The fate of the connected world with Alex Hawkinson
Alex Hawkinson is the founder/CEO of Smart Things, a Samsung NEXT portfolio company and the world’s foremost open platform for smart homes and the Internet of Things. Alex met with Ryan Lawler at CES 2018 to discuss the future of IoT and how connected devices translate to better health, more productive businesses and a happier world.
Ryan Lawler: Today we have Alex Hawkinson who’s the founder and CEO of SmartThings, part of the Samsung family. I met Alex five years ago at this very show when you were first demoing SmartThings for the first time I think.
Alex Hawkinson: Yeah, I guess that was before Samsung. We’re just sort of putting the basic pieces together. I think we had just done our Kickstarter campaign at that point and TechCrunch came by. We had a little house off strip and we were sort of demoing the prototypes at that point.
Ryan: Yeah, I was at TechCrunch at the time. We shot a demo video. It was really cool. But before we get into sort of the history of SmartThings and the evolution of the company, maybe you can tell us a little bit about what SmartThings is, just the audience has an idea of what you’re working on.
Alex: SmartThings is I think today the sort of the biggest and most open platform for smart home and more broadly for sort of consumer Internet of Things, so connecting everyday things in the world and then through the open platform allowing device makers and developers and service providers to add more and more stuff to the platform. Consumers, they use it mostly for smart home stuff, security, lighting, entertainment, all sorts of cool stuff.
Ryan: I think the market’s definitely familiar with how all those connected devices can be used and how they speak to each other and they’re waking up to the possibilities of what you can do now. But you started this company five and a half years ago and the Internet of Things was very different then. I guess maybe give us a little background, like how you got started, why you saw a need for this back then.
Alex: Yeah. It’s hard to imagine, I mean, looking back five years and knowing were sort of tens of millions of connected devices now. It all started at … I’ve been fortunate in my life, I’ve started a few companies and we had a small hiking house, hiking and skiing in Colorado, really far out in the mountains. In 2011, we had had a … I’d had my second child, or my wife had had our second child, and we had skipped a year going out there, and we arrived at the house to find it sort of, we’re desperate to get there, but found it destroyed by a flooding event. We think the pipes … The electricity went out. The house froze up. The pipes froze and burst, and then came back on and water ran everywhere for months, it must have been, because it was a disaster when we got there. It’s just the shock of you’re so connected to everything with your smartphone and elsewhere. It was the shock that the house didn’t have a way of communicating with us.
The basic idea was just this, it started with I was a geek from Carnegie Mellon, like prototype … I couldn’t find anything online at that point. It was very early in the industry. I started prototyping an open hardware Arduino based thing to connect the house, to watch over it. It was about two months into that I had a working prototype, and this is the beginning of 2012, and I had this sort of bigger insight, which was you could see I wasn’t a hardware guy. You could see if I could do it, there were thousands of companies creating connected things, and we saw the outline of the Internet of Things and just realized, I think luckily had the insight that like what happened with the first stages of the web, Google came along and sort of organized the information and Facebook came along and sort of organized the people in the social graph, that there needed to be a platform for connecting all these things.
That was the initial insight. We incorporated in April 2012. We didn’t know what we were getting into at that point, but went on to do a Kickstarter campaign in the fall because we believed since we weren’t hardware guys, we were software guys, it had to be an open platform because we needed devices and others to contribute to it. We did Kickstarter to sort of see if people would respond to it and it was a huge campaign. It 10x-ed what we hoped to get and then everything snowballed from there. That was the inception.
Ryan: Looking back I feel like it’s pretty crazy because I remember going to that demo house, and it was very rudimentary. You had some motion detectors and some connected light control, and I think maybe you could automatically turn on the Sonos or whatever by walking into a room or something like that. But there were really only three or four things you could do with it at that time. Thinking about where we are now with so many connected devices, maybe just from the company standpoint, talk me through the evolution of the industry growing up around you.
