In the fast-growing Internet of Things (IoT) industry, algorithmic technology promises ‘smart’ solutions to everyday problems. Drawing on a design research investigation, this chapter questions and critically examines the embedded epistemology of IoT, in the context of what I call the algorithmic paradigm. This examination reconsiders the prevailing epistemology and offers an alternative based on a second-order cybernetics perspective. This alternative recognises the importance of accounting for the role/agency of the observer/designer/user, the circular causality of user behaviour and technology, and the relationality of ‘smartness’. To explore the possibility of a shift in perspective from the current algorithmic paradigm to a second-order one, users are approached as experiential, non-linear subjects rather than as probabilistic and linear ones. Outcomes reveal the value of second-order cybernetics as an epistemological stance and a practical approach to research on the design of ‘smart’ interactions. The methodological framework demonstrates how design research and second-order considerations can work together, asking novel questions to inform disciplines with an interest in IoT interactions, from both a design perspective (the way designers approach their practice) and in terms of broader implications for society.