Business Canvas Update

An update to our business canvas based on recent interviews and discoveries.

New insights:
Farmers want demonstrations.
Agricultural shows are a great marketing tool.
Dealers generally buy only 2 or 3 of any type of large equipment in a given year. Expect buy-back agreements for higher sales risk equipment.

Integrated Crop Pest Management

Integrated Crop Pest Management (sprayers for conventional farms)
Wyatt Duncan – 831-594-0435 – jduncan@redshift.com

Interview with Joe Bingold

Wyatt’s company is contracted by farmers to spray conventional fields to remove weeds and pests.

When it comes to new equipment for weed control, many farmers think up new inventions on their own and go to local fabrication facilities to have it made. “ValleyFab” is one example - http://www.northernvalleyfabricationinc.com/

Wyatt typically buys all his spraying equipment from one manufacturer – Raven Systems.

Depending on the crop, it costs anywhere from $20 to $100 an acre to spray. However, most farmers – including conventional farmers – must do additional work on their own. Most vegetable crops get weeded or thinned by hand at some point. Often, farmers will spend $500 to $600 dollars per acre in weed control by the time the growing season is done.

When it comes to new weeding equipment, the simple question in everyone’s mind is “How well does it work?” You prove that it works and everything else is easy. Distribution is not that complicated in farming. Simply get the word out and people will naturally buy to reduce their costs. If you are in the 80 to 90% range on effectively removing weeds, your system would sell very well.

Interview with Ag West Supply Equipment Distributer

Ag West Supply – Large Distributer of Farm Equipment in Oregon
Doug Hiebert – Sales and Distribution Manager – 800-842-2224

Interview with Joe Bingold

6 months in advance they need to order tractors. Can order anytime in the year.

Fall and Spring is order-writing periods for farm accessories (i.e., all large equipment other than tractors, including pull behind equipment). Manufacturer’s build most equipment on demand and have lead times as they get equipment from other vendors. It is hard to get equipment ahead of time. Generally, farmers on the west coast play second fiddle to the farmers / distributers in the mid-west who get priority from the manufacturers. (I’m guessing this is more true for the pacific northwest than it is for California.)

When a farmer asks Doug for a piece of equipment that he doesn’t carry, often there is a suitable replacement that will do the same job, which Doug does carry. Doug knows what particular equipment is suitable for their needs (primary and secondary tools) – knows what the farmer really needs.

Once a year they will have a field day where farmers and other potential customers come and watch the equipment work. Doug likes these field days, he always gets a few good orders out of the field day.

Sometimes Doug will go demo a piece of equipment at the farmer’s facility – but that happens when he knows that someone is pretty interested.

Ag West Supply has an exclusive arrangement with Case IH. Most distributers have an arrangement with one of the big manufacturers. They are allowed to sell equipment made by someone else as long as it’s not a competing project.

Doug goes to a few shows a year to find out what is new and hot in the farming community. Based on reviews from these shows, he may order a piece of equipment to try it out and demonstrate it to the farmers at the field day. Sometimes, he’ll straight-up order a few units according to what they think they can sell.

Doug won’t bring in just one piece for a customer, he needs to have a few pieces of the same type for his economies of scale to work out. He tries to turn everything in a year, sometimes material gets carried a couple years.

The manufacturer (Case IH) will sometimes help out with equipment that is not selling well.
Ag West territory is Willamette Valley – Portland to Eugene. Madras.
Vegetable farms are mostly in the Woodburn area of Oregon.

Rates for American Vegetable grower

Guys, I found price information for American Vegetable Grower magazine. This is the main one that Michael Vosti recommended. For a campaign utilizing 2/3 Page adds during 6 months it should be about $20K. I'm pretty sure we could get them to consider writing an add on our technology if we spent this kind of money.

Jorge

Pictures of an Implement

This is a tripple bar by Gonzales Machinery and Forge. It's 20 ft long like they use in Central Valley. It folds in the middle using a hydraulic cilinder and has gauge wheels for support. It uses 3 square bars - 2x 2 1/4 in and 1 x 4 in bars.

In Salinas 160" (about 13.5 ft) is more typical for implements and they don't require folding nor typically wheels.

These toolbars hey mount to the three point hitch behind the tractor.

They sell a basic 160" tripple bar for about 3K and the 20 ft for about 4K.

This is what Cliff Kirkpatrick and Doug Williams recommended when we asked.
They seem like a good place to start to me.

