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!