Today, we are breaking down John Deere. With a history dating back almost two centuries, Deere has been a mainstay in the agriculture industry for generations. And despite its rich history as an incumbent, Deere is also on the leading edge of technology and innovation in ag-tech. To help break down John Deere, Zack Fuss is joined by Matt Coutts. Matt comes from a multi-generation family of farmers, and brings a unique ability to connect finance and farming. During our conversation, we discuss what the ag ecosystem looks like today, what drives farming economics, and why Deere holds such a strong competitive advantage that seems to only be growing. Please enjoy this breakdown of John Deere.
For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.
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Show Notes
[00:03:04] - [First question] - What Matt does as a farmer and where he spends his time
[00:03:54] - How big the global crop production and agriculture industry is
[00:05:48] - Key considerations in production efficiency with such a large market
[00:08:15] - John Deere’s role in the global agriculture industry
[00:08:58] - Deere’s business model and how they generate revenue
[00:10:14] - What farmers tend to buy and how distribution works
[00:12:06] - How a farmer traditionally thinks about their business
[00:13:18] - Some of the large machine purchases that a farmer needs
[00:14:11] - What a combine does and its role in crop production
[00:14:53] - The landscape and types of family farms
[00:15:57] - Whether or not farmers can earn above industry returns through any cycle
[00:18:18] - The role Deere plays in controlling variable costs to improve returns
[00:20:38] - The things Matt’s most focused on as a farmer and how Deere optimize outcomes
[00:22:48] - Brand loyalty and mixing and matching machines from different brands
[00:24:55] - What precision agriculture actually means
[00:27:55] - Overview of a harvest and how Deere equipment interacts with it
[00:31:16] - Unit economics and how their recurring relationship generates profit
[00:34:01] - Interpreting data, who owns the data, and digital agriculture analytics
[00:35:55] - What enables Deere to generate such large margins as an industrial manufacturer
[00:40:35] - Is Deere a higher-priced product than its competitors?
[00:41:16] - Recent acquisitions and what it says about their growth
[00:43:17] - The John Deere API and potential third party integration
[00:44:28] - Will farmers even be physically operating machinery in the future?
[00:46:35] - Lessons learned as a builder and an investor from John Deere’s story
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