How Withings’ Éric Carreel plans to raise his wearables company from the dead

As the wearables market emerged a decade ago, France’s Withings took its place among a class of pioneers that included such names as Fitbit, Pebble, and Jawbone. And in its home territory, Withings’ rise had French Tech boosters hoping that it just might be the startup hit the country craved.

So when the company was acquired by Nokia for $192 million in 2016, the news came as a shock. Withings’ cofounders insisted at the time that the deal would help them accelerate growth. Instead, within a year Nokia had snuffed out the Withings brand name as part of a broader, ill-fated strategy that involved writing down the entire value of the deal to almost zero and putting the Withings business up for sale.

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But it seems the biggest surprise was yet to come. The company, now officially Nokia Digital Health, was sold back yesterday to Withings cofounder Éric Carreel for a sum he says he cannot disclose. Just what he is getting back is unclear. However, what is clear is that he is wading back into wearables and connected health devices at time when the corpses of other pioneers are piling up and Apple has asserted its market dominance, thanks to the Apple Watch.

Yet Carreel insists he’s more optimistic than ever and says he’s gained important insights from the tortured histories of Withings and the overall wearables industry. He believes against all the odds that he can use those lessons to reinvent and relaunch his company while pursuing a strategy that focuses more than ever on health.

“What I’m passionate about is that we have a fantastic team, and we can go deep in the digital health area,” Carreel said in an interview.

Nokia and Carreel confirmed the deal yesterday, after announcing that they had entered into exclusive negotiations at the beginning of May. After two years of headaches, Nokia issued a rather bland, four-sentence press release that suggested it couldn’t distance itself from the acquisition fast enough.

In his own press release, Carreel was much more celebratory. He noted that the re-acquisition of the company he cofounded in 2008 includes 200 employees, with most based in the original Withings headquarters in Issy-les-Moulineaux, France. He vowed to “relaunch the Withings brand by the end of 2018 by following an ambitious roadmap.”

One thing he won’t have is cofounder Cedric Hutchings. At the time of the sale in 2016, Hutchings was in the process of moving to Boston to expand the company’s U.S. operations. After the sale, Hutchings moved to Silicon Valley to become head of Nokia Digital Health. Carreel said Hutchings is now working on another project.

Hutchings did not respond to a request for comment.

Carreel also didn’t want to address the big question in all of this: What went so terribly wrong with the Nokia deal? “I have no comment on what is in the past,” he said.

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Fast starts

When Hutchings and Carreel founded Withings in 2008, the iPhone wasn’t even a year old, but the pair foresaw an increasingly connected world with faster wireless networks and evolving components that would enable all sorts of new consumer electronics form factors.

They believed they could leverage France’s strong design history and its engineering prowess to create a company that would strike a revolutionary balance between tech, fashion, and connectivity. The company’s first product was a connected scale, which debuted in 2009. A year later, Withings raised $3.8 million in venture capital, and in 2013 it raised another round of $30 million. At the time, these were huge sums for a French tech company.

“Quantified self is only the first wave of a much more profound health care revolution,” Hutchings said in a 2013 press release for the funding. “Thanks to Withings’ solutions, users are gaining control over their personal health, and richer relationships are established between patients and health care professionals.”

By then, the company had introduced a connected blood pressure monitor and a baby monitor that could send data to a smartphone. There was a sleep tracking pad and a smart thermometer. Eventually, the company also introduced fitness trackers and a hybrid smartwatch with analog hands and health tracking sensors.

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Withings appeared to be growing nicely when Nokia came knocking in 2016. The call seemed an unlikely one. After all, Finland’s Nokia had sold its mobile handset business to Microsoft a few years earlier and declared it was exiting the consumer technology business.

Nokia Group appointed Rajeev Suri as president and CEO, and he said the company would focus on networking, its mapping business, and licensing its intellectual property. Nokia was a significantly smaller company with less than half its annual revenues after the deal with Microsoft.

But very quietly, Suri created Nokia Technologies, a kind of business within the larger Nokia business. Based in Sunnyvale, this group was assigned 30,000 Nokia patents that generate $800 million in annual revenue for the unit. The division also had 800 employees, mostly engineers. The idea was to use those patents, the licensing revenue, and the engineers to identify promising markets and launch businesses to target them.

