EMERGING

BETS
VOLUME 02, MAY 2013
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PRODUCT OF
For the second year, Deutsch LA’s Invention team journeyed to CES and SXSWi to wade through
hundreds of new products and services. What follows is an exploration into the emerging trends
and lessons, culled from that adventure, that brand marketers can apply to their own businesses.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 2 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
Invention began at Deutsch LA with the mission to solve complex
business problems through means that fall outside the comfortable
mold of advertising deliverables. Our team is charged with developing
disruptive offerings, relationships, and business models for our clients.
With that in mind, we attended two of the leading conferences relevant
to our industry - CES and SXSWi - to examine startups and products
that build on or extend emerging behaviors and technologies.
Startups and burgeoning products represent emerging bets
at the intersection of technology and culture. Any product that
a company produces is inherently a prediction for the future. CES
and SXSWi represent a rare opportunity to view hundreds of those
predictions in a single location, all vying for attention and adoption.
From these bets, we’ve collected an overall view of rising trends and
what brands and marketers can learn from those trends.
CES, which is typically a conference for major hardware brands,
was showcasing more and more startups in the hardware space
this year. Conversely, SXSW Interactive, which has in the past
been the launching pad for applications and software, this year
showcased a number of startups (and brands) emerging in
the hardware space. So why this marked attention and activity
among hardware startups? We have three theories:
More Accessible 3D Printing: 3D printers were on
everyone’s list of top disruptions this year and we’ve begun
to see a plethora of consumer-grade entrants.
The Internet of Things: The internet is no longer
contained to just a smartphone or a computer. We’re entering
an era where pretty much any object can turn into a Wi-Fi-
enabled, data-sharing, communicating device.
Crowdfunding: The cost of prototyping has decreased
but the cost of mass production is still high. Thankfully,
platforms like Kickstarter and IndieGoGo allow entrepreneurs
to share ideas with the world and get funding all without
meeting a single VC.
About This Report
The Big Trend: The Rise of
the Hardware Startup
PRODUCTS, STARTUPS,
AND COMPANIES
CONSIDERED FOR THIS
RESEARCH
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CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 3 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
AliveCor
DIY Technology
Consumer
Electronics
3D Printing
Health and Wellness
Home
The Internet of
Things
Mobile Accessory
Quantified Self
Toys and Games
Wearable Technology
Beam Technologies
Bia
Brainbot
Breathometer
Fabule Fabrications
Grippity
Lightup
Molecule Synth
Coco Controller
Flomio
Helio
Makerbot
Ninja Blocks
Double Robotics
Focus
Hiku
Makible
Nomiku
Dropcam
Good Night Lamp
LIFX
Misfit Wearables
Formlabs
Leap Motion
Memoto
InteraXon
Makie Labs
Olloclip
Rest Devices
Ouya
Sensus / Canopy
Tagstand
Pebble
Spark
Twine
POWERLeap
Pinnochio
PetHub
StickNFind
U Grok It
2013 Hardware
Startup Trends
Emerging hardware startups and the trend
categories they fall into.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 4 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
Key Trends
3D Printing and Maker Culture
2013 might just be the year that Maker Culture
goes mainstream. An outbirth of DIY culture,
Maker Culture stresses the rapid development
of technological leaps of imagination and has
playod a signihoant rolo in tno toon soono íor tno
last 5-6 years. With the increase of companies
supplying 3D printers, the decrease of their
overall cost, and the rise of new communities
beyond MAKE magazine, Maker Culture is
attraoting disoiplos outsido oí tno toon hold.
At this year’s conferences, we also saw how 3D
printing is impacting diverse industries, with a
major emphasis on health, as many organizations
are looking to the technology to solve pertinent
issues in the space. Moreover, we believe that 3D
printing is poised to disrupt manufacturing as a
whole, as we see companies being built entirely
on the creation of 3D-printed products.
3D Printers and Scanners
Makerbot: Ono oí tno hrst oonsumor-íriondly
3D printers, the Makerbot Replicator, has been
on the market for a number of years, and is
starting to gain mainstream momentum. Bre
Pettis, founder of Makerbot, gave the opening
keynote at SXSWi this year, and talked about how
the community is using the product in new and
transformative ways. His stories ranged from a
father who made insoles for his daughter so she
could be tall enough for an amusement park ride,
to a pair of doctors in South Africa creating low-
cost prosthetics for children. [Retails at $1,999]
Digitizer: Launched at SXSWi, the Digitizer is
the newest product from Makerbot and received
widespread attention. Think of the tool as a 3D
version of your desk scanner. Now any object
can be copied by using the Digitizer and
Makerbot in tandem. While it hasn’t hit markets
yet, it will be interesting to see how it will be used
by the community, and how manufacturers avoid
potential piracy. [Retail TBD]
7
Number of panels
and events around
hardware at SXSW
in 2012.
