Scaling IoT comes with many challenges. Stephen Prince, CEO and President of Vutility, joins Ryan Chacon on the IoT For All Podcast to discuss scaling an IoT business. They talk about what is unique about scaling an IoT business, the challenges of scaling hardware, the importance of partners in successful IoT, IoT pilots and moving beyond the pilot stage, horizontal versus vertical IoT solutions, and advice for succeeding in IoT.
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About Stephen Prince
Stephen Prince has served as CEO and President at leading energy technology and services organizations, including Centrica Business Solutions NA, Younicos, and Optisense Network where he consistently increased commercial adoption through global expansion and the growth of partnership structures. He has additionally held executive leadership roles globally at organizations such as Oracle, Largo, and Edison International.
Interested in connecting with Stephen? Reach out on LinkedIn!
About Vutility
Vutility is the leading provider of real-time IoT and cloud-enabled energy management solutions. By providing greater visibility into energy use, Vutility enables organizations to make better informed decisions to optimize their performance and reduce energy costs, achieve sustainability goals, and generate revenues with real-time insights. Vutility’s scalable energy monitoring technologies are used in a wide range of industries by organizations of all sizes with solutions deployed commercially in over 20 countries and protected by over 20 international patents. Vutility is backed by leading venture investors including Chevron, Constellation Energy, Cycle Capital, and Kickstart Fund.
Key Questions and Topics from this Episode:
(00:14) Introduction to Stephen Prince and Vutility
(02:38) Scaling an IoT business
(04:55) What is unique about scaling an IoT business?
(06:37) Challenges of scaling hardware
(11:02) Importance of partners in successful IoT
(13:29) Moving beyond the pilot stage
(16:11) Horizontal vs vertical IoT solutions
(20:10) How to succeed in IoT
(23:31) Learn more and follow up
Transcript:
– [Ryan] Welcome Stephen to the IoT For All Podcast. Thanks for being here this week.
– [Stephen] I really appreciate the invitation, the opportunity to speak with you today. Thanks Ryan.
– [Ryan] Absolutely. Yeah, it’s great to have you. So before we jump into the conversation we have planned, I wanted to ask if you would give a quick introduction about yourself and Vutility to our audience.
– [Stephen] So, my name is Stephen Prince, and I joined Vutility about eight months ago. I was brought in by the investor group. My background is around energy, energy service companies, energy tech, clean tech.
I’ve been doing it for about the last 30 years, so quite some time. Started my career at Edison International, the owner of Southern California Edison, and worked through the energy transition in the late 90s and then left the retail holding company and started taking on different roles across industry, more on the supplier side and some high points were at Oracle where I ran all indirect sales for the global business units and reported to Safra Catz, who’s now the CEO and then after doing that, started taking on Chief Executive Officer roles at clean tech, venture backed companies and developed a reputation as a turnaround guy. And so I’ve done sensing before. I’ve done battery energy storage. I’ve spent quite a bit of time working with battery energy storage, in particular the largest integrator in the Western world, a company called Younicos, got that turned around and sold to Agrreko. And then more recently worked for Centrica Business Solutions, which is the energy services company for what is rebranded British Gas, and I was president of US and Canada.
So, I come with a pretty deep background, both around sensing technologies, battery technologies, but also just the entire energy services market and with an emphasis on clean tech.
– [Ryan] Sounds like an awesome experience. Perfect person to talk about this topic that I know we had planned today, which are challenges to scaling an IoT business, right?
I think there’s a lot of challenges when it comes to going from that pilot to scale model with a solution, but then from a business standpoint, moving from a startup to a scale up business once you’ve proven market fit, you’ve validated what you’re building, you have customers, you’re starting to drive revenue, how you can do that.
So there’s a lot of different areas I want to touch on, but just if we were to just high level it for our audience, when it comes to scaling an IoT business, especially on the resourcing side of things, moving a business from startup to scale up, what are the big, what is that in and of itself a challenge or how is that a challenge for companies and how should people be thinking about how to overcome that particular challenge?
– [Stephen] I have a pretty basic approach when I take on these kind of assignments, and I break it down into several parts, and I think one of the initial parts really has to do with the product itself that’s being sold.
Does it work? Is it, is there a moat around the product? Do you have something that protects it from competitive tensions? And is it disruptive in nature? So first of all you’ve got to have a product that works, that is reliable and that you have some differentiation around. Ideally, you want to have a disruptive element to it.
