If You Think Consumers are Irrational, Don’t Run or Invest in a Consumer Startup
As a mechanical engineer, I believe in first principles.The first principle of building a consumer-facing startup is to recognize that consumers are rational.  They may deny it to themselves, but people always look out for their self-interests.  Their self-interests may be driven by helping others, or driven by vanity and selfish goals, but people always seek to feel better about themselves.  That satisfaction can be realized in many ways – some of which are self-serving; some of which are selfless.When I think about consumers, I seek understanding and counsel startups to do the same.  Suspend judgment.  Seek understanding.  Think about the state of mind of your end-users.  Did they just wake up?  Are they driving home?  Did they just get bad news?  Did someone in their family just die?  Did they just get great news?  Did they get a haircut they really like?  Did they just get a nice note from a friend?  Did a cute person just randomly smile at them?  On and on and on and on, our daily consciousness is overwhelmed with emotional interactions and feelings.Every consumer in the world is flooded with messages that compete for their attention.  How do you differentiate and get above that noise?  How do you convey your value proposition in less than a minute?  In less than 10 seconds?  Don’t judge consumers for their short attention spans – accept it – and figure out how to make their lives better with a product or service, and then message that efficiently and effectively.That’s the “mystery of life” in consumer-facing startups.  If this bothers you, don’t bother building or investing in a consumer company.  But if you love this challenge, and accept people as they are, jump into consumer-facing businesses.

If You Think Consumers are Irrational, Don’t Run or Invest in a Consumer Startup

As a mechanical engineer, I believe in first principles.

The first principle of building a consumer-facing startup is to recognize that consumers are rational.  They may deny it to themselves, but people always look out for their self-interests.  Their self-interests may be driven by helping others, or driven by vanity and selfish goals, but people always seek to feel better about themselves.  That satisfaction can be realized in many ways – some of which are self-serving; some of which are selfless.

When I think about consumers, I seek understanding and counsel startups to do the same.  Suspend judgment.  Seek understanding.  Think about the state of mind of your end-users.  Did they just wake up?  Are they driving home?  Did they just get bad news?  Did someone in their family just die?  Did they just get great news?  Did they get a haircut they really like?  Did they just get a nice note from a friend?  Did a cute person just randomly smile at them?  On and on and on and on, our daily consciousness is overwhelmed with emotional interactions and feelings.

Every consumer in the world is flooded with messages that compete for their attention.  How do you differentiate and get above that noise?  How do you convey your value proposition in less than a minute?  In less than 10 seconds?  Don’t judge consumers for their short attention spans – accept it – and figure out how to make their lives better with a product or service, and then message that efficiently and effectively.

That’s the “mystery of life” in consumer-facing startups.  If this bothers you, don’t bother building or investing in a consumer company.  But if you love this challenge, and accept people as they are, jump into consumer-facing businesses.

Why I Love the Bia
This is the freshest, most original hardware design I’ve seen from a startup in a long time.  It’s remarkable what the Bia team has built on a shoestring - it’s better in many ways than any other fitness watch out there - at any price.
There are a few things that really caught my attention.  First, they divided the watch into two pieces - a chargeable clip that goes onto your waist, and a smaller, lighter watch that doesn’t require charging.  The two connect to each other wirelessly, and work together as a functional unit.  Second, by having a larger clip, the Bia team was able to integrate a larger battery and a cellular wireless connection.
To me, this is the essence of insightful design.  Start with the true requirements - longer battery life, waterproof, useful when swimming, low cost - and then work from there with an open mind and no preconceived notions about the shape of the device.  In this case, having an open design mind meant that they split the device in two, which was simply brilliant.  I’ve been using this device for the last few days, and love how the separate clip makes the overall experience better than a clunky watch.  The canted watch face is a nice differentiating touch, but not as functional in practice as I had anticipated.
Finally, by integrating a cellular radio, all of your workouts go to the cloud as soon as you hit “save” on the watch’s touchscreen.  Which is easier than even using the Strava app directly on your iPhone.  I also have to believe that a cloud-based service boosts end-user engagement after purchase.  Why is that important?  Because it leads to higher Net Promoter Scores, stronger word-of-mouth recommendations by users, and lower customer acquisition costs as a result.  With persistent cloud connectivity, it’s a lot easier to push regular software updates as well.
One final point - it passed the “can I figure out how to use it without a manual?” test - which Soleus failed for me, and Garmin is only marginally better than Soleus.  I think this is a piece of hardware that’s particularly well-suited for partnerships, unlike other wearables - due to the thoughtful hardware and branding design that sets them apart in a meaningful way in a crowded market.
I could go on and on.  But the punchline is that it costs less than $300.

