Alex Hawkinson arrived at his ski shack in 2011 to discover it had been destroyed by water. Without realizing it, the pipes had burst 60 days earlier, forcing water throughout his vacation home and causing extensive damage. In the days that followed, Hawkinson began thinking about how interesting it is that, in an era where we can do everything else with technology, we still lack a way to be warned when an emergency happens at home.
Four years later, SmartThings is a growing force in the Internet of Things (IoT) market, but the Internet-connected home is far from saturating the market. While SmartThings may be a leading platform for consumer IoT, founder Jeff Hagins believes the company is just getting started.
The Connected Home
On a guys-only ski trip, Hagins and Hawkinson began brainstorming ideas for a sensor package for second homeowners. This package would include temperature and motion sensors, as well as a battery backup, LTE connection, and possible cameras. This package would allow the homeowner to monitor his second home from a distance.
“We spent a couple of months prototyping something,” Hagins recalls. “Eventually we incorporated the company in April of 2012. As soon as we incorporated the company, we started growing the employee base.”
Kickstarting SmartThings
As a team, Hawkinson and Hagins had already worked with telecom providers, so their initial thought was to partner with one of those providers. But the team noticed that Kickstarter was beginning to gain traction in the market, leading them to consider a crowdfunding campaign instead.
The company faced a challenge because SmartThings appealed to three separate groups: the consumer, developers who were building apps for a person’s home, and device makers who could utilize SmartThings’ software in their hardware. Through their Kickstarter campaign, launched in August 2012, SmartThings learned that telling their entire story on Kickstarter was difficult.
“If we had done our Kickstarter campaign and made it much more focused, like a door lock, we could have done a lot better, we could have raised more money,” Hagins says. “But we told this multi-stakeholder story about what we wanted to build, about our platform and our vision for what we wanted to build. And we did a great job of that, but at the time that we Kickstarted we only raised $1.2 million.”
The Benefits of Small Teams
In ten months and seven days, SmartThings’ small team designed and manufactured five consumer electronics devices, built its Cloud and iOS app, and began shipping to its Kickstarter backers. Today, as Hagins works alongside his much larger team of 100 employees, he wonders how such a small team accomplished so much in those early days.
“I think it’s a great testament to the fact that there are times, frankly, when a smaller group of people can actually accomplish more than a bigger group of people,” Hagins said. “That smaller group of people, among other things, had a way easier time making decisions about what we were going to do. We made decisions very, very quickly because we couldn’t take the time to really do a lot of analysis.”
What Worked?
At the time Samsung acquired SmartThings in August 2014, the company had a team of 55 employees and had raised approximately $20 million. Hagins believes there are several things that attributed to the company being able to move from an idea to Samsung acquisition in just two and a half years.
- SmartThings had a Big Hairy Audacious Goal (BHAG) that included becoming the open platform for programming the physical world, as well as becoming the leading platform for the consumer Internet of Things.
- SmartThings was never shy about raising money.
- SmartThings had phenomenal public relations. This is especially important if you’re telling a platform story.
- SmartThings had a product that encourages storytelling.
- SmartThings had a strong core team with more than 150 man-years of working together before they started the company.
- SmartThings was a fun product to build, as well as being a fun product to use
In the past few years, SmartThings was able to do big things, and serves as a solid example of what to do for entrepreneurs looking to break into new markets. But, their story is far from over. It will be interesting to watch how the smart home market grows in the next few years.