ET33- How to Capitalize on the Internet of Things
With IOT Strategist Kevin and The Hot Opportunities Right Now
The Internet of Things is what lets dumb tech become smart tech. This is happening right now and the examples people are familiar with, such as the fridge that tells you when to buy milk, are only the tip of the iceberg and not even very good examples of what is possible or likely to be truly transformational.
In this interview Kevin, an expert in helping businesses move into the space outlines some huge opportunities that are ready right now for major growth and exploitation by smart entrepreneurs and visionary companies. Not sure what to start- check out this episode for some definitive ideas of where tech is going and how to be part of cashing in.
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Matt: Welcome to today’s episode of Entrepreneur Talk Podcast. Today I’m talking with Kevin Cosner of the IOT Strategies where you can find him at IOT-Strategies.com. he’s gonna tell us a little bit more or hopefully a lot more about the Internet of Things which we’ve all heard a ton about. But, if you’re like me anyway, you know very little of the actual facts. So, thank you very much Kevin for taking the time to join us. Why don’t you just kinda kick it off with telling us a little bit more about your background and how you got into this?
Kevin: Absolutely, Matt. Thanks! So, first off, the Internet of Things as [inaudible 0:05:05.5]. It’s been around for quite number of years. It was known as M2M. But, technology has not moved to the point, or evolved to the point where you really could have this perfect storm of opportunity to create what is now this massive industry, potentially massive industry. My background has been wireless. It has been wireless for quite some time, many years. Specifically, it was in the area that had to do with the improvement or creation of cellular signal and capacity inside buildings and structures such as hotels or subway tunnels or sport stadiums. That technology is known as Distributive Antenna Systems in small cells. Because my background was in wireless, as I started getting more involved in developing IOT Space, one of the big aspects of IOT is how do all these devices that are gonna go out there and monitor everything communicate that information back to a central source, to obviously a software, analytics, and computers. That of course requires networks. Those networks usually be wireless. So, that just got me into it. I just started jumping into it. Once I realized the potential for this industry being a multi-trillion dollar industry, I got really excited and very focused on it.
Matt: That makes sense. Obviously, for things to talk to each other, they got to be connected. You’re not gonna have everything done over hard wires. So, just to kinda take the big picture as a starting point, the internet of things is the idea that a lot of devices, not just computers, are gonna be connected in able to interact maybe with people, maybe with each other. Right? So, the sort of classic example, I think, the refrigerator that can remind you to buy more milk or even place an order for milk with Amazon delivery service or something so that your refrigerator stay stuck. But, I’m sure there’s much more to it than that. So, what is this – the more likely – or maybe some of the other applications of what the Internet of Things can be for us?
Kevin: As I’ve talked a lot about, wrote a lot about, the Internet of Things is only limited by creativity. The ability of this – what I call it, I call it an ecosystem more than an industry – is so vast. That vastness encompasses every industry, every possible business or government even down to the personal level. So, some examples, you bring up the refrigerator which is a humorous one to me. In fact, I’ll be doing a post on LinkedIn about it in a humorous way because I think the whole idea of the smart refrigerator is kinda funny. But, you look at smart home, connected home applications, [inaudible 0:07:46.9], that’s been around for quite a number of years now. It’s now owned by Google. It’s a phenomenal application for turning something – just been an old technology – or thermostat at home into something that controllable over the internet. It’s smart and that it senses many things about your house and can make adjustments accordingly. So, you have things that that consumer whole level and pretty much everything else in the home as well. You have the Smart Home which is moving into lighting. Of course, the comfort the aspects of your home – monitoring everything around your home, alarm systems, doors and windows – but all integrated into a central source – over your smartphone, iPhone, Android Device, PDA – you have the opportunity to control and watch everything in your home and do everything. when you move out of that confined consumer space, and you move into the business realm and the realm of what’s also called the industriality of things, you’re moving into some applications that have to do with everything from the factory floor, the automation and monitoring every piece of equipment, a lot of that again has been going for a quite number of years. But again, technology has been able to evolve it, to allow it to expand dramatically. If you look at it from a simple application of time and money, one thing piece of equipment breaks down and its down for 2 weeks [inaudible 0:09:12.6]. It’s a lot of lost revenue. It’s a lot of downtime that cost you that company dearly. With the internet of things, with the monitoring that’s going on, with the sensors that are being employed into these devices, the machine is communication. Its saying “Hey! There’s something that’s a little bit out of norm.” Maybe a temperature issue, or friction issue, whatever it is. Now, they immediately know. “Wow! Something’s going on. We need to look at that piece of equipment.” They go there. They look at it. They determine “Wow! We’re not sure if this is really bad. But, let’s just order another part right now before it breaks down.” So, this preventive aspect is a huge area for IOT Applications. You move into automotive, in the smart cars. I don’t think anybody out there reads the publication in the