startups vs. the establishment

According to GreenTech MediaAcuity Lighting recently acquired Adura Technologies, a startup focused on wireless controls solutions for the energy retrofit space.

Good for them, a cash exit is what most of these startups want.  Unfortunately for the industry, there seems a long history of how innovation seems to die without so much as a whimper when hot little startups are bought-out by the conglomerates.  And it goes beyond just the usual excuses: Big pay days for the key players, corporate meddling, death by roadmap integration, etc.  I think innovation dies when startups give up their “David versus Goliath” mentality and are forced to conform to the status-quo of the industry.

I want to point out a section of the article written by Jeff St. John:

Why haven’t it and its competitors reached such lofty goals? Well, lighting is a highly fragmented industry, with lots of component and integration players on the manufacturing side, as well as a dense network of regional distributors and contractors. Since lights are supposed to keep working for decades, turnover in technology is slow.

In other words, it’s a tough market for startups. It also puts the burden on tech developers to make their innovations as simple to integrate into the existing business chain as possible. That’s led to partnerships that go beyond startups embedding their wireless processors in lights from big manufacturers.

I disagree.  Startups destroy tremendous potential value when they limit themselves to the antiquated status quo channels to market.  The problem in general is that the industry has not adopted smart networking or data simulation standards.  I believe this is mostly due to the middlemen in the industry, who continue to believe that forcing customers into proprietary packages is the most successful tactic.  It isn’t, but it certainly is the most effective way for these middlemen to retain their power and play all sorts of back-room shenanigans, to the detriment of both customer and manufacturer.

I think industry players, particularly startups who are not trapped with these legacy “partners”, must pursue a dual strategy of offering holistic solutions to end customers, while working together with other industry tech leaders to forge new interoperability standards to ensure complete offerings.  My hope is that the VC world will see the value in disrupting the old channels in the industry by forcing the development of new standards…whether “official” or “de facto”.

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About Brad Koerner

Venture Manager - Luminous Patterns Philips Lighting
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