Smartfrog – NOAH19 London


Hi everybody so I’m Katie from the smart for Cooper and I’m the CMO of the smart for group and Today, I would like to talk about how to build a hyper growth consumer centric IOT business So I would like to show you how we are actually doing it, but first of all I would like to introduce you to our mission statement so at smartfrog we transform the latest technologies into easy to use and into mass-market friendly affordable solutions With our solutions, we would like to transform the lives of everyone into more Affordable more secure and a more comfortable way So smartfrog was founded back in 2014 and in 2015, we actually launched our first product and Let me see where we are today so today we’re able to achieve a compounded annually growth rate in mor of more than 500% We were also able to acquire 1 million IOT users globally in more than 180 seven different countries and We achieved the gross margin of over 60% So in our industry Those are significant numbers and I want to show you now why those are significant numbers So if we take a look at the market penetration, you can see that only 3 percent of the entire Smart home security market are captured so far That’s globally so that means that we have a 500 billion dollar opportunity app open for grabs 97% of this market is still free for grabs So but let’s not stop here If we take it one step further and take a look at the overall smart home market globally we have only a very low market penetration so far of 8 percent that means 92 percent of the market is still wide open and also available to be captured That means we have a trillion-dollar opportunity and this is actually why we are in this market So I would like to show you three different drivers of growth First of all, we would need a market that is in the growth phase So check box our market at the moment is already transitioning slowly into the growth phase But that’s not all in order to address this market volume. You won’t need a consumer centric Software is a service business model and in order to build such a business model and also to manage it you would need Something that we call the full stack approach and this is basically an entry and control value chain Now I would like to elaborate a little bit more on each one of those single growth drivers So as I already mentioned our market at the moment is at an inflection point We believe that within the next 10 years Almost every household will have a smart home security system Installed and we also believe that within the next 20 years almost Everything in your household will be smart So following this trend and pioneering this trend we wanted to introduce a complete smart home solution Which is the canary pro Hollenbach? so this device is not only a smart home security camera with a built-in siren, but it also has temperature humidity and Also air quality sensors built in so that’s a complete solution and we have this already in more than half Of our US households so far but as I mentioned That’s not the only solution So let’s not focus on hardware or devices because in order to really address this market We need to build a consumer centric software as a service business model Why do we have to build it? Because our value proposition should be driven? Not by devices, but by software and by services only Why is that? Because consumers are looking for useful solutions. They are looking for an easy solution that they can plug-and-play They are looking for a solution that is affordable. And they are also looking for solutions that are safe so this SAS approach our SAS business model helped us to bridge the chasm and helped us also to achieve hyper growth and We were able to transition from the early market into the mainstream market Now having that business model you need what we call the full snake approach in order to really manage and execute it Let’s take a look what that means full stack approach as I mentioned is an end-to-end controlled value chain So that means you should not only have scalable cloud Solutions as well as software and apps as well as embedded software and dedicated hardware But you would also need an integrated marketing platform You will need a full ecommerce system you need to deal with Fulfilment you need to build an in-house CRM and you also have to deal with compliance globally So that’s exactly what we did We built this full stack IOT platform and this allows us and enables us to offer user centric dedicated solutions across different product verticals and As in every business we know the unit economics Must work so the beauty of this full stack approach is that it also allows us to manage our unit economics which are mainly driven by Appropriate customer lifetime values by high gross margins and by low customer acquisition costs Now we decided back in 2014 to go and introduce as a first vertical security and surveillance why is that that’s very simple because security met us to everyone everybody has something protect and Also according to various studies people are also already ready to pay for it, which is important so unlike our peers we decided as I already mentioned not to focus on hardware and Devices, but we build a business model that is purely focused on SAS software as a service and We are offering both freemium and premium subscriptions that are coming with a dedicated hardware optional included but only to enable our services and Also we decided to go for direct channels So we are mainly offering our service solutions via our direct channel Which means through our own online shops, of course as well We are also available in every known ian retailers and we also build in addition to that strong partnerships for instance with utilities with telcos or Well-known and established insurance companies. Why is that because we can leverage on their existing customer base. So Now once you become a well-known brand and you’re already in the home You have a competitive advantage that you can use so once you start building the reach you can upsell to your existing customer and user base and Start introducing further verticals such as smart home sensors or healthcare Appliance as well as elderly care and many more so doing that you will scale and further gradually collect reach as well as start to collect vast amounts of data and by doing that you will build your reach up and you will start building up your data and that gives you the opportunity to do more data driven businesses and who also Introduced to the market new marketing and advertising platform business models You might remember Amazon also started with books only as a first vertical and it’s all about focus and then once they start building up Their reach they introduce the next verticals one-by-one and scaled their own platform So I would say it’s a good business model and we all know where Amazon is today so I was talking about three different growth drivers and back in 2018 early 2018 we decided that we want to add a fourth growth driver and this is accelerated growth by M&A merger and acquisitions of our peers So the idea was that we can take their business models and they’re going to market strategies and just simply transform them by applying our going to market strategy our full stake approach in our business model and then transform their businesses by applying our expertise and Back in October 2018. We acquired canary we acquired the controlling interest in canary you might know that canary is one of the category leaders in the United States and Canary build a very strong brand recognition and is also an IOT pioneer in their industry So smart frog and canary are very complementary Whereas smart fur was focusing on the European environment Canary was building a market leadership position in the u.s. Environment saying that we started to apply our business model to Canaries and started to transform their businesses and While we were doing that we were able to improve the unit economics of canary significantly Let’s take a look. So we were able to achieve an uplift in sales so far More than 70% We were also able to achieve and higher the gross margin by more than 100 percent and We were also getting an uplift of 15% and the customer lifetime value which was mainly driven by C so smart frog will continue its rapid growth both organically and By further going through our validated pipeline of M&A prospects. Thank you you You

Leave a Reply

Your email address will not be published. Required fields are marked *