Each month, I try to read a few magazines on my iPad, although most times, they end up piling up until I get on a long flight with time to kill. One magazine that I like to read is Inc., which focuses on a variety of areas of entrepreneurship and business. I especially like to read their annual issue that talks about the fastest growing 500 privately-held businesses.
Many entrepreneurs might look at this issue and realize that their businesses are actually growing faster, but may choose to not submit their company for a variety of reasons....so, the list is not perfect. However, it gives you a fairly accurate account of some growth areas where people are seeing the most success.
One thing I noticed...not a lot of IoT focused companies on there.
Sure, there are some....ranging from home automation to "big data" etc. However, for an area that is supposed to be the hottest area of technology (at least according to some), one might think that there would be more on this list. It might be that some of the businesses in the IoT sector are just too new (there needs to be a bit of track record to make this list), or maybe my fellow IoT entrepreneurs are just a little shy.
Instead, the list covers other areas where the growth might not be as obvious, such as companies:
Too little action for amount of talk
I have heard this one a few times. Right now, the adoption rate is not nearly as exciting for IoT as it is in other areas of the technology world, such as social media and search. Investors only have so much capital to go around, so they often don't look that far out.
Not enough opportunity to disrupt
Many of the entrepreneurs in some of the more established areas made their money by disrupting or changing a particular industry. I mean, road salt has been around for decades, but one would think that either a technological change to the product or a change in distribution models might be an easy way to shake up an established market. IoT is still really in its infancy, so I don't doubt that many entrepreneurs think that it may be too much effort to disrupt the market in a meaningful way, at least not when compared to other areas.
The race for the bottom is never a way to make money
One only has to look at the AVL market to see a disturbing trend.....prices dove way faster than they needed to. I have heard stats about the AVL industry....how fast it is growing, how little market is penetrated and how easy it is to sell. However, I see too much of a "race to the bottom" on pricing every day in this space. Many entrepreneurs look for areas that allow them to have decent margins as well as the ability to differentiate themselves over the long-term, as a way to maintain decent returns. From what I have seen, this is already starting with other areas of the IoT space, like hardware and sensors....not a good trend.
The money is often at the trailing edge
I remember buying a laptop for college, some 20 years ago. It was slick, it was state of the art, it cost $2000 and it was about as smart as an Apple Watch is now. Technology gets better and prices tend to fall over time....so, it makes sense to sell everything at the beginning of the cycle, right? Well, for some, it can, but for many, it might make sense to wait until there is an established market and find ways to disrupt it.....I suspect that many entrepreneurs are thinking this about IoT.
Please don't get me wrong, there are some truly talented entrepreneurs whom have made huge investments (and money so far) in the world of IoT. However, I think that we need many more to see the growth that is predicted by most. I look forward to seeing more such stories in future additions of the Inc. magazine's fastest growing companies, as it will make for great reading on a future flight!