I think the second part is I always look at the team and what their mission is and how they’re executing against the addressable market. And the third part is I really want to understand the market and the customer base. And if there isn’t a large customer base, what is the logical customer base? And is there inherent demand for the solution, the disruptive solution that the companies are creating, that they’re providing. And so I, and obviously there’s always capital consideration, financial consideration, but I look at those four dimensions, and that’s what I did when I came to the Vutility. And so that’s just the foundation. If you don’t have that perspective, it’s really difficult to see how a business is going to be able to scale.
And I think it’s important to state, it doesn’t have to have a lot of breadth or necessary depth, necessarily depth, but you have to have those basics at least assessed and covered off if you have a really good starting point to move forward with.
– [Ryan] Given your experience in touching different companies, involved in different industries, is there anything you’ve seen that’s unique to an IoT company when it comes to scaling that type of business? There’s obviously lots of different components to an IoT solution. Not every company is focused on all the different components or at least doing them in house. So do you, have you noticed anything unique, just generally speaking, when it comes to certain challenges, or I guess maybe just characteristics of an IoT business that bring up certain challenges when it comes to scaling?
– [Stephen] The thing that I didn’t anticipate, but I definitely recognize is one of those challenges, really has to do with the communications, the gateways, the way that the devices transmit data and how it’s received and then how it’s consumed and leveraged by the organizations that have this deep desire to leverage the Internet of Things to do, perform business processes, critical systems on a real time basis. There’s a plethora of devices that are very capable in terms of the vision for IoT. Where I think I’ve been surprised is by the complication around the data collection, not the collection, but the transmission, the backend systems.
There’s a lot of choices. There’s a lot of variables. And it’s made out to be quite simple, and what I’m finding is there’s almost an art to how you make that work and make it effective, especially on a real time basis.
– [Ryan] Yeah, for sure. I think that’s what’s always been so interesting to talk to companies about. And one of the kind of focuses, or I guess components of an IoT solution is the device, right? It’s a very big part of this. So when it comes to, if we look at devices real quick, just hardware specific businesses, there are a lot of different pieces that go into bringing a device to market. Supply chains playing into that pretty largely.
What are some of the challenges that are specific to that component of an IoT solution? Because I think that’s an area where a lot of people know about the hardware, but might not really understand how hard or difficult it is sometimes to bring the hardware to market, to scale the business, to be able to support that solution long term because it’s not just software. It’s not a connectivity provider. It’s a little bit different. So are there, what are the challenges when it comes to the hardware based businesses and scaling that you recognize or seen.
– [Stephen] There are several dimensions to that. First of all, just the production of the hardware. I think that if we were to do a study, and I’m talking about hardware generically, and specifically the device that’s doing the monitoring, I’d say a majority of those devices today are manufactured in China. In mainland China. And for good reason. Because they have the technology, they have the ability to scale it. And they can do it at a very low cost. And so everybody’s trying to hit that price point, that feature function capability. Most certainly our devices are currently manufactured in mainland China. So, there’s the element of where do you manufacture them and what is the price point versus the value that the device creates that historically, if you went back five years, that would be no big deal.
But what’s happening more recent is it is becoming a bit of a big deal because there are certain classes of customers that will not accept an IoT device if the PCB specifically, the printed circuit board, is manufactured in mainland China, and I didn’t anticipate this when I took the job, but I most certainly have become much more aware of it.
And the user groups that are concerned about this represent a significant size of the early adopter market. So that’s one dimension that I think people have become focused on. The second thing is, the device, there are so many really compelling devices that bring such high value to the end user, but the installation of that device, the complexity of the install and the requirement to leverage professional labor to do it, has actually become a bit of an obstacle. And it, and I think it’s a little bit unique to the US maybe, US, Canada. I most certainly don’t see the issue being quite as extreme in Europe or in Asia.
But there, if we, by example, measure energy, power and energy, and so frequently the customer wants to see an electrician, a qualified electrician, be part of that process and at least initially at a minimum and finding and scheduling the resource the electrician, that’s typically done by the client, can be prohibitive, meaning timing and the ability to get that resource on site at the right time to perform those services.
I’ve actually found that the requirement for that kind of assistance to the extent it’s required can exceed the cost of the implementation of the hardware and the gateways and so there’s a dimension that complicates the delivery of the hardware in some instances and that’s been a factor as well.