24
Number of panels and
events around hard-
ware at SXSW this
year, a 350% increase
over last year.
Hardware at SXSW
110
Number of startups
who attended CES
in 2012.
154
Number of startups
who attended CES in
2013, a 40% increase
over last year
Startups at CES
From 2012 to 2013, theres been a significant increase in hardware startups at major tech conferences.
.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 5 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
Key Trends (cont’d)
The CubeX is a new consumer-friendly
competitor to the Makerbot.
CubeX 3D: Makerbot isn’t the only product of its
kind on the market. One competitor is the CubeX
3D, which won CNET’s Best of CES award. This
high-end printer, aimed at both enthusiasts and
professionals, can print 15% larger objects than
any other printer currently on the market. [Retails
at $2,499]
Startups built on 3D Printing
Makie: A startup from the UK, Makie, creates
custom dolls for young girls and a winner of the
SXSW Accelerator competition. Makie allows
oustomors to onooso spooiho attributos íor tno
doll they want online and have it produced just
for them. Years ago, a venture like this would
be almost impossible because of time and
resources, but 3D printing makes it easy to make
personalized creations quickly, and at a lower
cost than typical manufacturing processes.
Peeko: From Rest Devices, the Peeko Monitor is
the next-level baby monitor, a onesie for babies
that tracks their breathing, activity, temperature,
and noises. Parents can access this data on their
mobile phone with an accompanying app. Peeko
showcased their product at CES with 3D-printed
(thanks to Makerbot) prototypes for customers to
experience.
Internet of Things
In 2007, the world was wowed when the iPhone
was roloasod, íor tno hrst timo ovor putting tno
power of a computer in our pocket. Moore’s Law
has since been chugging away and now storage
and prooossing powor oan ht into inoroasingly
smaller and smaller things. As a result, we’re
starting to see a whole new era of connected
devices, giving our houseplants the ability to
tweet and our glasses the ability to project
location-based information onto our retinas.
This new wave of hardware-based products
launching at major conferences is leading to a
shift in marketing tactics as well. Flashy booths
in conference halls and free T-shirts are one
thing, but hardware startups are looking for more
creative ways of getting the actual product into
pooplo's nands. Lytro, a lignt-hold oamora tnat
lets you refocus images after you take them,
rented out their devices to SXSW attendees for
24 hours so they could play with the product in
real-world scenarios.
Google Products
Google Talking Shoes: Last year at SXSW,
everyone was talking about the Nike Fuelband,
a hardware product from Nike that tracks your
everyday movement and helps you visualize
your progress online. This year, Google took
quantihod solí to a now lovol, witn a prototypo
of talking sneakers that tracked activity and
motivated you to keep moving with audible words
of encouragement.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 6 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
Google Glass: Toward the end of the
conference, Google hosted a demonstration of
Google Glass, essentially a wearable, voice-
controlled smartphone that lives in the lens of
eye glasses. Seeing the presenter and members
of the audience wearing the device felt like a
glimpse into a very distant future.


The Memoto can be clipped on to record all the
moments in your day.
Wearable Technology
Memoto: Ono oí tno hnalists oí SXSW
Accelerator, Memoto, is a tiny, wearable camera
that takes a picture every second. It takes
lifestream to a whole new level. The camera
also serves as a GPS so it can organize photos
by location. By connecting the camera to your
computer, you can browse, search, and share
(quite literally) your life.
Pebble: While we’re all hearing about the rumors
that Samsung and Apple will soon release “smart
watch” devices, it turns out that some scrappy
startups beat them to it. The Best in Show award
at CES went to Pebble, an e-ink watch that can
sync with your phone, and is easily customizable
based on the users demand. The watch can be
used for anything from monitoring a golf swing to
controlling a music playlist.
Key Trends (cont’d)
Healthcare Products
Sure Response: A new service from Verizon,
Sure Response is essentially a system that lets
you keep track of an elderly parent, or any loved
one who might need assistance. Users can push
a help button and automatically deliver location
information in the event of an emergency to a set
list oí rooipionts, írom your signihoant otnor, to a
caretaker, to a 911 response.
