Ambrook CEO Mackenzie Burnett on American agriculture, rural resilience, and carrying 50lbs of fresh pork on Amtrak

24:19Yeah, totally. There's actually a whole spectrum of different ways when you can make it work. You can do it all yourself, but there's also a lot of co -ops basically, in which you can kind of share infrastructure. It just requires a shift in incentive structures, infrastructure, those types of things. And so it requires, and that sometimes can require a lot of public investment. What are things that people should buy directly from farmers as opposed to in the supermarkets? Like there's some things that travel pretty well. Beer travels pretty well, actually. And so you don't need to brew your own beer for quality purposes.

24:49You might want to just get it's fun. I was surprised. I thought the steak in the supermarket, I assumed it would be pretty good. Like, we have local supermarkets, but yeah, the direction you can see where meat was really good. Veggies as well. I think the local stuff will be better than the long supply chain stuff. I think these fries, you can just call up a local farmer and most likely they'll figure out a way to sell you half a cow. Well, to find an easy online payment solution. Yeah, exactly. I think actually the biggest thing people don't really think about is freezer storage or something.

25:15Yeah, half cow is quite bigger than people. Yeah, it's like, that feeds a full family for a while. Actually, there's a lot of things you can buy direct. But what should you buy direct? I think meat is a big one that makes way more economic sense of I direct if you just are willing to like just economic sense gastronomic sense. No, it's so much better too. Something I did with my team, one of my teammates found in Suggested, which was really awesome, was have you ever been to a traditional pick harvest? I have helped butcher a pig once, and that was quite an experience. But I think we didn't see all the steps.

25:51Yeah, we saw all the steps, and so that was a really interesting experience of participating in that. then we ended up butchering the pig at the end and we took home that meat. It was like 50 pounds that we carried like on the Amtrak. Who's the person that people love to have sitting next to them and I'm trying? That was awesome. It was by far the best burger ever. A Noin's level one is people playing music with that headphones on their phone. A Noin's level eight is carrying half a pig. Yeah, yeah. No, that from one to it's a customer now. So it was a yeah, it worked. Yeah, yeah. Okay, so Dr.

26:28Konsumer is making it but sorry, I'm trying to rewind to where we are. We're talking about Oh, yeah, the economics of them farming this lineage labor seems really hard Yes, labor is especially hard right now But it's it's hard for a couple of reasons. I think there's a lot of immigration related issues that a lot of folks are kind of facing right now But the second action and that is tightening of immigration meaning less labor. Yeah, so tiny immigration means that you have of less labor, because a lot of farms rely on seasonal labor. Farms and processing facilities, actually, which people don't think about, which is if you can't sell your product then for a lot of livestock, for example, then you know.

27:09And that was the issue in pandemic, too, which is a lot of processing facilities shut down, right? But the other side is actually skilled labor. It's not just seasonal labor, but it's pretty skilled labor has been harder and harder to get, even before the pandemic. I was a little bit out of some of these kind of stuff. I think it's just, it's actually quite a lot of skill and knowing how to like pick a crop without bruising it, for example, at the speeds that you need, or for example, like animal husbandry, or a lot of these other types of skills that, again, this goes back to like, how do we make it so that there isn't so much like rural brain drain and rural flight?

27:45Like a lot of the labor, you know, the people who might otherwise, who do that might not actually want to live or work. in those areas, even if they're not sort of seasonal immigrants. From a policy perspective, if you were in charge, if you were running, I'd know USDA, both your parents worked for USDA, what would you be waving your magic wand to do? Oh, interesting. I think there's actually two. One of them's outside the USDA, one of them's within the USDA. I'm really interested in a lot of the stuff that's happening with open banking regulations because I think actually the cost to a lot of what we're seeing or doing is the lack of accounting software is just an attempt like all we are doing is trying to get external data sources in and like make them all make sense, you know, and kind of where we're talking about with the metadata and all that before, like there's so much information that could actually be really helpful for our customers that is not being shared or is really expensive and difficult to get.

