Matthew Rooda solved a major issue for hog farmers through starting SwineTech. He raised more than $6 million in venture capital and has been recognized by Forbes 30 Under 30. Tune in to hear valuable advice from an entrepreneur who knows what it takes to grow a business and stay ahead of the competition.
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Matthew Rooda solved a major issue for hog farmers through starting SwineTech. He raised more than $6 million in venture capital and has been recognized by Forbes 30 Under 30. Tune in to hear valuable advice from an entrepreneur who knows what it takes to grow a business and stay ahead of the competition.
Chapter Summaries
Key Takeaways
Resource Links
CONNECT WITH MILLION DOLLAR
Hello, and welcome to Million Dollar Monday. I'm your host, Greg Muzzillo bringing you real successful people with real useful advice for people with big dreams. I understand and big dreams. I turned an investment of$200 and a lot of great advice from some really successful people into my big dream Proforma. That today is a half billion dollar company. Well, if you're a bacon lover, like I'm a bacon lover, and I know many of my friends are bacon lovers. even from their post out on Facebook, I have a fascinating guest today. He is a Forbes 30 under 30, person, and he is the founder, president and CEO of a company called SwineTech. Please join me in welcoming Matthew Rooda, Matthew, thanks for joining.
Matthew Rooda:Hey, thanks for having me, you know, based on that bacon reference, I was actually at an event in Ohio and they got bacon vending machines. I kid you not.
Greg Muzzillo:Really. And is it warmed up? Does it serve it warm or cold?
Matthew Rooda:No, it's like served cold. It's like an Oscar Meyer bacon vending machine. It's pretty cool though. It's been a neat initiative.
Greg Muzzillo:Well, very good. What will they think of next? All right. Matthew. I really enjoyed our talk prior to starting the recording, because it gave me a great understanding of far deeper understanding of what it is SwinetTech is doing. And it really is fascinating, but let's start at the beginning. I think at some point you were actually pre-med right?
Matthew Rooda:Yes. So growing up, I did a lot of work in the swine industry all the way down to contract vaccinating facilities when I was in fourth grade. So strong work at ethic, self driven. So I wasn't, I wasn't being forced to work, but it was something I loved to do. And then I went to college and I really wanted to try something different. My dad actually told me as a lifelong pork producer, do something different, check something else out. And so I really loved the idea of helping pigs be born. I thought being an obstetrician could be that next step of something, a little different that I would really enjoy. And so I studied genetics and biotechnology throughout college and in that time managed swine operations, but also worked as a medication aid in nursing homes. And that allowed me to really widen my horizon and really put me in a place to start the company we have today.
Greg Muzzillo:All right. So all of those things, those experiences and your father told you try something different at the end of the day, you kind of came back to the same industry. But I'm sure he's excited to, be able to share stories and share the enthusiasm for the industry. I'm sure he loves. So talk to us about the founding from the very idea. I think we're gonna start this. I think you're the co-founder actually. So having the idea, having the discussions from discussion to a business, right? The very early like, Hey, I think we're a business we're no longer an idea. Let's talk about those very earliest of moments.
Matthew Rooda:Yeah. So it all started when I was managing, a faring house. It's where all the mothers give birth, in Iowa and my freshman and, sophomore year of college while I was there, we were doing really well. But one really frustrating aspect of pig production is that mothers as they're giving birth, if they're not attended to in a timely fashion, cuz of everything going on, may roll on and crush their little baby pigs. And so I could have, have worked so hard, but walk in in the morning and see seven dead baby piglets underneath of a mother. And that was really frustrating and, you feel really bad for, for them. And I knew there had to be a better way. Well, during that time Amazon Alexa was coming out and voice recognition was a big thing. And when you go into a pig barn, you very quickly within a day or two, we'll be able to hear the sound of a piglet squealing and know if that piglet is in danger of being suffocated under its mother. So you, you run over there, you get the mom up and you save the pig's life. Well got to the university of Iowa and the university of Iowa sent out an email and said, we have$3,000 for a student with a good business idea. And if we liked idea and we give$3,000, we also have a program, a student accelerator, which you get free college credits, along with some other funding. And so I started thinking, you know, there's this problem around piglet crushing that I know is a global issue. I should talk about this. And so I reached out to some prior employers had them send me their production data. Then I sat down with the university in that session and showed them the data of the problem across multiple operations, significant sized operations. And they were like, you are the first person to ever come in and actually show us data to support your problem. And that led us to eventually getting that$3,000 and getting into that student accelerator, that was that first step. Because in that go ahead.
