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Why MSP is the Once, Current and Future Internet of Things (IoT) Alley

A slender wristband that manages your home’s climate control, stereo and security system with the flick of a finger. A system that turns your cabinets and appliances into “smart things” that sense the world around them and tell you what they’ve learned. A miniature electric guitar that teaches you how to play at your own pace and produces concert-quality sound to boot.
What do these three different gadgets have in common? One, they’re all part of the “Internet of Things” (IoT), a rapidly growing cohort of Internet-connected devices that directly communicate with one another and can sync with any other device that’s hooked into the cloud, including your personal smartphone, tablet or home computer. Two, they’re all — along with numerous other IoT devices — made or designed right here by companies in Minneapolis and St. Paul.
Currently MSP boasts a lively, innovative IoT scene that produces connected devices, and systems that make them easier to use, for businesses and consumers alike. There’s even a movement afoot to rebrand MSP as “IoT Alley” in recognition of its historical and contemporary contributions to the field. (Though Boston-area techies claim ownership of the “IoT Alley” label too.) Whatever you want to call it, there’s no denying that MSP is leading the march toward a future in which even the most mundane objects — furniture, apparel, lawn sprinklers — plug into the cloud and communicate with the wider world.
IoT hub before the term was coined
MSP has been a major IoT hub since the days of the mainframe computer, when IoT was known as “machine to machine communications” (M2M) and didn’t have much use outside of large-scale manufacturing applications.
Back then, remote data sensors made by Minneapolis-based Honeywell and other local firms formed intranet networks in self-contained settings, such as heavy-industry environments too hostile for humans to safely spend lots of time in. They supported early generation automation and monitoring applications, making manufacturing safer and more efficient.
In the 1990s, Minneapolis-based Medtronic pioneered a “smart” glucose-monitoring system that recorded patients’ blood-sugar levels as they went about their business and periodically sent the information to their doctors. Numerous connected medical devices followed.
“MSP was an IoT hub way before the term was even coined,” says Joe Morris, a local entrepreneur, investor, startup mentor and owner of MinMor Industries, a printing, packaging and promotions firm. “And it still is today: I’m currently working with several promising IoT startups.”
Today, geometric improvements in computing power and bandwidth have dramatically reduced the cost and complexity of Internet-connected devices, precipitating new applications that were once impractical or unthinkable. Modern factories are awash in connected devices, allowing them to get by with far less labor than a generation ago. Many medical implants transmit real-time data, though security concerns persist.
The Internet of Things is revolutionizing agriculture, too, with field-deployed sensors communicating soil moisture measurements to smart, highly efficient irrigation systems and Internet-connected tags enabling real-time inventory management at far-flung locations on large farms. IoT could even change how we water our lawns: A local company called IrriGreen makes a smart home irrigation system that uses up to 50 percent less water than conventional sprinklers.
“What makes the current situation different than before is the ability for [connected devices] to be created by almost anyone and the ability of these devices to communicate across a common medium, the Internet,” says Morris. “The potential there is almost unlimited.”
“IoT is a huge growth industry,” echoes Ryan Broshar, principal at local venture capital fund Matchstick Ventures, adding that it may soon be unhelpful to try to differentiate the Internet of Things from the Internet itself. “Pretty much everything will eventually be connected, so the term ‘Internet of Things’ really just describes the future of the Internet.”
IoT’s building blocks, made in MSP
IrriGreen is just one of many local companies working on smart, connected devices and systems. In large part, startups and established companies headquartered in MSP, or that maintain design studios and manufacturing facilities here, are leading the IoT sector’s heady growth.
Spark, for instance, makes development kits and “a suite of hardware and software tools” — with names like Core, Photon and Electron — that enable users to build connected devices in their workshop or basement. Spark’s technology facilitates rapid prototyping and testing; once the user works out the kinks in their device, the technology allows production to be scaled almost without limit.
For the cash-strapped, idea-driven innovator, Spark shortens the time necessary to demonstrate proof of concept, boosting the chances of attracting investors’ or collaborators’ attention before the innovator’s initial funding (or patience) dries up. Judging by the list of devices “powered by Spark” on Spark’s website, lots of inventors and entrepreneurs see the value in its solutions. Not surprisingly, Spark was a huge hit at last year’s Innovation Expo.
Exosite, another local firm, focuses its efforts on businesses looking tap the power of IoT and connect their equipment to the cloud.
“By 2020, there will be as many as 60 billion connected devices in use,” says Mark Benson, Exosite’s chief technology officer. (Other estimates are a bit more conservative, but still impressive: Research firm Gartner predicts 25 billion connected devices by 2020.) “Many, perhaps most, will be the sorts of devices we already use,” like household appliances, motors, car parts, even tables and chairs. In other words, the future of the Internet is about animating formerly inanimate objects — what Benson calls “pervasive computing.”
Exosite offers two solutions for IoT-ready businesses. The first is a software-as-a-service platform that manufacturers and parts suppliers can harness to produce connected industrial sensors, home appliances, medical devices and pretty much anything else. The platform supports clients’ APIs (programming interfaces that facilitate communication and data-sharing between applications) and integrates directly with the manufacturing process — “80 to 90 percent of what you need to create a connected product,” says Benson. Clients’ in-house development teams typically handle the remaining 10 to 20 percent.
Exosite’s second solution is a hands-on “professional services” package. Clients can hire Exosite’s in-house engineers and architects to outfit and set up newly connected devices, train in-house IT departments that may be unfamiliar with IoT protocols, and develop apps that integrate with connected devices. LogicPD, another MSP-based firm with offices in several other cities, offers a similar suite of services.
