BLN

The Business Leaders Network

Reasons to be Cheerful, Reasons to be Fearful in IoT

Alex Deschamps Sonsino – Founder, Good Night Lamp/Tinker London

Internet of Things 2015

If you are starting an IoT business what are your chances? Will being in the UK be an advantage?  Alexandra Deschamps Sonsino looks at the prospects for Internet of Things startups, what will work in their favour and what will be the challenges for companies entering the IoT Space.

Alexandra Deschamps-Sonsino is an interaction designer, product designer, entrepreneur & speaker based in London. She is the founder of the Good Night Lamp, a family of internet-connected lamps.

Alex has been building consumer-facing internet of things products, services and communities since 2006 for clients such as BBC R&D, Nokia, British Gas, EDF, BT and others.

She was co-founder and CEO of Tinker London, the first distributor of the Arduino platform in the UK that ran workshops around the world and offered design and consultancy services to global clients.

Not enough time for the whole talk? Notes from Alexandra’s IoT talk here, or, transcript below.

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sp1: Let’s welcome Alex Deschamps-Sonsino. [Applause]

Alexandra Deschamps-Sonsino: Hi. My name is Alex and I am the founder of a great many strange things. I thought I’d talk about a few things from my perspective. I’ll qualify all that. As background, for those of you who don’t know me, my first business, Tinker, was the first distributer for the first distributor of the Arduino in the UK. Who here knows what the Arduino is? Well done.

If you don’t know what the Arduino is, Google Arduino and think of it as the ancestor of the Raspberry Pi, although that would be insulting to the Raspberry Pi, I suppose. Same ballpark: education platform, open source hardware, open source software.

I did that for a bit. It allowed me to sort of work as a designer; I studied product design. Worked with a lot of technologists and understand technologies from a maker perspective, as well as from a starter perspective. On top of having a consultancy, which is called Design Swarm, I also have a product called the Good Night Lamp, which I’m developing. If you are curious about the inner workings of a start up with no money and very limited resources, google the Twitter handle for Good Night Lamp and you will see what I’m spending my days doing at the minute, which is mostly stripping USB cables.

I’m also the organizer of the London Internet of Things Meetup. The Cambridge Meetup here is awesome and is run by Mark, who is probably speaking in the next couple of days.

Plug. Please sign up now.

In London we were the first Meetup around this topic, and now the biggest Meetup around the world. Tomorrow there’s a panel discussion of all the Meetups coming together and having a chat about what’s going on in the Meetups. Do stick around for that. I think it’s ticketed separately or something, right? I’m not really doing this for advertising for Mark.

Mark Cheverton: [from audience] It’s full up, soo…

Alexandra Deschamps-Sonsino: It’s full. So don’t, don’t.

Some of the clients I’ve worked with across the board. I’m not really going to talk about my work. This is my first…third time talking at the IoT forum. I tend to talk about what I see because of the Meetup, because of the work I do, because of having the start up, from a really meta perspective.

“I’ll talk about what are problems that have sort of solved themselves, as it were, what I kind of think are non-problems, which I think is going to piss off 90 percent of this audience, and what I think are real problems, which might not concern 90 percent of this audience.”

Which is to say if you are in the B2B sphere and you are working for a large corporation, what I will say is completely tangential to your everyday living. So, please do carry on reading your email. You’ll be fine.

What I think are no longer problems – this is kind of text heavy because I was doing it on the train. The financing piece is kind of interesting. When I started Good Night Lamp, which was late 2012, I decided to kind of go gung-ho and I put all my money into building some prototypes, got a little bit of friends and family money together, went to town, had a kickstarter campaign. Oh my gosh, excitement. Failed on all counts.

Then I decided to go shopping around for investment. I spent a year and a half shopping around for investment and there was nothing, absolutely nothing. Whereas I’ve been running a series of master classes for investors interested in the Internet of Things. What sort of began with quite a lot of angels, has now become quite a lot of VCs, which is interesting. That means that probably in the next 18 months or so, people will start making investments in the consumer space. Again, because I’m not looking at B2B, I’m not looking at industrial applications, I’m looking at consumer.