Alex: I think, yeah, I mean it was … When we first saw, we saw these standards that were emerging like Zigbee and so on and we thought surely there’s going to be a lot of devices out there to pick from, but there really wasn’t. There were a few types of connected things, it was really early on, but the idea was that eventually there would be a lot of connected things, and that this idea was as you connect these even simple things, if you allow not device makers but developers, like what happened on your smartphone to program this stuff and do things with their own skill set, that a lot of new use cases would happen. That was the vision from early on. You had to kind of squint your eyes to see past the really early stage of things. Indeed, we, at the beginning it was basic things, like basic sensors, a few kind of poorly designed lights that you could control, occasionally lock, but still very spotty and unreliable.
But even then we could tell if you took a couple of these things, like take a motion sensor, that could be used for security. When you’re not home, when your phone’s not home, it could be a security event. When you are at home, it could trigger the lights to come on. If grandma was at home and you wanted to keep track, you could look at patterns of motion and see if everything is okay. Even with the simple thing you could see some early applications. But what’s happened now is the whole industry has grown up. I think in part we’ve been a part of helping make that happen, but we now have the biggest ecosystem of devices I think in the space. There’s more than 370 works with SmartThings devices today that are really rigorously tested. There’s 50,000 developers have signed up and built apps on the platform, and we see this proliferating all over the world now. It’s amazing to see the maturity. I can comment more on how the types of applications have grown.
Ryan: Yeah, we can talk about that. But before we get to that, I was kind of curious, very early on you decided to sell the company to Samsung, like what, like a year and a half in, something like that. So as an entrepreneur, how do you weigh that decision to say we can continue to sort of go it alone or we can join or partner with a much larger organization? What was your thinking around it at that time?
Alex: For me, so it was specifically it was like two and a half years in or so. We sort of got our start at the beginning of 2012 and it was August 15th of 2014, which I remember that day really well. We’ve been fortunate in that we had a lot of momentum and we had a great seed round, a great A round and we were about to do our B round. We sort of shipped our products and been relentless entrepreneurs.
For us SmartThings was always about the mission much more than sort of the economic outcome or other things. Because I’d sold previous companies I was in a position where it was really about this idea that if you connect up the whole world, you can, and you make it smarter with software, you can really solve some of the bigger problems in the world. We had been at it enough to realize that this was a really big, a big challenge, that was going to take a lot of capital to mature the company and that like any platform you really need critical mass. We had a few folks come and were interested. We chose to work with Samsung and bring the companies together for a couple specific reasons. One is we saw that they shared the vision for an open platform. Samsung had if people look at Android and realize like the earliest stages of Android really grew up Samsung and Google hand-in-hand. They believed in open platforms. They thought in the Internet of Things there has to be something that stays open and neutral. We had a shared vision for where it would go.
For us it was consumers don’t buy a platform. They start with solving a simple problem. Like in my house in Colorado, I would’ve bought a moisture sensor to get started. Then they grow, as they use it a little bit they grow in more and more scenarios. We realized simply that since we weren’t a hardware company, Samsung made the most things, the most starting points for the smart home, and we really thought this was something that could reach ultimately billions of consumers and just thought it was the right combo. They are great at hardware and distribution and reaching consumers everywhere, and we had the right platform and the right vision. It’s been a great combo.
Ryan: Yeah, I think the important thing there is keeping things open and it’s really incredible that you’ve been able to do that. I feel like in a lot of M&A situations with a product like this or a platform like this it would’ve been really easy for a company to come in and say, “Okay, we really want this technology, but we just want it for our own devices and we don’t want to play well with others,” right?
Alex: Yeah, I mean we … That was so core to our vision that we worked really hard to make sure there was C level alignment on that from the beginning, and also … But it hasn’t been without battles along the way. That open sounds great until each new product group has its product and it wants it to be special and different from the rest of the field. But we’ve persisted enough over these three years that now the flywheel is fully going and I think everybody recognizes both in Samsung and elsewhere that in the industry more broadly that it’s all boats rise together, that there’s much better, it’s much better for the consumer to have open choice that drives much more innovation and those other things. It’s been, I think it’s been incredible. But again, it hasn’t been without battles.
That’s also part of why we’ve stayed independently structured with Samsung NEXT, is that I think if we were absorbed into any one product team, we, at some level it would have been tempting because it was easy to collaborate with that team more deeply, but the flip side is I think we would have ended up closed off from maybe the other groups. It’s been a lot of hard work but here we are.
