Startup Launchpad April 2017 Tradeshow & Conference: Day 3

Day three of the show was bursting with activity, with buyers and startups discovering new and innovative hardware and making connections.

The day kicked off with product demonstrations, with Nanogrid exhibiting its smart LED light, Guangzhou MRice Digital Technology showing its magnetic Bluetooth speaker, Glance Tech demonstrating its smart dock, Conc Tech displaying its smallest 4k camera, Serafim shining its projection keyboard and Shenzhen Czurtek using its smart scanner.

At noon, China Daily presented its 2017 China Daily Innovation Awards. Five Startup Launchpad exhibitors were selected for honors. China Daily Publisher and Editor in Chief Zhou Li quoted Xi Jinping, saying that key to supply-side structural reform is innovation, praising the winners as leaders for the future.

Most Promising Startups
Xiamen Roopto
U Factory
Glance Tech

Most Promising Electronic Gadgets
U Factory
Beijing Tiertime Technology Co.

Following lunch, International Partnerships Manager of b8ta Retail Kyle Schutter discussed the state of retail environment.

“Retail is broken,” he said “I think we all can agree retail is not going the way it should. You can see how many brick and mortar stores are going down the drain and as a technology startup it can be difficult to get your hardware into stores.”

He said that many have turned to Amazon, which often offers better margins, but that many consumers find the experience lacking.

Schutter said his organization was trying to change that, setting up a store in Seattle. He said while it has startup products, the emphasis is on the events they hold and the user experience because the experience is what is key for them.

“People don’t drink Coke for the sugary water, they drink it because it makes them happy,” he said.
He said the retail fog of war can make it difficult for companies to see what’s happening and what’s going on. What companies don’t know they don’t know is often what trips them up the most in their journey to success, Schutter said.

Their Seattle store aims to help organizations to gain better insight. The store rents display space to startups to show their products and provides on online platform to track and see how many people have come to the display and how many sales the startup has made.

With cameras in the ceilings to monitor displays and obtained customer emails, the space helps startup gain valuable information about their displays, products and their customer, allowing them to make real-time changes that can improve sales, he said.

He gave one example of a startup who displayed at their store called NeoPen, a pen that syncs to the cloud. Initially, he said, they had a clean and elegant display. While sales were fine, they wanted to improve them. Through observation of their display, they found that a less elegant display with the book open and scribbles on the page stimulated more sales.

Customer study and feedback can allow startups to make vital changes that can make the difference between success and failure, Schutter said. He counseled startups to launch products slowly to clusters of backers in more remote markets so that if there are any problems they can be addressed quickly without requiring massive recalls that could garner negative press coverage.

He said in his experience of what customers cared most about, it was Price, Assortment, Convenience and Experience (P.A.C.E). E-commerce is big but not as big as many think, representing only nine percent of sales in the U.S. he said.

Amazon isn’t enough on its own, Schutter said, citing surveys where consumers were asked where they had seen a product in the last three months, seeing it in a retail store was ranked most important thing that resulted in sales conversions.

To close, he gave startups some other things to keep in mind when thinking about their products and launches:

-Pricing is the most important decision.

-Budget 15 percent of your gross profit for reverse logistic customer support.

-Smart home return rates are 20 to 30 percent –a lot of companies don’t realize how high that can actually be.

-70 percent of your revenue will come in Q4 and if you ship in Q1 because you missed Q4, you’ll miss a huge opportunity.

-Successful hardware brands often lose money on the hardware and make up for it with subscriptions and software services.

-Abandon rate is 50 percent for products.

Next, Frank Ma of ZigBee talked about its low-power interoperable mesh network that allows standardization across all IOT layers.

ZigBee is developing open global standards for wireless device to device communication, helping customers certify products. He said they had so far helped certify over 400 companies and that the company provided documentation and standards guides to all ZigBee members.

In addition to helping with certification and standardization, he said ZigBee is working on a new Harness initiative that brings common test platforms to all labs, with five global certification houses on its roster for authorized testing services.

ZigBee is also working on Dotdot, an evolution of application layer that offers a lower-power network covering all kinds of sensors that wouldn’t be limited to ZigBee devices alone. He announced they will be launching a certification and logo program for dotdot as well.

Next, Chee-Kiang Lim of Gao Feng talked about hardware-enabled services. China has four of the top 10 tech companies worldwide, Lim said, really allowing it to punch beyond its weight. The benefit of China, he said, is you have a more gradual adoption of technology. In China’s rural area, they didn’t even have computers. Because of this, the appetite for adopting technology is a lot bigger and more open than many other places in the world, Lim said.

For those in hardware, it’s very easy say add connectivity to a product and say it’s smart, Lim said. However, connectivity and hardware are not enough to have a product be a sustainable smart device. You’re enabling a whole slew of services that’s not possible with just hardware. It’s all about the utility derived from the hardware that matters, he said.

Hardware products enabled by software let you update the product and refresh the product without changing the hardware. The community is helping you co-create and produce your product, he said. Software’s about enabling hardware and further customizing the product for a better user experience, he said. The million dollar question is the what are the digital ecosystems you can build?

If you think about smart living each part of a person’s schedule has pain points to be solved. If you think about a person’s daily pain point and find a way to address this pain point with services, there’s a lot of money to be made. If you do it across a person’s whole routine, there’s even more money you can make, Lim said.

He said that while there will be setbacks as you roll a product out on the market, through a continued relationship with customers and creative thinking, you can come up with solutions.

Following Ma was Hubert Mak of the Smart City Consortium. He discussed smart cities, citing Portland and Kashiwa as two smart city cases.

