IoT/Connected Device Wave is Coming. Are you Ready to Innovate?
The success rate for start-ups inside large telecom companies has not been stellar, even when the strategies and ideas are brilliant.
Large participants in the real time communications industry have been put under extraordinary pressure over the last few decades, with new challengers encroaching (Facebook Messenger and WhatsApp on the consumer front, and Microsoft Teams, Google Drive, Dropbox and Slack on the business front) in parallel with cloud disruption, virtualization, intense security threats and the requirement to keep pace with generational shift with options like WebRTC, LPWA offerings like LoRa, LTE Cat M1, and NB_IoT, and now with 5G competing for attention and funding.
IoT innovation and creativity has been vibrant in companies in the US like AT&T, Verizon, and CenturyLink, as well as BT, Orange, Telefonica and others in Europe, plus Softbank, Telstra, Tata Communications and many more in Asia-Pacific. But the innovation is certainly not limited to larger players in the market.
Products have been explored, services designed, platforms rendered and more, but the roll-outs have been relatively slow, even though the growth rate has begun to steadily ramp over the last year.
What we’ve observed is that the greatest ideas are not manifesting into solid businesses that are large enough – in the beginning – to get the attention, time, intensity and funding to reach optimization. This is why more companies in the industry are turning to new approaches, including venture studios.
IoT Innovation is mission critical for remaining competitive in the Telecom + Network verticals, and here’s why:
IoT is nothing without network, and telecom providers are perfectly positioned to go big. But IoT is not “a thing” but rather “many things” encompassing sensors, security, privacy, communications, data ownership/governance, platform considerations/configuration, AI, Machine Learning, and the analytics stack (including operational, investigative, and predictive analytics). Making connected systems work beyond those elements requires internal process adaptation, organizational structure adaptation and current and future regulatory considerations.
Given the industry’s expertise in managing distributed networks as well as access networks, it is the IoT edge that is challenging everybody in the race to the top of what is becoming a massive business that will dwarf voice and basic data services and revenues in a few years.
The pace of innovation is both and opportunity and a threat. There will be winners and losers. The average tenure of companies in the S&P 500 has gone from 33 years in 1965 to a projected 14 years by 2026, and that delta is caused by failure to innovate. For the shareholders and stakeholders, and leaders of telecom and network companies, failure to launch IoT successfully is simply not an option.
Telecom is the only industry where volumes are growing 40–60% a year, but revenues are shrinking, and margins are under siege. “Unless you have a pretty good notion of where you’re going to be differentiated, there’s a risk you will not be able to monetize anymore,” said Maikel Wilms, Director of the Boston Consulting Group.
“Telstra is evolving from a telco to a techco — to be a world-class technology company empowering people to connect,” said Joe Pollard, CMO of Telstra. “We think that startups will be key in our transformation,” said Jean Michel Serre, CEO of Orange Labs. How can network and telecom companies launch thriving, multiple IoT businesses in the near term? Not being in the game is no longer an option. The challenge is, as always, in the execution.
Most corporate startups fail due to lack of innovation, agility, process, and entrepreneurial discipline with less than 4% of corporate startups ever reaching $1M in annual revenue.
Why do startups fail? According to CB Insights and Forbes:
And why do startups succeed?
Source: Kaufman Foundation “Returns to Angel Investors in Groups” Wiltbank + Boeker
Greater Experience + Ongoing Involvement = Greater Success
Like a movie studio turning a movie idea into a blockbuster by writing the script, hiring actors, raising capital, completing movie production + distribution, etc., a venture studio does the same to build new companies from idea to exit.
A Venture studio (also called startup studios or factories) is a type of entrepreneurial innovation center that combines financial capital, human capital, technical expertise, and analytical rigor to de-risk the process of building new ventures. There are now over 150 venture studios worldwide, such as Startup Foundry, Redstar, and BetaWorks. This model is growing rapidly and producing big exits for its investors.
Unlike other venture studios, Rocket Wagon Venture Studios (RWVS) focuses only on IoT innovation, and we’re on a mission to build IoT disruptive companies. RWVS is not a traditional VC firm. We are not an accelerator or incubator. We are hands-on co-founders who start at the idea stage to build, launch and grow great IoT companies to exit. RWVS plans to launch about 20 – 26 IoT companies in the Networking + Telecom verticals over the next 4-5 years.
As active co-founders we fully support the entrepreneurs, providing ongoing operational and strategic guidance to scale and exit. We work directly with the Founder to hire the core team and develop growth acceleration plan. Using our internal talent and capital, we conduct extensive research and set up the new venture. As experts in innovation, we leverage our internal ideation process as well at partner with academia, industry, and thought leadership to identify disruptive IoT opportunities.
Rocket Wagon Ventures Studios has been built from the ground up to provide not only an architectural framework for building IoT solutions, but commercial frameworks that will ensure those offerings will not be obsolete in a year or eighteen months. They should reflect a deliberate view of enterprise class IoT architecture to ensure those offerings will thrive within what has been a very complex ecosystem, and where the standards are still being determined. This requires a holistic understanding of the elements within an IoT architecture and their interdependencies.
We commercialize. We build working prototypes, evaluate, and refine with test customer/partners. We put the product in “live orbit” working directly with the Founder and leverage our network to grow the business with external clients.
We recruit and work with high impact entrepreneurs to generate, vet, curate, evaluate, and refine ideas for new disruptive IoT venture companies, and build initial demo to validate the product concept
In the Network and Telco space we’re focused on:
- Specific category considerations (LoRa, NB_IoT, 5G, etc)
- Understanding the specific corporate culture and goals
- Talent development
- Gap analysis and augmentation against corporate portfolio
- Executive interaction
- Co-existence in innovation centers
- Specific process for innovation monitoring and understanding
Our Network and Telco Studio filters ideas more aggressively in line with the funding partner’s needs, curating talent in line with funding partner’s culture and environment.
The studio model is becoming an attractive model for early stage and corporate innovation investors.
While I’ll post more details about how Rocket Wagon Venture Studios operates in the future, one of the most compelling features of participation is skin in the game than enables Network and Telco companies to stay in the game.
Why engage with us?
Innovation is hard. Most network + telecom companies fail due to a lack of ideation, agility, process and entrepreneurial discipline, both organizationally and culturally. Many need help to supplement their struggling or non-existent innovation initiatives.
This is where RWVS comes in.
Consider us your corporate IoT Innovation Center, providing line of sight access to industry innovation, supplementary services to add to your portfolio, and up to 40% equity in the ventures we create.
This enables companies to participate at scale in greatly de-risked pre-seed innovation.
- Line-of-Sight Access to Innovation: Products, Processes, Services, Insight
- Insight without exposure: Off the books, off the table
- Talent Development: Hands-on Mentoring + Immersion to foster innovation
- Portfolio Development: Closing gaps + establishing complementary offerings
- Monetary Return: Combined ROI + lower cost access to profitable IoT innovation
The sky is the limit in this new way of innovating, investing in and growing valuable new services – with far less risk, and a built-in ecosystem of experience and talent.
Let’s go for a test flight!