– [Ryan] When we framed up IoT solutions in the past, we’ve talked about there’s a hardware component, there’s the connectivity piece, the network side, there’s a software in the application layer, but discussing how those companies work together or the partners that you bring in to help with the actual rollout is something that I think deserves more attention because the environment in which these solutions are being deployed is obviously not always the same.
They all have their own challenges, and a lot of stuff is actually learned through those early stages, those pilots, those things like that. What have you seen? And something we talked about in the past is just the importance of good partners and the role of partners in the success of IoT solutions.
How have you seen that kind of evolve? Because you’re talking about another kind of, in a sense, partner that you need to bring in to help with the actual installation at times, obviously depends on the use case. But how have you seen that role of the partner evolve and change over the years as IoT has continued to progress?
– [Stephen] Let me tell you, I think partners are critical. Our model in particular is very partner centric and partner focused. I haven’t seen that many, or I can’t, you can count it on less than one hand, organizations that have the complete solution, and they offer a complete solution. There’s most certainly integrators that are playing into that requirement and there are professional service firms that actually integrate different IoT devices, gateways, and probably just as important, the visualization and the analytics that are associated with the data that’s collected.
So look, if you’re a customer, and we predominantly focus on commercial industrial from larger small medium businesses up to very large corporate brands, and we, our devices are focused simply on energy and power but the fact of the matter, most of those customers are using a plethora of devices, and they’re looking for a solution that’s comprehensive, so we can’t deliver that as an organization, and so we’re dependent upon partners that are able to pull those elements together and provide a complete solution to the customer.
And we’ve highlighted the labor side of that. And that’s been a challenge, I think, for anybody in the energy power and energy business of late, but beyond just that dimension, without those partners, you can’t really fulfill the customer promise and the customers don’t have those capabilities.
That’s the second thing that I learned. Customers, while they may feel like they’re able to ingest this because they have strong network engineering, they have strong facilities management and engineering support, when you get to IoT, there’s nuances that they just don’t have, and so they, you really require a comprehensive solution, which requires a company like ours to have really strong partnerships.
– [Ryan] And that kind of backs the idea that you really need something more end to end to be able to validate that technology for new customers, for customers to be able to justify the scale, justify the spend, get the buy in from other stakeholders internally in order to move beyond that pilot stage. And is that something you’ve noticed? It seems like something that I believe the partners are gonna play a pretty active role in helping that end to end solution come to life so that it can be, that scale potential can be realized early on for a company that’s looking to adopt.
– [Stephen] My experience in IoT and in the sensing side of it has been that it’s not been terribly challenging to find large, substantial brands, large consumers that are interested in doing pilots. They’ll do pilots, and they’ll do it on a very focused basis, on a niche basis to get validation that the devices work, that they communicate with integrity and the proper frequency and that the data they’re collecting is accurate and reflects what’s going on in the operating environment.
Getting those pilots has not been a challenge for Vutility by way of example. But to move to broad adoption, that’s not enough. The customer wants to have and must have a use case that says deploying these devices is going to result in the following economic, ESG, performance outcomes, and by the way, most of the time, in my experience, the outcomes they’re seeking are broader than the devices that we offer.
They’re incorporating vibration, temperature, humidity, any number of other measurements and other devices to get to the total comprehensive solution that garners the highest ROI and the highest achievable outcomes. And so the complexity grows as you go from pilot to broad adoption because you have to partner and have an ease of integration and participation with other devices and much more complicated gateways.
And so that partnering and that incorporation of that integrator, that broader role that, and most certainly the visualization of those outcomes is super critical.
– [Ryan] You’ve talked about your all’s focus, and it seems like you’re very intentional with the market you’re going after, the customer you’re going after, that kind of thing.
For companies out there that are listening to this, there has always been this battle between how narrow and vertical should we go versus how broad we should go? And I remember when I first got into the space, every platform was very broad, horizontal, our platform, IoT platform can build any use case for any solution in any industry.
And it just didn’t really hold up very well given what we’ve seen when it comes to the different successes across companies that are building applications and hardware for specific, use case specific verticals, at least a group of them as opposed to trying to do everything. How do you advise companies listening to this to help them make a decision on how narrow versus broad they should go when it comes to what they’re doing?
– [Stephen] I came into Vutility, and we had a very broad approach to the market. So, we, it was like we were planting seeds in a field, and we were Johnny Appleseed, we were throwing seeds, pilots and devices into the environment and trying to get broad adoption and in the process have proof points around multiple verticals and segments.
