j matthew pryor
/jmatthewpryor
Supporting impact and innovation in ag, food, and climate
j matthew pryor
4y ago
As I have learned more about how the agricultural insurance industry works, I have become obsessed with a very simple idea at the heart of the insurance game, but is completely absent from conversations about farm data in agricultural supply chains.
Uberimma Fides - there is no general requirement that parties to a contract act towards each other with utmost good faith. Insurance contracts, however, are part of a special category of contracts, those classified as uberrimae fidei, where parties do have that obligation towards one another [1]
Uberimma Fides literally means utmost good faith, and it describes the assumption of how parties deal with each other in an insurance contract - with the utmost good faith, sharing all information that is relevant to their dealings - in both directions. This is both legally and practically a critical part of how agricultural insurance (and indeed all insurance) works.
All parties must act with ultimate good faith in sharing information that impacts the pricing and efficient operation of products. It is understood that insurance needs to be at least a zero-sum game. Ideally, it should be a win-win game. But none of this can happen without the good faith of sharing data to ensure policies are priced properly, claims are assessed accurately, and so that underwriters and insurers can manage risk well.
All parties lose if risk is not managed, and a short-term win for a policyholder will be to their own detriment in subsequent periods if underwriters fail or policy prices increase through fraud or mispricing of risk
Where is the good faith in supply chains?
It seems that the role of data in supply chains does not enjoy the same treatment. I don’t think anyone would say that the default assumption around data sharing in ag supply chains is one of good faith dealing; quite the opposite.
The default assumption seems to be one of bad faith. This is likely based on the Fear of Unintended Consequences - the most damaging of the Farm Data Fears. Why do value chains work so differently to insurance markets?
Are value chains a zero-sum game? Perhaps they are win-lose games and that drives the fear.
Are farmers are waiting for someone to "show them the money" and won't participate until that happens
Perhaps there has to be an opportunity to attract a premium and recognize and reward new levels of transparency
We have it all wrong - it's not going to go that way.
The global food system is under unprecedented pressure for ecological accountability which is originating from two key areas:
Consumer Sentiment / Commercial Opportunity
Financial & Regulatory Disclosure Requirements
Greater sharing of farm data is the only way that these pressures will be addressed, and we have to rid ourselves of current assumptions about data sharing that are slowing things down
It's all about market access
At scale, for most farmers, these pressures won’t translate into premium opportunities but are far more likely to represent market access hurdles. These are tough conversations to have. Farmers are often left to bear the cost of additional regulation and so the prospect of needing to meet additional requirements for no benefit is both familiar and highly undesirable.
Nobody will pay for data alone
Nor will the situation be addressed by payments for farm data. This just isn’t going to happen. We have done farmers a disservice by setting an expectation that their data in and of itself is valuable - it is not.
That is not to say that data can't contribute to value creation it certainly does. But the value is usually downstream of production, and the data has to flow there to see the value realized. This confusion sits at the heart of the User vs Beneficiary paradox.
Reframing the conversation around good faith and benefits
The change needed is to reframe the conversation about farm data. We must redirect the conversation to be about what an ultimate good faith value chain looks like. The benefits that will flow to farmers will take different forms and be far more aligned to the benefits that flow in the insurance industry.
The ultimate advantage of an efficient and fair insurance industry is an increasingly sophisticated set of risk transfer tools for farmers. The better the risk transfer offerings, the better able farmers are to control their own destiny.
Agri value chains will respond in the same way. Farmers will receive the benefit of better offerings and can also manage risk around the loss of market access.
We need to stop telling farmers that they will get paid for their data and stop telling them to fear data sharing.
Digitally native solutions, that require access to better and more accurate information, will provide many benefits such as better access to credit and risk solutions for farmers. Forward contracts that include embedded risk instruments and asset-aware finance will provide exceptional benefits to farmers but can only operate at scale when we stop the narrative around data sharing and embrace the need to operate with ultimate good faith.
Be the change you want to see - play your part
This can’t be the responsibility of farmers alone, it is the responsibility of all the participants in the value chain to reframe their own language, and do the work needed to move toward good faith dealing.
In some parts of ag like insurance, uberrima fides, the sentiment towards data means that the future can be better for innovation and better for farmers.
In others like supply chains, without a change in sentiment, it will be much harder for farmers to be better off.
[1] 1995 'Uberrima Fides - Quo Vadis? Where to from Here?' - Catherine Larkin - Edith Cowan University
j matthew pryor
4y ago
I am late to complete by #ship30 journey - but it's allowed me to put down some guidance that I hope can be helpful.
