If you look at the most successful startups today, you’ll find plenty of proof that the hardware-enabled service (Haas) model works: Peloton, Particle, Latch and Igloohome all rely on subscriptions along with product sales. Even tech giants like Apple are rapidly reinventing themselves as service companies.
Yet, if you currently rely on device sales, the prospect of changing your entire business model might seem daunting.
At Minut, we are building smart home monitors (privacy-safe noise, motion and temperature monitoring) and recently made the transition despite the lack of resources on the process. Here are the seven lessons we learned:
- It is a question of when — not if.
- The transition will have company-wide impact.
- Your current and future target audience may differ.
- Price should reflect the value for the customer. Your revenue should grow with theirs.
- Avoid your free offer competing with your premium ones.
- Be transparent (internally and externally) about the changes. Over-communicate.
- Start the process early, check regularly with your team and set measurable targets.
Why subscriptions are the future of industry (and your startup)
Hardware has one advantage over software: customers understand there is a cost to your product. Now, this allows hardware startups to generate revenue with their first iteration, but it’s unsustainable as the company grows and needs to innovate: the software and user experience need continuous improvement and excellent support, just like in a software-only startup.
That’s why we see most hardware startups eventually launching a subscription model and limit what’s available for free. Even established companies — think Strava or Wink — often end up having to radically limit free features after years of operations.
Experienced founders and financial markets favor subscription models and recurring revenue. Market valuation multiples are typically much higher for companies that benefit from service revenue in addition to sales.
Aluminum and iconography are no longer enough for a product to get noticed in the marketplace. Today, great products need to be useful and deliver an almost magical experience, something that becomes an extension of life. Tiny Machine Learning (TinyML) is the latest embedded software technology that moves hardware into that almost magical realm, where machines can automatically learn and grow through use, like a primitive human brain.
Until now building machine learning (ML) algorithms for hardware meant complex mathematical modes based on sample data, known as “training data,” in order to make predictions or decisions without being explicitly programmed to do so. And if this sounds complex and expensive to build, it is. On top of that, traditionally ML-related tasks were translated to the cloud, creating latency, consuming scarce power and putting machines at the mercy of connection speeds. Combined, these constraints made computing at the edge slower, more expensive and less predictable.
But thanks to recent advances, companies are turning to TinyML as the latest trend in building product intelligence. Arduino, the company best known for open-source hardware is making TinyML available for millions of developers. Together with Edge Impulse, they are turning the ubiquitous Arduino board into a powerful embedded ML platform, like the Arduino Nano 33 BLE Sense and other 32-bit boards. With this partnership you can run powerful learning models based on artificial neural networks (ANN) reaching and sampling tiny sensors along with low-powered microcontrollers.
Over the past year great strides were made in making deep learning models smaller, faster and runnable on embedded hardware through projects like TensorFlow Lite for Microcontrollers, uTensor and Arm’s CMSIS-NN. But building a quality dataset, extracting the right features, training and deploying these models is still complicated. TinyML was the missing link between edge hardware and device intelligence now coming to fruition.
Tiny devices with not-so-tiny brains
Facebook is today launching a partner program for its Express Wi-Fi initiative, which helps bring higher-speed connections to developing markets, including India, Indonesia, Kenya, Nigeria, and Tanzania. The program itself involves having local business owners install Wi-Fi hotspots, where internet service is provided by local ISPs, mobile network operators, and others that Facebook has partnered with. Now, Facebook is launching a new partner program that will allow access point manufacturers to build devices compatible with Express Wi-Fi.
Facebook first began testing Express Wi-Fi three years ago, and has since expanded it to the five above countries and 10 partners. The idea behind the project is to create an entrepreneurial grassroots base for the its Wi-Fi service – that is, the operators and ISPs would be working with local entrepreneurs who want to resell internet access in their own communities. The partners set the prices, but Facebook provides the software.
The company has tried to address the needs of developing markets before, via its zero-rating program Free Basics. But this program was criticized over net neutrality concerns, as it only provided access to specific websites – like Facebook, of course – to the developing markets. India eventually banned that program in 2016, as a result.
Express Wi-Fi, on the other hand, offers full, unrestricted access to the web, not a selection of pre-approved sites and services. It’s one of Facebook’s many connectivity initiatives today, along with others like OpenCellular, rural access programs, drones, and other infrastructure projects.
The new partner program for Express Wi-Fi, announced today, was built to address specific issues Facebook and its partners faced in the field, the company now explains. It says it has been working with the manufacturers to build new access points that better detect registration pages and more accurately count the amount of Wi-Fi data consumed.
This will allow the Wi-Fi service providers to sell prepaid access as well as different traffic classes – like offering some services or content for free, while charging for others. Presumably, this would be another avenue of making Facebook free to developing markets down the road.
Facebook says having hardware manufacturers on board will help its operator partners more easily set up and manage their Express Wi-Fi hotspots.
Weak and expensive connectivity is a big barrier to Facebook adoption in developing markets, especially as user growth in developed regions is stalling – or, even decreasing at times. In July, Facebook reported no user growth in the U.S. and Canada, and a loss of European users it attribute to GDPR requirements. Developing regions, however, are still coming online and could bring Facebook a whole host of new users, if people can get connected.
Using an SD card reader and some soldering savvy, these hackers rooted out a ton of IoT zero days.
Feed: All Latest
Kickstarter and its crowdfunding brethren have played a pivotal role in the hardware revolution of the past decade. But even now that developers have a wide range of democratizing tools at their disposal, hardware is, as ever, hard. Today the service launched Hardware Studio, a new suite of tools aimed at helping developers navigate the choppy waters of hardware development. Read More
Startups – TechCrunch
These companies had a very special CES experience as they all pitched in front of multiple groups of judges on stage at the Sands Expo. The startups were competing for $ 50,000 and being named the winner of the Hardware Battlefield. After many deliberations, our judges narrowed the list down to four finalists: wearable device for pregnant mothers Bloomlife, smart sensors for construction… Read More
It’s one trend that’s been hard to miss, being mostly clipped and/or strapped in plain sight. To spell it out, hardware startups — and the devices they’re making — are having a moment, thanks in major part to crowdfunding websites providing the funding bridge between a promising prototype and the cost of manufacturing a shipping product.
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