This is going to be relatively short.
While the IoT market is in its infancy the hype is off the charts. Will the market be huge? Absolutely! For whom? Ah, that is a much more difficult question. Having been down this road in the past my suggestions for IoT startups are as follows:
Read “Crossing the Chasm” by Geoffrey Moore and then read pragmatic articles like this one that offer genuine insight into the market opportunity and timing. Rinse and Repeat.
If you are going to be an entrepreneur your most important job is to make money. Along the way you need to conserve resources (primarily money) to make sure you are still around when customers finally have money to spend on whatever it is you are selling. You also need to have a pretty good idea of how much those customers are willing to pay for your products and how/if your business will be profitable.
This is greatly oversimplified but I am trying to make a simple point. It is very easy to get swept up in frothy predictions referencing the number of connected devices over the next “X” years. There are plenty of analyst predictions you can reference that will look impressive in a business plan or pitch to investors. What is difficult, and your business depends on this, is understanding who is going to buy your product(s), when are they going to buy, why are they going to buy, and who are they going to buy them from (even it its your product don’t assume they will buy it from you). Most importantly, will you be cash flow positive or be able to bring in additional investments before your money runs out. You do not want to be the guy that has the best (potentially over-engineered) widget that everyone thinks is super cool…but not so cool that they start pulling out their checkbooks.
Finally, beware of customer science projects. Potential investors will want to know that you have at least one marquee customer. Visionary buyers inside marquee accounts may be able to acquire enough budget for a pilot project but there are no guarantees that even a hugely successful project will move past pilot stage. Keep in mind that your marquee customer is getting a paycheck every two weeks and can afford to take their time – chances are you may not have that luxury. You need to be comfortable having open, honest, difficult conversations with customers and investors (including your significant other) and be prepared to walk away from “Super-Mart” if you can’t see a light at the end of the tunnel.
That’s all for now. Now go to the top of this post…rinse and repeat.