28:41And so that is something that I am super interested in how things are developing there. So, as you were saying concretely, like in many countries, it is mandators that banks provide structured access to financial data for their customers because they say, you know, it's a customer's own data. Yeah. Banks have to give it an unrequest and buy, you know, an API format and things like this. Yeah. It's actually a very live topic in the US right now and there's lots of debates over this. Real 1033 and things like this. But you're saying it'll be very useful for Ambrok to have some open banking mandates where you guys can reliably get data in a sensible format.

29:15Yeah, it's not just used for amber, it's used for, I mean, for our customers. Like that is ultimately who we're trying to serve. Yeah, it's their data. It's their data. And so in all we're trying to do is get the data from someone else and give it back to them actually. It was just kind of a crazy thing that we have to fight for that. But yeah, no, I think that would be, that is something that if I could wave a magic wand honestly, I think that would actually help more than people think. And I know that you asked the question about the USDA, but I actually think that that would be. That's your top.

29:43That would be my top. Yeah, yeah. But I think on the USDA side, there's a lot of hoops that people have to go through in order to be able to get access to funding or programs that might be useful for the type of incentive structure alignment that I was talking through. And I think that a simplification of a lot of that, which I think a lot of people want. But we have our thumb in the scale, but we could at least do it in a more efficient way with us paperwork. Totally, yeah. Would you tweak farm subsidies up or down? Yes. To be honest, I think farm subsidies are so sticky that what I would do instead of tweaking up and down is I would just be extremely deliberate about when we just use to introduce a farm subsidy, like what are we doing?

30:25And if this was still around a hundred years from now, would we be okay with it? When you are designing these incentive structures, there's whole livelihoods and politics that are built around them and they last through that base. And they're going to be extremely sticky. So it's more like, be careful what you wish for. As I think actually the response I have to that, yeah. Ambrooke is a window into one of the most underappreciated stories in the internal economy, vertical SaaS. As Max is explaining, the finance of a modern farm, the complex and generic accounting software just doesn't work. So Ambrooke is building a SaaS from the ground up to solve deep industry -specific problems that generic tools can solve like crop -specific profitability or specialized agricultural lending.

31:09And Stripe then is the platform for these platforms. Stripe has tens of thousands of these from Ambrook for farming to Mindbuddy for gyms, and collectively those platforms per millions of small businesses. The best vertical SaaS platforms become an all -around system of record for their customers. They offer payments and loans and spend management and subscriptions and invoicing and tax automation reporting, all of which you can get from Stripe. Does now 95 platforms on Stripe would more than a billion dollars in GMV? So if you're building that indispensable system of record for your industry, come talk to Stripe.

31:43Are carbon credits a big revenue line for a lot of your customers? They're not the biggest revenue line. No, we just a relevant revenue line for a lot of your customers. You get deforestation for a lot of them. So for many of our customers, They do participate in carbon credit programs, but it's not as many as you might think. It still is a relatively small part of US agriculture, despite I think them being kind of really big in the public sort of consciousness. Carbon pavements are on a very long time frames and they require you to maintain the same behavior over about a 10 year period, otherwise you get clawback provisions.

32:24And so actually, I think it locks you into a plan. when you might actually want to be kind of adaptive or versatile in that. And I think actually went to a sustainability and add conference last year. And something that one of the producers said really struck me, which is, it's not enough to have a 1x payback. You have to prove that these programs can have a 3 to 4x payback. Otherwise, why would they do it? They should just do something else that is going to be able to better improve their bottom line. And I think that that just goes back to a lot of art thesis, which is this idea of like pragmatic environmentalism.

33:03You just cannot, you are not gonna see the level of change that you might want to see or need unless it makes sense for the bottom line. Climate is very critically charged, helping in the US. You studied climate security at Stanford. Most of your customers are in red states or the red part of blue states, which I think California. But I also think that people's views on these topics tend to be pretty nuanced. Like I think, I bet Sanford Diskins couldn't effectively steal man the views of your customers on such climate topics. So what do your customers think on climate topics? It's a great question.