Jorge

NIR camera

Hi guys, I found this camera that might be interesting. Near Infrared (NIR) is used quite commonly in food processing. NIR is the energy band just below red. Red light and NIR are the primary light bands captured by plants and chlorophyl. They are used in food sorters too.

http://jp.hamamatsu.com/resources/products/sys/pdf/eng/e_c307779.pdf

Jorge

Interview with Gonzales Machine and Forge

Michael Vosti – Manager, Gonzales Machine and Forge Inc
831 675 3421 work 831 214 3840 cell
29521 Gonzales River Road, Gonzales, CA

Phone interview with Jorge Heraud

They manufacture implements and represent a few companies too. (They don’t have a website)
Manufacturing side: They build custom bars for farmers. Each farmer wants something slightly different to match what they are doing. Eg mount bars in the front belly of back of the tractor, different tools mounted to the bar, etc
Representation: Biggest one is Tatu Marchesan, a large planter and tillage company from Brazil.
According to Manta.com they sell $2.5-5M

Competitors are AgFrame in Gonzales and Sutton Agricultural Enterprises in Salinas. AgFrame represents EcoDan. He gave me the name of “Jimmy @ 831 675 2580 works for AgFrame” if we want to contact them. He said EcoDan is really not needed if you have a good driver.

He said their standard 160 inch tool bar for rear mounting in a three point hitch would be one that has 2 bars of 2 ¼ inch each. They sell for around $3K. They have also made some stronger ones that are triple ones that in addition to having the two above mentioned bars have one 4 x 4 bar with two gauge wheels. They would sell for about $4K. Staying within 2 ¼ bars means that it’s a lot easier to mount things to them as brackets start getting a lot more expensive. I asked him to send me some pictures.

If we built something like this, who would be a good dealer for it? An implement dealer that has some ability to customize, adapt and support (Eg them, AgFrame and Sutton Ag). They would probably be interested distributing it.

Tractor dealers could too, but it needs to be ready to mount. A standard machine needs to fit 95% of the users because they don’t have the ability to customize / change. Coast Tractor is a good example. http://www.coastaltractor.com/. They sell a few implements. They sell and rent.

Where do you / others find about new things?
Trade shows – World Ag Expo is the biggest. It’s not too expensive. They did a 40x40 outside booth about 6 years ago and cost them less than $1000. You spend more manning it for sure. “Everyone goes there and talks about what they saw”.

Magazines: Main ones in rank order are: Vegetable Grower, Ag Source, Farm Equipment and Tractor House.

He is planning on going to the World Ag Expo. We agreed to meet there. Should call him at his cellphone. They will be exhibiting in the Tatu Marchesan booth.

Some images from Salinas

1.Cliff Kirkpatrick, Salinas area manager for Bolthouse points to where carrots seed lines start. Lines show where he'll cultivate. Carrots are still very small. He waits until they are at 3-4 leave stage before cultivating.

2.Typical farm tractor operator has 6th grade education.

3. Picture of weeds in an unplanted and unburned area

4. Broccoli. Cultivated very close, but many small weeds remain. Weeds grow faster than plant and if unchecked will take over taking all nutrients. Field will need to be weeded by hand in a few days.

Krisada (Mick) Kritayakirana - Chris Gerdes's Control Lab

Krisada (Mick) Kritayakirana [krisadak@stanford.edu]

1^st In-Person Interview with Lee Redden

Mick is a Ph.D . researcher in Chris Gerdes’s Lab. He specializes in GPS guided control of autonomous vehicles for drifting (really cool). He just got back from a conference in Detroit on autonomous vehicles.

Images in DropBox

Mick’s main focus has been with lower level control and controllability of the car (what if you hit a mud or ice patch) and not higher level control (like is that a plant or a weed).

We talked about the accuracy of his GPS systems. He gets 2cm with RTK and 30cm with omni-star. His lab has created its own RTK system for under $4K with IMU that is similar to RTK (uses CMM for correction values). For him GPS is a tool, not what is really interesting.

Overall, Mick’s specialty was different than what we are looking into. He will introduce us to another researcher who does more image processing and CS stuff than low level control.

Reflection on asking about dollars

I wanted some input from the teaching team on this.
I have had two interviews where talking to the customer has resulted in finding a hair on fire need for a weeding system, reducing the customer cost, danger to crop from cross contamination,...(other real problems with labor) but when asked how much they would pay for a system like this, they say a number that is around 10%-20% of what they are currently paying for labor! which is too low to develop a system like this and start a company. If the number was around a 50% reduction in cost to them for labor, the company becomes reasonable. Is this common and what should we as a team think about with this kind of customer feedback?

