Simplisafe is 'Blowing The Doors Off'

By: John Honovich, Published on Feb 17, 2017

The company alarm dealers love to hate, Simplisafe, is 'blowing the doors off' according to Michael Barnes, one of the top financial advisors in the space.

Inside, we examine Simplisafe's progress, business model, estimated RMR, annual revenue and market share.

********** ***** ******* **** to ****, **********, ** '******* the ***** ***' ********* to******* ******, *** ** *** top ********* ******** ** *** space.

******, ** ******* **********'* ********, business *****, ********* ***, annual ******* *** ****** share.

[***************]

**********

********** *** ******* ** 2006 ******** *** ***** **** off *** ********** ~$*** - $***. Unlike *********** ***** *******, Simplisafe **** *** ******* a ******** *** ******* this ******* ** * differentiator. *******, **** ********** is **** *********** ********** ** ********* with Simplisafe ******** $** - $** *** that.

** ****, *** ** Silicon ******'* ******* *** ******** $** ******* ** Simplisafe.

"Blowing *** ***** ***"

** ********* ******** **********, ******* ****** ***** about **********'* ********* ***********, saying **** ** *** 'blown **** ** ***** statistics", **** *** "**** on ***** ***** ** powerful", *** ***** ******* are **** ****.

*** ** *** ********* negatives ** **********'* ***** is **** **** ** not ******* ****** ** multi-year *********. ***** **** is * ******** *******, it ******* *** ********** cash **** ** ******** for *** ***** **********.

*******, ****** ****** **** Simplisafe *** ************ * statistical ******** **** ***** how ****** ***** ********* overall **** ****** / take **********. **** ****** these ********* *** *** locked **** * **** term ******** *** ** not **** ** **** as *********** *******, ****** observed **** *******, ********** has * ****** **-********* revenue **** **** ** highly ********.

********, **********'* ** ***** costs *** ***, ***** they ****** * ********** high ** ***** **** for ********* *** **** their ********* ******* **********, in ******** ** *********** providers *** ********* ********* both ********* *** *******. As ****, *** *** cash **** / ******* over ***** ******** **** can ** ***** ****, as **** ** *** need ** ******** *** first *** ***** ** payments ** ****** *** subsidies *********** ** *** traditional *****.

******* / ****** *************

****** **** **** ********** was *** ******* ****** in *** *** ***** segment **** ** ********* ~$30 ******* *** ** 2016. ****** **** ********* Simplisafe *** ***** **-**% of *** ******* ** the *** ***** *******.

*********'* **** *** *** then ~$** *******, **** annual ********** ******* **** in *** $***+ ******* plus *** ******* ***** (likely *** **** ** millions). ***** *** **** margins ** **********, *** the ****** ********* ** ********* ********** and ****** *** *********, it ** ****** **** Simplisafe ** ****** **********.

** *** ***** ****, given ******** ***** *** was ~$*.* *******, ********** is ***** ***** *% of ***** ******** *******. Certainly, *** * ~** year **** ******* ********* against ********** **** ******* of **** ** **** sales ****** **** ** an ********** **************, ****** still * ********** ***** force ** *** ******* market ** ***.

***********, ******** ******** ******* ******* Simplisafe, *** ****** / progress ** ********** ********* should ** *******.

Comments (17)

Armando Perez

IPVMU Certified | 02/17/17 02:50pm

One note... They do have a contract, they just dont require it. if you do the optional monitoring, you are most certainly under a very binding and liability limiting contract. Just because its listed as a "terms of service" and approved with a click instead of a signature makes it no less a contract.

Impressive performance financially nonetheless, even if they are equally less than truthful as the alarm companies they love to vilify.

John Honovich

IPVM | In reply to Armando Perez | 02/17/17 03:00pm

They do have a contract, they just dont require it.

But that's what I said in the post:

Simplisafe does not require a contract

To this point:

if you do the optional monitoring, you are most certainly under a very binding and liability limiting contract.

I clarified the other reference to:

that they do not require annual or multi-year contracts

My point is not that no legal terms exist but that no lock-in exists.

