This pattern is the most visible in the music industry, in which many trendsetting bands often fail to achieve mainstream popularity. Artists like the Dead Kennedys, Kraftwerk, and Captain Beefheart all pioneered genres, but this translated to limited amounts of fame and fortune. Such a paradigm can also be seen in technology, where it’s simply not possible for every new product to become the next iPhone. Like music, some tech products are well before their time, while others serve as important sources of inspiration before they ultimately fizzle out.
Influential Smart Home Inventions
Today’s infographic from The Zebra looks at the smart home inventions helping to define the future of the nascent home IoT market. The devices listed below may not all be massive commercial successes like the Google Nest, but many of them will be cited as influences in helping shape the smart home.
The above smart home inventions range from inactive projects like the Jibo social robot, which ran through its $73 million of funding, to more commercially successful and widely available products like the Sonos smart speaker and the Google Nest smart thermostat. While they’ve had differing levels of adoption and success, all of the above products are expected to be major influences on the smart home market going forward.
Smart Influence
To see why these products are so interesting, let’s take a deeper look into some key spaces:
1. Utilities
Before smart technology, most home utilities were controlled inefficiently and crudely. However, devices like tado° and Nest have shown that temperatures should be optimized based on the habits of the people that occupy the home, rather than via manual controls. To accomplish this optimization, tado° adjusts air conditioning or heating based on how close a user is to returning home, while Nest programs itself based on the users’ schedule. Theoretically, these both allow for significant savings on energy bills, and future smart home inventions will likely follow in similar footsteps.
2. Security
In the past, if you were gone for a long time, your best option may have been to have friends, family, or neighbors check up on the property. In the smart home era, security is quickly becoming a priority so that keeping an eye on your property can be easier, safer, and more effective. App-controlled smart locks like August can grant access to visitors via “virtual keys”, while Cocoon senses disturbances in the home and alerts users via smartphone.
3. Health and Entertainment
You do most of your living at home, and the smart home aims to make this experience healthier, while also making it convenient and pleasurable. Smart home inventions such as Awair will allow you to monitor and analyze your home’s air quality, while detecting harmful allergens and irritants in real-time. On the entertainment front, it’s worth noting that one of the most influential devices in this category — the Jibo social robot — has gone belly up. Despite this, it is commonly speculated that the robot was well before its time, and there are now a variety of companies working on similar ways to bring AI and robotics to the home.
The Future of the Smart Home
In the next decade, the smart home is expected to grow even more autonomous. New products will be responding to trends pioneered by many of the above products, such as voice control, homeowner data sharing, appliance connectivity, AI integration, sophisticated security systems, and smart kitchen devices. on But fast forward to the end of last week, and SVB was shuttered by regulators after a panic-induced bank run. So, how exactly did this happen? We dig in below.
Road to a Bank Run
SVB and its customers generally thrived during the low interest rate era, but as rates rose, SVB found itself more exposed to risk than a typical bank. Even so, at the end of 2022, the bank’s balance sheet showed no cause for alarm.
As well, the bank was viewed positively in a number of places. Most Wall Street analyst ratings were overwhelmingly positive on the bank’s stock, and Forbes had just added the bank to its Financial All-Stars list. Outward signs of trouble emerged on Wednesday, March 8th, when SVB surprised investors with news that the bank needed to raise more than $2 billion to shore up its balance sheet. The reaction from prominent venture capitalists was not positive, with Coatue Management, Union Square Ventures, and Peter Thiel’s Founders Fund moving to limit exposure to the 40-year-old bank. The influence of these firms is believed to have added fuel to the fire, and a bank run ensued. Also influencing decision making was the fact that SVB had the highest percentage of uninsured domestic deposits of all big banks. These totaled nearly $152 billion, or about 97% of all deposits. By the end of the day, customers had tried to withdraw $42 billion in deposits.
What Triggered the SVB Collapse?
While the collapse of SVB took place over the course of 44 hours, its roots trace back to the early pandemic years. In 2021, U.S. venture capital-backed companies raised a record $330 billion—double the amount seen in 2020. At the time, interest rates were at rock-bottom levels to help buoy the economy. Matt Levine sums up the situation well: “When interest rates are low everywhere, a dollar in 20 years is about as good as a dollar today, so a startup whose business model is “we will lose money for a decade building artificial intelligence, and then rake in lots of money in the far future” sounds pretty good. When interest rates are higher, a dollar today is better than a dollar tomorrow, so investors want cash flows. When interest rates were low for a long time, and suddenly become high, all the money that was rushing to your customers is suddenly cut off.” Source: Pitchbook Why is this important? During this time, SVB received billions of dollars from these venture-backed clients. In one year alone, their deposits increased 100%. They took these funds and invested them in longer-term bonds. As a result, this created a dangerous trap as the company expected rates would remain low. During this time, SVB invested in bonds at the top of the market. As interest rates rose higher and bond prices declined, SVB started taking major losses on their long-term bond holdings.
Losses Fueling a Liquidity Crunch
When SVB reported its fourth quarter results in early 2023, Moody’s Investor Service, a credit rating agency took notice. In early March, it said that SVB was at high risk for a downgrade due to its significant unrealized losses. In response, SVB looked to sell $2 billion of its investments at a loss to help boost liquidity for its struggling balance sheet. Soon, more hedge funds and venture investors realized SVB could be on thin ice. Depositors withdrew funds in droves, spurring a liquidity squeeze and prompting California regulators and the FDIC to step in and shut down the bank.
What Happens Now?
While much of SVB’s activity was focused on the tech sector, the bank’s shocking collapse has rattled a financial sector that is already on edge.
The four biggest U.S. banks lost a combined $52 billion the day before the SVB collapse. On Friday, other banking stocks saw double-digit drops, including Signature Bank (-23%), First Republic (-15%), and Silvergate Capital (-11%).
Source: Morningstar Direct. *Represents March 9 data, trading halted on March 10.
When the dust settles, it’s hard to predict the ripple effects that will emerge from this dramatic event. For investors, the Secretary of the Treasury Janet Yellen announced confidence in the banking system remaining resilient, noting that regulators have the proper tools in response to the issue.
But others have seen trouble brewing as far back as 2020 (or earlier) when commercial banking assets were skyrocketing and banks were buying bonds when rates were low.
