April 25, 2012 | Nicola Kerslake

Jorge Heraud, co-founder of Blue River Technology, a Stanford-derived startup that is leveraging concepts and technologies from the fields of robotics, machine learning, precision agriculture and more to advance sustainable agriculture, has deep roots in agriculture technology. Prior to starting the company, he spent 15 years at Trimble Navigation where at different points in his tenure there he headed up engineering for the company’s GPS Products and Precision Agriculture units.

It was while working at Trimble Navigation that Heraud started to evaluate what he wanted to do next. “I loved Trimble and could see myself spending another 15 years there, but then I thought, ‘am I really that guy who spends 30 years at the same company without ever having tried anything else?’” So, he signed up for the highly regarded Stanford Sloan Master’s program to figure out his next move.

As is so often the case, the decision that changed Heraud’s career path was made almost on a whim. One of his buddies wanted to sign up for Steve Blank’s entrepreneurship class, and Heraud decided to join him.

Steve Blank, who is somewhat of a folk hero in entrepreneurial circles, describes himself as a “retired serial entrepreneur.” In early 2011, Blank decided to try “an experiment in teaching entrepreneurialism” with his latest Stanford class. Instead of having students write a business plan, Blank sent them out into the field to talk with potential customers.  Both Blank and his students’ blogged about their progress as their ideas developed. The class has since become part of Silicon Valley folklore, both as a result of the viable startups that it spawned and the entrepreneurial philosophy that it pioneered.

In the class Heraud teamed up with a group of engineers that included among other, Lee Redden, a PhD student and former NASA engineer who comes from a family of farmers in Nebraska. The team set out to determine the market potential of a laser-based automatic weeding machine for golf courses. All engineers by training, they built a prototype robot on the side that was so powerful that Blank later joked that he was concerned that it might run over the family dog. Heraud and Redden, however, struggled to find the right fit between their product and a potential customer; “we churned through a lot of ideas that just didn’t work,” notes Heraud.

Eventually, the team realized that Heraud’s old stomping ground of sustainable agriculture was a far better fit for their product than golf courses. So to further explore this avenue and develop systems to eliminate weeds without harming crops or the environment, Heraud and Redden launched Blue River Technology. Their technology has since undergone a significant shift. “Lasers turned out to be too expensive a way to kill weeds, so we switched to food grade organic oil,” comments Heraud.

The new solution works as follows: A camera is mounted to the back of a tractor, and the attached equipment zaps weeds with tiny drops of hot, pressurized oil as it passes over them. The process is similar to that used to sterilize food, and it works well on any young weed. There are still kinks to work out in the product; “part of the technology challenge is training cameras to differentiate between weeds and crops” according to Heraud. The hope, though, is that Blue River’s automatic weeding system will provide a viable alternative to herbicides in traditionally farmed fields, and to labor in organic production.

The initial target market for Blue River’s product is organic lettuce farmers, who suffer from a combination of tight margins, rising labor costs and contamination concerns that make the company’s automatic weeder especially attractive. According to a UC Davis study[1], weeding costs are around 8% of total cash cultural costs for organic leaf lettuce, a sufficiently large figure to be the difference between profit and loss for a crop with notoriously tight margins. The shift towards mechanization on farms has long been driven by rising labor costs and availability, which have been exacerbated in recent years by immigration reform and tighter enforcement of existing laws. Some organic farmers also have ethical concerns around the use of low-paid illegal immigrant workers, preferring to hire more expensive unionized labor. Additionally, one source of bacteria – such as eColi and salmonella – in produce arises as a result of contamination from workers’ shoes; automatic weeding helps to address this concern.

The product is currently at a prototype testing stage on farms, and a commercial product is expected by mid-2013. Blue River envisages running a fleet of weeding machines itself, and pricing the service such that the return – in the former of lower labor costs and better yields – accrues 2/3 to the farmer and 1/3 to Blue River.  Beyond lettuce – California’s largest crop – Blue River plans to target other organic produce crops such as carrots, tomatoes and strawberries. The company plans to eventually target conventional growers as well.

Blue River also possesses many of the elements that attract venture capital to a firm including a team with a blue chip background, a product that addresses a genuine need, a clear path to profitability and a large market. Heraud estimates that the addressable market size will be $1.4 billion by 2015, 70-80% of which will be in organics. He sees the market growing at 15-20% per year. To date, Blue River has been funded by a combination of a federal grant and seed investors – including Steve Blank – but the team expects to raise an A round before its product is commercial.

It’s a little soon for the Company to be thinking about exits, but there are a couple of logical acquirers among farm machinery and traditional chemical company majors that do not yet have a strong presence in the organic agriculture space. Blue River’s greatest challenge now, as Heraud concedes, is to prove that the technology works consistently in field; “it’s what everyone wants to see,” he concludes.

Nicola Kerslake is a real assets investor, entrepreneur & advocate and maintains the blog, Real Assets Junkie.