hand or in the internet or watches a program in TV that doesn’t talk about smart cars and in the implementation of new technologies that allow all sort of monitoring in vehicles. I’m not just talking about a car driving by itself. That’s something completely separate. I’m just talking about all the advances in monitoring your car. The automotive manufactures, one of the more interesting aspects that has been talked about is how this product manufactures will ultimately evolve into being service companies where most of their revenue will come from services and the profits won’t be driven by the products anymore. If you could know something’s going with your car ahead of time, it takes some money to know that and saves you a lot of money on all those horrible repairs because you waited too long. That’s kind of the thinking in the auto industries and many other industries where it comes to watching and monitoring these devices. You can also go – the oil industry is one that’s in the news about every 60 seconds lately because of the price of oil calamity. If you look at sensors on oil pipelines out in remote areas, they can’t get out their all the time. Maybe they won’t get out to monitor switches and valves that often. Now, they can be monitored every second of every day and they know exactly what’s going on in these remote areas. That’s a tremendous benefit in both maintenance and safety in those areas. One of my personally favorites is the vending machine industry and any company that has a route operation where they have to drive around and service things. If you know those devices in this case, the vending machine is low on certain things or again, there’s an operational issue on the machine, you’ll know that before you go out with your truck roles are very efficient, are timed perfectly. You have a dramatic deduction in overhead costs both from the stand point and employee time, obviously gas, maintenance of the vehicle, wear and tear and you also stop the truck that goes out with exactly what needs for [inaudible 0:12:04.2]. No more going out and going “Oh! Darn! I forgot the box of skittles.” Now you gotta go back. You know that you need to bring skittles in that machine and boom! It’s there. Believe me; I could talk about applications like these for an hour. It just goes on.
Matt: It sounds like there’s almost an endless number of possibilities. So, who’s best poised to take advantage of this? Are there startups that would be good fit? Are there existing companies that need to modify that they are doing? From an entrepreneur’s perspective, where’s the low hanging fruit to attack first, to get a jump in to this industry?
Kevin: Absolutely. That’s a really good question because the opportunities, the companies that are out there, there’s a ton of small companies startups funded with small amounts of venture money. What I mean small amounts, $30 million or $50 million. That’s a lot of money. But obviously, in the world of venture funding that’s a drop in the bucket. There’s lots of those types of companies out there and many of them are doing some really great things. You also have, obviously, the big boys out there – IBM, Strong Leadership Position and the emerginiality, Cisco, Intel, in fact Intel, and yesterday just came out with their own prediction for the number of connected devices by 2020. What’s funny is the general number from all the survey companies and at the close around that has been 50 billion connected devices by 2020. Intel, yesterday, came out and said 200 billion. So, somehow Intel must see the future better than all the survey companies. You got AT&T, Horizons, of course on the carrier sides. Just about every major company in the text side and the communication side is getting into IOT or is already in it. Again, I can throw names out here but the smaller guys that are in the market with some very specific niche approaches and some very creative applications out there. Many of them have real projects, real installations not just what we’re thinking about doing or we have bunch of money, or were in the plan c. they are really doing it. They have customers and they have installed some very creative and successful applications.
Matt: So, as the IOT strategist, what’s your role in the process and how are you helping your clients to figure out what it is that they can do to maximize their ROI on this new space?
Kevin: It depends upon who the clients is. A lot of clients would be in the category of again, “We haven’t done something yet.” There are companies that once they implement IOT, it help them improve something within their business, reduce cost, whatever it might be. They don’t understand the steps necessary what’s real, what’s not real. That’s an example of a type of customer I would go in and I help guide them through that process from the very beginning through implementation of the technology and help them bring in the right partners, the right companies to look at and the right long term strategy for that implementation. Other companies might be in this space already whether they are companies that are utilizing IOT to, again, improve their business in some way or reduce cost. Maybe they’re at a point where they stuck at a point or they are not sure being guided the right way by the vendors or the partners they already have. I come in and act as a kind of like a program or project manager at that point where I’m overseeing the partners they already have and ensuring that it’s in the best interest of the customer, client or company – regards to what’s being done. For companies that are in the space on the development side, developing the applications, developing the products that obviously will fill the need, there, I help them on the other side. Now, I’m helping them create a strategy, streamline and go out and get the right customer for whatever software or hardware products they are developing. They might have the great piece hardware or software but they haven’t completely conceived how broad their client base might be. I can help bring that into focus for them and then ultimately, ill drive them in the right directions and bring those customers in and of course, help them succeed with the sales of their solutions.