33:42Our customers think a bunch of different things. I wouldn't be able to summarize with just one statement, though I will say that one of my favorite articles that that off -range, which is our editorial independent media publication published, was an article titled, where soil is holy, but climate is seldom mentioned. And I think that it's kind of like talking about climate sometimes feels like talking about politics or money. And yet these producers that this article talks about in a lot of the producers that we work with are just around the US are actually doing the type of things that you would put under like a climate umbrella.

34:24You just have branding at a such. It's just not branding at a such. And I think a lot of actually what I've learned from our customers is that a lot of people want the same things. They just aren't talking about it in a way that might feel familiar to someone who grew up in, you know, around, like San Francisco, for example. We're talking a lot here about the insights and business that Amber allows. One of my favorite books about accounting is The End of Accounting. which talks about how GAP is basically poorly suited to this day and age. One thing that points out is that accounting is trying to do many jobs, right?

35:03If you're an equity holder, it's trying to help you figure out what the future returns on your equity might be. If you're a debt holder, it's helping you figure out will you lose all your money or will you get paid back. If you're at the IRS, it's helping you figure out how much taxes this business is. and then there's kind of management accounting, which is helping you understand, like you're saying the kind of P &L view of hay or the dairy side of the operation or something like that. And so this kind of helping management make better decisions. But in particular, people tend to have a view that there is this God -given truth of just, what the business is.

35:43Whereas in fact, accounting is a tool for a job. And the job you might want to do with accounting actually really varies. And so I'm curious how you think about that where we charge the jobs that you want to help firms do. Like are you helping them pay their taxes? Is it all about making different decisions? Yeah. And yeah, just that idea that accounting is a bit overloaded these days. Yeah, totally. Actually, I think the way that we talk about internally is there's sport types of accounting. The first layer is just cash. It's sort of like if you had a snapshot, like what was happening? and actually most many businesses in the US file cache basis.

36:19The second layer, which I think, which a lot of startups are kind of subjected to, because they meet the threshold requirement for this, is filing a cruel, which is, we certainly introduced the idea of time into accounting. So the idea of a constatiable, accounts payable, ARIP, etc. The next layer is enterprise accounting, which is that idea of your entire business line basically, so hey, cattle, et cetera. And then the final layer is managerial accounting, which is truly like unit economics. It's like, what does my cost per acre, how much should it cost me for a dairy to produce a pound of milk, like that type of accounting?

37:02And the way that we think about it is we have customers who come in at every layer. And I think actually the beauty of building accounting software or is that a conscale? Like, yes, Scab might be, like, you know, sort of overloaded, but at least it is standardized in its scales. And so we have folks who come in who are coming off of actual pen and paper and a shoe box of receipts who are interested in adopting software for the first time to do their accounting, to just get from the, you know, to get tax prep to be done easier, or maybe go from cash to a cruel. And then we have folks who are at sort of the, they're at the cruel, arrogant enterprise layer who are interested in actually getting to the unit economic analysis.

37:44I mean, I've seen, so Derri's are extremely complicated businesses. They're like a cow calf operation, which is a your typical cow ranch, and then some, they're like a very complex cow calf. And I've seen Derri's higher ex -bankers to get to that level of the managerial analysis. Yes, yes. And I think that is what we are building for Ambrook, is we have customers who are able to get to all four layers. of accounting because the way that we just like architected the data structure in the beginning and the way that we are trying to wrap and de -jargan you know a lot of the complexities of doing your books correctly.

38:22If you want to walk people up the inside curve and take wherever they're currently operating and just making it easy for them to reach the next level. And it's okay, we consider customers to be successful in Ambrook if they just top one level up. Yeah, yeah. That makes sense. People might think you as a software business, but I got a sense that you identify in a significant way as a FinTech business. Is that a fair characterization and maybe even an expen on that? Yeah, for sure. I typically think of FinTech businesses in two different ways. The first way is just, are you sort of facilitating payments?