Why I Love the Bia

This is the freshest, most original hardware design I’ve seen from a startup in a long time.  It’s remarkable what the Bia team has built on a shoestring - it’s better in many ways than any other fitness watch out there - at any price.

There are a few things that really caught my attention.  First, they divided the watch into two pieces - a chargeable clip that goes onto your waist, and a smaller, lighter watch that doesn’t require charging.  The two connect to each other wirelessly, and work together as a functional unit.  Second, by having a larger clip, the Bia team was able to integrate a larger battery and a cellular wireless connection.

To me, this is the essence of insightful design.  Start with the true requirements - longer battery life, waterproof, useful when swimming, low cost - and then work from there with an open mind and no preconceived notions about the shape of the device.  In this case, having an open design mind meant that they split the device in two, which was simply brilliant.  I’ve been using this device for the last few days, and love how the separate clip makes the overall experience better than a clunky watch.  The canted watch face is a nice differentiating touch, but not as functional in practice as I had anticipated.

Finally, by integrating a cellular radio, all of your workouts go to the cloud as soon as you hit “save” on the watch’s touchscreen.  Which is easier than even using the Strava app directly on your iPhone.  I also have to believe that a cloud-based service boosts end-user engagement after purchase.  Why is that important?  Because it leads to higher Net Promoter Scores, stronger word-of-mouth recommendations by users, and lower customer acquisition costs as a result.  With persistent cloud connectivity, it’s a lot easier to push regular software updates as well.

One final point - it passed the “can I figure out how to use it without a manual?” test - which Soleus failed for me, and Garmin is only marginally better than Soleus.  I think this is a piece of hardware that’s particularly well-suited for partnerships, unlike other wearables - due to the thoughtful hardware and branding design that sets them apart in a meaningful way in a crowded market.

I could go on and on.  But the punchline is that it costs less than $300.

Launching LaunchPad on SiriusXM
I’m thrilled to announce today’s soft launch of LaunchPad, a weekly 2-hour talk radio show on Wharton’s new SiriusXM channel 111.  I’m co-hosting LaunchPad with Karl Ulrich, a well-known entrepreneurship professor at the Wharton School.  We plan to focus on how to launch and build startups.  Our first show is later today at 4pm Pacific time, and runs for two hours.  During the show, we plan to have guests from the startup business community join us.  We’ll also take live on-air questions from callers at 1-844-942-7866 (1-844-WHARTON).As an early-stage technology investor, I was surprised to learn that SiriusXM is thriving and growing in subscribers.  Wharton has partnered with SiriusXM to power a new business radio station with 40 hours/week of original content.  For years, I’ve been actively involved as an advisor to the Wharton Entrepreneurship program, I’ve guest lectured regularly at Wharton, and I’m a huge believer in the school’s mission of promoting entrepreneurship around the world.I’ve never done anything like this before, and I’m excited to try something new and different.  Today, our first guest will be Andre Haddad, the CEO of RelayRides, a Shasta-backed marketplace for peer-to-peer car rentals.  In addition to being an investor, I’m also a user of the service.  Next Wednesday, Adam Jackson, the founder of Doctor On Demand will join us at 4pm Pacific time.  DoctorOnDemand lets you use your smartphone to consult a doctor by videoconference, allowing you to avoid a trip to the ER.  You can see his product featured here on The Colbert Report.What do you think?  What topics should we cover?  Who should we invite onto the show?

