Bitcoinia

At first I thought Bitcoin was silly - geek libertarian naïveté of using technology to escape the forces of evil called “financial system” and “government control”. And don’t get me wrong - a platform sporting killer apps like “Drug Dealing for Dummies”, “MoneyLaundry 2.0” and the unexpected Chinese runaway success of “From China with Cash” (which has gone largely unnoticed in the US), expecting governments to keep their hands off? Good luck with that.

I was surprised seeing an authority like Chris Dixon leading $25M investment in Coinbase. Earlier investments in the space had been somewhat on the other end of the gravitas scale. Was I missing something?

 I took the time to dig a bit deeper into the technology and protocol, and actually agree that this is significant and disruptive innovation. It has the potential to make money transfers and micropayments way more secure and efficient than what is available in US today. But then, US is also hopelessly lagging the rest of the world in this, as in other infrastructure investments.

Both Europe and China already have national payment gateways, through collaboration between financial institutions and the governments. They are non-profit. Government provide regulatory, banks provide oversight. The result is super efficient debit plastic, with fixed transaction fee of a few cents. It also allows such “radical” ideas as direct wire transfer between accounts in different banks, without having to write a check. To European and Asian readers: yes, you read that right.

While visiting the Nordics I have not needed cash for years. Plastic is accepted everywhere, at no significant cost for anyone. In the occasion when you need to pay a friend or split a bill, a mobile banking transfer is now as easy as sending a text. China is quickly moving in the same direction through UnionPay, which might transform the global credit card business.

But Bitcoin could surely solve real use cases, also outside US. Social, digital micro-incentives in advertising and gaming is a good example. I am sure there are many more.

Still, Bitcoin in its current form as a currency is doomed. Why? Because a currency needs stability, and stability is provided by a central bank.

To enthusiasts, the idea of having a currency with no central bank seems to be a good thing. The argument is along the lines that it will become more stable as central banks cannot inflate the value by printing more money to fund government deficit.

So here’s my prediction of how Bitcoin will play out in the current form. I believe the currency will survive this first hype curve, supported by enthusiasts in tech community. What will ultimately kill it as a currency is when increased transaction volume makes it a meaningful asset class for hedge funds. With no backing or oversight, it will be paradise for market making traders. They make money whenever there is volatility and sufficient volume of amateur traders to crush. The resulting permanent volatility will effectively make Bitcoin unusable as a currency.

Bitcoin could work great though if it were just a digital payment protocol. If it was pegged to the dollar, or rather a basket of dollar, euro, yuan and yen, it could be a serious disruption and help make financial transactions frictionless. Digital exchanges like Coinbase could become the new de-facto digital payment gateway. Could this be the scenario the smart money is investing in?

Suits vs Surfies

Interesting to observe the micro-cultures of the valley, almost as diverse as the microclimates. I have spent last couple of weeks getting involved with the Telecom community, centered down south in San Jose. They talk about semiconductors and Moores law - actual substance for the real world. But slow-moving.

The urban hipster haven of SoMa feels worlds apart from San Jose.  SoMa talk is Insta and Snap. Lightweight, viral entertainment. And counter-intuitive to the microclimate – hot and sunny San Jose dress code is suit, while cold and foggy city wear is surfer shorts.  

And then there is us in the middle. We are somewhere on the Peninsula – San Mateo, Palo Alto, Mountain View.  We do software and internet and cloud stuff. We dismiss city as fluff and shrug at San Jose as boring hardware.

City is not all fluff of course, and hardware is far from dead or boring. So many new exciting device+service products launched this year, and innovations of Arduino and RasPi making creative process so much more dynamic and accessible. But Telco world keep pitching dead-on-arrival technologies like NFC for mobile payments. As our Lean Startup mentors teach, they need to learn how to fail faster...

Angels for Christmas

Just a quick update that we recently closed an angel investment round, raising more than $100k. In addition we won a $50k grant from Innovation Norway.

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Our angel investors are a great bunch of experienced industry experts with heaps of clout and acumen. Charles Huang and Kai Huang bootstrapped Guitar Hero. Anders Brandt built a Norwegian internet service provider. WilliamKlippgen co-founded Kelkoo. Bjørn Haugland built ConfirmIt to a global software company. Chris Evdemon is insider of Silicon Valley angel and VC community.

This is our Dream Team. And as with any Christmas present, it is really the thought that counts. We are very proud to have earned your confidence and trust!

In our own backyard

Sometimes you go casting a wide net only to find what you look for in your own backyard.

We where in the need of a good developer that had experience in OpenWRT, a Linux-based software that can be used on a range of routers. Starting with Google, this lead us to a Master Thesis written about this in the southern part of Norway some months ago. Then talking to the one writing this paper then lead us to yet another person that he had used as an advisor.

