Focus on the scale that your customers can’t see, w/Land O'Lakes CEO Beth Ford

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1:29And right now, you can get six months of Rippling free when you sign up at rippling.com slash scale. That's R-I-P-P-L-I-N-G dot com slash scale. Don't get sad. Get Rippling. Terms and conditions apply. They knew they were in the ice region.

1:56They were keeping their eyes peeled for ice. But unfortunately, the conditions of visibility that night were in fact so clear that it actually created a slight haze on the horizon. So the irony is, because they could see so far and so clearly, it actually meant they saw the iceberg a few seconds later than they would normally have done. And of course, it was those few seconds that proved fatal for the Titanic. That's Tim Moulton, and he's telling us the story of the most famous shipwreck in modern times. As a Titanic expert for the past 30 years, he can take us deep into one of history's most lopsided battles.

2:45Titanic was 46 ,000 tons. She was the largest moving object made by man. She could have a collision with another vessel and still survive. But of course, the Titanic's collision wasn't with another ship. The iceberg was 100 feet high. And that's above the surface of the water and 400 feet long. And ice, as you know, is many times bigger underneath the water. So in fact, the ice globe probably weighed about one and a half million tons. Right, the iceberg. Icebergs are famous for two things. One is this story. The other is that most of their mass exists below the water's surface. We say that's just the tip of the iceberg when we mean there's a lot more than meets the eye.

3:44In the Titanic's case, there was a lot more actual iceberg than what met the eye. And because of how light bent across the clear night sky, the iceberg itself was closer than it appeared. So once the ship got too close, a collision was inevitable. Titanic was made out of plates of steel that were riveted together. So rather like a patchwork quilt, whereas instead of using wool and cotton, you're actually using plates of steel bound together by steel rivets. But that quilt of steel was doomed. No matter how big they had built the Titanic, it was never a match for the immovable ice.

4:31The thing is, when a ship, no matter how big the ship is, even if it's the largest moving object made by man, when it meets a giant iceberg in the dark, it's that elemental, awesome power of nature. It's that weight of millions and millions of tons of the iceberg. And no matter how clever people are to make a strong ship, that ice is always going to win. The Titanic's visible scale, however grand, was no match for the hidden scale of the iceberg. And with companies, we too often focus on scale that's visible. Massive campuses, thousands of workers, offices around the globe. But this familiar picture of growth isn't the only kind there is.

5:20There are less conspicuous ways to scale, giving your business not just raw size, but structural integrity. That's what I believe when it comes to growing your business, don't be afraid to be the iceberg. Scaling beneath the surface gives you ballast to help keep you afloat. You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. And then you go back to, this is totally going to be amazing. There are so many easy wins. I have no idea what to do. Sorry, we made a mistake. but you have to time it right.

5:58Oops. Working out of a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We have it made just how you do it.

6:10This is Masters of Scale.

6:16I'm Reid Hoffman, co-founder of LinkedIn, partner at Greylock, and your host. And I believe that when it comes to growing your business, don't be afraid to be the iceberg. Scaling beneath the surface gives you ballast to help keep you afloat. I was asked recently whether startups should aim to scale horizontally first or vertically. That is, should you focus on making a broad market grab or start looking to control more of your supply chain? And the truth is, I don't believe in a hard and fast rule about which direction to grow. Because the way you really want to grow is strategically. Icebergs, as it happens, aren't all one shape either.

6:56Some look like mountains, others more like wide, flat tables. There are little ones and big ones. But no matter what the shape, the ice below an iceberg surface provides a very strategic function. Far from dragging it down, the ice below the surface is providing ballast and stability. Ballast gives a scaling company stability too. It can also provide opportunities to beat the competition. I wanted to talk to Beth Ford about this because as CEO of the heritage brand Lando Lakes, Beth has worked hard to build that ballast and scale operations strategically, often far beneath the surface of what the average customer knows.

7:38She's been at the company since 2012 and CEO since 2018. Before that, she managed supply chains for a host of scale businesses from PepsiCo to Scholastic. Now, when I say Lando Lakes, you probably think butter. And Beth says that's fine by her. We like to say we sneak up on people. We love that everybody loves our butter. Thank you. Thank you, thank you. We love it too. But as well, it's a bigger, broader business. There's kind of a B2B component and it's a B2C component. We have to think more broadly than just at the acre. Thinking broadly is one of Beth's great talents. It's a skill she's honed from childhood, growing up in Sioux City, Iowa.

