Want a Piece of the $33B-and-Growing 'Internet-of-Things' Market?
Executives from crowdfunding site Indiegogo and a connected-home product company share five tips for success.
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The Internet is set for another revolution, much like the smartphone explosion of the 2000s. This revolution, the "Internet of Things" (IoT), will connect physical devices, such as air conditioners, appliances and lights to the Internet.
The IoT is generating particularly widespread interest due to its projected growth from $33 billion in 2013 to $71 billion in 2018. Like technology revolutions of the past, much of the market will be captured by new companies with innovative products.
Related: The 7 Most Useful Smart Home Devices
We see connected-living startups pop up almost daily, but there are a few things that truly set successful IoT startups apart. So, how can you position your business for IoT success? Here are our top five tips:
1. Ensure your device tells a "story."
Your product needs to tell a clear story that can both stand alone and also work well with other services. Consumers need to understand what specific need this product will serve, in their language.
The "connected lifestyle" is really a grouping of these individual stories -- a novel -- that work better together. However, average consumers rarely walk into Best Buy intending to purchase a full suite of connected products all at once. Instead, they focus on one need at a time.
The best way to handle this? Make sure that your product's initial value proposition is crystal clear.
The Zen thermostat is a good example. Its initial use case was clear from the beginning: a simple thermostat that connects to the Internet. This clear value proposition coupled with the fact that setup was easy and the product already had an established team behind it (fact: Indiegogo campaigns run by two or more people raise 94 percent more money than campaigns by single individuals), made it a desirable and well-designed campaign from the gate -- attracting both consumers and press.
2. Plan your compatibility roadmap from day one.
Customers don't want to invest in dead-end technology. They may not even fully understand the concept of the IoT when they purchase a connected device, but consumers have begun learning the value of combining several IoT devices together to increase their overall usefulness.
What many don't know, though, is that multiple standards exist and that not all devices speak the same "language." Thus, it's critical that your product plays nicely with other devices and services.
3. Mentorship is even more important than you think.
Every connected product requires expertise in many different domains: hardware layout, standards interoperability, industrial design, distribution strategy and many more. Leveraging industry mentors will help you make the best product possible.
Related: Why U.S. Innovation Needs China to Achieve the Next Technology Mega-Trend
Mentorships can come in many forms: guidance through a crowdsourcing campaign, assistance with radio frequency design, navigation through complex certifications, and advice on distribution channel selection. Look to companies such as platform providers, chip manufacturers and business partners for this mentorship.
For example, you should know the difference between Zigbee and Z-Wave, and what each standard can offer in terms of distribution channels and strategic partnerships. Rather than relying solely on technical issues, startups should think through these types of implications to guide their connectivity decision. Mentors can help you navigate these multi-faceted issues.
4. Have a plan for handling privacy, security and data from the beginning.
Life is made better by sharing information, but as we share more and more data, you need to know how you're going to protect it. Even technology goliaths have made privacy missteps, causing reduced consumer confidence and lower sales volumes.
This is certainly another area where mentorship can lend a hand. Partners can also accelerate your time to market by providing robust, safe, proven infrastructures that your devices can leverage.
5. Assume the person setting up your product knows little about technology.
The average consumer will not take the time to learn about technology in order to use a new device. Customers purchase IoT devices to make their lives easier, not more complex, so it's important to ensure you are catering to novices, not early adopters. One of the most critical things to simplify and streamline: the set up of your connected device.
While it is most important to cater to the average consumer, technology enthusiasts are often early adopters. Since they fuel the early phases of your growth, it is also important to provide them with access to advanced configuration, customization and other features. Just don't let those tech-focused features take center stage.
The future awaits.
Historically, upstart companies have had huge opportunities during similar technological upheavals such as the industrial revolution, the introduction of the Internet and the propagation of smartphones.
Consider the histories of John Deere, Oracle and Google. All of these companies grew exponentially due to technological shifts like the one we're seeing with the Internet of Things. Give your company the best opportunity to take advantage of this huge market expansion by keeping these tips in mind.