Del and Burtis Aufenkamp – Retired Nebraska Farmer

Del and Burtis Aufenkamp – Retired Nebraska Farmer 402-274-4685 cell

1^st Phone Interview with Lee Redden

***Key Insight***

Organic farming practices allow people who want to get into small “hobby” farming the opportunity because they would quickly become limited on by acreage (Like before combines). Making a machine to make organic row crop farming more productive would allow bigger modern farms the opportunity to go into organic farming without large labor crews.

Del is a retired farmer in Nebraska. What/ Why I interviewed him was because he farmed organically before fertilizer, herbicide, and pesticides were created. This brings up a point that the methods used in the 30’s are the same methods that are becoming more popular today. It also is interesting from a trends and historical point of view.

When he was growing up his family has a 240 acre (big back then plot) and one tractor (they were modern). His family would not have wanted more land because there was not enough labor to work a bigger field.

Currently his son (Arlin) farms about 5,000 acres and would farm more with the same machinery if he could obtain better leases for ground. This shows the trend of farming to sustain your family to farming as a big business where many people are being squeezed out by bigger farms.

Terry Folton – Small time organic farmer in Nebraska

Terry Folton – Small time organic farmer in Nebraska 402-430-1551 cell

1^st Phone Interview with Lee Redden

****Key Insight*****

Terry brought up a good point about organic farming. It can be done with old equipment that has been in the shed/weeds for 30 years. When he started he bought a tractor for $2500, cultivator for $500, and disker for $500 so a small farmer can get into organic farming, with its lower yields but higher prices for corn. There is a tradeoff between more labor and less land is key.

I think there is a large group of people who want to have a small family farm but can’t because farming has become a big business. Organic might open up the possibility that they can farm with smaller plots of land.

Also, all farming was organic farming at one point 80 years ago.

Figure 1 Images of modern farming

Called Terry Folton for initial Interview to hear about how he operates his organic row crop farm in Nebraska. His “cash crops” are soybeans and corn that he rotates every other year and sometimes plants

1. Oats

2. Alfalfa

3. Clover

After planting alfalfa he then plows it under for fertilizer. He has a 40 acre farm (really small).

He got into organic because of his wife (influencer). He will probably switch back to conventional because he is having another kid and it is too much work to keep up with. It took 3 years of growing just wheat on the field to become certified organic. His neighbors often look at his field as weird because weeds grow in it. Modern farming uses herbicides and no weeds grow and the corn looks really healthy. Organic crops look weaker and receive criticism from peers. (neighbors are influencers)

When Terry got into it the government gave a $50/acre subsidy for switching to row crop.

$$$$$

Organic corn is ~2x the price of normal corn.

Normal Acre yield is 125 bushels -> organic is 95-100 bushels / acre

Fertilizer is a big let down in organic farming. He paid $150/acre for fertilizer (specially nuggeted chicken poop) and then had to scrape it across the ground.

Technology

Currently he has tried the flame burner to burn off the weeds. The tills the field a few times before planting and then cultivates in-between the rows after that. He uses normal farm equipment in his operation but it requires power-washing after used on modern farming.

He hires a team from his construction company to use corn knives to cut weeds in beans and corn.

The weeds are typically taller than the 30-36” rows.

Terry will send me names of a few people he does business with that led him into farming like Martin Kleinschmidt (just e-mailed)

Interview with Stanford Grounds

Company: Stanford Ground Transportations

Contact: Mary Nolan, maryn@bonair.stanford.edu, 650 924 3138

Date: 01/12/2011

Interviewer: Joe, Jorge, Uwe

Key takeaways:

• The supervisors would not feel comfortable sending out an autonomous mower by itself. They would prefer an operator going out with 2-3 mowers "supervising" the mowers.
• The environment changes regularly (e.g. new lamp posts, ...). They would need to reprogram the autonomous mowers regularly.
• Health and safety costs is a big issue which autonomous mowers could help to solve.
• The mowers and the supervisors are a committed team; replacing team members by machines will raise some emotional issues.

Company / Operations:

1. How large is your operation? (i.e. how many acres?)

• 97 acres

2. How often do you mow?

• Each loan about two times per week, e.g. the Stanford oval twice a week 9:30-12:00am

3. How many people are involved in mowing? What is a typical salary? Is labor a significant cost-driver for you? Are they your direct employees? Are they unionized?

• 7 employees employed for only mowing (5 days a week, 8h a day), Salary: $33 per hour, Unionized: yes

4. How many machines are used? What is the most common brand / machine used. What type of machines do you use? How much does each mower cost? What is there useful life

• About 15 mowers ranging from push-behind mowers ($1,000) to tractor-sized machines ($65k)

Typical mower: golf cart size ($18k)

Different sizes ranging from 21inch cutting width to 48inch. Use of type depends on terrain and corridor widths. Usually: the larger the loan the larger the mower.

