Verkada Lead Investor’s Fundamental Errors

Published Feb 05, 2020 13:52 PM

The man behind Verkada’s stunning $1.6 billion valuation, Aydin Senkut, has been talking up many fundamental errors he made in the investment.

IPVM Image

From fundamentally misunderstanding Honeywell and Hikvision to even Verkada itself, he has made one daring bet.

But that does not mean he will wind up losing money on this risky deal. Inside this note, we examine his errors and, despite that, why his money may help himself and Verkada.

Please **** ** *****

****** ******** **** ******* *** *** need *** ***** ***** ***, ** he******** ** *** ********:

* **** ** **** *** ***** clear: ******* *** *** ** **** of ***** ***weren’t ******* *****. They had plenty of runway from their previous funding.

*** ***** **** *** ** ******** three ******** ***** ** **** **** would **** **** ******* * *** round.We ****’* **** ** **** and they didn’t want to go through a formal process. [emphasis added]

** ********* **** ** ****** **** this **** **** *********. ******* *** not ******. ** **** *** *** the ***** ****** ** *** **** valuation **** ******** *****, **** ** now.

*** **** ** * ***** ** Silicon ****** ****, *.*., *** *** Information's ****** ******:******* *******’* *** ******: ******** ****** and *********** ******.

Marketing *** *** ** *******

** *** **** *********, ****** ******** that:

*** **** ****** ***** ******** ** marketing. *** **** ** ********* ******* the *******-****** *** ** ******, ****** solid.

** ***** ** *** ***** ******* is ************ *** **** ** ** physical ********, ** ** ******** ***** on *********. *** **** ** **** give **** **** ** ********* ** Yeti ******** ** * **** ** a ******* *******, *** **** **** run ************** ** ****:

IPVM Image

*** **** **** ***** ******** ** online *********. *** *******, *** ** their ********* ******** ********* ******** * quarter-million ******* *** ******* **** ** Google:

IPVM Image

******, *********, ******* *** **+************** ******* ** ********:

IPVM Image

***, ** ******,****** **** $*** *** ************ ****** ****** *** *******:

IPVM Image

*** ******** ** ********* **** ******* out *** ********* **** ***** *******:

IPVM Image

******* ** ******* ***** **** *** because **** *** ******** ** ************* amount ** **** ***** *** *********.

Hikvision *** *********

**** *** ***** ***** ** * startup, *** **** ** ******* **. Senkut *** **** **********, *********:

*** ***** ****** ************* ** *** big **** ****** **. ********* ** valued ** $*** *******-****. *****’* * Chinese ******* ****’* **** $** *******. The *********** ** ** *** ********* system *** *** ********* ** *** world? ****** **** **** ****** ******’* be ******.

********* ** ********* ****************** '********' *******. **** * ******** of ********* **** *********, **** **** of *********'* ******** ** *********, *** and *** ********, *** ***** *******. People *** *** *************** **** *** market **, **** ****** ********** **** Honeywell ** * ************ **** **** many ******, **** ** ***** **** nothing ** ** **** *******'* **** hopeful ****** '********' ********.

*** *** ******* ******* ** ** referring ** ** *********, ***** ** currently ****** ** ~$** ******* ***. Hikvision *** **** ******* ********* *** 3 *******:

  • *** *** ********** ******* **
  • *** *** ********** ****** ** ******* foreign ***********
  • *** ***** ****** ********** *** ********* inflated, ***** ****** ** *** **********.

*********'* ********* ** ** ************* ********* from ******* **** ***** ** ** sense ** ******* **********.

***, *** ***** *** *** ********* about ********* ******** *** ***** ****** valuations,**** *******, * ******* ** ******, ***** ******* *******, ******* *** both ******* *** ** ***** ****. They ***** **** * ****-*******-****** **** valuation. ** *** ****, **** ***** be ***** ** **** */**** **** valuation.

