The way Peter Barris sees it, wearable technology is a big opportunity most startups have overlooked. That is, it’s being overlooked beyond the consumer space, where technologies like Google Glass, FitBit and the long-rumored Apple iWatch dominate most headlines.
Where the emerging technology could make a large-scale impact is in the enterprise, the New Enterprise Associates managing general partner told attendees at the recent Columbia University Private Equity and Venture Capital Conference.
“When you talk about wearables and you think about Google Glass, everybody is kind of thinking about the consumer applications of it,” Barris says. “Nobody is talking about the enterprise applications. When you start talking about pick and pack, when you talk about maintaining equipment in oil fields, there’s lots of application for wearables at the enterprise level.”
Indeed, wearable technology could be a $3 billion industry in 2014, according to a recent Financial Times article.
However, much of the activity right now is centered on smart watches, smart glasses or fitness tracking devices, items that appeal to consumers looking for the next frontier in updating Facebook or shedding pounds. As Barris notes, those applications play well to the media and to younger, more connected consumers who grew up using computers.
“We as a firm quite frankly have a big focus on enterprise,” he adds.
Smart glasses, for instance, could save the oil and gas industry $1 billion each year in field services, according to at least one report, Accenture writes. The technology gives way to connected employees, augmented with additional resources to get the job done. Some even see Google Glass’ potential to make oil fields safer, giving employees more convenient, real-time information that could help engineers work more efficiently.
Another hole Barris sees potential for startups is in manufacturing, where the barriers to entry today are not what they were a decade ago. New tools like 3D printing can help take something from concept to product quickly and at less cost.
“When I talk about manufacturing today, I talk about the prospect of 3-D printing and lowering cost. The same thing is going on in biotech, by the way now,” he says. “It’s a different game. It’s not 12 years, $1.2 billion to get a drug out. It’s molecular targeting, small clinical trials that happen faster and cheaper. Manufacturing is going the same route. It’s now a much less capital intensive practice that starts to make a lot of sense for venture capitalists.”
There’s nothing wrong with young technologists creating startups that focus on the consumer space, Barris says. Enterprise solutions aren’t as immediately obvious to tech industry newcomers. However, the right idea could be lucrative.
Applying the right idea to the right industry is but one of the lessons Barris learned in his years with the $2.6 billion venture capital firm. It’s a message he wove into the narrative during his panel at the Columbia event.
“When we go into a new area or sector like energy, we get smart in that area,” Barris says. “Not only do we educate ourselves, we make sure we populate ourselves with people that understand that space and come out of those industries, and we build networks in those industries.”
It was a hard-learned lesson in cleantech, energy and even the larger technology space after the bubble that began in the 90s burst in the years leading up to the recession. Energy tends to be a particularly difficult sector for investors because of its capital intensive nature, Barris says. Getting into any new industry comes with its own learning curve. Mistakes happen and not everyone survives.
However, Barris says, mistakes of the past have given way to tremendous opportunity today. The environment for innovation right now is the best he’s seen in 20 years.
“It’s a Darwinian environment,” Barris says. “I do think more companies will be successful than have been in the past for a lot of different reasons, and that’s a longer discussion. But yeah, you’re going to have more fallout. Is that a bad thing? From my perspective, and this may sound immoral, I think that’s a good thing. That’s a good thing. That’s creative destruction. But the best entrepreneurs are the ones that have failed once, twice, sometimes three times and then they go on to do great things. So I think that’s a great environment.”