8:23I'm number five of eight children. We were very much a working-class family. Raucous, as you can imagine. I share a room with my three sisters. I get one drawer that's mine. As I say, I have to have a place to put the hand-me-downs, because that's what's happening in my world.

8:43In a home with eight kids, there weren't many spare resources to go around. But Beth remembers the day she learned she had a lot more than she thought. My mother always would go to a family that was in need during Thanksgiving, and we'd go bring a meal. It's not like we had tons extra, but she was like, we're bringing them a turkey and the fixings. And so we went to this one particular home, and maybe I'm 11. and it was this apartment and these kids are running around in their underwear. You know, it's kind of not a great location. And we left and I said to her, why are those kids running around?

9:19She was, didn't you see? Their one pair of clothing was on the radiator, drying. And then she looked at me and she said, do you see how much you have been given? Do you understand your responsibility? And I think that that was formative for me. Beth's mother showed her how to notice when there's more to a situation than meets the eye. Suddenly, Beth looked beyond the unruly circumstances in front of her to see the deep need underneath. She also saw how many resources she actually had and how important it was to make use of them. Beth went on to college, and before long, she was thinking about resources full-time.

10:00Mobile Oil recruited her as a supply chain trainee. She wasn't their typical candidate, but to Beth, the work made sense. I was there for nine and a half years. I had, I don't know, eight or nine different jobs, in-line operations, managing tanger barge, trucking facilities, manufacturing facilities. I did a little time on the trading floor. And what I learned about myself is I liked businesses that touch people, that make things, that do things. As Beth approached her 10th year at the company, she discovered she was more interested in the problems of supply chains than she was in becoming an oil executive.

10:38Supply chains consist of many individual points of contact that, when strung together, become a massive unseen force delivering the products and services we use every day. A customer can hold a happy meal in their hand and never see how many steps it took to get there. And Beth wanted to understand every point along that line. So she took a series of positions running supply chain operations. She went from Pepsi to Scholastic. At each new company, Beth learned about the business end-to-end, looking for new opportunities to drive ahead of competitors by building verticality and stability. She wanted to make sure her company was the iceberg, not the Titanic.

11:19When Lando Lakes first reached out to her to come aboard the company, Beth's first reaction was swift. And at first I was like, no. On the surface, heading to Minnesota to run operations for a butter company did not make sense. I received this call when I come to Land O 'Lakes. I was living in New York City. My wife was running this fund of hedge funds. We had three children. And I'm like, you know, we're good here. I'm not in Iowa anymore. Jill, my spouse is from Peoria, Illinois. We're like, look at us. We're in New York City. Isn't this fun? It's cold there in Minnesota. And I'm feeling like I'm a New Yorker now.

11:56Minnesota's 10 ,000 lakes, while indeed very cold at times, aren't home to any icebergs. But when Beth visited Orlando Lakes Operations there, she was surprised by the company's scale beneath the surface. They started talking about the cooperative model, the challenge of feeding a growing world population. My predecessor, Chris Polisinski, spent quite a bit of time talking about this mission of feeding a growing world population set to go to 9.5 billion by 2050 and the need to double production during that time. On Beth's visit, she learned about the massive scope of Lando Lakes' mission, feeding the world and doing it as a cooperative.

12:35I've worked in small private businesses, big corporations, you name it. And this was really fascinating to me because really it's a collective that works together for a common good. You may already have a couple of questions. Like, I didn't know Lando Lakes was a co-op. What does a co-op at scale even look like? You're not alone. Many people don't know much about this structure, myself included. So I ask Beth all about it. People who are not familiar with this, and by the way, this is one of the things I'm going to ask you a bunch of questions about because I'm really curious to learn myself. We don't have anything like it within Silicon Valley and the tech industry.

13:10This company was founded in the 1920s by Upper Midwest dairy farmers who were trying to get their sweet cream butter into the population centers in the east. So they formed this cooperative. How can we do that? We can work together to invest to get our product into the East and the marketplace. This cooperative was sort of a marketing alliance where Midwestern farmers could work together to sell butter to Eastern states. And then they were successful. So then they formed a supply cooperative, which means all the feed and all of the crop items to grow their animal feed, they're being supported by this supply cooperative.

13:45And so they had a feed business and they had a crop supply business. What those farmers were doing was creating ballast for the cooperative in a way that gave them both opportunity and protection. Their marketing collective gave them access to this new eastern market, which they could only break into by working together. Their supply collective shored up stability around their supply chain back home. A hundred years later, this is still more or less how Lando Lakes Cooperative works today, though on a much, much larger scale. Now, they're a Fortune 500 company with annual sales that hover around$14 billion.