Investor ******

********* ** *******, ******'* ****** ** 'all *** ********* ** *** *****':

**** *** ** ******* ** ****'* this ** **** ***** *********. **'* just *** ****'** ******* *******. ****'** going ** ***** ****** ** **** and **** *** ***** ** ****** the ********* ****** *** *** *** buildings ** *** *****

Still *** ***

***** ** ** ****** **** ******* will "****** *** ********* ****** *** all *** ********* ** *** *****" or **** ****, ** * *******, or * ***** ** *** *****. But ******* *** ***** ********* ** not **** ****.

********* *** ***** ****** ***************, *******'* lead ******** ***** *** **** * good ******.

** ******* ***** ***, *.*., **** $5 *******, ** ***** ** ************* for (***-*****) ***** ************ / ******** security. *******, ******* ** ******** ** unprecedented ******-**, ****-********** *******. ********* ***** conventional ****** ******* *** ***** ************ business ** ***** ********* ** ****** sales (**** * ***** ** *****, sell * ***** ** **** ***** next ****, ***.), ******* ** *********.

********* ** *******'* *********, ** *** contrary ** *******'* **** ********, ******** the **** *** ** **** ***** is ** *** *** ***** *** marketing ****** ** *** ** ******** as **** ** ********.

**********, *** ****** **** ***** ********** the ********* ** ******* ****** **** this ***** ***, ** *** ********, the ********** ** **** ***********, *** power ** *******'* ***** ******* *** being ******* ******'* ***** *** ***** to ********, **** *** **** * lot ** *********.

*** **** ********* **** *** *** now, *** **** **** *** *** them ** *** ****** ******* ** fire ** ******** **** ******* **** next, *** **** ****** ***** ********* will ** **** ******* ** **** and ****** ** *** **** *** complexity ** ****** *** ** ***-**-*** Verkada ****** **** ** *********** ***********.

*******'* *** *** **** ***** **** but**** **** **** ****:

******* ** ************* ******. ****’* *** mainly ** *** ****** ** *** system. **** ******** **************, *****’* *significant ******* ********** from the customer: she has invested both in the hardware and the labor to physically install a system throughout her buildings. [emphasis added]

******, ******* **** *** **** ** generate ******** ** ******* ** ** worth ******** ** *******. *** *********** guaranteed **** **** **** *** ******-** Verkada ***** *** *** ********* ** be *** **** ********** ***** / access ******* ****.

*** ** **** ***** ***** ******* to ***** ** *** ******* ******, Verkada's **** ******** *** **** **** make **** ***** *** ***** ****.

Comments (34)
UM
Undisclosed Manufacturer #1
Feb 06, 2020

*** ******* *** ** **. ******'* email ******* ******? * **** **** swampland ** ******* **** ** ***** want ** ****** **. ** ***** not ** ***** **** ***, *** once ** ***** ** *** *** up * ******** **** ** **** be ***** ********. ******* ** *** is *** ***** *****, *** ** seems **** **** **** ** ********** might ** ** *** *****.

(21)
Avatar
Michael Gonzalez
Feb 06, 2020
Confidential

**** *** **** *** *******?

UM
Undisclosed Manufacturer #1
Feb 06, 2020

*'* **** ******** **** *** *******, it's ***********. * **** ***'* ***** they **** * **** **** ******** model ** **** ********.

(2)
(1)
(4)
UI
Undisclosed Integrator #7
Feb 07, 2020

**** *** **** *** *******?

*** ******* *********?

(3)
(8)
UI
Undisclosed Integrator #2
Feb 06, 2020

* ***’* **** ** *****, *** this ******* * *** ******** **** someone ******** ********** **** *** *** manufacturers *** ********* * *** ****** Verkada ****.

Avatar
Ross Vander Klok
Feb 06, 2020
IPVMU Certified

***. ** ** ***** ** ** how *********** ****** *** ******** ***** on ****** **** ***'* **** ***** to *************. * ***** **** ** fundamentally *** ******** ** ******* *********** though *****?

