In our previous article, you could find some food delivery trends for 2021. Despite the overloading of the food delivery, we are sure there is always a place to fit into if to use neighboring niches. Today, we would like to pop into the IoT startup world. From the fitness tracker on your wrist to the smart speaker in your office, you would probably agree that the world is now driven by the internet of things!
If you’re looking for a startup idea, this particular niche is now a very lucrative one to get into. However, it also has its pitfalls.
In this article, we’ll look at what the internet of things is, why it is so popular with investors, and how you can build a business in this particular sector.
What is the internet of things?
The internet of things (or IoT for short) is the network of connected devices that work together to exchange data with other devices and systems.
IoT devices are pieces of equipment that have internet connections in them, even though you wouldn’t expect them to. For example, although your smartphone wouldn’t be seen as an IoT device, your fitness tracker or smartwatch would be!
Here are some examples of IoT devices you may already have around the home include:
- Smart lightbulbs
- Fitness trackers and smartwatches
- Smart speakers and digital personal assistants (for example, Amazon Echo and Google Nest)
- Internal and external security cameras and motion sensors
- Tracking sensors
- Smart thermostats
Odds are, if your device has ‘smart’ in the name and is controlled by an app on your phone, it’s an IoT connected device!
The IoT is powered by what is known as the edge cloud. This is a subset of cloud technology, which manages data as close to connected devices as possible. The edge cloud allows devices to work quickly and efficiently. For example, with self-driving cars, it’s crucial that data is processed as soon as possible, to ensure quick decision making and reduce the risk of accidents.
Which industries use the internet of things?
Alongside the connected devices in your home, the IoT is used across a range of industries to automate simple tasks as well as make data collection and transfer easier.
Here are some of the industries making critical advances in the internet of things.
- Healthcare. IoT devices are being used in the medical industry to help save lives. As well as the fitness devices that were mentioned earlier in this article, automated insulin pumps and ingestible sensors are making it easier for people to manage chronic conditions. Smart devices like security cameras and thermostats are also allowing older people to live independently in their homes for longer
- Utilities. Smart meters can be frequently found in homes and offices around the world. These sensors mean that companies don’t have to pay people to read meters, and customers can take steps to reduce their carbon footprint
- Retail. From supermarkets to clothing outlets, IoT sensors can help boost profits. Stock rooms have sensors so that businesses can see when they are running out of certain items. Sensors can be used to see how customers shop in stores, meaning that companies can use psychology to make sure people spend as much money as possible
- Agriculture. Smart sensor technology can be used to help farms and food providers create maximum output with minimal waste. Sensors in greenhouses can automate temperature and humidity, with drones used to carry basic tasks like spraying and planting crops
- Manufacturing. The manufacturing industry was one of the first to utilise IoT technology. Sensors on equipment can be used to monitor output, allow processes to be controlled remotely and identify when equipment needs to be repaired
- Town planning. Smart cities are the cities of the future, with sensors in lifts, escalators, traffic lights and security cameras being used to build a picture of how people and vehicles move around. For example, IoT technology can be used to monitor pedestrian movements and see if people are adhering to social distancing guidelines
Why is the internet of things so popular?
The internet of things has been talked about since the 1980s and 1990s, but it’s only been in the last decade that the use of connected devices has skyrocketed.
Why has this been the case? Technology has become more advanced and more affordable.
- IoT devices are cheaper to design, manufacture and ship
- The rollout of 5G technology means that it is easier for IoT devices to stay connected. It’s estimated that by 2025, 5G will cover a third of the world’s population.
- Wi-Fi is seen as more of an essential need, with more households and public places having access to broadband and cable. It’s estimated that nearly 9 out of 10 homes in the US now have some kind of internet subscription, compared to 4 out of 10 homes in the year 2000
- There is more access to data available, making it easier for IoT devices to make decisions quicker and more effectively
- Artificial intelligence (AI) has significantly advanced in the last few years. AI makes voice technology more viable and allows IoT devices to converse with people
The generations coming of age have grown up in a world of technology and connected devices. Millennials are more likely to use technology than their Gen X and Baby Boomer counterparts, with 93% of Millennials owning smartphones compared to 68% of Baby Boomers.
Our top tips for launching an internet of things-related startup
Three out of four IoT startup companies fail. This makes it a challenging niche to get into. Get it right though, and it is a worthwhile investment. Google bought Fitbit in 2019 for an incredible $2.1 billion!
If you’re considering building your startup company around the internet of things, there are a few things you need to take into consideration.