38:54And so there's a sense of like, are you in the payments flow? The second way that folks typically talk about FinTech businesses is like do you hold deposits, do you lend basically deposits from lending? Maybe also cards I think would be part of that. And so for us, we actually, from the very beginning, Soldom is inseparable. Like we were just interested in solving our customers problems and in order to be able to get more accurate data into the ERP, like being in the payments flow was just made it a lot easier to be able to do that. And I think building with a lot of the fintech optionality enables us to have a lot more of the options to solve more of the problems with capital that we were kind of talking about earlier.

39:39So I think about that as in several, I think that the choice that we didn't make though is, and we are just now getting into credit, we decided actually early on not to give away free money. So that was a... controversial and start a fun. And I think I think it was actually controversial. Sure. It was a, and we grew slower in the beginning because of it. And I think that the thought that I had was that it would, and we had raised in the very, you know, beginning of started during, during Zurb. And so, and so the thought that I had was I basically what I did it was I just, I did all these like financial models.

40:18And I was like, I just don't see how this makes sense actually. If I'm trying to get to like a healthy merchant business, like I don't see how to do that. The free money part makes it challenging. I don't see how this works if interest rates change even a little bit. A piece of advice that I got that I thought was really, really helpful and kind of helped me shape this, which is I wanted to actually get the hard parts right first, which I think is the sad side of the fintech side. And I wanted people to be adopting us because they like the software. And we got the work flows right, not because we were giving away free money.

40:50because we can always give away free money. Like we can turn that on when we want and when we have enough of the partners to be able to do that. And I think because we actually did the slog of like build accounting software that has a high NPS like that people actually like using, like we now have way more optionality to be able to leverage the fintech side of the business. And when you say free money, do you mean blow market loans, do you mean free payments, do you have a specific free money? You mean? Oh, yeah. I mean, I mean, blow market anything. So blow market anything, right? I think that like, you know, You can you can give away free payments that actually cost you you know, cost you money.

41:28So it's anything that that like requires you to have And a negative unit. It is how a lot of founders fool themselves that they have product market fish when they don't are users coming for the product Or are they coming from the subsidy? Yeah, they can build movie pass and you know movie efficiency and adders love and numbers of free movies Yeah, totally the economics make it challenging. Yeah, and I think maybe it would have all worked out if I was willing to do I just, I just, you're all fashioned in that way. It's all of fashion. I was like, I thought we were supposed to be building for like 70 % gross margin.

41:58Yeah, that's sort of like what I was doing. That was what we ended up building the business around. You seem unusually passionate about instant money movement. Mm -hmm. Compared to most people I know. Um, 9 % dial and instant money movement. Is it a reflection of what you're getting from your customers or? Yeah, I think it's also a first principle. I kind of the idea of like, if I'm actually thinking about solving the problem for what we're trying to solve, it seems like actually a lot of the issue is that money movement is slow and expensive and context less. I think that, so it's instant money movement and high context money movement.

42:35And I think there's just a lot of dead money sitting in the economy. That's just for some reason in transit between middlemen. or too accepting of that. Yeah, and I think it's something that people are used to. Yeah. But I think if you think of a check sitting in the mail for like 10, 14 days, a guess maybe it's like, it's kind of floating, someone's sort of a ability to get that. So it's cash flow management. I think that's a legit thing that I think you have to solve for. If you're saying, you know, not everyone actually wants, not every business wants instant money movement. But I think, but I do think that there's also a sense of like having to go through any set of ACH helps, doesn't make sense.

43:15I was joking with Jackson on our podcast that the takeaway I had from Stripes sessions was instant money moona. All right, that's going to be a solve problem. What's the next problem we can solve? And I was talking to some Stripes afterwards and they're like, no, it's actually still really hard. I'm thinking of bi -reasoned the future you guys have got this. Yeah, yeah, no, I think we will make our progress. Yeah, it feels like many things are coming together. I'm curious. Well, maybe you can explain briefly how you guys use Stripe to set up my actual question, which is, if you were running Stripe, hold you to differently.