Ryan: Yeah, here we are. We talked a little bit about some of the initial applications that you had at the time for those first demos. I’m sure the use cases have expanded dramatically. Let’s talk about what you can do with SmartThings today.
Alex: You can do a lot. It’s remarkable these hundreds of devices from great device makers all over the world and then the 50,000 plus developers, it’s sort of the sky’s the limit. What we see is, I mean, there’s universal basic human needs so there’s a top sort of four use cases in smart home. Those are peace of mind, like where I started the company, knowing things are okay at home, and that might be security, it might be life safety, it might be tracking your kids or pets or elders, things like that. That’s one of the big two. Connected lighting it’s super popular. People just like home decorating. You like it to reflect your comings and goings and sort of magical to have your lighting affected by your presence. Entertainment, I think we’ve all seen the rise of connected speakers and music and voice control and all that. Of course energy, companies like Nest got their start around that, saving energy passively in the house.
But once you look past those big four you see this very long tail of hundreds of different applications where it’s sort of it’s the challenge in building a company in the Internet of Things is that it’s not one size fits all. Humans are very unique in their own idiosyncrasies. We have, I don’t know, whole applications for handicapped people living at home that’s helped with automations and special devices to help them live a better life. We have Minecraft integrations from gamers that want their home and their lighting environment and sound to reflect stuff that’s happening in the virtual world. They want their virtual world to flash when somebody messes with their Minecraft treasure chest or whatever. You have this really big diversity and it changes all over the world, it’s sort of very gratifying to see it happening.
Ryan: With so many different use cases, what’s the typical customer journey? Like when someone first starts interacting with SmartThings, is there a certain channel or a certain product that it’s sort of the entry point for most consumers?
Alex: I mean those big four that I mentioned are the most common starting point. Consumers will say, “You know what? I had a flood. I need to go fix that. I can’t have that happen again,” or, “There’s been a break-in in my neighborhood and I want better monitoring,” or whatever. “I see an advertisement of voice-activated lights and I want a connected light,” or so on. Those home security and monitoring, lighting, connected music, and this energy savings are the most common starting point.
On average a consumer for us after one week, they have five connected devices to SmartThings. Then this remarkable thing happens. I don’t know if everybody’s seen the movie Inception with Leonardo DiCaprio, it’s a little old, but it’s an awesome, it’s like that. So people, once they have something connected, they have this realization, it sort of pops, it’s like, “Oh, what if X, Y, and Z could happen.” So five devices after one week. After 90 days the average household for us has 10 devices. After six months, the average is more than 15. People find these known use cases, and that’s why the open platform’s so important is because regardless of where they start, they then either deepen it, you buy security, you want the connected lock or camera, or they broaden into those other use cases, and it’s amazing to see it at work.
Ryan: Is it the case where they’re just realizing that they have these devices already in their home that can connect to SmartThings, or are they specifically going out and buying devices that work with your platform?
Alex: I think it’s all the above. You see lots of journeys through things. Some consumers have a plan to get there and they want to start simple for budget, or it’s complexity, they want to try it out, and then they go deeper. In some cases they … there’s more devices showing up. So Samsung, we announced that 90% of all things made by Samsung now are connected to SmartThings, so that’s 90% of 500 million devices a year. It’s a lot. More and more consumers will just have something in their household that can connect and unlock some use case. More and more you’ll see it very low friction, very low cost to get started. Then you of course have things like home builders are starting to build this into homes. So either show up at your home or your apartment, and there it is, it’s ready to go. It’s hard because there’s a lot of different pathways, but it’s … We’re reaching the point now where it’s many, many millions of households as opposed to where we started, which was like my house.
Ryan: That’s really awesome. Talking about CES, you had that first demo, and then a couple years later you’re demoing as part of Samsung. So what’s that journey looked like charting through each of these different events over the last five years?
