Internet Of Things (IoT) -- The Lean Way

By Tom Taulli

Often, being early in a market is a bad thing. As the old saying goes: The pioneers are those with arrows in their back.

But for entrepreneur Saar Yoskovitz, being early has turned out just fine.  In fact, he started his business, Augury, when the buzzword, the Internet of Things (IoT), did not exist yet! But based on what he was

seeing at the time — back in 2011 — he knew there were some interesting trends that would rapidly become mega markets.

Yet the early days were not easy.

“The basic premise of connectivity was challenged from the beginning,” he said. “So being self-funded for two years was essential. We needed to wait for the market to catch up.”

For the most part, Saar applied IoT technology to various mature markets, such as maintenance in factories and commercial buildings. That is, the platform helped customers with the diagnoses of machines based on the sounds they made, leveraging ultrasonic sensors paired with machine learning algorithms.  To use an analogy, it was like  Shazam — but for machines.

No doubt, the benefits have been substantial for customers, in terms of energy conservation, safety and overall lower costs.

According to Saar: “We were one of the first to try applying the lean startup method to hardware, which was not easy to do. We had to develop fast iterations of hardware prototypes without guaranteed funding.”

With a cost discipline that is a part of the company’s DNA, there has not been much of a need to get outside capital. Keep in mind that — so far — there has only been seed funding of $2 million from First Round Capital, Orfin Ventures and Lerer Hippeau Ventures.

In terms of the overall opportunity, Saar sees IoT as still very much in the early innings. “From fitness trackers to the Industrial Internet of Things (IIoT), each sector is in a different stage of maturity,” he said. “The consumer side is still searching for that one killer app that will bring IoT into the mainstream. Over the next few years, we’re going to see a tremendous land grab: everyone will fight to become the hub. In order for this to succeed, it will require a move from walled gardens to a truly open, interoperable network.”

He already sees various mega companies taking aim at the opporutnity, such as Apple, Samsung (the company has an “open IoT” initiative), Google (which bought Nest), GE and Belkin. And yes, there will be many startups that will get a piece of the action.

The good news is that the market is likely to be enormous. “Recent data suggests that industrial IoT will boast a $320 billion market by 2020, including diagnostics and monitoring as well as big data analysis,” said Saar. “This makes sense because big companies actually make money on the industrial side of IoT because it optimizes their processes.”