43:50I think you guys doing a great job running Stripe. No, no, but actually. I run a whole document. I know. I run it. My sense is that Stripe strategy in the long run is to figure out how to transcend the constraints of traditional money movement. Like how much do you participate in the traditional financial institutions that have been set up, and how much do you transcend that and build something novel? I think a lot of what actually Stripe is doing with building its own payments network, somehow building its own deposits network, which I think you still need to partner with banking institutions on do that.

44:30So you're still kind of anchored with that. But I think that's actually where stablecoins becomes quite interesting because it's permissionless. And so it's like, who does Stripe mean to? I think the way that I would kind of think about it is who does Stripe mean to get permission from today in order to exist in the way that Stripe wants to exist? Yeah, I think the thing that we think is interesting about financial infrastructure is it's by its nature multiplayer. You look at old e -commerce systems and ones that even might have been unprimed or just the software is very outdated. And Shopify came along and built an amazing product and said, here's a much better rate manager, e -commerce store and manager inventory and built a nice storefront and everything.

45:12And they were able to really clean up as a part of that market because you could replace your old e -commerce system with Shopify. What's interesting about what we're doing is payments and to large degree financial services are by their nature multiplayer where every payment is with some counterparty, right? And even if it's not, even if it's something like, you know, where do you store your money or how do you do AP or something like that? Like there are lots of banks out there that people have the deposits with or you know, people wave their hands and say, oh, crypto will obviate this. But when people have money in crypto, they will store it in Coinbase or in Binance or what have you.

46:00And so our view is that for whatever job is being done, there will be a whole bunch of other counter parties that we're going to integrate with and work with. And so an interesting part of running a business like Stripe is that you're working with all these partners. And you can actually pull things along and make them way more modern. We've done that in a bunch of areas, but it's much more of, you're the captain of a sports team, as opposed to your Alex Hanoel's doing, you know, solo rock climbing. It's a different kind of sports. Totally. But there are, there are players that Stripe is just deeply, will just be deeply competitive with, who will not want to play on your sports team.

46:44I think there's a difference between who do you partner with and who do you generally have to run through in order to be able to build a better version of financial infrastructure that is open. Does actually move on modern rails, right? Is actually ultimately not better for everyone. It's not incentivized by value capture. I think there's a lot of sense of how can you get more of the ecosystem cheering you on? sort of it's a transcendence from like, strike as like the upstart startup, to strike as the champion that's pulling everyone into the future. So maybe what you're saying is, strike previously provided easy access to the existing financial system.

47:23And now we've gotten to a point where the strike can actually have some voice in shaping the, and has come to the scale, we're gonna have some voice in shaping the future financial system. And you're saying that we have to take that seriously, Obviously, the best is now where we are, as opposed to being a passive participant in, I guess, this industry exists. Totally. Yeah, I think this is the thing that, like, I mean, we're at a very different scale of stright, but the thing that I have been talking about lately with my team is, like, the company changes under our feet. It's like, when are you wake up and, like, oh, it's like the rules are different, actually.

47:57Like, people are carrying about different things than they did before. And, like, the voice that we have in the ecosystem is different in these types of things. and I think, I do actually think that, like, Stripe is pretty clearly a leader on some, on a lot of these axes, but I haven't heard as much of the voice in terms of, like, what is the vision in which? Yes, yes. We want to build. I see a future in which, like, there is a vision of the world that I want to exist, and Stripe is uniquely in a position to be able to make that vision true, and I want to sign up for that vision. Yeah, I think maybe also you've probably picked up on this dispositionally.

48:38We're just not naturally drawn to pre -enhancing products before they're anywhere close to. We like to do a thing and hopefully we get it right. Totally. And our views, you can't meme your way to a product being good. You put out a version of it that's imperfect and then you gradually it or it hasn't over time. And so maybe also we've just been a bit too to Liri of what we think are grandiose statements as a product development method. Yeah, I think that's the piece of like what feels missing is a sense of the painting the picture of what the world could look like if strike wins. What is your answer to this question?

