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SMU482

SHRIMP ON SMARTPHONES? EFISHERY: AGILE INNOVATION IN

INDONESIAN AQUACULTURE (A)
We’re going to make it happen.
- Elon Musk, CEO, Tesla and SpaceX1

It was a cool afternoon in November 2016 at the executive meeting room of eFishery Pte Ltd, an
aquaculture start-up based in Bandung, Indonesia. Gibran Huzaifah, the CEO, looked past his team
at Musk’s quotation stencilled boldly across the concrete wall. eFishery had pioneered an automated
fish feeder that enabled farmers to use their smartphones to control the motorised distribution of food
across fish ponds. The question at hand: to undertake a high-risk initiative to enter a new market—
providing feeders for shrimp farms. Shrimp differed from fish for many reasons. Geographically,
shrimp farms were less accessible and their ponds were much larger in size. The feeder would have
to be remodelled to work well here. Yet the opportunity in shrimp seemed exciting. Shrimp farmers
had larger farms and earned better margins than fish farmers. Gibran listened to multiple, often
contradictory viewpoints from his team. He knew his staff were well attuned to issues on the ground,
yet he would have to make the call.

Gibran had come up with the idea for eFishery in 2013 – envisaging a tech firm organised around an
automated feeder that would improve the productivity of local fish farmers. The young CEO and his
partners spent two years building a viable prototype before ramping up outreach and sales efforts in
2016. They worked hard to follow an agile model, used customer feedback to set, assess, and shift
priorities, and started a promising business replete with untapped potential.

Yet despite eFishery’s flexibility, by the end of 2016, Gibran found himself at a crossroads. The
promise of a strategic pivot to become a data-driven platform business beckoned to a pathway of
rapidly scaling profits. However, despite Gibran’s high expectations, customers were just not as
enthusiastic as he had hoped, and sales remained sluggish. The team believed that if they were to
scale, they needed to on-board a critical mass of new farmers and secure stable revenue. Gibran
needed to get over an immediate hurdle - cash flow.

One path was to diversify into providing feeders for the shrimp market, where farmers enjoyed higher
margins and profit. Yet Gibran and his team had shied away from this segment earlier due to its high
barriers to entry and entrenched competition. Taking on a new market would be a huge gamble at a

1
Carl Hoffman, “Now 0-for-3, Spacex's Elon Musk Vows to Make Orbit”, Wired, May 5, 2008,
https://www.wired.com/2008/08/muskqa/, accessed April 2018.

This case was written by Professor Simon Schillebeeckx, Research Fellow Ryan Merrill and Adina Wong at the Singapore
Management University. This case was written with the support of Singapore’s Ministry of Education, under the Tier 1
Academic Research Fund (#16-C207-SMU-023) “Sustainability of Natural Resources: Seeding an SMU community and
research agenda on food and water with an ASEAN focus”, awarded to Dean Gerard George and Assistant Professor Simon
JD Schillebeeckx at the Singapore Management University. The case was prepared solely to provide material for class
discussion. The authors do not intend to illustrate either effective or ineffective handling of a managerial situation. The authors
may have disguised certain names and identifying information to protect confidentiality.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Copyright © 2018, Singapore Management University Version: 2018-05-10

moment when the company was struggling to make ends meet amid minimal financial slack. The
initiative could also distract Gibran from his larger goal of transforming eFishery into a platform for
data services that could scale across the value chain by supporting not only fish farmers but also their
suppliers and customers.
Time was running out, and Gibran had to decide: To Shrimp? Or Not to Shrimp?