The contrasting sizes show that any city is capable of embracing smart design features into its city that allow greater energy efficiency and services to its citizens.

“You’re mistaken if you think a smart city’s gotta be big, it’s gotta be huge,” he said.

Portland was able to use public-private partnership smart city features, while Kashiwa connected public, private and academic spheres in order to achieve its goals and achieve LEED neighborhood development platinum certification.

He discussed the potential for Hong Kong, saying there was a lot to be done. Mak said his company first major project in Hong Kong was a Causeway Bay hotel in 2005 that was inefficient and not sustainable. They reengineered the building.

In their efforts to improve efficiency and collaboration between different teams who work on these kinds of major construction projects, Mak said his organization developed their own hardware and software to speed up the building a better building.

Following that project, his organization took on the Holiday Inn Express in Hong Kong Soho with the desire to build the tallest smart and efficient building in Asia. They ended up with the world’s first high-rise building to achieve four platinum awards, he said. By using smart design principles and having clear communication and collaboration between the different development teams, you can save significant energy, he said.

When designing and creating a building, they look at all features that can enhance efficiency and reduce waste from heat-reclaiming panels to water-saving irrigation tanks and more he said.

“We’re not just saying in the outcome you have lower electricity bill, we look how was can reduce rebar and concrete,” Mak said.

For his company’s third major project, they took on a mega-factory, building models and breaking them down smaller and digitizing them using 5D technology allowing for all layers of construction to be modeled and accounted for, helping to cut down on backtracking and construction waste.

The next project his company will be taking on is the Yau Lee Residential Development.

When you talk about a bigger development, you need that technology in order to build robust design for the future, he said. From the engineer’s perspective, you want to do it right the first time. On the construction site, it’s very difficult or impossible to achieve. That is why his organization looked at FSDI special data information, so they can do it right the first time and don’t need to retrofit, he said.

If you design a building that doesn’t conserve energy, it doesn’t matter what you do in daily life to conserve, it won’t be as substantial, Mak said. Construction is in a vital position to help the industry and communities and world save money, he said. He said his organization wants to help lower the barrier for entry and help, because in the construction industry, people often don’t know what they need to do to get energy-saving design achievements.

For their upcoming project he said they planned to use city engine to look at how construction will be impacted by surrounding buildings and use 3D imaging to walk non-engineering stakeholders through renderings of the building to ensure it meets their needs.

To close, he said smart cities don’t have to be top down or government only, but can be led by business and startups, which can help ensure we have a sustainable world for future generations.

“We’ve seen a lot of initiative from small startup companies,” he said.

The final speaker of the day was Caspar ter Horst of ProductIP discussing privacy and the internet of things.

ter Horst said that when we talk about privacy, we often talk about it in relation to payments, user ids or passport numbers, but the security isn’t enough, he said.

Often, product producers will through in technology that makes their offerings predictive without fully consider the implications, unintended consequences or their responsibilities for the data that is produced from it.

“It doesn’t take rocket science to add an RFID Chip to add clothes or furniture at huge quantities in low cost,” he said.

With the size and scope of the IoT, Caspar said that it’s big numbers, it’s big business and it’s unavoidable. He said companies need to ask themselves, what changes in their responsibilities. what should they do and not do and how they can protect their business.

He pointed to unsecured IP cameras as an example, with simple hackable passwords set like abc123, saying that users won’t change this, saying it’s up to brands to be the ones to recognize this and provide better security.

He said the main risks posed by inadequate IoT security include

– Theft of data from the systems or theft of material items as a result of information gained illicitly from the compromised systems.

– Danger of health and safety from compromised systems not operating in the intended manner.

– Non-compliance with laws or regulations as a result of loss of data from a compromised system.

ter Horst said that manufacturers have little incentive to spend time and money making products more secure to prevent hackers. They think in terms of production and profit rather than thinking as a software producer and then when something goes wrong with it they disappear, he said.

“People blame producers, but it’s brand managers who should take more responsibility for it,” he said.

He said the in regulations in the EU, when manufacturers are not mentioned in the law, then that means it is the brand that is responsible and they need to ask questions in the production process to make sure the products they are producing will be able to satisfy regulation.

“The brand owner and importers are responsible for compliance, the OEM is not responsible,” he said.

He said that brands need to cover 30 to 40 compliance regulations with real evidence. He said it was a major challenge brands really needed to think through, saying that to introduce a sensor to a product will take an hour, but startups will change their whole supply chain including data management in the process.

“If you already struggle with regulations that have been around for 30 years, how can you handle IoT regulation? ” he asked.

He said product producers should review their role and ask themselves if they are sure they want to be the brand owner and importer and ask themselves if they could you partner instead.

To close out the presentation, ter Horst gave startups a list of things they need to in order to meet the challenges of IoT and protect themselves and their customers including:

-Expertise on your development team, including white hat hackers.

-Proper technical files that ensure you can prove you’ve used state of the art solutions and applied all the correct steps now and in 10 years.

-Sufficient budget to monitor compliance of mass production.

-Good product traceability.

-CE declarations of conformity should be correct and available.

-Levies for WEEE and batteries paid for by startups or their country distributor.

-Membership in alliances to follow what is happening in IoT.

It was a highly informative day, full of celebration of the current achievements of startups and consideration of some of the challenges and potentials for the future.

For day four, we’ll be having more product demos, Buyer’s Corner and experts discussing robotics and 3D printing. Be sure to join us for the final day of the Consumer Electronics show!

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