How an agri-tech company grows like a crop, bottom-up, converging along market demand.
Author: Zhou Feng
Editor: Barry
Photo: Gerhard Schmidt
The first time I saw this, I was in the middle of a story about how the world's most popular TV program, the TV program, and the world's most popular TV program, the TV program, and the world's most popular TV program. Peng Bin's choice in 2007 was characterized by the typical "unreliability" of young people. But this seemingly unreliable venture has persisted to this day, changing an industry that has a long history and the same life as human civilization - agriculture.
Now, in the 37 million acres of cotton fields in Xinjiang, half of the pesticide spraying, fertilizer spreading operations have been taken over by drones. These vehicles, which liberate human beings from agricultural labor, come from Peng Bin's Jifei Technology.
The main rival in the competition with Jiffy is DJI, which has almost monopolized the consumer drone market. The two sides are in a fierce battle, described by industry insiders as "the price war is so fierce that the gross profit of plant protection machines has become negative."
The reality does not seem to be so exaggerated, but the gross profit margins have fallen off a cliff, which is an indisputable fact: according to the prospectus submitted to the Shanghai Stock Exchange last week: as of the first half of 2021, the gross profit margins of Jiffy's agricultural drones were only 15.94%, which is less than half of the 37.86% gross profit level in 2020.
Even so, the polar flight is still in the competition with the giant high-speed growth. The company earned 469 million yuan of operating income in the first half of this year alone, close to 530 million yuan for the whole of last year. And the 48.76% growth rate of the company's revenue in 2020 was more than quadruple the 10.81% growth rate of the previous year.
If all goes well, "the first agricultural drone" will be landing on the Science and Technology Innovation Board, to raise 1.509 billion yuan on the open market. So far, the story of a perfect entrepreneur has written a good outline - because of the hobby of entrepreneurship, found no one to open up the blue ocean, and the giant fight did not lose. Favored by the capital and the times, Peng Bin's image of a lucky man is just like that.
Only in this story, the long run of 14 years of entrepreneurship, the capital market for many years of cold and do not understand, the financial statements of the huge losses year after year. Imperfections can not be written into the story, but in the entrepreneurs, warm and cold know themselves.
Earlier this year, VentureBeat visited the headquarters of Jufei Technology in Guangzhou and exclusively interviewed Peng Bin, the company's founder and CEO. After a quick chat, we realized that the company is more like a crop in a farm field, growing from the bottom up and following market demand.
This is perhaps the most valuable quality a good entrepreneur should have.
Here's an interview with Peng Bin from VentureBeat:
Technology CEO Peng Bin" img_height="70" img_width="900" data-src="//imgq7.q578.com/ef/1203/4b1db0442d6547a1 .jpg" src="/a2020/img/data-img.jpg">"Can you go public with a cash settlement?"
Entrepreneurship: when did you first decide to do agriculture?
Peng Bin: In late 2012, early 2013, we saw our own aircraft flying more and more stable, and thought that this kind of product should be like a car, there are many practical application scenarios in the altitude of less than 300 meters.
We traveled all over the country looking for applications. One of the times we went to Xinjiang, we brought our own large aerial camera and passed by a large cotton field.
At that time, it was just in time to hit the defoliant before the cotton harvest. We modified the aerial camera on the side: put on two mineral water bottles, connected to the car wash pump, so that it can spray water - so made a prototype, test flight.
Farmers see that quite good, can help a lot of help, and not like a tractor, into the operation will scrape off the cotton peaches. We thought it was worth trying in depth, and we officially set up our first team in Xinjiang from 2014.
The year after that, we did full-season validation from closed weeding before cotton planting to spraying defoliant before harvest. During that time we also received our first payment from a farmer for our services. This gave us more confidence.
Entrepreneurship: At that time, when you said you were doing agriculture, were there many people who recognized it?
Peng Bin: It was very unapproved. The use of drones to help farmers hit pesticides in the farmland was like a fairy tale at the time. At that time, almost no one thought that agricultural drones were a very important industry application.
There is still a lot of confusion today. We've been asked by investors: does agriculture need technology? The young people are not fleeing the countryside? Every year, the agricultural population is not decreasing? The farmers use cash to give you settlement? With cash settlement if you can go to market ......
Early investors are okay, more thinking about technology can not subvert and change the industry. In the mid-to-late stage, investors are more concerned about the business model and financial modeling, which is particularly questionable.
Startup: How do you answer these questions?
Peng Bin: I often communicate with investors and advise them not to misunderstand. Agriculture is indeed a depression in value, but it is worth putting agriculture aside and looking at it from the perspective that we are a technology company: we are just using technology products to solve the problem of agricultural scenarios.
From this point of view, what was originally thought to be an obstacle has finally become a driving force: it is because of the loss of agricultural population that we need to use technology to improve labor efficiency; it is because of the large number of acres and three-quarters of the land is deserted, and then we need to focus on the use of science and technology to labor.
