Victoria and her team are true entrepreneurs! After many successful years, their current market weakened and through serious discussions with their customers they found the “next big thing” – printing active light. Sounds crazy but that’s what they do to respond to serious needs for people to be seen when falling into the ocean, running in the evenings, skiing, working in dangerous environments or simply to look fantastic. The material they have developed is connected to a battery and can be washed and applied on wearables, helmets and so on. When they won 2015 Outside Gear of the Show together with POC at Interbike 2015 in Las Vegas, their journey really took off.
Sensus is an absolutely gorgeous electric guitar connected to the Internet, loaded with sensors and with features like any synthesiser. It’s developed by Mind Music Labs, a startup at THINGS in Stockholm founded by Michele Benincaso, an Italian “Maestro” from Cremona’s Antonio Stradivari Luthiery’ School. After having worked in the guitar world for more than ten years producing guitars for world-famous guitar players, Michele understood that while the world was changing at a fast pace and musicians’ needs were constantly evolving, guitars and most music instruments were stuck in the ’60s – with artists increasingly resorting to electronic equipment and computers to fill this gap. Michele and his dream-team of experts have developed Sensus and a couple of months ago they were ready to show the world. They did a YouTube video that immediately went viral and ever since they have been winning piles of awards. In June at Midem Cannes they were selected the most promising music startup of 2016 among more than 150 submissions representing 31 countries from around the world!
Sensus is a very inspiring example by itself but also underlines that it takes deep industry knowledge and a wide range of hardware, software and communication expertise to develop a great IoT solution. Avanti!
The pace of technological development remains vivid and it takes great people and sharp focus to understand what to use it for and how. Like if this wasn’t challenging enough, a new generation of internet is rapidly emerging where things are added to the people and organisations already connected. The three key deliverables from IoT are efficiency, security and sustainability and this alone will make huge impact on business and society. Almost everything will be affected why it’s vital to start work on risks and opportunities in all fields now. The only big difference from when Internet arrived is that ignorance will not be an acceptable excuse this time.
Imagine combining 3D scanning, Internet, data analytics, design software and 3D printing. What would that do to fashion, retail, healthcare and distribution? Or heat cameras, drones, Internet, cloud computing and data analytics. What could that do to fire fighting, border control, building management and search for lost people.
We are facing huge change in the magnitude of when we went from farming to industry and it’s really time to start working on all the opportunities and issues.
Most new solutions involve connected hardware which makes life somewhat more difficult. Hardware adds complexity and time, requires financing, impact the environment directly and increase financial risks. Large scale manufacturing has moved to developing countries and with that also experience and skills. It’s quite easy to see the value added by data from the connected things but unless someone connect them there will be no data. We simply will have to cope with the fact that things will stay in the physical world even if the virtual world is much easier and faster to work with. One important implication of that is that innovative and successful startups with hardware as part of their solution hardly can scale up to become global since it will take too long time. This is why we have to learn how to transform innovation in sharp startups to value creation in large international companies.
We started the hardware hub THINGS downtown Stockholm in March 2015 to learn how to make this transformation. We have some 30 carefully selected startups and Sweden’s biggest maker organisation in our 2000 m2 building at the campus of KTH Royal Institute of Technology. And we have a handful of export companies including ABB, Assa Abloy, NCC and Husqvarna as main partners. Since hardware is too broad we focus on themes agreed with our partners and these are IoT, sensors, wearables, 3D scanning/printing, automation and robotics. We have been practicing for over a year now with all types of meetings, events and workshops with our industry partners and other enterprises including Deutsche Telekom, Daimler, l’Oreal, Airbus and Nike. By now we have learnt enough to scale up our efforts and involve more startups and enterprises. The current startup community involved includes some 150 startups now and in June we launched THINGS Enterprise Circle to build a community of Swedish and international enterprises who want us to help start or accelerate their technology innovation and digitalisation efforts.
