The following interview is a conversation we had with Patrick Henry, Co-Founder and CEO of GroGuru, on our podcast Category Visionaries. You can view the full episode here: $6 Million Raised to Build the Future of Water Management.
Patrick Henry
Thanks for having me, Brett, really appreciate it.
Brett
Not a problem. I’m super excited for our conversation, and I’d love to begin with a quick summary of who you are and a bit more about your background.
Patrick Henry
Yeah, I mean, that could take the entire episode. I’m a serial entrepreneur. I have undergrad in engineering and MBA. I went to Georgia Tech undergrad and USC from MBA. I grew up in the midwest, in St. Louis, Missouri, and out of grad school. I worked in Silicon Valley for about ten years for some of the bigger tech companies and started running companies back in 2001. Grow Guru is my fourth technology startup, and I also had my own kind of small consulting advisory business between two of the companies. Had multiple exits, took a company public in 2007, ran as a public company for seven years. I eventually drove it to a $1.2 billion valuation for about three nanoseconds, and it was a good exit for a lot of people.
Patrick Henry
And joined Growguru in 2018, was initially angel investor in the company, kind of supporting the two original co founders. And actually they invited me on as kind of the third co founder once we kind of got the idea fully baked and the technology kind of started on the right direction. So it’s all about water management and helping the planet. So excited with what we’re doing right now.
Brett
A few things you mentioned there that I’d love to double click on. So you mentioned a tech company there in 2001. It looks like that was Lincom wireless. Back to 2001. I also saw that was in September. So that’s 911. What was that like?
Patrick Henry
Yeah, it was interesting. Lincom wireless was backed by a large defense contractor called the Titan Corporation. So they had decided to incubate some commercial businesses outside of the defense sector. They’re trying to diversify, and were doing Wi Fi for video transmission. So it was kind of a specialized version of Wi Fi with built in quality of service. And after 911, they stayed supportive for a while, and then kind of in 2002, they decided to get out of all of their commercial businesses and just focus on defense, because obviously that was a big opportunity for them. So they ended up shutting that company down about a year after I joined, even though were making pretty decent progress.
Patrick Henry
So, you know, things can sometimes happen outside your control, as you know, in the startup world, but met some great people there, and were on the track, and I kind of cut my teeth running a company, even though I been kind of number two, number three position in a company up in Silicon Valley. So it was a good experience nonetheless.
Brett
What about the company you ipo ed? What was that experience like? And the reason I ask, I think every founder, every entrepreneur dreams of that day where they get to take their company public. What did you learn from that entire experience and what was it like?
Patrick Henry
Yeah, well, the first thing for the founders and management teams out there, an IPO is an exit, but not for you. So it’s an exit for the venture capitalists and the early investors in the company. But I remember about ten years into my time in tropic communications, so we had been public for kind of weathered through the downturn. We’d been public for like four years, and I sold like 20% of my stock, and people completely freaked out. This is after being there ten years, so kind of ridiculous. But at any rate, yeah, I mean, first thing is, I don’t waste that. I think an exit selling a company, either private equity or to a strategic buyer, is more of an exit for founders.
Patrick Henry
But yeah, it was definitely a dream of mine, and I turned out to be incredibly challenging, running a public company for seven years, whether through the downturn. So basically, were one of the last tech companies to go public in 2007, just as the subprime meltdown was occurring. And it was actually a busted IPO, which means the bankers told us they weren’t going to be able to take us public. So basically theres a whole lot of stories, all this kind of cut to the chase on the big one. So it was like December 7, 2007, we had been on the IPO road show for about two and a half weeks. We were driving the big Cadillac Escalade in New York City, ready to take the company public, and we got a call from our bankers saying that it was a busted IPO.
Patrick Henry
They weren’t able to oversubscribe sufficiently. Typically, you want to sell about ten times as much stock as you have to sell an oversubscribed market, because a lot of people trade the first day. So you need to have enough demand out there that you can hold up the stock price and actually have it go up. And that was not the case. So we are marketing our deal in the nine to $11 price range, trying to raise $100 million at the midpoint. And I wasnt going to take no for answer. So I talked to my CFO. We had six bankers representing us, three smaller banks and then a couple of bigger banks. And I talked to the bigger banks and our analysts there, and my CFO called the smaller banks, kind of what they were hearing from prospective buyers of the stock.
