we control all the hardware growers can run their own experiments from batch to batch or even room to room where you’re only testing a different nutrient or you’re only testing a different level of lights and because we control all the hardware we can set a baseline where we can have an effective A, B testing. So anybody who’s into software or who’s built websites before might be familiar with when you’re doing an A, B test you only change one variable and this was extremely difficult before Grownetics because there’s so many factors in the environment. But because we’re actually tracking everything and actually automating everything we can help growers test these theories that they have in a very scientific way and by abiding by the scientific method.

Matthew: This is really exciting because other industries they kind of have fiefdoms and rigid beliefs and there’s a whole industry around keeping things the same or just marginally improving things and one of the great things about the cannabis industry is that it’s just exploding in so many different directions and there’s not those; a lot of historical belief systems. There’s still some rigid belief systems around growing and so forth but there’s so many new entrepreneurs coming in and there’s not all this historical legacy sludge that grimes up everything. It’s just all fresh and new and people can try things and adopt them quickly. So this is really exciting to see.

Eli: Thank you Matt. Coming from you someone who is a big name in the industry interviewing a lot of companies that means a lot and I totally agree. I mean the cannabis industry itself has allowed Grownetics to become what it is because if you were; the reason why this system doesn’t exist is (a) because you need an extremely talented and passionate team to pull it off which we have and (b) is because if you were to increase yields by 5% of tomatoes ten years ago no one cares because the margins on tomatoes are so low but when cannabis growers are making so much money and so much depends on the quality of the cannabis and actually the yields themselves because they’re making so much more per gram than you would a tomato. This allows for the need and the value proposition to actually optimize and improve a grow to be prevalent in the market and that’s what we’re seeing.

Another great thing about the cannabis industry is the feedback loop. So when we go to; if you go to Whole Foods or you go to Trader Joe’s or you go to King Super’s and you buy a tomato you know that it’s organic or not and you can look at it but you don’t know the nutrient density, you don’t know every property but because the cannabis industry; the Marijuana Enforcement Division actually regulates that people need to test their batches we can see how much CBD’s were produced, how much THC was produced, and because growers are already required to do this legally we can actually show the final results of our system and how much we’ve improved quality in yields which would be much more difficult to do in a tomato grow where growers aren’t going to invest as much per acre as they would with Grownetics and with the cannabis system and actually make a lot more money using our system because of the price that cannabis is selling at.

Matthew: Yeah and I definitely thought prices would be down more than they are right now because there’s so much efficiency in cultivation but it’s between $2,200 and $3,000 a pound right now wholesale because of all these new requirements for testing on cannabis and there’s a; cannabis has to pass more rigid testing now in Colorado. I thought it would be much more affordable to buy in the wholesale market but it’s still quite high $2,200 to $3,000 so there’s still quite a bit of opportunity in the cannabis space in the short term and intermediate term here in Colorado with prices that high.

But switching gears to microclimate. So I want to talk about that a little bit. So everybody’s familiar with a microclimate. Maybe they walk over a mountain ridge and they see that the whole landscape has changed. The trees are greener, there’s more water, the altitude; just the whole variety of things are different in an environment,but a microclimate within a grow is not something we often hear about. What is that exactly and how do we try to make the microclimate come into the rest of the climate so it can be managed more easily?

Eli: Yeah so the technical answer to this question is we’re going to touch on; if I talk about our 3D sensing network but in terms of more of a broad view. So each grower has their flower room, they have their vegetative state room; their veg room, and some growers have multiple gardens. What we want to do is we don’t want to optimize for a room. We don’t want to optimize for a grow. We want to optimize at the plant by plant basis because why we’re building this is to grow the best food and medicines sustainably at scale and we believe that to really actually come through on this vision that we have we need to be as specific as possible and really show not if your rooms not functioning properly but if you’re plant isn’t functioning properly. So we are going to optimize in the plant by plant level.

Another thing that because we’re optimizing on such a small level and we have all our analytics and machine learning algorithms imagine you’re a grower and you have five different grows. If one grow or even one room is performing better our data and analytics system can read why that’s happening and actually in real time optimize your other grows even if they’re in a different state. That’s the power technology is giving this industry right now and that’s why we think it’s so, so, so important to get as specific as possible so we can use that information; that data we’re gathering and actually transfer that to these bigger grows.

It would be analogous Matt to if you’re in a big lecture hall and you have a professor and there’s 300 students or you have your own personal tutor. While you can still learn and still be a great student in a larger setting we feel that by optimizing at the plant by plant basis in these microclimates we can actually help the overall vision of this company and what we’re trying to do. If you’d like me to get into the actually 3D sensors.

Matthew: Yeah let’s talk about 3D sensing. What is 3D sensing?

Eli: So most of the agriculture automation stuff in agriculture the most they would do is tell you how much humidity is in this room, how much CO2’s in this room. We can actually detect if the humidity is lower on the lower part of the room closer to the floor and one closer to the ceiling and actually make sure that we regulate these levels; the same thing with CO2; same thing with practically anything. So we’re getting as specific as possible and we’re testing the environment at multiple levels within the room and within the grow which makes what we’re doing (a) more accurate, and (b) more efficient. Because we’re going to such a small level that we can actually adapt our data and adapt what we’re doing in the garden based on not just what a room is doing and not just what a plants doing but based on multiple levels of environment within the room and that’s what our 3D sensing lets us do.

Matthew: How is Grownetics different than the other cultivation technology solutions out there would you say?

