Cisco Exec to Lead Firetide

Firetide had been the most visible and vocal proponent of wireless mesh surveillance but, in the past few years, the company has gone relatively quiet. Now, the company has announced a new CEO, tapping Cisco veteran John McCool who spent 17 years with Cisco, most recently serving as CTO and senior VP of the Global Enterprise Segment, before leaving the company last month.

For this note, we talked to McCool about Firetide’s position and its plans going forward, concluding with an analysis of their positioning.

Key Points from the Interview

Here are the most notable statements Firetide's CEO made:

• Mobility infrastructure - trains, buses, etc. - is an emerging market.
• Leverage growth in back hauling video to the cloud across mobile infrastructure.
• Interest in the industrial sector, specifically energy, where equipment needs to be moved.
• No plans for raising new funding (last funding was $8.5 million in 2009)
• Says they are generating cash.

What direction are you taking the company? How does it relate to surveillance? 

Mesh technology has this interesting combination of high-bandwidth and the ability to deliver a continuous stream of high-definition video from a moving video source. The initial deployment of video surveillance were static, but we’re seeing an emerging area of what we call mobility infrastructure -- moving trains, moving buses, for example. They want the same surveillance capability, but have the technical challenge of moving at 60mph. This is an opportunity for Firetide to expand its business and make this more valuable to infrastructure and municipalities.

What do you think about Firetide's past position? What kinds of things are you going to do to help accelerate growth?

Firetide started at a time when there wasn’t a lot of mobile devices. State of the art was WiFi on a notebook. It was a very different time, and there wasn’t broad use of digital video. The ecosystem that really drives growth really didn’t exist in the marketplace until 2008-2009. [Also] Things are moving toward cloud-based infrastructure that can store a great deal of video, the market is moving pretty quickly. I’m looking to make sure the company is in a strong position to leverage the transition to HD video streams on mobile infrastructure that must be back-hauled to cloud-based storage and processing systems. [McCool also say the company is expects to see growth in its Asian markets.]

Firetide says it currently has 10,000 customers in 40 countries. In which sectors are you seeing new interest in your technology?

We are seeing emerging interest in the industrial sector, specifically around the energy area. Outside of public safety, industrial users aren’t just interested in good connectivity to sensors, but worker safety and worker communication as well. They’re also putting more equipment in remote sites because they have to process data remotely. These companies are seeing the limitations of satellite upload or 4G technology and looking for a new way to connect. Also, they move this equipment around and not having to manually reconfigure a wired network by having a mesh network that can automatically reconnect will help them tremendously.

What is the current state of funding? Are you capital positive and are you interested in expanding into other markets?

The company completed a Series E a while back and continues to grow the company based on that. We are generating cash and balancing that against our expansion plan which will include new products as well as expanding into new technologies. We have a very strong position in North America and places like Asia-Pac and have seen phenomenal growth starting at a very small base.

Can you quantify your comments on "phenomenal growth"? Are you generating positive operational cash flow?

Yes, Firetide is generating operational cash flow, and we're growing fast — faster than the total addressable market of the WiFi sector. (Note: McCool specifically did not want to comment on whether the cash flow was positive or negative.)

What was the growth rate? What was it year-over-year for 2012?

We would prefer to not disclose comparisons of this nature.

How many employees does Firetide currently have and are there any plans to expand?

Our current headcount is just over 100, and we are hiring in all functional areas: engineering, support, marketing and sales.

Any plans to raise another round of funding?

We are not talking about raising funding at the current time.

IPVM Analysis

The most positive element of the new hire is the validation it brings for Firetide. While Cisco's brand in surveillance is a punchline Firetide's location in Silicon Valley helped. Getting a Cisco executive to move to Firetide is impressive, especially since Firetide serves a niche within a niche (wireless within surveillance). Moreover, if the company wanted to raise more funding or negotiate partnerships, we believe the new CEO's background would help such efforts.

On the other hand, Firetide's strategy appears to be largely the same as it has for the last few years. While Firetide started with a push for wireless mesh everywhere in surveillance, they have struggled to win against dramatically lower cost options, like Ubiquiti. Our survey of favorite wireless surveillance products demonstrated that. 

The areas that Firetide are targeting are niche, even for wireless surveillance. While the company may be able to excel in applications where vehicles, and the wireless devices therein, are moving very fast, that is a distinct minority of the market (though individual projects are likely to be large). More problematic is likely to be the plan to capitalize on backhauling video to the cloud, given the extreme cost of building such robust, bandwidth heavy networks versus leveraging edge storage inside or at the camera.

Moreover, even 'bullish' projections of wireless surveillance growth offer fairly modest prospects.

Overall, it appears that Firetide will continue to be a niche player in the surveillance market. However, it will be worth watching what changes the new CEO brings over the next year, as he settles in.

Firetide's response:

"We think wireless will replace lots of wired ... A really good robust wireless mesh network has the potential to replace a whole range of wired applications [not just video]. That's the point. Rather than being a niche there is going to be a growing need for customers. Not just in wireless video, but wireless everything."

On the wireless surveillance market:

"We do believe that video over a wireless mesh network isn't a big market, but there's no need to switch our focus away from that that and we're not. But when you look at the lower cost options like Ubiquiti and you apply them to mission critical applications, we believe that our solution is a better solution. Often it's not about lower cost, it's about a better application, and we think people will be willing to pay for that." 

"Mobility and back hauling video to the cloud, up until now, it's been hard to do it, but we think with the right mesh network technology we can do both. These areas, you say are niche areas. We see them as growth areas. You may say it's niche, but we see these as the more technically challenging and the most relevant to customers … These applications have huge potential if they can be done well. Today it's a minority argument, but there is an upside. And the upside is pretty big if we can do it right."