Indonesia

Indonesia was the largest archipelago in the world, with over 17,000 islands spread across the Pacific
and Indian Oceans.1 Its largest and most populous islands were Java, Sumatra, Sulawesi, Kalimantan
and Irian Jaya. The official language was Bahasa, while over 700 languages and dialects sounded
across its islands.2 Indonesia was also the largest economy in ASEAN. 3 Agriculture4 contributed
13.6% of its US$2.839 trillion GDP in 2015; industry, 42.8% and services, 43.6%.5 Specifically
aquaculture, which referred to the rearing of aquatic animals, or the cultivation of aquatic plants for
food, in natural or controlled marine or freshwater environments was worth US$8.4 billion annually
in 2016 (refer to Exhibit 1 for further details on Aquaculture in Indonesia).6

By 2016, growth in aquaculture had outpaced growth in the human population. Annual per capita
consumption of fish and shellfish had more than doubled since the 1960s to over 20 kilograms per
person per year. 7 Indonesia led the region in fishery and other aquaculture production and was
projected to outpace its regional competitors in expansion of the fishery and aquaculture sector over
the next decade (refer to Exhibit 2 for details on Indonesian Aquaculture in Context, South East
Asia).

1
Indonesia at a glance, Food and Agriculture Organization of the United Nations, http://www.fao.org/indonesia/about-us0/indonesia-ata-
glance/en/, accessed April 2018.
2
Indonesia Economy 2016, Countries of the World, https://allcountries.org/world_fact_book_2016/indonesia/indonesia_economy.html,
accessed April 2018.
3
Indonesia at a glance, Food and Agriculture Organization of the United Nations, http://www.fao.org/indonesia/about-us0/indonesia-ata-
glance/en/, accessed April 2018.
4
Included rubber and similar products, palm oil, poultry, beef, forest products, fish and similar products, shrimp, cocoa, coffee, medicinal
herbs, essential oils, and spices.
5
Indonesia Economy 2016, Countries of the World, https://allcountries.org/world_fact_book_2016/indonesia/indonesia_economy.html,
accessed April 2018.
6
“Aquaculture in Indonesia Report 2016,” by MarketLineAdvantage, 2017, MarketLine Database, Retrieved from MarketLine Advantage
database via SMU Pyxis.
7
“Global per Capita Fish Consumption Rises Above 20 Kilograms a Year”, Food and Agriculture Organization of the United Nations,
http://www.fao.org/news/story/en/item/421871/icode/, accessed April 2018.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

eFishery

Recalling eFishery’s founding, Gibran alluded to a form of enlightened self-interest. A young fish
farmer with a freshly minted degree in biology, Gibran felt an automated fish feeder would “scratch
his own itch”8 and solve the problems faced by his fellow fish farmer friends.

The problem that eFishery is addressing is the inefficiency of feeding in the fish farming business.
Feeding is done manually, and farmers lack technology to control the pace, quality, and security
of feed distribution.9

Gibran’s initial idea was quite simple: to replace human labour in the feeding process, and with it a
plethora of problems. For instance, sometimes a labourer lacked skill and dumped too much food into
one part of a pond and neglected others, or failed to feed the fish regularly. Labourers circulated
among tens or hundreds of fish ponds and were hard to monitor. In the worst cases, they might even
steal food from one farmer and sell it to another for quick money on the side.
Armed with a design sketch for an automated feeder, Gibran partnered with a university classmate
(who subsequently became the COO), to incorporate eFishery in late 2013. Their first hire was a
mechanical engineer who helped the young entrepreneurs develop and fabricate a prototype
combining a feed hopper and a throwing arm with an integrated circuit board.

The autofeeder promised to improve both fish health and farmer profits. Hand-feeding led to fish
food pellets clustering in a few parts of the ponds where fish would rush and compete for food. For
breeds like the nila, which had spikes on their bodies, jostling for food resulted in scratching, injures,
and even blinding. When injured fish were harvested and sold at market, many had lost their shiny,
glistening surfaces and fetched inferior prices. Inefficient feeding was also expensive, and it left
uneaten feed floating in the ponds or built-up at the bottom to biodegrade. Rotting feed upset the PH
of the water, reduced growth rates, and increased disease. Risk of contamination forced farmers to
do extra work to change the pond water every few days, and for an average fish farmer with anything
from ten to over a hundred ponds, this was an arduous, time-consuming, and costly task. Overfeeding
was another challenge, as Gibran explained,

A major cost for fish farmers is overfeeding. First, of course, there’s the feed itself—70% to 90%
of the total cost of the pond is food. But water quality is equally critical. Normal mortality rate
with clean water is about 10%. But overfeeding accumulates waste feed at the floor of the pond,
reduces water quality, and can increase mortality rates to up to 50%.

eFishery had an austere start. Gibran started the venture using his own money and practiced
bootstrapping to finish his prototype. For two years, he lived in his office with his family and
teammates. In the third quarter of 2014, Gibran received his first grant of US$100,000 from Mandiri,
a large Indonesian bank, and put the money into R&D. By the second quarter of 2015, eFishery had
a viable product, and resolved to go to market.