HealthID: Another product from Verizon,
HoaltníO, is an NFC (noar hold oommunioation)-
powered wristband that contains important
personal information that you can have on
you wherever you go. Your medical record,
allergy, and pre-existing condition information
can be wirelessly transferred to an emergency
responder from the device.
Canopy’s Sensus Case lets users add touch
functionality on the back and sides of their
smartphone devices
Smart Device Cases
Sensus: A new product from Canopy, the
Sensus Case adds touchscreen functionality
to the back and right-hand side of your Apple
mobile device. This lets users interact with any
experience on screen without blocking the view
of the screen in a more comfortable and relaxed
position.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 7 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
AliveCor: Cases can also provide life-saving
functionality, too. AliveCor is a heart monitor
within an iPhone case that, when grasped,
records an accurate electrocardiogram that is
sent through app the on their phone.
Crowdfunding
An entrepreneur, garage-based engineer, or
general hobbyist’s ideas are no longer limited to
their personal network to raise money. With the
popularization of crowdfunding platforms like
Kickstarter and IndieGoGo, product development
is becoming easier than ever.
Tech conferences are often the place where
software startups try to make a lot of noise, woo
investors, and hopefully raise some funding
while they’re there. Learning from this technique,
hardware startups collect some initial interest on
a crowdfunding sites, then use the conferences
as a venue to introduce the product to a much
larger audience. In fact, it’s more important to
hnd a oonnootion witn tno gonoral oonsumor
or early adopter at these events, since they are
more likely to be the potential investors.
Wearable Tech
Shine: A produot írom Misht, Snino is a
wearable activity tracker that connects to your
phone. The design is minimal and the feedback
focuses on reaching daily tracking goals. The
waterproof product offers versatility by tracking
steps, bike pedals, and swim strokes.
CST-01: Like Pebble, CST-01 proves that the
watch is hardly a piece of dead technology. The
CST-01 is an e-ink watch being promoted as the
Key Trends (cont’d)
0
375K
750K
1.125M
1.5M
Robot Dragonfly StickNFind Misfit Shine BugASalt Facewatch Elevation Dock CST-01 Galileo Twine Memoto
1M
Funded on IndieGoGo Funded on Kickstarter Average Initial VC Investment in a Startup
According to BuzzSpark, the average startup in it’s first year receives ~$1M in VC funding. Over the last
year, we’ve seen crowdfunding sites become a nearly equally effective approach for hardware startups
as projects begin to attract press and platforms attract more users.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 8 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
“world’s thinnest watch.” After raising over $500K
on Kickstarter, it went on to win many of the Best
in Show awards across CES.
The CST-01’s E-Ink Display
Product Add-Ons
Olloclip: Focusing on the increasingly-popular
photography space, Olloclip is a 3-in-1 lens that
oasily attaonos to an iPnono, oííoring hsnoyo,
wide-angle, and macro options. Olloclip had
a big presence at SXSW, but it wasn’t exactly
making its debut. It started raising money in
2011 on Kickstarter and gained enough ground
to make a big splash at the tech conference this
year.
StickNFind: StickNFind are Bluetooth stickers
that you can put on devices so that you never
lose them. The stickers come with a partnered
iPhone app which serves as a sort of RADAR
for these commonly misplaced items. A smart
simple idea that solves a real consumer unmet
need.
Connecting Digital to Physical
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Supermechanical’s Twine
Key Trends (cont’d)
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 9 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
What brands can learn
from these trends
Tools that Empower More Making
What makes products like Makerbot or Twine
disruptive is that they are extremely user friendly,
giving anyone the tools to make things without a
steep learning curve. Twine doesn’t require any
coding skills to implement, allowing anyone to
“hack” everyday objects and add connectivity.
Brands are accustomed to distributing products
that are “feature complete” and most large
oorporations logally hgnt tnoso tnat naok tnoir
products. We’re at the beginning of a cultural
expectation that products should be malleable,
that the delivery of a product or device is merely
the beginning (nay, an invitation) for consumer
collaboration. Brands are accustomed to inviting
UGC in their marketing, but organizations should
become more comfortable with consumers
augmenting and adapting their products as well.