Launching LaunchPad on SiriusXM

I’m thrilled to announce today’s soft launch of LaunchPad, a weekly 2-hour talk radio show on Wharton’s new SiriusXM channel 111.  I’m co-hosting LaunchPad with Karl Ulrich, a well-known entrepreneurship professor at the Wharton School.  We plan to focus on how to launch and build startups.  Our first show is later today at 4pm Pacific time, and runs for two hours.  During the show, we plan to have guests from the startup business community join us.  We’ll also take live on-air questions from callers at 1-844-942-7866 (1-844-WHARTON).

As an early-stage technology investor, I was surprised to learn that SiriusXM is thriving and growing in subscribers.  Wharton has partnered with SiriusXM to power a new business radio station with 40 hours/week of original content.  For years, I’ve been actively involved as an advisor to the Wharton Entrepreneurship program, I’ve guest lectured regularly at Wharton, and I’m a huge believer in the school’s mission of promoting entrepreneurship around the world.

I’ve never done anything like this before, and I’m excited to try something new and different.  Today, our first guest will be Andre Haddad, the CEO of RelayRides, a Shasta-backed marketplace for peer-to-peer car rentals.  In addition to being an investor, I’m also a user of the service.  Next Wednesday, Adam Jackson, the founder of Doctor On Demand will join us at 4pm Pacific time.  DoctorOnDemand lets you use your smartphone to consult a doctor by videoconference, allowing you to avoid a trip to the ER.  You can see his product featured here on The Colbert Report.

What do you think?  What topics should we cover?  Who should we invite onto the show?

Inside Nest’s Palo Alto Garage
Shortly after Shasta’s Series A investment in Nest Labs, I took this picture of Matt Rogers and Patrick Corcoran.  Note the roll-up garage door in the background!  When it wasn’t raining, the driveway served as an extra conference room.We invested in Nest over three years ago in 2010, when they were experimenting with hundreds of different sensor technologies.  Together with KPCB, we were the only two venture investors in their Series A round.  There were only ten people on the team, and they were over a year away from shipping any products.  It was a natural fit with our Series A focus at Shasta Ventures.I served on the board at my favorite stage of early company growth, between Series A and Series B.  I could never talk about the company – in fact, Tony’s direct involvement was a closely guarded secret at the time.  During the last three years,  I’ve gotten to know many of the people at Nest.  I’ve learned a lot from several of the best entrepreneurs and start–up execs on the planet.  It’s an awesome, dedicated team full of current and future Silicon Valley leaders and entrepreneurs.All of us at Shasta Ventures are honored to have had the opportunity to invest in Nest and help them build their business.  I think it’s a great mutual fit with Google.  They just acquired the best hardware team on the planet.  All of us at Shasta are excited to see how far Tony and Matt can take Nest with Google’s support and resources.

Inside Nest’s Palo Alto Garage

Shortly after Shasta’s Series A investment in Nest Labs, I took this picture of Matt Rogers and Patrick Corcoran.  Note the roll-up garage door in the background!  When it wasn’t raining, the driveway served as an extra conference room.

We invested in Nest over three years ago in 2010, when they were experimenting with hundreds of different sensor technologies.  Together with KPCB, we were the only two venture investors in their Series A round.  There were only ten people on the team, and they were over a year away from shipping any products.  It was a natural fit with our Series A focus at Shasta Ventures.

I served on the board at my favorite stage of early company growth, between Series A and Series B.  I could never talk about the company – in fact, Tony’s direct involvement was a closely guarded secret at the time.  During the last three years,  I’ve gotten to know many of the people at Nest.  I’ve learned a lot from several of the best entrepreneurs and start–up execs on the planet.  It’s an awesome, dedicated team full of current and future Silicon Valley leaders and entrepreneurs.