8
To “scratch ones own itch” means to solve a problem one perceives as a consumer in the market. Gibran was a fish farmer himself, and
identified a gap in the market in the lack of an automation tool. While “scratching one’s own itch” is a classic logic for entrepreneurs,
scholars have discussed the limitations and risks of the impulse in various settings. See for example:
https://hbr.org/2014/05/when-scratch-your-own-itch-is-dangerous-advice-for-entrepreneurs
9
Gibran Huzaifah, CEO eFishery, quoted in an article by L. Cosseboom, “eFishery Reels in Funding from Aqua-Spark and Ideosource”,
TechinAsia, 9.8.2015, https://www.techinasia.com/indonesia-startup-efishery-funding-news, accessed April 2018.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Gibran spearheaded sales, travelling tirelessly from farm to farm. His mission: to educate farmers on
the benefits of automated feeding and convince them to replace traditional hand-feeding with an
oddshaped, lime-green machine that looked like it belonged more in a futuristic movie featuring
robots rather than on a fish farm.

The AutoFeeder

The feeder contained a tailor-designed circuit board, a hopper loaded with feed, and a throwing arm
to fling the food across a pond. Manufacturing was outsourced to China, while the software brain of
the feeder was retained in Bandung. When a machine arrived from the port, Gibran’s engineers would
install the encrypted, proprietary eFishery algorithm into its circuitry—only then would each new
feeder come to life.

Complementing the feeder was the eFishery app accessible on the farmer’s smartphone and linkable
to an eFishery Dashboard on any web browser. In-app settings allowed farmers to control feeding
frequency and volume for each pond, and decide whether a feeder would fling pellets at fixed times
or at timed intervals (for further details on the eFishery System, refer to Exhibit 3).

The smartphone app used peer-to-peer wifi to transfer data to and from the feeder at a maximum
distance of 50 metres. The app also connected to the Cloud via 2G/3G/4G coverage to update and
exchange data with the eFishery dashboard. This allowed each farmer to monitor a rich tableau of
feeding data for all the ponds on their farm and input details about each active pond into the App or
Dashboard: age and species of fish, fish biomass as babies and at harvest, and the brand, type and
amount of feed. This helped track production and organise critical inventories. While farm labourers
could throw feed about 3-4 metres, Gibran’s feeder could disperse pellets up to 10 metres in an
attractive, “raindrop” fashion. The feeder could prevent fish from fighting in unnecessary
competition, reduce injury, and lower contamination.

Sales and Marketing

Through 2015, Gibran was the only person in a sales role, while the rest of the team worked on
engineering improvements. Gibran initially targeted smallholder farmers who worked on between 10
and 100 ponds, selling the solution on a promise of increased efficiency (up to 20%) and a doubling
of profits. Yet despite the attractive value proposition, many farmers were unfamiliar with automated
feeding and wanted time to be convinced about the technology’s benefits. To overcome their risk
aversion and uneasiness with apps and dashboards, Gibran encouraged them to trial the feeder - free
of cost - for three months. If a farmer was happy, he or she could pay back rent for the trial, and
thereafter keep renting or purchase the product.

Based on his experience, Gibran was not surprised that farmers were rarely willing to pay over
US$500 to buy a feeder for each of their ponds. They earned small margins, and they wanted
assurance that eFishery would keep the feeders running, rain or shine. In the end, most liked the tech
and chose to rent. As result, Gibran innovated a rental model. At US$25 per unit per month, farmers
could scale the solution across their whole operation, confident that eFishery remained the owner of
the system and carried the lion’s share liability for break downs and servicing (refer to Exhibit 4 for
further details on the eFishery purchase and rental structures).