(7)
JH
John Honovich
Feb 06, 2020
IPVM

**** ***'* **** ***** ** *************

** ********, ******* ********* ** ***** making **** ** *** ****** ***** you *** ***** ****** ** ******* what **** ******. **** *********** **** out ****** *** *** *** **** are **** **** **** **. **** Verkada ** * '***** ****'? ** could. **'* ****** ******* * ***** ticket *** *** **** ** ** have ***.

*** *******, *** ********* ********** ** just ***********. ** *** ***** ****, he **** ** ** **********, ***** has **** ******** ** ***** *** diligence ** ****** ******* *********. '******** **** *** *****'. ******** **** *********. ***** ******* eats *********. ** ***** ***.

(1)
(1)
UM
Undisclosed Manufacturer #1
Feb 06, 2020

******* **** *********

*'* **** ** *** *** ********* campaign *** **** ***

(1)
(4)
U
Undisclosed #9
Feb 10, 2020

**** **** *********** ****.

UD
Undisclosed Distributor #3
Feb 06, 2020

*** **** ******* ****** **** **** a ***** ***** ** *** *****.. you *** ****** **** **...***

JH
John Honovich
Feb 06, 2020
IPVM

*** ***** ***** ******** ** ***********.

* ***** **** *** ***** ***** that. *** **** * *** ***** a **** ** ***** ******** ** thousands ** ******* ** **** **** to ****** ** *****? ******* ** effectively ******* * ***-**** ***** **** online ** *** ********** ***** ****** media *********** *********.

(9)
(2)
U
Undisclosed #8
Feb 07, 2020

*** **** ***** ** *** **** to **** * ***** **** ******* out ****** **** *****?

:)

(3)
RF
Remiel Feng
Feb 06, 2020
ENS Security

* ****** *** ***** **** ********** is *****, ******** **** ** ***** into ********* *** ** **** ********* when ***** *** **** * *** qualified ***** ****** **** ** *****. I **** ****** **** ************ **** have **** ********** *** ***********...

(1)
JH
John Honovich
Feb 06, 2020
IPVM

**** ***** *** **** * *** qualified ***** ****** **** ** *****

* ***** *****'* ***** ****** ** believe **** **** * *** ** leads. **** ***********, ******* *** ****** certainly ******* ******** *** **** *** lead **** ************ *********. ***'* *** Axis *** * **** - ****'* a ***-**** ****** ****, **** ***** but *** ******* *********** ** ******* some **** ******* ** *** ******. With ******* ****'* * ****** **** + * **** **** *********** ** an ******* ** ****** ******** *** years ** **** **** ********* ***** of **** ******* *** **** ********* licenses.

* **** ****** **** ************ **** have **** ********** *** ***********...

**** **** ** ****** ** *******? As *******'* ******* ****:

***** ****** *** *** ************ **** end *********

*****'* *** *********** **** **** ******* but **** **** *** ******. ******* is ************** ********* ***** ***** ********** and ***** *** ********* ********* *** there **** *** ***** ** ** handed *** ******* / ***** ******* work.

(5)
UI
Undisclosed Integrator #5
Feb 06, 2020

**** ** **** ****!

(1)
Avatar
Ross Vander Klok
Feb 07, 2020
IPVMU Certified

* **** ****, ** **** ***** hers, ** ******* ** *** ***** his........ **** *** *** *** ************** in *** **** ***** ** ***********.

(1)
(3)
UM
Undisclosed Manufacturer #4
Feb 06, 2020

** ***** ** *** ***** ******* is ************ *** **** ** ** physical ********, ** ** ******** ***** on *********.

"******** *****" ** "******** ****************" ** *********?

******* ******** - *** ******** ** is ** ***'* *********.

(1)
JH
John Honovich
Feb 07, 2020
IPVM

***********" ** *********?

***’* *** **** ***** ***** ** much ** ******* * ******** ** the **** ******* ******* ** *** industry. ** ** *****, * ***’* know *** ** * ******* **********.