Alex: It’s been crazy, I mean. That house, we didn’t even plan to demo that first CES. We just couldn’t afford hotel rooms. We rented a house way off strip and then we’re like, “Do you think the owner would be mad if we put some stuff in here and then we called people to come over and check it out?” But it started there. The next year we did, we were like, “That worked really well. Let’s build an open smart home. We’ll get some of the partners to come in with us. We’ll actually build out a house. We’ll leave it for the owner.” They liked it. That was awesome.
Then the third year we were like, we’d never had a booth and we were in the city that is the Samsung booth at the center of it and it was all just about the promise of where it was going to go, but a little bit scary honestly because we were just 50 people at the time of the acquisition. Now you look forward, hence the announcements this week have been that SmartThings is the single cloud behind all Samsung devices and of course all these partners. We announced the single that more than 60 apps that Samsung had are consolidating into the SmartThings app, next generation of that this spring, and you have hundreds of works with partners, with works with SmartThings stuff all over the place, you have service providers building on the top. At this point it’s been remarkable. I mean, we’ve grown, we’re millions of houses, tens of millions of connected devices. We connect. Here’s a stat for you. This year we connect more devices per hour than we had total at the time of the acquisition.
Alex: It’s insane.
Ryan: Yeah, that’s really crazy. That’s huge both on the cloud side of things and the app side of things. When you talk about working with partners, what does that mean to, like what’s the pitch to them? Like, “Let us handle control of your devices so you don’t have to build your own app,” or like what’s the balance there where partners might want to have some control but also be somewhat open?
Alex: Yeah. The tide has really changed in this since we got started. I mean when we got started it was I love Nest but Tony was very much a… sort of oriented towards a closed model, and so it was really a fight a lot of times for us to get other people to want to work with us. That’s really shifted now where I think open is sort of the default model and I’m pretty proud of helping drive that. What it comes down to with a partner is you basically, they have to see for themselves that a) your product is better if it’s integrated.
I’ll give you a concrete example. A great camera is the NETGEAR Arlo wireless camera, or pick your camera that works with the platform. A great light might be a Philips light or Leviton light or whatever it might be. The camera on its own it has a motion sensor. It’s awesome if it can turn on the light next to it. NETGEAR’s not making any lights and Philips isn’t making any cameras, and so it takes a moment for those partners to see like, “Wow, there’s a better outcome for customers that will draw my product into more sales if I integrate in this open way.” Yes, there’s some threat, you have to make a good product because you’re in a competitive landscape, but all boats will rise.
Secondly, so that’s sort of the main message, and now we have, we’re big enough that we provide a lot of distribution. For small device makers, we have millions of consumers that we can expose your device to or your app to, and with the announcement this week it’s pretty remarkable. The new app is not just on smartphones. It’s on everything with a screen. It’s iOS, Android, it’s TVs, it’s refrigerators, it’s … it keeps going, and so wearables, et cetera. Now we say you integrate in one place with our open model and you get exposure across all of those areas and all the distribution channels. It’s a powerful message, so it’s working.
Ryan: At the same time that this industry is sort of grown up around you, the competitive landscape has changed a little bit where you have some other large companies sort of getting to the space and building their own home control apps. How do you think about that and what’s that look like for you?
Alex: I learned early in my career that if you’re building a company you should have an eye on the competition but it shouldn’t dominate your thinking. You just have to build a good product and it’s a big market and that should be your focus. We have watched the competitive landscape indeed has changed, but generally day to day we don’t focus on it. We just focus on, hey, how do we make it better for consumers, how do we make it better for our partners, and that’s the honest truth.
It has changed a lot though. I mean in the beginning there weren’t any other devices that had a lot of distribution, and we felt like we had to convince consumers. Now you have device makers in each of those categories with millions of households too, and you don’t have to convince as many initial consumers that this is a decent idea. Some of the proprietary platforms have come and gone. There’s been lots of little startups. It’s capital-intensive. I feel fortunate about our timing and our relentlessness.