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Over time, Gibran refined the sales process and hired more salespeople. A sales kit showed how
easily the feeders could be reset and serviced, and gave flowcharts for using the app and dashboard.
A new sales team took to the field; their daily mission was to convince farmers to trial the product.
With field visits and pop-up stores at busy commercial areas, the sales team averaged 32 demos per
sales rep per month by the end of 2016, and achieved a 41.2% conversion rate. Average order size
per farmer was 5.3 units, and eFishery started to bring in real revenues (refer to Exhibit 5, eFishery
System Placement in Ponds).

By the end of 2016, eFishery was serving over 1500 ponds in East Java and Sumatra, and Gibran’s
research showed another 10.2 million fish ponds in Indonesia on the horizon, and another 55.2 million
ponds in Asia beckoning just out of sight. The tech was good, and Gibran turned his sights to a wider
audience.

Iterating and Improving

Almost all of the major decisions we make on building a new idea, product or service, even the
business model, stem from listening to our customers.

Throughout 2016, Gibran was gathering feedback on how to improve the first-generation feeder.
Farmers said the “product was smart, but not smart enough”, and compared it to the best workers.
Excited and curious about how human acumen could still beat the machine, Gibran asked to shadow
these workers, and followed the best to observe their techniques.
Gibran was struck by a revelation—the true value of a high-skilled labourer (who cost Rp 900,000
(US$65) a month per hire) was in knowing when to stop feeding. Because the worker fed the fish
three or four times a day, they developed experience in telling when the fish were getting full. By
perceiving subtle signals in swimming patterns, the best feeders slowed down the pace and got better
efficiencies as a result.

In contrast, Gibran’s green automaton was preloaded each day with a certain quantity of food, and
would disperse its pellets on a preset schedule, typically about 12 to 30 sessions per day. The
autofeeder had no way to observe when it needed to slow down or stop. Loyal to a fault, it dispensed
a full hopper, regardless of its diners’ appetites. Gibran knew overfeeding led to cost, injury, and
contamination. Yet preloading smaller volumes risked underfeeding. Gibran decided the feeder
needed a new feature: perception.

The Fish Sensor and a Spectacular Fail

Gibran dedicated the greater part of 2016, and all three engineers in his eight-person team, to building
a fish activity sensor. The new feature would sense when fish were full, and pause, slow, or stop the
feeding process accordingly.

In the first quarter of 2016, Gibran challenged his team to design and fabricate a market-ready sensor
in three months. Led by a mechanical engineer, the team produced a mechanical system to be
submerged deep in the pond and respond to increased contact with satiated fish. According to theory,
these fish would swim deeper away from the surface, contact the sensor, and trigger the feeder to
slow and even stop the feeding.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

By the third quarter, it was clear that the sensor was a spectacular failure. Fish swam into the sensor
at all times; they swam all over, hungry, full, or just visiting friends. As often as not, the sensor told
the machine to stop prematurely, and provided no consistent intelligence with which to regulate the
feeding. Gibran scrapped the design, and resigned himself to a total rework.

Targeting Critical Mass

Despite the abortive start, Gibran remained keen to find another way to give his automation eyes. If
the feeder alone could save 25% of feed costs (20% of total farm costs), a good sensor could surely
provide another 7% of savings and make eFishery’s system more attractive. And while the added
savings were certainly an incremental improvement, Gibran felt a sensor would give the “Wow!”
factor and offer a strong selling point. He explained,

This sensor, the technology and its promise, makes the auto-feeder sexier. For the farmer, this
idea can transform the machine into a single attractive aesthetic, like the MacBook Air. We can
go to the farmers and say, “Hey, we have a feeder than can sense your fishes’ appetite. You want
to buy it?

Like the design of an Apple laptop, the Wow factor doesn’t really give you any significant
improvement on other machines, but it sure looks pretty, and then you’re sold (refer to Exhibit 6,
eFishery Competitor Comparisons, for further details).

