In the fragmented smart home market, start-up Yonomi has a unique model. Founded in 2013 in the USA, it offers a smart home integration platform with the mantra of “agnostic interoperability”.
Co-founder and CEO Kent Dickson explained in a recent interview with Rethink: “Our goal is to make it easy for innovators to build great apps that connect with the smart home.”
This view works against the prospect that Google and Amazon will forge an effective duopoly, where newcomers are unlikely to survive unless they integrate with one of those ecosystems.
Dickson responded: “I don’t think you have to choose your side early on. If you’re a device maker or service provider, you’ll want it to work with everyone else, but you don’t have to choose one ecosystem.”
Yonomi offers a platform which “plays a broker role between hundreds of devices,” translating the commands they send to each other in a smart home ecosystem. The business manifests itself in two end products – the Yonomi cloud platform, which currently hosts around 300 consumer smart home devices, and an end user application which is free to use and mainly designed to drive usage, since the company does not sell on any of the data collected from it.
The company’s guiding principle is that “basic interoperability in the smart home should be free”, Dickson said, and the revenues come from selling the cloud platform to businesses that want their products synced up with everyone else’s.
The cost of this service varies depending on the customer, with Yonomi often charging on a ‘per-household’ basis. Device makers can integrate with the Yonomi platform with their own cloud head-end by making their application programming interfaces (APIs) available to the company, or they can use Yonomi’s in-house Thin Cloud head-end, which around 10% of its clients choose to adopt.
The Thin Cloud came into being after Yonomi began operating. Dickson explained that “we weren’t thinking that device makers needed us to build a cloud head-end. But along the way we found many of them were really struggling to connect to the cloud at scale, with good APIs and with necessary speed.” Device makers which opt to use Thin Cloud automatically get integration with both Google Assistant and Amazon Alexa.
While many ‘connector partners’ in its smart home ecosystem are huge consumer electronics companies – Dickson gave the example of Philips’ smart lighting company Hue – many of Yonomi’s clients are specialists that want to get their products to market as effortlessly as possible.
“We have customers who are specialists, who have PhDs. They don’t want to be in the hardware or middleware business, they just want a way to rapidly assess what else is in the home and to be able to connect to those devices,” Dickson explained.
These less commercially aware customers come from a wide variety of verticals. One sector from which Yonomi is receiving regular attention is domestic energy management, with three or four clients in this sector currently in the works. Other popular sectors are home insurance platforms, ‘ageing in-place’ health services, and home security.
Dickson noted how simpler smart home security services are getting increasingly popular. “Not everyone wants to pay $50 a month for a professional security system. Most people just want a push notification when important things happen, like a person being at your door.”
There are comparisons with SmartThings, but the key difference is that Samsung’s offering is enabled by a hub, which is tied to certain hardware, much of it Samsung devices.
“A key piece of being agnostic is having no horse in the race,” Dickson said. “Samsung cannot be agnostic if it makes appliances. I think the team probably want to be agnostic, but at the end of the day, they aren’t going to treat a Whirlpool appliance the same as they’d treat a Samsung one.”
Dickson has an unusual optimism that the smart home will not be permanently dominated by the cloud giants. “There’s enough of a balance of power that there is a détente among Big Tech,” he argued. “No-one has a dominant market position and none of them believes they can run away with the smart home market. They know it’s going to have to be open.”
It seems that Dickson’s optimism is also fueled by the ever-plummeting price of smart home devices. He noted how device makers are trying to squeeze manufacturing costs as much as possible. Dickson noted that device makers “won’t get recurring revenue from your devices once sold, and they need to keep that thing connected for 10-15 years, so they have to capture the cost of that in the initial sales price”. Lower manufacturing costs make the chances of that more likely.
He also noted how players such as AWS have helped in disaggregating cloud applications from hardware, and relentlessly driving down the cost of cloud computing. Dickson sees this as a stimulus to diversifying the smart home sector, arguing that “if you can keep pushing down the cost of doing business, the variety of business that exist will flourish,” referring back to those cheaper home security products.
Yonomi has received large investments from both Allegion and Gentex. The former invested in the company in 2017, while Gentex was the lead in Yonomi’s Series A round in 2018. Both companies were customers before they became investors. “They saw the problem we were solving and saw that it wasn’t just specific to them, that the market would benefit from it being scaled up,” Dickson said.
Yonomi is planning its Series B round sometime this year, looking to raise between $8m and $10m. Currently Yonomi is at 24 staff, although there are plans to expand following the next funding round.
Yonomi is not turning a profit but says “revenue is growing year over year”. Yonomi’s sales channels are still primarily inhouse but it is starting to work with channel partners too, which will take the platform to customers into their domains, such as telecoms. Most of the firm’s current business is in North America and Western Europe, though there is some growth in Asia, the Middle East and Africa.