Why Your New Smart-Home Won’t Really Belong to You

We've been talking about smart homes and smart cities for a long time.

However, it turns out that we are not willing to pay very much for simple convenience, so the technology is coming into our homes bundled with different agendas.

We've seen this happen with the success of Alexa and Google Home, and we are now seeing it here in Japan with Nature Remo.

Today we sit down and talk with Haruumi Shiode, the founder and CEO of Nature, and we discuss not only what the future of home automation will look like, but who will be paying for it.

It's an enlightening conversation, and I think you'll enjoy it.

Show Notes

The real motivation behind smart home purchases How hardware entrepreneurship went mainstream The one way in which crowdfunding is still relevant Why Nature decided to launch English-first How to outsource hardware production without going bankrupt Nature's real business model for the future The importance of demand-response in Japan The growing significance of corporate alumni networks in Japan Why Kyoto might be Japan's next innovation center

Links from the Founder

Everything you wanted to know about Nature Remo Friend Haruumi on Facebook Follow him on Twitter @haruumi524 Read about Haruumi's transformational sailing journey. It's a pretty cool story.

Leave a comment Transcript Welcome to Disrupting Japan, straight talk from Japan’s most successful entrepreneurs.

I’m Tim Romero, and thanks for joining me.

Smart homes and smart speakers have not really changed our lives in the way that was predicted. I mean, it’s not that they have not sold well. Amazon has sold over 100 million Alexa-enabled devices and the technology is a really amazing, but voice assistance remain a novelty rather than a real step forward, and here in Japan, even with Japanese language support, the adoption rate has been low.

I think a big part of that is the lack of conductivity, and by conductivity, I don’t mean the ability to connect to a computer or interact with other programs. I mean, smart speakers don’t connect us to each other in new ways. In the end, they are just an input device. They don’t provide something that we don’t already have in our lives. Well, today, I’d like you to meet Haruumi Shiode, the founder and CEO of Nature’s created a new smartphone device, the Nature Remo.

Now, the Nature Remo provides some immediate utility: the ability to control your life and your air conditioner from your smart phones or based on rules that you set up, but the real reason that Nature is so interesting is what comes next. It’s a lot more than just turning your lights on and off; it’s a new way of connecting with each other and a new way for power companies to manage the power grid during times of peak load.

But you know, Haruumi tells the story much better than I can, so let’s get right to the interview.

[pro_ad_display_adzone id="1411" info_text="Sponsored by" font_color="grey" ] Interview Tim: So, I’m sitting here with Haruumi Shiode of Nature, so thanks for sitting down with me.

Haruumi: Thanks for inviting me for this podcast.

Tim: No, I’ve been looking forward to it. So, Nature makes the Nature Remo which is a really interesting device that you can probably explain a lot better than I can, so what is the Remo and how does it work?

Haruumi: Nature Remo is basically a very small tiny device that can turn your AC or TV, or lighting through smart device. It communicates with those appliances through the infrared and they connect to Wi-Fi, so that you can control from your smart phone or smart speakers.

Tim: Okay, so infrared means it’s sort of – it’s emulating the remote control for your TV or your air conditioning?

Haruumi: Yes.

Tim: Ah, okay, cool. So, if it’s infrared, and so if I wanted to outfit my apartment with these and control or my air-conditioning units and my TV, so would I need one Remo in each room?

Haruumi: Yeah, you have to have one device per room.

Tim: Okay, and since it’s infrared, it needs to be line of sight, so you mount these on the wall or high up in the rooms?

Haruumi: It will do anywhere. Yeah, yeah, it just has to be line of sight to the appliance.

Tim: Okay.

Haruumi: And, just to give some background to the audience, in Japan, most of the air-conditioners come with infrared control, and obviously, TV comes with infrared remote control, so when the Google Home or Amazon was launched in Japanese market, there was not many smart home devices that can speak with those smart speakers. The people wanted to have kind of a bridging device, so Nature Remo was exactly that one.

Tim: Okay. So, actually, anything with a remote control, it could control, right?

Haruumi: Yes.

Tim: Okay, that makes sense.

Haruumi: Infrared remote control, to be precise.

Tim: Infrared remote control, right. And, what do these devices, what do they cost?