Products for your Products
Typically, new digital ideas look a lot like
microsites, mobile apps, and social campaigns;
but they don’t always have to. And just because
your brand already makes a physical product
(like a car, or a beer bottle) doesn’t mean that
your digital ideas couldn’t be an object that can
augment the current offering. Companies like
Sensus or Alivecor are examples of physical
products that add digital functionality to the
iPhone, much like an app. In the future, will the
app store evolve into selling hardware products,
too?
2012 Present
2.22.2012
Nike Fuelband
A bracelet that tracks a
user’s daily activity, this
device interacts with Nike+
and steps or activities are
converted into Fuel Points.
8.24.2012
Evernote Smart Notebook
Moleskine which pairs with
the Evernote App, making
all sketches and notes
searchable, forever.
2.2.2013
Oakley AirWave
HUD embedded in Oakley’s
goggles which links to user’s
smartphones and provides
metrics feedback like the Fuel
Band.
1.09.2013
Disney MyMagic+
Disney rolls out testing for
a wearable bracelet with
embedded RFID tags. These
can serve as a new ticketing,
payment, and tracking
system within the park.
4.11.2013
Heineken Smart Bottle
Heineken created a beer
bottle for Milan Design Week
that reacts to the drinker’s
movements and environment.
6.13.2012
Evian Smartdrop
A prototype magnet and
subscription service that lets
families or businesses order
Evian bottled water to their
door on the spot.
While the Fuelband takes the lion’s-share of press when it comes to companies making products, there
has actually been a steady increase of companies creating standalone hardware products and services
that are available directly to the consumer. We cover these regularly over at our blog, Inventioni.st.
CC-BY-NC-ND 3.0 - Deutsch LA 2013
Page 10 of 10 Authored by: Bud Caddell, Charlotte Myerberg, and Rachel Mercer
What brands can learn
from these trends (cont’d)
Experiment in New Spaces
Sometimes the best way for a brand to evolve is to nudge themselves
into new territories that expand their business and their offerings.
Companios liko vorizon aro taking tnoir oxportiso in ono hold (in tnoir
case, building data and phone networks) and applying it to the health
space. Whether or not their products (Sure Response and HealthID)
become an integral part of their business, it shows that these types of
ventures can open new possibilities.
Smoke Testing as a Marketing Tool
Ideas are cheap. Execution is expensive. Just as startups use a clever
video on Kickstarter to expose a new idea, we’re beginning to see
brands like Oreo and Budweiser launch proof-of-concept videos that
test the social waters and validate a new idea. Organizations rarely
get to market with their original idea in-tact, and it’s time for brands
and marketers to begin to test their assumptions before investing
small fortunes in development.
Hardware Competition
Twenty years ago, monolithic companies like Xerox and IBM suddenly
had to fear garage-based software startups like Apple and Microsoft.
Today, with the advent of cheap 3D printing technologies and micro-
funding, every business model is suddenly ripe for disruption from the
garage-based hardware startup. The next few years will determine
whether the infrastructure and distribution of large companies will
overcome the grassroots funding and novelty of small-scale hardware
developers.
The Innovation of Dead Tech
With rumors swirling that Apple and Samsung are both developing
smart watches, we asked ourselves, “Who still wears a watch?” Plenty
of people, it turns out. With the rise of the Internet of Things, every
single device is suddenly a candidate for innovation. You may stare
at your toastor and tnink, "You'ro |ust an inoíhoiont oirouit," but soon it
could be tweeting and sharing its way to a completely new price point.
MAKING INVENTION WORK
FOR YOU
“Disrupt yourself before
someone does it for you.”
- Google
We believe that in order to survive,
organizations must myopically
chase their own obsolescence. All
businesses face an increasingly
connected and therefore more
uncertain world, and with it, we
all compete in a smaller pool,
full of more demanding and less
attentive consumers. Advertising
can be a powerful driver of growth,
but advertising alone cannot
steer a firm to future success.
That’s why we’ve created a
department of Inventionists – a
mix of researchers, creatives,
technologists, and entrepreneurs –
to help our clients experiment with
new tools, products, and business
models.
Our group specializes in
concepting and developing pilot
programs and products that
disrupt the status quo, ignite
culture, and create business
change. We also help brands find
their social mission and work with
the larger advertising force at
Deutsch LA to pursue that mission
through interactive ideas. If you’re
a business with an appetite for
experimentation and marketing
innovation, we’d love to partner
with you.
Get in touch.
Bud Caddell
SVP, Invention
bud.caddell@deutschinc.com