The majority of us spend 90% of the day indoors, and the concept of “smart homes,” which aim to make this environment better through technology, is also becoming familiar.
CubeSensors, the focus of this interview conducted by the BRAIN PORTAL Editorial Department, is a hardware startup from Slovenia that developed “CubeSensors Cubes,” smart home sensors that have been delivered in more than 50 countries worldwide since the product went on sale in 2013. The startup racked up the accomplishment of winning the Best Hardware Award at LAUNCH Festival the same year.
The CEO Mr. Ales Spetic is currently active working toward the sale of “Koto” — a redesign of the product. We spoke with him about stories from the production of CubeSensors, as well as about the current state of the smart home market and his expectations for the future.
Delivering indoor environment solutions
—— To get started, could you tell us about what inspired you to come up with CubeSensors?
Ales Spetic (below, “Spetic”): One of the inspirations was actually my daughter. During the winter, she would often get sick and one day she asked me: “Why do I always feel bad in the winter?” Some fathers may simply respond, “Because it’s cold outside,” but as an engineer, I know that is not true because cold viruses are not sensitive to temperature.
Then, when I began looking into it, I found that one of the main reasons is that indoor ventilation conditions are remarkably poor during the winter. Obviously, we know that the environment indoors is poor, but we do not measure it or anything. This being my inspiration, I wondered whether we could measure how poor the environment was and what kind of impact it has.
—— In the smart home industry, where did you feel CubeSensors had a competitive edge with its concept of measuring a variety of factors that significantly affect the comfort of indoor environments with one small sensor?
Spetic： Prior to our product, there were no products that could measure indoor environments, and the argument can be made that we were at the very forefront of this change. Of course, there were products like professional-grade measurement devices, but for all intents and purposes those instruments were for when you call a repair person to your house to take measurements.
CubeSensors, however, are compact products with a nice design that allows users to take all kinds of measurements related to the indoor environment just by placing the product somewhere in their house. “Quantifying indoor environments” in this way was our concept when just starting development of CubeSensors; however, what users really want to know is not numbers, but rather solutions for indoor environments.
And the strength of the solution we provide is that our solution allows users to detect different attributes such as room temperature and atmospheric pressure and link these attributes together. For instance, by associating temperature with a different element like humidity or air quality, users can learn more about their indoor environment.
—— Specifically, what kind of solutions are possible?
Spetic: For example, when the heating is used in a building, humidity levels plummet and people with sensitive respiratory systems may cough as a result of the dryness. Usually, people do not know the cause until they feel the dryness of the air, but our product is able to detect the cause earlier and enables you to counteract it. This is our unique solution that no one else can provide.
Cooperation with local suppliers
—— CubeSensors shone brightly in the top position at the CES Hardware Battlefield hosted by TechCrunch in 2014, but what kind of challenges did CubeSensors, being from Slovenia, face on the way to gaining global notoriety?
Spetic: The most difficult thing was that suppliers had to like us since we are a small startup. For example, placing an order of several thousands units often falls short of the minimum order quantity of suppliers. In other words, we lacked sufficient bargaining power. Even if they made some kind of mistake or something and delivery got pushed back, it was hard for us to exert any pressure on them for it.
For instance, if there were 15 different suppliers, we would have to wait for every one of them to deliver a quality product by the deadline, and it would simply be very difficult to control all of this due to our lack of bargaining power. We are in a different position than big companies like Samsung that order in extremely large quantities.
—— What kind of criteria did you put in place when selecting production plants and suppliers?
Spetic: We were beginners when we just started CubeSensors and were not necessarily familiar with the hardware manufacturing process, so we took it to heart that we had to get a solid understanding for ourselves of the production line situation. Consequently, if there was a factory in Asia, we would have to hop on a plane and spend a day or two getting there to check the production line. This is a deadly cost for small startups.
In particular, since we had special requirements for the plastic, we determined that offshore manufacturing was not possible and opted for plants near us or suppliers in Europe for everything aside from battery assembly.
