IoT Startups – What makes them tick or suck?


I attended many IoT startup events and hackathons. This is what I learnt.

B2C market:

This is the first choice of any entrepreneur who is having idea of IoT startup.
Reason being huge market. However this market in IoT segment has its own risks. Let us understand consumer(customer) market, what they look for?
3 Cs – Cost , Convenience, Choice
The solution need to provide cost advantage , additional convenience and provide a choice which was non-existing before.
From startup side, we also need to consider another three Cs – that is competition, continuous support and customer reach
Now look at the famous startup ideas – Smart home, smart watch  etc..

Consider Smart home solution –
Cost : Does the consumer get cost advantage? NO, In fact he has to pay for data usage
Convenience – to some extent , yes. But still not good enough to make an impact
Choice— to some extent, yes. We provide mobile as new switch to operate (near or remote) , but action affects the person inside/near by. I mean, then usecase defeats its own purpose, if the person is nearby, he can use the switch itself.
Competition – Almost, every one offers smart home solution for lights,fan and water.
Continuous support – Most of the smart home providers do not even mention about post production support. How they can support large area out of their town is still a question
Customer Reach: Here we talk about all customers. How to reach out each and every one. Huge money goes into just marketing, not sure of conversion rate though.
Similar is the case with smart watches, fitness tracker, baby health monitors

Now look at B2B market:

Following are the steps:
1. Identify the existing problem of any specific industry and make a solution for that which can be small impact
2. Make the benefits pitch and reach out to only few small startups in the same industry to make shorter sales cycle
3. Create a demo kit and demonstrate Proof of business (not proof of concept)
4. Make product project plan and seek for investment from them as co -creating for the identified customer.
5. Make partnerships with ODMs, chipset vendors, communication service providers etc to get cheaper cost
6. Build case study and reach out  to next customer (repeat steps 3,4,5)

What B2B companies look for:

3 Ds : Differentiation, Durability, Design


in B2B market, it is fierce cut throat competition. Playing a cost lever will hit the profit margin. So most of the organizations are focussing on creating unique product in their offering. Thus differentiation is the key requirement. So any IoT startup creating a small difference in the process or design is what actually B2B players are looking for. Novelty in process improvement even as small as 1-2 % is good for them.  Even there is initial investment, many are ready for piloting when Differentiation is ascertained


Unlike customer segment, where frequency of changing a product is fast, B2B market is looking for “Fix and forget” model for their organizations.  So IoT startups making the product lifecycle longer is preferred. In fact, this is good business model for startups, as against going for release cycle every and then. By nature of hardware components in IOT ecosystem, creating a change in design later or frequently is not so easy. I see a good common goal – making durable goods


Consumers are also look for better design, but the need in B2B segment is bit higher. Even good novel idea without proper design may not be even considered by B2B segment. Organization make decisions on the product and employees use the product. It is forced on them. So unless product is of superior design considering “experience” aspects , it will be discarded.

I would strongly suggest focus only on B2B market than customer segment.

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