Bountiful Automated fruit & vegetable
scanner: taste, appearance, shelf-life, food safety # of Interviews: >200 (153 class + >50 prior) ORIGINAL IDEA FINAL IDEA Demand forecasting and intelligent purchasing for grocery stores

Matt Schwartz MBA / MS
(Food & Ag) Founder, Protein Snack Co Food & Ag Operations Nathan Fenner MBA + BS/MS & Lecturer Stanford Mechanical Engineering Robotics Engineer Stacey Huang PhD Candidate Electrical Engineering Spectroscopy Mayank Agarwal MS MS&E Computer Science Team Mentor Partner, CTO Khosla Ventures Deep Startup & Engineering Expertise Sven Strohband Team Bountiful

Our initial interest Pre- class
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Our initial solution An automated
fruit & vegetable scanner that uses spectroscopy, computer vision, and machine learning to measure taste, shelf life, and food safety “If we can measure taste, the whole market will adopt it and grow better produce and we’ll make tons of money!” Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

-Classify produce distinguishing between sellable
(meets buyer specifications) vs. unsellable; ultimately create spectrum of unsellable to perfect (incl. dimensions of taste & safety) -Sort produce quickly, cheaply, and with no harm to produce -Maintain customer data platform / user interface (Produce Grower: performance per acre; Produce Distributor: performance per supplier farm) Business Model Canvas Update -Produce buyers and end customers: retailers, restaurants, food service providers -Taste experts and laboratories to inform classification and gradation of the produce -Agriculture and Food Regulators and Gov’t entities (FDA, USDA) -Food safety international standard setters (BRC, SQF) -Food safety consultants Key Suppliers: -Machine parts? Produce Growers Long-term: All types of produce growers Short-term: strawberry growers and high-value lettuce growers -Initial buyers may include Food Safety and Quality Assurance within grower businesses Produce Distributors Companies that purchase produce from the farm gate or directly from growers to re-sell to Restaurants / Grocers / Food Service and vertically integrated distributors (e.g., Sysco) Long term: all distributors Short term: focus on large distributors who purchase at scale -Technical talent: engineers, scientists, coders -Machinery: harvesting and produce-sorting robot -Data from each kind of produce for calibration of the produce-sorting classification routine -Financial capital to build initial equipment -Sales Machinery construction/maintenance - parts, labor Research - sensor and ML experts, food scientists, taste experts Data analysis and reporting team - data scientists, UI for consumers, infrastructure, servers, customer service [Service model only] - labor to man the harvest robot / produce scanner Channel managers Marketing / Trade Shows Salesforce Produce Growers If subscription service: customers pay for harvesting and categorization service (charged as % of selling price of produce assessed) If equipment: customers purchase harvest robot that can be self-operated Produce Distributors If subscription service: customers pay for quality detection, food safety analyses, & classification (charged as % of selling price of produce assessed) If equipment: customers purchase scanner that can be self-operated Produce Growers -Responsive to growers’ needs - tailored service to fit their equipment, growing techniques, processing & storage equipment -Meaningful feedback loop -Trust, transparency, and confidence in team and tech Produce Distributors -Trust in consistent performance -Rapid response maintenance and backup - Technical expertise Produce Growers -Lower reliance on harvesting labor and lower harvesting labor cost -Reduce waste → increase volume of sellable produce -Reduce food safety incidents -Consistently measure quality for buyers -Enable growers to command premium for higher quality produce -Enable the creation of a brand around product attributes -It would be valuable to berry growers if we could automate aesthetics and shelf life testing Produce Distributors -Lower labor cost for quality assurance and food safety -Reduce food safety incidents -Consistently measure quality -Command premium for higher quality produce Retailers -Grocery Produce QA will find significant labor savings and reduced shrink through automated scanning -Online Grocery will find value through delivering taste ratings to consumers (increase revenue) and optimized logistics for shelf life (reduced waste) Produce Growers Equipment model - Farm equipment dealerships/ retailers Service model - Direct Salesforce Produce Distributors -Direct Salesforce -Food Safety Consultancies? Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

We realized we needed to
measure value at Attribute / Customer intersection Attribute Measured Grower Distributor Grocery – Brick & Mortar Grocery – Online Restaurant Food Service Consumer Taste Aesthetics s Food Safety Ripeness / Shelf Life General Thoughts Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

