Mel Torrie Transcript
Clint Betts
Mel, thank you so much for coming on talking to us today. You are working on some really interesting things. How long have you been doing this?
Mel Torrie
We have been doing this for 23 years.
Clint Betts
So at what point were you like, "Hey, we can make all of this stuff autonomous?"
Mel Torrie
It was really back probably 26, 27 years ago when I saw a wheelchair driving by itself down a hallway, and it was using ultrasonics to position itself at the university. And I realized that sound was able to localize something just like a bat. And that once you know where you're at, you can do everything else you need to with the electronics that were available at the time. So yeah, 26, 27 years ago.
Clint Betts
That's incredible. Tell us how you got started. Did you grow up here in Utah? What led you to Utah?
Mel Torrie
I was born and raised on a farm in Canada in the middle of nowhere, and the only escape from the cows, from my neighbors, was to go to Ricks College or BYU, so Rexburg, Idaho, or Provo. And I decided to go to Ricks and that's how I got my start out of the country and then got back from a mission in Denmark and applied for BYU Provo.
My grades weren't good enough because I'd been used to milking cows every morning and decided to enjoy my freedom a little too much. And so I got rejected from BYU and the counselor at Ricks said the best transfer of credits was to Utah State University, and so took the only option up there and the rest is history.
Clint Betts
That's awesome. Well, Utah State University, that's a beautiful campus, a beautiful area, one of the top agricultural schools in the country, which is pretty remarkable.
Mel Torrie
Yeah. I didn't realize it, but my father had come here while my mother was pregnant with me, and then he went back to Canada because of the cows, because it was mostly sheep here at the university. And so he went back for cows. I came here to get away from cows.
Clint Betts
Oh, that's great. And so what did you major in? When you went to school, what were you thinking?
Mel Torrie
Yeah, I went to a counselor and said, "Hey, I want to design speakers for Bose. What's the major?" And they had no idea, but they decided electrical engineering was the closest thing. And so I started electrical engineering, got a master's there and an undergrad in computer science. And then an undergrad opportunity came up to help with the space shuttle payloads. And so I volunteered there and learned how to do some critical things that are used in space, like quality soldering and things like that.
And then saw that wheelchair, bugged my professor who was over that robot, and we finally got stuck in an elevator. He asked if I could solder and I said I was darn good at soldering. I put things in space and he hired me to start assembling robots. And from there grew through the lab and started managing programs.
Clint Betts
And at what point did you spin out a company? Did you spin out the company from Utah State University?
Mel Torrie
Yeah, there was not much of a tech transfer group, but John Deere saw a paper I wrote in ‘98 and said, "Hey, we'd love to do a project with you." And I was managing a team at that point. And so we did two years of development for Deere and they said, "Hey, we like what you're doing. If you started a company, we would partner with you."
So I spun out with two professors, about five students, and the tech transfer group was lucky and we were off on our way.
Clint Betts
That's incredible. So what did you work on in those early days?
Mel Torrie
We started with Orchard Vineyard Tractor. If you do the market studies, and it's embarrassing, but they're finally starting to deploy now in Silicon Valley and really the vineyard country over there, the robots we were working on 23, 24 years ago.
So Orchard Vineyard Tractors that were spraying dangerous chemicals was a great application. It got people out of harm's way and also had high utilization, high cash crop.
You're driving those tractors through those orchards and vineyards every seven days, so it really fit well.
Clint Betts
How far away are we from autonomous farms?
Mel Torrie
Yeah, I think we're finally getting close, and part of it has been the liability concerns about getting sued. We worked with John Deere for 11 years, Case New Holland, the second largest, for another eight years. And the persisting challenge was, there's no foundational standards to claim that we're adhering to to help you with litigation in court.
And so there was just that paranoia that a farmer disabled safeties, which they always do, my dad is one of them. And then how do you have enough quantity out there and cash to be able to defend yourself against some of those willful disableds of safety? And so we are finally to the point where we have the standards maturity, that there is that comfort level, and obviously the prices are cheaper now,the sensors are better, but I think the biggest fear was really that liability.
Clint Betts
And you think we've gotten that figured out?
Mel Torrie
Yeah. Yeah. I think we're finally there. I would say Elon Musk with his car and his claim around the human still has that oversight is really how we're getting there, where there will be a human over a video link, like a security camera system where you're watching five or 10 tractors and that human is ultimately your backstop. And so I think that's how we're rolling out now. So it's just starting, but that's really going to be the basis for the safety case.
Clint Betts
What are your thoughts on Elon? I mean, you're in his industry, he's in your industry, or autonomous vehicles type stuff, and he's been saying for a long time we're getting pretty close there. Seems like we are getting really, really close there.