I've made plenty of mistakes in my own founder journies. Part of my goal in writing these atomic essays was to create some easily digestible tips to avoid those mistakes that I see others repeating. I thought it would be useful to recap some key lessons for my penultimate essay for this voyage.
Here is a summary of some things you can do to increase your chances of having an impact in your agritech endeavors.
Don't assume you can cut out the intermediaries and go direct.
Agriculture is a complex set of interconnected value chains.
Many of the existing structures and supply and advice have resisted disruption for good reason. The set of deep relationships and entrenched incentives are powerful forces that won't yield to technology alone.
Don't make the mistake of naively assuming that selling directly to farmers is the straightest path to success.
Don't get fooled into seeking attention when you should be building a reputation
I've been there and it can be painful.
The constant effort required to get noticed and have an opportunity to explain to your potential customers how they will benefit from using your product or service. The ease with which newly minted startups seem to get coverage.
Resist the urge to confuse attention with reputation. Double down on customer discovery and value creation, deliver awesome customer service, and win by having a great reputation
Do the work to help your investors see what you can see
Early-stage startups rarely have strong evidence of product-market fit.
When you get asked for easy evidence like sales traction, don't stare blankly, provide other compelling evidence that your early customers and supporters believe what you believe. They may not be paying you money, but if you're really on to something, they will be acting in ways that make it clear that they want what you're building.
You need to help investors suspend their disbelief and go on the journey with you.
Do pay attention to the importance of human psychology in farmer adoption
Technology alone is rarely so compelling that adoption by the market just happens.
More often than not, technology creates new ways of working, but there is far more needed to encourage the majority of people to work on those new ways. There are key reasons that farmers resist adopting new products. Too often, founders aren't clear on who really benefits from a product and don't focus on the design of their business model and incentives.
Hopefully, some of these short notes have been helpful or at least got you thinking about things a little differently.
j matthew pryor
Business Models
4y ago
A digitally native approach to agriculture allows you to disrupt existing channels and go direct to the farmer
Traditional advice and retail networks exist largely to support the incumbent suppliers of farm inputs and machinery. The advice farmers get is inevitably influenced by the products the advisors sell and the margins they receive. Speaking directly to farmers will remove the intermediaries and deliver more value.
Oh, the billions of dollars that have been burned as a result of this line of reasoning.
Advice is cheap, reputation is expensive
Agtech founders, their advisors, and their investors also confuse attention with reputation in designing go-to-market.
It is true that you can likely get the attention of a farmer if you're talking about how to improve yield, save time, save money or improve prices. What you can't get easily is a reputation or their trust. That must be earned. It is tempting to look at retail and advice networks and see the economic elements - margins and supply. The far more important aspects are the psychological ones - incentives and reputation.
There is a set of well-designed incentives and hard-won trust that underpin these networks and you ignore them at your peril (and great cost).
The road less traveled
It is not that it can't be done. In fact, the landscape of advice and influence in retail networks is constantly in flux as Shane Thomas outlines here in great detail.
The erosion or dismantling of one network does not happen in isolation and will be replaced by another. There are great examples of models like Farmers Business Network that are doing things very differently.
The mistake you must avoid is simply to ignore what has gone before and assume a straight line is the shortest path.
Understand who is the user and who is the beneficiary. A go-to-market without clarity here is a path to destruction.
Disruption is not the same as innovation. Incumbents have a lot to lose and will invest heavily to protect their position. Innovation that creates new revenue streams for incumbents can be powerful and valuable innovation.
Know what battle you are fighting. If you are intent on major disruption then you best be prepared for a long, expensive, and well-planned passage through the messy middle.
As Einstein apparently said, make it as simple as possible but no simpler.
Thinking you can go directly to farmers risks being far too simple a business plan.
j matthew pryor
Business Models
4y ago
I hate the saying that there is nothing new under the sun - in part because I know it's often true.
I am not much of a maximalist in technology terms, but I guess I could call myself an optimism maximalist. The problem with maxing out on optimism is that you can end up drinking your own kool-aid. This belief usually takes the form of an endless search for the next iteration of a technology that will solve a persistently stubborn problem. There is often an unfounded belief that based on recent technology improvement, now is the time that we can solve a problem that others have tried and failed to solve in the past.
There are areas where this belief is pervasive and yet remains starkly in the face of progress and leads to much discontent.