Customers say positive value, follow
up So we talked to 40 customers in 2 weeks Attribute Measured Grower Distributor Grocery – Brick & Mortar Grocery – Online Restaurant Food Service Consumer Taste “It’d be nice but I don’t get paid on it. I measure BRIX just to hit spec” “It could be cool to intelligently send good stuff to good customers” “Would be nice…” ? ? The big players don’t care I care, but it needs to look good or I’m not buying Aesthetics We care. But not sure how much? “If you could automate my spec QA, you’d have a $B company” ? We care, but this isn’t a pain point Definitely Food Safety Bigger issue for cut fruit (some mention of annoying FSMA) We care, but this isn’t a pain point (although, FSMA) We care, but this is mostly OK already Major concern (we heard a lot of Chipotle references) We care, but this isn’t a pain point (although, FSMA) Definitely Ripeness / Shelf Life We’ve heard yes, but want to confirm ? This could be big! ? ? ? General Thoughts “I just want to hit my spec” “This is interesting, but how would we do it?” “I’m busy” Need to talk to them Need to talk to them, but we’re putting lower priority “Who cares” We don’t want to target consumers Mixed opinions or unsure, follow up OK for big fruit. Opportunity in thin wall produce Customers say it doesn’t add value Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

Attribute Measured Grower Distributor Grocery
– Brick & Mortar Grocery – Online Restaurant Food Service Consumer Taste “It’d be nice but I don’t get paid on it. I measure BRIX just to hit spec” “It could be cool to intelligently send good stuff to good customers” “Would be nice…” ? ? The big players don’t care I care, but it needs to look good or I’m not buying Aesthetics We care. But not sure how much? “If you could automate my spec QA, you’d have a $B company” ? We care, but this isn’t a pain point Definitely Food Safety Bigger issue for cut fruit (some mention of annoying FSMA) We care, but this isn’t a pain point (although, FSMA) We care, but this is mostly OK already Major concern (we heard a lot of Chipotle references) We care, but this isn’t a pain point (although, FSMA) Definitely Ripeness / Shelf Life We’ve heard yes, but want to confirm ? This could be big! ? ? ? General Thoughts “I just want to hit my spec” “This is interesting, but how would we do it?” “I’m busy” Need to talk to them Need to talk to them, but we’re putting lower priority “Who cares” We don’t want to target consumers So we talked to 40 customers in 2 weeks OK for big fruit. Opportunity in thin wall produce WE DISPROVED PRETTY MUCH EVERYTHING Customers say positive value, follow up Mixed opinions or unsure, follow up Customers say it doesn’t add value Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

Latest business model canvas Pre-class
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…and realized we were hallucinating
An automated fruit & vegetable scanner that uses spectroscopy, computer vision, and machine learning to measure taste, shelf life, and food safety “If we can measure taste, the whole market will adopt it and grow better produce and we’ll make tons of money!” NOPEPre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

But where to pivot???

SUPPLY VARIATION  VERY SMALL
PROBLEM DEMAND VARIATION (HOW MANY CUSTOMERS PER DAY)  BIG PROBLEM

…we had come upon a
huge problem $218B 63M Tons $57B 25M Tons FOOD WASTE Total Consumer Facing Biz GROCERY STORES Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

We started exploring the problem
and were surprised to find… Current Solution Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d Manual Time-intensive Cumbersome Inaccurate Inconsistent

New idea! Demand Forecasting for
Grocery Current Solution Bountiful Solution Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

And it could be a
potentially huge market Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

-Writing and maintaining predictive software
for demand -Parse and analyze large datasets for indicators that impact consumer buying patterns (demographic data) -Data mining for social trends scraping articles on current events for trends, etc) -Retailers that are currently dissatisfied with their demand forecasting/inventory management software -Retailers that currently have -Restaurants -Competitors to keep -Researchers in the field of predictive data analysis Retailers -Grocery stores that stock perishable goods -Specifically - produce procurement directors and store managers Restaurants -Premium sit-down restaurants that buy perishable ingredients the day of preparation-Technical talent: engineers, scientists, coders -UI: tablets to be provided to retailers -Data to assess relevant metrics -Sales Research - data analysts, predictive forecasting Data analysis and reporting team - data scientists, UI for consumers, infrastructure, servers, customer service Channel managers Marketing / Trade Shows Salesforce Retailer Subscription service: customers pay yearly for demand forecasting service based on volume of goods covered by the demand forecasting software Retailers -Trust in consistent performance -Transparency in data management and privacy protection -Quick updates and bug patches -Tailored service Retailers -Reduce shrink losses by preventing over-purchasing of perishable goods -Reduce out-of-stock incidents -Reduce upfront costs in overstocking -Enable auto-placement of orders based on demand forecasts Restaurants -Reduce shrink losses by preventing over-purchasing of perishable goods -Reduce labor cost during low-demand hours -Ensure customer satisfaction by having more waiting/kitchen staff during high-demand periods Retailers -Direct Salesforce -Trade shows -VARs - software suite on a tablet with retailer tools So we created a new Business Model Canvas Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

We quickly spoke to >40
grocery store employees • Validated our value propositions • Discovered new value proposition of reduced ordering time • Learned a ton about our customer • i.e., Produce Buyer is the end user, CFO is economic decision maker Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