At this point it’s clear to me that efforts to learn how to transform innovation from small to large companies have to be based on processes not one-off events, absolutely common interest (i.e. IoT and hardware are far too generic but battery technology and energy harvesting or wearables are ok) and really careful selection of companies and people for workshops. The purpose of a workshop is to inspire and bring new ideas and approaches to the enterprise and the aim is to have the enterprise to buy projects and prototypes from the startups to get the collaboration going.
Small and large companies who learn how to work together in an efficient and mutually beneficial manner will be the winners in the networked society. We are determined to figure out how to make this happen at THINGS and welcome enterprises and startups who want to be part of our journey.
Crossing the chasm is hard for start-ups which Geoffrey A. Moore explained so well already 1991. It is also a well-known fact that going from a consulting business model to a product model is really difficult. There are practical challenges like cash flow sales and marketing but the mind-set related ones are the most difficult ones. In essence a consulting sales person always tries to sell at least what a customer is asking for while a product sales person have to manage customer expectations to release dates, price and features. Still companies are trying since the ability to scale faster and more profitable is seducing and the ones who succeed can end up in a much more interesting situation. No risk no glory! There are also examples of bets where companies separate the platform they use as consultants from the consulting and SAP is a great example of that.
In the IoT space I believe we have an additional strong argument for going from consulting to product. All IoT solutions include hardware, connectivity, data collection, data analysis and distribution of information. Customers want to leverage these systems to improve their business why most IoT solutions are customer, application or industry specific. The traditional way to develop an IoT company is to “get hold of” a platform to develop customer applications on. So most IoT companies come with a technical asset which they try to turn into a solution for a specific customer need. The challenge is to learn enough about an industry or application to make customers impressed and eager to buy. Wherever I go today I meet IoT startups with solid but quite generic platforms and some customers, often in different industries to make it even more complicated. They might have invested a couple of million dollars to develop and maintain the platform most often using external money. The combination of IoT rapidly becoming an international business and quite local and not really specialised IoT platform companies will unfortunately create problems in many IoT startups.
I have now seen a couple of IoT startups successfully going from consulting to product and believe it is a great way to go. By taking the de-tour as consultants they can finance their company themselves as long as they need. In the consulting stage they might test different potential markets for their product, they build relationships with customers, partners and potential recruits in the target market and they can develop their product back home in stealth mode if they like.
It is still challenging to go from consulting to product like this but if this is the plan already from start one can mitigate risks by hiring product people and structure the company as a product company. And again, no risk no glory!
The telecom industry got a head start in the early days of IoT aka M2M. Ericsson took the lead with the 50B connected devices mantra which translated well into an obvious role for huge operators with millions of connected users and massive investments in wireless networks. And it went without saying that the obvious providers of technology and solutions would be the telecom vendors already in the family. This was a clever and well executed plan by primarily Ericsson since the operators were looking for the next massive growth opportunity after having connected most people and given them data buckets. Operators went for it with one primary caveat – we will not only provide connectivity.
Now, only few years later IoT has gone from a connectivity focused baby to a data centric young adult. IoT is only a new phase of Internet – we’re adding things to people and businesses already connected – which explains the speed of development. From a usage point of view, Internet including IoT and the enabled services and solutions will remain customer focused and very fragmented and the operators will continue working hard to figure out their role beyond connectivity.
Here’s what I would do. The two major challenges for IoT are security and privacy. The smaller one is security since we are used to repair and plug holes as we go, and since we tend to have a very short memory. But privacy is really challenging since nobody knows how the requirements will develop over time. When your data is out you can never get it back why any service will need a solid privacy architecture to cope with future requirements without having to rebuild from scratch. The user must own his or her data and decide who should get hold of it.
