Paul Carroll
I’m often intrigued by how far back the roots of innovation go. For instance, we know that automobiles trace back to at least the 1770s, because the first auto accident was recorded in 1771; a Frenchman hooked a steam engine to a cart and crashed into a wall.
As for the Internet of Things, our ITL Focus topic for this month: Some students at Carnegie Mellon rigged a vending machine in 1982 so they could monitor whether it had sodas available and whether they were cold. In 1993, students at the University of Cambridge pointed a camera at a coffee pot and got it to send a live feed to their computers so they could see if coffee was available without having to walk over to the coffee station.
Those IoT examples say something about how clever students can be about being lazy, but I’m more interested in what they say about adoption curves. The IoT is avant garde these days, yet its roots trace back more than four decades.
You’ve become the poster child for the Predict & Prevent model for insurers, based on your innovations with the IoT that led to the Ting device that plugs into a wall socket and detects electrical problems. You’ve done the research and shown that you can prevent so many fires that dozens of major carriers are giving Tings to customers at no cost. But you still face headwinds.
What can you tell us about the headwinds that IoT innovation faces and about how you’re overcoming them?
Bob Marshall
I would probably qualify the notion of headwinds or challenges. We're distributing roughly 50,000 Tings a month, and by many measures that would be considered extraordinarily successful.
We wanted to go faster—not just for business reasons but because we're trying to have an impact on homes, families, communities, and society. If we can't get Ting into tens of millions of homes, then there will be a lot of electrical fires and damage and loss and fatalities. Still, we’re probably approaching 1.4 million homes.
What's driven the success, I would say, is the clarity of the mission. Customers worry about fire. They don't want their house and their family to ever have to deal with a fire. When we can communicate Ting’s value proposition to the homeowner, they adopt it enthusiastically.
The challenge when it comes to Ting is that it's a new category. It's a device and a service that nobody's ever had before.
People recognize that you need multiple smoke detectors in your house, you've got to replace the batteries, and every 10 years you're supposed to replace them. But when we first describe Ting to a customer, it’s not something they know they need. So we have to build that awareness.
When we do a brand awareness survey of the U.S. population and ask if they're familiar with Ting, this thing that can prevent electrical fires in your home, less than 2% of people are going to say they're aware of it.
This year, we're going to make a pretty substantial investment to build brand awareness of Ting. When one of our carrier partners sends an email campaign to their homeowners asking them to get Ting, we want people to be more likely to say, "Oh yeah, I've heard of that thing, and I want it."
Paul Carroll
Simplicity is a significant advantage for Whisker Labs. I’ve seen lots of innovations fail because companies assumed that the benefits they delivered were so great that consumers would be willing to jump through a few hoops. They almost never will. But when I got my Ting, I just plugged it into the wall and scanned a QR code to give you a way to send me notifications if you ever detect problems. Took me maybe a minute… and I’m technologically challenged.
Bob Marshall
100%. We've been focused on that from day one. The connected home and IoT became very significant about 15 years ago, but a lot of the early IoT sensors required too many devices, too many batteries, and the apps and UX were clunky. Anything that is not simple for the homeowner is not going to scale. It just won't.
If you go back 10 years or so, even if somebody signed up for an IoT device, only maybe 30% of people installed it. The economics were broken. Somebody paid for all that hardware to get shipped, and 70% of devices never got plugged in, so there's little loss prevention.
Batteries are an issue, too. If you power a device with a battery, you have to replace it after a few years. Are people going to remember to replace the battery? If they don't, the economics get all wrecked. We paid for getting hardware in, and the service has stopped.
By contrast, 85% to 90% of Tings get installed, and there's no battery. The sensor will last 15 years or longer without needing anything to be replaced.
Paul Carroll
When did you start Whisker Labs?
Bob Marshall
The impetus for the idea came from Earth Networks, where I was a cofounder. We were an IoT sensor company deploying weather and climate sensors, connecting them to the internet, and collecting massive amounts of data. We provided that data to NASA, NOAA, utilities, and insurance companies. We had a lightning detection network.
Then my sister-in-law's house burned down in 2015. They lost their entire house and a pet to an electrical fire. I didn't know anything about electrical fires at the time, but when you research them you learn they start from loose connections and damaged wires that arc and spark.
