Struggling Arcules Changes Chief Revenue Officer

By John Honovich, Published Oct 29, 2019, 10:50am EDT (Info+)

Canon / Milestone spinout Arcules has struggled, now changing their Chief Revenue Officer, just a year after he came on board.

The issue is not Arcules alone, as we argued this summer - Milestone Has Problems - the biggest of which is Arcules.

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Vote / ****

Comments (35)

Lol, Arcules CEO today is speaking about translating technology to revenue:

What is he going to say? Don't be like Arcules?

In fairness, this event is chaired by Scott Schafer...

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John;

This used to be a quality constructive blog. Now it has sunk to mean spirited personal attacks. This post is a great example. Cancelled my membership today. I’m out.

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Chris, what is personal here? Arcules CEO is giving a speech about business - specifically increasing revenue - which is ironic since Arcules is struggling with revenue.

This is not a 'personal' issue - like someone's haircut or dress or accent - executives want to stand up and deliver lectures about revenue, while not being able to do so, it is fair game to call them out on it.

If you don't like that, I can understand that, but it's not 'personal'. Agree/disagree?

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perhaps it was the casual dig at the Industry’s Formerly Most Influential Influencer

;)

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“The main job Petterson has done since becoming CEO is leading Arcules to be a public embarrassment.”

“In our experience interacting with him, he has been earnest and diligent though, probably understandably, overwhelmed._ - clearly portraying a CEO is “...overwhelmed” is a critique of his personal ability....no?

Sounds pretty personal to me in a very short article.

While some of your team (Bryan) still focus on objective benchmarking of product (the reason I signed up so many years ago) you have lowered yourself to name calling and creating controversy. I’m sure this sells some subscriptions but you just lost At least one. I know that won’t bankrupt you but I also know I am not alone in my professional and personal opinion.

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clearly portraying a CEO is “...overwhelmed” is a critique of his personal ability....no?

No, by definition, it is of his business ability. He is overwhelmed in dealing with Arcules business issues.

Chris, you are certainly entitled to think it is 'mean' or not 'nice' to say that but it's clearly not personal. It has nothing to do with him as a person outside of business, maybe he is great with his neighbors or volunteers at a soup kitchen on the weekends or he is funny at the bar. None of those things enter in my analysis of his ability to do his job as CEO of Arcules, of which, he is clearly 'overwhelmed'.

creating controversy

Yes, it creates controversy to criticize the most powerful players in the industry whether it's Canon/Milestone/Arcules or the PRC/Hikvision, etc.

sells some subscriptions

So you think the way to make money in an industry dominated by giant corporations like Canon and Hikvision is to criticize them publicly?

We speak out on the issues that we think are right. Arcules did change the CRO, they are struggling. It is a news story worth covering and we are the only ones who ever do it because everyone else is too happy to take money from large corporations. That's why we can call out big corporations and do the industry's only testing program. I do appreciate your feedback, Chris.

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The main job Petterson has done since becoming CEO is leading Arcules to be a public embarrassment.

So you believe “The main job Petterson has done since becoming CEO is leading Arcules to be a public embarrassment.” is an objective review of his abilities as a CEO? I find It to be petty and beneath what started as a quality, objective review of products.

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Yes, as the saying goes "harsh but fair". And keep in mind I was quoting and responding to his LinkedIn profile that asserted "We get the job done" which is minimally absurd given the job Arcules has done in the last 2 years.

You can feel free to disagree and present evidence for your case about the 'business'.

what started as a quality, objective review of products.

We have been criticizing businesses for many, many years. This is not new. Off the top of my head, some examples:

Chris, I don't object or get upset if people disagree. You are free to object, and present opposing viewpoints and other evidence. Thanks!

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I don't know a ton about Arcules other than the obvious struggles they have gone through, but I do know and have a lot of respect for Mr. Waterton. He is a strategic thinker, and he knows how to put together and execute a proper plan. While he may be coming from the "other" side of the industry, the shift in thinking is one that simply takes a little time. The skills necessary to perform in this type of a roll, however, are much harder to teach / learn.

I can't say that I have any level of confidence in Arcules, but I can say that I do have confidence in the ability that Nigel brings to the equation, and from a personal perspective, I sincerely wish him the best in this new role.

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I feel Arcules has been developing so very slowly and is being passed on their chance for market share left and right. Their resources available beneath the Canon brand should be shining bright, especially when ARPTEC chipsets/future cameras eliminate their clunky physical architecture.