Value Proposition

Assuming the cost for an automated machine can be recovered in 1 year through labor reduction, would you buy this product? How much labor do you think it could you save?

• No clear answer, but it seemed interesting to them to have a worker checking the loan and then supervising 2-3 autonomous mowers to do the work. Meanwhile, the worker would check an adjacent loan.

2. For mowing: Is labor safety an issue? Could autonomous machines solve it?

• Yes and yes. They have problems with heavy machines and steep/wet terrain.
• Medical costs are substantial, injuries occur on a regular basis. Mary wanted to check some numbers for us.

4. Is idle capacity an issue? Would you benefit from using autonomous machines by night?

• Not really. At night the irrigation is on, i.e. mowing is not possible. Plus, in some areas there are noise restrictions.

5. What are the quality criteria for mowing/weeding? Is human error a problem?

• Straight lines, nice edging, no damage of the turf due to heavy mowers

Customer Relationships/Channel:

1. Where do you buy your current equipment?

• Exclusively from dealers: customer support (troubleshooting, spare parts, education about upgrades) is very important. They buy from Turf & Industrial, Santa Clara, and MMI Power Equipment, Milpetas

2. What level of confidence would you want before you buy? Is a demonstration enough? Or a trial period?

• Definitely trial period.

Stanford Athletic Field Maintenance

Joel Ahern – Sports Turf Manager – Stanford Athletics
jahern@stanford.edu

In person interview with Joe Bingold and Jorge Heraud

Joel is a manager with Stanford Athletics – he also operates machinery. The conversation started a little rocky because as I was describing the business concept and technology, someone from a different division (sewer) who was at the table and listening shouted, “Hey Joel, they’re making you obsolete!!”

Joel, however, was very polite and gave good feedback about the potentials for this technology and the probable pitfalls.

He was very suspicious about the quality of the technology. He didn’t believe you could get the machine to be reliable enough to mow sports fields – especially not a baseball field which had a lot of unique elements. Even mowing a standard rectangular sports field has a lot of dynamic components. You need to be careful about walls, tracks, lines, goal posts, etc.

Joel typically mows sports fields with someone else. It takes them about 1.5 hours to mow a baseball field or rectangular sports field. About 25% of their time is spent mowing and the remainder is used on other field maintenance activities.

Joel is responsible for 52 acres of field. Joel has 4 FT workers, 3 PT workers (using man-power outsource), 1 PT irrigation worker, and 1 PT maintenance worker. They typically mow in the morning, he would prefer to mow later – but often can’t because of either field use or employees gone for the day.

The workers are unionized and salary is normally around $25/hr but can be significantly higher for those who have been working for a long time.

Joel thought that an automated vacuum machine might be a good idea for this technology – the machine would automatically follow the mower around and collect clippings.

Stanford Stadium Maintenance

Kevin Moore – Maintenance Division Manager – Colony Landscape Company
Kevin@colonylandscape.com

In person interview with Joe Bingold and Jorge Heraud

Kevin is a member of the Sports Turf Management Association (STMA). He recommends we talk with folks from STMA. We should also investigate getting in touch with the Golf Course Superintendents Association of America (GCSAA) - http://www.gcsaa.org/

Colony Landscape is a professional landscape company that services stadiums, sports fields, athletics, alumni, graduate housing, commercial corporate parks, schools in Santa Clara, practice facilities, San Jose city parks .. etc. Colony also performs landscaping work (e.g., preparing the ground, planting, etc.).

Colony Landscaping is responsible for about 390 acres, 12 acres of which are high-end sports fields.

About 120 people work at Colony and Kevin oversees 45 people in the maintenance division. Kevin is on Stanford’s campus nearly every business day.

Stanford’s Stadium takes about 2 hours to mow and gets about 120 mowings per year. He will typically mow the stadium himself. It’s a high visibility job, has to be done perfectly, the grass on the stadium appears on national TV. After he mows, he will then go back over the grass and vacuum. If he catches the grass, he will need to empty the basket 1 time.

The mowers that colony uses typically cost about 40 to 50K, will run about 12K hours, lasting about 7 to 8 years. They use John Deere tractors. Like most organizations, they only use one company for their mowers.

Labor is a significant cost in their business. A fully loaded (salary, benefits, workers comp, etc.) worker costs $35/hr. Health insurance and workers comp is a big factor. Colony will bill people out at around $70/hr.