Haruumi: So, right now, we’re giving a little bit of a discount, so it’s selling at around $70.

Tim: So, tell me about your customers, so how many users do you have and what kind of people are they?

Haruumi: So, our user base is getting close to 100,000. We just recently did the customer survey, and we got a response from more than 2000 customers. Majority of our customers are male and aged between late 20s to 50s, then many of them work or IT or the makers in Japan, so they are kind of tech-savvy.

Tim: Definitely the early adopter profile, right? So, is there motivation playing with cool new gadgets or what do you think the main motivation for your current customer base is?

Haruumi: Two big reasons why they buy the device: one is they have Google Home, Amazon Echo, they want to control their home appliances through their voice, so they buy our device, and the other reason is, our customers want to control those home appliances from those smart phone, like turning on the AC before they come back.

Tim: So, it’s mainly convenience?

Haruumi: Yes.

Tim: We will dive into the business model in a few minutes, but before that, I want to back up a bit and talk about you.

Haruumi: Okay.

Tim: Now, you quit Mitsui to go to Harvard Business School, and in another interview you did, I noticed that you said you went to Harvard to start a startup which just struck me as a really weird phrase, you know what I mean? I mean, I hear people who moved to San Francisco to start a startup all the time, but Harvard Yard MBAs tend to go into investment banking or consulting, so what were you thinking?

Haruumi: Even if I look at the stats, that is not exactly true because Harvard has been putting a huge effort to promote entrepreneurship and there’s a bunch of entrepreneurs, and if you think about the Japanese market, two big entrepreneurs are Harvard MBA alumni. One is Mikitani­-san from Rakuten, the largest e-commerce company in Japan, and the other one is Namba-san from DeNA. They are both from Harvard Business School. Before, you can’t name a big entrepreneur from Stanford Business School.

Tim: From Japan?

Haruumi: Yeah.

Tim: No, you’re right, I can’t, but I mean, yeah, Namba-san and Mikitani-san, their kind of entrepreneurial journey, it’s almost like the last generation of Japanese entrepreneurs, right? I mean, that was back when starting a company meant you had to have the right connections to the right people, and it’s different now.

Haruumi: Yeah, so I knew that I’m going to start my own startup when I was 10. My father was an entrepreneur, so I have been observing him like starting a company and a really exciting moment of launching his own product, so I have been preparing to start my company. The last missing piece for me was a global connection.

Tim: Looking at your website, it looks like the Harvard experience really helped you. You participated in a lot of startup programs and one a few competitions that were directly related to that school.

Haruumi: I think it helps in many ways, so probably the biggest one is that trust that I can get from typically, B2B partners. In Japan, everybody knows Harvard Business School. If I say – oh, I don’t need to say that, and then they see me on the website, and then they see that I graduated from Harvard Business School.

Tim: So, you founded the company while you were at Harvard. Your launch, so you founded in 2014, right? And in 2016, he launched a Kickstarter campaign, an IndieGogo campaign, and a Makuake campaign. All the same time?

Haruumi: No, we started from Kickstarter, and then moved to IndieGogo, and then started the Makuake campaign here in Japan.

Tim: So, what was the objective of the multiple platforms? Are you fund-raising or was this part of your marketing campaign?

Haruumi: Pretty much our marketing campaign, but there was a big trend in the crowdfunding circle starting with Kickstarter, and then shifting to IndieGogo, because Kickstarter is only 30 days, but IndieGogo, you can run as long as you want, so after you finish Kickstarter, people are doing the IndieGogo right after that, and Makuake, the reason why we did Makuake is there’s a bunch of Japanese potential customers who are not really good at English, so we wanted to reach out to those audience as well.

Tim: For marketing purposes?

Haruumi: Yes.

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Tim: Alright. I mean, obviously, the Makuake backers were all Japanese, but for the Kickstarter and IndieGogo, where most of your backers from the US or from Japan, or from somewhere else?

Haruumi: Yeah, that’s another reason why we did Makuake, so after doing Kickstarter, we found a 50% of our backers are from Japan and 30% is from the US, and 20% is the rest of the world, so we saw a big fraction from the Japanese market, yeah. Then, we did Makuake to get customers.

Tim: So, you have 50% backing from Japan and your Kickstarter page,