Who said that products targeted at young children can also be used for grown-ups? Well apparently Iddoo and its Retrouve Doudou say so! In short a ‘Retrouve Doudou’ consists of two little devices: one that you attach to the kid’s security blanket, and one that you keep in a known location. The idea is twofolds:

• if the kid misplaces his/her security blanket at home, you can use the second ‘Retrouve Doudou’ to ping the first one. The first one will then emit noise, light up.
• if the kid misplaces his/her security blanket outside and you cannot ping it, there is a code on the back of the ‘Retrouve Doudou’ that allows the finder to get back in touch with the owner via the Iddoo website.

As it turns out (I chatted with the inventor/CEO at the ‘Salon Baby’ in Paris), he made a large proportion of his sales from…. adults (men) who consistently lose their keys!

Is this a good investment?

As usual, let’s have a look at the financials of this company and how much money they make on each product. The product is sold between €20 and €29,90 for two.

To start with, here is a quick component list with price estimates:

• RF chip (the website claims a range of 8m on 2.4GHz), which could be something like that: Freescale RF Transceiver. They cost about €3 each for a good quantity (100s).
• Casing is made of plastic and some rubbery bit that is safe for children. It also has a clippy bit to attach it to the safety blanket. Apparently this is 100% manufactured in France so I would estimate the cost to be in the area of €1/piece.
• Miscellaneous devices (little tweeter, LED, battery, screws etc.): about €1.
• Packaging in France: about €2

Just for manufacturing, we can estimate the cost of each unit to be about €7 giving a total cost per pack of €14 leaving a 30% margin for a €20 price and a 100% margin for a €29.90.

A 30% operational margin is quite low considering you still need to account for R&D, marketing, SG&A (especially in France), sales. The price point seems to be correct (it sells) however, I would have liked to see a consistent 50% margin rather than a discount that kills your margin: a 33% discount in price reduces your margin by close to 60%!! Also, I understand the manufacturer’s concern of safety and why he wants to keep the manufacturing in France, however this is not advertised strongly enough in my opinion.

From a technical point of view, I like the product and I think it will sell. I would have liked to a see perhaps a Zigbee technology (offering a 100m range) because outside of Paris, houses can be that big and probably bigger.

Competitive advantage

They are clearly first to market, at least in France! One of their main competitive advantages is the registration of the ‘Retrouve Doudou’ that helps them build a community and thus keep a certain level of interaction with its users. However, I have doubts whether this competitive advantage is sustainable especially when China will be pouring some cheap copies in a couple of years. Provided Iddoo can develop their brand and create new products or additions to the current products (e.g. pairing more ‘Retrouve Doudou’), they will be able to grow and become the reference for Children ‘gadget’ products.

Would I invest in it?

In this situation, I would like to know what the long-term strategic plan of the firm is. The product is excellent: it sells and will sell more. However, investments should be long term, in a good company that will be come great. I would be interested to see what they do with their profits, if it anything but reinvested capital, (in my opinion) this will forecast trouble ahead.