Who’s going to show you the money?

Who’s Going to Pay For IOT?

“Advertising paid for the Internet, who will pay for IOT?”, said this ex-googler turned IOT entrepreneur on the terrace of the NOAH conference venue in Berlin last week.

1. Users

That’s the idea by default. People want it? They pay for it. It works for most things under $100, less so for things under $200, and becomes much harder for anything beyond. Also, the product often has to deliver direct benefits to the individual user without the need for network effects or infrastructure.

2. Corporates

Embed the tech into cars, chairs, planes, offices, residential buildings… This works well for products whose value is shared by more than one user, do not have direct personal ownership, or when part of a bigger system (like a car).

3. Insurance

Many medical and wellness devices could be fully or partly reimbursed by insurance. Some because of the direct benefits they provide to users, which would lead to less medical issues and save money to insurances and their subscribers. To some extent, the mere “self-selection bias” of good actors — who are often more willing to be tracked — could even justify a “placebo device”.

4. Government

It worked for Elon Musk with cars, rockets and solar panels. It could work for IOT. In particular, cities aiming at lowering expenses, downtime of equipment, usage of utilities, etc. could be direct customers, or on behalf of citizens.

Evolution

Those categories are not incompatible. We saw some HAX startups get to market with crowdfunding (B2C) as a way to get attention for the bigger B2B play. The sales cycle and constraints of each potential customer vary greatly. Some — like insurance companies — also dislike the idea of buying from a “startup”. Teachers might not be able to pre-pay via crowdfunding, etc.

Partner @ SOSV — $700m VC fund for Deep Tech (biology, robotics, etc.) | Digital Naturalist | Keynote Speaker | Angel Investor

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