Larry Ellison’s $500 Million Vertical Farming Startup Is Struggling to Grow

Larry Ellison is probably best known for being the founder and CEO of Oracle and a close confidant of President Trump. But he’s also spent years quietly building a vertical farming startup. And after a lot of time and nearly $500 million in investment, the company is still struggling to take off, with its early indoor farms likened to more of a DIY project than something that has received nearly half a billion dollars in capital.

The Wall Street Journal has a new story detailing all the problems that have beset Sensei, and what stands out the most is just how pedestrian many of the problems seem to be. Sensei initially focused on building vertical farms on the Hawaiian island of Lanai, which of course, is mostly owned by Ellison. Somehow, despite living on the island, Ellison did not anticipate that the unique environment there would pose problems:

Winds blew the roofs off the greenhouses multiple times. Ellison said the structures would cost $12 million, but they ended up costing closer to $50 million, both from the damages and cost overruns, according to people familiar with the matter.

Ellison said the greenhouses, totaling 120,000 square feet, would be off the grid, powered by solar panels thanks to its partnership with Tesla. But the panels often didn’t work. The high winds showered them with dirt and debris, and there were questions on whether they were installed properly, according to one of the people.

Instead, the greenhouses’ fans, water pumps and other needs were often powered by diesel generators.

Wi-Fi problems meant cameras and high-tech sensors, which were supposed to monitor the crops’ health and control such things as window shades, also didn’t operate as planned.

Large-scale indoor farming has been a dream of the agriculture tech sector going back more than a century, and in some pockets of the world, it has shown promise. Vice President JD Vance and Elon Musk’s brother Kimbal have both taken cracks at using technology to produce vegetables indoors, with the idea being that food could become more affordable and accessible if it can be grown locally, in any environment, with tech replacing costly labor. Think of a traditional greenhouse that grows crops like tomatoes, but on a much bigger scale, with artificial lighting that allows vegetables to grow in any season.

On Lanai, the soil is not ideal for commercial farming, and the island must import 80-90% of its food. Many places around the world feature similar conditions and could theoretically benefit from vertical farms.

But vegetables are low-cost staple goods, and the initial upfront costs to build out these startups have made the produce more expensive than consumers are willing to pay. Vertical farming startups like Sensei require expensive artificial lighting and have other complex operational needs, like all that software to monitor crops. Large, heavy crops like corn are not necessarily suitable for an indoor farm either because they have long growth cycles and it’s difficult to support their weight in a stacked system. That in part explains why many vertical farming startups have focused on heads of lettuce.

Both Vance and Musk’s startups have largely failed to achieve their aims—AppHarvest, the farming startup that Vance was a major investor in, filed for bankruptcy in 2023. Musk’s Square Roots laid off most of its staff the same year.

Besides technical challenges, these startups have struggled to reach economies of scale. Similar to a startup like WeWork that had similarly bad economics, Sensei is not a traditional Silicon Valley startup that builds apps that can be scaled very quickly. There is a reason why Uber and Airbnb prefer to not own any assets. Sensei is building a capital-intensive, physical business that needs a lot of money and patience to reach a point where the crops can be grown profitably.

Thankfully, Ellison is one of the richest people in the world, and he can afford to spend $500 million on something he believes in—though the Journal article alleges he might be losing patience. Sensei has more recently retreated from Lanai and is now testing operations in Southern California, where the company is prototyping a new system that uses robotics; it is also testing its robots at an existing greenhouse in Burbank. Things may ultimately work out for Sensei if Ellison’s friend President Trump manages to wipe out all the migrant farm labor across the country, as he seems hoped to do, leaving robots as our last hope to grow vegetables.