1. Find your unique selling point
As the IoT market grows, so does the competition. For example, Apple, Fitbit, Huawei, Samsung, BoAt and Xiaomi are all big players in the wearables market!
This means that you have to make sure that your product stands out in a crowded market. Do your research, see what your competitors are doing and put together a thorough business plan.
Does your product solve a problem that your target audience has?
Remember that your IoT business does not necessarily have to design and manufacture a connected device. For example, it could be a SaaS that helps businesses optimise their websites for voice search, or a startup company that securely connects equipment to the edge cloud.
After all, all IoT devices need a thorough infrastructure in place to help support them.
2. Avoid novelty products
You may think that your idea is funny and will raise a few smiles, but will it have longevity in the market?
Many IoT devices fall into the trap of offering a solution to a problem that nobody has.
For an example of an IoT device that dramatically failed, take Juicero. This Wi-Fi-enabled juicing machine cost $400, with critics commenting that you could do a quicker and cheaper job just squeezing fruit with your hands. Even though the device raised $120m in investment, it closed down 16 months after launch.
Another example of an IoT device that did not do as well as expected was the Quirky Egg Minder. This was a smart egg tray that told you when eggs were going bad. In reality, there are a lot of ways you can tell that eggs have gone off… including checking the expiry date stamped on them! Although the product is still around today, the company had to slash the price from $100 to $9 to get people to buy it!
Customer research is critical. Will your target audience be interested in your idea, or do you need to go back to the drawing board?
3. Make sure your idea is yours and yours alone
IP issues can pose a significant problem for startups. Not only can they waste time and resources, but they can make it harder for businesses to get investment in the future.
As the market for IoT devices is so broad, it can be easy to accidentally use other company’s ideas. Take the time to research potential IP clashes. Working with a lawyer who specialises in intellectual property law can save time and money in the long term.
4. Get the right people on board
This means that it is crucial to get the right people on board from the very beginning.
If technology isn’t your strong point as a founder, it’s critical to hire the right people with the relevant skills, either as permanent staff or on a consultancy basis. Getting the architecture of your device right is essential.
So, if you’re looking for angel investment or venture capital funding, working with someone who has prior experience in the industry could prove to be a significant advantage.
Many founders with experience of failed IoT startups cite a phenomenon called the Dunning-Kruger effect. This is when people think they are more skilled in a particular area of expertise than they actually are.
What does this mean for your startup? It means that you may think you know all there is to know about the internet of things, but this isn’t the case.
5. Pivot where you have to
It’s especially important to be flexible in this particular market. If it looks like your IoT device or support service is not working for you, can you be flexible and move to an alternative plan?
Take for example, Amazon Dash buttons. These were physical buttons that customers could keep at home. By pressing them when they were low on a specific item, Amazon would automatically place an order.
In 2019, Amazon announced that it was no longer selling the buttons. People were using their Amazon apps and digital personal assistant devices to order products instead, reducing demand for the physical buttons.
6. Think about device security
As the popularity of IoT systems has grown, so has the risk of security breaches. More entry points make it easier for cybercriminals to hijack a device and control a network. Plus, as a lot of data collected by IoT devices is of a sensitive nature, this can trade hands for a lot of money on the black market.
In case, you are considering launching an IoT device to market, you will need to consider how you will protect it from being compromised. Just put some key questions to yourself:
– How will people log into these devices,?
– How will you ensure privacy at certain times?
– And how will you make sure devices are regularly patched to remove new vulnerabilities?
It’s an exciting time to work in the IoT industry. The number of devices available on the market is growing all of the time, giving the general public many different options.
However, the growth of the market means that you have to make sure your product stands out from the crowd. What is your unique selling point, and why is it that customers should buy from you?
It’s essential to do your research to make sure your device will stand the test of time.
So, if you are planning to make your way into the world of the internet of things, we wish you the best of luck!
Want to get your IoT startup idea up and running? You Are Launched can help
You Are Launched has been working with lean startups, accelerators and venture capital companies since 2014. We already worked with Smart Suitcases, Micro-navigation with a help of iBeacons, BacTracker Breathalyser integration, FitBit FitnessTrackers, UV-waves tracker, and sure smart watches, and NFCs. So, you can be sure in our tech background. But, this is not enough for us, and we are looking for new opportunities.
We would be pleased to work with you to build on your IoT startup idea, guiding you through building a solid business plan and helping you get the investment you need after.
So, contact us today and see how we can help your startup find success.