Asking the experts: Insight from Indiegogo and IoT entrepreneurs
Recently at the Genius of Things summit in Munich, IBM announced an exclusive partnership with Indiegogo and Arrow Electronics to help bring new IoT ideas to life. The collaboration will bring together crowdfund-to-production services from Indiegogo and Arrow Electronics with IBM’s Watson Internet of Things Platform.
Indiegogo startups that join the new initiative will have access to IBM’s Watson IoT platform via Bluemix and industry-leading cloud services at no charge.
This will allow them to easily incorporate ready-to-use capabilities, such as artificial intelligence, Blockchain, advanced data analytics and cyber security into their product designs. Watch the video for further information.
Meeting the experts
Ahead of the announcement, the IBM IoT team managed to catch up with Indiegogo and two experts, Greg Kahn, President and CEO, Internet of Things Consortium, and Kevin Li, co-founder of successful startup PlayDate.
Indiegogo helps entrepreneurs of all kinds bring their ideas to life. As IoT develops, it’s important to help entrepreneurs create products that fit into our increasingly connected world.
The Internet of Things Consortium
The Internet of Things Consortium (IoTC) is a trade association for the IoT marketplace. Founded in 2012 and formed as a 501(c)(6) in December 2015, it is a member-based organization that connects a global ecosystem of leading companies building the Internet of Things – spanning across areas including home automation, smart cities, connected cars, connected retail and wearables. The IoTC’s mission is to ignite the growth of the IoT movement by facilitating partnerships, promoting knowledge sharing and education, and driving adoption of IoT products and services.
PlayDate: an interactive IoT experience
PlayDate is something quite new. An IoT start-up founded by three partners – Kevin Li, Anthony Chien, and Hulk who is the chief beneficiary and tester. PlayDate creates a truly interactive IoT experience that allows pets and humans play together using a remote-controlled ball. A camera inside the ball lets pet owners see both their pooch and where the ball is going.
What makes an IoT entrepreneur?
In this article, both Greg and Kevin share their perspective on what they believe it takes to make it as an IoT entrepreneur. Not surprisingly, Greg and Kevin’s insight offers a common sense approach to dreaming big. While neither party offers any magic formula for success, we think you’ll like some of the secrets to IoT start up success we’ve teased out of them.
Indiegogo: helping startups bring their ideas to life
Indiegogo is committed to helping entrepreneurs bring their ideas from concept to market, a partner in every step of the way. The Indiegogo campaign strategist team helps entrepreneurs ensure they can reach their crowdfunding goals. As part of this commitment, Indiegogo has created a variety of partnerships to help with everything from design, to manufacturing, to retail.
Crowdfunding partnerships address unique challenges faced by IoT start ups
Manufacturing in particular can prove to be quite challenging for IoT products, so by working with companies like Arrow and IBM, Indiegogo is poised to help entrepreneurs create the best possible products.
According to Kevin Li, co-founder of PlayDate, one significant difference between a regular start up and an IoT start-up, is the manufacturing component. For example, an IoT start up typically has a novel piece of hardware which is being introduced as a big part of the offering. Any custom designed piece of hardware will need to be designed, tested and then mass-manufactured. With hardware, a start-up will need substantial time to gather components, work the kinks out of the design, and then manufacture the pieces. This is different from software where a team can continually iterate on a rollout. That’s a luxury not available for hardware-centric devices and solutions.
“An organization needs to be certain their device works properly before starting production. You don’t want to end up with thousands of broken units that can’t be fixed after the fact.” – Kevin Li, PlayDate.
Never underestimate the importance of rapid prototyping
Of course everyone wants to know what the next best thing is – before someone else comes up with the idea. Testing ideas out quickly is critical to gaining interest from potential backers, providing proof of concept, and working through iterations or refinement. According to Kevin, rapid prototyping has really opened up the space for IoT startups, really reducing the amount of time it takes to get a product from ideation to market.
“Platform-as-a-service providers like IBM are giving start-ups access to an incredibly powerful infrastructure that can be launched, almost instantaneously, at a fraction of what it used to cost.” – Kevin Li, PlayDate.
Solve a problem that real people face
When asked if there was a recipe for success, Kevin honed in on two things. The first thing is to make sure you are solving a real problem. With IoT especially, it’s all too tempting to create, connect or build something because you can. Just because something is cool or fun, doesn’t mean it’s worth pursuing as a venture.
