Verkada Lead Investor’s Fundamental Errors
The man behind Verkada’s stunning $1.6 billion valuation, Aydin Senkut, has been talking up many fundamental errors he made in the investment.
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 ************** ** ****:
*** **** **** ***** ******** ** online *********. *** *******, *** ** their ********* ******** ********* ******** * quarter-million ******* *** ******* **** ** Google:
******, *********, ******* *** **+************** ******* ** ********:
***, ** ******,****** **** $*** *** ************ ****** ****** *** *******:
*** ******** ** ********* **** ******* out *** ********* **** ***** *******:
******* ** ******* ***** **** *** 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 **** ***** *** ***** ****.
*'* **** ******** **** *** *******, it's ***********. * **** ***'* ***** they **** * **** **** ******** model ** **** ********.
* ***’* **** ** *****, *** this ******* * *** ******** **** someone ******** ********** **** *** *** manufacturers *** ********* * *** ****** Verkada ****.
***. ** ** ***** ** ** how *********** ****** *** ******** ***** on ****** **** ***'* **** ***** to *************. * ***** **** ** fundamentally *** ******** ** ******* *********** though *****?
**** ***'* **** ***** ** *************
** ********, ******* ********* ** ***** making **** ** *** ****** ***** you *** ***** ****** ** ******* what **** ******. **** *********** **** out ****** *** *** *** **** are **** **** **** **. **** Verkada ** * '***** ****'? ** could. **'* ****** ******* * ***** ticket *** *** **** ** ** have ***.
*** *******, *** ********* ********** ** just ***********. ** *** ***** ****, he **** ** ** **********, ***** has **** ******** ** ***** *** diligence ** ****** ******* *********. '******** **** *** *****'. ******** **** *********. ***** ******* eats *********. ** ***** ***.
*** **** ******* ****** **** **** a ***** ***** ** *** *****.. you *** ****** **** **...***
*** ***** ***** ******** ** ***********.
* ***** **** *** ***** ***** that. *** **** * *** ***** a **** ** ***** ******** ** thousands ** ******* ** **** **** to ****** ** *****? ******* ** effectively ******* * ***-**** ***** **** online ** *** ********** ***** ****** media *********** *********.
*** **** ***** ** *** **** to **** * ***** **** ******* out ****** **** *****?
:)
* ****** *** ***** **** ********** is *****, ******** **** ** ***** into ********* *** ** **** ********* when ***** *** **** * *** qualified ***** ****** **** ** *****. I **** ****** **** ************ **** have **** ********** *** ***********...
**** ***** *** **** * *** qualified ***** ****** **** ** *****
* ***** *****'* ***** ****** ** believe **** **** * *** ** leads. **** ***********, ******* *** ****** certainly ******* ******** *** **** *** lead **** ************ *********. ***'* *** Axis *** * **** - ****'* a ***-**** ****** ****, **** ***** but *** ******* *********** ** ******* some **** ******* ** *** ******. With ******* ****'* * ****** **** + * **** **** *********** ** an ******* ** ****** ******** *** years ** **** **** ********* ***** of **** ******* *** **** ********* licenses.
* **** ****** **** ************ **** have **** ********** *** ***********...
**** **** ** ****** ** *******? As *******'* ******* ****:
***** ****** *** *** ************ **** end *********
*****'* *** *********** **** **** ******* but **** **** *** ******. ******* is ************** ********* ***** ***** ********** and ***** *** ********* ********* *** there **** *** ***** ** ** handed *** ******* / ***** ******* work.
* **** ****, ** **** ***** hers, ** ******* ** *** ***** his........ **** *** *** *** ************** in *** **** ***** ** ***********.
** ***** ** *** ***** ******* is ************ *** **** ** ** physical ********, ** ** ******** ***** on *********.
"******** *****" ** "******** ****************" ** *********?
******* ******** - *** ******** ** is ** ***'* *********.
***********" ** *********?
***’* *** **** ***** ***** ** much ** ******* * ******** ** the **** ******* ******* ** *** industry. ** ** *****, * ***’* know *** ** * ******* **********.
**** ****** *** ****** ** ******* they ****, ****** ***** *********** ***********, that **** *** *********** ******* ** a **** **** **** ****** ** profits. *** *** ********* ** ******* the ***** ** ** **** **********.
***/***, * ***** ***** ******** *********** economics *** ***** ***** ** *** long **** ******* ********** ********, **** if **** *** ****** **** ******** a ******* * **** -**** * ******* ** ****, ****** A ******* ***********
* ** ********* ** *******'* *** strategy ** **** **** ** ***** companies - **** **** *** ******** and **** ** *** ***. ***** Verkada ****** ***** **** ***** *******, they **** *** ** **** *** promise ** *** *** ******** ******** and *********** ********.
***** *** ************ ****** *******’* ***** has ****** ********* ******* ******* **** do *** **** ** ******* ********** and *** ***** ** ****** **-****.
****, *** ***** ** ********* ******* to ** **** ***** **** *** residential ***** ********, ********** ** **** get ********** ** *** ***** *** access.
