Connected Things: Confessions from a Midwest Entrepreneur


In this blog, I am interviewing guest, Claude Aldridge. Claude is a senior executive, business leader, and entrepreneur. He most recently was the Cofounder and CEO of Trellie, a wearable technology firm focused on creating Luna Smart Jewelry which filters out the noise and notifies the user of important calls, texts and calendar events, providing her with the “power to be present”. Previously, Claude spent time in various technology startups, was an Associate in a VC firm and successfully built and sold a financial advisory practice. He lives in Kansas City with his wife and two kids.

SR: What is internet of things in your opinion? Is it things talking to things?

CA: To me the IoT is simply the interconnection of physical “things” through technology that can send and/or receive data.

SR: What are the best commercial applications of IoT? Google Glasses? Driverless cars?Nest Thermostat?

CA: I think there are a ton of really big, hairy audacious IoT projects going on by company’s like HP, Cisco, IBM, and Google which have the potential to change the planet as we know it today. We will talk to our cars and they will listen. There will be smart cars, smart cities, smart buildings and factories. In the fashion-tech world where my company Trellie lived, we paid close attention to Ringly, Fitbit, and Misfit who were doing incredible things considering the space was still young.

SR: What drew you to this industry and why did you start Trellie?

CA: I co-founded Trellie with a long-time friend of mine, Jason Reid, after we both discovered our shared frustration with the inefficiencies of mobile communication. Specifically, the day we happened to be meeting for lunch, I showed up really frustrated that I couldn’t reach my wife on her phone even though I knew she was available. We started talking about if others were having similar frustrations and possible ways to do things better. What really started the wheels turning was a study we came across commissioned by Nokia that basically said most women carry a handbag and this is where they store their phone…and because of that, they miss half of their incoming calls. This was eye opening to us, not because my wife was missing my calls but because I thought about what happens if my son gets seriously injured at school and the teacher can’t reach her in a timely manner. This led us to develop the Trellie Classic, which was a very simple Bluetooth wireless charm that hangs on the outside of your handbag and lights up when you get an incoming call or subsequently miss a call. It was insurance that you weren’t going to miss that important call.

SR: They often say pioneers have arrows in their backs? Is it too early to jump into IoT without being slain?

CA: I am familiar with this saying as Trellie was really early in the space. In fact, when we first started we referred to ourselves as consumer electronics for women because the terms “wearables” or “IoT” didn’t really exist in the main stream yet. We knowingly jumped in early because we were solving real problems. As things progressed it became apparent we were going to need some “staying power”, meaning capital reserves, to make it through the maturing process of the space in general. Unfortunately we failed at securing capital. A great example of an early pioneer who was successful is Misfit Wearables who just sold to Fossil for $250 million. They started right around the same time as us. As for starting now, I’m a big believer that you can’t time the markets including the IoT space. If you can build it now, then build it now…the rest will sort itself out.

SR: What core competency do you need to succeed in this space? Software or hardware expertise? Business acumen? Leadership?

CA: Well this is a loaded question. Going forward as a startup in the IoT space, I think you need product differentiation, something special that makes your product unique. This past year, I met with a lot of venture capitalists that basically told me they had stopped investing in the IoT space because there were so many products and so many companies jumping in so instead of trying to pick winners, they were observing and letting the space evolve…kind of a survival of the fittest thing.

Product differentiation and staying power (capital to overcome inevitable hurdles) are big ones. I think the main core competency is knowing your hardware. We worked with multiple teams of engineers on our products, some were good and most were bad. There are only so many quality engineers that you have access to who can work on electronics small enough to fit in IoT type of products and do it well. We learned the hard way and at the end of the day this delta probably contributed to the failure of our company.

SR: What one factor is necessary for accelerating IoT in the consumer market?

CA: I’ll give you two. First, batteries have to get smaller and more efficient. I don’t know how that happens or even what the physics are around that challenge but it has to happen if you really want IoT to blend into your daily lives which is the ultimate goal I think. Second, I think the consumer products need to take that next step and really use the data they are collecting in a meaningful way for the user. One cool thing we were working on was using your data to help you capture time back in your day. It’s probably a whole other discussion but if you could pull that off, that is life changing to a lot of people.

SR: Recently you had to shut down your business.  Any lessons learned? If you did it all over again what would you do differently?

