The interesting thing with the Big Bang is that it started as a tiny dot in the nothingness of the ultimate nothing, and the explosion created both time and space in an ever expanding way.
Fast forward a few eons later, the universe of the Internet of Things (IoT) is at its Big Bang stage, which means anywhere you look, you will find a new smart bulb flickering somewhere in the consumer market. Sadly, most of what was created after the Big Bang disappeared and this is the likely future for the majority of IoT startups.
Why? Because of Darwin.
“That’s not different from all the startups out there. There’s only a 1% chance they’ll make it”, you may say. Nope, what makes an IoT startup different to buidling, say, a consumer mobile app that does…. well, anything, is that there are many more variables to consider. The physicality of it makes all the difference: The materials, the supply chain, the new markets being formed these days etc.
Shrinking technology in a bloody red ocean
For instance, let’s take a look at connected wristbands and smart watches. We see more and more wristbands focused on solutions for the lifestyle, sports, and medical consumer markets. Most of them will soon be consumed by large enterprise solutions, like those provided by Apple, Google, Samsung and others, and become no more than a smart watch app. The reason for this is that version 2.0 and 3.0 of these watches will already include the ever shrinking sensors that are housing the wristbands of today, so it would make no sense building more and more hardware (expensive) when you can build software (cheaper) and enjoy the market penetration muscles of the giants.
When the ocean of the Internet of Things (IoT) is as blood red as it is, and when technological leaps are so frequent, investing in consumer solutions is just a waste of money. These startups face huge competition not only from other startups developing smart objects (Big Bang, remember?), they are competing against other giants like Lego, Swatch, Mercedes, HP, Oakley, Victoria’s Secret, Ralph Lauren and others that know their future business development is in the cloud–IoT–Wearables–Car–Drone business.
Invest in value and not in a nice to have
So what is the correct way to invest in wearable technology?
The answer is to find the value. Things we buy mostly succeed because they provide value, whether its an object, a service or a piece of software we need. Most of what we see now in ‘Kickstarter’ websites are things that by definition are nice to have. I’ve written in the past about Google Glass, ‘Nice to Have’ failed:
Google Glass for consumers, failed. No consumer really needs an expensive Android phone on his head just for fun. It’s a nice to have, not a must, not a life changer. Plus, it’s bringing the battery-life problem straight to the face, and we can really do without it. But worry not, every consumer wearable device which is going be only a nice to have is going to fail. Google Glass was just the first at exploring this new frontier.
Investing in B2B IoT Makes More Sense. Unlike consumer based solutions, the value of wearable technology and IoT in the B2B and enterprise markets is very clear and the future of B2B wearables and IoT is as bright as the sky on a clear sunny day.
For the savvy investor, the logical thing to do would be to invest in B2B wearables and IoT startups. What markets are we talking about here, specifically: The car industry (connected cars in the connected city), first response and emergency (better decision making, save more lives), the medical industry (doctors, hospitals), farming (better food, less water), technicians (better service), smart cities (more secure, better service to people), and there are many more.
In each of these verticals, use of wearables and connected things can and will radically transform the operations for the better, saving and making more money for everyone involved.