After changing the perspective, we can see whether our products can achieve a balance between operational efficiency, cost, and other value points to form purchasing power. If so, then the business model is nothing more than building marketing channels and iterating on product matters. As long as there are people doing it, there will be a market for it.
But the most convincing thing is the scene. The investors were very impressed when they dove into the countryside with us, because they saw that agriculture is really what we described.
How did the first order come about?
Peng Bin: When we did the validation, we chartered a piece of land and took responsibility for the harvest. Once the next piece of land can not hire people, the farmers said you do not only responsible for their own, I this piece of land together with the drug good, to pay you.
At first, he asked how much a drone costs. We built less equipment at that time, it is very expensive. The farmer was not going to buy one at 180,000, saying he could not afford it in his life.
But the effect of using a drone to do medicine is really good. Later, we asked an acre of land if we counted 10 dollars, we give you medicine okay? Farmers then feel that we can try, because it costs almost as much to hire someone to do the medication.
That's how we got our first order. Later, we applied for a 400 phone number, the number is "9803131" - "just help you spreading medicine spreading medicine", brushing a lot of walls. The process is that the customer service team gets a call and sends our boys to help the user with pesticides.
Entrepreneurship: Who made the first call?
Peng Bin: I don't remember exactly. But our earliest business was in Xinjiang, so it must have been a call from a fellow villager in Xinjiang.
At that time, the other party also felt: "You are a liar, right? How can you possibly help me with something as hard as hitting pesticides?"
Entrepreneurship: Bringing an airplane to work in the past, the other side does not say so.
Peng Bin: No, we have had a group of young men with six or seven airplanes to the farmers, two hundred acres of land took two or three days to finish the situation. The other side had to give us each a sprayer, do not let the drone, think people are more efficient.
Why did it take so long? There are problems with the water quality and the design of the spray nozzles. Not long after the drone flew out, the nozzle clogged up and had to return for repairs.
And agricultural drones flying at a low altitude, only two or three meters from the ground, by the ground magnetic interference will be like a headless fly like a mess. The load of the machine is also not adjusted.
In the beginning of the total one, all kinds of strange things have happened. From what I can see now the machines were completely unusable then, just experimental. Our early products were changed two or three times a year, and slowly improved to fit the realities of agriculture.
Entrepreneurship: Agricultural drones are to B, and when we first started our business it was quite a bit more to C. Which one do you think is harder compared to these two directions?
Peng Bin: I think it's to B. Because the C end of the consumer drones are not used very often. Most of us today buy an aerial drone and go back and use it for a few hours a year, which is a lot.
But industry drones are a dozen or two dozen hours of work a day. The agricultural drones that we make may have to work 24 hours a day during the busy farming season. Customers' requirements for reliability, fatigue resistance, and stability are much higher than those of consumer products, and are not of the same order of magnitude.
Entrepreneurship: Besides making the airplane more reliable, what are the most important changes in other directions?
Peng Bin: Automation. I remember very clearly why that change was made.
It was 2015, and I was on the front line serving farmers with the operations team as the product manager and main product owner. That day, we were hitting pyrethroid insecticides, which are equivalent to highly concentrated mosquito liquid, and the skin will be allergic to contact. We followed the drone for thirty to forty meters, and the liquid came at us head-on, making us red in the face.
I was like, young people don't use these drones. Since then we've made a lot of important decisions to make the drone semi-automatic from remote control, and then fully automatic. It can be understood as going from making a good vacuum cleaner to making a fully automated smart sweeper that helps you with your home hygiene.
Entrepreneurship: How intelligent is the Polaris drone today?
Peng Bin: Almost all intelligent: take out the phone snap two clicks, go to work!
When it comes back to land, just change the batteries, change the pillbox, snap on your phone and point twice, and then don't bother after that.
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Why farming is a trillion-dollar market
Entrepreneurship: How do you feel about companies going public?
Peng Bin: We can actually go public, we can meet all the requirements of revenue scale.
But going public isn't the only goal. Jiffy has a very grand vision and wants to make a real difference in the world. But if the conditions are right, we will actively prepare to go public.
Because what we do affects a lot of people. Becoming a public *** company and being publicly regulated is also good for the long-term governance and health of the company.
Startup: Do the requirements to be met include profitability?
Peng Bin: I don't think you can measure the value of a company purely by how much it makes. A company may invest a lot of money in research and development of future products, which may result in a loss in the present.
Losses don't mean the company is worthless, and many Nasdaq-listed companies are seriously losing money, but their market capitalization is tens of billions or hundreds of billions. This shows that people are still willing to pay for this thing that entrepreneurs do, rather than pay for the state of the moment.
Entrepreneurship: What are the plans for follow-on development?
Peng Bin: Definitely expand the product development team to make more products that solve the actual problem of agriculture. As a technology company, only by converting money into valuable products can investors get a greater return.