Patrick Henry
These are mutual funds, hedge funds, etcetera. And we found out that there was appetite for our deal more in the six to $8 price range, but we sold less stocks, so tried to raise maybe like 50 or $60 million. So the bankers didnt want to do it. My board was supportive of it. We had a big meeting to discuss it. Finally, one of the older Krusty bankers was like, were going to get this deal done. So the next day, were at the credit swiss office in New York City at top floor, smiling and dialing for dollars. Federated Kaufman came in and fidelity came in, and we got the company public, which was extremely fortunate for us, because the next year and a half was just a total disaster from a market standpoint.
Patrick Henry
Many companies didn’t survive, but were able to survive and then eventually thrive as a company because of that.
Brett
I also see that you completed six acquisitions there. What did you learn about acquisitions throughout those six deals?
Patrick Henry
Most of them don’t work out, so you better make sure that they’re small. If you do something this big, I think it’s really important that you’re not just buying technology or you’re kind of blending two cultures. I was fortunate that the bigger one that we did two big ones. The first one we did prior to going public, and it was a company called RF magic. And the co-founders there were actually involved with my co founders at Entropic. So they had kind of a common history. It was a San Diego based company. They had a very complimentary product line. So there was a good kind of mix of core competencies, kind of like putting the band back together. So that one worked out incredibly well. They had kind of a high gross margin, low volume business.
Patrick Henry
We had kind of a bigger volume, medium gross margin business. And on a blended basis, it kind of diversified out. It looked like a really good company. And I think that scale was essential for us to be a successful public company while we got kind of the bigger business, really cranking another one that we did, which later in my tenure there, they had a system on a chip business for digital set top boxes, and there had been a big shakeout. There used to be like, I dont know, 15 or 20 companies doing those types of system on the chip products, and there were like three players left standing, Broadcom, SGS, Thompson, which they now call StMicro, and this business that was part of Conexa, which eventually became part of Trident. We actually ended up buying that business out of bankruptcy.
Patrick Henry
And it was a real challenge. I mean, it was just, you know, we had some significant business. I wouldn’t have done it if I didn’t get major support from our two of our big end customers, DirecTV and Comcast, to do the deal. So we had some baked in demand for it. But it’s just a really tough thing to take a business that was already struggling and try to turn it around while you’ve got another business that you’re running, unless that other business is just a cash cow throwing up tons of money. So that was kind of a good learning experience from that. The other ones worked out either okay or not in a great way, but they were small, so it wasn’t like a big deal relative to the overall size of the company.
Patrick Henry
And it allowed us to take some risk and get some complimentary technology, get some complimentary patents at a minimum, and also get some really capable people onto the team that ended up helping us in other areas.
Brett
Well, what you said at the start of the podcast is definitely true. We could spend the whole podcast talking about your background, and there’s so much that I want to unpack, but I do want to make sure that we leave plenty of time to get into everything that you’re building today. So let’s switch gears at a high level. What does Groguru do?
Patrick Henry
Yeah, Grogu is all about strategic water management for commercial farmers. We help farmers make more money by increasing crop yield and more efficiently using water and other scarce resources in a more sustainable way. So it’s a technology where we bury multiple soil sensors in the ground at the root zone of the crop, and we do continuous soil monitoring at the root zone, which helps us to not only monitor kind of the process, control the crop during the growing season, but the soil for multiple years, even when there’s not crop in the ground. So really is a very important technology for getting kind of the maximum productivity out of a crop. Our big differentiators are that we are the only company on the planet that has a permitted install solution for annual field crops like corn and soybeans.
Patrick Henry
And that’s 85% of the irrigated acreage in the US market and the vast majority of rainfly aggregate in the US and worldwide. So it’s a very important technology for getting productivity and also for more efficiently using water and fertilizer and energy and labor in a more sustainable way. So it’s very important technology. The other kind of key differentiator we have is the recommendation engine that sits in the cloud. And that’s really all about kind of the marriage of crop science, which is called agronomy and data science. So basically, we built artificial intelligence, machine learning algorithms in the cloud based on that combination. And the combination of that with the continuous soil monitoring really provides a great set of insights for farmers to be more productive.