And when I arrived, and by the way, so to use the analogy, we got some trees that sprouted and bore fruit, but we had a lot of little striplings that didn’t really amount to much and didn’t get properly fed and supported. And so those pilots may have gone well, may not have gone well, but they, we didn’t really get a deep adoption, industry adoption and proof points and so my focus and what I’ve learned from that experience is it’s really important to be able to focus on verticals and segments and go deep. And the reason being is you have to have a pilot that generates a really solid demonstrable use case.
And so if you just go broad and wide, and you don’t put the focus on the customer and the use of the device and the economic outcomes, you’ll never get the broad beyond pilot adoption. And so we have examples like in healthcare or oil and gas or in some of the, in the utility segments where we’ve really focused intently on the customers.
We’ve really participated aggressively in the use cases to the point that we’ve created new registers on the devices to accommodate the different artifacts, the collection frequency, the collection depth, the granularity and fidelity that has taken what was a simple single use case and turned it into nine use cases.
For healthcare by way of example and the payback on the deployment is literally days rather than weeks or months. And that’s the kind of focus and effort you have to put into it if you have a hope of broad adoption. So that’s the conclusion I’ve come to. I’m not sure everybody agrees with me, but most certainly it has really paid off for Vutility. Our first quarter, we did more business than we had done in the prior two years, and we did that by focusing on a vertical, a segment, and really leaning into the customer.
– [Ryan] I’ve seen that countless times over the last, I’d say eight months, 10 months or so with companies that have transitioned from going broad to more narrow and utilizing the domain experience that they have from other use cases that are all in one area, let’s say automotive, for instance, and building their solutions to be more turnkey, more directed at those potential buyers and focusing their resources on that type of sales effort, business development effort, as opposed to trying to cast a super wide net, and it’s been incredibly successful for them. So, I totally agree with you. Last thing I wanted to ask you before we wrap up here is if you were to give advice to the people listening to this on how to really give yourself the best chance of success moving beyond the pilot into that post pilot expansion rollout, what are the things or the key things you would advise a company to be thinking about, to be doing, or just how to approach that?
– [Stephen] What’s most critical in this journey, because really, I know people may not want to hear this about IoT, but we’re crossing a chasm, and it’s taken longer than I think any of us thought it would. And the promise is huge. There’s endless possibilities for any number of IoT companies and devices, but it’s all about focusing on the customer and that journey. So, I’ve already said it’s important to really focus and go deep on a vertical segment basis, but the, just the constant focus upon the customer journey and how you engage with that customer from pilot to broad adoption is absolutely critical.
And I’ll just emphasize, the money markets, the capital and its sensitivity to growth and growth for growth’s sake versus quality growth has just changed dramatically in the last six to twelve months And so nobody’s willing to throw capital at a business or an idea if it’s just for broad growth without real depth and consistency and margin.
And the way that you hold on to margin, if you’re in the equipment business, the service business around IoT, is a flawless customer experience that is associated with real economic outcomes, real business outcomes that people can bank on and rely upon. So to me, it’s all about that journey and the way you service and focus on that customer.
And you have to do it in a way that’s capital efficient because capital has gotten very expensive and difficult to raise. And so by doing that and doing it with depth, you’ll get the support of your investors. You’ll get the support of capital markets. And then these early adopters will create the market for you, for their competitors and tangential businesses as a result of those outcomes. That’s the secret to success. Vutility is a perfect example of changing focus, intensity, and realizing real outcomes as a result of that. And we’ve recently raised a capital round in a very difficult environment, and we did it in less than two months because we took that approach. And we had real proof points for our investors, for our customers, and for the employees. Because if you don’t give that kind of an experience to your employee base, they’re going to find somebody else who can.
– [Ryan] Totally agree with you. All fantastic advice, fantastic insights for our audience to understand and really wrap their head around when it comes to moving into that next phase of growth with a solution for a company in the IoT space specifically.
Stephen, for our audience who wants to learn more about Vutility, what you all have going on, maybe even follow up on this conversation in some capacity, what’s the best way they could do that?
– [Stephen] You can contact me at, we have a website at Vutility, v u t i l i t y dot com. You can go there or you can contact me directly at stephen.prince@vutility.com. I welcome the opportunity to talk to potential customers or even other IoT companies. I’d be happy to provide advice and perspective if it’s useful to you. Ryan, thanks so much for having me. I appreciate the opportunity to speak with you and everybody on the podcast.
– [Ryan] Absolutely. Yeah. Thank you so much for your time and excited to get this out to our audience.
– [Stephen] You bet. Have a great day.
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