Date post: | 17-Nov-2014 |
Category: |
Technology |
Upload: | guy-turner |
View: | 3,347 times |
Download: | 0 times |
Internet of Things
Everything is Changing (still): A VC’s perspective
Simple events remind us IoT is everywhere
+I recently experienced a new “smart elevator”
Push the touch screen, it tells you which to board. No buttons, no indicators. You must trust it.
Our life was in it’s hands.
The women next to me and I looked at each other
“Everything is changing,” she said.
IoT: A fundamental shift in our world
Source: Cisco
First: A quick bit about HPVP and meHappy to chat more any time4
• Twitter: @guyhturner
• Blog: vcwithme.co
• Mgmt Consultant
• Angel
• Engineer
• Twitter: @hydeparkvp
• Early-stage IT at $0-2M rev rate
• Midwest focus
• $25M fund size
• Seed or Series A, $1-3M rounds
Iot is not what we hear about in TechCrunch
… these are only the tips of the iceberg and only training wheels
This is…
… and this
IoT is an industrial and business play
Source: Intel
Deployment of “things” in the IoT
This is not the first industrial revolutionContinued evolution of human:machine:world interaction
1st ~1800 2nd ~1870
Source: Multiple, ECNMAG
“cyber-physical production systems”
town factory
subsistence farm
mass productionquality of life
poverty (sort of)
SteamCentral gov’t
TelegraphElectricityFossil fuel
3rd ~1975knowledge worker
factory worker
SiliconComputerInternet
4th ~2010connected devices
people (scary)
Micro/nanoEfficient chipsBig data
IoT: a network of unmatched power (again)Analogy: Telegraph is to train as IoT is to personalization
10
Source: Chandler, Strategy and Structure
- Coordination and planning- Across many points- Over long distance - In (near) real time- Of multiple independent
machines/people- To meet human physical
needs at scale- Affordably
- Coordination and planning- Across many points- Over long distance - In real time- Of multiple independent
machines/people- To meet physical human
needs at scale- Affordably- On a 1:1 basis
1:1 marketing1:1 supply chain 1:1 environment1:1 healthcare
As with all revolutions, money to be made(and heads will roll)
11
• Upstarts with agility
• Certain asset ownerso Telecom (bandwidth)o Raw materials (as for all
revolutions)
• Software models (sticky, network effects)
• The un-connected/untrained
• Slow adopters
• Large industrial with antiquated sunk cost in faster moving sectors
• Hardware models (unless low cost provider)
So what (is the size of the prize)?12
Source: ICD, Google Finance
$8.9TRILLIONPER YEAR by 2020!!!!$0.5B
APPL Mkt Cap
$0.36BGOOG
Mkt Cap
7.9% CAGR
Market size13
• Revenue
• Devices by category
• Growth rate
Tons of entra
nt startu
ps and big
company brands
That’s why three of top 5 IoT VCs are big HW companies; $1B invested in 2013
14
Source: CBInsights
Top 5IntelTrue
QualcommCiscoKleiner
Intel has always struggled in mobileQualcomm an offensive move
Cisco under threat from SDN (software-defined network)
15
… and other HW companies jumping in
$100M fundHealthcare IoT
$100M fundManufacturing IoT
48M GBP fund from UK gov’tGeneral IoT
Source: TechCrunch
(OK, not a HW company but funny)
Are hardware models doomed?16
“Make up for margin with volume” only works in a blue ocean race… the start of a new market
Android announced
First android soldiPhone high end
iPhone low end
Source: Garmin, aaplinvestors.net
… or if you can be the low cost provider17
“How Lenovo
found treasure
in the PC
industry’s trash”
Source: Businessweek
Yet, software pricing power builds with time18
As a business, how much do you spend today on SW vs 10 years ago? How about HW?
Stickiness
Network Effects
Switching costs
Source: Salesforce 10-Ks
***Action***
Decision
Insight
Incr
easi
ng v
alue
HW
HW’s value is in extending the reach of SW
Data
Example: smartgrid
load balancing
Exception: human
affinity for beauty
(eg, iPhone)
Why so many HW companies seeking IoT SW models
***Action***
Decision
Insight
HW
SW business models excite VCs
Data
E-commerce, Lead Gen, Advertising
SaaS (ERP, Marketing Automation, CRM, etc)
SaaS (analytics, monitoring, business Intelligence)
DaaS, Data Aggregator, Data Normalizer, Storage
Sell it, wait, sell it again later (maybe)Leasing/renting… may be a play here
In IoT, these models applied on a per device or per endpoint transaction basis
Watchout startups: structure of some IoT target verticals favor incumbents
21
Des
ign
cyc
le a
nd
life
cyc
le
Speed of adoption
Big companies have two major resources vs startups: Time and money
(somewhat) better for startups
Favors incumbents
Example from HPVP portfolio22
• Vision: sensor backend-as-a-service
• Huge opportunity to replace installed base of on-site sensor backends, but players TOO SLOW to adopt within startup funding and lifecycle
• Instead, FOR SPEED, working on the innovative edges of industry – new active sensor base with big companies and their existing customers
What it means to be “human” changes in every revolution
23
How we have changed
1st ~1800 2nd ~1870
3rd ~1975 4th ~2010
Wants not needsPeasant to production
Worker to thinker ?
Scenario 1: utopian network node25
Human needs/wants known by external and internal (implanted) network of technology in real time or BEFORE human sensed
Intellectual/thought driven society with technology meeting physical needs on a 1:1 basis… “Wall-E”… except prettier?
Scenario 2: technology industrial complex26
Rise of SW network effects and returns of scale creates outsized wealth and power concentration
Source: Forbes
Do we trust these people not to be evil?
This phenomenon driven by SW and SW margins
Scenario 3: Skynet (of course this would be in here)27 Technology evolves faster than we do, creating own species of
smart connected devices with autonomy and self-determination
Source: Marseille Museum, Intel
10M years 40 years
Human Brain Evolution Computer Evolution (via Moore’s Law)
If climate change was an unintended consequence of human ingenuity, imaging what else is possible!
Scenario 4: never alone28
Always connected
Loss of freedom and personal sanctity
Psychological mechanism ill equipped to cope
Being human is to have problems, being an entrepreneur is to solve them
29
IoT will solve problems, and it will create new ones
Will you solve a problem now with IoT, or one that IoT creates?