Beyond HumanBig PictureCatalystsConnected WorldExchangeMarketing MixNew MoneyNew SchoolPeople SciencePulse

Looking for the tech market’s next big thing? It’s the Internet of Things

hero image hero image
Photo credit:

NEXT Berlin

Still setting the thermostat yourself? You'll be part of the minority in a decade.

Fewer than one per cent of householders have smart homes now. But it won’t stay that way for long, says Tado CEO Christian Deilmann…

When Google announced it was buying startup Nest Labs for a $3.2bn earlier this year, it confirmed what many were thinking: Internet of Things is here to stay.

During our day-to-day lives, we are already surrounded by smart technologies that capture information and data. Think mobile phones, heating systems, your new car and so on.

With Internet of Things, these devices can begin to talk to each other to solve our problems and streamline our lives.

In short, they can cut out the middle man: us.

Munich-based Tado is pioneering this transition. Its systems combine a “smart” thermostat with geolocation, weather and multi-user settings all controlled from a free phone app.

So when you’re at work, the thermostat keeps energy use low. When you’re on your way home, it either heats or cools the house depending on the weather that day. It does all this hands-free.

Tado claims it can reduce energy bills by as much as 31 per cent. And after raising about $13m in investor funding, it has investor support for its mission.

Hot Topics spoke to Tado CEO Christian Deilmann

Tado was set up in Munich, as opposed to nearby tech hubs like Berlin and London. Why?

Berlin is famous for internet startups in consumer orientated markets, but Munich is traditionally where the high tech firms are found. Infinion Technologies and Intel are there, for example.

My co-founder Johannes Shwarz and I were in Munich anyway. We had to create a prototype and final product so we had to source engineers and software designers who are all in Munich. We didn’t see any point moving.

Where have you launched?

Before the funding, Tado was active in Germany and the UK, but now, we’re live in France, Italy and Spain. Germany and the UK are still our biggest revenue drivers but the others are picking up very quickly.

Is each market unique?

Yes, they are all different! Germany is the biggest technological challenge because of all the different interfaces for different heating systems.

The UK has the most competition, France actually has electrical heating systems in a third of its homes, whilst Italy and Spain more readily use our cooling systems. Every market will pose its own challenge.

How would you react if Nest decided to test the European market?

The whole Internet of Things home category is quite new. It helps to have a few other companies and stakeholders helping to educate the market and spread the word. Competition is good.

Nest coming to Europe is interesting. For some countries, like Germany, Italy, France and Spain, it would be a technological challenge for them and we have a two year advantage to keep our position of leader in Europe.

How did you select your investors?

It’s difficult. You never really know at the beginning if it’s right. Investors sit on the board of your company and have a say in important decisions – so getting along with them is key. But so far we have been very happy with our choices.

When will you look for your next round?

The middle of next year.

How does regulation affect Tado?

There are some regulations in the UK and Austria, for example, where utilities are given government incentives to help to reduce the energy demand of their customers.

This is one reason why the UK utility sector is picking up this smart heating topic much faster than others. So, Tado now has a partnership with SSE, the second biggest energy utility in the UK while Nest has partnered with Npower.

What about a security framework? Is it robust?

There is no set regulation of security but each geolocation thermostat has its own IP address – it is a similar process to online banking, which is secure as it can get.

A Tripwire revealed a survey last week found that 59 per cent of IT personnel are concerned that Internet of Things could become “the most significant security risk on their network.” What’s your feeling about the risk involved in IoT?

It is important that every stakeholder is using the internet protocols and the highest security standards that are out there at the moment. They are in continuous development and improvement so it is as secure as it can get.

There are different levels of risk. Hacking into the thermostat wouldn’t be nice for the customer but for the hacker, it wouldn’t be much fun either. For other services like door locks however, the issues regarding hackers will become a problem.

Is there an opportunity to developer Internet of Things services as well as products?

Yes. We already monitor the heating system for water pressure problems, boiler error codes  and so on – and now we make use of this information: sending push notifications to make the customer aware of a problem.

We then advise the customer of an engineer in the area that can help them. This upgrade is called Tado Care.

It’s still pretty new but the further we expand our products into people’s homes, the more repair contracts and installation jobs associated with this industry will increase, we think.

We are coming together with a traditional, slow moving service industry but it will be an exciting journey.

What has been the public response so far?

We’re moving forward to an age where Internet of Things takes away the burden of everyday life. Some of our consumers find it mysterious that it hasn’t happened sooner.

With Tado you can bring an assistant to take care of you around the clock. From a very old system, it’s a huge leap.

And how many people use smart home gear at the moment? In the UK, for example?

Not a lot. Below one per cent I guess.

How long before systems like Tado to go mainstream?

Within the next five years, I am very sure that 25 per cent of all households will have an intelligent thermostat.