Patrick Henry
And ultimately, it’s kind of the precursor for irrigation, automation, and even automation within kind of the broader set of crops, even rain fed crops.
Brett
What was it about this problem, this solution and this company that made you say, yep, that’s it, I’m going to go spend the next, you know, 510 or however many years of your life building?
Patrick Henry
Yeah, I mean, I’ve done some really cool, interesting things in my career, most of them in communications and consumer electronics. I actually, they got funny stories. I was nominated for entrepreneur of the year three times. Earth some young entrepreneur of the year three times. And virtue was that of the emerging category. So I was competing against a bunch of other companies that really didn’t do what we did. And there was this guy that I was competing against. We were doing entropic communications are basically helping people watch more television, which, not to say that’s not important, but this guy had a product that instead of getting like a hypodermic needle shot in your eye, you use eye drops and like, dude, you’re going to win this second. I’m going to have a chance against you.
Patrick Henry
So the thing with Groguru, it’s really important for the planet. There’s nothing more strategic than having enough fresh water to drink and irrigate our crops and enough nutritious food to heat to feed a growing population. So it’s very important for the planet from a food and water standpoint, and just, you don’t want to destroy the planet in the process of the sustainability part of it’s also critically important. So it’s kind of doing something that’s really important for the planet. In addition to something that’s really cool, that I think we can build a very big company that’s very exciting.
Brett
This show is brought to you by Frontlines Media podcast production studio that helps b two b founders launch, manage and grow their own podcast. Now, if you’re a founder, you may be thinking, I don’t have time to host a podcast. I’ve got a company to build. Well, that’s exactly what we built our service to do. You show up and host and we handle literally everything else. To set up a call to discuss launching your own podcast, visit Frontlines IO slash podcast. Now back today’s episode. When you say commercial farmers, can you paint a picture for us of what that means? A lot of the founders that are listening in, a lot of the guests that we brought on, their cybersecurity, their it, their dev tools, they won’t even know what a commercial farm is, most likely. So what is that?
Brett
How do you define that? Is that, you know, based on acreage or what is it?
Patrick Henry
Yeah. So a commercial farmer is somebody that grows food not for their own consumption, but for public consumption. And the vast majority of them that are in what we call broad acre row crops, field crops, they’re pretty big farms. But in the US, there’s well over a million farms and most of them are multi generational family farmers. So it’s not just big corporations. I mean, there can be multi generational family farmers that have 5000, 10,025, 40,000 acre farms that are very significant customers. But fundamentally, it’s somebody that doesn’t just have like a garden, that they’re growing stuff for their own consumption, but they’re growing stuff for sale to the public. Either they’re growing food to feed animals, that eventually feed humans, or they’re growing food to feed humans.
Brett
What’s the state of their business today? If you were just to try to summarize what it’s like for a commercial.
Patrick Henry
Farmer right now, farming is tough. I mean, that’s a tough business. You know, it’s very challenging. It’s a global business. It’s very sophisticated. So farmers, you know, like most of us, they don’t have enough time to get done everything that they want to get done. So any solution that you provide to them has to either save them time or not create more headaches. So it’s got to be easy to use, easy to sell, easy to implement, highly reliable, very rapid payback period, and a high roi, high return on investment. So those are kind of how they make their decisions, but they’re not. I guess the common conception, you know, is this haysy person out there, but these are very sophisticated business people that are dealing in a highly complex global market environment. And the ones that are good, they’re really good.
Brett
We had another founder on in the ag tech space, and I think his answer to that is, it was bullshit. This idea that, like, it’s, oh, it’s farmer John. And yeah, they’re not familiar with technology. He’s like, I’ve never seen a buyer group that’s more motivated and willing and ready to try any new technology that can help them be more successful and be more profitable. Sounds like that’s been the case for you as well.
Patrick Henry
Absolutely. I mean, they look at return on investment and they look at ease of use and reliability. So any system that they use this in agriculture technology or an ag tech product, in order for them to use it, they got to trust it. For them to trust it has to be highly reliable, and there has to be a trusted advisory network that stands behind it. So even if you have something that just kind of, it’s an app on your phone and it works 99% of the time, the percentage of the time that it doesn’t, they need somebody that they can call and that person has to answer them. And these are important decisions they’re making based on this. So having the trusted advisory network is also critically important to providing a solution in this market space.