14:24The financial structure is that we hold back some of the earnings and we invest it in equity or invest it in technology. And the rest of it goes out as a dividend, a patronage. We work with small producers, Amish farmers, where we literally go to the mailbox to give them their paper check, right? And large producers. And our job is to advantage all of them. What I see in this co-op model is a network ecosystem, the same way Airbnb is a network of independent homeowners and renters, or Etsy is a network of independent craft sellers. When configured the right way, network ecosystems add both opportunity and stability.

15:04They can help you vault to great heights of success, and if something fails, the network can help absorb the blow. In our Titanic versus iceberg metaphor, think of a network ecosystem as the many layers of ice keeping your iceberg stabilized in the churning sea. But cooperatives take this network model one step further. An Etsy seller or an Airbnb renter don't automatically own slices of the company. They would need to go buy stock for that. But a Lando Lakes member farmer does own part of the company. Even if their own farm is small, they not only get a cash dividend, they have all the leverage of a scaled organization.

15:44They have access to scale purchasing power, scale advertising, and scale supply chain investment. Remember, scaling vertically works best when it's strategic. Acquiring companies just to get bigger is generally poor strategy. It adds complexity without purpose. and suddenly you look more like the Titanic with its hull made up of steel panels that are vulnerable to impact. No matter how strong the steel or how big the hull, if the rivets holding them together fail, the boat sinks. To help us understand how Lando Lakes is scaling beneath the surface, Beth agreed to give us a tour of what's going down at the famous butter brand.

16:28You know the dairy business, our butter business, our cheese business. We own Cozy Shag, Vermont Creamery. Every pound of butter we manufacture. It generates two pounds of dairy powders. That's a commodity. It goes on the international market. We sell it to Nestle, Carina, Animal Nutrition. We feed all the zoo animals. We feed the Olympic horses. We have a big research farm outside of St. Louis. Very much into R &D tied to our animal nutrition business. A key partner of Tractor Supply. We have NutriBlend, which is vitamin business that goes into feed stock. And then we have our Winfield Technologies business, which is actually our biggest business.

17:00This is probably about$6 to$7 billion. If all of this is starting to sound a bit overwhelming, here's the simple version. Not only does Lando Lakes span a range of dairy products like butter and cheese, they also feed the cows that make the milk for butter and cheese. And they make the vitamins that enrich the feed that feeds the cows. And they gather the data that protects the seeds that grow the crops that make the feed that feed the cows, that make the milk that makes the butter and cheese. Okay, let's go back to Beth. It's a tech-enabled, data-enabled business coupled with expertise. We have applied research plots, and we have a research center in Wisconsin, agronomists that work with growers to optimize production.

17:47We say farmer to fork because we see the entire continuum. One thing that speaks well about the longevity of this continuum is that it developed, pardon the pun, organically. The farmers who started the Lando Lakes Cooperative saw that working together to shore up their supply chain made them stronger and harder to disrupt. This is the same philosophy that led to Lando Lakes' staggering vertical depth. It's an ecosystem. What we're doing is using agronomic advice technology. We're partnered with a local retailer to work with a grower to optimize the profitability of their production. And we do this by leveraging our data, our analytics.

18:30This data-driven approach to farming isn't actually new. Farmers have long made it a regular practice to test the soil, rotate crops, and check the weather. These high-tech innovations echo what they've been doing all along. The farmer is iterative. They're the original environmentalists, the original entrepreneurs, and they're constantly investing their land so they can hand it to their next generation. Investing back into the land is growing beneath the surface, literally. Because the quality of what you put in the ground determines the quality of what grows out of it. That's not just a metaphor.

19:06That's Lando Lake's business model. And that model keeps expanding into a myriad of unexpected places. This is Mike Nicholas, Capital One business customer and co-founder of Ansett Uncles, a plant-based restaurant and community space in Brooklyn, New York. and he's telling us how they started a product line. We already had a space in the community. The food was an extension of our lifestyle and our values. So we know we wanted to create something that was an offshoot to that. Our pepper sauce. That's my grandmother's recipe. That's like a liquid gold, right? If someone wants to approach us and ask us, what do we do?

