Agriculture


Article of the Day

AgTech Mid-Year Investing Report – 2016 – AgFunder

____________________

Seed stage investment continues to drive agtech investment, representing 52% of deals recorded. The total size of seed stage investments grew with 159 seed stage deals raising $104 million in H1-2016 compared to 260 deals raising $130 million for all of 2015.
~ AgFunder

Student Ag Entrepreneur Business Concepts by Subsector

Visitors to the Agricultural Entrepreneurship Initiative ask me what businesses student ag entrepreneurs are most interested in.  One way to answer the question is to look at business concepts students create for the entrepreneurship course I teach at Iowa State University, Entrepreneurship in Agriculture.

Two week’s ago, students in the course pitched their favorite of the 2 or 3 new business ideas they’ve developed in the course.  I went through the list of business concepts and categorized them by subsector.  I use subsector definitions from the AgFunder report on AgTech investment activity.

Alternative Protein – These companies look to replace traditional sources of protein such as meat and eggs. Companies fall into three categories: cellular agriculture; ingredient innovation; and the production and discovery of alternate protein sources, such as crickets or algae.

Animal Health & Nutrition – Companies that identify agricultural livestock or farming of aquatic organisms as a key market.

Bioenergy – Companies producing energy made from materials derived from biological sources.

Biomaterials & Biochemicals – This includes companies using biological material to produce/farm: peptides, bioplastics, non-ag inputs, microorganisms, pharmaceuticals, microbes and algae, functional ingredients/nutrients/phytoceuticals.

Cannabis Technology – Companies developing technologies for the emerging legal cannabis and hemp markets.

Decision Support Tech – This is our primarily software-focused category. It includes but is not limited to precision agriculture technologies. It includes satellite data companies, big data, and ERP technologies. Excludes companies categorized under drones & robotics, and smart equipment & hardware, and irrigation & watertech.

Drones & Robotics – Companies that are building drones or robotic technologies which have self-identified food or agriculture as a key market.

Farm-2-Consumer – Companies that directly deliver food to consumers from farms, differing from food e-commerce, which involves e-grocers, meal kit delivery services, and specialist meal delivery.

Food E-Commerce – E-grocers, meal kit delivery, and specialist meal services which are attempting to disrupt the agriculture value chain. Excludes restaurant delivery.

Food Tech – A broad category including food processing, food enhancing technology (e.g. flavor or nutritional value), packaging, food analysis.

Food Safety & Traceability –  Includes all companies attempting to track food production, food sterilization or introducing technologies that reduce the risk of food safety concerns.

Indoor Agriculture – Includes all farming operations that occur indoors or in greenhouses, and the technologies that accompany them. It does not include Cannabis-related tech, which is spun out into its own category.

Irrigation & Watertech – Includes all technologies involving the management of water for agriculture. Some precision irrigation companies could technically fall into smart equipment or decision support tech, but we felt that this categorization would be more informative.

Smart Equipment & Hardware – Predominantly includes sensor technology, Internet of Things (IoT), and other non-robotic machinery in the food and agriculture value chain.

Soil & Crop Technology – Includes: biological inputs and treatments, chemical inputs, genetics–based tech, new crops, seed technology.

Waste tech –  Includes products made out of food waste, wastewater treatment for agriculture, and agriculture or food waste mitigation technologies.

 

Student Business Proposals By Category
Entrepreneurship in Agriculture Course
Fall 2016 Semester, 94 Students

Category                                                                        Percentage
Alternative Protein                                                             0%
Animal Health & Nutrition                                              11%
Bioenergy                                                                              0%
Biomaterials & Biochemicals                                            3%
Cannabis Technology                                                         1%
Decision Support Tech                                                      9%
Drones & Robotics                                                             5%
Farm-2-Consumer                                                            15%
Food E-Commerce                                                             0%
Food Tech                                                                            0%
Food Safety & Traceability                                               0%
Indoor Agriculture                                                             5%
Irrigation & Watertech                                                     0%
Smart Equipment & Hardware                                       5%
Soil & Crop Technology                                                    0%
Waste Tech                                                                          0%

Non-Technology Agriculture                                         20%
Non-Agriculture                                                                15%
Social Impact                                                                       8%

I work the students through various exercises to see if we can identify new business ideas that come from something unique to their experiences or observations.  In particular, many of their ideas come from:

  1. A problem they’ve noticed or experienced that others haven’t noticed.
  2. An experiment, accident of circumstance, or heritage activity from their past.
  3. A personal passion and interest.