At the beginning, local suppliers did not have the proficiency to be able to handle each one of our different demands, but we built experience through a lot of trial and error and learned how to do things better together, so now we can tell the suppliers how things should be done.
The past, present, and future of smart homes
—— You mentioned earlier that there were no monitors for ordinary households in existence prior to CubeSensors. Could you tell us about the smart home market back then in 2013?
Spetic: When we began developing our product, even Nest had not yet announced its products, so we can say that CubeSensors were part of the first wave of smart home products.
However, with the lack of ample funding for us, being based out of Slovenia, our development was slow compared to other startups that began at the same time. Consequently, by around the time we launched our product, Nest and other companies had already announced their products. But on the flip side, thanks to our slower development, we were able to announce our product amid the entire market being active.
—— Compared to back then, have there been any changes to the circumstances surrounding hardware startups?
Spetic: One that differs greatly from three years ago is the circumstances around crowdfunding. This is also one of the reasons we cancelled the campaign that we launched last year on Indiegogo. While it was alright three years ago, Indiegogo has now reached saturation and there are numerous campaigns running at the same time, making it more difficult to get the results you desire.
Three years ago, if there was a successful product that already had a track record of distribution, there was confidence in the product and it was able to earn a lot of support. Now, however, it just does not work the same way even if you run a campaign on a crowdfunding platform like Kickstarter or Indiegogo. The reason for this is that users are not placing their confidence in these platforms because there have been many failed projects.
With an uncertain shipping time, we withdrew the Koto campaign that we launched last year, and we solicited reservations but have not raised any funds in order to avoid falling into the crowdfunding trap of “Take the money but don’t deliver.” Moving forward, as long as there are no changes to the environment around crowdfunding, our thoughts are that we will not likely make any plans to use crowdfunding. Rather, we would like to secure inventory and make it so that we can deliver within 24 to 48 hours whenever there is an order.
—— The entrance of startup companies just keeps rising in the smart home market. How do you view the trends of the industry as a whole moving forward?
Spetic: I think the competition between big companies like Apple and Samsung is going to heat up in the future. All of these companies are gearing up to provide their own smart home platforms, so small manufacturers may have to battle from a position of providing supporting products for these platforms in order to avoid competition with these big companies.
On top of that, I think that even more products on the smart home market will be integrated moving forward. As opposed to devices like mobile phones, the life of household appliances is generally 5 to 15 years, so the replacement cycle was slow to begin with, but I think this cycle will become slower and changes will become very big. Just within the next one or two years, it is expected that the majority of air conditioners and other household appliances will be connected to each other, so I think this will become a major point of competition.
—— So, on a final note, tell us about your future expectations for CubeSensors.
Spetic： First of all, we need to deliver our product to as many people as possible. While it depends on how fundraising, the environment, and the market goes, our product is competitive and there really is a lot of demand for it. If we cannot scale this business, we probably will not succeed. So we have to determine how to proceed.
We feel that we are the most seasoned professionals with regard to the field of products we are currently working on, so if this product succeeds we will expand on it. If, hypothetically, we do not pursue this route, there may be a possibility that we work on something even bigger with new ideas and the help of new members.
Not only has there been a sharp uptick in market entry by startup companies over the last several years, progress is being made in the construction of platforms by major companies in the current smart home market in 2016. It is by no means a smooth road that awaits startups that have their sights set on manufacturing and selling products in the future.
Mr. Spetic has continued to be active with CubeSensors since the dawn of the smart home industry. Reflecting back on the beginnings of the company, he relates the following:
“For us, there is no so-called domestic market. The population of Slovenia is smaller than many cities around the world, with just 2 million people. So, at the same time we started our company, we had to face the world. “
To succeed in the smart home market where the competition will become increasingly intense moving forward, a broad vision to see trends worldwide, and even the attitude to learn much from the know-how of preceding companies will, perhaps, be needed.