Greg Muzzillo:Was there a partner involved at that time or did you later bring in a partner
Matthew Rooda:Just after that? Basically I brought in that partner just after and just during, really just during that process, me and my best friend, an individual named Abraham Espinoza from Mexico who was studying at the university of Iowa and okay. He was studying computer science. I said, you know we should really go for this and at least give this a shot. And he was all about it. And so we went through this accelerator process where we had to find two other people to join our team. And it was kind of tentative whether they were on our team long term or not, but it's somebody for the program. And in this program, we had the opportunity to put together what they call the business model, canvas, understand your key components of your business, case and business model. And we went through that program. And during that time, an individual from an accelerator in Iowa came up to us and said, Hey, I've been following you guys through this program from a distance. And I like what you're doing. Our applications are full, but we'd love to accept you guys as an 11th team to our accelerator, which was a 90 day Techstar style accelerator. And then we'll give you$25,000. And the only, key thing that you need to decide within the next 48 hours is you got to drop out of college for a semester.
Greg Muzzillo:That's a big, that's a big ask. That's a big ask, but explain to our listeners, cuz some of them don't know what is an accelerator?
Matthew Rooda:An accelerator is a group of individuals that have created a curriculum for entrepreneurs that have recently started a business or are preparing for an inflection point in their business. And so you go in, they help you meet with mentors, they help you refine your pitch, help you, really take that next step within your business. And for us it just taking it from concept to proof of concept.
Greg Muzzillo:Of some accelerators are university college, related. Some of them are actually independent, maybe funded by angel investors or whomever but they sometimes can also just provide office and some minimal sort of support. And just an environment where all kinds of people with all kinds of ideas are sharing together, networking together and, lots of good things can happen there. So thanks for that explanation. Al l r i ght. So you ge t a, become a part of this accelerator an d t hen tell us more.
Matthew Rooda:So we're a part of this accelerator. We learn to present our company and in a more line, a professional way the, the leader of the accelerator was Eric Engleman and, he and his team of advisors were, were just incredible at helping us refine our presentations. And that really set us up to acquire the capital that we needed to even get to a point where we were a viable business. And that's where we went from accelerator stage into pitch competition stage. Yeah. So let's talk about that a little bit because even, I am only mostly familiar with pitch competitions at the college level where the entrepreneurship program at a school and my wife and I, we were talking about that we co-sponsor the$50,000 big idea Gator competition at the University of Florida. But so most of what I'm familiar with is university related pitch competitions, where one of the members of the team has to be a student or a recent graduate of the school. So tell us about these other pitch competitions that are not university related. Well, so within the university related pitch competitions, they are, there are many universities that accept applications from students from other universities. Baylor's a big one. BYU does that along with many others, Princeton, Harvard. I guess at that time we had already put together a pretty good presentation. We knew what our roadmap was gonna be and all our core value propositions. So I just started to Google business plan competitions and I applied for them all. And like you, I think there was a website called grasshopper and there's, there's all these ones out there. You just got to Google and you got to dig. Within that though. It's for us, the hardest part was how do you get accepted once you're on stage? We, we did very well. We won 25 of the 31 we competed in, but I might have filled out like 90 applications to, present at business plan competitions. And you really start to get on a circuit and you start to see the same people because once you figure it out, it's a pretty good source of revenue to really keep your business moving on. And typically the people that are good at it find a way to get to the other competitions as well.
Greg Muzzillo:90 applications. And over what period of time in pitching, in these various competitions over what period of time and how much money did you raise?
Matthew Rooda:So we really started competing in business plan competitions that the, the very beginning of 2016 with the QEC competition in Queens, Canada, we came in second in that one. But then quickly went on to Princeton and MIT and, and Harvard and Microsoft and all these others and got first and within about a year, year and a half, we were able to acquire just over$300,000 in non dilutive grants from these competitions. And that really allowed us to build out the proof of concept hardware that we needed to raise a seed round of funding.
Greg Muzzillo:Okay. By non dilutive, explain a lot of people don't know,
Matthew Rooda:No strings attached. Here's a check for$50,000 and you do with it what you think is best for your company?