Brett
What else have you done to really build trust and credibility with commercial farmers?
Patrick Henry
A lot of it is who weve selected to be our channel partners, our market channel partners. So we look within region and we look for people that really have significant market domain expertise and relationships within that market. So it kind of jump starts the trust. So youre basically leveraging off the trust that those folks have built. Now you still have to build it with them. So a lot of them have looked at a lot of different technologies. So some of the people on my team, especially our head of sales and our chief agronomist, are people that have been in this agriculture game, specifically in the United States and specifically in the midwest for over a decade. So they’ve got significant relationships. They’re known entities within that market. And building those relationships with our trusted advisory network and our dealer network has been very important.
Patrick Henry
The other piece of it is building the right strategic partnerships, because you can’t do it all yourself. Even Cisco didn’t do it all themselves. They had partners. And having the right partners that have domain expertise and really core competencies in key areas that you don’t becomes very important to build complete system solutions. So thats something else we’ve really focused on.
Brett
Are there any numbers or metrics that you can share that highlight some of the growth that you’re seeing today?
Patrick Henry
Steven yeah, I mean, we had a struggle, like many companies through the downturn, through the pandemic, and kind of the subsequent kind of inflationary period and stuff like that. So really within the last year, we started growing at a more rapid clip again, and we changed our business model last year. We always had the intent to sell hardware as a service, kind of the hardware and software combined at a single subscription price. But as were building the trust and the relationship with the farmers, we initially sold the hardware, and then we had annual software subscription. So it’s really been only in the last, late last year were able to switch to hardware as a service. At that point, we had five years, five growing seasons, as they call it, of data. The solution works the way farmers expected it to.
Patrick Henry
So at that point, they’re willing to make more long term commitments. So that also moves all of our revenue to recurring revenue, as opposed to kind of one time hardware sales plus a software subscription. So our revenue this year, we’re expecting it to over four x versus last year, but our recurring revenue or annual recurring revenue, well, more than ten x. So in order of magnitude more annual recurring revenue in 2024 versus 2023. And we’ve got tremendous momentum already in the spring. We’ve built our dealer network, we’ve built these trusted advisor relationships, and we’re really cranking right now. It’s exciting time for us.
Brett
What would you say has been the most important decision that you’ve made to.
Patrick Henry
Date in my life or in this company in Groguru? I think emphasizing, when I first got involved with the company, were selling a little bit more into perennial crops in California. And you get so much noise around water issues in California, especially with the tech industry kind of center of gravity and Silicon Valley, and you could miss the bigger market opportunity, which is rolling in the midwest, where they also have significant water issues and portions of that market. And it’s a much bigger market. And our solution has a much more significant competitive advantage in those crop types and that geography.
Patrick Henry
So really making the decision to emphasize and focus on what we call the western corn belt, the Mississippi Delta, and we still do business in California, and we still have a potato business, but most of our focus is really today around growing that business in the midwest.
Brett
Trey, what have you learned about fundraising? I guess not just throughout this journey with Growguru. But in general, if we look at all of the funds you’ve ever raised, all the fundraising you’ve done, what would you say would be the number one piece of advice that you’d give to a founder whos looking to go out and raise money?
Patrick Henry
Trey yeah, thats an interesting question, because i’ve raised, I don’t know, couple hundred million dollars in equity financing for my companies. But the easiest money to raise is the more money you’re raising, the easier it is. The easiest money I raised was doing $100 million secondary financing for entropic communication. I didn’t have to go on the road. I just made a few phone calls and they mailed it in. But raising smaller amounts of money is difficult. And it’s gotten even more difficult over time. If you look back in kind of early days of entropic, so like 2003 through 2005, before they took the company public, the landscape of venture capital was much different. Back then. The big VC’s on Sandhill Road, Silicon Valley, you would go talk to 30 or 40 of them. Most of them would say no, but eventually get some money.