Get there, guys! We want a good cloud platform! The more entries available, the better we will all be.

The issue is not Arcules alone, as we argued this summer - Milestone Has Problems - the biggest of which is Arcules.

While this isn't the thread for it, Milestone has big UI problems.

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From experience, CROs come in, implement trendy sales dogma (Challenger for example) but never truly put their ear to the group so to speak.

In Arcules' case, it doesn't no matter how much you polish it......

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I think “software only” cloud providers don’t offer enough of the pieces of the solution to ever be financial successful just selling SAS, as they don’t offer or making revenue from the internet connectivity, cameras and they don’t typically own the server farm, so after paying for hosting per camera to AWS or Azure etc, it is hard to make real RMR money at few bucks per camera. You have to have millions of cameras connected to make any kind of integration money.

This is not factoring in the challenges of developing Cloud VMS to work with 3rd party cameras. More and more concept of the “lock in” proprietary camera is less of a concern to general pop, as it to security industry people, as could be viewed as a commodity device. Proprietary camera/vms can also be easier to offer nice security features, that are harder to achieve with 3rd party camera and vms

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It is hard to make real RMR money at few bucks per camera

You are right to a degree, which is why it's important to have cloud storage (more RMR) as a part of the equation or just charge a lot for the proprietary cameras in order for the manufacturer to make things worthwhile for themselves and their dealers.

More and more concept of the “lock in” proprietary camera is less of a concern to general pop

If you're talking about small jobs, then you might be right, but when talking about the medium-large size projects, spending $1000 or so dollars for a camera that is unusable for any other cloud provider or even traditional VMS if the user decides to convert to an open platform solution is not something most customers are okay with at all.

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Proprietary camera/vms can also be easier to offer nice security features, that are harder to achieve with 3rd party camera and vms

That's reasonable. That's basically the Avigilon vs Milestone argument. And Avigilon does 3x the revenue of Milestone.

I think “software only” cloud providers don’t offer enough of the pieces of the solution to ever be financial successful just selling SAS

That I think is too strong. Arcules is the same model as Eagle Eye and the later is doing fine. What are you alluding to in Verkada, e.g., is no doubt true in terms of explosive revenue growth. But Arcules can certainly do better than it is now, though likely nowhere ever close to Verkada, to continue that example.

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My impression of Arcules, from people I have met there and a friend who works there and tried to recruit me, is that it's basically like a well-funded graduate school research project. Employees there are very happy, the environment is great, there's little pressure to, say, actually make a profit, because of the endless money from Canon. Sounds like a great place to work....until Canon inevitably pulls the plug.

Indeed, the place is full of talented superheros who are great software engineers, but lack any sort of industry experience (at least in my opinion). I was given a demo of their software and immediately saw potential issues that would be found as soon as it is installed at any reasonably-sized site (for example, an event-viewer/alarm monitor that would be easily overwhelmed by, say, a loose door contact fluttering in the wind).

All this is from the engineering perspective, and I have no clue as to the business/sales talent. There have been companies in this space that have succeeded in spite of their products being absolute 💩, so anything is possible. That said, product weakness is generally overcome only by a stellar support infrastructure.

I give it another 6 months to a year before Canon pulls the plug and acquires something similar instead.

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I give it another 6 months to a year before Canon pulls the plug and acquires something similar instead.

My gut feel is that, if they can't right this in the next year or two, they fold it back into Milestone and then have Copenhagen clean up the (their) mess. Acquiring a cloud VMS would be difficult to justify, even for Canon. Obviously Canon has billions but I think they would find it much less expensive to roll it back in and sort it out.

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It is arguable that spinning it off was the wrong move from the start. Should have remained a part of Milestone and became the cloud arm of Milestone.

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Arcules cannot be a part of Milestone Cph.

First of all, it was conceived outside of the Brøndby office, as Milestone Management apparently did not feel that the Brøndby staff had the chops to do something innovative. Instead, "innovation" had to come from CA. In this case the "innovation" was to do "edge recording" and "cloud recording".

Milestone probably had a big fat red year coming up, and to make that disappear, Arcules was "sold" to Canon. Hole plugged. Arcules, at it's core, remains the same, but Milestones books would not be tainted by Arcules burn-rate.

If Arcules was an integral part of Milestone, it would basically be a cannibal in their midst. Obviously not in every case, but from time to time, you'd most assuredly have PM's from either team yelling about stealing customers and that sort of thing. There'd be heated arguments about prioritization of tasks that support Arcules vs XProtect.