Cheaper IoT irrigation automation will deliver mainstream water use efficiency improvements
Better technology integration and partnerships will get farmers to share more data
Advise networks don't add value - technology will allow us to go direct to the farmer
Adaption doesn't deliver adoption
The groundhog-day of technology renewal cycles actually does more harm than good.
The constant moving and shifting of the tectonic plates of agtech lead to hesitation and confusion for farmers and their advisors. These persistent problems with the lack of adoption aren't related to a lack of technology adaption. I've written about on-farm connectivity and farmer data before, highlighting that these are not technology problems - they are trust problems.
Don't be a technology maximalist and human psychology minimalist.
Technology and psychology are orthogonal but only one of them is fundamental
I love getting to speak with founders and being enveloped by their passion and enthusiasm.
That starts to become uncomfortable when the conversation heads in the direction of technology maximalism. I struggle to know what to do at times - balancing my own optimum and belief with the scar tissue of my past and evidence of what works and what doesn't
One thing is know is that technology without psychology is most often a road to nowhere.
Don't bring technology to a psychology fight
There are many examples of where technological innovation creates new pathways and new ways of working.
However you ignore human behavior and incentive design at your peril. If you don't truly understand the reasons why challenges persist despite large sums of money being thrown at addressing them, don't let your first reaction be to reach for the technology hammer.
Save yourself some heartache and consider that there might be more fundamental reasons why farmers aren't adopting.
j matthew pryor
Business Models
4y ago
There has been a lot of head-scratching about the true meaning of the collaboration between Microsoft & Bayer
AgFunder published a good summary of many of the different perspectives but didn't land anywhere in terms of an opinion of whether it is, or is not, a big deal. Of course, people are going to pay attention when two large companies strike a partnership. This is particularly interesting based on who they are, and on the never-ending fascination that we have with the importance (or not) of data in agriculture.
In my view, the announcement isn't news, even though it is newsworthy - and here's why.
The rails are heading the wrong way
A lot of the discussion has been about the underpinnings of what we call digitally native agriculture.
Do all these new digitally-native applications need a set of rails? Is there an opportunity to create a common infrastructure for third-party developers to build their applications on top of? Yes, it's called the cloud and we already have at least 3 major flavors of it. Application developers need leverage and platforms provide leverage, but there are natural boundaries where platforms stop and applications start. Leverage is a powerful incentive, and behavior change needs properly designed incentives.
I don't see how the combination of Bayer and Microsoft creates a horizontal infrastructure that incentivizes application developers to move away from what they're already doing.
Who is the user, who is the beneficiary?
Another blot on the ledger is the lack of clarity about exactly who this is for.
The obsession with farm data is well-founded in one particular way. Farmers are very concerned about how improperly used data might cause them harm. If they already use a Bayer service, then this deal doesn't mean much. Many might use any number of Microsoft products, but I can't see how that makes them trust Bayer any more than they already do.
It is unclear who is the user and who is the beneficiary in this collaboration, and so it seems destined to suffer the fate of initiatives that try to be all things to all people. There are some pretty strong forces opposing the wide adoption of a combined offering like this:
Data integration is a distraction. The idea that we can only digitize when we collect data directly on-farm doesn't take into account that the factory has no roof - there will be multiple ways to source data.
What does success look like? Sharing more data is not a technology problem, it's a trust problem. I don't see a solve here.
Don't ignore disruption. When people talk about digital transformation, they often gloss over the real change agent which is disruption and disintermediation by digital natives. It's not clear that there is any protection afforded against those forces by this partnership.
Any doubts I have about this partnership are not based on doubts about Microsoft or Bayer - clearly, they are both great companies.
However, I feel that success in digital transformation will come from completely reimagining what digitally native agriculture solutions will look like and building those.
j matthew pryor
Business Models
4y ago
My co-founder Sarah Nolet has a saying that I love - show me the incentive, I'll show you the behavior
Innovation is addictive and it's very easy to spend all your time getting something new and cool to work. I am as guilty of this as the next person. Our superhuman ability to control atoms and cells and molecules and bits is mesmerizing and can also lead us astray.
The harder the atoms etc are to coral into action, the more tantalizing it is to not stop until they do what you tell them. This, however, involves big risks:
In addition to being cool, how do you know it is useful?
In addition to being useful, does it change things in a way that matters?
In addition to changing things, can you get lots of people to start doing it?
Cart, meet horse.