All of us at Shasta Ventures are honored to have had the opportunity to invest in Nest and help them build their business.  I think it’s a great mutual fit with Google.  They just acquired the best hardware team on the planet.  All of us at Shasta are excited to see how far Tony and Matt can take Nest with Google’s support and resources.

You can recognize a pioneer by the arrows in his back.
Beverly Rubik

Yesterday I wrote a post about the most interesting hardware startups to me - which I call the Pioneers.  Near the end of the post I suggested that I wasn’t  that interested in the wearable space.  It’s not that I don’t believe in the category.  It’s just that I think the Pioneers have already emerged here, and now the incumbents are trying to catch up.

In my view, two startups qualify as Pioneers in the wearables category:  Fitbit and Pebble.  Both companies labored well ahead of the market in this category, and arguably defined what it is today.  In both cases, potential partners and investors doubted the size of the market and underlying consumer demand.  Both founders proved the doubters wrong.

James Park founded Fitbit years before the word “accelerometer” made it into the consumer vernacular.  On a shoestring, he built early prototypes and brought it to market despite manufacturing challenges.  I think a strong argument could be made that his company catalyzed the “quantified fitness” market.  Other companies with far larger marketing budgets like Nike and Jawbone are chasing them now, but Fitbit truly pioneered the category.

At the same time, Eric Migicovsky hand-built early prototypes of the Pebble connected watch - originally branded InPulse.  Together with a small, bootstrapped team, he worked out of a ranch house in Mountain View and sold watches online.  This experience of hand-building devices put his company in a perfect position to launch one of the most successful Kickstarter campaigns of all time.  This Kickstarter campaign, together with a brilliant approach to social media, gives them a chance to stay ahead of the monsters like Samsung that are trying to buy their way into the category.

The question for both companies is whether they can outrun the arrows fired from behind by the consumer electronics incumbents.  I’m a fan of both James Park and Eric Migicovsky, so I wouldn’t bet against them.  To keep growing, they’ll have to leverage their early head starts, and authentic end-user connections, to stay ahead of the CE giants and their billion-dollar marketing budgets.  Every successful hardware category (including Sonos, GoPro, and Nest) faces this challenge, but wearables are a category where unusually large marketing budgets are being deployed by the big boys, as seen by the focus of this year’s CES.
The Pioneers
While getting ready for 2014 and CES, I’ve been giving some thought to what the most exciting hardware startups have in common.  They’re all pioneers - creating new categories where they didn’t exist before.
Sonos has created a huge new market for plug-in wireless speakers that stream music from the Internet.  GoPro created the personal HD videocamera for sports - a category that never existed before.  Nest reinvented the thermostat by applying machine learning and great design to a tired appliance.
Beyond these early hardware startup leaders, there are other exciting territories as well.  Oculus is inventing the virtual reality headset.  94fifty and Zepp are creating exciting new ways to measure and improve sports performance.
In contrast, I’m less excited about startups entering well-recognized categories like wearables - an area that’s attracted huge investment from incumbent consumer electronics giants with enormous marketing budgets and economies of scale.  That’s essentially farming, rather than pioneering.  I’m looking for wild new categories of hardware that simply weren’t possible in the past - the categories being created by the pioneers.

The Pioneers

While getting ready for 2014 and CES, I’ve been giving some thought to what the most exciting hardware startups have in common.  They’re all pioneers - creating new categories where they didn’t exist before.

Sonos has created a huge new market for plug-in wireless speakers that stream music from the Internet.  GoPro created the personal HD videocamera for sports - a category that never existed before.  Nest reinvented the thermostat by applying machine learning and great design to a tired appliance.

Beyond these early hardware startup leaders, there are other exciting territories as well.  Oculus is inventing the virtual reality headset.  94fifty and Zepp are creating exciting new ways to measure and improve sports performance.