Greg Muzzillo:No ownership, correct? Just yeah. More of a grant if you will. Yep okay. So for a year, year and a half you're going around north America sounds like actually raise eventually$300,000. Is the business up and running yet or no, there's still no real operation or sales or revenue.
Matthew Rooda:No operation sales or revenue. We were definitely in a spot where we were building out a technology that would use voice recognition to hear the squeals of baby pigs and then take that over specific time domain and communicate to a wearable placed on the mother's side that would alert her to safely get up and save that piglets life in an autonomous fashion. So there were, there were four different inventions that we needed. So we were going to Vietnam and Japan to find the correct adhesives that were medically safe for placing on an animal. We were working in North Dakota with our plastics manufacturer. We were all over the place during this time just setting up what we needed to get our patents in place and the product in a place where we could make a production run after a seed round of funding.
Greg Muzzillo:Even that process of earning patents, intellectual property is expensive and time consuming. How many patents do you have today that are either whether they're still in the process being filed or they've been granted, how many patents do you have?
Matthew Rooda:So it'd be four patents and then, four, trademarks as well.
Greg Muzzillo:Yeah. That patent piece as, a person who judges business plans at University of Florida, University of Notre Dame Case Western Reserve University etc. I think that's one of the big things that I know I look for is, Hey, this is a really great idea, but once you start doing it, what are you doing to, you know, know kind of close the door on other organizations competing with you? Because just to breed competition by itself is not really a very affordable business. I know, you know that right? Protecting your concept is a huge piece and part of it, how did you go about finding the right patent attorney being able to afford it, being able to understand the process of it all, tell our people about the importance of that and how you went about it. Yeah.
Matthew Rooda:So what we did is we worked with local entrepreneurs that have done things like this in the past, and they recommended who to work with and who not to work with and who might be the best fit. I think when we looked at patents, it's definitely a great barrier to competition. But then we also take a look at, other things we do in software, right? And we look at Facebook and these other companies and we had an advisory who told us, you know, you're gonna have things you can't protect, you can't build a moat around, but you're the only one who has the specific vision of where you're going. And so the question shouldn't be, can somebody copy you because they're most likely gonna copy you different because they don't understand your core vision. The real question should be is your vision, right? Because if your vision is right, the ability for other people to compete or catch up or keep up, it's tough unless they have just incredible amounts of funding. And so that was something we held dear to heart and we really took both strategy to heart and, pushed with those.
Greg Muzzillo:There's no doubt. First mover advantage is a huge advantage also with, or without patents and trademarks. And by the way, you didn't explain it, but it's the same people typically in a law firm, the intellectual properties, people that deal with the US PTO, right. US patent and trademark office, that can help, give you great advice around that. And you can learn a lot and I bet you did Matthew at USPTO.Gov right? You can learn a lot about just examining what patents exist, what trademarks exist.
Matthew Rooda:They actually uspto.gov even has a, like a fourth grade math assignment about saving pigs. So we competed in a competition with the and we got first place. We award a gold medalist as from the US PTO office as a student in the undergrad category. And then a year later we see on this fourth grader thing evolved from innovation. It was hilarious. Wow. So someone out there's learning to save pigs in math
Greg Muzzillo:You know, all right. So I'm fascinated, by the story, I didn't know, there were that many resources to go and raise money, and I'm really loving learning all of this. So at some point though, you've got the patents, you've got the products, you've got all of the processes, et cetera. At what point, how many years after starting raising money and having the idea for that first pitch, how many years, or how months or whatever did it take to go for from being a real business with your real first customer?
Matthew Rooda:So with a real product manufactured in a scalable way, it was probably about three years. We really didn't. We really didn't start any of the product manufacturing outside of prototyping until year two. So that first year or first nine months was mainly understanding, okay, say, how are we going to approach this whole thing? What is our strategic plan? And then the next year was how do we get the initial grant funding that allows us to prove what we're talking about can actually take place. And then with that, we had the social proof from all of these competitions and agencies to go out and say to investors, look, we have something of potential value. Would you be willing to give us a seed round of funding that allows us to go chase this? Did You have an initial seed round of funding? Prior to even being a revenue generating company? We did. So we got a little over, one and a quarter million a nd, a nd funding just to go out there and get the, t he molds and t hen materials we needed to, put these devices and farms and hire on some, engineering talent, from a local aerospace company. And, that really allowed us to move forward. I guess, one name that's notable to mention in the accelerator process, post that first founder with Abraham, we brought on somebody named John Rourke and John was, an individual with a background in NASA, the Pentagon Royal air force, just a very, tech d riven individual, but very scrappy. And so coming up with prototypes and being able to, move and pivot very quickly was a real strength of his that allowed us to have the prototypes. We needed to go raise a seed round.