The next leg up for IoT: consumers
These building blocks underpin the “next big thing” for IoT: consumer applications. As connected devices become cheaper and more ubiquitous, says Morris, it’s easier and more economical to devise new ways to sell them to individual end-users. Jamstik, for instance, is a compact, Internet-connected “electric teaching guitar” that produces super high-quality music and taps the cloud to deliver a customized curriculum based on the user’s performance and preferences.
An even bigger market for MSP’s consumer-facing IoT innovators: home automation. In the past five years, home automation has transformed from a fringe novelty for techies into an increasingly affordable and commonplace trapping of middle-class life.
“I’m not sure how MSP got into the home automation business,” Morris admits, “but it’s a big, big focus here.”
Reemo (made by an MSP-based startup called Playtabase) is a powerful, lightweight wristband that controls basic home functions like climate control, entertainment and security, all with a flick or two of the wrist. The device can be programmed to initiate event sequences when users go to bed or return home from work — in the latter instance, perhaps simultaneously turning on the lights, disarming the security system, unlocking the doors and powering up the thermostat with a single command. Reemo was a co-winner at this year’s CoCo Pitch Night, a sure sign of its broad appeal.
SmartThings, another local home automation firm, is much farther down the road to success: Samsung bought the company last year for a cool $200 million. Like Playtabase, the company makes a proprietary system that loops formerly “dumb” in-home fixtures and appliances into an intelligent, communicative, fully connected network. SmartThings’ system is even more extensive than Reemo: It includes exterior and interior motion sensors, for instance.
Like Reemo, SmartThings’ system can be customized to the user’s preferences and routines. By analyzing users’ behavior patterns, it also “learns” over time. The interface isn’t quite as simple — no wrist-flicking — but the SmartThings system does sync with the user’s smartphone: a pocket-sized, fully mobile home control panel.
These IoT successes might not be possible without a supportive, tight-knit community of developers, engineers, entrepreneurs and other innovators. IoTMPLS describes itself as “a monthly meetup focused on uniting scrappy coders, engineers, makers, hackers, thinkers and doers with artists, marketers, entrepreneurs and innovators.” Among other things, the group dedicates itself to helping members tackle tough IoT-related engineering and programming challenges.
Meanwhile, Beta.mn — co-founded by Matchstick Ventures’ Broshar — has a broader focus, supporting startups in every corner of MSP’s tech scene, including IoT. Beta.mn sponsors informal events and meetups where innovators and entrepreneurs meet, mingle and discuss what they’ve been working on in a laid-back environment. The group’s mission, per its website is simple: “We believe that by throwing meaningful events...for the area’s brightest innovators, we’ll ensure that the next big thing happens in our own backyard.”
IoTMPLS, Beta.mn and similar groups contribute to a community-first ethos that sets MSP apart from more cutthroat innovation hubs. “As I’ve become more involved in MSP’s startup community, I’ve noticed that people here want to help others with little to no concern about themselves,” says Morris.
In other words, MSP’s brightest innovators and investors aren’t single-mindedly focused about becoming the next Mark Zuckerberg or Steve Jobs. They’re more concerned about the professional success and well-being of their fellow innovators: what benefits one member of the community benefits the community as a whole.
How MSP keeps its IoT edge
No matter how innovative you are, though, selflessness only gets you so far. Recent examples of MSP-built IoT firms looking for growth elsewhere should give the region’s boosters pause. After accepting Samsung’s buyout offer, SmartThings relocated its headquarters to California, though it does retain a significant presence here. Spark remains independent, but it too opened a Bay Area office after a successful funding round and now seems more focused on building up its West Coast presence.
Spark and SmartThings raise the question: Does MSP need to do more to support and retain successful startups?
“It’s certainly concerning that promising companies feel the need to move elsewhere” when they reach a certain size or level of success, says Benson.
Broshar, Morris and others believe that the key to a more robust, retention-oriented MSP IoT startup scene lies in building bridges between local early stage companies and the Medtronics and 3Ms that may one day buy them out — or, for startups that remain independent and become wildly successful, compete with them for the same customers.
Pairing the efforts of support groups like IoTMPLS and Beta.mn with a more robust funding and mentorship ecosystem — exemplified by people like Broshar and Morris — could help startups move beyond the do-or-die phase, become profitable and ultimately attract the attention of their more established peers.
“There’s no lack of willingness [among large firms] to engage with nascent IoT startups,” says Morris. “But big companies aren’t able to invest in every single startup out there — they’re not built that way.” Instead, he says, they bolster startups indirectly by providing financial support for business-development initiatives and organizations like GreaterMSP, Minnesota Cup and the Minnesota High Tech Association, which in turn support and recognize the efforts of local IoT entrepreneurs.
Separately, MSP’s political leaders need to recognize the long-term economic importance of maintaining the region’s edge in IoT and other next-generation tech sectors, says Benson. Exosite tripled its square footage last year, he notes, but it’s already in danger of outgrowing its new space. Though his company isn’t threatening to leave the region, younger firms that can’t devote as much capital to rent payments and other overhead costs may feel pressured to move to cities or states with better tax incentives for job-creating startups or lower business taxes in general.
Thanks to the enthusiastic, often selfless innovators pushing the boundaries of what’s technologically possible, however, the region is well-positioned to lead the next phase of IoT growth. But as the Internet of Things becomes increasingly indistinguishable from the Internet itself, other IoT leaders are likely to emerge as well. Boston may well wrest the “IoT Alley” label eventually — and that’s fine, as long as MSP remains known as the IoT capital of the North.
Brian Martucci is The Line’s Innovation and Jobs News Editor.
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