We then engaged in conversations with this person, and understood that this might be the right guy for us. And where was he based? In the room next to us in StartupLab here in Oslo.

I could have literary jumped on top of my desk, shouted ”Any OpenWRT-knowledge here?” and he would have been able to answer.

Employee No. 1 is about to get hired!

Becoming Alchemists

Proud to announce that we’ve been selected for next batch of Alchemist Accelerator in Menlo Park. It is a six month program backed by leading VCs and is only for B2B startups. Heard lots of great stuff on how Ravi Belani and his team run the program, so really looking forward to it.

Some other big news coming up as well, more updates next week 

Urban Mill

Urban Mill / Startup Sauna outside Helsinki is definition of new cool. Laidback, anarchistic, hipster incubator lab next to Aalto, the major tech university. Anyone can get in and hang around, desks are available on a “first come first served” basis. Old factory buildings, high roof and no walls. Open space – in every possible meaning.

Active Life Village in Urban Mill, Helsinki

We knew immediately that this was a perfect location for one of our smart home labs. Urban Mill is defined as a “co-working and co-creation platform prototype for urban innovation”, sporting several initiatives that fit perfectly with ours. ActiveLife Village is all about wellbeing for senior citizens, lots of wireless home solutions and technology. Asema is doing great stuff in smart energy management. We can create a really cool cluster of companies out there, allowing developers to innovate in even more sectors than we had imagined. 

Our lab in miniature

Arctic Raspberries

We spent two days in Oulu this week, working with Tony & co from Symbio “rapid prototyping team”. They had done a great job in short time, and we now have a functioning hardware prototype! After testing porting OpenWrt and Zigbee USB dongle to Raspberry Pi, Pandaboard and SABRE Lite development boards, we decided to go with Raspberry Pi. It has better support from the community, and is easily available to any DIY geek that want to try our technology out at home. 

Our Raspberry Pi with Zigbee USB dongle

The compromise is that we cannot support too much of transcoding and other CPU heavy operations in the prototype. But that’s ok for prototype and lab experiments.

It was our first visit to Oulu, but definitely not the last. Really impressive competence cluster, located just short of the Arctic Circle. Given recent changes at Nokia, there are now heaps of start-ups doing world class R&D and innovation, mostly focused on smart and embedded devices. Oulu rocks!

The Interconnected Home

Just listened to a GigaOm podcast on what is wrong with the Internet of Things - Om Malik and Stacey Higginbotham discussing what makes sense and what doesn't. Om Malik talks about things not being ready yet, and that devices need to be more transparent and work with each other, introducing a couple of (to me) new phrases - the "interconnected home" and "in-home computing fabric". Well worth listening to:


Stacey is in my opinion the most insightful blogger on Smart Homes and Internet of Things, so if you want to stay up to date just follow her Twitter

Prototyping on Steroids

Domos is primarily an operating system, i.e. a software platform. This is also where we have our core competence. So when we realised we had to make hardware prototype to be able to connect all the cool devices and sensors out there, we clearly felt outside our comfort zone. I had been working towards big OEMs in China, and knew the upfront costs of getting to prototype level could easily run up to $100k. And even worse, it could take months to make. Not great for neither budget nor momentum.

We have now reduced the prototype cost by 90%. And delivery time from months to days. How? Thanks to very cool rapid prototyping technologies:

1. Low-cost hardware development boards like Raspberry Pi, Pandaboard etc have been adopted by makers and geeks around the world. The ecosystems build-in support in open source software projects. In our case, OpenWrt - a Linux distribution for embedded devices that included support for Wifi access point functionality – recently added communities working on RPi and other development boards.



Raspberry Pi - a $35 PC (image from PCMag.com)    

2. Additive manufacturing We’ll be using a technique called Selective Laser Sintering that provide robust, industrial grade casing for our prototypes at zero upfront cost. Best of all, we can test out design ideas at low cost before making final decision.
   

   

   SLS printed house

These rapid prototyping techniques almost completely remove the upfront investment. In return we get a higher unit cost of around $500 - $1,000 per unit. But we only need 10 units to power our Smart Home Labs, so for us it is a no-brainer. And we can do all this in Europe, allowing rapid and iterative development. The big takeaway is that innovators can test their creative ideas in rapid iterations with very limited upfront investment. The result? An explosion of cool, smart gadgets and wearable devices.

I just love technology.

Why we need an OS for the smart home

Homes are slowly getting smarter, but are still far away from reaching its mass market potential. We now have phones that can help us navigate the world, but does very little inside our four walls. We have cars that will soon be on auto-pilot and wearable tech that make Minority Report look yesterday. Surely our homes should be up next?

