VCs and Startups Consider HaaS Model for Consumer Devices
All familiar with software as a service right in a way. SAS has taken over the world. For software and all sorts of enterprise and consumer settings, but even increasingly. In all consumer settings as consumers have gotten used to. You know paying for digital things. I mean you can think of Netflix. As software as a service in a way. Well, are you ready for hardware as a service? Let me give you an example. Noura is a company that makes high. End earphones the NRA phone. For example is what the company calls the world's smartest headphones. You can buy the neuro phones today for three hundred ninety nine dollars, or if you pay ninety nine dollars, ninety nine cents up front and subscribed to pay nine dollars ninety nine cents a month. You can also own the near Afon. This is not rent to own. This is subscribed to us. As long as you keep paying, you can get a new neuro phone device every twenty four months. You can get the over the air software updates that keep the device improving, and Oh, yeah, keep the device working because if you stop paying, the device shuts off. Remember when there was that whole Brouhaha about Sonos end of lifing support for their earliest speaker systems. Yeah, get ready to hear a lot more about hardware service quoting techcrunch. In a recent email exchange Duncan Turner general partner at the x accelerator, which backed Noura described Hass hardware as a service as a great way to keep in contact with your customers and up sell them on new features most importantly for startups, recurring revenue is critical for scaling business with venture capital, and we'll help appeal to a broad set of investors, Haas also often has a low churn as easier to put. Put onto long term contracts and quote the upside to consumers clear. Don't pay for everything all up front, and your freer to experiment with new devices in ways you wouldn't have been otherwise. This is especially important in a world where brick and mortar experience is increasingly rare, even before retail ground to a halt courtesy of covid nineteen. There's also a clear appeal for those who are inclined to frequently upgrade devices quote. It's providing continuous value than it should be worth paying for Y combinator partner Eric Makovsky, tells tech crunch, if not stop using it and move on, it also is more sustainable hardware. These days requires a lot of software to work and the development and maintenance of that software costs money companies that have a continuous source of revenue will be able to continue to improve their product offerings through software updates and quote in two thousand eighteen. Eighteen study analysts parks associates noted a potential hurdle, however quote while a consumer reluctance to pay subscription fees is well documented. Haas models may get more traction. Where more value can be offered at less financial risk to the consumer, the challenges to create a service bundle with clear value that consumers find attractive consumers will pay for services that they perceive as valuable and complete tasks that they cannot or prefer not to do themselves unquote. As another VC is quoted, saying in the peace and I've seen myself over the last few months, startups don't have to be talked into Haas into this new sort of business model. Providing consumers can be talked into buying in as well if there is a new hotness right now in startup pitches at the moment it is basically subscription, but for x that sort of the new uber, but for X, and it's easy to see why this is so attractive to start ups. We've spoken endlessly before about how reliable and easily anticipated revenue is provided by subscriptions. But also if you have a subscription business, consider that you could achieve scale, not at the end of some years long slog through the Dark Valley of losing, money. Imagine, you could achieve scale and essentially bootstrap your way to it off. Your own cash flows from basically day one.