Greg Muzzillo:And that seed round that one and a quarter million dollars was diluted. They took some owners I'm assuming in the business. Yep. All right. So, and I know you've had other rounds and you've raised up to over 6 million, so you're doing something very meaningful. During those first couple of years though, prior to having a big over million dollar seed round, how did you and your partner feed yourselves? That's a long time to be going without a revenue generating business.
Matthew Rooda:So I was actually working as a medication aid in a nursing home during a lot of this process. And so that's, that's how I did did that on my part. I think my COFA founder was working at, old Navy for a little while and, we really weren't able to pay ourselves. So cuz I mean, we could have paid ourselves, but we wanted to put every dime back into the business and do whoever we were bringing in.
Greg Muzzillo:And I like seeing that when I review a business plan, I get a little disturbed, when people put a lot of money in that for them selves as a salary early on. I guess that's maybe because I'm a bootstrapper and I've talked to a lot of other people that say, no, I'm perfectly fine with it. They need to get focused on the business, et cetera, but, good for you guys.
Matthew Rooda:For you guys. And one, one lesson learned is after we raised that seed funding, because we were already on a venture path, we probably paid ourselves too late. And so that's definitely a discussion founders need to have with their investors and with themselves and understand, you know, it's all good to, bootstrap, but once you do accept that funding, making sure that you're not wasting time compensating for too low of an income. So that's probably something I spent a lot of time doing is wasting time cuz we didn't pay ourselves enough.
Greg Muzzillo:That's a great point. And and having that conversation with your seed round funders is a great idea that, that our listeners should hang onto. All right. How did you find your first paying customer client?
Matthew Rooda:So first paying customer client came and from a recommendation from one of our, mentors throughout the programs, they had knew someone who knew another person who, who had then brought us there. The university of Iowa does a really cool thing with all the other universities in the state called the Okoboji entrepreneurial Institute. They take eight students from all four universities and they bring them to one location. You actually live with an entrepreneur for a week. Well, in that scenario, the entrepreneur, one of the entrepreneurs, there was, uh, best friends with another guy who owned a pork production company. And that's what allowed us to get in there as our first paying customer. Yeah,
Greg Muzzillo:Yeah. Yeah. Some people think that serendipity, I think it's all law of attraction, great things happen when people have positive energy, positive thoughts and there's no accidents. Right. All right. So I know you mentioned that your business pivoted, so you get the first customer and things are underway. Talk about the evolution now of the business and how, of course we've had COVID to deal with. Of course there have been other issues, in the swine and pork industry. Talk about those issues and talk about how you pivoted to what the business is today.
Matthew Rooda:Yeah. So we raised that seed funding round and a big portion of that went towards university testing at the Kansas State University to ensure proper welfare. So we actually got to work with Temple Grandon, which is a big name in animal welfare and, and that was pretty awesome. validated that the technology was not only safe, but it was effective. So we went out, got some more customers. Uh, we had some customers that were seeing incredible benefits, but then we ran into some that weren't seeing the benefits that we were expecting. And over the next couple of years and thousands of hours of video data and, trial work, we really found that yes, our technology can work incredibly well at saving pigs lives, but there's a big, there's a bigger people component to it. if you bring a technology into an environment and it says there's a problem, it still requires the person to respond and then carry out specific actions. Well, in our industry, we lack the ability to understand compliance to a lot of the processes that happen day in and day out. And so that was preventing not just us as a precision technology company, but many precision technology companies in our industry from actually bringing a product to market and getting past that initial test phase to a pure scaling, and real, really realizing success on, on a high level. So what we did is we stepped back, worked with 65% of the industry and focus groups and built what we call Pig Flow, which is a workforce and swine management platform that allows teams to better collaborate with one another driving, efficient workflows process compliance and pay it cares. And what that's doing is it's a platform for not just the industry and its employees to properly run their businesses. It's also a platform for precision technologies to ensure compliance in the management of their products. And so that's really setting us up as a key foundational company to this industry. Is that
Greg Muzzillo:Is that A SAS, model? What's the revenue model.