But privacy is not only a technical issue why we need trusted partners to help us manage our data. Today most of us trust serious banks to manage our financial data as an example. Our trusted partner needs big muscles to force and enforce proper agreements and obviously have to walk the talk themselves. Operators already manage a lot of our private data and provided they do that well, this is a great position to build the trusted partner role on. The trusted partner role can also be required to build and orchestrate a fair and robust sub-eco system in a specific market like smart homes or connected cars.
So why is privacy of importance anyway? Today most users of internet applications sign up without even reading the agreements. One often hear “I’ve nothing to hide” as the key argument to avoid the hassles of reading and thinking. But with today’s capabilities in data analytics, all digital traces and information we leave behind can quite easily be used to picture an individual, understand how a product is designed, see patterns, understand security procedures and arrangements and so on. In the wrong hands this can be really bad and this type of information is already very useful for burglars to know when people are away and industrial espionage for example. A small example of what could, technically, be in use today is recruiters knowing without asking that a female candidate is pregnant, don’t exercise or have a heart problem.
I am absolutely convinced neither consumers nor policymakers will let this development continue as today. And this is where I believe operators with a relevant brand can find their role in IoT beyond connectivity. A role which will be increasingly important and valuable as far out as I can see. Two good examples of operators I see moving in this direction today are Telefonica and Telia Company (see FAQ 6 and 7).
Startups is not an industry, they are kids of industries in the same way as kids are young adults. This quite simple insight provides some good guidelines for dealing with startups.
It is very valuable for kids to be with older and experienced people since they can provide a lot of experience and wisdom. The same goes for startups – being with grown up companies in the industry they target is immensely valuable. Established companies can provide feedback to plans and prototypes, advice on choice of partners and go to market approaches and so on. But they can also pay them little to provide a prototype, POC or study the same way my grandmother paid me 1$ to cut her lawn – a great combination of making some money, getting a reference and still do something useful for the customer. I believe, generally speaking, that this is a much better approach than giving the kids 1000$ to go figure out something great.
Technology develops rapidly why innovation requires very sharp focus on technology and application. Since building a large international company from scratch takes a lot of time it’s often a better way to integrate the innovation in an exist large company to create value. With large organisations having to bring in innovation from outside and startups having to get their innovation into established companies’ solutions, channels and marketing those who learn how to do that well will be successful. This is exactly what we try to learn at THINGS, together with the sharpest hardware oriented startups in IoT, wearables, 3D scanning/printing, automation, robotics and medtech, and our open-minded industry partners like Assa Abloy, Husqvarna, ABB and NCC.
IoT will make major impact on how we do things and what can be done, across industries and borders. Adding things to the Internet creates a massive opportunity in pair with what Internet have done to us to date. The major challenges are as always to be found in organisations and processes, rarely in the technology as such. However, if we cut the cake differently, and look at it from people making bets on creating and implementing IoT products and services, I would argue that the two biggest challenges are security and privacy. And security is the smaller of these two big ones! We have always had security challenges, but they can be mitigated and fixed on the go. Fixing bugs and problems are part of the development so to speak. If someone finds a back-door and steal our jewels, we will install a lock on the door and hope people will forget it, if you see what I mean. The vendor of the door takes a hit but people have a tendency to forget quite rapidly.
But with privacy it’s a matter of architecture and trusted partners. If data that at some point in the future is considered sensitive is “out there”, it’s too late to take it back. In the digital world nobody knows how many copies there are, who has them, what they use it for, and so on. Most countries have laws and policies for this already, sure, but the first issue is that policymakers probably will shape up rules and policies down the road. Nobody will be badly punished for data that is made available before the changes, obviously, but it might take fundamental changes of systems and services to meet the new policies if the architecture isn’t there already. The second, and much more difficult challenge is that people themselves might change their views over time on what is acceptable and not. Such changed requirements are neither planned nor managed within countries or companies. They might come and go, spread across by social media and gather less or many people behind. And policy makers are always influenced by public trends, media etc. so these “unmanaged public policies” can force rapid legal changes as well.