57 percent of student ideas were related to agricultural technology, 77 percent in total related to agriculture.  Most, but not all, students are agriculture majors at ISU and/or have backgrounds in agricultural production, so probably not surprising as to their interests.

The top category in the AgFunder report linked to above for 2016 investments was Food Commerce, a category ignored by students.

What categories of student business plan or investment will be the most attractive when we look back ten or twenty years from now?  I suspect certain themes will run through winning businesses.  To suggest a several:

  • Time/labor saving technology – It’s an old story in agriculture, but technologies that save labor win in the long-run.  Robotics offers a myriad of potential applications to take labor out of various processes in agriculture.
  • Unique food ingredients and products – Consumer interest in food products with a story will continue to grow. Where was it grown?  How was it grown?  What makes it different?  What experiences are coupled with the food?
  • Data at the right time and place – We have a lot of data in agriculture today.  The question is what to do with it. Technologies, services, models, and algorithms that enable decision making at points in time where those decisions make a difference in outcomes will win.
  • Disruptive economic models – New technologies and accompanying business model innovations enable challenges to existing supply chains and logistics models.  Some may create significant changes in unit economics for production of certain agricultural products /commodities which will drive changes in place of production and logistics of product movement.

What are the most interesting categories of future business opportunities for you?  Why?

Article of the Day

Why Grass-Fed Beef is on a Roll – Wall Street Journal

Supermarkets Make Stars Out of Weird Apples, Knobbled Carrots and ‘Spuglies’ – Wall Street Journal

____________________

This magical, marvelous food on our plate, this sustenance we absorb, has a story to tell. It has a journey. It leaves a footprint. It leaves a legacy. To eat with reckless abandon, without conscience, without knowledge; folks, this ain’t normal.
~ Joel Salatin, farmer and author of Folks, This Ain’t Normal; You Can Farm

Food as a Lifestyle Purchase

A megatrend I see underlying change in agriculture and the food industry is a switch from food purchases for taste and convenience to a lifestyle item.  This megatrend expresses itself in all kinds of ways, but it presents both challenges and opportunities to agricultural entrepreneurs.  The ugly fruit and vegetable campaign, growth in grass-fed beef, the bigger organic aisle at your grocery store, local food fans.  All these are indications of changes in U.S. food markets that are being driven by our customers.

megatrend-food-as-a-lifestyle-purchase

Case – Whole Foods. Whole Foods Market Inc. is the grocery store chain featuring foods without artificial preservatives, colors, flavors, sweeteners, and hydrogenated fats.  It is the United States’ first certified organic grocer.  It started in 1980 in Austin, Texas and now has more than 400 stores and 90,000 employees. On a trip to Austin last summer, I spent three hours in the first Whole Foods store.  I talked with staff and customers and checked out products and produce.  Austin is certainly not Ames from a cultural perspective, but I came from that tour with an even stronger sense of the underlying shifts in consumer preferences for food. Consumers interest in the health characteristics, production methods, source, and environment impact of what they eat is increasing, and it’s not a fad that will run its course.   You may or may not be a fan of items in the organic aisle, but its become almost 4 percent of U.S. food purchases, approaching a $40 billion market.

fruitsandvegetablesorganicdemand

Case – Sawmill Hollow Family Farms. Sawmill Hollow Family Farms in western Iowa is a great example of a farm-to-table business riding the megatrend wave.  Andrew Pittz pioneered growing aronia berries, a native superfood with polyphonolic compounds, including: antioxidants, anthocyanins, resveratrol, proanthocyanins, now considered to be one of the most nutritionally dense fruits on the planet. He evangelized the products made from aronia berries, and has forged a place in the market for a growing array of superfood products.  From an entrepreneurial perspective, consider the boxes he’s checked in developing his business.  Crop/product with an intriguing story – check.  Product traceable to farm – check. Product with unique and marketable nutrition and health traits – check.

