Micropower Fails

Author: Brian Karas, Published on May 02, 2016

Wireless video surveillance is a tough business. Micropower sought to deliver a wireless, turn-key, professional video solution.

The most famous wireless failure is certainly Firetide, who after spending $50 million in VC funding, took a small buyout, and fell off the face of the Earth.

Micropower quietly raised and burned a lot of money itself, ~$20 million, including $6.5 million for Motorola in 2012, $7.5 million in 2013$2 million in 2014, and nearly $5 million in 2015.

We look at what caused Micropower's downfall in this report.

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Comments (23)

How could VCs keep pouring money into this business?

I will say they had some talented people on the team but the whole concept / approach was almost doomed to fail. It structurally never made much sense years ago and, with alternative approaches improving, it made even less sense now.

I get when VCs make big bets in risky, but very high growth, consumer offerings, but I am confused why they would do so in super niche markets.

I know this may come off as a political comment, and maybe it is, but what I learned over the years is, people with money aren't always smarter or more capable than the average person.

I don't mean to insult the very smart and capable entrepreneurs and heads of businesses as there are those out there. But just like there are poor people who get rich through hard work and ability, there are rich people who get poor or loose lots of money through ineptitude and poor decision making. (And sometimes they are the same person.)

That may be going far off from specifically why Micropower failed, but the first and last sentences you made were kind of general, so I decided to make a general comment.

But, it would be interesting if IPVM could maybe reach out and contact some of the investors specifically, and see what the thinking was behind their investment. I know some IPVM members are investors, as they have commented on here before, so they would be interested from an investment standpoint. I know it wouldn't be easy- no one likes talking about why they lost money in an investment as much as they like talking about how much money they made in one.

Several years ago I heard the phrase "A fool and his money are soon venture capital".

I'm not knocking VC's, but I agree with your idea that many times investors don't fully understand exactly what they're investing in.

"see what the thinking was behind their investment."

I remember one incident very clearly, talking to a TimeSight investor.

This person probably had 6 hours worth of video surveillance industry 'experience' but they shot down every concern or objection I brought up. Obviously, that did not work out well...

One issue is that it's super hard to make judgements with very little information on specific markets and yet most investors do that, since they invest in a variety of markets.

The other is that it just does not matter because if they are 'right' 1 in 10 times and that 'right' time is a Unicorn, than all the mistakes are paid for.

Of course, the problem with wireless solar video surveillance is that it has zero unicorn potential. That said, I do not how Micropower pitched their VCs. Surely, they had some bigger plan / vision / path to billions, viable or not.

I'll take a counter view on this.

I'm not all that surprised that they managed to raise $20M. They were promoting a security camera that combined solar and wireless. Solar and wireless (especially solar) were "hot" for a while, and I think VC's have been kind of interested in security at times, but unable to figure it out.

Micropower had working units, and the average investor probably didn't fully understand just how limited they were. But for a pitch, you've got a device that can be put up in a couple of hours, and doesn't require trenching cables to the other side of a parking lot or field. The cost is "comparable" to trenching, but doesn't have any disruption or need for permits or delays waiting for utility lines to be marked off.

It looks like Micropower followed the path of a speculative investment from a venture perspective.

It's not clear from this post although it is heavily implied, Is Micropower out of business?

Yes, we have received multiple confirmations that they have ceased operations.

I have a client/friend that came into many millions with a flash in the pan product that was a serious fad for a year or two. He made probably a little over $20M with this little product in that time span.

He was "New Money", if you are familiar with the term. He decided to get into high stakes poker, where he appeared on the NBC show of the same name. Sure, he lost some and won some. But, where he really lost his ass was in VC. He burned at LEAST $15M messing around in an arena he had little working knowledge of.

He still has a few remaining startups that have life and someday may pay out, but a grand majority of his investments have folded long ago.

While I'm sure this doesn't cover the gamut of VC investors, it is the one first hand situation that I'm aware of.

Too much money chasing to few QUALITY ideas.

When the FED prints currency at light year speed(too avoid reality, DEFLATION - JAPAN) it enables the "INVESTMENT" community WALL STREET and more importantly SILICON GULCH to promote garbage as a "NEW" "GAME CHANGING IDEA".

EVERYTHING has to be disruptive... B.S.

What is clearly the case is CONSUMER ECONOMIES, (U.S. 70% of GDP) can only absorb so much crap on salaries that haven't increased in over 16 years.

A great idea does not translate into great management, great execution, etc., etc.

I took a long look at this product. I like the concept. I agree it had a very small niche. Price was an issue and so was sunlight exposure. Consumers wanted to put it just anywhere, regardless of direct sunlight.

I know I keep harping on this, but most of these companies do not know how to market their products. Their idea of marketing was for a sales person to just start phone calling or cold calling. That is a remarkably inefficient use of person-power. You can invent the greatest product in the world, but if people can't find you, it will never take off.

I had lunch with one of their former sales VP's a few years back when he was trying to sell me on the product. I drew on a napkin a simple design of a wireless, solar powered camera system and priced it on Amazon in front of him. My point was that any self respecting integrator would build the solution in-house at a fraction of the cost and with HD resolution Vs. the 480TVL they offered back then.

