In the following exchange, Regrow AG’s co-founder and CEO, Anastasia Volkova, offers us an insightful window into building enterprise SaaS for a vertical (agriculture) and notes the ways in which it increasingly, unmistakably resembles horizontal software.
Like any successful company defining product-market fit, there was a lot of trying to understand what works, testing hypotheses, and thinking about what pricing models could be applied for the right value distribution.
All of it, though, came down to addressing some fundamental questions:
- Whose problems are we solving?
- How are they measuring the benefits?
- How are they evaluating the risks?
- How can we align our models with what they already understand (such as how they charge their customers and how their services get rendered)?
Then, additionally, we sought to get a sense of how much of the standard “best-in-class” SaaS playbooks and systems could be brought to agriculture. There are things that clearly don’t fit in. And then, there are some surprising things that do indeed align with this space.
For example, it’s interesting to consider the concept of an Ideal Customer Profile (ICP) that tends to be this almost formulaic cornerstone of the SaaS go-to-market philosophy. And it holds across industries. Including ours.
Although things do get a little bit more complicated for us.
Primarily, because it’s hard for Regrow. Given the pervasiveness and complexity of the problems we’re solving, isolating an ICP to only one part of the agricultural supply chain and saying this group represents the ultimate customer isn’t realistic.
Instead, we’ve landed on several ICPs that we’ve systematically unlocked and prioritized based on what’s currently most needed in the market.
As in, where does the current state of climate action stand when it comes to agriculture? Where does it get stuck, and what are the critical challenges to help it scale and unlock itself?
Let me expand on what I mean here.
To unlock the agrifood industry transformation, we need to serve customers across a set of complex supply chains. We need to serve companies upstream. Those that sell to farmers and provide them astronomic advice.
Plus, those that are downstream, and closer to consumers, such as food manufacturers. Then also the folks in the middle (traders and aggregators) to connect the respective supply and demand parts of the supply chain.
What is encouraging, though, based on the patterns we’ve observed is that Regrow is serving a supply chain based on universal demand and supply principles.
More importantly, the roots of our core promised outcomes — enabling GHG emission reduction and ag-resilience strategies — are focused mostly on the farm.
So we are able to look longitudinally at wide groups of customers including agricultural input providers, processors and consumer packaged goods companies. With the ICPs being somewhat different in every part of the supply chain (depending on the parts of the vertical they’re sitting in) but largely having the same goals.
A persona to illustrate this would be a Head of Sustainability, someone who would have similar objectives at each of these companies. They would surely have slightly different purviews stemming from what their company does and what sustainability implies.
But as long as a company is touching agriculture, a significant part of the footprint they’re concerned with, often majority, would be on the farms and that’s where Regrow concerns itself.
To sum up, what comes to the fore is being really clear on THE problem that ties all ICPs together, not necessarily the shape of the solution.
Which is still incredibly complex.
If we look beyond the supply chain component and consider the private sector and the public sector divide, we’re looking at places where similar decisions get made entirely differently. The complications only deepen further.
So the way we’ve tried to structure is to have a go-to-market pod for each of the core ICPs. It’s a model that best reflects the differences between the customers and their levels of sophistication.
Which means, each of these groups has a different set of constraints, concerns, educational needs, and frankly, their own little vocabularies. If someone is closer to the farmer, they’d call something a commodity. If they’re closer to the consumer, they’ll call it an ingredient.
What this model does not capture well is the relationships and dependencies along the supply chain.
We’ve also learned that it’s not only about us matching the product with a customer’s level of sophistication and more about us helping them increase their level of sophistication so that they can access and fully benefit from Regrow.
Our product is very comprehensive and it combines some of the critical pieces of the ultimate process that the companies need to adopt. Including: the ability to plan, prioritize, take action, be able to effectively report on their climate action in agriculture, compare it with a baseline and prioritize again.
As a result, the whole virtuous cycle of setting targets, executing programs towards lower emission levels, and getting to higher resilience levels across the supply chain can be never-ending.
Regrow meets where companies are in their journeys across these phases of that life cycle. A less mature customer would launch a smaller initiative or just start with analytical exercises as opposed to engaging their suppliers with a program in which to invest.
Hopefully, the latter action is the optimal state to which they’ll eventually get to over the years, but not everyone is ready for that from the start.
Still, the reporting requirements, based on the tailwinds that this sector has for climate action, pushes everyone to at least report with a certain level of rigor. And that gives clarity to the sector.
Product market fit is rightly described as a feeling that founders experience when they’ve achieved it. It’s an unmistakable feeling. It is also transient.
There’s no permanent summit that once reached cannot be lost.
What you’re really experiencing is increased inbound from customers dictated by several circumstances they’re likely going through.
For us, to name a few such conditions: the disruptions of the supply chain post-COVID, the increasing effects of climate change, and the political actions that make the regulatory environment more strict.
With those kinds of tailwinds, a company like ours undergoes customer engagement at a deeper, more profound, partnership-like state. That drives customers to almost take the product off our hands. That is what I’d call product-market fit.
That said, I wouldn’t say we have absolute/perfect product-market fit. Does anyone?
After all, as I mentioned earlier, we serve a wide set of ICPs with varying levels of sophistication.
For the most sophisticated customers, we have a very strong fit. Because we’ve already been solving problems they have only now begun to discover, we have answers for their questions.
But for every new market, for every new ICP, for every new level of sophistication, for every new offering, and for every new part of the offering, we’re constantly looking to (re)establish a stronger product-market fit. With its own adoption, learning curves and ROI.
Another way of thinking about this is knowing the nuances of competition. And the competition may not always be with a like-for-like SaaS solution. It might come from a different share-of-wallet competitor.
Where else would that money go if it wasn’t going to you?
If the customer was willing to solve a problem in an alternative fashion, without buying the product, what would they do? In Regrow’s case, they could turn to consulting. Or to more foundational research.
Both remain challenging to connect back to on-the-ground action but are things that people can opt for as first commitments, nonetheless.
Considering these, getting to product market fit in climate tech definitely represents a fair amount of complexity. But, then, it also represents probably the most rewarding work we can be doing to ensure our customers are successful .
This seems like such an obvious insight in hindsight. But I don’t find it as much talked about.
As a vertical-specific product that’s in the scale-up phase for some of its offerings. One that’s also still establishing the right fit for some of its newer offerings and newer markets. And having been at it for seven years, I’ve realized one thing is increasingly true.
As we scale, we operate more and more like a typical B2B SaaS business rather than a deeply-entrenched, vertical one.
Of course, there’s always a very heavy infusion of environmental, agricultural, and food-related concerns. So we’re steeped in climate science, the prevailing worldviews on the subject, and constantly mapping adjacent industry impact.
But we’ve been able to build our product, engineering, and go-to-market functions to be more akin to a standard, maturing enterprise SaaS organization and hire people from such businesses who happen to be passionate about climate.
Folks who already have specialist, hard-won expertise in, for example, how to be a great product marketer. And need our help to acquire the specifics of customer empathy and the wider background for the space.
We’re also seeing that experienced operators are seeking out such positions themselves with almost a sense of calling for working in this space.
— Basis’ founder, Bebe Kim on why biz fundamentals trump all silicon-valley “must-haves”
— Dragonboat’s co-founder, Becky Flint, on the three pre-PMF questions founders must ask
— Crossbeam’s co-founder, Bob Moore, on the most important way to enter new markets