The Internet of Things (IoT) is one of the most exciting industries to build a startup in. With the seemingly endless number of things that can be connected, the types of products and services that can be created limited only by your imagination.
However, because IoT is such a young market, entrepreneurs are still traversing an unknown landscape, learning the unique nuances and idiosyncrasies of IoT as they go along. And while the challenges that IoT founders face when launching companies are similar to those that conventional founders face, there is no denying that IoT products and services require certain special considerations.
And that’s why we've written this blog post that outlines some of the most important steps to launch a strong IoT startup.
Determine if Your Idea is IoT-Related
Since IoT is a relatively new concept in the world of startups and tech, some founders often claim that they are building an IoT product, when in reality their offering is a typical software service or a physical product that doesn’t utilize the web in any way.But determining if your idea is IoT-related is crucial to the success of your company, and is not something that should be glossed over.
Below are some of the reasons why you should take the time to determine if your startup idea is IoT-related before actually launching an IoT company:
Branding & Marketing
Accurately describing your company is essential for positioning yourself in an already-crowded market. Your target customers are looking for a product or service that not only solves a problem, but utilizes the internet to solve a problem. If you advertise your offering as an IoT solution that isn’t web-enabled, then good luck attracting and retaining customers.
Fundraising
When pitching to investors, you must be able to clearly articulate what your offering is and how it works. And because many investors stick to the rule of “invest in the founder, not the product”, your inability to highlight the connectedness of your product will leave a negative impression upon potential investors, and kill any chance of follow-up meetings -- all because you didn’t know whether your company was genuinely IoT-related or not.
Finding Talent & Resources
IoT offerings require numerous tech components, which means that you have to be as clear as possible when defining the needs of your product. Will it need tracking hardware? Sensors? How will it record and save data? And how can users access this data? Mobile or web applications? What about cloud-based orchestration capabilities? All of these various aspects need to be identified in order to seek the right talent to build your product and the right partners to support it.
IoT is a Buzzword
Like many tech terms in the startup world, IoT is a buzzword and is tossed around far too casually. If the IoT industry is going to continue to thrive, the entrepreneurs who work within it need to ensure that their products adhere to the strict definition of “IoT”, and not the vague and diluted interpretation that is now associated with it. When aspiring entrepreneurs describe their company as IoT when it isn’t, they’re inadvertantly chipping away at the credibility and viability of IoT.
Because of this disparity, it’s important for aspiring entrepreneurs to first have an understanding of what makes an IoT product. According to IoT Agenda, the Internet of Things (IoT) is defined as “a system of interrelated computing devices, mechanical and digital machines, objects, animals or people that are provided with unique identifiers and the ability to transfer data over a network without requiring human-to-human or human-to-computer interaction”.
In order for your offering to be IoT-related, it must have the following features:
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A thing. This may sound vague, and it is, but that means that just about any “thing” can be connected to the internet these days (hence the term, “Internet of Things”). Your “thing” can be a device, like a watch or a smartphone, as well as an automobile with built-in sensors, a farm animal with a biochip transponder, a person with a heart monitor implant, or just about anything else you can think of.
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Internet capability. Whatever your “thing” is, it must be able to be assigned an IP address and provided with the ability to transfer data over a network through wireless technology, micro-electromechanical systems (MEMS), or microservices.
Don’t feel restricted to any specific industry or sector, as IoT is becoming more and more prevalent in our society. For example, IoT can be seen extensively in precision agriculture, wearable tech, building management, healthcare, energy, transportation, and more.
Know What Your Customers Need
Once you’ve determined that your idea is well within the realm of IoT, like any other founder you must then ensure that your offering is something that customers would actually want. However, also like any other founder, your product must be more than a mere novelty and should solve a problem.
Remember, just because something is connected to the internet, doesn’t mean that someone is automatically going to hand over their hard-earned cash and take one home to take selfies with it.
While the fact that nearly every natural and man-made thing can be connected to the internet and become “smart” as a result is an exciting one, in order to create a potentially successful product means that you have to first focus on a specific customer pain point. And to do this, you have to conduct extensive market and customer research.
In your research, you should examine your competitors. Does something similar already exist? How popular is it? Is your solution better, cheaper, faster, safer, etc. than what’s already out there?
Even if you conclude that your offering is far superior to that of your competitors’, you must also explore how it will affect your target customers. How will it improve their lives? How will it affect their behaviors and their daily routines? If your product provides a considerable functional improvement on the lives of your customers, what are some of the potential emotional benefits that a connected service or device can offer? Be as specific, and brutally honest, as possible when asking yourself these questions.
Build on What Already Exists
While building a final version of an IoT product will require numerous technological components, many of which you’ll have to create yourself, don’t let that stop you from creating your offering. With the vast number of resources at your disposal, it’s easier than ever to hack together a working version of your product, which is ideal for founders who are still working on their MVP and need customer feedback or are seeking investment.
When building your MVP (minimum viable product), it’s imperative that you focus on the core functions of your offering. While it’s tempting to get caught up on the vast potential for bells and whistles that can be added to your offering, having limited time, money, and resources, means that you’ll have to first ensure that the important functions are fleshed out before.
When outlining the core capabilities of your offering, be as specific as possible, whether they are simple, complex, or anywhere in between. For example, your MVP descriptions may look something like the following:
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Users can access data from sensors through the accompanying mobile, desktop, or web application.
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Sensors will track acceleration, vibration, and temperature, and can be applied to any metal surface.
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Cloud service will enable registration and management of devices, and analysis of information in real time.
In the startup world, founders will often start with what is known as a “piecemeal MVP” (more of which can be found in the Founder Institute blog post, “The Art of the Hustle: Unconventional Methods for Building a Startup”). In a piecemeal MVP, founders create a version of their product that is based on current technology and slap together a functioning model that utilizes existing tools and services to emulate the experience and process their customers will go through.
Another way to leverage existing technology to build your IoT product is to partner with other companies that have complementary products and services to create a complete solution for your target customers. A solid design and a manufacturing partner that supports prototypes can really bring your product to life.
Luckily, there a few options out there. For example, Maxim Integrated can help startups by quickly and efficiently transforming their concepts into working prototypes. Early-stage IoT companies can get started with Maxim by registering for a free Design Startup Pack, which includes a built and tested reference design or an evaluation kit designed to meet the needs of their end product. Click here for more information on how Maxim Integrated supports IoT startups.
Keep in mind, however, that regardless of how you build the prototype of your offering, it needs to work. You may be creating a potentially groundbreaking technology that the world hasn’t seen before, but your customers and investors need to see how your product works before they give you money.
Final Thoughts
IoT is still in its relative infancy. And while that means that the future of this growing industry is uncertain, it also means that there is a world of possibility waiting to be explored by innovative entrepreneurs and creative thinkers. Now that you have the foundation of a lasting and meaningful IoT company, are you ready to take your idea to the next level?
