IoT Startups are Doomed — especially smart vents…

IOT Hardware and devices…a difficult business to say the least…especially for a start-up.

At first glance, it seems simple enough; put a few sensors into a device, develop an app and you have an IOT device for the market.

But the realities are much more complex.

You need to manufacture these devices. And if there are various sizes (like smart vents), you need various SKU’s, which makes it less scalable, more difficult to forecast and more expensive…or in short, seriously increases the risk/exposure.

Then there is the app development, which involves firmware, software, cloud/hosting development and continuous updates, improvements to stay current. And if there are algorithms required, this is another line item in the R&D bucket. Then there is the ongoing hosting, support, warranty management and capital raising to support it all.

And if you can get all of this right, you then have the challenge of getting the market to buy the device…at scale.

Reading “Crossing the Chasm” will give some insight into the market adoption process, but won’t save you from the most likely outcome.

Unless there is an obvious business case, or are backed by the big guys (Amazon, Google etc) I don’t see how any of the IOT device startups can succeed in their current form.

With the above in mind, it is no wonder why most startups will (or already have) fail, and why those that appear to be succeeding are backed by the companies that can afford the investment and expensive lessons associated with these IOT devices.

The business case for connected devices is also rare — Take smart vents (Keen, Hibersense, Flair). Great idea. Solves the too hot/cold problem. But is it scalable in its current form?

With 12 SKU’s, is it scalable from a manufacturing perspective? As a startup? Not even close.

Then there are the ongoing support and warranty costs…despite having no recurring revenue/subscription to offset these costs…and the cloud/hosting costs…basically, continuous bleeding until the inevitable happens.

But there is hope…and it may require doing less. Moving from doing it all, to just doing one thing really well. This is like startup class 101.

Taking a step back; from a development perspective, these devices require “full stack” development as described above. This amplifies the risk exponentially.

If it was simply a manufacturing business of hardware, the risk could be managed.

If it was simply reselling sensors, the risk could be managed.

If it was simply developing firmware, the risk could be managed.

If it was simply developing an app, the risk could be managed.

If it was simply developing an algorithm, the risk could be managed.

But stacked up, altogether into one device — the risk is exponentially amplified, and simply unmanageable.

My view is that these devices are attempting to bypass a natural evolutionary process. Trying to do it all now, rather than focus on aligning to the natural progression of the market.

The devices like Echo/Alexa are cool and provide convenience for the weather, music, traffic, etc…but are they solving real problems?

Is there a real business case for them that can be measured? They are very cool, but I think they are distracting us from progressing awareness and market demand for solving real problems.

I think they are also setting the baseline for IOT startups to emulate in a way, and this is seriously dangerous.

Another Startup Course 101: Start with the problem and work backwards to develop the minimum viable tech to solve it.

For example: Here is a problem that could be solved today…not with more devices, but in a more practical way; by simply deploying sensors and interpreting the data.

Carbon Monoxide: We all have the alarms that indicate emergencies and these have saved lives….for years now. But they really only tell us when there is an emergency. How many hours were our families breathing an ever-increasing level of CO until it reached the level to set off the alarm? Or how high is the level of CO at any given time in the air we breathe while in our homes?

To solve this, some may think, this is a great idea for a device…well Foobot and AWAIR already beat you to it…but they are $150+ devices, with an app, and with all of the challenges mentioned above…and they only measure the air within the immediate area of the device. Dead in the water.

If we want to solve this, we want the ability to sense small changes in the quality of air, or level of carbon monoxide in the air…but throughout the entire building or home.

Practically speaking, this is simple and inexpensive to do…just deploy a bunch of relevant sensors that talk to a hub or gateway…throughout the building.

Most sensors are cheap now and continue to get cheaper.

And there is huge progress being made into synthetic or super sensors, that combine all relevant sensors into a single unit. Check this out: https://www.youtube.com/watch?v=aqbKrrru2co

These sensors or similar sensors are the foundation for being “connected,” whether at the device level or system level.

With sensors installed, the next step is data acquisition and interpretation.

This provides visibility to the environment and opens up the environment to becoming truly cognitive. The data ingested from this sensor network sets the foundational platform for all things IOT.

Once the data has been interpreted, and patterns identified, there are very specific problems that can be solved, either by humans, software or hardware.

More to come on all of this, but it’s time to look at this holistically, with the intent to solve real problems and truly add value to our lives using these sensors in their raw format as opposed to these sensors being package into expensive, unreliable hardware products.

I love a healthy debate, so please don’t hold back on your comments :)