In fact, some might argue we are there. What are your thoughts on him as an entrepreneur, as a CEO, as a leader?
Mel Torrie
Wow. I want to do obviously what he's done, which is disrupt industries and you can't argue his record and I'm thrilled that he hasn't really tried to put all of his money against any of our markets. He's trying to get into mining now, but not really the autonomy, just try to secure some of the rare earth materials for his batteries.
But I think our styles are definitely different. My goal is to make lots of millionaires, not make me a billionaire. And so I think that's different and how you treat people and that if you do it right, you should be able to excel and even exceed companies where it is all about the big dog and where the product or the customer or the shareholder is ahead of people in priority. So we differ there in just how to treat people, but man, you can't argue the hard work and the disruption.
And it's ironic and fun that he's been saying we're almost there for quite some time, but we're so much closer because of how he pushes, that we're almost there, brings the investment money, almost there, keeps his people engaged and motivated. But it's hard, so hard and so it just keeps the ball moving forward. And so you do have to push and take some risks and try to be there as fast as possible. And you're usually wrong. It usually takes longer, but that's okay.
I have found one of our keys to success is the naivete of believing how close we were. That's been the key. If we knew how much it would take, we never would've gotten here, never. And so I can trace that back in each of our industries that our lack of understanding of the complexities was one of the vital keys to success.
Clint Betts
That seems to be naivete and maybe this whole idea of, “I can do this, and it won't take as long as maybe it actually will,” seems to sum up entrepreneurship actually in a lot of ways. You need that at the beginning.
Mel Torrie
Yeah. I get paranoid when people say, "This time we're really going to figure out how long it's going to take." Because the more you bring all of that paranoia and the estimates and the financial burden is so monstrous that no one will go with you, you have to bring some optimism, your best guesses, and you grow as far as you can and more money comes and confidence grows and you get closer.
Clint Betts
Did you bootstrap this thing for a while and how were you able to do that?
Mel Torrie
Yeah, I was in a restaurant with a John Deere executive probably 24 years ago, and he pulled out a napkin at the table and started sketching out Clayton Christensen's model around the innovator's dilemma and how these big companies struggle to innovate. And he said, "You are our answer there."
And I knew that that was on every innovation executive's desk or bookshelf in these big companies. And so I created a slide and raised about $300 million with that slide of saying, "We are the answer to the challenges you have as a public company trying to innovate or as a venture capital or private equity that's pushing for exits and not quite aligned with what the customers want."
So that's been the key. So we've really funded that through large end users, like the world's largest mining companies, large farms, co-ops, those kinds of things, as well as the monster OEMs, equipment manufacturers that just struggle to innovate with the pressures of the public markets and quarterly outlooks.
Clint Betts
Yeah. And if I'm not mistaken, you've taken money from SoftBank recently, which is the behemoth in the funding and financing world. What was that like?
Mel Torrie
Yeah, so it's been so awesome. So they came to us through LinkedIn and said, "Hey, we see you're the leaders in outdoor autonomy. We want an autonomous golf course mower." And I said, "Well, we don't take exit-driven money and well, I'm not going to sell my people to the highest bidder."
And so they agreed to a non-exit driven investment and placed the valuation of our company more on a licensing deal with the technology for the golf course autonomy. And then they said, "Oh, you're also doing logistics trucks around distribution centers and ports. We'd like a piece of that too." I said, "Well, you can put money into that, but again, I'm not exiting."
And so they agreed to a revenue share for that product line as well. And so just been incredible people to work with. It's the SoftBank Robotics Group, so obviously they pull from a common set of money and leadership, but they're focused on building great companies. We've been very fortunate with them as a partner.
Clint Betts
Autonomous lawn mowers are out there now. That's a thing. Were you guys behind all of that acceleration and getting that into the market?
Mel Torrie
That would be fun to pretend, but I would say no. Obviously we worked with John Deere for years on mowing. That was our second effort was golf course mowing with them in 2001, and so sure, something might have filtered there, but it's really some of these smaller mower companies that took an MVP style approach and we're just going to randomly drive around your yard and bounce off a wire.
And then the tech has just gotten better and better and better to where now, finally, and it's been 20 years, they're able to drive a decent line and make it look okay. And that's really on the consumer side, we've really been pushing to lead on the bigger equipment that is less consumer but higher margin, higher utilization, commercial type work.
Clint Betts
What's your main focus right now? What is the main thing you're trying to produce?
Mel Torrie
The rocket right now is really around mining. Our competitors like Cat and Komatsu has spent between $300 to $500 million, according to estimates by people from those companies. And so we've been working for quite some time with end users who really want to avoid being stuck with a single color of equipment so that they can only buy from a Caterpillar, only have their data stack, their infrastructure and only really be able to plug in their equipment. And so the end users have funded us for six years with millions of dollars to bring an OEM agnostic solution to the market. And so we're in a mode now where it's, how fast can you make them?