…and got to know our
customer Bill the Produce Buyer Job title: Produce Buyer Jobs done: Receive produce, count inventory, assess sales velocity, place orders Location: Everytown, USA Starts work: 5am Ends work: 12:30pm 40,000 “Bill the Produce Buyers” in US 100,000+ Store Buyers of Fresh in US Calculation: # of grocery stores in US: 40,000 # produce buyers per grocery store: 1 Receive produce from truck and break down pallets Assess last night + this morning’s sales by looking and talking to team Check out computer data (historical sales) & place tomorrow’s order 5AM 9AM 10AM Customer Archetype Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

…and got to know our
customer Bill the Produce Buyer Job title: Produce Buyer Jobs done: Receive produce, count inventory, assess sales velocity, place orders Location: Everytown, USA Starts work: 5am Ends work: 12:30pm 40,000 “Bill the Produce Buyers” in US 100,000+ Store Buyers of Fresh in US Calculation: # of grocery stores in US: 40,000 # produce buyers per grocery store: 1 Receive produce from truck and break down pallets Assess last night + this morning’s sales by looking and talking to team Check out computer data (historical sales) & place tomorrow’s order 5AM 9AM 10AM Customer Archetype THE 20 YEAR OLD KID WHO UNLOADS THE TRUCK IS THE SAME GUY WHO PLACES THE ORDER! Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

…and got to know our
customer Bill the Produce Buyer Job title: Produce Buyer Jobs done: Receive produce, count inventory, assess sales velocity, place orders Location: Everytown, USA Starts work: 5am Ends work: 12:30pm 40,000 “Bill the Produce Buyers” in US 100,000+ Store Buyers of Fresh in US Calculation: # of grocery stores in US: 40,000 # produce buyers per grocery store: 1 Receive produce from truck and break down pallets Assess last night + this morning’s sales by looking and talking to team Check out computer data (historical sales) & place tomorrow’s order 5AM 9AM 10AM Customer Archetype THE 20 YEAR OLD KID IS RESPONSIBLE FOR A CRITICAL COST DRIVER IN A 2-3% MARGIN BUSINESS!!! Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

...and started trying to sell
pilots Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

…with mocked up Dashboards as
an MVP Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

So we did what anybody
in there right mind would do… “How do we validate Willingness To Pay & a bunch of other canvas hypotheses???”

WE WENT TO VEGAS Pre-class
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-Software development: aggregate internal data;
aggregate external data -AI development: build predictive algorithm for sales; build tool that takes sales prediction and suggests purchasing -UI development: Design tools to be effectively used by grocery buyers and owners -Retailers that currently have no or inadequate demand forecasting solution -Competitors, including non-direct competitors selling retail software but not in perishables -Researchers in the field of predictive data analysis Large Medium Retailers -Grocery stores that stock perishable goods and have data and some tools for purchasing -Specifically - produce procurement directors and store managers Small Retailers -Small mom-and-pop stores that stock perishables and have data but no tools to use it intelligently Food Service -Food Service companies that serve large organizations and have data but no tools to use it intelligently -Technical talent: data scientists, coders -Customer data -UI: tablets, computer software, or physical reports to be provided to retailers -Exogenous data -Salesforce Research - data analysts, predictive forecasting Data analysis and reporting team - data scientists, UI for consumers, infrastructure, servers, customer service Channel managers Marketing / Trade Shows Salesforce Retailers and Food Service Subscription service: customers pay yearly for demand forecasting service based on volume of goods covered by the demand forecasting software SaaS - Value-based pricing possible Retailers -Trust in consistent performance - proven cost savings -Transparency in data management and privacy protection -Quick updates and bug patches -Tailored service Retailers -Predict demand based on a myriad of inputs - current events/social trends, promotions, weather change, demand of related products. -Reduce shrink by preventing over-purchasing of perishable goods -Reduce out-of-stock incidents -Reduce upfront costs in overstocking -Enable auto-placement of orders based on demand forecasts -Spend more time rotating produce instead of ordering -Improving cash position by reducing necessary buffer stock in inventory Retailers -Direct Salesforce -Trade shows -Pilot programs -Word of mouth - increased performance of one retailer will drive competitors to adopt - We left with many learnings

…and many potential pilots Pre-class
1 2 3 4 5 6 7 8 9 10 Beyon d “You are right on the money with this idea – we’re interested” -EVP, Large Grocery Chain “If you are able to do this, it would save $55M across our 200 stores in 3 years” -Director of Shrink, Medium Grocery Chain

We’re projecting a run rate
revenue of $3.5M in <3 years • Assumes 10 stores in 2017, 100 stores in 2018, and 500 stores in 2019 • Assumes ~$2,500 price point per store per year (very conservative)

We’re going to pursue this
as a business going forward! Biggest Open Questions Just how much better can our tech do than the current solution? How much will customers actually pay for this? How much will it cost us to integrate with customers? Push forward with Pilot Programs Next Steps Get customers to sign Letters of Intent Benchmark with other grocery software vendors that integrate with POS systems Pre-class 1 2 3 4 5 6 7 8 9 10 Beyon d

BOUNTIFUL THANK YOU! Intelligent Food
Purchasing