In contrast, I’m less excited about startups entering well-recognized categories like wearables - an area that’s attracted huge investment from incumbent consumer electronics giants with enormous marketing budgets and economies of scale.  That’s essentially farming, rather than pioneering.  I’m looking for wild new categories of hardware that simply weren’t possible in the past - the categories being created by the pioneers.

A Christmas of Enchanted Objects, Brought to You by the Internet of Things
I’ve been spending New Year’s Eve thinking about 2013 and looking forward to 2014.  I just realized that many of the gifts under my family’s Christmas tree this year were Internet-powered devices:  Sonos speakers, a 94fifty basketball, an Anki robotic racecar set, and two Toymail mailmen.
Four different enchanted objects, all powered by the Internet of Things.  Every one of these gifts required a smartphone to act as a remote control to the device.  All of them were hits with my kids.
Using them raised a bunch of questions.  Most of them required immediate software updates - which took a long time and definitely degraded the out-of-the-box experience.  And what happens when the company that made each of them goes out of business or is acquired?  Do they stop working?  Then there’s the issue of device compatibility.  Anki required BLE-enabled iOS devices - and one of my kids had an out-of-date iPhone so there was some disappointment when she couldn’t join in on the races (we didn’t have enough current iOS devices).

A Christmas of Enchanted Objects, Brought to You by the Internet of Things

I’ve been spending New Year’s Eve thinking about 2013 and looking forward to 2014.  I just realized that many of the gifts under my family’s Christmas tree this year were Internet-powered devices:  Sonos speakers, a 94fifty basketball, an Anki robotic racecar set, and two Toymail mailmen.

Four different enchanted objects, all powered by the Internet of Things.  Every one of these gifts required a smartphone to act as a remote control to the device.  All of them were hits with my kids.

Using them raised a bunch of questions.  Most of them required immediate software updates - which took a long time and definitely degraded the out-of-the-box experience.  And what happens when the company that made each of them goes out of business or is acquired?  Do they stop working?  Then there’s the issue of device compatibility.  Anki required BLE-enabled iOS devices - and one of my kids had an out-of-date iPhone so there was some disappointment when she couldn’t join in on the races (we didn’t have enough current iOS devices).

Driving & Collecting Big Data at Road Atlanta

Last week I drove across the United States to take my car to Road Atlanta – from San Francisco to Tuscon, then to San Antonio, next through Texas to New Orleans, and finally to Atlanta.  Not many people have heard of Road Atlanta, but in my view this racetrack is one of the wonders of the automotive world.  Like Laguna Seca in California, and the Nürburgring in Germany, it incorporates huge changes in elevation.  Unlike Laguna Seca (but like the Nürburgring), it has a huge back straightaway that allows a driver to build huge velocities.  It’s a lot like that old, 1920’s house in your neighborhood – they don’t build them like this anymore.  At Road Atlanta, the walls are close to the track, there isn’t much runoff room if you exit the racetrack in most places, and there’s a LOT more danger.  Yet, like that house from the 1920’s, it has a special feeling when you enter past a white picket fence (literally) that feeds your soul.

It’s that awesome.

Of course, I decided to wire up my car with modern technology.  I mounted my iPhone 5S to the windshield and ran a $30 iPhone program called Harry’s Lap Timer.  So-so UI, but unbelievably great functionality.  About 80% of the time, the UI was intuitive and functional.  About 10% of the time, I wondered which of the two options given to me would erase all data from my last set of laps on the track.  And about 10% of the time, I was simply confused.  But overall, a great experience.  In addition to Harry’s Lap Timer, I mounted three GoPro Hero2 cameras (front, back, and interior), a VBOX Sport, and a GoPoint Technology OBD II dongle on my car.  The VBOX Sport is a specialized device that records GPS data at a rate 20x higher than that of an iPhone 5S, leading to far more accurate positioning information, so that I could review my exact line on the racetrack.  The OBD II dongle fed engine speed, throttle, and gear information into Harry’s Lap Timer on my iPhone.  The video above was produced from Harry’s Lap Timer, which gathered information from these other devices and overlaid performance data on top of the iPhone video recording.