49:15What does it look like if we win? I just want more people to believe in the American dream. My grandfather believed in it when he immigrated from India to the US. And he built up his own, he was built his own engineering practice. And that was sort of what put his fight kids through school. My mom believed a version of it when, you know, she immigrated when she was eight here with her family and with my grandfather and went into public service because she wanted to, you know, she told me, you know, a couple of years ago it was because she wanted to give back. So a country that had served, you know, her, you know, I had given so much to her.

49:56And I'm doing a version of it, right? That because I think I went to a school that got me involved in tech, and then I moved to San Francisco, and I was became familiar with capital markets, and I have access now to a version of that. But I see so many of our customers that are trying to live a version of that and are struggling. And I want that to be, I want there to be many different types of American dreams that are possible. When you say making the American dream accessible, You're in particular talking about where Amber can help is making entrepreneurship and wealth about wealth building broadly accessible.

50:34Yeah, broadly accessible. Not just the folks who know how to raise venture capital. Right for tech businesses. Yeah. Who have you learned from as you as you've built this business? I think to the people who come to mine or one of them is Josh through yeah, Josh Cushion right thrive who took a really early big bet on me and and the vision that we were building for the team. And I think the thing that I really have always really admired about Josh is he's so precise. We never talked to Josh, he's thoughtful and all of his words, but he's enormously ambitious. There's a level of quiet ambition in what he does.

51:11And he has over the course of, even the past couple of years, has become much more widely recognized in terms of his ability to put his finger on the macro, I think. Yeah, it came from, you know, the Trivles Founders, Helango, and now they're one of the leading multi -stage fence returns. Yeah, exactly. So I think the thing that I've learned from him is the sense of like, you can be quietly ambitious. And that fits my style much better, I think. I think the second person actually that I've learned a lot from is Dylan Field, who just a lot of big investment in Ambrook. Dylan is so able to like, having a conversation with Dylan is one where he can connect the search teachers to the tactical and back up in the same thread.

52:03He can go from 40 ,000 feet to five feet and back up to 40 ,000 in the same sentence in a way that doesn't create any whiplash. And that I think I've actually found that to be extremely rare in both investors and operators to be able to do that. People are either in the weeds or the... Or the enemies are so... At the end of the year. At the end of the year that it's not very helpful. And Dylan is able to go back and forth between the two in a way that I've learned a lot from and I think I've gotten a lot better at. Is that dispossitional by him or because he's running a public SaaS scaled company?

52:35It's a good question. I've met a lot of founders operators who can't do it. So I think that probably, you know, Figma, his ability to build Figma has probably ton of a lot in that, but I also think that there must be something more disposition about it. Yeah. Last question. Why are you building offerings, your media property? Offering started out as an experiment called amber research. It was before we had built anything that we could really show people, and so I wanted it away for two reasons. One, I wanted a way to kind of talk about our brand and put something valuable out there that would be useful.

53:10And so we started out by just doing some, we actually published a couple of like very early days research articles with academics using some of our early like anonymous data from all the work we were doing. And then it turned into actually this editorial independent media publication that has become widely popular in its own right. I've always wanted to build some sort of my own version of like a research or academic journal. Like a lot of the research I did when I was in grad school on climate security actually in particular was looking at the co -production, it was called the co -production of actionable science.

53:45And it's how do you build, how do you create knowledge in a way that involves all the stakeholders and gets them all on board and sort of the knowledge that is created. And so it's not just creating these ivory towers. And I always thought that if I could, I wanted to build something that would evoke that type of ethos and Offrange was my attempt at doing that and it now is sort of stewarded by a really wonderful editor Jesse and has its sort of own life in that but in the early days It was really this idea of like I wanted to create actionable science That would be useful for people to be able to make better decisions Yeah, watch out or PC most part of it.

54:28If people want to check it out, why should they go? Well, I already said I really loved the the the piece that we wrote Evandruz is the is the author where soil is holy but climate is still not mentioned I love that piece. Yeah, that is like that's an old big one. I think roads. Okay. Well, Kenzie. Thank you