For all intents and purposes, the current setup is the optimal one - if Arcules can get their act together. I think they can. It's not about headcount, but about getting the right heads, and I'm told they got some reinforcements from Cph to help clean up.

That said, even if they do clean up, I see some stiff competition that might steamroll Arcules (and others) down the line. If that happens, the best Canon can hope for is to cover their losses by selling it as an acquihire transaction.

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Instead, "innovation" had to come from CA.

Over the years, I got that impression from Milestone as well. They really wanted to be 'Silicon Valley' the place but became 'Silicon Valley' the sitcom.

Related: 2012: Milestone Moves Into Silicon Valley and Milestone CEO 'Dares' To Go To Silicon Valley And Release An NVR.

If Arcules was an integral part of Milestone, it would basically be a cannibal in their midst.

How is it not a cannibal now? Ok, because they are not selling much of anything, granted :) But if an 'independent' Arcules starts to sell for real, they will cannibalize Milestone either way, no?

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The cannibalization is a given in either case, but if the cannibal is sharing a table at the cafeteria violence and chaos might will ensue. Right now the cannibal is in CA, and does not disturb the Milestoners in Brøndby on a daily basis.

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I really don't understand why it would be so bad if the 'cannibal' was inside. You can at least orderly move people over if it is the same company. But with a separate company, it is way more complex for employees and customers of both.

So you think if Arcules was a product inside of Milestone Systems right now, things would be worse than they are right now?

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I really don't understand why it would be so bad if the 'cannibal' was inside.

Have you ever met a cannibal?

When XProtect Lite and XXV was all the rage, Milestone decided to hire new, outside people to work on the 2nd gen platform. People with zero experience in the tech and industry. To the old farts (including me), it felt like mgmt was "artificially" stifling our ability to drive the old platform forward, and a lot of times you kinda lose the motivation to do anything new, because the sweet new, and so far non-existant platform will also do it, and naturally do it 10x better w/o the mountain of technical debt that the old code is carrying around. Things that do not exist are usually flawless.

It was (predictably) a disaster. Basically, Milestone management let a cannibal lose inside the office, and unfortunately this particular cannibal didn't really know what it was doing. (the "corporate" version that eventually emerged was a 2nd attempt at a 2nd gen.)

With a remote cannibal, Lars and Bjørn can prod either team and goad them into a competition that will (hopefully) make both platforms better. They can credibly claim that the distant and mysterious Arcules will eat your colleague if you don't step up. It doesn't seem as if they're actually cultivating and feeding a cannibal in the office down the hall.

In fact I don't think Milestoners see Arcules as a remote cannibal at all. I frankly don't think they worry or think about Arcules on a daily basis, so that's even better.

And why should they? Milestone is #1 #2, so why worry?

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If I am not mistaken though, Genetec and Avigilon seem to have no problem offering a cloud solution under their brand. Why can't Milestone do the same?

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In principle a VMS manufacturer should have no issue offering a cloud add-on (offering on-prem, hybrid and cloud-only as needed).

Milestone could too, if they hadn't messed things up. Arcules was a part of Milestone in the past, but they isolated it for some reason. I believe the primary reason was to remove a cash-burner from the Milestone financials - and as a distant second, to ... well... f..k if I know a second reason.

The first mistake they made was to believe that Brøndby (Cph) couldn't innovate. That's offensive to staff in Cph, and it might be a sign of vanity and desire to be hip and cool in a pretty boring industry. So they open an office in the US, and the C-suite starts racking up frequent flyer miles and bonus points on hotels in Sunny CA. The staff loves their sugar-daddy living thousands om miles away, who usually leaves you be, is easy to please, and so life is good. As a developer, it's a place to earn a living while waiting for a better offer at a more awesome place.

So, eventually some responsible people start asking about the actual output of this crazy teen spending all that moolah, and it's all getting a bit embarrassing when daddy's CC start getting rejected for reaching the max limit while buying diapers at the local K-mart.

Do you admit you incurred a massive loss due to vanity and inability to direct a creature of your own creation and cut your losses and start over? Not likely. Instead you move Arcules off your books, and into the books of Canon, where it's a rounding error in a single quarter. Problem solved.

We're now (at last) at the predicament Milestone is in now. If Arcules was truly, and genuinely, not a Milestone entity, someone at Milestone Cph should start developing an XProtect cloud feature (right now) to compete and crush Arcules. I doubt this is not going to happen. I am convinced that if the resident Milestoners were allowed to do it, they would eradicate Arcules in a few months, and it would be very clear that the whole Arcules folly was wildly irresponsible and irrational.

