Four Business Building Takeaways Everyone Can Learn from Lumo Ag

How two co-founders are thinking differently about building their irrigation technology company

Overview

Lumo co-founder and CEO Devon Wright shared a post on Linkedin after receiving a patent for Lumo One, the world's first smart irrigation valve, this week titled Lumo One Patent Approval and the myth of a "Faster Horse" where he shared this line regarding the classic quote “If I had asked people what they wanted, they would have said fast horses”:

That faster horse line is dangerous. Because too often it’s used by innovators to look down upon or dismiss the same exact people they’re trying to serve. It creates a God complex that’s extremely harmful to hardworking, people (aka your customers) who have meaningful insights and valuable contributions to make.

It’s a unique take on an often quoted line. But Lumo is full of contrarian takes and approaches.

Lumo differentiates itself by being the first irrigation valve to have a built-in controller, the first to have a built-in flow sensor, and the first valve that is completely wireless and internet connected. All of which are powered by Lumo’s irrigation management software.

I have been fortunate to talk with Devon and his co-founder Bennett Fitzgibbon in the past and while the product is compelling, what has stood out the most to me was what made them start the business and their approach to building the product and the company.

In my conversations with them, four things have stood out that I think all of us can learn from.

1. Solve Your Own Problem First

Devon has an eighty tree orchard in California. He realized the amount of water being wasted for a variety of reasons— asking around about what he could do to solve the issue. Everyone he asked told him it’s just the way it is. But that wasn’t good enough, he wanted to figure it out, and along the way realized, if he is having that much trouble managing water usage on his hobby-orchard, how much trouble are they having in the large orchards?

The story reminds me of a framework that VC and Lux Capital founder Josh Wolfe uses where he asks the question “What sucks?” to find ideas. Asking what sucks identifies where opportunities lie.

I think anyone looking to found a company, or build a product within an existing organization can use the “What sucks” framework and Lumo story as inspiration.

2. Roll Up Your Sleeves (This is my favorite point)

After determining that there might be a business, Devon and Bennett realized they didn’t know anything about large orchard irrigation. Many would go ask consultants, do farmer interviews or simply build without consideration for customer needs. Devon did something rare— he took a job working for a viticulture management company for several months where he drove from vineyard to vineyard and got to learn the inner workings of large irrigation systems and the problems the farmers and irrigation managers face. Devon would then report back to Bennett what he learned, helping to form a deeper understanding of the customer context, the problem to solve, inform product development and company focus.

Devon got paid by a different company while building his own business.

3. Nail Your Customers Job-to-be-Done

Much of the reason for taking on a job was to grasp a better understanding of the “job-to-be-done.” (highly recommend watching the linked video)

The theory of Jobs to Be Done is a framework for better understanding customer behavior, identified by the late Clay Christensen.

The framing is that people don’t “buy” products, they “hire” them to perform some job in their life or within their business that moves them forward to an outcome or goal.

It’s based on the classic quote that “people don’t want a quarter-inch drill bit, they want a quarter-inch hole”. The premise is to figure out what kinds of situations people might find themselves in, contextualize the situation under which decisions are made, understand what kind of pain individuals experience, and why they might go looking for solutions to solve that problem. This framework has been cited numerous times within Upstream and I think is a useful lens for informing a deeper context and understanding for why customers (and farmers) do what they do.

Irrigation technology companies have struggled with adoption and success. In 2021, I teamed up with Tenacious Ventures to write the The agtech adoption dilemma: irrigation where we highlighted the psychological aspects challenging adoption. Devon and Bennett wanted to avoid this and so they worked to be crystal clear in the job to be done.

The takeaway they shared with me is subtle, yet incredibly astute:

“In irrigation, everyone thinks the job to be done is opening and closing valves…the real job to be done is getting a certain amount of water on the crop at the right time”

The reason this context is notable is that irrigation systems are complex— opening and closing valves is one small component of irrigating. There are other components that need to be simultaneously working, measured and managed, including the water pump, pressure fluctuations, flow rate limitations and much more.

This insight informed the unique product development that made for them designing their smart irrigation valve, which has a built-in controller and flow sensor, while also being connected to the internet.

4. Focus, Focus, Focus, then Focus Some More

Businesses often go after numerous different markets simultaneously. In the world of start-ups, this is acutely challenging because it stretches people and financial resources at a time of financial constraint.

As Shawn Carolan stated, start-ups don’t starve, they drown.

I have talked about a lack of focus as a key challenge of Indigo and FBN.

In order to raise money, venture capitalists are drawn to large total addressable markets (TAM).

When a young start-up is in need of a capital injection, it can be easy to say “why not go after geography x or crop y as well? We already have people asking for it in those crops and regions.” And that is how a start-up can drown.

Start-ups often focus on “de-risking” VCs TAM risk (aka too small to ever deliver a return even if successful) before de-risking the operations of their own business.

Bennett and Devon told me they want to ensure the business works operationally in a specific geography, in a specific crop before expanding anywhere else.

In fact, Lumo only operates in wine grapes in the Napa/Sonoma region of California. And in their words to me, they will continue to do so until they reach at least $1 million in ARR.

It takes immense discipline to operate this way. Customers always ask for more, VCs want to see a product can work beyond a small region and crop and often founder ego drives a desire for “bigger.”

Lumo just closed a seed funding round, and in an already challenging raise environment, it was made more challenging because many VCs expected them to expand beyond their focused region and crop. They wouldn’t budge, illustrating their conviction.

As they pointed out to me, almond growers face different problem than grape growers, have different regions and different end users and demands. This would challenge the operations of the young business. Expanding too early would require them to spend more capital on people, change the product, and stretch their attention.

It’s noteworthy that Bennett and Devon both worked for Yelp— a market place-esque business. Marketplace operators have to be disciplined in when and where they expand because of geographic nuance and the need to build out network effects. Geographic nuance is well-known in agriculture and one of the most under valued marketing tools in agriculture is farmer-to-farmer praise— something that can only gain momentum in a constrained geography and is its own form of network effect.

Final Thoughts

Lumo is still early. They operate in an area of agriculture I know virtually nothing about. However, the approach Devon and Bennett have taken to build the initial product and customer base is compelling, and makes them not only worth worth watching, but also learning from for anyone building a company or building a product.