No regrets! We had an amazing 3.5 year run and are very grateful to our family, friends and investors who supported our vision. Unfortunately, we couldn’t overcome a costly engineering challenge, a fundraise gone bad and a 5 month acquisition that didn’t materialize…all simultaneously. We are still taking personal inventory, but at this point, for me, the biggest learning was that a consumer product idea like Trellie, which combined female fashion and IoT technology was too untraditional for most Midwest investors. We successfully raised the first rounds of investment from friends, family and some local angels but that well quickly dried up.   As I mentioned earlier, with a product in this space, you need staying power when things get tough. And that requires risk capital that just doesn’t exist in the Midwest in my opinion. Hardware products that have a little higher cost structure and may not generate meaningful cash flow for a while frankly scare Midwest investors. We actually learned this early on which is why we shifted our fundraising focus to New York City and Boston. The problem we encountered there is unfortunately we are still fighting the stigma that innovation does not come from the flyover states. There is a pervasive bias that you can’t possibly build a company, find the talent or get the support you need to build a billion dollar company in the Midwest. I think that thinking has started to evolve in a positive manner on the coasts but we aren’t there yet. So my take away would be to know where you are going to get your capital to carry you through the tough times and start working those relationships early in the process before you actually need the money.

SR: Good advice. I look forward to hearing about your next venture. I have a feeling we have not heard the last of your big ideas!


storytelling11-resized-600[1]In this blog, I am interviewing guest, Alex Kruglov. Alex is the co-founder and CEO of Smiletime, a video platform for premium content that allows audiences to serve as an integral part of the storytelling, driving, interacting and engaging with content on screen. Prior to co-founding Smiletime, Alex spent six years at Hulu overseeing all of its content acquisition efforts. Alex graduated magna cum laude from Brown University and received his M.B.A from Harvard Business School, where he graduated in the top 5 percent of his class as a Baker Scholar. Alex lives in Santa Monica, Calif. with his wife and two daughters.

SR: I have known you for a while as a content junkie. How do you have enough time in the day to watch all the content you do?

AK: I don’t play golf… Haha….All jokes aside, I consume more than your average bear. For me, it’s both a job and a passion. Throughout the day, I am constantly reading, watching, and listening. I have been driving a bit more lately, so that’s podcast time, a new category for me. After the kids go to bed, I generally watch serialized shows.

For what I do, staying on top of the latest and most cutting edge content is absolutely crucial. But I also love every moment of it. To be able to work in a field that delights and gives me energy after all these years is absolutely magical. 

SR: What are your favorite content mobile apps?

When it comes to really watching video, I do so more in the living room or on my PC. Netflix, Hulu, and HBO Now are my go-tos there. When it comes to mobile, I limit my viewing to shorter clips. I will get more to it later, but I generally find that most video distributors are not doing nearly enough to create an experience that feels native to the mobile device footprint. Smiletime changes that, so I guess from my incredibly biased perspective, that’s my favorite mobile video app.

I do love to read on my mobile device, so my favorite content-specific app is the Kindle. Otherwise, Facebook and Twitter dominate as my source for articles and short-form video.

SR: How is the delivery of broadcast content going to continue to change with media consumption being so multi-screen, mobile and ubiquitous?    

Most of the developments have been purely good news for both consumers and creators. As recently as 10 years ago, if you found yourself at home on a weekday at 4pm, you would have to settle for watching a Soap or a daytime talk show. Now you can watch anything you want, old, new, live, long or short. You can pick a new series to binge or watch a live broadcast on Al Jazeera.

What broadcast networks continue to do well is make big, broad TV shows, spectacles.  Just as with big movies where big budget comic book films and sequels dominate and continue to provide returns, with some exception the broadcast networks are still the best at making big loud shows like The Voice, Empire and Quantico.

That said, the traditional business model of a broadcast network (appeal to tens of millions of viewers and earn revenue through advertising) has ended some time ago. Broadcast networks are all now paid subscription fees by the carriers. Some have already launched direct to consumer OTT apps with exclusive programming only available online (including CBS and Star Trek).

The concept of “broadcast content” is not relevant to most young consumers. They just watch stuff they like when they want to. As gatekeepers and audience-aggregators, networks continue to have strong ability to gather audiences and market to them. Over time, where and how they gather, and how they monetize will change. But to this day, the studio system remains best at making big and loud productions that reach mass audiences.

The more interesting question is what comes next. When television first came around, there was a real concern that it would be a major hit on the feature film business. Instead, it became a fundamentally new art form. Our obsession at Smiletime is how to facilitate the creation of that new art form that feels native to the Internet and its device footprint. Traditional TV and film isn’t that.

