Mistaking Surveillance Start-up Success

Author: John Honovich, Published on Sep 28, 2011

People routinely assume that start-ups with big marketing presence at trade shows, magazines, events, etc. are successful. This is highly misleading and obscures a critical factor in true long term success - the ratio of revenue to company investment. In this note we explain why companies with a low ratio, such as 3VR, Intransa and Pivot3 are in far worse shape and riskier than companies like Avigilon, Exacq and Genetec.

Indeed, if you only looked at booth size, sales calls, ads, etc. (which is the easiest approach) you would think that the companies were of equal strength or that the former were actually stronger. This is far from the case.

Getting Sales

Roughly speaking, startups can get sales from one or two ways:

  • Buy business: If you spend a lot of money on sales people and marketing, you will get sales even if what you are selling has questionable value. A combination of vendor hype and end user naivety will assure that.
  • Generate value: Even if you do not spend much on marketing, if you have a clear value proposition, you too will get sales.

Here's where it gets confusing: In the short term both approaches can drive similar levels of revenue. As such, if you look at revenue alone, the companies appear to be similarly successful. That is highly highly misleading.

Startup marketing spending splashes are inherently unsustainable. You cannot indefinitely sell dollar bills for 85 cents. This is a 'jump start' technique approved by investors to quickly get the startup to some level of critical mass. However, it can implode unless the company's products offer real sustainable value.

Looking at Surveillance Companies

Let's start by looking at the 2010 annual revenue of 6 video surveillance companies:

  • 3VR: $14 Million
  • Intransa: ~$20 Million (estimated - insiders say estimate is too high)
  • Pivot3: ~$20 Million (estimated - insiders say estimate is too high)
  • Avigilon: $32 Million
  • Exacq: $19 Million
  • Genetec: $40 Million

These companies are roughly in the same revenue range and roughly founded in the same time frame (7-10 years ago). If you are looking at just revenue, the companies seem to be close.

Now, let's look at the amount invested in them - numbers are not exact but are in the approximate range:

Get Video Surveillance News In Your Inbox
Get Video Surveillance News In Your Inbox

  • 3VR: ~$50 Million
  • Intransa: ~$100 Million
  • Pivot3: ~$100 Million
  • Avigilon: ~$5 Million
  • Exacq: ~$4 Million
  • Genetec: ~$3 Million

You can start to see great disparity between the two groups of companies. To pull this together, let's look at the ratio of revenue to investment:

  • 3VR: 0.3
  • Intransa: 0.2
  • Pivot3: 0.2
  • Avigilon: 6.4
  • Exacq: 4.8
  • Genetec: 13.3 

Let me show it to you visually so you can see it:

This difference in efficiency between the groups is drastic. It points to one clear fact - the latter group of companies are doing a much better job of meeting customer's needs and has a far greater likelihood of being successful.

To cap it off, it is nearly certain that the companies in the latter group are all profitable while the companies in the former group are burning cash and are dependent on further investment.

What About their Growth Rates?

You might object and say, "3VR, Intransa, Pivot3, etc. keep on announcing record growth levels. Surely that shows their strength." However, the reality is that when you are spending so much on sales and marketing that such 'record' growth is needed just to survive.

What About Independent Integrator Satisfaction?

On the various online surveillance forums, Avigilon, Exacq and Genetec are three of the most commonly praised products by integrator technical people. Integrators love Avigilon so much that it is sometimes annoying. By contrast, we rarely, if ever, hear integrators recommending 3VR, Intransa or Pivot3. Indeed, our recent Intransa discussions confirm that most technical people remain skeptical about their value.

While independent integrator satisfaction is much harder to read, it is clearly a much more reliable indicator of real product acceptance.

What Does This Mean?

This pattern happens regularly in the industry. Right now, the two recent entrants spending a ton on marketing are Briefcam and Brickcom. We hear about them all the time from their PR and sales people but rarely from integrators. Bad sign.

If you want to reliably determine which companies are going to be sustainable leaders focus on the ratio of revenue to investment and what real integrators are saying, not the marketing machine.

Comments : PRO Members only. Login. or Join.

