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Drop the Use Case: Investing in Technology First

There's been quite a bit of a focus surrounding startups and use cases over the past thirty odd years. I, however, challenge this line of thought.

 

In the 80s, Apple, Atari, HP, and many others debuted their focus not on the use case, but instead on the actual technology behind the products they made. This passion for creating the next wave of software and hardware is what drove the industry to where it is today.

 

Next time an investor or venture capitalist challenges your concept, either your technology hasn't matured to a point of investment or you don't have a clear path to bring that technology to peoples hands. Either way, having a strong technology side to your business is what will allow you to continuously grow and foster a business that outlasts your competitors.

 

 

A dying concept, yet a proven success

 

Putting technology first is a concept that many startups have dropped. And many startups have failed. One common question that comes up is: How can you possibly drive your business with this concept? The solution is to find people that have a passion for building the next wave of technology.

 

This isn't the first time that companies strayed away from the technology and focused on a singular product line. Let's take a look at Kodak - one of the photography giants that fell by hinging their business on a singular product, instead of advancing technologies. Kodak actually invented the digital camera, yet failed to capitalize on this opportunity, as they didn't believe in the technology itself.  It had a very clear business model: sell film-based photography and don't allow anything else to cannibalize their film sales. So when digital came to existence in 1975, instead of advancing technology in the photography industry, they scoffed at the idea of bringing something that will eliminate their film-based photography sales. By focusing on a singular use case instead of focusing on technology, they worked themselves into bankruptcy.

 

film photography new wearables

Don't be left behind: By focusing on the technology, you can adapt

 

High value, but higher price

 

In the world of IoT and wearables, we are fortunate to be at a similar stage to when PCs were just at their onset. There is high value, however desire to adopt is lower due to a muddied perception of the cost/value proposition.

 

A disjointed price point for purchasing power among the consumer; since there is a tangible item which generates the value for the buyer, the price is quite steep: ~$350 for your choice of wearable or IoT item. The gap, however, needs to be dropped to the point of standard incremental cost for the smart item for widespread adoption. For example:

 

A regular light bulb costs about $1. You buy a smart light bulb and that price skyrockets to $70! Does a smart bulb generate an additional $69 of value to you? I would estimate probably not. That is, unless you are some sort of light show DJ that hosts house parties on a regular basis.

 

Until the difference in price narrows, I struggle even myself to purchase smart items. The closest match at this point is the smartwatch - a stylish and clean watch costs approximately $100-$150. The same variant as a smartwatch will cost about $200.

 

What does this mean for companies in the wearable and IoT space? Focus on the technology, it is what will ultimately drive people to want that watch, that smart item, or that wearable. 

 

Oh yeah, there's also the added bonus of adapting as consumer trends and tastes change, instead of being tied down to a singular use case.



Kiwi

Toronto | http://kiwi.ai

Building the future of connected devices and AI as we know it