19:44We provide flavor. Growing a product line is no small investment, but Mike and his wife and co-founder Nicole were able to manage with the help of their Capital One Business Card. Working with Capital One Business, we're able to leverage our limits and utilize those points, making sure we can continue the scale at the speed that we need it to go. To learn more, go to capitalone.com slash business cards. Most single-function AI tools just gum up your workflow. Project management becomes a tedious relay race of copying, pasting, and switching tabs until you forget what you were even doing. Say hello to Superhuman, the AI productivity suite that gives you superpowers everywhere you work.

20:26With the intelligence of Grammarly, Mail, and Coda built right in, you get things done faster and collaborate seamlessly. Superhuman lets you handle multiple tasks wherever you're working. No more copy-pasting, no more jumping between AI tools, and there's no learning curve. Superhuman gets what you really need from day one. It understands your writing style, helps you focus on what matters, and proactively offers the next best step. Unleash your superhuman potential with AI that meets you where you work. Learn more at superhuman.com slash podcast. That's superhuman.com slash podcast. We all remember the choices that shape the course of our lives.

21:06In business, world-renowned venture capital firm Sequoia Capital calls them crucible moments. Their podcast brings you inside the pivotal decisions that defined some of today's most influential companies like Stripe, Klarna, Zipline, and Supercell. Tune into Sequoia's new season of Crucible Moments to discover how some of the most transformational companies of the modern era were built. Crucible Moments is available everywhere you get your podcasts and at cruciblemoments.com. Go listen to Crucible Moments today. We're back with Beth Ford of Lando Lakes. If you're enjoying this episode, you can share it using the link masterscale.com slash Beth Ford.

21:49And to hear my complete interview with Beth, become a member at masterscale.com slash membership. There's so much more to this interview, from breaking down Lando Lakes board structure to Beth's story about how Lando Lakes feeds Olympic horses. You won't want to miss it. We're talking with Beth about creating ballast by growing strategically beneath the surface. Whether you're looking to control more of your supply chain or to build out new offerings to gain competitive advantage, both pursuits can help you keep your business afloat. In other words, don't be the Titanic, be the iceberg. For the past hundred years, Lando Lakes has been using their cooperative structure to create both stability and opportunity.

22:32Lately, that opportunity has come in the form of data analytics. And in 2016, they used this data to launch a sustainability program. We have Truterra, our sustainable production business, to help a farmer improve the sustainable production methodology. So what will it mean if they use cover crops? What happens with a variable rate application of fertilizers? And we developed a model, this Truterra Insights Engine. It's got over a trillion data points. So a farmer can look at that and say, how can I use this information to improve my processes, my practices, to improve sustainable production, improve carbon capture?

23:10The member farms that participate in the True Terra program both drive this data engine and benefit from it. We talked to one of those farmers about it. I think the first job I ever had on the farm was chicken chores. Every kid like had to go through it. And that was, you know, water, feed them, gather the eggs. That's Lucas Fricke. He's a co-op member and sixth generation farmer on his family's farm near Ulysses, Nebraska. Our family has always been a part of a cooperative. I was cleaning up my grandparents' house that I now live in. We were actually able to find, if I remember right, my great-great-grandpa on my grandma's side, his membership certificate from the co-op just a couple miles away.

23:56Lucas's farm has been using Lando Lake's True Terra Insights Engine for a while now, so he can explain what it is and how it digs for insights beneath the surface. Their Insights Engine takes all of our farming practices, puts it in here. It's a lot of smart coding. And it helps us create a baseline and tells us how much CO2 are we sucking out and putting in the soil. What's our erosion impact? Where can we try new practices to get even better? One example of a new practice this Insights Engine suggested is for farmers to change how they till their soil. Because tilling soil or churning it up with a big machine to prepare the ground for planting actually releases carbon into the atmosphere.

24:48Through the Chuterra Insights engine, it said, hey, on this farm, why don't you try a strip till? So instead of taking a disc or a plow turning that soil over or a disc going over the top and mulching up the plant material, it said you're going to go through your field with a specialized machine and you're going to have a width about six inches wide and we're going to till up just that one spot. We're going to do it in strips all across the field. So we're reducing our tillage. We're creating a better environment for that plant. By creating a better environment for the plant, we have the opportunity to be a more productive plant at the same point.

25:26And so because of that, we sequestered more carbon in addition to our original practices. But changing your tilling strategy means new farm equipment, new machines. That's an investment. And Lucas needs to know how to make that investment pay off. So with that, Trutera is like, hey, you have this great data. We have a very interested party, in this case, Microsoft. You may remember that back in January 2020, Microsoft made a massive pledge to be carbon negative by 2030. And by 2050, to have removed enough carbon to make up for all of its emissions and electric use since the company's founding in 1975.