"Because you're making the same mistake I made. I'm also an engineer."
I was on a call with the founders of a startup looking for grant writing help. Immediately I wanted to work with them because they were so smart but I knew that I couldn't because I didn't believe that I could raise money for them. It was a great engineering achievement for an important problem with a flawed business model.
"So, you built a $500 device to test soil when you can use test kits that cost $2 and have the same accuracy? And on top of the $500 a unit you have to buy a $1,000 motorcycle to be able to drive around to test soil for farmers?"
They nodded.
I try not to give unsolicited advice but when I saw them making the same mistake I made 10 years ago. I couldn't help myself.
Here was my mistake back then: we noticed that there was a lot of cow dung in rural areas and a need for an alternative to firewood for cooking fuel. 2 plus 2 makes biogas and we installed reactors that cost around $1,000 (which we financed) for farmers to transform cow dung into clean fuel for cooking. It was a miracle for farmers and they loved it. But sales were hard. And customer service was harder. There were no addresses. Here's how we had to give directions to the repair team "go down to Mary Wambui's house. The one by the guy with the gold teeth then go past the cornfield and then make a left at the tree." It was impossible to cost effectively serve the customers. When some people defaulted on payments and we sent a team to collect the unpaid reactor one farmer chased the team down with pangas.
We built an awesome technology, patented it, and eventually I realized it's never going to work. To this day people approach me and say "Kyle, I'm starting a biogas company. Can you give me any advice?" Sure, don’t start it. That's the best advice I can give and it will save you 5 years. But no one takes my advice. Ever.
I made the classic engineer's mistake. I wanted to work on a hard technical problem. But it wasn't a worthwhile business problem. LPG is a great way to give clean energy to people for cooking. If I had made LPG distribution just 10% more efficient I would have had an impact on millions of people and been financially successful, too. True, it's not a biofuel, but much better than chopping down trees. But distributing LPG was not a technically interesting problem to me. I wanted to work on something "hard." I wanted to look good and be respected as an engineer.
That's the mistake my new friends made. As engineers they found the most difficult technical problem and then tried to make the business model fit it. It was a hammer looking for a nail. I know this too well.
I could save these young, smart entrepreneurs 5 years of their life but they couldn't hear it. And who knows, maybe I'm wrong.
The hardest thing to watch is I can see two multi million dollar businesses they could build if they pivot now.
One. They could get cheap, effective soil test kits for $4 after importation and sell them for $10, making 60% margin, maybe split that with the distributor. Will they ever do it? No, but someone should. There's good business and impact too.
Two. A technology consulting business where they build tech for rural projects. They have proven their technical expertise. Companies that have both an interesting technical and business problem are dying for talent.
I know these guys will be successful. Probably this business will fail; it will cause heartache but they will grow for it. Next time, if they're not too disheartened, they will start another business and it will succeed. Hopefully we stay in touch and I get to follow their progress.
This all makes me wonder what advice I'm ignoring today.
What advice are *you* not listening to?
Grants of the week
Gulbenkian Prize for Humanity. Calouste Gulbenkian Foundation. Mitigate Climate Change; Low Carbon Future; Resilient Society. 3rd party nomination. €1M. Feb 28.
Business Partnership Facility - Enterprises for SDGs. Circular Economy, Sustainable Development, Conservation. African Countries (Belgian Development Cooperation priorities). €50K to €200,000+. Feb 11
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The problem with us engineers
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"You're both engineers, aren't you?" I said.
Yeah, how did you know? They said.
"Because you're making the same mistake I made. I'm also an engineer."
I was on a call with the founders of a startup looking for grant writing help. Immediately I wanted to work with them because they were so smart but I knew that I couldn't because I didn't believe that I could raise money for them. It was a great engineering achievement for an important problem with a flawed business model.
"So, you built a $500 device to test soil when you can use test kits that cost $2 and have the same accuracy? And on top of the $500 a unit you have to buy a $1,000 motorcycle to be able to drive around to test soil for farmers?"
They nodded.
I try not to give unsolicited advice but when I saw them making the same mistake I made 10 years ago. I couldn't help myself.
Here was my mistake back then: we noticed that there was a lot of cow dung in rural areas and a need for an alternative to firewood for cooking fuel. 2 plus 2 makes biogas and we installed reactors that cost around $1,000 (which we financed) for farmers to transform cow dung into clean fuel for cooking. It was a miracle for farmers and they loved it. But sales were hard. And customer service was harder. There were no addresses. Here's how we had to give directions to the repair team "go down to Mary Wambui's house. The one by the guy with the gold teeth then go past the cornfield and then make a left at the tree." It was impossible to cost effectively serve the customers. When some people defaulted on payments and we sent a team to collect the unpaid reactor one farmer chased the team down with pangas.
We built an awesome technology, patented it, and eventually I realized it's never going to work. To this day people approach me and say "Kyle, I'm starting a biogas company. Can you give me any advice?" Sure, don’t start it. That's the best advice I can give and it will save you 5 years. But no one takes my advice. Ever.
I made the classic engineer's mistake. I wanted to work on a hard technical problem. But it wasn't a worthwhile business problem. LPG is a great way to give clean energy to people for cooking. If I had made LPG distribution just 10% more efficient I would have had an impact on millions of people and been financially successful, too. True, it's not a biofuel, but much better than chopping down trees. But distributing LPG was not a technically interesting problem to me. I wanted to work on something "hard." I wanted to look good and be respected as an engineer.
That's the mistake my new friends made. As engineers they found the most difficult technical problem and then tried to make the business model fit it. It was a hammer looking for a nail. I know this too well.
I could save these young, smart entrepreneurs 5 years of their life but they couldn't hear it. And who knows, maybe I'm wrong.
The hardest thing to watch is I can see two multi million dollar businesses they could build if they pivot now.
One. They could get cheap, effective soil test kits for $4 after importation and sell them for $10, making 60% margin, maybe split that with the distributor. Will they ever do it? No, but someone should. There's good business and impact too.
Two. A technology consulting business where they build tech for rural projects. They have proven their technical expertise. Companies that have both an interesting technical and business problem are dying for talent.
I know these guys will be successful. Probably this business will fail; it will cause heartache but they will grow for it. Next time, if they're not too disheartened, they will start another business and it will succeed. Hopefully we stay in touch and I get to follow their progress.
This all makes me wonder what advice I'm ignoring today.
What advice are *you* not listening to?
Grants of the week
Gulbenkian Prize for Humanity. Calouste Gulbenkian Foundation. Mitigate Climate Change; Low Carbon Future; Resilient Society. 3rd party nomination. €1M. Feb 28.
Support to Agricultural Revitalization and Transformation (START) Funding Facility. UNCDP. Agro-processing / Value addition. Northern Uganda. Blended Finance. $100K. March 15.
The St Andrews University Prize for the Environment. Biodiversity and Sustainable development. Worldwide. $100K. Feb 5.
Business Partnership Facility - Enterprises for SDGs. Circular Economy, Sustainable Development, Conservation. African Countries (Belgian Development Cooperation priorities). €50K to €200,000+. Feb 11
African agriculture knowledge transfer partnerships (KTP). Innovations in Agriculture. Lead applicant must be UK; Project partners in: Ghana, Nigeria, Kenya or South Africa. 150K GBP. April 14.
Yours,
Kyle