One market that was quickly identified was digital health. Withings was acquired to jump-start that effort, and Hutchings was put in charge of Nokia’s new digital health unit. Carreel became an advisor for a year, and then he left the company. When I had the chance to interview Hutchings in June 2016, just after the deal closed, he was clearly pumped about the prospects.

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“We have a huge ambition,” Hutchings said. “Nokia Tech is essentially a new company. And it’s in a very strong position to be seeding and building new businesses at Nokia.”

Dead ends

Things fell apart quickly.

In 2014, Nokia had recruited Ramzi Haidamus, who was then enjoying a successful run at Dolby Laboratories, to lead Nokia Technologies. The idea of running a startup within Nokia that was based in Silicon Valley and came with massive internal funding was too tempting to pass up.

“I’m always pleasantly surprised how much people love the Nokia brand,” Haidamus said in an August 2016 interview with VentureBeat. “Our challenge is to remind people that Nokia is still here, and that it’s also a new Nokia.”

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Less than two weeks later, Nokia announced that Haidamus was leaving the company.

“Ramzi has created a strong foundation in Nokia Technologies,” Suri said in a press release. “I wish Ramzi well and am confident that with its strong foundation, Nokia Technologies will continue its progress without missing a beat.” Haidamus said in a statement that it was the “right time for me to explore new opportunities to pursue my passion for building and transforming businesses.”

Obviously, something was amiss. And indeed, over the next year, Nokia Technologies would begin to unravel in a very public way.

A year after Haidamus was out, the company announced it was killing his digital media initiative, which included the Ozo virtual reality camera. In October 2017, Nokia said it would write down $164 million of the Withings purchase price. In February it began a strategic review of the digital health business that did not offer much hope.

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Most tech deals don’t work. But few go so far south so quickly.

The Verge reported that Nokia’s chief strategy officer, Kathrin Buvac, concluded in a memo that “our digital health business has struggled to scale and meet its growth expectations … Rather than only falling in love with our technology, we must be honest with ourselves … Currently, we don’t see a path for [the digital health business] to become a meaningful part of a company as large as Nokia.”

And so began the hunt for a buyer, as Nokia confirmed it was going to focus once again on its telecom roots. This chain of events led full circle back to Carreel.

Whither Withings

Despite these pratfalls, Carreel sees something that apparently almost no one else does. Even if sales are off, and the Withings name has been junked, he points out that there is still a large community of people using Withing’s products every day. Since news of his talks with Nokia last month, he said he’s heard an outpouring of support from users who want to see the company get a fresh start.

Beyond that, he’s convinced that the connected health market is still in its infancy. He said many of the connected health products, whether they are wearables or scales, focus on what he refers to as “wellness” — that it is, they provide only the most basic information designed to let people track progress and motivate them to take better care of themselves.

His vision is to take the company more aggressively into “digital health.” Though there is not a hard line between “wellness” and “digital health,” Carreel seems to define the latter as including more sophisticated devices that monitor health by looking at a much greater range of biological information. He describes something that approaches the idea of a connected medical device, rather than just a smart scale or a fitness wearable.

“Knowing that if you take a few more steps each day it will be good for your health has been the focus,” he said. “Our biggest challenge is really how to go deeper into the health side of this. And to do that, we have to learn how to better work with the medical community, including doctors and hospitals. We have to create a strong link there.”

Part of that evolution will include investing beyond just the devices. Carreel said the key will be developing not just gadgets, but the data and services around them. Currently, he believes too much of the information users receive is too basic and doesn’t give them enough insight to take actions to improve their health. Creating better health services and delivering more actionable insight from health data will be critical, he said.

“Between the product and the service and the data, there is a virtuous circle,” he said. “So if you have a good product, you can get good data, and that lets you offer a good service. And then it’s an ongoing process to improve each of those.”

Carreel has also promised to reintroduce the Withings brand later this year, while also continuing to service the current Nokia health products.

But for all this ambition, the state of the business remains fuzzy. Carreel said there was no need to raise any outside money immediately, which seems to imply that the company has at least enough revenue coming in to fund new product development and research. Yet Carreel sounds every bit like a fresh-faced entrepreneur who looks out the window every morning with conviction that he’s working on something that could change the world.

“These devices have to be even more about how to keep us in good health,” he said. “Or if we already have a chronic disease, how we can measure and manage that. I think we are just at the beginning of the history of this market where we have to invent how we measure health.”