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10% weekly growth for a year will certainly get investors' attention. However, for a company like this, I think the most important consideration is how you pla

by sama 11y ago

10% weekly growth for a year will certainly get investors' attention. However, for a company like this, I think the most important consideration is how you plan to build a monopoly. There are lots of companies proposing to build automated food growing units for families with very similar plans; what stops this from being a race to zero-margin pricing? Why will a customer buy your product in 5 years and not one of the many clones? People refer to this in lots of different ways--Warren Buffet as the relatively benign sounding "moat" and Peter Thiel directly calls it a "monopoly". Whatever you want to call it, how do you plan to do it? When will you have the first unit in customers' back yards? How are you going to price it? If it pays for itself in 5 to 6 years, have you thought about going out with a leasing program? I think people almost never do enough on the financial innovation side.

ph0rque 11y ago
Thanks for the reply, Sam. To build a monopoly, the plan is to make the product open-source. On the data side, having data about all the different environmental conditions and how they affect plants and fish will also help build a monopoly. The first unit will go in a customer's back yard in a few months. In my new-construction neighborhood of ~400 houses, I plan to find 10-30 customers; I've started talking and have several interested. The 5 to 6 year payback period is conservative: it assuming the need to build a greenhouse to house the AutoMicroFarm for year-round production. At scale and without needing a greenhouse, the payback period drops down to 3-4 months (when compared to similar organic food). Edit: as far as a lease program, the USDA has a family farm lending program with a low rate that we could tap into on behalf of customers.
- sama 11y ago
  Could you say more about how making the product open-source will give you a monopoly? Will the data be open-source too? If the product is open-source, how will monetization work? If you can get 30 houses in your neighborhood as happy customers, that would be a great start. You should give them super customer service--ie, go around to their units and make sure everything is working perfectly. The word-of-mouth recommendations from your first customers is so important. What do the unit economics look like? How much are you charging for the current units, how much do people need to spend a year to operate them, and how much do they save on groceries?
  - ph0rque 11y ago
    My thinking is that the hardware and software will be open source, but not the data. Also, the OS license would allow modifications for the customer, but not for resale. Since the biggest part of the cost will be the "dumb" hardware (the containers and structure make up ~70% of the cost), it should be straightforward to sell the product at a profit. Another point of monopoly would be to keep up a pace of innovation that is faster than the competitors. I am offering the first customers a sale price of just the material costs. Also, they would get 24/7 support, and the CEO's (i.e. my) cell phone number. Currently, similar products cost $1500+. My costs are $1000 (in quantities of one), and that price will come down 10-fold once I can manufacture 10k units per year. At the current costs ($1500), the payback time is 1-2 years. Once purchased, the cost to operate is negligible (tens of dollars yearly). So they save $1-2k in groceries annually, depending on the length of the growing season.
    - sama 11y ago
      I think you will have a hard time claiming that the project is open source except the data which you keep and monetize. I strongly suggest considering other models. Why do you want to "open-source" this at all? Why not just make it hardware and software you sell, and recommendations about how to grow based off of your large data set, but very hackable?
      - ph0rque 11y ago
        Sure, I have no qualms with dropping the open-source label, and opening up the data set. (However, trying to patent the hardware/software might be hard to do, given how much prior art is out there). Do you have any other suggestions on how to build a moat/monopoly?
        sama 11y ago
        I'd be tempted to try a Nespresso/Gillette model, where the initial product is cheap and the "refills" are relatively expensive subscriptions, but very high quality and easy to use.

by sama 11y ago

ph0rque 11y ago

Thanks for the reply, Sam. To build a monopoly, the plan is to make the product open-source. On the data side, having data about all the different environmental conditions and how they affect plants and fish will also help build a monopoly. The first unit will go in a customer's back yard in a few months. In my new-construction neighborhood of ~400 houses, I plan to find 10-30 customers; I've started talking and have several interested. The 5 to 6 year payback period is conservative: it assuming the need to build a greenhouse to house the AutoMicroFarm for year-round production. At scale and without needing a greenhouse, the payback period drops down to 3-4 months (when compared to similar organic food). Edit: as far as a lease program, the USDA has a family farm lending program with a low rate that we could tap into on behalf of customers.

sama 11y ago
Could you say more about how making the product open-source will give you a monopoly? Will the data be open-source too? If the product is open-source, how will monetization work? If you can get 30 houses in your neighborhood as happy customers, that would be a great start. You should give them super customer service--ie, go around to their units and make sure everything is working perfectly. The word-of-mouth recommendations from your first customers is so important. What do the unit economics look like? How much are you charging for the current units, how much do people need to spend a year to operate them, and how much do they save on groceries?
- ph0rque 11y ago
  My thinking is that the hardware and software will be open source, but not the data. Also, the OS license would allow modifications for the customer, but not for resale. Since the biggest part of the cost will be the "dumb" hardware (the containers and structure make up ~70% of the cost), it should be straightforward to sell the product at a profit. Another point of monopoly would be to keep up a pace of innovation that is faster than the competitors. I am offering the first customers a sale price of just the material costs. Also, they would get 24/7 support, and the CEO's (i.e. my) cell phone number. Currently, similar products cost $1500+. My costs are $1000 (in quantities of one), and that price will come down 10-fold once I can manufacture 10k units per year. At the current costs ($1500), the payback time is 1-2 years. Once purchased, the cost to operate is negligible (tens of dollars yearly). So they save $1-2k in groceries annually, depending on the length of the growing season.
  - sama 11y ago
    I think you will have a hard time claiming that the project is open source except the data which you keep and monetize. I strongly suggest considering other models. Why do you want to "open-source" this at all? Why not just make it hardware and software you sell, and recommendations about how to grow based off of your large data set, but very hackable?
    - ph0rque 11y ago
      Sure, I have no qualms with dropping the open-source label, and opening up the data set. (However, trying to patent the hardware/software might be hard to do, given how much prior art is out there). Do you have any other suggestions on how to build a moat/monopoly?
      - sama 11y ago
        I'd be tempted to try a Nespresso/Gillette model, where the initial product is cheap and the "refills" are relatively expensive subscriptions, but very high quality and easy to use.