Case – Blue Apron.  Blue Apron is a meal kit business founded in 2012 that now delivers more than 5 million meals monthly.  Blue Apron’s approach, the meal kit, offers the convenience of delivery while keeping home cooks in the kitchen. The precisely portioned dinners minimize waste and allow consumers to try ingredients they might not otherwise buy, at a price they’d have trouble matching–roughly $10 per meal per person.  And many of the ingredients are sourced directly from farms.  Is this sort of service just for people in cities?  I heard about Blue Apron from a student who’s parents live in rural Iowa.  Both are busy so they enjoyed the convenience, the quality of the ingredients and meals, and the introduction to new food ideas.

What does food as a lifestyle purchase mean for opportunities for agricultural entrepreneurs?  That’s difficult to forecast, but it’s safe to say that there has never been a better time for the imagination of entrepreneurs to define the future of food and agriculture.  Emergent sweet spots will continue to emerge for entrepreneurs who can reduce transportation costs, have fewer levels between farm and consumer, and create novel products and experiences.

What opportunities do you find most interesting that may be driven by tomorrow’s food consumers?  How will those opportunities shape agriculture and the food industry?

Article of the Day

Idea Evaluation Checklist – Entrepreneur

____________________

“Every problem has a solution.  You just have to be creative enough to find it.”
Travis Kalanick, Uber

Evaluating Early Stage Ideas for Startups

The beginning idea for a startup business is only part of what’s necessary to get to a viable business, but it certainly helps to start with a quality idea.  So how should aspiring entrepreneurs both come up with and evaluate the potential of new business ideas?

A tool I’ve developed to help students evaluate their own and other student startup ideas is the Startup Evaluation Matrix.  It also serves as the rubric by which I formally evaluate and grade new startup business concept papers.  In addition, I increasingly use it when speaking to aspiring entrepreneurs from outside the course who are looking for feedback on their ideas.

Startup Evaluation Matrix - Kevin Kimle - Iowa State University

Each of the elements of the Startup Evaluation Matrix reflects a yin and yang relationship; complementary, interconnected, and interdependent forces that shape its attractiveness. This balance in a startup business idea is difficult to shape, yet one that consistently comes through in the most attractive startup concepts.

Migraine Problem/Value to Customer – I use Diana Kander’s all in startup book’s notion of a problem that represents a significant opportunity, a migraine problem. A business needs to solve a problem so significant that customers will do whatever it takes to solve it, including paying someone else for a solution.  Envision the problem as a migraine headache.  The flip side of the problem is the value of the solution to the customer.  Does the solution have a clear and significant advantage?  Does it hit the ‘homerun’ of being better, faster, and cheaper?  Does the solution deliver value while making life simpler for customers?  So many technology startups miss this mark in that they may be able to solve a problem, but they are so complex or require such significant changes in behavior that they simply will never be considered viable by most prospective customers.

Niche Now/Big Market Potential – Peter Thiel in Zero to One writes that entrepreneurs need to look for ‘monopoly’ opportunities; markets where they can shield their businesses through various means from competition that will bid their profits to zero.  I think of attractive market opportunities for startups as being markets that are niches currently, but with the potential of big growth.  When we started E-Markets in 1996, there was not really a market for Internet-based electronic applications in the agribusiness space.  However, the Internet was new as a platform, and clearly had significant growth potential as a better, faster, cheaper platform for e-business.  Today I see agricultural entrepreneurs working on indoor aquaculture, robotics, diagnostic software, and other areas that have an undefinable market opportunity today, but huge potential in tomorrow’s market.

Doable Now/Unique Solution Long Term – Rarely is their something completely new, whether a technology, production system, product, service, or method.  Rather, entrepreneurs combine old things in new ways, and new places to create new solutions to new audiences.  New ideas build on old ones and combine them in unique, new ways. Quality startup ideas balance the do-ability of a new solution near-term with its long-term uniqueness.  A startup that will truly scale can’t be a copycat, it must aim to solutions that are unique and represent the target for which copycats aim.

Contrarian/Surprise Element – An attractive startup idea has some element that is contrarian.  It is treading left while everything else is treading right.  Perhaps that arises from the independent-minded nature of entrepreneurs who chart their own course.  The contrarian nature of interesting new business ideas also lends an degree of surprise or unexpectedness.  The highest impact startups will be something that could not be predicted by most people in advance.  The innovations that disrupt an established market will be initially dismissed by businesses that will eventually be put out of business.  In 1996, I was involved in a consulting project for Kodak.  The Senior VP we worked with dismissed the strategic threat of digital cameras.  Kodak was the first company to market a digital camera in the 1990s, but largely ignored the opportunity. Kodak filed for bankruptcy in 2012.