Matt: How do you see things breaking out between say a standalone purpose built device like Nest vs. stuff that’s more of a bolt on or incremental improvement to existing technology, existing hardware, the car that lets you know it needs an oil change or an industrial equipment that lets you know it’s time for service or whatever? How do you see that breaking out between brand new to the world type of ideas vs. incremental improvements to existing technology? It seems to me most of it is gonna be coming on the cost saving side. But maybe again, I just don’t have enough imagination.
Kevin: That’s a nice question. Again, I’m focusing the difference their between the consumer side more and then more of the business and the industrial side. On the consumer side, you and I both know that people get excited about stuff. Here’s the new piece of technology and here’s what it’ll do. It’s gonna change how you live your life. The smartphone, of course, when Steve Jobs gave us the smart phone for the first time, everyone went “Yeah. Okay. What do we need it for?” Next thing you know, you changed the world because of that device. I think, on the consumer side, you have the potential for products like that. I don’t know how [inaudible 0:18:11.0] is but it’s a great product as of other products that came out. It has altered how people – certain aspect of how you live your life in your home. The consumer side is gonna be huge. There’s a lot of products coming out. There’s a lot of products that are coming out integrated into other products that we, as the consumers, use. I’ll use the example of the refrigerator again. That market is gonna be huge but I think the real long term excitement and benefit of IOT is really on the industrial business side. And yeah, you’re right. A lot of it has to do with cost reduction or more efficient use of resources especially with a lot of regulations and industries are finding themselves under new regulations that will continue to be developed and implemented especially with whole issue of global warming or whatever. There’s a lot of efficiency aspects that IOT will bring. But it also brings an entirely new paradigm for revenue for these companies. A moment ago I mentioned the concept of product companies becoming service companies. That is a real hard concept for companies who wrapped their heads around especially when their entire life has been “we come up with an idea. We build a product. We sell a product. We get money for the product. Okay. How many of those products we have to sell to cover our overhead?” the revenue comes in one time. Right? I sell you a box you pay me for the box. Now, I got to sell someone else a box to keep the money coming in. these product companies now have the opportunity with the properly implemented IOT applications to have re-occurring revenue coming in that is driven by those products. The products, its kinda like HP in their printers. We go on buy a printer. They practically give them away with all the rebates and things to get a staff to pay for an overpriced ink. The ink becomes their re-occurring revenue stream because we are always using up the ink. So, take that model to just about any product company now. You can almost guarantee there’s some involvement into the service model that could be defied with IOT implementation. That’s where the largest revenue is gonna be coming from. That area. The funny thing is we’ll be saving money on the back end because of efficiencies and making a gazillion times more on the front end by implementing a service model into the strategy.
Matt: So, it’s really just a matter for those companies to identify where those potential opportunities are and then figuring out how to exploit them which sounds like exactly what you’re working to help them do?
Matt: So, if somebody wants to play in this space, what kinds of skillsets do they need to bring to the table or assemble on a team? I’m assuming this is a pretty hard work, intensive thing. You’ve gotta know sensors and you’ve got to be able to integrate those sensors of different kinds into whatever project you’re talking about and there’s a software side obviously as well. What other skills sets or specific skill sets are the ones that are the most critical in this particular industry?
Kevin: Well, talking specifically from the stand point on the end customer, not from the stand point of someone that wants to sell a product into this space, but the end customer themselves, you’re right. There are many components to this but the beauty of it – by the way, some of those components you have the sensors which of course had the devices they can install to them machinery or whatever your product is, the actual small device that does all the monitoring. Then, you have gateways which are the antennas that are part of the network itself. Then, of course, the back end, the analytic software and what takes the big data and turns it into actionable, measurable and viable resources. So, a company, the reality is, a company does not have to invent their sensor that map to go out and engineer gateway or deploy their own network. The nice thing is through the companies that are already out there in the space on that product software side, it’s a matter of partnering to right companies in order to get those pieces, parts and software that you need for your particular niche. I know a lot of companies are talking about “Oh! We have to go and build our own sensors because they are specific to me.” that is not accurate. The statement is not accurate. There are many very excellent companies that are in the business of engineering and developing devices like sensors and they will even custom develop them for you if there’s something about your application that just as a little bit too unique for what they have already done. Of course, depending upon the volume and all the other stuff, the sensor prices have come down to dramatically low level. And the same thing with the type of networks we’re talking about, IOT, the way it’s designed, the way the sensors are designed, can operate over cellular, Wi-Fi, Bluetooth or completely different type of network which is called an LP WAN or Low Power Wide Area Network. Those are based on license frequencies and those are amazing. Some of the leading types developing wares out there, one is called LORA which stands for Long range. You have one another called Thread which is owned by Google, and others. So, from the network side, again, it’s just identifying the type of network that will support the application you’re looking at. If your application is all around the factory floor, Wi-Fi is probably gonna be beautiful because you probably have an excellent Wi-Fi network set up already. If its supporting devices that are over the place outside remotely, then you’re probably looking at cellular or more than likely. I almost guarantee it won’t cellular. It will be LP WAN network. If there’s not an LP WAN network in your area, guess what? You as the company can deploy your own. You don’t need to go to the SCC to get approval. It’s not that costly. Yes, there’s some engineering required. But again, with the right partners, that’s not a big deal. You can make that happen.