Humans are notoriously bad at change - they just generally like to keep doing what they are already doing.
In the early days of Observant, we saw so much wasted time by people driving farm vehicles over long distances to check things that could be checked remotely. What we didn't appreciate was that some people love nothing more than clocking at 500km on isolated back-country roads. Ah, the serenity.
If you don't know how you're doing to change people's behavior, there is little point in creating a new way of working.
Innovation and incentive design are a matched pair
Bending physics or chemistry or biology to your will is fun and cool and awesome, but ultimately futile if nobody else pays attention.
At the same time as creating new pathways to an end result, you need to spend time deeply understanding motivations and incentives. How can you also engineer incentives for the adoption of the new way to do things. Be aware that this will often need you to look past a single stakeholder and take a wider view - likely a supply-chain view. The incentive design (and corresponding business model) needs to respect the difference between the user and the beneficiary.
The 90s called and asked for its business model back
Don't fall into the trap of thinking that innovation will sell itself - especially in agriculture.
Don't waste all your efforts creating new ways of working without spending the same amount of time designing the incentives that will underwrite its uptake.
If you match your innovation with incentive design you're taking the best shot at changing people for the good.
j matthew pryor
Climate Solutions
4y ago
In a recent conversation, I referred to enteric methane emissions as an existential threat to the livestock industry.
I was challenged by someone else on the call, implying that I was being alarmist, and on consideration, I decided to moderate my position by generally asserting that it was a serious challenge to the livestock industry and that more needed to be done.
More recently though, I am less sure that it is actually an alarmist position; I worry that we're not acting fast enough or taking the matter as seriously as we should.
We assume that people actually know where food comes from.
I know where food comes from. I have participated directly in steps along the way. I've never held a boning knife, but I am not confused about what it takes to put food on my plate - any kind of food.
There is danger in assuming that most people understand what it takes. I wish it were the case that everyone got to experience life on the land and got to connect directly with their dinner. But this isn't the case, and complacency based on the belief that there aren't other viable choices is a high-risk strategy.
Reducing enteric methane emissions in livestock systems will be very hard, but we shouldn't assume we have plenty of time to do it.
Momentum shifts and tipping points are hard to pick and punitive to miss.
I am not calling it. I am full of passion for sustainable livestock systems and look forward to investing in and supporting innovators in the sector.
I do wonder about how close we are to the edge. How good do alternatives need to be before many people will switch, or at least won't exercise a lot of discretion? If methane continues to be treated as an individual and particularly dangerous greenhouse gas (GHG) then what additional pressure will come to bear on our livestock systems?
We have seen recent examples of significant shifts in policy sentiment relating to methane, and Australia is particularly vulnerable to large momentum shifts in this regard.
Pathway creation is vital. There is a lot being done, but we can't move too fast in creating scalable pathways for livestock systems to lower enteric methane emissions.
CO2 equivalents may not be. Assuming we can look at CO2 equivalents as a net-zero position for on-farm or industry level emissions may not be enough - sell offsets at your (possible) peril.
Data and more of it. Emotive arguments are hard to win, we have to be quantitative and specific about progress (and not just based on reducing herd numbers).
Livestock systems will be vital to sustainable agriculture, but we won't retain a position in the global food system without paying attention to how big a threat is posed by enteric methane emissions.
j matthew pryor
Climate Solutions
4y ago
Much of the discussion around autonomy in agriculture is focused on when self-driving machines will take over
Labor shortages, improved precision, and lower input intensity production all demand that more must be done with less, and autonomous farm vehicles seem like an obvious solution. The problem is that this thinking treats it like a binary occurrence, that machines will or will not be autonomous.
A more effective way of framing the discussion is around the jobs to be done, and which are best suited to, or least impacted by autonomy.
Weeding and tilling are great examples of jobs that are very amenable to autonomous operation
Harvest, especially in large-scale agriculture, still looms as an enormous challenge for autonomous operation
There is a wide range of tasks from spreading to planting that sit on a scale from plausible to challenging
Autonomy won't be just one thing
Another way to think about how autonomy is playing out in agriculture is to segment along the following lines:
style of autonomy: non-autonomous, augmented-autonomy and native-autonomy
ways of working: what new and existing pathways are created for achieving outcomes
jobs to be done: the set of tasks that make up agricultural production that is mechanized and automated
Each autonomy style enables ways of working and leads to jobs to be done
Augmented-autonomy makes a lot of sense for many jobs.
