Why our smart home customers paid but never opened the box
I co-founded a smart home startup where we nailed the first-time setup experience. Eight-year-olds could do it. We got it down to minutes. And still, a significant number of paying customers never even took the hardware out of the box.
They'd cleared every hurdle: purchase, registration, subscription. But the real friction? Someone had to decide to open a box and plug something in. That weekend became next weekend, then next month, then it lived in a drawer forever.
The six-device threshold
Even customers who did set up faced another problem. We built and tested in small Oslo apartments where a gateway, sensor, and smart switch felt meaningful. Then we sold to suburban houses and sent three devices. Three devices in a big house isn't a smart home—it's a gadget in a corner.
Our usage data showed a U-curve: lots of customers with 2-3 devices (whatever came in the box), then a dip, then a group with 10-20 devices. The middle was empty.
The threshold was around six devices. That's where the system started behaving like an actual system. Multi-room control, proper monitoring, automations that made a real difference. Below six: a product. Above six: a smart home.
We used to say that to understand the value of a smart home, you have to have a smart home.
The pricing paradox
Why not just sell bigger starter kits? Price. A six-device package costs roughly twice what a three-device one does. You're asking someone to spend more on a product whose value they can't yet see. That's the paradox we (and the entire industry) never solved.
Beyond the first aha moment
Startups pour energy into the first aha moment: get users to value faster, reduce time-to-activation, smooth onboarding. It's important and tempting because it's easy to measure and show progress on.
But at some point you're optimizing something that's already good enough while the real problem is elsewhere.
When you build something and pour yourself into it, there's a natural tendency to treat activation as validation. Someone used the thing you built! But the question isn't whether they used it—it's whether they used it enough to see what it actually does.
One deal in a CRM is a sample. Fifty deals with your whole team logging activities is when the tool disappears into workflow. Most products have a version of our six-device threshold. Most companies aren't tracking where that point is.
The instrumentation problem
What made this harder: our instrumentation wasn't built to find these patterns. The data existed in NoSQL databases—technically accessible but practically invisible. We tracked what we needed to ship and keep the product running. Not what we needed to understand adoption.This is common at startups. Early on, the CTO sets up database structures from a technical perspective. Nobody's thinking about what a PM or growth person will need a year later. By the time you look for deeper adoption patterns, data is spread across systems that were never meant to talk.
The six-device threshold was in our data the whole time. We just took too long to find it.
The B2B2C complication
We were a white-label platform. We didn't control pricing, packaging, or sales. We couldn't just sell bigger kits or offer installation. The lever we had was the partnership: structuring relationships so data flowed both ways.
If we were starting again, we'd have built this into contracts from day one. Sales data, activation data, expansion data. Not as reporting, but as shared investment in understanding the customer journey. In B2B2C, data isn't yours or theirs—it's about joint success. Without it, we spotted patterns too late and couldn't act even when we did.
Start early with instrumentation
When you have twelve customers, instrumentation feels like overkill. You know their names, what they're doing, you can just call them.
But that's exactly when the structure needs to go in. Not because the data matters yet, but because the habits and infrastructure you build at twelve customers are what you'll be stuck with at twelve thousand.
By then, the questions are harder, patterns are subtler, and the cost of not having clean data is measured in months of delayed insight.
The second aha moment was in our data the whole time. We just didn't build the system to see it until it was too late to act on it.
Read the full post: https://holenventures.substack.com/p/the-second-aha-moment
