A product story

Today, we’re delighted to announce Netatmo is being acquired by Legrand*. This marks the end of a great chapter for C4 Ventures. We’ve worked closely with the company for 5 years as an investor through the launch of no less than 13 products and accessories. We are proud to have modestly participated in what is primarily the story of a man who loves designing and building amazing products, Fred Potter.

Pascal first met Fred at LeWeb Conference in 2012. Upon seeing Fred take the stage to present Netatmo’s first product, the connected weather station, Pascal recognised a calling for New Product Introduction, a talent that he had rarely witnessed in his career, most notably at Apple. When my turn came to meet Fred, I was immediately struck by his vision and passion for reinventing everyday objects. I have been sitting on Netatmo’s board since then with the privilege of witnessing the company’s evolution as it strove to bring great products into households.

This success has been made possible thanks to a few principles which have constantly been at the core of Netatmo’s products.

Making the complex simple

Very early on, Fred explained to me that Netatmo wasn’t targeting geeks or early adopters and even less tech savvy Venture Capitalists like most of its competitors at the time, but the average homemaker. In other words, it aimed at putting smart home devices into the hands of Jane Doe (or Madame Michu, as we call her in France!).

Netatmo obviously has the capacity to design and build thermostats that can learn behaviour or adapt to people’s location. Instead, the team chose to focus on a well-thought software, a straightforward set-up process and a state-of-the-art user experience, trumping all the fancy bells and whistles of competing products and making Netatmo’s thermostat successful from day one. Simple is often what people need.

Netatmo went even further, making not only software but also hardware simple. It was no small feat to design the Welcome camera, a Smart Indoor Security Camera with face recognition. Nathalie (head of R&D) and Fred really wanted to handle face recognition on the camera rather than sending images to be processed in the cloud. This was a key feature to provide a strong competitive edge compared to other cameras on the market. It also addresses consumers’ potential privacy concerns.

However, face recognition requires a lot of processing power leading to a potentially high temperature of the chipset which does the calculation, and consumer product must not go higher than 50 degrees to be certified. Most consumer electronics solve this by adopting a different form factor or by adding a fan, which would have spoiled the user experience. Fred’s team’s answer was to design the camera so that the natural airflow within their iconic tube cools the processor, leading to a high performance and a quiet product.
This brilliant mechanical design with an affordable price and consumer-friendly features were the ground base of Welcome’s success.

Creating network effect

Netatmo has always been very good at creating viral effect within its portfolio of products. This took the form of indirect network effect between products, i.e. when buying a second product from Netatmo makes the global solution better than the two products separately.

For example, the thermostat uses the data from the outdoor weather station to better calibrate the heating pattern of the house or flat and therefore improves the user experience.

Netatmo has also been able to leverage the data generated by all weather stations in the world to create the Netatmo weather map. Given the density of users who agreed to share this date, the map has proven to be a very useful tool for Netatmo’s community but also for future customers.

Focusing on outstanding design

Another thing behind Netatmo’s success with customers all over the world is the extreme attention to details and Fred’s love of beautiful products. The Weather station famous design was reused for the Camera and after the Smart Thermostat, Netatmo extended its partnership with Philippe Stark to design the smart radiator valve and its round e-Ink screen. Because all consumer hardware products are obviously meant to be touched, weighed, felt etc… , a beautiful design can help command a higher price. This has always been at the core of Netatmo’s product range.

Betting on Business Solution

Netatmo started as a pure Business to Consumer proposition. All of its first products were sold directly online or in retail to consumers (weather station, rain and wind gauge, thermostat, cameras etc…). But we always saw the potential to provide amazing products to businesses. Netatmo found the ideal partner when Legrand, a 5.5bn EUR revenue French group led a large round of financing to invest alongside us in November 2015.

Following this partnership, the company accelerated its business solution line. Netatmo and Legrand notably co-developed the product line Celiane with Netatmo which was launched in 2018. More commercial partnerships followed on with Vaillant, Velux, Muller…

Business Solutions have further fuelled the company’s growth and Netatmo’s technology and know-how has progressively become critical to its partner’s product offering obviously leading to today’s announcement.

There are very few world class engineering teams like the one Fred Potter assembled to create amazing products so it’s no surprise Legrand decided to acquire Netatmo.

At C4 Ventures, having helped Netatmo along this successful journey makes us both really proud and eager to keep looking for amazing start-ups to invest in and support.

I’d like to wish all the best to Fred and the team within Legrand. It’s certainly a happy ending for us, but just the beginning of another chapter for the company.

OH.

*Transaction subject to customary conditions precedent. Read the full press release here.