Especially where the same way of working is supported by the non- and augmented-autonomy styles. The new autonomous John Deere 8R is a great example of this, where a job like tilling will work in the same way, regardless of the syle of use. This will drive adoption because of the situational flexibility offered.
Some jobs might be better done with native-autonomy because it unlocks new ways of working.
Some jobs will be done in totally new ways
Weeding is a job that can be done in many ways, and where there is great interest in autonomous applications.
Another challenge of weed management is herbicide resistance and lower-chemical production. Native-autonomy solutions will open up entirely different ways of working and will create superior solutions for weed control. Mechanical chipping, electrocution & laser, even attacking weed seeds before emergence may lead to jobs being done far better.
Autonomy will roll out in waves in different parts of agriculture and no one style will suit all applications.
j matthew pryor
Business Models
4y ago
Dedicated IoT networks have terrible economics and don't scale.
There have been many waves of enthusiasm and investment around pervasive IoT networks. Connected devices that will stream data from every part of the globe and enable businesses to make better-informed decisions and drive out waste. This has been promised over and over in agriculture, always just on the cusp of delivering real value.
Just as they confuse the user with the beneficiary, people also confuse the cost of installation with the cost of operation, and in the end, the cost of operation wins.
There's no point connecting devices if you're not connecting people.
The recent announcement of French company Sigfox filing for bankruptcy protection is no surprise at all.
The field of dreams nature of dedicated network infrastructure for device-only networks is bound to come unstuck - especially in sparsely populated areas. The business model relies on the enticingly low cost of participation but demands huge uptake and low churn to absorb the constantly high cost of operation.
Data is only useful if people can see it, and in regional areas, people need to be connected to see their data.
Infrastructure costs must be amortized as widely as possible.
For remotely connected device applications it is tempting to solve for power first.
Sigfox and LoRA are specifically designed for low-power and low-cost participation. This comes at the heavy price of needing entirely proprietary infrastructure. Installation costs can be controlled (to some degree) but operating costs are hard to control. Dedicated infrastructure needs dedicated support and with low margins and high visit costs, things can go south in a hurry.
Technologies like 4G/5G and Wifi are not low power but are pervasively supported, and can be shared by devices and people, creating the ability to share operating costs and motivate action to lower support costs.
Device-only networks are a premature optimization, and won't serve the needs of digitally nature agriculture.
Focus on the goal. There is no point in having more data if people can't get access to it
Optimize for operating cost. Maintenance cost will always trump installation cost over the long haul
Just because you can doesn't mean you should. Directly sensed data might be more accurate, but the cost of the additional accuracy often outstrips the additional value delivered.
New sources of data are critical to improving performance and sustainability in agriculture, but the operating cost of getting the data have to be matched with the value delivered and the costs that the market will bear.
j matthew pryor
Background Stories
4y ago
Ship30for30 has been awesome - I have never written and published so much and I am thrilled.
Last night, however, as I passed the halfway mark (round the horn, nautical analogy ...sorry), I realized that I was also only getting half the benefit. I've been writing a lot but thinking far less - I need to do more thinking.
Writing and thinking as a virtuous cycle
Aside from the short stories, the balance of topics I have written about so far were already live cultures.
I have spent time, sometimes a great deal of time, thinking about the concept and refining it by exposing my ideas to the real world, calibrating them against founder conversations, investor conversations, articles, etc. This thinking process has been greatly enhanced by my personal use of Roam Research, which I love using and has been the subject of several #Ship30 pieces by @philmorle.
The process of systematically capturing and refining thoughts and external stimuli into ideas and subjecting those ideas to the stresses of real-world calibration is vital, hugely satisfying, and frustrating beyond measure.
I fell off the think wagon first, and then fell off the write wagon
As I tried to pen my most recent piece, I realized that I was scraping the bottom of my 'well-formed idea' barrel, and I didn't like the hollow sounds I was hearing.
The timing here is fortuitous because I am heading off on a 3-day hike, out of the coverage zone of the modern internet. Weather permitting, this will be a most welcome refresh and provide plenty of reflection time to build some solid hypotheses to try & strengthen or smash. It will also mean 3 days of not posting, and so technically a broken streak of 16 daily publications
Ah well, failure is just a stopping point on the way to success.
Think and ye shall write
I am not doing #ship30 simply to be a #thinkboi (thanks @rpethe) but to help develop and refine my thinking through the forcing function of publishing regularly.
A short break at the mid-point will hopefully get me back the that virtuous cycle of thing->write->think