Deciding the quality of a startup business idea is more art than science.  Malcolm Gladwell’s Blink explains that choices that seem to be made in an instant-in the blink of an eye-actually aren’t as simple as they seem.  I know great investors and entrepreneurs that very quickly assess a startup idea, a business plan, or the viability of a new product or service.  I suspect that they have some kind of internal matrix-like structure that enables them to make snap judgements that are most often on-target.  Their mental matrix has been developed based on experience, but I’ve found that the Startup Evaluation Matrix is a means to embed a beginning way of thinking for less experienced entrepreneurs too.

How would you apply the Startup Evaluation Matrix to the following early stage agricultural businesses?  Which of these business concepts holds the most promise?  Why?

FarmStockNY, LLC – FarmstockNY is a New York based vertical farm delivering locally grown, premium quality produce using only the best organic practices. We use substantially less resources and can produce 10 times more yield (utilizing patented growing towers) than traditional farming methods. With our proprietary greenhouse and business model we can offer a large array of produce in an ecologically and economically sustainable way at very competitive prices.

EndoBiome – Current agricultural practices will be challenged to safely meet the nutritional needs of future populations. EndoBiome was founded to to tap the diversity of the plant microbiome to produce microbial products that increase agriculture. yield and sustainability. Endobiome is differentiated by a proprietary isolation process that yields beneficial microbes and a high-throughput bioassay to identify microbial products that improve root systems.

FarmShots, LLC – FarmShots automates the detection of diseases, pests, and poor plant nutrition on farms. We’ve grown rapidly over the past two years- scaling from small farms to more than 300,000 acres across the United States. We’re excited to be changing the face of agriculture as we know it.

Farb Guidance Systems – Formed with the purpose of developing, manufacturing, and marketing the next generation of machine guidance technology for agriculture: agricultural machinery that drives itself and can be guided and controlled from anywhere in the world. The technology, in conjunction with the equipment, will increase production and profits, decrease accidents, and help develop regions of the planet un-farmable today.

Article of the Day

In divisive election year, voters agree: Infrastructure needs fixing – Agri-Pulse

“Economic development provided the basis; Lincoln said much later, that would allow every American ‘an unfettered start, and a fair chance, in the race of life.” – From Team of Rivals, Deloris Kearns Goodwin’s book on President Abraham Lincoln and his cabinet.

Key Infrastructure for Disruptive Agricultural Technologies

Sara Wyant from Agri-Pulse asked me to participate in a forum this week on rural infrastructure.  Roads, railroads, locks, roads are each examples of infrastructure important to agriculture and rural economies.

The middle part of the U.S. produces a high proportion of U.S. ag output, much of it big and bulky, but efficiently ships those products to customers on the coasts and around the world.  In many ways it was the transportation ability of the Mississippi and associated rivers that enabled the economic development of the U.S. beyond the east coast. and the ability to ship products efficiently has remained part of the competitive advantage of the U.S. even as other modes of transport have developed.

As part of a panel asked to address disruptive innovation and agricultural infrastructure, I identified four key inputs for disruptive agricultural technologies.