The second is to broaden the distribution channels. We currently cover roughly 1/3 of the counties in China, but we expect that more than half of the counties have agricultural scenarios that are suitable for drones to enter. The channel building is not complete and needs to be expanded.
Finally, we also want to build the first super factory in all of China, or even the world, to produce agricultural robots.
Entrepreneurship: Why do you want to build your own factory?
Peng Bin: You can imagine, in the future, if a robot can take care of 10 acres of land, China's 2 billion acres of arable land will need about 200 million robots.
Maybe 10 acres is a bit small, so let's expand the robot's scope of work to 100 acres, which would also require 20 million agricultural robots - and not just drones.
And agriculture is very concerned about the cost, need to use the scale of production to bring down the unit price of agricultural robots. Such a large scale of production naturally requires the scale of the super factory.
Entrepreneurship: Roughly speaking, this is already a trillion-dollar market.
Peng Bin: This is just China, there are 20 billion acres of arable land in the world. So without us, the world would have a great agricultural robotics company.
Of course we hope we are, not only serving the Chinese agricultural market, but also working for the freedom of food and the freedom of agricultural production around the world.
The completely unmanned agriculture
What would it look like?
Entrepreneurship: It's hard to support such a big vision with a model that's as operations-heavy as helping people with medicine.
Peng Bin: Yes, that's why we made a big adjustment to our business model in 2017.
Before that, there are large farmers, and agricultural pesticide dealers to find the door to say do not want me to help him spread medicine, to buy my equipment. Because with our services, you have a small area is not cost-effective. And we are a unified price, pricing is not reasonable.
For example, the charge for the land at the east end of the village can be higher than the west end of the village, because the road is particularly difficult to travel. Also sometimes the weather conditions don't allow for it, and it's a rush, but for various reasons we don't have enough flexibility in our service.
They said you sell equipment to me, I live near these villages, can serve them anytime, anywhere, you just need to protect us on the line, do not have to directly serve the farmers, they know more about the local situation.
So in October 2016, we released our first drone for foreign sales, and from 2017 onwards, we started to officially sell it. Since then, we've stepped back.
Startup: It feels like a user turned reseller, with more third parties to run it, or localized.
Peng Bin: I think the essential logic behind it is that we don't want to do what the user can do, we want to do what the user can't do. We serve the user and improve the user's business efficiency, and maybe the value chain is clearer.
Also because of this our turnover in 2017 quickly exceeded 100 million, explosive growth, especially fast.
Entrepreneurship: extreme fly today not only drones, but also unmanned agricultural aircraft, unmanned vehicles, sensors, big data, why the transition to the direction of intelligent agriculture platform?
Peng Bin: Initially there was no such idea. At that time, I felt that the agricultural drone itself is a big thing, and it needs to be invested for many years to get the technology off the ground. Waiting for 2016, 2017, after the team has a deep understanding of agriculture, we turned the idea to platform development.
Startup: What is the understanding?
Peng Bin: In the past, there were a lot of tech companies around the world that wanted to just be the brains and guide agricultural production. But at least for now, that attempt to hand over execution to people has almost always failed.
We've also thought about this, and the summary is: the most pressing problem in agriculture is not decision-making, but execution. Because people are intelligent beings in their own right, they make decisions with experience while executing.
For example, if you're weeding, the system tells you to put more herbicide in the area. People working in the field don't even need the system to tell, after seeing it, take the sprayer and spray two more times to get it done, which still needs AI to judge?
And we're lucky to have done the execution first: take over the heavy labor with drones, and then command the drones with machine decisions. This makes practical sense.
The same is true from a data acquisition perspective: in the past, people, as the mainstay of agricultural labor, also collected data, which was processed by the brain and became the subjective experience of each individual.
Today, with the addition of advanced equipment, agricultural data collection has become an objective process, the data into a more objective, rational decision-making system to deal with, the results can be recognized naturally.
From the user's perspective, he does not need to know how many algorithms behind the perception and decision-making. Because the ultimate need of the user is to have a field free of pests and diseases, and a healthy crop.
To meet this demand, it is necessary to make agricultural labor not dependent on people; agriculture should also be from relying on the inaccuracy and inconsistency of experience to relying on the objectivity and reliability of data. It is only at the end that artificial intelligence makes executive decisions about machines based on perception and understanding of the overall environment.
This is actually a whole set of unmanned system in the three links of perception, decision-making, and execution.
Entrepreneurship: Have you ever envisioned what a completely unmanned agriculture would look like?
Peng Bin: We believe that the thousands of years of human farming will come to an end, and that the repetitive heavy labor in future agricultural production will be done by a large number of robots. The human being is only a caretaker and decision maker, no longer directly operating every piece of land.
In this way, the first thing that will happen to humanity is food freedom. Not only would hunger be solved, but human labor in agriculture would be freed up, which would bring about a lot of changes on a social level.