Not all ideas deserve the amount of energy, resource, time and sacrifice it takes to go from concept into production. Choose wisely.
“I think the key differentiator between good ideas and successful ventures is the ability for the founders to execute. A big part of that is recognizing that not all good ideas are good venture ideas. Many ideas that seem good on paper, don’t really make sense in practice. I think too often folks in the IoT space build products that are nice to haves that don’t necessarily solve any real problems. Centering the company on core problems facing pet owners is one thing we strived for with PlayDate from the get go.” – Kevin Li, PlayDate
In the instance of PlayDate, Kevin and team (co-founders Anthony Chien and Hulk) started out to solve a problem faced by many people – specifically pet owners.
If you have a faithful furry friend at home, you are intimately familiar with the guilt you experience after you close the door, head to the office, leaving your best friend sits at home. Unless you work at a hip progressive dog-friendly firm, chances are you can’t take the pooch to the office. Kevin and fellow co-founders Hulk and Anthony Chien saw a niche opportunity, set out to solve a problem faced by a huge population of people, and created a solution that solved the dilemma: how to play with a pet remotely?
Opportunity everywhere, but what’s a winner?
While estimates for IoT market value vary widely by source, there is one thing everyone seems to agree on – and that’s how enormous the opportunity is – both for entrepreneurs and established firms. Following are some projections from well-respected sources:
- IDC predicts global IoT revenue will reach $7.065B by 2020 from $2.712B in 2015, attaining a Compound Annual Growth Rate (CAGR) of 21.11%.
- Bain projects that by 2020 annual revenues could exceed $470B for IoT vendors selling hardware, software and comprehensive solutions.
- McKinsey suggests that IoT will have a potential economic impact of between $2.7 to $6.2T (in US $$) through 2025.
- GE estimates that Industrial Internet has the potential to deliver up to $11.1T on an annual basis by 2025.
But, sheer size of IoT opportunity doesn’t mean everyone is going to be a successful IoT entrepreneur. Greg Khan feels there are several “hot” areas within the IoT sector for entrepreneurs to pursue:
- Anything Privacy/Security Related
- Voice Recognition
- Construction-Based Technology
- Logistics & Inventory Management
- Agriculture Technology
- AI for Enterprises
- Health Technology for Seniors
- Augmented Reality
Defining the minimum viable product
According to Greg Kahn, other than sleep (!), the biggest need for an IoT entrepreneur is defining what the minimum viable product (MVP) means for your business and team. In product development, the MVP is a product with enough features to gain validated learning. With limited funding, the MVP is critical to an IoT-start-up’s success.
When tapping into the IoT’s potential, both Greg and Kevin say there’s no one magic formula for success. However, Greg does feel there are a few guidelines that will help an entrepreneur take an idea to a successful venture:
- Pinpoint the market potential and get validation from 5-10 trusted (i.e., informed) sources
- Choose a founding team carefully. Balance culture with skill-sets that don’t significant overlap (strategy, finance, engineering, and marketing)
- Clearly define and detail the minimum viable product (see #1)
- Rely on data to make decisions but don’t get stuck in analysis paralysis.
- If possible, manufacture locally to start so that you can adjust processes without needing to jump on a plane to do so
- Use off-the-shelf solutions when it isn’t critical to your core product/solution
- Collaborate/partner with other entities that can provide significant resources
- Invest in a marketing (or better yet, influencer) strategy
We asked Greg what kind of a framework for success he would recommend for IoT start-ups and entrepreneurs – and in reply he offered these points:
- Address a specific pain point that the marketplace (your ultimate consumers) have identified
- Secure adequate funding
- Focus relentlessly on customer needs
- Build partnerships/alliances
- Hire the right team
- Embrace risk, yet minimize exposure
- Remain agile
- Harness analytics
Key take aways: The devil’s in the details
The ability to execute efficiently, definitively and fast can make or break a start-up when moving a good idea to the market.
- Focus on ideas that solve a problem people care about
- Accelerate your time to market through rapid prototyping
- Test, retest, and then test again
If you’ve a project you want to try out, why not sign up for a Bluemix trial? It’s free for 30 days, and you can start building immediately. Or to read more about IBM’s IoT solutions, visit the IoT website.