  1. Electricity – Electricity is a key input to agricultural technologies involving microchips, controller, sensors, and a range of technologies that will form the basis of robotics and artificial intelligence taking root in agriculture.  Hydroponic and aquaponic technologies are now being used to grow vegetables and deliver them locally twelve months per year.   Use of software and drones is playing an increasing role in crop scouting.  Microchips are being placed in many traditional pieces of agricultural machinery, enabling them to connect to other devices and enabling better decision making based on new streams of data.  In Iowa and most of the Midwest, electricity infrastructure and cost levels are quite good.  Iowa, for example, has a strong group of rural electric cooperatives that are poised to play a key role in emergence of agricultural technologies.  Grade: A.
  2. Water – The FAO estimates that only 0.003% of earth’s water is available for human use.  Yet it takes a lot of water to produce agricultural products.  Water use and water quality are huge issues for agriculture and certainly a key input for disruptive agricultural technologies.  Indoor aquaculture systems are  a key emerging example of technologies that involve water.  Can we produce fish in a sustainable way and relieve pressure on wild catch and environmental issues related to sea and pond-based aquaculture production systems?  Can we use technology to improve water quality in agricultural production systems?  Water in the rural Midwest is largely available, but water quality in streams related to agricultural production is a challenge.  In addition, the water treatment infrastructure of many rural communities could be challenged by both emerging regulatory and consumer issues. Grade: B.
  3. Bandwidth – The Internet of Things has many possibilities for agricultural technologies, with devices, machines, and even crops and livestock connected to the cloud for sensing, monitoring, analysis and intervention.  The possibilities, however, are limited in broad swaths of rural America for lack of bandwidth/cell phone signal.  Given a geographic footprint that’s big and population that’s small, there are inherent constraints to investment in significant infrastructure for rural areas, but clearly there needs to be some sort of breakthrough in wireless technology for agricultural technologies that find value through connecting to the cloud in rural areas.  Grade: C.
  4. Human Talent – The core input for disruptive technologies in agriculture is people.  Whether entrepreneurs who invent and commercialize technologies, or the people that work with them, human talent is key.  The potential for technology is unlimited because it is linked to human imagination, which has no boundaries.  The Agricultural Entrepreneurship Initiative and Iowa State Univeristy has impact in this through the work our graduates do in rural communities, as well as other higher education institutions.  But that’s only part of the population.  I fear our public schools, especially at the high school level, are not preparing rural young men and women as well as they could for careers of impact in their communities.  Grade: ?.

What do you think are the key pieces of infrastructure for agriculture’s future?  Which parts of that infrastructure do you anticipate will be important for your career and entrepreneurial aspirations?

Article of the Day

Prototyping for Success, Power, and Unlimited Riches – Think With Google

____________________

Twitter was a mere prototype in 2006; now, many of us have become adept at saying all we have to say in 140 characters.
~ David Horsey

Lean Startups and Agriculture

Lean startup is a term coined after being proposed in 2008 by Eric Ries in  his book, The Lean Startup.  Ries based his ideas on his experiences working in startups, asserting that startups can shorten their product development cycles by adopting a combination of experimentation, iterative product releases, and what he calls validated learning. Ries’ overall claim is that if startups invest their time into iteratively building products or services to meet the needs of early customers, they can reduce the market risks and sidestep the need for large amounts of initial project funding and expensive product launches and failures.

Important lean startup principles include the following.

  • Eliminate uncertainty
  • Work smarter, not harder
  • Validate learning
  • Develop a minimum viable product

Does this methodology play a role in agricultural startups?  While software can be an important part of ag startups, often we are dealing with equipment, living organisms, mother nature, and other complexities not faced by a pure infotech startup.  In my view, the principles become even more important because of these complexities.

My adaptation of minimum viable product is what I term dirty prototypes.  What is the most crude prototype you can develop that will enable you test your assertions of value, customer interest, and technical plausibility?

Development of prototypes is a powerful means for an entrepreneur to try to avoid pitfalls typical in development of a startup business.  However, development of a prototype in isolation from prospective customers can also be an empty exercise.  Entrepreneurs need to develop prototypes, but also need to test and evolve them while working with prospective customers.

I experienced this, more by accident than design, at my first startup, E-Markets, in 1997.  I had developed a very crude prototype for a browser-based application.  Ultimately, our first customer pointed at the prototype on projector screen and said they wanted to buy it.  But they really didn’t want to buy the prototype.  Rather they wanted to buy a much more developed version of the prototype that was highly customized to their needs.  During about a 4 month process, we worked daily with the customer and their network of business partners to develop a solution.  In the end we had simultaneously developed a much better application, but had also achieved the buy-in of employees of the customer organization and a network of others involved in their business.

Prototype development, in the ideal, isn’t a linear process.  Instead it’s an iterative process of evolving the prototype or prototype idea based on rich interactions with prospective customers.  This interaction leads not just to a better prototype, but to the winning business model that contains the new product and/or service.

Developing a prototype while engaging potential customers helps discover and validate the important details of their problems and needs.  Most importantly, the engagement process converts those potential customers into real, paying customers.  As you develop those paying customers you’ve developed and built a company and business.