Most recently you have voice. These voice controlled speakers were not even on the scene a couple years ago. I think it’s remarkable to see the huge uptake around Amazon’s Alexa lineup and Echo lineup, and of course Google’s Assistant. You see the advertising all over CES. That’s sort of … It’s easy to conflate voice, it sort of overlaps, it’s one of the key interfaces, but it’s very different than IoT because it has a lot of purposes on its own. But that’s really changed the mix too and that there’s a lot of consumer interest in that. Some of those companies, there’s a coopetition that we get into even though we partner with all of them really closely. We’ll see where it ends up, but right now, again, it’s an open model and we see everybody’s growing a lot.
Ryan: I know that AI and machine learning are big buzz words, but I’m wondering how that might affect the capabilities of your platform. Very early on you could program it to do very interesting things, but was very much a if this, then that relationship. How is AI and its potential applications change what you can do with SmartThings?
Alex: It’s a great question. I mean, I think our goal, our vision has always been to make this really easy while being totally open, and I think that one of the best promises of AI in the Internet of Things is the chance to make things much easier, much more deeply valuable for consumers, without them figuring it all out on their own. A concrete example is we see as an example developers doing … I’ll give you three quick examples. Energy use in the house. If you combine weather data with more than just the thermostat, with temperature data around your house, it turns out you can really do a better job of optimizing, making it comfortable while saving money, and that takes … You can’t program those rules. You need machine learning to do that.
Security. The problem with security systems is you trigger the security system and then you don’t know … And so false positives. AI we’ve seen could really figure out if it’s you or if it’s an anomaly. We see a lot of applications there and other spaces like that. Then of course things like connected health or elder care or other spaces as we’re bridging now outside of the home as well. There’s just a tremendous opportunity. How do you know if somebody needs help? I think there’s a subtle pattern there. It’s not just an avert, they hit the panic button. I think it’s going to have a really big impact. I think that we’re just starting to see it now. I think it’s one of the big areas that we’ll see a lot of innovation in the next few years.
Ryan: Excellent. You mentioned going out of the home just now. Like what does that look like? What sort of devices or use cases there?
Alex: It’s really broad. I mean, the company was actually not called SmartThings when we founded it. It was Physical Graph Corporation. My wife convinced me that that wasn’t a ring-y, like what is it going to ring on the consumer mind. But the idea was still smart things, it’s not like smart home. It’s if you connect things and then you make it so that regular software developers, meaning not firmware people but all the millions of software developers can do stuff with them, that you’re going to see things become smarter. That has nothing really to do with home at some level. We chose home because that was my initial use case and we thought it’d be hard to get it right. But now with these 50,000 developers we see, and you can add custom devices, we see it bridging into connected health, connected auto, small business, lightweight industrial, and yeah, all sorts of different spaces where this basic idea you can connect things in that environment and make them smarter.
What’s an example? Small business. How do you help small businesses compete with the big guys? Well, of course they want to keep track of their shop or where their service people are. You can use IoT to do that. But you can track how many customers are coming through the door, where are they spending their time in the store, where should you improve things, and all that side of stuff. You see these variations in the use cases based on those things. I could go on all day about that.
Ryan: That’s really cool. Without giving up too much around your product or news roadmap, what’s one thing that you are really excited about for 2018?
Alex: I think we’re finally at the cusp of the sort of second stage of Internet of Things. The first stage this past five years has been about characterize, it’s like connecting things, like connecting them and making them work at all. I think we’re at this place where it’s analogous to smartphones, first few years of the smartphone market were to selling phones, and if you imagine trying to start Uber or Lyft before that if they had to build a custom driver device and stuff, it would never work. But suddenly smartphones were everywhere and you could build a service over the top that disrupts transportation.
I think Internet of Things is similar. Now there’s enough things, there’s tens of millions of things, and now developers can start building these services over the top that do totally different stuff. We announced ADT as an example, 140 year old, biggest monitoring company in the world. They ejected their proprietary platform. They’re working on top of SmartThings now. I think there’s so many opportunities in every facet of life for developers, and that’s part of this single app announcement that we made in Things. I expect this year there’ll be of course more gadgets, but even more so I’m really excited about the new apps and services that make consumer lives better.
Ryan: Awesome. Excellent. Well, thanks again for joining us. Congrats on the last five years. Sounds like things are going really well, and look forward to seeing what you have next CES.
Alex: Thanks so much.
Ryan: Thank you.