“In that [consumer] space… things are getting better”

In that space, things are getting better. A lot of the start ups that come through the meetup are finding support very quickly, either in the form of grants or in the form of government funding. There’s more and more of that kind of thing available, which wasn’t available even a year ago when I gave this talk.

The interesting thing from a product design perspective, because I studied product design – industrial design as a BA and interactional design as an MA. When I studied that and was interested in technology, a lot of the businesses that would call themselves industrial design or product design business really didn’t engage with technology businesses very much on a consumer level, again.

Now I’m finding, especially in London, is that businesses that do product design traditionally are starting to help start ups. These are two start ups I’m kind of…I’ve noticed have product design support. Even a year ago, that would be very rare.

You would find that people were doing their own kind of product design or their own…You know, they’d work with a friend who also graduated from so and so. They would be doing sort of half-assed product design and certainly not ready for manufacturing in any capacity, then putting that on kickstarter and hoping for good things to happen.

Whereas, now they’ll go to a kickstarter campaign in really professional manner. They’ll have an idea of what it means to manufacture the thing they want to do. They’ll be prepared with a bill of materials. They’ll have thought through all of this because of those new partnerships. I think that’s exciting.

It means that product design is sort of catching up with the technology field in a way. We can have debates about product design as a definition some other time. More and more corporations are obviously understanding that this isn’t a fad. A year and a half ago when I was looking for funding, I approached some people in this very town about investing in the Internet of Things. The response was, “Well, we don’t really think IoT is going anywhere. We’ve got some patents around this space but we’re kind of letting them lapse.” Very, very conservative.

Whereas, obviously, this is the third edition of the BLN. This room is still full. People are interested in this topic. Bigger and bigger organizations are interested in this topic. People are doing fantastic exits, like Pilgrim, who is in the room.

“It’s a space that more and more large organizations understand and want to get involved in.”

This is my annoying the crowd thing. Non-problems for me are kind of things that are sort of waiting to sort themselves out, if you will. On the interoperability side, on the security and privacy side, from an again consumer perspective, a consumer experience and certainly start up perspective, these things are the last fucking thing you care about on your day-to-day basis.

You care about finding a market for what you are doing. You care about making a compelling case to John Lewis to store your stuff. All of these kinds of things take precedence over what are essentially problems that large corporations need to solve amongst themselves.

For a start up for someone who’s beginning in this space, this is sort of nice to have kind of problems. There are things that you’l solve if you have the time, if you have the money, if you survive the next 18 months.They kind of exist in a strata of concern that’s above and beyond what most people’s problems are.

Real problems are kind of what are real emerging problems. I will not only qualify the problems, but also offer possible solutions. Feel free to talk to me about what those possible solutions are, whether I’m wrong, whether I’m kind of totally bullshitting here.

“A possible problem is the incubator/accelerator space.”

A lot of feedback that I’m getting from people who are joining incubators and accelerators is often, “Well it was great while I did that, but then I left and there was no support.” My response is kind of like, “And you were expecting what, exactly?”

[Laughter] If you are an entrepreneur, if you – traditionally, entrepreneurship would have meant you are running a tiny business for a long time and then maybe you hire another person and that’s exciting, then, you know…

Whereas, incubator spaces are allowing people to exist in a sort of financial respite mode that’s interesting. You get $15 grand for 3 months and you get to work on your thing and not worry about money. Then, wait. You go back to your life where you have to worry about money every single day of your life and have panic attacks at 3:00 in the morning because you can’t generate the sales you want to generate. I’m sorry, but that’s what running a business is like.

To what extent are incubators and accelerators really providing an environment for someone to understand what it’s like for someone to run their own business and run their own smart hardware business is interesting. A think it’s a possible…something we should possibly do something about.