It’s an example from history, but David McCullough’s book, The Wright Brothers tells a powerful story of using prototypes to move to success.  The Wright Brothers gained very little through existing theories or basic research.  Rather, they developed the first powered airplane through years of trial and error.  Their pathway was through flying kites, carefully watching different kinds of birds in flight, building models, building a wind tunnel, and finally traveling for three straight years from their home in Dayton, Ohio to Kitty Hawk, North Carolina to try their planes.  Theirs is another example of theories following invention, not the other way around.  The Wright Brothers used some of the mathematical aerodynamic theories that had been developed with their second prototype, but they were wrong and a tremendous frustration to their efforts.  Articulate theories on why an airplane works the way it does emerged after the invention.

Wright Brothers First Flight, December 17, 1903. Orville piloting. Wilbur at the wing.
    Wright Brothers First Flight, December 17, 1903. Orville piloting. Wilbur at the wing.

Skipping forward from the Wright Brothers’ first flight in 1903 to 1997, my prototype work was with an Internet-based electronic commerce application.  It melded business processes in the agribusiness space with software that enabled new types of more efficient and effective behaviors.  Much to my pleasure, I have had Iowa State University students apply similar methods to their products.

Colin Hurd at Agriculture Concepts developed the roughest of prototypes while a junior at ISU for what became his Track Till product in 2012.  In 2013, prototype number 2 was a much more sophisticated product that has much resemblance to today’s commercial version and got Colin his first sale.  In 2014, he sold a more refined product, not anymore a prototype.  In 2015, he licensed Track Till to Yetter Manufacturing.

Ryan Augustine was senior at ISU in 2012 when he developed the business concept for AccuGrain.  The business anticipated using an ISU-patented technology for using X-Rays to measure grain flow.  By 2013/14, Ryan had secured the funds and expertise to develop prototype number 1 for AccuGrain. In 2015 he developed prototype number 2, tested it, and now is making his first sales.

Clayton Mooney, Elise Kendall, Ella Gehrke, and Mikayla Sullivan developed the concept of a mobile food dehydration unit and formed KinoSol in 2014.  They competed in the Thought for Food Challenge, making the finals in 2014, and continued to evolve their product through testing and prototyping.  After seven prototypes, KinoSol is today at commercial launch.

Prototyping while developing customers is one way that entrepreneurs fail successfully.  The only thing you know when developing new product and service concepts, is that they will be wrong.  The technology won’t work as envisioned, it won’t have a clear value, it won’t meet the needs of a type of customer, etc.  Product successes arise from the learning that happens while interacting with prospective customers who are experiencing use of the new product.  Sales is an essential function of the prototyping process, whether in agriculture or any other industry.

How may prototyping apply to your business?  How can you use a dirty prototype to develop a customer relationship?

 

Article of the Day

AgTech Investing Report – 2015 – AgFunder

____________________

Your time is limited, so don’t waste it living someone else’s life. Don’t be trapped by dogma – which is living with the results of other people’s thinking. Don’t let the noise of other’s opinions drown out your own inner voice. And most important, have the courage to follow your heart and intuition. They somehow already know what you truly want to become. Everything else is secondary.
~ Steve Jobs, Co-founder, CEO, Chairman Apple Inc.

What Are Young Agricultural Entrepreneurs Working On?

I ask many friends to serve as panelists and speakers for the entrepreneurship course I teach at Iowa State University, Entrepreneurship in Agriculture.  These folks, and others, ask what students in the course are interested in and working on.  I suppose the curiosity arises from looking to young aspiring entrepreneurs for creative thinking on new opportunities.

This week students in the course will pitch their favorite of the 2 or 3 new business ideas they’ve developed in the course.  I went through the list of business concepts to be pitched and categorized them by subject.  Most are agricultural businesses, 83%, with non-agriculture businesses in the ‘Consumer Products & Services’ and ‘Social Impact categories the remaining 17%.

Student Business Proposals By Category
Entrepreneurship in Agriculture Course
Spring 2016 Semester, 92 Students

Category                                                                        Percentage
Consumer Products & Services                                      14%
Artisan/Speciality Food & Beverage                             12%
Farm Services                                                                    12%
Recreation/Hunting/Outdoors                                      12%
Plant & Animal Health/Genetics                                   12%
Agri-Tourism                                                                       8%
Precision Agriculture                                                         7%
Logistics, Risk Management, Marketing                       5%
Decision Support Technology                                          5%
Robotics/Farm & Livestock Equipment                        5%
Agricultural Processing                                                     4%
Social Impact                                                                       3%

I work the students through various exercises to see if we can identify new business ideas that come from something unique to their experiences or observations.  In particular, many of their ideas come from:

  1. A problem they’ve noticed or experienced that others haven’t noticed.
  2. An experiment, accident of circumstance, or heritage activity from their past.
  3. A personal passion and interest.