I describe our conceptual product and the initial thoughts on cost savings. Kevin listened with interest and a sign of disbelief. His response:

If this was trusted and proven, as a business man this is something he would want and implement. He is certainly profit driven – but he is also highly risk averse. He knows he has to stay ahead to remain competitive – the industry changes every 10 years. However, his job is on the line in two ways. First, he decides what equipment gets purchased and he is also responsible for the quality of the field. If the machine messes up the look of a stadium, his job is on the line. Second, an automated machine also replaces himself … he is both a supervisor and an operator. There is a close connection in this industry between who decides what equipment will be purchased and who actually uses the equipment.

Kevin is very concerned about reliability and consistency. He cannot imagine himself leaving a piece of equipment alone to go mow one of his fields. This would make him very nervous.

Kevin also notes that the operator is not just sitting on the mower mindlessly mowing around. The operator is paying attention to several things:
• The condition of the grass – is there a wet spot, is fertilizer needed, is a portion dying?
• The condition of the mower. Mowers will often have hydraulic lines burst – which sprays hot oil on the grass, killing it. Without an operator to notice, the machine could kill large streaks of grass.
• The condition of the field. The operator is looking for objects within the grass to avoid running over them with the reel mower. A bolt in the grass will destroy the reel mower – costing at least $1000 to repair and putting the machine out of service.
This type of value-added work is lost when you replace the operator.

Kevin thinks that if he was to try an automated machine, he would use it in an enclosed practice field that is seen and used only by the team.

Kevin also discussed other types of mowing (golf course, school districts, etc.) and suggested we look at those areas instead.

Los Altos Maintenance Supervisor

Brian J. McCarthy – Maintenance Services Manager – City of Los Altos
650-947-2879 – bmccarthy@losaltosca.gov

In person interview with Joe Bingold

Brian is responsible for purchasing all equipment for Los Altos municipal use. He buys equipment ranging in price from a couple hundred dollars to three hundred thousand dollars (sewer cleaning trucks). The purchase of a lawn mower is not the big of deal for him. He writes up the purchase agreement and submits it to the city council. He needs approval for purchases over 25K. The city council normally rubber stamps a purchase like this … although if Brian had chosen an unknown brand, that might raise some eyebrows. Further, the city council would probably not be pleased if Brian submitted a request to buy an automated mower that didn’t have a track record of success and could potentially cause harm to constituents.

The three biggest considerations in Brian’s mind when purchasing a piece of machinery are:
1. Operator Safety (or in the case of autonomous mowing, the safety of park users)
2. Reliability
3. Cost

Brian sees this technology as a big risk management concern. There are kids in the fields – super liability.

The purchasing decision follows this routine:
1. Division supervisor determines need for a new piece of equipment and gets Brian’s approval to pursue options.
2. Equipment vendors bring in their equipment for demonstrations.
3. Equipment operators provide their feedback on the different models.
4. Division manager recommends a model to Brian.
5. Brian, who has been closely involved in this process, determines what equipment to buy.
6. Brian brings an authorization request before the City Council for the equipment. Money has likely already been budgeted.
7. City Council Approves
8. Brian signs the purchase agreement.

The labor rate for the Los Altos operators is $80/hr fully allocated and $27/hr just labor.

Without some sort of special grant money to try out an automated mower, Brian does not see himself purchasing one of these.

Los Altos Parks Supervisor - Damon

Damon Cockerham – Supervisor of Parks Maintenance – Los Altos Parks and Recreation
650-947-2870

In-Person Interview with Joe Bingold

Los Altos has 20 acres of turf spread across several parks (biggest park ~3.5 acres), which are mowed once a week by 2 operators with 2 ride-on mowers. It takes 1 day (Wednesday) 9 hour shift to mow the entirety of the Los Altos parks. Thus, it takes about 18 hours to mow the parks. Of this time, about 5 hours is actually spent on the mowers – a lot of time is spent in travel between parks, clearing the grounds, etc.

They currently have a John Deere and a Toro mower. The mowers last about 10 years and cost about $60K. Residual value of the mowers at the end of the 10 yrs is $3K.

Given the smaller amount of turf that Damon is responsible to mow, there is probably not a business case for an automated mower. It is unlikely that they will reduce their manpower with this technology. That said, Damon did believe that an individual could start a mower going in a park and then go do other maintenance in the meantime (edging, park inspection, etc.)

Damon’s biggest concern was liability. He knows that teenage kids will likely mess around with the mower and create problems – potentially damaging themselves.

They are not overly concerned about damaging the blades by running over something small because they use rotating blade mowers. The mowers, would, however, need to have sensors to avoid other obstacles that can be present in the parks – such as bottles, branches, etc.

Due to noise ordinances, they cannot mow in the evening or night.

Mowers’ health is not a liability for them. Workers sometimes complain about back pain, but they don’t do anything about it (don’t sue).