To a degree, are they also sort of replacing of what traditionally what someone would have done is to take an MBA, sign up for an MBA or sign up for a design course for a few years, figure out what they want to build during that period of time, do it with peers, start up businesses. And start up businesses in a way that’s more organic and where they are supported by a whole bunch of other things, other than money.

In a way, the money bit is sort of false comfort. So this is a random idea. What does an incubator look like that doesn’t give you any money? Would you do something differently because you had absolutely no financial support and you had a very short period of time, but you knew you had access to lots of resources? What would you do differently as an entrepreneur?

You would figure it out. You would figure out how to pay your bills as well as take advantage of what was in front of you. Instead of being in a comfortable position of not having to worry about paying your bills.

Having worked for myself all my life and/or created my own businesses, I don’t know what it’s like to have the comfort of someone else paying for your bills. I would like to think that that makes me a better entrepreneur than that someone has that comfortable environment — not successful, just better.

The Digital Catapult who are housing me very, very generously. They’ve given me a desk for six months. They’re in Kings Cross and I think they almost are there in offering that kind of support. They are doing a lot of different things. I think Azita will be talking tomorrow about what they do. I would like you to listen to her with this in mind. What does an environment that’s sort of a supportive environment for an entrepreneur in this space look like. Could they be it?

I think they could. I don’t know whether that’s going to happen now or later. The opportunity for these problems to emerge and for the solutions to come together…Things happen really quickly.

“Second real problem… Building a connected product in the consumer world and the consumer space.”

Second real problem or real perceived problem, I guess…Building a connected product in the consumer world and the consumer space. Who’s done this, in this room? Raise your hands. One-ish, two-is, three-ish, four-ish, yeah…Takes years. Absolutely years. Not two years, not the way in which we think about web or app kind of development as being something you can just spin out and sell in two years.

There’s a really good article – I don’t remember where – about Sonos, the wi-fi music system. They didn’t start making money for the first five years. That’s five years of investment that Index invested in them. These are long periods of time.

We kind of have to recalibrate how we talk about entrepreneurship in that space and how we talk about investment in that space.

There’s a word that I’ve started thinking about more and more that used to used a lot more. It’s cottage industries. If you look at the feed for Good Night Lamp, for what I am doing at the minute, I am basically assembling them myself. I have customers in this room, so I can’t be here…Andy is here. I can’t be here for very long because I have to go back to assemblying them myself.

That’s how a lot of these thing probably should exist. It’s how a lot of these ideas actually come together in other markets. If you look at design, you look at jewelry, you look at kind of other markets where you are shipping a thing that’s of high value, that’s complicated to make, more often than not people will start from their bedroom and grow from there.

As opposed to start from a really cushy corporate environment, or as opposed to start from a moneyed environment. I think we have to maybe rethink about the fact that those are interesting and valuable processes that someone should go through. Someone should be building a business from their bedroom. It shouldn’t always be a co-working space or whatever. Co-working spaces…If your problem is getting a desk, you don’t have a business, because that is not a problem. There is always someone you can ask for a spare desk.

I’m assembling them myself at home because at the minute, that’s what I can afford, what’s convenient and what will give me the least hassle possible. I don’t have to ask anybody for using xwinzit or soldering all day long.

Sugru and Tatty Devine who are in completely different markets. They’re in…so Tatty Design does laser-cut jewelry. They started, they are extremely well-known and do extremely well. They have like three stores in London and they are worn by all the celebrities. Sugru, these are all businesses that took years to come to fruition, that took that one kind investment from someone who took a chance or it took some celebrity to wear a piece of jewelry and then they were out of there. But those are not often the stories that we tell around technology or around Internet of Things products, around consumer products that have a technology aspect to them.