Using that data, I’ve been able to go back and look at my performance on each lap.  What was my line?  When did I hit the brakes?  Did I hit the brakes hard enough?  Could I have used more throttle in each turn without breaking the car loose and sending it into the weeds?  Using the power of a modern iPhone and Bluetooth peripherals, I was able to rapidly improve my real-world performance – and in a way that didn’t involve as much danger as trial-and-error on the racetrack itself.

Now I’m hooked.  I’m planning to drive on as many different racetracks as I can as part of my bucket list.

I’d love to hear ideas on which tracks I need to visit.

No Dimmer?  Really?
Earlier today I finally got around to installing a couple of Belkin’s WiFi-connected wall-mounted WeMo switches.  I’ve been excited about the prospect of IFTTT integration and triggering the lights remotely - but ended up deeply disappointed by the lack of dimming functionality in the switch.
What was Belkin thinking?  How could a product manager let this get out the door?  There’s nothing worse than taking the time to buy and install an expensive product that delivers on several dimensions - solid industrial design, good packaging, easy-to-use software, and personalization capabilities as shown above - but then fails to live up to the product promise of customization that a cheap, dumb dimmer switch has delivered for decades.
If I wasn’t about to test out the IFTTT functionality, I’d probably be ripping the WeMo switches out of the wall right now.

No Dimmer?  Really?

Earlier today I finally got around to installing a couple of Belkin’s WiFi-connected wall-mounted WeMo switches.  I’ve been excited about the prospect of IFTTT integration and triggering the lights remotely - but ended up deeply disappointed by the lack of dimming functionality in the switch.

What was Belkin thinking?  How could a product manager let this get out the door?  There’s nothing worse than taking the time to buy and install an expensive product that delivers on several dimensions - solid industrial design, good packaging, easy-to-use software, and personalization capabilities as shown above - but then fails to live up to the product promise of customization that a cheap, dumb dimmer switch has delivered for decades.

If I wasn’t about to test out the IFTTT functionality, I’d probably be ripping the WeMo switches out of the wall right now.

The Internet of Things is On its Way to the Flyover States

I’m utterly fascinated by the “flyover states”. Earlier today I flew back from Boston on a clear day, and spent hours looking down at fields, mountains, and deserts. What did I think about? I thought about the people going about their daily lives far from the coasts. What goes through their minds, what are their hopes, their fears, their aspirations? And what’s the latest they’ve heard about technology?

At some point, the concept of “the Internet” made it into the flyover states. So did Google. Then the iPod. Then Facebook. So what’s next? The Internet of Things. Look at the exponential curve above. Over the last few years, searches for “the Internet of Things” have taken off. This wave will be as big as the consumer Internet wave - and possibly bigger, as we enter a world of enchanted, magical objects connected to each other over wireless and the Internet.

Any sufficiently advanced technology is indistinguishable from magic.

Arthur C. Clarke

I’ve always liked this quote, and with the advent of the Internet of Things, it’s more relevant than ever.  Later this morning I’ll be moderating a panel on the future of Wearable Technology at GigaOm’s Mobilize Conference in San Francisco, where we’ll be talking about where we’re headed next with Internet-connected watches, glasses, and even socks.

What happens when everything around us connects to the Internet?  We enter a world of enchanted objects, brought to life by creative new spells, also known as software.  “Internet of Things” entrepreneurs are creating products now that are increasingly indistinguishable from magic objects.

When WiFi is Cheaper Than Water, This is What You Get…

Parody bait for Saturday Night Live.

The Saturday Night Live parodies based on Kickstarter and Indiegogo are coming soon, if they haven’t started already.  There’s a clear formula for crowdfunding videos, and as you can see in this video, they’re coming hand-in-hand to every prosaic product category you can imagine.  Forget water bottles - imagine parodies about Internet-connected pizza boxes and toilet paper.  In fact, the reality is probably not that far off, when you imagine power scavenging technology + WiFi + CPU power that costs next to nothing in terms of price and power.