Patrick Henry
And they were willing to lean in with early stage companies, do a seed financing that they roll into the Series A. Those days are over. Most of those funds up there now, these mega, billion dollar, multi billion dollar funds, they have to write 30, 5000 million dollar checks to be able to move the needle on their fund. And thats not early stage investing, thats growth stage investing. Its actually gross stage investing in things you expect to be unicorns and super unicorns. So its just a completely different environment. And thats provided this funding gap for early stage companies. And Silicon Valley is kind of partially filled with angels and super angels. But even with Groguru, we’ve had much larger and much more significant over a period of time, angel based rounds before. We did our first institutional round of financing.
Patrick Henry
We just did our first institutional round of financing last year. And it wasn’t Silicon Valley guys. It was one of them has a Silicon Valley presence, but it was primarily led by an Orange county based venture capital firm that does early stage, you know, seed stage investing. So its one of those things where you got to have to grind it out more with smaller check sizes, with angels. A lot of strategics wont invest until theres a financial lead or the Series A. So you have to have a strong network of angel investors and you have to get involved in technology incubator programs to get your visibility up. We did a couple rounds of equity crowdfunding during the downturn because there wasn’t any money available from private investors or from venture capital.
Patrick Henry
So you got to be flexible, you got to be creative, and you got to be willing to just grind it out, I guess is the best way I would put it.
Brett
Trey, lets imagine that a founder comes to you and they say, I want to build technology. I want to sell to commercial farmers. Based on everything you’ve learned so far, what would be the number one piece of advice that you’d give them?
Patrick Henry
I always recommend against anybody starting a company, and they’ve got to fight me to try to start it because it’s so hard. And most people, they think of the glamor of entrepreneurship, and it’s just hard. I mean, it’s very difficult to build something out of nothing. And there’s a lot of low points. And you’ve got to have a lot of resilience and perseverance and really believe in what you’re doing and have agility and flexibility and be willing to adjust, adjust all the time. You know, you work at a big company, you got a lot of people around you that can support you. And entrepreneurship. You don’t have that. I’d say, you know, a small company is like one person doing six jobs, and then in a big company, it’s like six people doing one job.
Patrick Henry
And if you’re going to sign up for something like that during the inevitable low points, you really have to believe in what you’re doing. Then you got to say, okay, I believe in this, but also, is it a potentially massive market opportunity? Am I timing it right so that it can grow at an explosive rate? Do I have a real significant competitive advantage that sustainable over time? And can I build the right team around this? And all those things are essential. That’s why most companies go out of business, because it’s so freaking hard.
Brett
Final question for you. Let’s zoom out into the future. So, three to five years from today, what’s the big picture vision that you’re building?
Patrick Henry
Yeah, I mean, we’re trying to transform how farmers think about water and water management from a strategic standpoint. And the roadmap that we have is really getting to the place where it’s the precursor of irrigation automation. And then there’s also some things that we’re doing with continuous soil monitoring that will be important in rain fed crops as well. Too much detail to go into right now in a short conversation, but it’s really kind of transforming the idea how to strategically manage water and strategically manage long term soil health at the root zone of the crop, which is what really matters. You know, that’s where the crop grows. So that’s the things that we’re focused on. I’m building the right partnerships and customer relationships to grow a big company and really transform an industry.
Brett
Amazing. I love the vision, and I’ve really loved this conversation. We are up on time, so we’re going to have to wrap here. Before we do, if there’s any founders that are listening in, they feel inspired and they just want to follow along with their journey. Where should they go?
Patrick Henry
Yeah, I mean, you can find me on LinkedIn, probably. That’s the easiest way to direct message me on there. It’s Patrick Henry, and my company is GroGuru. The company is on social media. I’m also on social media, but LinkedIn is my main thing from a business standpoint. You can go to the GroGuru website. It’s GroGuru.com That’s a good way to reach us as well and learn more about the company. But those are probably the best ways.
Brett
Amazing. Patrick, thanks so much. This has been a lot of fun.
Patrick Henry
Thanks, Brett. I really appreciate the time.
Brett
No problem. Keep in touch.
Patrick Henry
You too.
Brett
This episode of Category Visionaries is brought to you by Front Lines Media, Silicon Valley’s leading podcast production studio. If you’re a B2B founder looking for help launching and growing your own podcast, visit frontlines.IO podcast. And for the latest episode, search for category visionaries on your podcast platform of choice. Thanks for listening, and we’ll catch you on the next episode.
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