Really, most consumers have absolutely no idea what we are talking about. I, as a sort of experiment, I went to John Lewis and I was like I’m going to go buy a wearable. People in the industry are just talking about this. I’m going to go and see what it’s like. I went to John Lewis, the big John Lewis down on Oxford Street, all the way up, looked around. Went all the way up to the 7th floor, where they sort of hide technology, like, “Oh, you have to go up to the 7th floor to go see tech.” Then I looked around for 25 minutes before some guy, who was standing in front of a little kiosk that was yay-high that was locked where there were some wearables. There was some couple already looking at them, trying to compare them. I had to stand in line behind this couple who were being talked to. Then, “Hi, can I buy a thing that measures my activity?” pretending to be the average consumer. He pushed this thing on me, which was called the Misfit, which was perfectly fine if I wasn’t an educated consumer.

I wasn’t someone who had probably been looking at this or been reading about this over and over again, I would never have found this by accident. That’s a problem. It means that a lot of the things we are doing exist in this sphere that is completely away from what is comprehensible by normal consumers. We have to train ourselves to talk to them in ways that make most people’s partners go, “Hey, why don’t we buy this for Christmas for Auntie Blah-blah.” That has to be the goal. In retail, that’s kind of the goal. If you can convince someone to spend some money for Christmas, it means you have a thing that you have spoken to them about forever and they’ve made a decision that’s an important purchasing decision.

On the…It’s not only consumer products, but it’s also smart city stuff. Done a bit of research for Nomina Innovation around smart cities. A lot of smart city projects – I think there are some councillers from Cambridgeshire in the room – a lot of the money that powers smart city projects is not tax money. The idea that you would have to say to your citizens, “We are now investing as a city in this smart thing,” feels a bit risky.

Cities go after UK funding, EU funding, other pieces of funding as a way to experiment without necessarily roping everybody and all their citizens into a conversation about what it means to be a smart city. What it means for my taxes every month to go partly to a thing that might be valuable. We don’t know how to talk about IoT that way that is valuable and meaningful.

I was part of this really strange roundtable a few weeks ago. The objective was to explain to a lay person what the value of the Internet of Things were so that government could make a decision about whether they wanted to invest in IoT in the next few months. A table full of experts? No one could come up with a good definition or a good thing that you might say to someone in the pub. That’s a problem.

How am I doing?

sp3: [from audience] Great.

[Laughter]

Alexandra Deschamps-Sonsino: So… ideas how to solve that. There’s a really, really interesting history behind what is now the Design Council. I don’t know if you’ve ever been to the Design Council or interacted with them. They started out as a UK project to promote British design post-war. Obviously, the industrial space had to pick up and people’s creativity had to pick up as well. What they did, was they invested in a space in Haymarket in London, very central. They just put it as a showcase of all British designers. It was carpets. It was chairs. It was whatever. That was second world war, that was fine.

I think that to that with IoT would be awesome. It would be a space where you could showcase everything that is going on so that people who are walking down the street who are tourists, who are just strolling about on a Sunday can go, “Ooh, what’s this? Ooh, what’s this weird product? I’ve never seen that in John Lewis.”

For John Lewis to be able to go, “Ooh, they’re getting awesome footfall, maybe we should buy some of these things or maybe we should try some of these things out for Christmas.” Just an idea.

Then real problem four is I think the interesting thing coming from someone who used to distribute a platform and used to distribute hardware, it’s an interesting space to now be at the application stage, selling a lamp that connects to the internet. The more entrepreneurship or most of the entrepreneurs that I see are really selling platforms, selling software platforms, hardware platforms, hardware tools and essentially selling the spades or buckets of the gold rush of IoT. We have to sort of remember that application, end user applications are also going to be making money.

Yes, the volume might not be there, but if you invest in the right verticles, it could be very interesting. Leonard, who may or may not be in the room, probably not in the room…has a start up called Kemuri, that’s for the aging population. The aging market is a huge market. All of us will become old. Somehow, we refuse to invest in that space. We refuse to see that as an exciting space. As designers, as young designers, getting old is for other people.