Matthew Rooda:It is. So we went from a razor blade model, you know, where you sold a piece of hardware for a cost. And then there were recurring fees that came with that to just a pure cost per animal managed model.
Greg Muzzillo:Razor blade model. I think everybody understands right. Give away the razor blade to make money on the blades itself. Right? Yes. Um, and, and that's what you're talking about there. Explain how your razor blade model worked, what prior to becoming a SAS model?
Matthew Rooda:So we had the hardware, the listening system and the wearable component for the mother as she was giving birth. And that came at an upfront cost, let's say of a thousand dollars. And then we had the adhesive that would take that wearable and allow you to transferable attach that to a new mother every five days as, as they were giving birth and, going in and out. Well, that patch itself was a disposable. And so they would have to buy recurring patches. Got it.
Greg Muzzillo:Very good. And SAS is software as a service where people are just sort of paying to rent or you use, or whatever your technology, not necessarily buying anything, can people still buy, all of that stuff. The products also is that also still a revenue center for you.
Matthew Rooda:It, it is still a revenue piece for us right now. We're more focused on Pig Flow and that's the key pivot that was a big success for us, just because pig flow is a foundational tool that will help products like smart guard, that piglet protection technology survive and thrive in, in a world of change in this industry,
Greg Muzzillo:Fascinating man and your a bright young man, to just sense, an opportunity, to see a problem and sense an opportunity, and yet not get stuck on that original idea to sense a different challenge and to sense an even bigger opportunity it's really quite a gift. I know that, you know, we talked about this prior on here. I know that over time, um, swine and pork has been kind of big in the news. It's an international challenge. And I know that you got involved internationally. Tell us about that.
Matthew Rooda:Branstad who's the ambassador of China was the ambassador of China, was the governor of Iowa. And so when we started out our business, we got to know him well. And so that's what allowed us to do that over there. We also got to meet with some of the largest producers. In China they had a disease called African swine fever, which was a virus that originated from warthogs in Africa and eventually made itself to China. Well, 50% of all production of pork in China was done in the backyard of homes. And so it was it. Yeah, it was not nearly as advanced as what it is in the United States and Europe. And that's what allowed a lot of that to spread so quickly. So we saw just a, decimation of the industry over there, which really provided an opportunity for other areas of the world to supply pork to China. They still have not been able to recover from that. ASF is the acronym for African swine fever. That's spread to Germany, it's spread to as close as, I wanna say the Dominican Republic. So there's a lot of concern right now that this ASF might make its way into the United States. And so for the last two years, our government and our industry have collectively worked together to, to plan for how would they respond. So that way we don't see the, the impacts that China did.
Greg Muzzillo:And I would imagine that that would drive demand for your technology, because if and where there is great compliance, there are better, I would imagine fences around, keeping this out, keeping that Problem out.
Matthew Rooda:Yeah. Bios better biosecurity practices, making sure that, what is going on is safe and secure.
Greg Muzzillo:Awesome. Matthew, you're a fascinating guy who is built a fascinating business, no wonder you're a Forbes 30 under 30 award winning entrepreneur. Now tell us, you've already built a dynamic business, a successful business with international recognition. What are the big dreams you have left for this business and for your life?
Matthew Rooda:Yeah. So with this business, the big dream that I might have is that we can, at one point in time, as a society have complete welfare assurance and traceability within the supply chain. And that's gonna really take a lot of collaboration through our industry, safe and secure pork that focuses on pigs, people planet. The sustainability story that comes with this pork should be the first carbon neutral source of protein, that's consumed in this world. So that could be pretty exciting. Personally, it's, it's kind of an open book. There's a lot of directions that I could go. There's, there's a lot of people that I've been able to meet, and there's a lot of change that's gonna happen when we look at the last 10 years, so much has happened. So I can't imagine what the world will look like in the next 60 years.
Greg Muzzillo:I'm highly confident Matthew, that you will find more challenges than opportunities, to apply your creative problem, solving skills and create new and exciting opportunities for you and the world. Matthew, thank you very much for joining us.