Soon we’ll be in a world somewhat indistinguishable from magic.  Where the spells are software written to conjure action and meaning from every object around us.

Nest Reinvents Another Mature Category

Earlier today, Nest Labs launched their second major product, the Protect smoke and carbon monoxide detector.  First, Nest tackled the biggest source of wasted energy in the home - HVAC control.  Now, Nest has reinvented the most important safety device in your home - the smoke alarm.  750 million smoke and carbon monoxide detectors are installed in the US alone, and millions of them have dead batteries.  This is a huge, important, and overlooked market.  And a better product will save more lives.

All of us at Shasta are thrilled to be early Series A investors in the company, when it was a 10-person team working out of a squirrel-infested garage on Alma Street in Palo Alto.  They’re a mission-based company focused on saving energy and saving lives by making overlooked but important products sexy.

Skeptical of the smoke alarm category?  Check out the early reviews on Wired, The Verge, and TechCrunch.  I think they’re going to sell a lot of these.

What Happens to the Hardware When the Software Goes Away?Last week I got this email from Sonos that really made me panic.  To paraphrase, it said “…if you own Sonos equipment and upgrade to iOS 7, you might lose the ability to play back your music.”Since then I’ve reflected on this a bit.  Just two weeks ago, I bought and installed several Sonos units in my home that I expect to last for years.
What does this mean for Internet-connected hardware?As long as the software that powers the hardware is actively updated and maintained, the hardware will stay alive and improve with time.  But what happens when that software is no longer actively updated?  What happens when the smartphone vendors stop supporting old operating systems and you can’t control your hardware with software that won’t run on the latest smartphone operating systems – which are getting massive updates on Android and iOS every single year?  What happens if the company that sold you the hardware doesn’t update the software?  The answer is simple:  the associated hardware dies.Look at a Sonos box, for example.  It has three buttons:  mute, volume up, and volume down.  To work, it requires an operational smartphone.  What happens if the smartphone software goes away?  As one of the most successful hardware startups of the last decade, Sonos is going to be around for a very long time.  But what about the less successful hardware startups?It’s a strange conundrum for consumers.  People buy hardware and expect it to last forever.  But modern Internet-powered hardware has a finite software horizon and each device effectively delivers a service.  Over the next few years, expect consumers to increasingly shift their expectations of hardware - and think of it as a service, not property in perpetuity.

What Happens to the Hardware When the Software Goes Away?

Last week I got this email from Sonos that really made me panic.  To paraphrase, it said “…if you own Sonos equipment and upgrade to iOS 7, you might lose the ability to play back your music.”

Since then I’ve reflected on this a bit.  Just two weeks ago, I bought and installed several Sonos units in my home that I expect to last for years.

What does this mean for Internet-connected hardware?

As long as the software that powers the hardware is actively updated and maintained, the hardware will stay alive and improve with time.  But what happens when that software is no longer actively updated?  What happens when the smartphone vendors stop supporting old operating systems and you can’t control your hardware with software that won’t run on the latest smartphone operating systems – which are getting massive updates on Android and iOS every single year?  What happens if the company that sold you the hardware doesn’t update the software?  The answer is simple:  the associated hardware dies.

Look at a Sonos box, for example.  It has three buttons:  mute, volume up, and volume down.  To work, it requires an operational smartphone.  What happens if the smartphone software goes away?  As one of the most successful hardware startups of the last decade, Sonos is going to be around for a very long time.  But what about the less successful hardware startups?

It’s a strange conundrum for consumers.  People buy hardware and expect it to last forever.  But modern Internet-powered hardware has a finite software horizon and each device effectively delivers a service.  Over the next few years, expect consumers to increasingly shift their expectations of hardware - and think of it as a service, not property in perpetuity.