We have to kind of get over that. We have to get over the fact that this is unsexy. There’s a lot of money there and there’s a lot of opportunities. When you think about tracking people’s behavior, when you think about putting sensors in homes, really creepy when you are 20, not so creepy when you are 70, 75 and you’re alone because your partner has died, for example. Those are markets that really need to be fostered and really need to be loved. We don’t really know how to do that right now.

So should someone rich out there, with a lot of money, put together a kind of IoT investment fund that specifically looks at these verticals

That looks at these issues and goes, “We’re only doing connected products and we’re only doing connected products for health and the aging population,” for example. That would be awesome.

Not necessarily that group of people coming from the pharmaceutical world. Obviously, that would be the easy way, but something else. Maybe get investors to realize that the return on investment is going to be really long and they just have to live with that. That’s hard because you could invest in an app, in a website and make your money in two years and off you go.

“This is a new world. This world needs more support and it needs more yeses than it needs no.”

So, homework. I like giving homework.

I think there’s a lot of skepticism. I hear a lot of, “Well, you know. This has been tried before, 10 years ago within corporation X,” or, “Well, I don’t know. This seems a bit risky.” I think we have to sort of stop talking about risk and start taking risks and start investing in people who might not seem like a great…It might not seem like a great idea because they have no market. That’s because there is not market for this stuff. The markets are being really decided and are emerging because the applications space is changing all the time.

People will decide to use your technologies and your – whether it is communication technologies or hardware – in completely new and novel ways. It’s a little bit like explaining to people what a lightbulb is useful for when they don’t know about electricity. We’re at that stage. You can decide to invest in the light bulb when the electricity’s almost there. Or you can just decide to wait. There’s a lot of light bulbs that will simply not see the light of day and ideas that will just fall by the wayside. I think that would be a great shame, especially in England, especially when you have such a manufacturing history and such an investment history. Great projects are born here and are born around this area for centuries.

I think there is a lot of value in taking a positive spin on what might seem like a weird punt, really. I will share with you, just to close, what has been hanging over my desk for the past year and a half. Which is to say, the things that I have told you today will be completely irrelevant by next year. That’s the pace at which things are changing. In a way, this is a useful – and hopefully, we have time for questions – this is a useful conversation to have, but the things we’ll be discussing the issues we think are issues now, will not be tomorrow’s issues. I think that’s a good thing.

Thank you very much.

[Applause] Question: I was hoping you could respond to the “nice problems to have” slide.

Alexandra Deschamps-Sonsino: That’s my favorite slide. I never should have put that in. Let me put it this way, when you have 99 problems, privacy and security isn’t one of them. Affording ENC testing, affording UL testing, figuring out…I’ve been trying to figure out for 3 weeks what box to put my lamps in because I am trying to figure out what the most cost effective way of packaging lamps is…

Question: What about the perspective…How would you say start ups are contemplating things like downstream data use, XXX supply products?

Alexandra Deschamps-Sonsino: I’m switching lamps on and off. I have the worst start up ever. I’m doing the “Hello World of IoT”

[Laughter]

Question: XXX engineering?

Alexandra Deschamps-Sonsino: This is an interesting one and not to get caught up in my case, you know, “my case study is…” My start up is more complicated than the average start up. The average start up will have made – to the last speaker’s point – a lot of people will have engineered their own solutions to all of those problems.

I’ll tell you exactly why. If they don’t, if they rely on other partners, then they lose IP and they lose investibilty. It’s not even a word, but you know what I mean. The conversation with an investor is almost always, do you have IP? Then you go, “Ooh, yes. I think. I have the data of my customers.” “Oh, OK. Do you own that?” The answer has to be, “Yes.”

In my case, I’m using a partner company called SI, who are based in Guilford, who do end-to-end services. I’m switching lamps on and off with SIM cards. It’s the most complicated way of switching lamps on and off XXX. They own that service. They own that gateway. They own the entire structure around it. We’re trying to even figure out how to build an API over that because it’s not even APIable at the minute.