And that's a wonderful place to be. So scaling, we're using a great partner in Salt Lake and doing the production there and we are really doing the product development final QA and testing for building automation solutions on top of the two to 400 ton trucks as fast as we can make them.
Clint Betts
What are you doing on these a hundred acres up there in northern Utah?
Mel Torrie
Hey, we have a proven ground, so we've got a bunch of asphalt test tracks that we can clear winter and get all the snow off and we have a command center. We'd love to have you up, Clint, to drive some autonomous vehicles. And so we've got this big command center with lots of screens and we have mostly kids just graduating from high school who will run this video game-like interface that can control all this equipment and orchestrate the movement of these vehicles and really replicates what we're doing down in mining.
For example, in Australia where the truck drivers have now been trained, they commit never to lay anyone off and they retrain the drivers. Some of them now run our software from 800 miles away and run the mine and don't have to leave their families and fly into a camp in the middle of nowhere.
Clint Betts
What lessons did you learn as a farmer growing up?
Mel Torrie
Hey, I haven't gotten that one. I would say one of the biggies for me has been you're really at the mercy of the weather and call it fate, whatever. And from my parents, I saw that they survived on the brink of bankruptcy every year, and yet they always gave, when the next door neighbor needed hay for their cows, my dad loaded up the truck and we took bales over to them and we literally were on the verge of bankruptcy every year.
I remember one year he brought all seven of us boys, his sons to the bank review board for a bankruptcy hearing, and the seven of them were on one side of the table. He put all of us on the other side and pleaded his case that I'm raising boys not cows and just every year we had the miracles we needed because he put his neighbors first over his own financial return and worked his tail off. And so we learned that hard work and then you put people first and you will win. You win that infinite game as far as keeping it going and ultimately producing results.
Clint Betts
Yeah, and nowhere near the operation it sounds like you were doing, but I come from a bit of a farming background myself. I love what you just said that your dad told the bankers that I'm raising boys, not cows. That's pretty beautiful.
Mel Torrie
And it's bold. I still can't believe it. We went to the bank, we went into the bathroom, we all knelt down and had a prayer in the bathroom. My dad put his foot up against the door, then we walked in and just told them, “Yeah, I've got a financial return coming. We've got these 300 hundred cows, we're going to sell some great calves this year.” But he was very clear on his mission and I can't imagine the scene of us kids, but they went for it and just gave us another year.
Clint Betts
Yeah. What was their response to that? The bankers were probably stunned.
Mel Torrie
I think so, obviously they closed the door and had their deliberations and ultimately we got it. So I don't know what they said. They didn't seem like cheery folks to me. They weren't high-fiving when we told that story, but they bet on us. And the farm's still in the family. My brother was working at Ford in finance and he came back to take it over from my dad and build a great program with his son and another brother. And so it worked. They made the right bet.
Clint Betts
Does any of the machinery or anything you've done operate on the family farm?
Mel Torrie
Now you're pulling up my hypocrisy. Our partners with Deere said, you really can't just go rogue and deploy outside. And so we haven't been able to go outside of those bounds. So my brother's begging, but we have not sent any autonomy up there.
Clint Betts
On the mining front, what mine are you working on? What minerals, what are you doing in that whole space?
Mel Torrie
Right now iron ore has been the biggest, gold and coal have been programs in the past, so we had a mine running in the Ukraine, that's obviously been paused. We've run in Africa and Elko, Nevada, and really in the outback or the Pilbara they call it in Australia is where the biggest autonomy center of the world is.
And we've just won the largest deployment in the world of autonomy, it's a mine of 300 vehicles. There will be 100 of the big trucks as the first rollout. And that's what we're pounding out right now.
And then every additional vehicle as fast as we can. So we've been asked to start on the second round of different kinds of vehicles to deploy there, but we have to have all of those vehicles in that same video game, like interface of autonomy for all the safety interactions and make sure that we're optimizing that flow of iron ore out of that mine.
And so it's really an AI and machine learning optimization to move material as fast as you can and right now harder because you have a lot of humans in the loop. And so you're trying to interact safely around humans and optimize an operation that has human interaction.
Clint Betts
It's interesting to hear you say, "Hey, we're not looking for exits. We want to build this long term." And you've obviously done that. I mean, you've been in business for a very long time. What is the end goal?
Mel Torrie
So in 2018, I finally got my wish of making everyone owners. And so as you consider the challenge of aligning hundreds of people, getting them to make the kind of decisions that are as optimal as possible to get the level of effort to get the camaraderie and alignment, I think back to those early days where there were 10 of us and that ownership mindset was really it. So I was able to convince my wife, who was the CFO at the time, that we should give everyone ownership through an ESOP.