**** ** * ***** ******* ** what ******* ** ** * ******* situation ******** **** *******..*** ****** **** will *** *** ********* ****** **** WeWork *** ** **** ***** *** must ****** **********, *** **** ****** profitable *** ****** **********.
*** ***** *** *** ******* **** Neumann *** *** ****** ******* - WSJ
**** **** ***** *** **** ** the ****** **** ********* ****** ***** were ***** **** * ***** ********** model...
**** ****** *** ******* *** ********* buildings ***, **** **** ******* ************* I **** ** ******'* ******** *****, Verkada's ***** ** ******.
*** ********** ** ******** ******* **** money ** *****-***** ******. ****** ** an ******* ** ** *******, ****** there *** **** ****** ***** ** works.
* ***** ******* **** ******* ** wants ** **** **** ****** ****** else ** ***** *****, ******* **** once *** **** ** *****, ** will ** **** *** ** ** be ****.
***, ****** ***** ******* ******* ***** their *** *******, ** ***** ******* OEMed?
******, **** ******* ***** *** ******** / ******** *** *** ******** ************ by *******, ******* ********* ******* *****.
***, **** *** *******'* **** ****** import *******. **** ****** *** *** importing **** **** ******* ***** ****** questions ** *** **** **** *** actually *******:
***** *** **** * **** ****** of ********** **** ***** *** ************* of *******'* *********.
************,* *********** ***-**** ** **** ****** has ********* ********** *******("** ******* ******* ** *** *** cameras, *** ***-** ** **** ** 272 ******* ** *** *** ** next ****"). *** ***-**** ******* *** ** go **** ******* *** **'* ***** an ********** ***** ** *** ******* even *** * **** **** **** end-user:
* *** *** ** *** ******** from * ******** **. * *** I ******* ***** ********* ******* *** more **** * *****
****'* * **** ******* ** ***** funnel ** ******: ****** ***** ** -> **** ******* -> ****** ***** person -> **** ***** *******. ******* did *** *** **** *** *** I ** **** **** *** **** others ***** * ****** **** *** industry ************* ***.
** ***** ** ********* **** *** doing * ***** ***, ******** ***** digital ********* ****** *** **** ****** well.
********** *** * ******* ******* ***** 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?
*** *****:
*******'* ***** ** ********* ****:
****** *******, **** * **** **** of ***** **** **** ****** ****-*** end-user *****.
**** ***'* *** *** ***** ** distribution *** ***** **** ***** *** deals ** *** *********** **** **** to **** **** (** ***** ** switching ***** ********)
***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******. Most **** **** **** ****, ****** sales, *** - **** **** *** traditional ******** ****** (****** ****, ****** supply *****, ***). *** *** ******? Ramp ** ** **** *** ** fast ** ******** *** ****.
***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******.
****'* **** *** **** *** **** super ********* *** ********. * *** of ****** *** ** ** ****, especially ** *** ****** **** *** poorly ******** ** *** ******* ** the ******* / ********.
*** * ******* ******** ***** *** or *********** ** ******** *** * assure ** **** *********** ******* **, in * ******, **** ** ********* end **** **** ******. ******* ****** and ******** *****, ** ** ** effective *** ** ***** *****.
***** ***** **** *** ** *** and *****, ****** ******** ** *********** and *** ******** ****** ** *******. Most **** **** **** ****, ****** sales, ***
***... ***! **** * ******! **** of ********'* ***** **** ***** ** the **** *** ***** **** **** Ricoh, *****, ***. *******, *** ****** path ** ***** ************ ***** ** via ******* ******* ********.
*******. *** *'** **** **** **** Avigilon *** * ***** **** ******* employees ****** ** ****. ** **, maybe ****'* *** ****'** ******* **** that ***** *** ****** *************** - or ******* ****** **** **** ***** is ***** **** **** ****'** **** the "******" **** **** ***** *** 60-80 **** ***** * *** *** 18 ****** ****** ******* ********** *** as ****.
* ***'* **** **** **** ** training ******** **** *** ****** *******, and * **** **** *** ******** of *** ********* **** ** ***** people ******* *****. *******, * **** never ***** ****** *** **** ** Avigilon ***** *** *****'* **** **** he's ******* *****. **** ** **********, and **** **** *'** *****, *** Avigilon **** *** *** ****** **** trained ** *** **** ***** *******, but **** **** *** ***** ** what's ***** ** ** *** ******.
*** ******** **** *** *** ****** well ******* ** *** **** ***** product, *** **** **** *** ***** of ****'* ***** ** ** *** market.
****: **** ** ******** **** ** Avigilon **********. ** *****, * ******** if **** *** ** ******** ******** patting ********** ** *** **** *** no.
*** ******* *** ** **. ******'* email ******* ******? * **** **** swampland ** ******* **** ** ***** want ** ****** **. ** ***** not ** ***** **** ***, *** once ** ***** ** *** *** up * ******** **** ** **** be ***** ********. ******* ** *** is *** ***** *****, *** ** seems **** **** **** ** ********** might ** ** *** *****.