Gibran believed the sensor had big implications for driving sales and attracting investors. This growth
would enable flexible pricing and improve competitiveness.

We want to pursue profitability and ensure we have a good margin from our established pricing.
But if we want to have more growth and scale-up sales, then we also need to have discounted
prices. The sensor can get us to a scale with a much more attractive marginal cost. So the sensor
needs to be radically cheap. In fact, all of our product and services need to be radically cheap,
but they need to work.

By the end of 2016, eFishery was closing new rental contracts at a rate of 100 to 200 units per month,
and the unit’s cost hovered at around US$250. Gibran estimated at 1000 units per month, costs could
fall by up to 50%. At that point, even if competitors emerged with a better product, Gibran felt he
could sustain his market share by competing on price.

Reading the writing on the wall, Gibran abandoned the fish sensor and sought a new theory. His team
settled on “ripple sensing”, a sensor that could detect fish movement by measuring ripple velocity on
the pond surface. A slower velocity would signal fish were getting full and prompt the feeder to
pause.
Around this time, in Q3 2016, eFishery received US$750,000 from Aqua-spark and Ideosource (a
Dutch and a local Indonesian venture capitalist respectively) in return for 27.5% of equity. This was
based on a pre-money valuation of US$4 million. Amy Novogratz, partner at Aqua-Spark, described
the Dutch VC’s interest in eFishery,

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Indonesia has about… 2.7 million fish farms. When brought to scale, eFishery’s technology
could have a massive impact across a global industry plagued by inefficient feeding.10

Retaining most of the new funds to refine the feeder, drive sales and scale up regional outreach,
Gibran committed 5% of funds to the ripple sensor. He hired a new mechanical engineer, a software
engineer, and a data scientist, and the new team estimated the sensor would add about US$50 in unit
costs. Their assessment recalled Gibran to his longstanding tenet: “All our products and services need
to be as cheap as possible, else we will not be able to sell them.”

The Platform Idea for Data Services

Through the fish feeder, eFishery had begun collecting an enormous amount of data. This data
described a wealth of interesting trade flows, including the buying and selling of key inputs like feed,
chemicals, and marketable fish.

Gigran realized the field of smart analytics was blossoming, and eFishery enjoyed unfettered access
to the data on its dashboards. Questions about privacy were largely unheard of in the farming
community, and buyers were happy to share their data in return for using the technology.

We don't have any contract related to data usage, so we are the de-facto owners of all data on our
system. And so far, our farmers don't really care if we own and access the data. They actually ask us
to read their data and give analysis and recommendations. In 2018, the idea of "data privacy"
remains an alien topic for our customers.

If eFishery could use this data to build a platform business, Gibran could use its power to create new
value for farmers and for a wider ecosystem of players who could benefit from relevant data services.
Gibran saw several pathways to add value and evolve eFishery from a hardware solution into a new
sort of meta-platform broker and market maker. By spanning the value chain, eFishery could connect
farmers to a more efficient and intelligent ecosystem of suppliers, buyers, and financial
intermediaries. But throughout the process, he wanted to stay true to his roots.

No matter what, the main people we want to serve and benefit are ultimately the farmers.

FishBiz and FishFax

Gibran saw potential for a first phase for data services in two new ideas that got farmers excited.
First, by leveraging machine-learning algorithms and lots of raw data - on fish breeds and feed types,
feed purchase history, and harvest data - FishBiz could provide farmers with predictive capabilities
to improve their operations. FishBiz could track feed purchasing behaviour against consumption at
the pond level, and then use algorithms to predict harvests.

Next, FishFax could give farmers bespoke credit scores based on their purchase and harvest histories.
Data-based scoring could help the most responsible farmers show lenders they were good debtors,
and from banks’ perspective, the farmers who wanted FishFax would be those who paid for purchases

10
Leighton Cosseboom, “eFishery Reels in Funding from Aqua-Spark and Ideosource”, TechinAsia, September 8, 2015,
https://www.techinasia.com/indonesia-startup-efishery-funding-news, accessed April 2018.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

on time and brought steady volumes to market. If FishFax could attract exactly those farmers with
whom lenders wanted to deal, Gibran expected the product to boost banks’ confidence to extend loans
by solving an adverse selection problem in credit markets.