**** ****** *** ****** ** ******* they ****, ****** ***** *********** ***********, that **** *** *********** ******* ** a **** **** **** ****** ** profits. *** *** ********* ** ******* the ***** ** ** **** **********.

***/***, * ***** ***** ******** *********** economics *** ***** ***** ** *** long **** ******* ********** ********, **** if **** *** ****** **** ******** a ******* * **** -**** * ******* ** ****, ****** A ******* ***********

(2)
(1)
U
Undisclosed #6
Feb 07, 2020

* ** ********* ** *******'* *** strategy ** **** **** ** ***** companies - **** **** *** ******** and **** ** *** ***. ***** Verkada ****** ***** **** ***** *******, they **** *** ** **** *** promise ** *** *** ******** ******** and *********** ********.

JH
John Honovich
Feb 07, 2020
IPVM

***** *** ************ ****** *******’* ***** has ****** ********* ******* ******* **** do *** **** ** ******* ********** and *** ***** ** ****** **-****.

****, *** ***** ** ********* ******* to ** **** ***** **** *** residential ***** ********, ********** ** **** get ********** ** *** ***** *** access.

(1)
Avatar
Rick Caruthers
Feb 07, 2020
Galaxy Control Systems

**** ** * ***** ******* ** what ******* ** ** * ******* situation ******** **** *******..*** ****** **** will *** *** ********* ****** **** WeWork *** ** **** ***** *** must ****** **********, *** **** ****** profitable *** ****** **********.

*** ***** *** *** ******* **** Neumann *** *** ****** ******* - WSJ

**** **** ***** *** **** ** the ****** **** ********* ****** ***** were ***** **** * ***** ********** model...

JH
John Honovich
Feb 07, 2020
IPVM

**** ****** *** ******* *** ********* buildings ***, **** **** ******* ************* I **** ** ******'* ******** *****, Verkada's ***** ** ******.

*** ********** ** ******** ******* **** money ** *****-***** ******. ****** ** an ******* ** ** *******, ****** there *** **** ****** ***** ** works.

* ***** ******* **** ******* ** wants ** **** **** ****** ****** else ** ***** *****, ******* **** once *** **** ** *****, ** will ** **** *** ** ** be ****.

(1)
(1)
RF
Remiel Feng
Feb 07, 2020
ENS Security

***, ****** ***** ******* ******* ***** their *** *******, ** ***** ******* OEMed?

JH
John Honovich
Feb 07, 2020
IPVM

******, **** ******* ***** *** ******** / ******** *** *** ******** ************ by *******, ******* ********* ******* *****.

***, **** *** *******'* **** ****** import *******. **** ****** *** *** importing **** **** ******* ***** ****** questions ** *** **** **** *** actually *******:

(6)
JH
John Honovich
Feb 07, 2020
IPVM

***** *** **** * **** ****** of ********** **** ***** *** ************* of *******'* *********.

************,* *********** ***-**** ** **** ****** has ********* ********** *******("** ******* ******* ** *** *** cameras, *** ***-** ** **** ** 272 ******* ** *** *** ** next ****"). *** ***-**** ******* *** ** go **** ******* *** **'* ***** an ********** ***** ** *** ******* even *** * **** **** **** end-user:

* *** *** ** *** ******** from * ******** **. * *** I ******* ***** ********* ******* *** more **** * *****

****'* * **** ******* ** ***** funnel ** ******: ****** ***** ** -> **** ******* -> ****** ***** person -> **** ***** *******. ******* did *** *** **** *** *** I ** **** **** *** **** others ***** * ****** **** *** industry ************* ***.