And it was funny, someone even asked why I was crying? I teared up as we made that announcement to our employees that they were all going to be owners. And so we allocated shares. And what's fun about that is it really provides that long-term strategy where I can turn it over to like-minded people who will put people first from the foundation of the team that has made all of this possible.
I've just seen too many friends who've sold companies and the people that helped them get there are really sidelined. Their benefits are cut quickly by the big companies, they struggle to produce because of the quarterly earnings and some of the challenges with that and the turnover in leadership.
So the vision is really an employee-owned company that is in for the long haul to build an incredible company that is leading in the industrial automation space, so across outdoor industrial equipment and prove that putting people first should be able to outperform those short term exit in three to seven years and sell your people to the highest bidder and go buy an island or start another company.
Clint Betts
Yeah, that's a remarkably different strategy than we hear from most companies and CEOs these days.
Mel Torrie
There are not many books on that. It's not really celebrated. And as you talk about who are the great leaders, it's how many exits, how big was their raise? How big was their exit? It is not, “How did they treat their people and build a long enduring enterprise that scaled and stayed within the family.” And by the family, I mean these employees, this team that helped make it possible.
I was speaking at a public robotics company once and they were laying off 50 people and had a hundred million in the bank. And I said, "What are you doing?" They said, "Well, if we spend more of our savings, then our stock price will drop. Boeing will buy us and move us to Georgia."
And so these people that have sacrificed and brought their hands, mind and heart to the table are just dumped. And I just can't fathom that.
And I guess the long term bet is that you will get more of their hands, hearts, and minds if you do put them first. If they do see that, you get that retention of they're onboard and they give everything they've got because you're aligned with their needs and interests and what they care about. They're owners, you give them a voice and you help them reap the rewards as an owner, you give them a choice in the benefits, in the IR&D spending, in the hack-a-thon spending as far as what time they get to spend on their own projects, on the training budget.
And so I've just tied formulas to gross profit for everything that they've asked for, and then we just jointly try to maximize that gross profit and get the things that we aspire to make our journey better.
Clint Betts
And so there's a way where they vote on what the company does and what they themselves would even be working on.
Mel Torrie
Yep. So we do surveys and so we've asked, "Hey, what benefits? Rank these benefits in importance to you." And we literally report on that formula every month with, we made this much gross profit in the robots that we've shipped. That means our training budget or your hackathon budget or your IR&D, your cash bonus, your vacation days are all coupled in or your 401K. Anyway, we've applied formulas for that.
So this year has the most variables now that are tied into that. So training budgets now are tied in, so you want more training. You want to go to a class instead of just getting a book like in the early days, then this is the gross profit number, and here's how your role will contribute to that gross profit and get you what you would like to have.
Clint Betts
I like to end every interview with this question, and I think now is a good time to ask it given what you just described. And we often say at CEO.com, "Hey, the chances that are given are just as important as the chances that are taken." And it sounds like you're giving your employees a chance in what you're describing to be an owner and to be a part of the company and be a part of the decision making and the direction of where everything's going.
I wonder, in your own life, who gave you a chance?
Mel Torrie
Yeah, that's a zinger. I think obviously my parents who worked their tails off and said I could do anything I put my mind to despite my terrible grades, but I would say my wife has been the one, she's the one who worked me through school, waking up at 3:30 to do medical transcription and working in different ways just to get me through school, and then to be that support where we've taken the company, right up to three near death experiences where we've had to mortgage everything.
We've had every credit card, every amount of leverage the bank would give us for everything that we own, and she's stuck by me and let me do it three times. And the last one, she said, "I can't do it anymore."
And we have this saying, seek to understand, seek to be understood, and then get on board with the second-best decision like it was your own and the second best meaning, it wasn't yours. And so she said that night, "I can't go on. I cannot support the second-best decision. We're all out of money. You've got to sell and take that offer that you've been given."
And then the next morning she said, "I remembered we can take a loan out on the rest of our 401K. I've done the paperwork and I think we can make payroll." And within a week our company quadrupled in value into those nine figure kinds of numbers. And that she supported me and then didn't force me to take those nine figure offers to sell the company. I'm speechless. I am indebted to her forever.
Clint Betts
That's unbelievable. Mel, thank you so much for joining us. Good luck on everything that you're working on. It's incredible what you've accomplished, what you've built. It means a lot to have you on the show. Thank you so much.
Mel Torrie
Clint, you're the legend, man. Thanks for having me. It's amazing what you've created in this area and just so thrilled to be a part of this community.
Clint Betts
Appreciate it. Thank you so much, Mel.