Yes, they will – but at the current rate of innovation, no time soon. There is no lack of great technology, and the value proposition should be compelling. So what is stopping adoption? The simple answer is – your wifi router.

The wifi router is the single point of connection between all cool sensors, gadgets and devices that are available for the home. They all need to connect through your wifi to connect to their respective cloud and mobile apps. And yet, there has been almost zero innovation on wifi routers when it comes to enabling the smart home. Innovation for smart homes is naturally app-centric these days. And why shouldn't it be, of course you would want to control your house through your mobile?

The answer is “yes”. And “no”. You want the apps. What you don’t want is a separate app for each device. And a separate cloud login. And a separate connector hub. And a separate protocol. There are great smart things out there today, but the underlying infrastructure is simply not scalable.

Smart home infrastructure without Domos

This is why we need the operating system. And why it needs to be on the wifi router. We need to decouple devices from apps. Let device makers make devices. Let developers make apps. Enable open competition and innovation.

In technical terms, the operating system adds an abstraction layer that enables developers to make one app that leverage all connected devices, on any protocol.

The devices are here. The apps are here. The open protocols are here. The smart router OS is the missing link. 

We plan to build it.

Back in da Hub

Another London workshop, and meeting Bill and Dorien from a cool product development company called ARRK. The prototype casing was a big concern for us, expecting large upfront costs on tooling and moulds. Not very bootstrap friendly. We have no need to worry though.

Dorien showed us some super samples of what they can do in prototyping with laser 3D printing and cuts. Exactly what we need. Cost is affordable and process very flexible. But what really impressed was the quality of the end prototypes he showed us. Got to love tech innovation.

"Seriously, you have 3D printed all this?"

Keeping it real

When catching up with friends in the "valley" it is easy to envy the momentum and energy. But there are some advantages of doing a tech start-up outside. When being stuck in the "real world", it is much easier to stay in touch with what is going on out here.

Reality is that most people don’t read TechCrunch and GigaOm before breakfast. They don't scan Kickstarter when buying new gadgets. And they couldn’t care less about the holy grail called Internet of Things.

Intense discussions on "What would make me buy this thing?"

Multicoloured light bulbs and connected fridge will not make the cut here. Neither will X10 or Insteon type of geek gems. But a simple way of controlling your kids’ use of internet just might. Or monitoring your pets while at work. Or smart ways to save energy consumption. Or keeping track with the holiday home. Or watching Netflix and YouTube on the TV set without the clunky (so-called) Smart TV.

So last week we invited some of our friends to a first “focus group” session in Oslo. We got some great feedback and insights, and generally seemed pretty pumped up about the idea. Thanks so much guys, we need your help to keep it real! 

Lost In Translation – How It All Started

The idea started spinning when I was working in Tokyo last winter. I loved Japan - great people, food and nature. Very polite and unassuming, and of course tech savvy. But the language is…. complicated, even after spending 7 years in China. So I found myself admiring a lot of the cool infrastructure they had, without necessarily understanding much of how it actually worked.

The control panels in my apartment were case in point. It had some brilliant features – for instance it would record a video when someone was calling for me at the door when I wasn't at home. So in theory I could see who had been visiting when I got back. If I had understood the menus that is. Most times I ended up receiving a call from the security people and a lot of “sumimasen, daijoubu desu”.

Home control panel

So this thing was obviously connected, but I couldn't access it on my terminals. Why couldn't it just stream to a mobile app? Come to think of it, why couldn't the whole monitoring just be built into the WiFi router? I had been doing work on smart devices in Symbio, so I knew it would be possible.

Anyway, ideas have developed but the key vision remains – get our home devices to wirelessly plug-and-play to a smart device where user experience just makes sense. No hassle, no wires, no protocols, no weird buttons. Just a simpler, better life.

Luckily the toilet panel had pictures

Being creative in the Hub

Ambience matters. We just finished our second f2f workshop, this time in a cool incubator space downtown London. Ian and his team build a new makers movement platform out of here, and the buzz and energy of 200 people of 50 startups in one huge space certainly inspired. Worlds apart from my normal “office” space one could say.

Two intense days, working with David who help us design the device. Two ideas graduated to the final, both very cool. Can’t wait to see them in 3D. Maybe we can mold first batch here instead of china. Also playing around with some ideas for name: Domo and Multo. Domo is inspired from Japanese, Multo from Italian/Roman. Values intended to be open, flexible with endless opportunities… but also just simple, easy names. Need to test it out and let them mature a bit.

Anyway, fired up and ready to go now! Next 6 weeks will be finalising v1 offering – device design, sensor packs and app UX. Build focus groups and prepare late summer launch on Kickstarter + retail in Norway. Now back to fresh snow in Sixt!