Gibran had both ideas mapped out on paper, but he wasn’t sure if he had enough good data on the
dashboard, a big enough pool of customers, or the data processing expertise to roll out a viable and
compelling product.

Marketplace

eFishery’s dashboard would soon have the ability to predict the quantity of feed and other required
inputs (e.g., probiotics, vitamins, fingerlings) for farmers’ operations. This data would help farmers
anticipate upcoming costs and order inputs directly from suppliers in a timely fashion. Next, Gibran
wondered if he could leverage his access to big data on supply and demand, paired with his direct
access in farmers’ offices (via the eFishery dashboard), to build an eFishery Marketplace to link
farmers directly to key suppliers.

He was certain that suppliers would compete to have access to a new online outlet, and he wondered
if they might also be interested in additional data services. For example, Marketplace could provide
industry reports on changes in the Indonesian market, tailor reports for individual suppliers to show
their market share by geography or by fish species, or provide a benchmarking function for both
farmers and suppliers. Gibran wondered which of these services would be the most profitable, and
which might carry unseen risks.

eCosystem Brokerage & the Amazon of Fish

Gibran also envisioned opportunities for eFishery to evolve an even greater capability to sell farmers’
harvests directly to buyers. If eFishery could grow to have superior knowledge about supply and
demand, could it evolve into some form of online brokerage, helping farmers to secure the best price
and buyers to secure the freshest fish at the nearest locations? Gibran called this product platform
eCosystem, envisioning an online marketplace where all parties would be enriched by lower trading
costs, better information, and more efficient means of contracting.

But Gibran wondered, if he was committed to helping farmers, could eFishery also be a broker? If
eFishery supplied FishFax and FishBiz to only some farmers and not others, would he run the risk of
conflicts of interest in connecting buyers and sellers? Or could he leverage big data and the wisdom
of crowds to make eCosystem transparent enough to ensure both its sustainability and the credibility
of its information?

Priority Setting and the Urgency to Grow Sales

In allocating resources among projects, Gibran believed eFishery should focus on only three priorities
in any given quarter. (For further details on eFishery Priority Setting for 2016-2017, refer to Exhibit
7.) In the last quarter of 2016, these priorities were (starting from the most important): Growing sales
(always Gibran’s top priority); building a working product; and developing the sensor.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

While working on the second ripple sensor, Gibran faced an increasing cash crunch. Although by this
time the company had streamlined its sales processes, it still faced operating losses. Customers were
happy with the rental arrangement but showed little interest in large ticket purchases. The rental
model had proven a huge risk, as farmers could terminate their contract at any time, and Gibran’s
inability to move inventory off the balance sheet had left eFishery’s business model very
capitalintensive. The company had not yet turned profitable; Gibran felt compelled to make more
aggressive moves to grow the business and drag it out of the red.
Pursuing the Shrimp Market

Starting from the third quarter of 2016, Gibran and his team began to revisit the idea of going after
an adjacent market – shrimp feeding. They had tabled the idea early on in the business, but then
decided to focus on fish farmers and leave the riskier shrimp business for later.

Shrimp differed from fish. Geographically, shrimp farmers were spread out along the coastlines of
Indonesia’s many islands. While fish farmers usually lay within an hour’s drive of landlocked
Bandung, eFishery’s salespeople would have to drive at least four hours through remote mountain
areas to reach the coastal shrimp farms. Moreover, shrimp ponds were much larger in size. Gibran’s
fish feeder was installed at the side of the pond and threw feed a few metres over a 90-degree arc, but
a shrimp feeder would need to be located at the centre of the shrimp pond and throw pellets up to
20m over a full 360 degrees. And shrimp feeders had to be tough.

Shrimp farms are brackish. The salinity is much higher in shrimp ponds compared to fish ponds,
and the water can destroy the electrical parts in the feeder within three months.

