Rising Demand for Smart Devices
Published: November 9, 2013, in the Orange County Business Journal. Author: Chris Casacchia
A low-profile Irvine technology company headed by former Apple, Google and Cisco Systems executives is in the midst of an aggressive expansion plan in Orange County.
GreenWave Reality is moving next month into a more than 10,000-square-foot headquarters at 133 Technology Drive that’s three times larger than its current digs, providing plenty of room for growth.
The company, which makes networking software and sensors that allow devices to talk to each other, said it plans to hire more than 200 highly skilled engineers, programmers and software developers in the next year, more than doubling its workforce as it scales the business and attracts more global customers.
Its dozen or so customers include utilities, consumer service providers and household lighting makers. Nondisclosure agreements prevent naming most of them.
Irvine will be the fastest-growing region for the company, Chief Executive Greg Memo said. “We’re really interested in getting the best technologists,” he said.
Memo and his management team can draw from experience. He formerly ran the Irvine-based Linksys router business at Cisco Systems, the world’s largest networking equipment maker with some $48 billion in annual sales. The San Jose-based company sold the home networking group in January to Belkin International Inc. in Playa Vista.
Financial terms weren’t released, but Linksys was expected to sell for much less than the $500 million Cisco paid local entrepreneurs Victor and Janie Tsao for the company in 2003.
Connected Device Boom
GreenWave’s growth comes as demand rises in the U.S. and globally for smart devices connected in the home.
Swedish telecom networking equipment maker LM Ericsson forecasts that more than 50 billion devices will be connected by 2020, creating opportunity for newer companies like GreenWave to enter a deeply fragmented market with a few giants at the top.
GreenWave was expected to announce another significant customer this week.
Technical Consumer Products Inc. will use GreenWave’s Home2Cloud platform to power a new smart LED lighting system released by the Aurora, Colo.-based company.
TCP has an exclusive retail deal with The Home Depot to reach consumers and has other agreements with resellers for distribution in industrial and commercial markets.
GreenWave’s technology, which captured an innovation award at the International Consumer Electronics Show in January, allows users to easily program an LED lighting system through a smartphone, tablet or Web browser Wi-Fi connection.
Users can also set up a smart control system with free application software that automates personalized settings.
Memo demoed the technology for the Business Journal at GreenWave’s headquarters, using an iPad to dim a room with a finger swipe and adjust brightness levels for isolated bulbs in the LED system.
“You don’t have to buy specialized dimmers,” he said. “You can connect and talk directly with each bulb through our solution.”
TCP product manager Dave Geraci said the market is looking for this type of combined offering.
LED bulbs, while far more expensive than traditional versions, have an average life span of 10 years and use 80% less energy than incandescent bulbs, which haven’t changed much since Thomas Edison tested the first functional one in 1879. They last 10 times longer than compact fluorescent bulbs, according to the U.S. Environmental Protection Agency.
Adding a big customer such as TCP will help GreenWave accumulate more users, a key metric for gauging any company’s success and value in the app world. Consumers primarily use its technology through smartphone and tablet apps.
TCP ships some 1.5 billion bulbs annually through big-box retailers and other channels. The company expects sales to grow by “double digits” this year. LED bulbs are projected to account for about 20% of its sales and eventually surpass compact fluorescent lights, according to Chief Financial Officer Valarie Campbell.
CFLs accounted for about 90% of the company’s $300 million in sales last year.
“TCP is one of the biggest lighting companies you’ve never heard of,” said GreenWave Chief Marketing Officer Nate Williams, who joined the company in July as it closed a $19 million Series B financing round.
Williams, who cut his teeth in the finance industry as an investment banker for JPMorgan in New York, was lured away from Google, where he served as senior director of software marketing, part of the Mountain View-based company’s $3.7 billion connected-home service business.
“I wanted to get back to a startup,” said Williams, who joined Google in 2011 after its $12.5 billion buy of Motorola Mobility Holdings Inc. “GreenWave was getting a lot of credibility for having a deep team.”
Company founder and Chief Technology Officer Martin Manniche held the latter title at Cisco’s consumer business group, where he led the connected home design team. Manniche joined Cisco in 2005 after it acquired his Denmark-based KiSS Technology A/S for $61 million in cash and stock. Manniche played a key role in bringing the first hard disk drive recorder and connected DVD player to the market.
Capitalizing on Tech Weakness
GreenWave, established in 2008, focused on gaining a foothold in three target markets: connected lighting, home monitoring and energy management.
It researched about 40 companies that power or manufacture connected devices and found their products difficult to install and hard to use. Most, they said, required professional setups.
“We take out all the complexity of these different technologies,” said Memo, who got his start at Apple handling advanced multimedia product management and Mac computer networking. “We’re looking at how to make the customer have the best user experience.”
GreenWave zeroed in on European utilities, an industry that’s much more diversified and less regulated than its U.S. counterpart. Utilities also operate other business lines, such as home security, networking services and consumer products, potentially opening up revenue streams for GreenWave.
The company struck a flagship deal three years ago with German energy provider E.ON SE to power its smart meters in customers’ homes. The data can be viewed through a Web browser, tablet or smartphone app.
E.ON wanted the technology to gauge customer energy use as the U.K. aims to deploy 30 million smart meters by 2020 in an effort to ease power grid systems across Europe.
The smart home system saved residents more than $300 a year on energy costs, according to the first-year results of a two-year study of 75 homes northwest of London.
The technology, which can also monitor gas consumption, electrical appliances, thermostats and central heating systems, among other applications, is now a standard feature offered to E.ON customers around the globe.
E.ON, the world’s largest publicly traded energy services provider, has more than 26 million customers. Revenue eclipsed $211.7 billion last year.
GreenWave can alter its business model to suit the customer, offering straight software licensing or subscription-based services.
Big Plans
GreenWave has raised more than $31 million to date from backers that also include Los Angeles-based Craton Equity Partners, which targets sustainable companies.
The company is using the proceeds from its second round of financing led by Menlo Park-based Westly Group “to accelerate rollouts and continue to scale our organization,” Memo said.
The company employs about 40 people in Irvine and more than 150 companywide. Its engineering offices are in Denmark and Singapore, the latter of which funds some operations with a grant from its economic development department.
Steve Westly, an early Tesla Motors investor and former state controller and eBay marketing executive, joined GreenWave’s board in the deal.
The Westly Group has grown into one of the largest clean-technology venture firms in the U.S. Four of its portfolio companies have gone public on the Nasdaq, including Tesla.
Privately held GreenWave wouldn’t disclose revenue but said its cloud-based software is being used by more than 1 million people.
Memo said, “We’re the brand behind the brand.”