Lightning is essentially a big spark in the sky, and we had really sophisticated sensors that could measure every lightning strike on the planet. So I challenged our chief scientist, chief technology officer, and lead engineer: Why can't we take that global lightning detection technology, miniaturize it, and detect these tiny sparks that cause home fires?
We started work in 2016. It took us the better part of two years, incubated as a skunkworks project inside the old company. We incorporated Whisker Labs in September 2017 after we'd figured out a technical solution.
This is a life safety product, so it had to be completely proven. We did substantial testing in thousands and thousands of homes before we made Ting available to the public in early 2020.
Paul Carroll
There’s a seminal book, “Crossing the Chasm,” by Geoffrey Moore, that is still much-read in Silicon Valley even though it came out in the early 1990s. It notes that lots of companies attract early adopters who are fans, maybe even fanatics, but never cross the chasm to a mass market. When you thought about crossing the chasm, did you target insurance companies, go direct to consumers, or do both?
Bob Marshall
Insurance only. There have been a couple of successes that took the direct-to-consumer approach—Nest and Ring—but then you've probably got 100 companies that failed. It takes too much money to market a new product to consumers and get the widespread adoption needed to make the business work.
So we elected to go insurance first, particularly given that fire is an important issue for carriers. It's a big loss category.
Obviously, carriers wouldn't deploy the Ting technology until they had seen full testing of it. So we deployed with a number of insurance companies. We went to employees. We went to agents. We deployed to their labs, and we did a couple years of extensive testing before our insurance carriers would offer it to their actual customers.
Paul Carroll
You've now commissioned research that demonstrates that the savings from fire prevention are significantly greater than the cost of deploying Ting. But in the early days, how did you move beyond test projects with insurance companies?
Bob Marshall
Insurance companies are obviously very conservative by nature, and actuaries want 100,000 home years of data before they're comfortable with anything. So how do you get there? We were fortunate to have partnerships in place with people who believed in what we were trying to do and the mission. They were very much committed to the mindset of moving toward Predict & Prevent, and they were willing to make the investments to make that happen.
Now we've got ample data to document the performance of the technology. We know that customers love it. We know that customers stay with their insurance carriers longer when they're provided Ting. We cobrand the experience, and we know engagement is high. So we check all the boxes.
And the way we've structured our partnerships—I think this is super important—is something that wasn't done in the earliest days of IoT in insurance. Early on, the business models weren’t aligned. Companies selling prevention technology to insurance carriers were satisfied with selling the hardware. If you got an insurance carrier to buy 100,000 water sensors, that was a big win. The sellers really didn't care whether customers plugged them in or not or prevented any loss.
The way we structure our partnerships, we don't make any money on hardware. Literally, none. Sometimes we lose money. Our model is only about the service. We only get paid if the devices are plugged in and providing the service. So we literally lose money if they're not used. It's on us and the partnership to make sure customers are plugging in Ting, it's staying online, it's preventing fires and doing good.
It's critical to make sure the interests of all parties in our partnership are aligned.
Paul Carroll
How do you get from 1.3 million or 1.4 million homes to the tens of millions you want to reach?
Bob Marshall
We launched the product commercially in March 2020, which was terrible timing, as COVID shut everything down for a year or two, but progress is now pretty steady.
Nationwide is a good example. They were already at 80,000 homes and recently committed to putting Ting in 500,000. That's a sizable percentage of their home book. And that's because they know it works, they know it prevents losses, and their customers love it.
We’re working with almost 40 carriers today, and they probably cover 60 million to 70 million homes in the U.S. If we got every one of our insurance carriers to put Ting in just 25% of their book, that’s at least 15 million homes.
That's why we're investing in marketing to build brand awareness and make it easier for carriers to get their customers to adopt Ting. We're working on incentive programs to engage agents so it's not just the corporate part of the carrier motivated to get it out.
I think our carrier partners really want us to get to that next level of scale. If we're only in 5% of your book as a carrier, we're not affecting your bottom line. The 5% of your customers that have it absolutely love it and love you, but if 95% of your customers don't have it we're not making a meaningful impact on your loss ratio corporately.
Paul Carroll
Thanks, Bob. I always feel better after we talk.