That’s why my case is like a crap case study. What I’m doing is like I did all the things wrong and I continue to do all the things wrong in the most interesting possibly way and most expensive possible way.

The average start up will build their own stuff. Might partner with people if they are slightly bigger and they realize that a partnership with someone who’s offering a software environment or software platform for them is the right thing to do. It’s not often at a really, really small start up scale, like less than 10 people they are often doing everything themselves. I’m not sure if that even answers your question…

Question: Yes.

Alexandra Deschamps-Sonsino: Ok, cool.

Question: XXX

Alexandra Deschamps-Sonsino: That’s a good question. The question was, “What are worrying investors?” I’m sorry, I’ve forgotten you’re first name. Karima came to the IoT investment master class that I put on. What worries you, Karima?

Karima: I think it goes back to one of the points that you raised. We do look at long horizons, so 7 year horizons are not uncommon. But ultimately, you need distribution. We tend to invest in B2B. So if you are investing in companies and the distribution isn’t there, you don’t know what the incremental horizon is. That’s probably the biggest concern.

Alexandra Deschamps-Sonsino: I think if other people could answer all my questions, that would be awesome.

[Laughter]

Question: I’ll ask a question because XXX somebody else to answer as well. I don’t know how to ask this question quite, but how different is the Internet of Things than from just things, right. People look at Internet of Things and they think Internet. But actually, it’s not an internet market, it’s a things market. So how applicable is what you are talking about to just general manufactured products? Is it the same, exactly the same problems?

Alexandra Deschamps-Sonsino: Yes and no. So I’ll give you an example of an industry that’s isn’t that. The toy market’s really interesting. The average toy – at least from the last time I was working on toy stuff – which is some years ago, now. The average toy has to cost no more than $15-20, which is what, £7-10. You can’t put any internet into £10. I’m hearing, “Yes you can,” in the room. OK, fine. Then you can, but for something fully packaged, distributed, it’s a very problematic space for them. Lawrence, who may or may not be in the room, used to work with Hasbro with stuff for putting electronics into toys in the ‘90s. They looked at this space. It wasn’t quite right.

Whether – and I think they are the perfect example of things that have their own problem space and there is a market for those things, and there is no change around that possible within that industry. Whereas if someone takes an electric XXX and sticks it in a toy and knows how to market that, right now it will still be more expensive than the £5, £15 toy – and for a retailer, they have to look at, “So you are telling me I have to get rid of a £15 toy to put your £38 toy in there? Huh, No.”

It’s kind of the dumb things versus the smart things when it comes to both the retail side of things, the logistics side of things, because you have both streams of production. The lamps for example, I have a vendor making the enclosure. I have a vendor making the electronics. I am the vendor assembling the two together, to make sure everything is packaged and everything works, tests, etc. That’s not unlike the device market, in that sense, but the product design around it is more complex. You have things that are just…the lamps are made out of wood instead of plastic because for small quantity is easier to make in the UK and easier to make with high grade materials than not. I think there are differences between things, normal dumb things.

There are less differences in the device market, if you will. But it is the fact that you are selling devices in a space where you usually sold things. So you suddenly have to compare the two. The average consumer will compare the two. I think the best example of that is, you go to John Lewis and then you have lighting. Beautiful lights everywhere. £600 lights. Then you have SAD lamps kind of stuck there. They kind of look like they are part of the same family of things, but not quite. SAD lamps are really ugly. They look like these blobs, for obviously, normal reasons. Obviously, there’s no connection between the two markets at all. I would like a really beautiful SAD lamp. I don’t want a crappy looking one. But the crappy looking one that will get me into John Lewis cost less to me as a consumer than the beautiful one that I would prefer.

Roundabout way of saying Yes and no, I think.

[Laughter]

sp1: That’s all we have time for.

[Applause]

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