Related Reports

The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
Securadyne CEO: IPVM 'Entertaining For An Ignorant Few' on Apr 16, 2019
Securadyne's CEO Carey Boethel is unhappy with IPVM's report - Failed Integrator Rollup, Securadyne Sells to Guard Giant Allied. Indeed, he...
Strong ISC West 2019 For Manufacturers But Concerns For 2020 March Move on Apr 16, 2019
ISC West 2019 was strong for manufacturers, according to new IPVM survey results of 100+ manufacturers, consistent with 2018 results. However,...
Alarm.com Favorability Results 2019 on Apr 15, 2019
The once dot com startup has evolved to become a core provider for home security and is now expanding into commercial. In their first entry in...
ISC West 2019 Report on Apr 12, 2019
The IPVM team has finished at the Sands looking at what companies are offering and how they are changing their positioning. See below for 50+...
UK Installer CCTV Aware - Flat Pricing, No Salespeople on Apr 10, 2019
This is a different kind of company. They do flat pricing, they do not have any salespeople and 50% of their sales are sold and booked...
Failed Integrator Rollup, Securadyne Sells to Guard Giant Allied on Apr 09, 2019
One of the most ambitious integrator rollups of the decade has reached its conclusion—selling to a mega guard company. Allied Universal has...
Spring 2019 50+ New Products Directory on Apr 08, 2019
We are compiling a list of new products for Spring 2019 and have over 50 already. Contrast to Fall 2018 New Products Directory and Spring 2018...
The Hanwha Techwin Million Dollar ISC West Booth on Apr 05, 2019
One million dollars for 2 and 3/4 days. That is what Hanwha will pay for its ISC West 2019 exhibition. While the event is free for most...
Startup iryx Launches, Led by Ex-Arecont and FLIR Executives on Apr 04, 2019
Suddenly, the video surveillance industry is witnessing a new wave of startups. Now launching is iryx, a startup led by veterans of 2 of the...

Most Recent Industry Reports

Access Control Course Spring 2019 - Last Chance on Apr 19, 2019
This is the last chance to register for the Spring Access Control Course. IPVM offers the most comprehensive access control course in the...
Riser vs Plenum Cabling Explained on Apr 18, 2019
You could be spending twice as much for cable as you need. The difference between 'plenum' rated cable and 'riser' rated cable is subtle, but the...
Verint Victimized By Ransomware on Apr 18, 2019
Verint, which is best known in the physical security industry for video surveillance but has built a sizeable cybersecurity business as well, was...
Milestone Drops IFSEC on Apr 18, 2019
Milestone has dropped out of Europe's largest annual security trade show (IFSEC 2019), telling IPVM that they "have found that IFSEC in EMEA no...
The Fastest Growing Video Surveillance Sales Organization Ever - Verkada on Apr 17, 2019
Verkada has the fastest growing video surveillance sales organization ever. In less than 2 years, they already have more salespeople in the US...
Door Operators Access Control Tutorial on Apr 17, 2019
Doors equipped with door operators, specialty devices that automate opening and closing, tend to be quite complex. The mechanisms needed to...
Securadyne CEO: IPVM 'Entertaining For An Ignorant Few' on Apr 16, 2019
Securadyne's CEO Carey Boethel is unhappy with IPVM's report - Failed Integrator Rollup, Securadyne Sells to Guard Giant Allied. Indeed, he...
Dahua Repositionable IR Multi-Imager Camera Tested on Apr 16, 2019
Dahua has released their first repositionable multi-imager camera, the Multi-Flex 4x2MP, claiming integrated IR, true WDR, and flexible...
Strong ISC West 2019 For Manufacturers But Concerns For 2020 March Move on Apr 16, 2019
ISC West 2019 was strong for manufacturers, according to new IPVM survey results of 100+ manufacturers, consistent with 2018 results. However,...
Axis Supports HD Analog on Apr 15, 2019
In 2017, Axis declared 'Everything is IP': Now, in 2019, Axis has released support for HD analog, with their new encoders.  Why the change?...

The world's leading video surveillance information source, IPVM provides the best reporting, testing and training for 10,000+ members globally. Dedicated to independent and objective information, we uniquely refuse any and all advertisements, sponsorship and consulting from manufacturers.

About | FAQ | Contact