Eli: So we are the first ever optimization platform and this goes back to what we were talking about with the older agriculture industries before cannabis. So there are other older agricultural companies that can dispense CO2 into the environment or add nutrients even with the touch of a button but what they’re not doing that we’re doing is collecting data extremely and rapidly. We’re collecting ten million data points a month from a single grow on average and using that data to actually improve and optimize the yield and optimize the quality and we’re really going to see the big benefits of that when we implement our machine learning algorithms which like I said we’re on the cusp of it.

So the ability of that like I said and our Middleware to connect to any hardware sets us apart based on our technology and I know this isn’t what most business people like to hear or what most people think when they think of competitive advantages but I got to tell you Matt I have the best co-founders anyone could ever ask for. Just the passion and the excitement every day and the people we talk to is just incredible. So our team I’m extremely confident in it and I love working with these guys; Vince and Nick but extremely important is our why.

We know that we want to build this company to actually improve the world and help it and grow better food and grow better medicine and we believe cannabis is an extremely powerful medicine. So that is the driving backbone of why we’ve grown so fast in just eight months we’re at the forefront of this industry in terms of grow optimization and why every day I just see the excitement with our team and we have a bunch of people every day hitting me up and if I haven’t responded to your emails forgive me of people who want to join our team; extremely talented people. So anybody out there you can have better technology, you can have a better business strategy, but if you don’t have your why and you don’t have that passion and that vigor that everybody on your team knows that they’re doing something great and they’ll go through the little bumps that are inevitable in a startup that’s going to make a company successful.

What we believe, what I believe and I think that’s what we have that all of these older agricultural companies can’t touch for days. So we’re really excited and aside from our tech that’s what we bring to the table.

Matthew: In terms of what it costs to get into Grownetics do you have any price points you could mention?

Eli: Yeah so currently we’re doing our early adopter program. I have one more spot left and these are grows at cost. I’m actually turning down grows right now and I don’t mean to offend anybody it’s just we’re growing very fast and we’re hiring right now and we’re going to wait for these two more but early adopters to be implemented but we have one and this will be at cost. So if any growers or dispensary owners are interested in joining with our early adopter program please contact me and like I said it’s going to be a drastically lower cost.

In terms of our pricing model in February we’re going to charge between $5,000 to $10,000 dollars a month depending on the size of the grow for our full system including hardware, including support which has been very minimal in our first grow and the reason we’re doing this Matt is because speaking with growers it’s a cash flow issue. People would way rather pay a monthly fee that’s more reasonable than a big upfront fee and we’re so confident in our system that we’re offering a 30 day money back guarantee as well when we launch this pricing model. So yeah between $5,000 to $10,000 dollars a month and we do everything.

Matthew: Eli in closing how can listeners learn more about Grownetics?

Eli: So our website is www.grownetics.co. That says .co not .com. So www.grownetics.co and if you guys would like to contact me personally Matt is it smart to give the email on this podcast?

Matthew: Sure if you like to take chances go ahead.

Eli: Okay I’ll do it. Please guys don’t make me regret this. Founders@grownetics.co is the email. So if you guys want to email us if you’re interested in joining the team. We’re growing very fast like I said. If you’re interested in other issues and also if you’re a grower that would like to get the most cutting edge advanced system on the market at a drastically low cost and this is a great opportunity if I can say Matt in our early adopter program for these smaller grows to actually be on par with these larger grows that have much more resources. So this we’d love to get a local company to really help them jump to the next level in terms of cultivation. But we’re open to anyone so if you’re interested in that please contact me.

Matthew: Now I know we have a lot of listeners in California and Nevada as well is this just local to Colorado for now?

Eli: So there’s a lot of factors. It’s more about working with early adopters. Now we do have a back log of orders in terms of February of these new grows coming on so we’re open to all that but in terms of our early adopter program it’s really on a case by case basis and like I said we’re getting a lot of demand right now. There’s a lot of things going on so I just want to make sure we don’t spread our resources to thin.

Matthew: Okay.

Eli: But Nevada and California are definitely places where we would like to have one early adopter just to have a foothold in that area and I love California and Nevada as well so it’s a good excuse for me to get down there.

Matthew: Okay. Well Eli thanks so much for coming on Canna Insider today. We really appreciate it.

Eli: Thank you Matt. I really appreciate it. I love your podcast and keep doing this man I love it.

Matthew: If you enjoyed the show today, please consider leaving us a review on iTunes, Stitcher or whatever app you might be using to listen to the show. Every five star review helps us to bring the best guests to you. Learn more at www(dot)cannainsider(dot)com/itunes. What are the five disruptive trends that will impact the cannabis industry in the next five years? Find out with your free report at www(dot)cannainsider(dot)com/trends. Have a suggestion for an awesome guest on www(dot)cannainsider(dot)com, simply send us an email at feedback(at)cannainsider(dot)com. We would love to hear from you.

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Matthew Kind discusses technology in the grow room with Eli Duffy, CEO of Grownetics.
Learn how to maximize yield and collect data to help your grow.

Important Update:
What are the five trends that will disrupt the cannabis market in the next five year?Find out with your free guide at: http://www.cannainsider.com/trends

Key Takeaways:
[2:20] – Eli talks about how he got into the cannabis industry
[4:33] – What is Grownetics
[5:43] – Eli explains what Middleware is
[7:13] – How business owners use the Grownetics dashboard
[10:20] – Eli talks about the ROI on Grownetics
[11:50] – What variables should growers look at when expanding a grow
[13:43] – How cultivators can look at past and present data to help their grow
[19:13] – Mitigating microclimates in a grow
[21:24] – What is 3D sensing?
[22:24] – How Grownetics helps yields
[24:54] – Grownetics price points
[26:15] – Contact details for Grownetics

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