So you could then say, why can't we just have Milestone absorb Arcules once again? They probably could, but it would be faster and more efficient for Cph to do their own thing from scratch, and have the cloud-support be more of a new little brother, borne from the loins of the existing team, and not be some spoiled, entitled and cannibalistic teen showing up at the office one day.

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Milestone probably had a big fat red year coming up, and to make that disappear, Arcules was "sold" to Canon.

it’s a Canon eats cannibal world...

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It's not about headcount, but about getting the right heads, and I'm told they got some reinforcements from Cph to help clean up.

Cph=

1) Corporate Headquarters

2) Copenhagen

3) Either

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Update: Lee Mehler, former long-time Anixter executive is now working for Arcules, as this SNG profile says:

From what we heard elsewhere and from his LinkedIn bio, he is technically a consultant.

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From a technology standpoint I like Arcules. I like their choice of cloud provider, I like the interface, and I like their continuously evolving feature set. I want to see them succeed.

I’ve known Nigel Waterton for quite some time, and I don’t see him jumping onto a sinking ship. Despite the obvious differences between integrator and manufacturer sales, I think his industry experience will help significantly. I also think that his attention to detail and process is exactly what Arcules needs.

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Note: We did reach out to Arcules CEO and CRO. The CEO never responded and the CRO did but then did not call. We are happy to speak to them or any executive we cover. We'll make the offer but it's up to them. And if they are good execs, they will have the confidence and ability to make their case.

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I just wanted to show my gratitude for the entire team at Arcules in light of this story.


Arcules understood the issues New York Security Solutions Inc was experiencing with our anchor client and their video system which consists of 45,000 cameras across the globe.


Together we have been successfully meeting some very unique and difficult deliverables.


To date no other company in the industry has ever done so much for New York Security Solutions Inc in such a short period of time.


Over the course of 4 months we migrated 9,000 cameras and accomplished the following.


- A fully vetted process for remotely converting a vms into an Arcules Gateway avoiding a rip and replace scenario.


- Supported 7 different camera manufacturers one of which does not play nice with most video management systems.


- A solution for exporting camera information from the current video solution and importing into Arcules


- A solution for archiving approximately 1 petabyte of vms footage a month into the cloud in preparation for the migration.


- A solution for accessing the archived video footage when the need arises.


- Complex user roles based on the clients requirements, something very few vms’s can do.


All while meeting security regulations in multiple countries.


We are no where close to being done, but I couldn’t be happier with the team we are working with.


Andreas, Steve, Matt, Cody, Cindy, Jeff, Ben, Nikolaj, Jesse and whoever I missed thank you.

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Gregory, thanks for sharing that, good to hear. With Arcule's vast advantages, they should have lots of success stories like this so it will be interesting to see if they can make your experience the norm and turn things around.

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Together we have been successfully meeting some very unique and difficult deliverables.

that’s encouraging!

however your description sounds more like an Arcules professional services gig than a straight deployment of a mature product.

question, is the major Arcules expense on your project the product or the consultants?

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I would not call any cloud service a mature product, none of them are where I would like to see them.

I met with many cloud service providers before I chose Arcules, I identified components missing in all of them that typically exist in on-premise solutions.

I asked each provider whether or not they could add a particular feature or make a change and although what I was requesting was reasonable the timeline to develop it was uncertain or just plain no.

This project is a paid opportunity for a cloud service provider to accelerate the development of their platform, the solution met the clients minimum requirements and the client understood that the features they are looking for would come in time.

In regards to Arcules the major expense is the product, I would not say they are acting as contract consultants it is truly a team effort, I already work with a very capable team of developers and enginners at NYSSINC, we are both young companies and our teams mesh well.

Not really concerned with appearances or politics, I am only concerned with solving a problem for my client.

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I would not call any cloud service a mature product, none of them are where I would like to see them.

fair enough.

This project is a paid opportunity for a cloud service provider to accelerate the development of their platform...

i’m not sure what you mean. you’re paying them to modify/extend their product, or they’re doing the mods for free?

either way, my unsolicited advice would be “beware of the one-off”, aka a “special version” of the software customized for your needs, but not fully re-merged with the official code base...

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Arcules released a short video interview of the new CRO:

He alludes to his time at ASG saying that they were 'changing the direction of a whole industry' and were a 'market disruptor', which is fair to say, did not happen.

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