Teams that build continuous customer discovery into their DNA will become smarter than their investors, and build more successful companies.
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Awhile back I blogged about Ashwin, one of my ex-students wanted to raise a seed round to build Unmanned Aerial Vehicles (drones) with a Hyper-spectral camera and fly it over farm fields collecting hyper-spectral images. These images, when processed with his company’s proprietary algorithms, would be able to tell farmers how healthy their plants were, whether there were diseases or bugs, whether there was enough fertilizer, and enough water.
(When computers, GPS and measurement meet farming, the category is called “precision agriculture.” I see at least one or two startup teams a year in this space.)
At the time I pointed out to Ashwin that his minimum viable product was actionable data to farmers and not the drone. I suggested that to validate their minimum viable product it would be much cheaper to rent a camera and plane or helicopter, and fly over the farmers field, hand process the data and see if that’s the information farmers would pay for. And that they could do that in a day or two, for a tenth of the money they were looking for.
(Take a quick read of the original post here)
Fast forward a few months and Ashwin and I had coffee to go over what his company Ceres Imaging had learned. I wondered if he was still in the drone business, and if not, what had become the current Minimum Viable Product.
It was one of those great meetings where all I could do was smile: 1) Ashwin and the Ceres team had learned something that was impossible to know from inside their building, 2) they got much smarter than me.
Crop Dusters
Even though the Ceres Imaging founders initially wanted to build drones, talking to potential customers convinced them that as I predicted, the farmers couldn’t care less how the company acquired the data. But the farmers told them something that they (nor I) had never even considered – crop dusters (fancy word for them are “aerial applicators”) fly over farm fields all the time (to spray pesticides.)
They found that there are ~1,400 of these aerial applicator businesses in the U.S. with ~2,800 planes covering farms in 44 states. Ashwin said their big “aha moment” was when they realized that they could use these crop dusting planes to mount their hyperspectral cameras on. This is a big idea. They didn’t need drones at all.
If you can’t see the video above click here
Local crop dusters meant they could hire existing planes and simply attach their Hyper-spectral camera to any crop dusting plane. This meant that Ceres didn’t need to build an aerial infrastructure – it already existed. All of sudden what was an additional engineering and development effort now became a small, variable cost. As a bonus it meant the 1,400 aerial applicator companies could be a potential distribution channel partner.
The Ceres Imaging Minimum Viable Product was now an imaging system on a cropdusting plane generating data for high value Tree Crops. Their proprietary value proposition wasn’t the plane or camera, but the specialized algorithms to accurately monitor water and fertilizer. Brilliant.
I asked Ashwin how they figured all this out. His reply, “You taught us that there were no facts inside our building. So we’ve learned to live with our customers. We’re now piloting our application with Tree Farmers in California and working with crop specialists at U.C. Davis. We think we have a real business.”
It was a fun coffee.
Lessons Learned
- Build continuous customer discovery into your company DNA
- An MVP eliminates parts of your business model that create complexity
- Focus on what provides immediate value for Earlyvangelists
- Add complexity (and additional value) later
Listen to the blog post here [audio http://traffic.libsyn.com/albedrio/steveblank_hplewis_140219_FULL.mp3]
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Filed under: Customer Development, Teaching, Technology |
Steve, great example on pivoting and how Key Partners can leverage the business model.
Great story. !!!
Sent from my iPad
I learned a new acronym the other day. GP,DS = Great Product, Didn’t Sell. This means that building a great quality product doesn’t drive desirability. For a business to be successful to need to build a product that is :
– Desirable: Build something so desirable that people just have to have it.
– Sustainably Desirable: Build something that people will want over a period of many years.
Figuring out what people will find desirable is what talking to customers is all about.
Great Aha! and super reminder that “… there are no facts inside the building.”
Thanks Steve, this is a great reminder to focus on what customers will actually pay for. High tech methods might “sound cool”, but Ash’s team focused on what would actually pay the bills and won by getting a data acquisition tool and a potential distribution partner. Nice job, as I work to build a business this is a very helpful post.
Very timely article I can share with some students I am mentoring.
This is an great example of why we need think about technology as separate and distinct from the value proposition. I can see why you were smiling!
I can see why you were smiling. This is a great case highlighting why to think about your technology separately from the value proposition.
Some great lessons here. Technically of course, a photographic infrastructure to do this already exists in the satellite community. We will see more and more data for sale from both ex military and commercial organisations in the very near future at very affordable prices. Crop dusters with cameras may be a short lived proposition.
Hold on. Continuous Customer Discovery? Sure, great idea; and in this case the team gained the cropduster insight from their customers. But it could have come from others in the ecosystem. This aspect of the MVP had less to do with the functionality delivered to the customer than in how it would be delivered. Isn’t this an example of Continuous Business Model Discovery (achieved via Continuous Customer Discovery)? I am making this Talmudic point because the customer is not necessarily going to have all of the information to build the rest of your business model. When you get out of the building, sure go talk to the customers but don’t ignore those planes buzzing around the field.
Nice! I love the suggestions too.. thinking inside the box to turn it outside in… Love it!
This is a great story. Reading things like this really helps hone ones sense of “finding the need” and focusing their business. As a musician, being able to think like this is something I’m always trying to work on.
This is very awesome post.This aspect of the MVP had less to do with the functionality delivered to the customer than in how it would be delivered. Isn’t this an example of Continuous Business Model Discovery (achieved via Continuous Customer Discovery)? I am making this Talmudic point because the customer is not necessarily going to have all of the information to build the rest of your business model. Thank you by sharing us.