The shrimp market was also full of competitors; roughly 90% of farmers used simple, ‘homemade’
feeders. Compounding the problem, Gibran and his team had zero contacts to get started.

Yet the opportunity seemed huge. While the overall market for fish was larger, the average shrimp
farmer had five times the number of ponds, implying a larger ticket size per sale. Shrimp farmers also
earned better margins than fish farmers, and so would be more likely to purchase feeders instead of
renting. If so, eFishery might be faster to break even in shrimp, invest profits to improve its product,
and more quickly scale up sales. Gibran spelt out his dilemma,

We had taken 1.5 years to build the fish feeder. Now we needed capital to build the shrimp
feeder, and with our minimal resources, it was really hard. We had to decide whether to focus
on what was already working, or divide our focus to a new market. We were scared to go into
shrimp: we were late to the market, and estimated a risk of failing at about 50%.

A Time to Act

Gibran stood at the crossroads. He needed to decide whether to stake the business on pursuing shrimp
farmers, or begin his pivot to a platform.

He knew in his gut that his team had developed the expertise to succeed in shrimp, a market that once
had been daunting and now looked attractive. The engineering team was confident they could tackle
the technical challenge of brackish shrimp ponds, and the sales team was eager to beat low quality
shrimp feeder incumbents with their demonstration skills, smart phone app, and dashboard offering.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

But Gibran had doubts that the sales model for fish could work for shrimp, and knew that if he pulled
the company to focus on the coasts, it would mean real trade-offs. He had come to see enormous
potential in an online platform model - the speed at which it could scale and the incredibly low
marginal costs of replicating a software solution instead of hardware sales.

To foray into the shrimp market, eFishery would have to stop R&D on the ripple sensor and divert
20% of its scarce cash resources into fabricating a shrimp feeder. More importantly, shrimp would
mean delaying work on FishFax and FishBiz for at least another year. Markets moved fast in the
digital age, and Gibran worried he could miss his window if he slowed the march from pond to cloud.
This would be the biggest decision Gibran would make for the year, and perhaps the most pivotal in
eFishery’s history.

Question for PreWork Exercise:

1. What innovation does EFishery offered?
2. What market opportunity was targeted?
3. How does the innovation effected company growth?

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

EXHIBIT 1: AQUACULTURE IN INDONESIA 2010-16

Indonesia Aquaculture 2010 - 2016

Source: “Aquaculture in Indonesia report 2016,” by MarketLineAdvantage, 2017, MarketLine Database,

Retrieved from MarketLine Advantage database via SMU Pyxis.

EXHIBIT 2: INDONESIAN AQUACULTURE IN CONTEXT: SOUTH EAST ASIA

Fishery & Aquaculture Production by Country: Million Tons 2000 - 2015

Source: “FAO (2017b), Global Production Fisheries (database) www.fao.org/fishery/statistics/global-production/en

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Projected Increases for Major Production Activities: Southeast Asia 2017 - 2026

Source: OECD-FAO (2017), “OECD-FAO Agricultural Outlook”

OECD Agriculture statistics (database)

EXHIBIT 3: THE EFISHERY SYSTEM DIAGRAM

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

Source: eFishery

EXHIBIT 4: PURCHASE AND RENTAL PRICING STRUCTURES

Source: eFishery

This document is authorized for use only by YOS SUNITIYOSO in 2020.

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SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

EXHIBIT 5: EFISHERY PLACEMENT OF AUTOMATED FEEDERS AT THE PONDS

Source: eFishery

EXHIBIT 6: AUTOMATED FISH FEEDER COMPETITOR PRODUCT COMPARISONS

Source: eFishery

This document is authorized for use only by YOS SUNITIYOSO in 2020.

 For the exclusive use of Y. SUNITIYOSO, 2020.
SMU-18-0010 Shrimp On Smartphones? eFishery: Agile Innovation in Indonesian Aquaculture

EXHIBIT 7: QUARTERLY PRIORITIES AT EFISHERY Q1.2016 – Q1.2017

Source: eFishery

This document is authorized for use only by YOS SUNITIYOSO in 2020.