I think I ended up with 6 x Wireless, Solar Powered, Battery backed-up 720P's for the price of one of MicroPower's cameras.

My point was that any self respecting integrator would build the solution in-house at a fraction of the cost and with HD resolution Vs. the 480TVL they offered back then.

I think I ended up with 6 x Wireless, Solar Powered, Battery backed-up 720P's for the price of one of MicroPower's cameras.

But that's the fallacy the other way. Surely your 6x figure does not include labor or risk or troubleshooting having to do that yourself.

As my comments above indicate, I still think Micropower had fundamental issues but DIYing something that complicated does not come without its own risks and indirect costs.

I disagree John. A UBNT radio is likely much more capable than any integrated radio. Not to mention, it is easily replaceable in the case that you need to change out the radio for any reason; frequency change, distance change, beam forming, etc.

Now sure, your point about having more labor may ring true, but that assumes that the lower capable integrated radio gets the job done. I would much rather spend a little more time to install a radio set that I can rely on, not hope that engineers did well enough designing a "one-size-fits-all" solution.

And I doubt that the install labor for a UBNT install would approach the materials cost delta between any given IP cam and the MicroPower cam.

On top of all of this, with standard IP cam selections, you pretty much can choose any style, form factor, feature, etc instead of settling for the small selection that MP offered.

In the end, they defaulted due to likely this very argument. Integrators can and will provide solutions to complex issues on their own.

You only addressed the wireless element, not the solar part. Most integrators, in my experience, don't dabble with solar powering wireless cameras, not to mention the aesthetic and functional issues of having larger solar panels sticking out.

This is not being pro-Micropower, simply an acknowledgement that a guy pricing out a solar wireless video surveillance solution on Amazon leaves out a lot of tricky and costly points in delivering a professional solution like that.

That may have been a true statement with their first product release, when the PV panel was integrated into the camera housing. Nevertheless, MicroPower realized along the way that it wasn't sufficient power and their latest solution was basically a bunch of COT's packaged nicely in a box: http://micropower.com/wp-content/uploads/2015/02/Solveil_IR_Data-Sheet_Final_020915.pdf

So I don't see the real difference between buying their product Vs. acquiring parts and doing it myself.

Micropower had much lower power consumption, making it easier, simpler and less parts needed (battery and panels) to deploy the system. Of course, there are tradeoffs (frame rate, resolution, fixed, etc.). But that made the remote side simpler to deploy. Including the fact that they would support and design it, reducing the need for experimentation and troubleshooting on the integrator's side.

I don't see the real difference between buying their product Vs. acquiring parts and doing it myself.

If you are solar wireless solution expert, there may not be. But most integrators do not, and even for those that semi-frequently do, it is something few technicians on staff are going to be well trained to do.

While I admit, we've never needed a solar solution, I know little about solar specifically. However, I did work for a battery company for a short stint and understand that part fairly well. The solar panel just recharges the battery. I'm sure it wouldn't take us long to figure out a viable, cheaper solution.

we've never needed a solar solution... I'm sure it wouldn't take us long to figure out a viable, cheaper solution.

Easy to say on the Internet...

John, as a transmission manufacturer, with a heavy focus on wireless we certainly noticed Micropower and found their offer interesting. It was as previously mentioned, extremely limited in terms of distance and camera quality. In our market, providing a wireless solution that can handle any camera has been key as most customers want better resolution than the MP camera offered. We often get asked for solar and therefore 2 years ago formed a strategic partnership where we can provide a full, turnkey solution for wireless and solar, again with the ability to use whatever camera the customer wants. The main learning curve for the customer is what the size of the panels will be, this was the main thing that set MP apart, very little power consumption so very little solar panel. Our solutions require larger panels but again provide the customer with the ability to deploy the equipment they want. We've provided solutions for anything from a fixed camera requiring 5 watts up to a Flir thermal camera requiring 70 watts. As for the DIY comment, we take this out of the equation as we consult with our customers and provide a full solution from wireless design to solar kit specification and build. All the integrator needs to do is install the equipment, install batteries and connect their devices. This has proven very successful and easy, even for first time users of solar.

Most integrators have the human resources that are already getting paid to come to the office everyday and it is a part of their overhead.

If they can build a solution in-house at a lower cost they will. The first time design may take longer and cost a bit more, but thereafter they have a marketable solution that is a cookie cutter to build.

Most integrators have the human resources that are already getting paid to come to the office everyday and it is a part of their overhead.

That's not a very good integrator if they routinely have people getting paid with nothing to do, especially their most knowledgeable people who would best be able to hack on something like this.

The first time design may take longer and cost a bit more, but thereafter they have a marketable solution that is a cookie cutter to build.

And that's a problem. For most integrators, a wireless solar video solution is not regularly needed, so it's hard to justify the investment into building one's own.

I just got an email from a Public Auction company acting on behalf of Micropower, selling off their extra inventory and office furniture, so I'll take that to mean that they are done..

Does anyone know of any ex-Micropower dealers or Reps? I'd be interested in talking to them about their experiences.

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