The top category in the AgFunder report linked to above for 2015 investments was Food Commerce, a category ignored by students.  Curious, but local grocery HyVee has started online ordering and delivery, so maybe this isn’t such an interesting spot for entrepreneurs living in Ames.

Other top categories of 2015 investment from the AgFunder report line up better with student interest; drones & robotics, decision support technology, and soil & crop technology for example.  The students’ interest in animal health and technology relative to 2015 funding certainly reflects Iowa agriculture relative to other areas, heavily concentrated in the animal protein supply chain.

What categories of student business plan or investment will be the most attractive when we look back ten or twenty years from now?  I suspect certain themes will run through winning businesses.  To suggest a several:

  • Time/labor saving technology – It’s an old story in agriculture, but technologies that save labor win in the long-run.  Robotics offers a myriad of potential applications to take labor out of various processes in agriculture.
  • Unique food ingredients and products – Consumer interest in food products with a story will continue to grow. Where was it grown?  How was it grown?  What makes it different?  What experiences are coupled with the food?
  • Data at the right time and place – We have a lot of data in agriculture today.  The question is what to do with it. Technologies, services, models, and algorithms that enable decision making at points in time where those decisions make a difference in outcomes will win.
  • Disruptive economic models – New technologies and accompanying business model innovations enable challenges to existing supply chains and logistics models.  Some may create significant changes in unit economics for production of certain agricultural products /commodities which will drive changes in place of production and logistics of product movement.

What are the most interesting categories of future business opportunities for you?  Why?

Video of the Week

What do you know that no one else understands? – Peter Thiel

____________________

“All great thinkers are initially ridiculed – and eventually revered.”
~ Robin S. Sharma

Contrarian Agriculture

Contrary
adjective
          Opposite in nature, direction, or meaning.

The most entrepreneurial paths are those that are new and untried.  Identifying those paths comes, at least in part, from the way the entrepreneur looks at and interacts with the world around him or her.  While pleasing other people is not a bad habit, agreeing too quickly with others on the way the world works today dampens one’s ability to identify interesting opportunities.

My contention is that entrepreneurs find ways to be contrarian.  In doing so they uncover ideas, pathways, and ultimately businesses that are trail-blazing.  Peter Thiel gets at this in interviews and his book Zero to One by asking ‘what truth do few people agree with you on?’

One method I suggest to students for putting your inner contrarian to work is to capture it in a persona.  In my case, I envision a neighbor of my grandfather named Vladi.  Vlcdi was dead before I was even born, but I still recall Grandpa’s tales about the sheer orneriness of Vladi, and some of the funny reactions to his behaviors.  So my inner contrarian takes the form in my mind of a German-accented farmer in 1930s bib overalls growling disagreement at those people and situations he encounters, just for the amusement of it really.

Another means of honing your contrarian skills is to examine bits of conventional wisdom and where you may differ from it.  Conventional wisdom is the body of ideas or explanations generally accepted as true by the public or by experts in a field.

Five examples of what I take as conventional wisdom in agriculture includes the following.

  1. Agriculture’s primary challenge between now and 2050 is how to feed the growth in world population from today’s 7.4 billion to the 9.4 to 10.0 billion in 2050.
  2. Cheaper energy means that supply chains in agriculture will be longer.  The distance between where agricultural and food products are produced and where they are further processed/consumed/used will increase.
  3. The most significant resource constraints for agriculture will be land and water.
  4. The emerging middle class in countries with rapid economic growth are adopting western diets.
  5. Economies of scale will continue to heavily impact farm and business size, with increasingly large farms and agricultural businesses occupying a bigger part of markets.

What does your inner (or outer!) contrarian tell you about any one of these five examples of conventional wisdom in agriculture?  Reply to this post.  In addition, reply not only to this post but to those of other respondents.  Do you disagree with any of these examples of conventional wisdom? Unleash your inner contrarian!