Matt: Oh! I mean, even in just that, it sounds like there might be a lot of opportunities if somebody wanted to startup a company, a service provider for setting up LP WAN Networks. If the demand for everything else grows, then that’s gonna bring along the demand for those specialized networks and people who know how to set them up and deploy them, that would be an outside service. Yeah, it definitely sounds like there’s no shortage of opportunity here for the ambitious entrepreneur, those startups, or even the established company to move in to some of these spaces as the demand grows. I’m sure there’s a lot of projections but do you have any sense of or feel for how this is going to ramp up and how soon we’re gonna start to see this kind of hit a tipping point?
Kevin: Oh, yeah! I can’t tell exactly when the tipping point happen. I see it happening right now and you hit the nail on the head. In fact, [inaudible 0:25:26.8], I wanted to say bingo. You have aligned them up. The reality is, there’s a lot of opportunity in this area for an entrepreneurial entry in any one of these spaces. Now, granted on the hardware side, you have some phenomenally successful companies on the hardware side building pieces and parts. We can continue and talk about the names of many of them but the bottom line is there’s a lot of sensor type companies and gateway manufacturers that are out there. You also have some very powerful successful companies on the software side. But the key areas that I see the most opportunity is the networking, without a doubt, and the software side. On the networking side, when I first found out about LORA, the first thing that popped into my head, this is again because of my background in the wireless world was companies should jump here. Deploy these LORA networks all over the place. Own them under a model called Network as a Service (NASS) and just offer people subscriptions for a monthly fee. All your sensors can communicate over my network. How many sensors do you have? It’s this much per sensor – whatever the pricing model might be. Being able to deploy these LORA networks or someone chooses another type of LP WAN Network, again, it’s not that costly to deploy them and it provides, without going into extreme detail of the engineering or how the whole thing works, I’ll just say that the signal is able to cover vast areas. A single gateway or antenna could literally cover in a rural or suburban area, 15 miles around and support thousands of sensors on a single antenna. You can imagine how cost effective it is to deploy this network. I see that area being huge for the opportunity companies that are in the space and they are already some that have done that. They are doing this exact thing right now. They’ve got jump in everyone else. I see those companies being extremely successful and probably in the next number of years, they probably get bought out by some of the big wireless carriers who aren’t looking at LP WAN right now because they are obsessed with finding a way of evolving their cellular networks to support the type of data which is really really small need, really low bandwidth stuff cost effectively. So, yeah. Big opportunities there. Back in analytics, big data in analytics, huge opportunity for software companies especially when it comes to software that is specialized in certain industries in business types. That’s a big deal. There’s lots of money in Software as a Service (SAAS). Yeah, I’ve used the terminologies that says the IOT is offering the greatest opportunity for innovation since the industrial revolution. It is truly an amazing environment for innovation and new business startups.
Matt: Wow! That’s pretty exciting. I have called out a couple of those business models specifically where there’s opportunities right now. It’s pretty cool too. I certainly heard of software as a service. I have not heard of networks as a service. But I think those kinds of business models in general with the recurring revenue and the built-in base and kinda locked in users, that’s just tremendous way of doing business and growing quickly and getting yourself a very good price should it come to acquisition which I’m sure down the road, when the big companies figure out that their not gonna be able to ramp up as fast and its cheaper and easier for them to just go ahead and buy the guys that got there early. Those are gonna make for some nice exits for some of those early innovators which is being entrepreneur is all about.
Matt: Awesome! Well, thank you, Kevin, for taking the time. For people who are interested in finding out more about your service and the internet of thing strategies, where they can find you?
Kevin: Sure, absolutely. Our website is still under development so there’s not much to see but it is IOT-Strategist.com. they can of course follow me on twitter, @buildingtheIOT. They can also email me at kevin@IOT-strategist.com. Or call me 702-533-5886.
Matt: Awesome! Well, thank you so much for taking the time and kinda opening the window. It’s sort of funny. It’s such a huge thing. And yet, I would guess to 99% of the people, it’s like it doesn’t exist. It’s not on their radar at all and yet 10 to 15 years from now it may completely transform the way that almost everything we touch actually works. It’s sort of an interesting place to be. It’s a huge thing coming in the process and building up and yet most people just don’t have any insight to just exactly what’s going on. So, thank you for sharing that and opening that window for us.
Kevin: Absolutely! Anytime, Matt!