4. Has the line between content and distribution completely disappeared? Amazon and Netflix have hit series like Hand of God and Orange is The New Black.  Verizon purchased AOL this year. What’s going on?

AK: I don’t think who owns who matters all that much. Netflix is what HBO would have been if HBO could get directly to the consumer without the cable company. The name “Home Box Office” essentially means just that. Of course, HBO Now is precisely that today. News Corp has owned Sky for years. Comcast owns NBC Universal and before that tried to bid on Disney. Before owning a media company, Comcast launched multiple networks including E!

SR: What is innovative storytelling? I keep thinking of non-linear techniques that Quentin Tarantino applied in Pulp Fiction, but is that realistic on a consistent basis?  Can American audiences appreciate a disjointed narrative or are we too addicted to beginning, climax, end?

Pulp Fiction blew everyone’s mind because it was really good. There are plenty of great films (Memento, Mulholland Drive, and Inception immediately come to mind) that follow very different narrative threads, but I wouldn’t be too fast in dismissing stories with a beginning, middle, and an end. The major issue today isn’t that the formats are stale but rather that too many movies and TV shows get made. John Landgraf, one of the most impressive network heads working today, presented an analysis recently that showed how many scripted TV series are made every year. The number today is unsustainable primarily because, simply put, there aren’t enough genius creative people out there to make that much.

Same concept applies to books. The cost of writing a book is the writer’s time. It doesn’t require armies of people to coordinate something impossible. That said, the number of good books every year doesn’t grow significantly. Moreover, when you have innovative new formats (like “Choose Your Own Adventure”), they generally only apply to a limited subset of books rather than becoming dominant.

Long story short, I don’t believe that the appetite for amazing storytelling is any less now than it has ever been. If anything, it is much higher. And the format is driven by the demand of the story and the storyteller. Full stop.

That said, today’s world offers creators more opportunities to better suit their narratives to a medium. Smiletime, for example, allows creators to deeply engage their audience in real time, something live performers have been doing for many centuries. Smiletime also allows audiences to connect not just with the performer, but with each other, creating real time passionate forums around shared interests. While Smiletime allows ubiquity, more exploratory formats, like VR, have allowed genius creators (like Chris Milk) to reimagine narratives that are no longer restricted to the rectangle of the screen and allow 360-degree views.

I have never been more excited about storytelling and audience delighting opportunities than I am today.

AK: Skipping traditional video is not new. Youtube has been facilitating prosumerism for a decade, where video content is co-created, tagged, shared, and rated.  What is the new video form around the corner? And what business models other than advertising against it will make it viable?

I don’t think I would consider YouTube’s videos themselves to be so untraditional. If you take a close look at what’s working on YouTube, you get a pretty large swath of very traditional stuff: music videos, late night TV clips. You also get many dozens of newly minted megastars that are skipping traditional gatekeepers and going directly to consumers. These new celebrities are making videos that are shorter than film and TV and released in different patterns, but I would argue the videos themselves aren’t an order of magnitude different from what other programmers have created in the past to appeal to younger audiences. Do you remember MTV in the 80s and 90s?

The lack of gatekeepers, however, is a really big deal. YouTube created an unprecedentedly simple large scale experience. There is a nontrivial number of stars that are making millions of dollars a year, taking advantage of their strong grasp of their audiences and declining costs of production. This is a big deal because we are seeing a new category of creators who are also entrepreneurs. And we are seeing a lot of them. These men and women own their programming and know their audiences better than anyone. I’d make an analogy to Martha Stewart, a savvy performer who’s also a world class businesswoman. YouTubers are that on steroids. And there are many of them.

SR: How is your company Smiletime changing the game of innovation in video that we should be on the look out for?

I started Smiletime with my co-founders Jace Hall and Sharon Chang due to our shared frustration over the limitations of video. Hulu, Netflix, Amazon, and yes, YouTube, are not differentiating their programming from each other, instead investing in exclusive programming, playing the same game that broadcast and cable networks have been playing for years.

Having exclusive programming is crucial, but it’s just as important to create a user experience around both content creation and consumption that differentiates your platform from all others. Smiletime does that. We offer creators and consumers an opportunity to connect and lean into programming in a way no other video services do. Engaging in a Smilecast is as similar to playing a video game as it is to watching a TV show. Not surprisingly, I think of that as the “new video form around the corner.”

SR: Thanks for your conversation. Good luck with your new project!