(1)
(1)
RF
Remiel Feng
Feb 07, 2020
ENS Security

** ***** ** ********* **** *** doing * ***** ***, ******** ***** digital ********* ****** *** **** ****** well.

JH
John Honovich
Feb 08, 2020
IPVM

********** *** * ******* ******* ***** the ********** ******** ***** ***** ** *** ********(**** ***********):

***** ******** *** ** ** **** dropped ** *** ** * *.* they ****** ** **** *******, *** investor ****** ** *%. *** **** 5% ** * *******? **** *** didn't **** *** **** *******? *** why ** ** ** **** **** the ***** **** **** ** **** when * **** ****?
****, * ****, **'* **'* **** again, **'* ********* ** ***'* *** that *****. * ****, ** *** question **, ** **** *** ** the ***** ************, ** ***** ** crunched, **** *********** **** *** ***** anything. *** **** *** ****** ** maybe **** **** ******* ** ******* available **** *** ******* *** **** at *** **** ***** ** ***** to *** ******, *****?

*** **** ***** ***** ******* ** more ******* ** - **** ***** Verkada ** **** **** *****? **** market ** **** ** *** *** only ***** ** ****. *** ** does ***** ** *********** *****. **** if ******* ****** ******* $*** ** $200 ******* ** *** **** * years? **** **** **** ** **** it?

UM
Undisclosed Manufacturer #10
Feb 10, 2020

*** ******** ** **** ******* *********** for ******** **********.

(1)
(1)
UM
Undisclosed Manufacturer #11
Feb 19, 2020

*** *****:

*******'* ***** ** ********* ****:

****** *******, **** * **** **** of ***** **** **** ****** ****-*** end-user *****.

**** ***'* *** *** ***** ** distribution *** ***** **** ***** *** deals ** *** *********** **** **** to **** **** (** ***** ** switching ***** ********)

***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******. Most **** **** **** ****, ****** sales, *** - **** **** *** traditional ******** ****** (****** ****, ****** supply *****, ***). *** *** ******? Ramp ** ** **** *** ** fast ** ******** *** ****.

(1)
JH
John Honovich
Feb 19, 2020
IPVM

***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******.

****'* **** *** **** *** **** super ********* *** ********. * *** of ****** *** ** ** ****, especially ** *** ****** **** *** poorly ******** ** *** ******* ** the ******* / ********.

*** * ******* ******** ***** *** or *********** ** ******** *** * assure ** **** *********** ******* **, in * ******, **** ** ********* end **** **** ******. ******* ****** and ******** *****, ** ** ** effective *** ** ***** *****.

(3)
(2)
UI
Undisclosed Integrator #7
Feb 19, 2020

***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******. Most **** **** **** ****, ****** sales, ***

***... ***! **** * ******! **** of ********'* ***** **** ***** ** the **** *** ***** **** **** Ricoh, *****, ***. *******, *** ****** path ** ***** ************ ***** ** via ******* ******* ********.

UM
Undisclosed Manufacturer #11
Feb 19, 2020

*******. *** *'** **** **** **** Avigilon *** * ***** **** ******* employees ****** ** ****. ** **, maybe ****'* *** ****'** ******* **** that ***** *** ****** *************** - or ******* ****** **** **** ***** is ***** **** **** ****'** **** the "******" **** **** ***** *** 60-80 **** ***** * *** *** 18 ****** ****** ******* ********** *** as ****.

UM
Undisclosed Manufacturer #1
Feb 19, 2020

* ***'* **** **** **** ** training ******** **** *** ****** *******, and * **** **** *** ******** of *** ********* **** ** ***** people ******* *****. *******, * **** never ***** ****** *** **** ** Avigilon ***** *** *****'* **** **** he's ******* *****. **** ** **********, and **** **** *'** *****, *** Avigilon **** *** *** ****** **** trained ** *** **** ***** *******, but **** **** *** ***** ** what's ***** ** ** *** ******.

(1)
(1)
JH
John Honovich
Feb 19, 2020
IPVM

*** ******** **** *** *** ****** well ******* ** *** **** ***** product, *** **** **** *** ***** of ****'* ***** ** ** *** market.

****: **** ** ******** **** ** Avigilon **********. ** *****, * ******** if **** *** ** ******** ******** patting ********** ** *** **** *** no.

(2)