The Struggles of Vertical Farming

Larry Ellison, the renowned founder and CEO of Oracle, has been quietly investing in a vertical farming startup, Sensei, over the years. Despite pouring nearly $500 million into the company, it is still facing significant challenges in taking off. The early indoor farms have been likened to DIY projects, rather than a well-funded initiative.

Challenges Faced by Sensei

A recent article by the Wall Street Journal has highlighted the problems faced by Sensei, including issues that seem surprisingly mundane. Initially, the company focused on building vertical farms on the Hawaiian island of Lanai, which is mostly owned by Ellison. However, the unique environment on the island posed unforeseen problems, such as strong winds that damaged the greenhouses, causing costs to escalate from $12 million to $50 million.

The greenhouses, which were intended to be powered by solar panels, thanks to a partnership with Tesla, often malfunctioned due to dirt and debris accumulation. As a result, diesel generators were used to power the fans, water pumps, and other essential systems. Additionally, Wi-Fi issues hindered the operation of cameras and high-tech sensors that were meant to monitor crop health and control window shades.

The Promise and Challenges of Large-Scale Indoor Farming

The concept of large-scale indoor farming has been around for over a century and has shown promise in certain parts of the world. Vice President JD Vance and Elon Musk’s brother, Kimbal, have also attempted to leverage technology to produce vegetables indoors, aiming to make food more affordable and accessible. The idea is to create a traditional greenhouse on a much larger scale, using artificial lighting to grow vegetables in any season.

However, the initial upfront costs of building such startups have made the produce more expensive than consumers are willing to pay. Vertical farming startups like Sensei require costly artificial lighting and complex operational systems, which can drive up expenses. Furthermore, large, heavy crops like corn are not well-suited for indoor farms due to their long growth cycles and the difficulty of supporting their weight in a stacked system.

Failures and Struggles in the Industry

Several vertical farming startups, including those backed by Vance and Musk, have failed to achieve their goals. AppHarvest, a farming startup that Vance invested in, filed for bankruptcy in 2023, while Musk’s Square Roots laid off most of its staff the same year. These startups have struggled to reach economies of scale, and their capital-intensive, physical business models require significant funding and patience to become profitable.

Sensei’s Future Prospects

Ellison’s wealth and patience may ultimately help Sensei overcome its challenges. The company has retreated from Lanai and is now testing operations in Southern California, where it is prototyping a new system that uses robotics. Sensei is also testing its robots at an existing greenhouse in Burbank. While the company’s future is uncertain, it may ultimately benefit if President Trump’s policies lead to a reduction in migrant farm labor, potentially creating a greater demand for robotic farming solutions.