Undisclosed Manufacturer #1

02/17/17 03:32pm

300,000 American Homes Open To Hacks Of 'Unfixable' SimpliSafe Alarm

Brian Rhodes

IPVMU Certified | In reply to Undisclosed Manufacturer #1 | 02/17/17 03:50pm

The attack disclosed in that video is a variant of the endemic 'unfixable' one in millions of ADT/Vivint/DSC systems. See: How to Hack an ADT Alarm System, ADT Sued, Claimed 'Easily Hacked'

Undisclosed Manufacturer #1

02/17/17 04:16pm

Well, I too can care less about the "attack".

What caught my eyes in Forbes's article was this: "SimpliSafe has also installed a one-time programmable chip in its alarm, meaning there's no chance of an over-the-air update. It means there's no patch coming, leaving all owners without a remedy other than to stop using the equipment, Zonenberg said."

A security system without firmware upgrade capability ? Did I read that right?

Ari Erenthal

In reply to Undisclosed Manufacturer #1 | 02/17/17 06:32pm

When my area went from 7 digit dialing to 9 digit dialing, we had to go from customer to customer with this PROM programmer and literally burn new chips to reprogram the panels with the central station area code.

When those jerks in Congress changed the date of Daylight Savings Time, most panels could manually download the update during an onsite visit by a technician, but some panels had to have the chip physically swapped out. Luckily they'd moved to EPROM by that time, so we didn't have to physically burn anything, we could just download the old programming to a laptop, power down, swap the chip, power up, upload all the old programming to the new chip, pray, test that everything worked, try to convince the customer that they owe you money for the service call and that acts of Congress aren't covered under their warranty, get screamed at, and go on to the next customer.

The alarm business can be funny sometimes.

Richard Williams

IPVMU Certified | In reply to Ari Erenthal | 02/20/17 02:02pm

Ahhh.....the old DTI panels with the programmable chip you had to take out and "burn". At least it gave you two tries with the second layer available by breaking off the second pin...lol. The good old days.

Undisclosed End User #2

02/17/17 06:08pm

Physical security is all about multiple layers of security... I was concerned about my SimpliSafe system being less than fully secure, so I layered my home's DYI security with Canary, Arlo, Glock, etc.

Undisclosed Integrator #5

In reply to Undisclosed End User #2 | 02/17/17 07:42pm

I would say you are relying pretty heavily on that last layer TBH.

Undisclosed End User #2

In reply to Undisclosed Integrator #5 | 02/17/17 07:46pm

I'm good... Also have big dog and retired racist neighbor with a pistol-grip shotgun.

Undisclosed #3

02/17/17 06:28pm

I'd like to vote to forever ban the use of the phrase 'Blowing The Doors Off'

Undisclosed #4

In reply to Undisclosed #3 | 02/17/17 07:29pm

I'd like to vote to forever ban the use of the phrase 'Blowing The Doors Off'

Especially regarding Intrusion.

Undisclosed Integrator #6

02/18/17 02:25am

I think the problem with simplisafe is that it's sort of a one trick disruption pony. Where do they pivot to and how do they move upstream? All they've successfully done is driven down alarm margins in the b2c space where the consumers already were fickle and the competition was pretty rough with the national players a la vivint / adt. I'm not sure simplisafe has eaten a ton of the profitable lunch of local/regional dealers though as much of what simplisafe has taken over in the market is lower end/smaller homes. Sort of the 80/20 rule.

I don't know what the simplisafe product pricing is out of taiwan/china, but they are still going through the cellular carriers even if at wholesale rates per line. So their 15 a month plus what the lower end of the whole sale cost is ($2 per account) the gross profit is probably somewhere around $11 a month per active user. They spend a balls ton on advertising everywhere which is fueling the majority of their growth. I can't say they are growing organically without their huge VC injection.

I should mention that the manufacturers and regional companies are already pivoting to combat simplisafe a la DMP's DIY portal for dealers and many dealers having on site shopping carts now with security packages you can customize.

[Note: See DMP OnDemand Monitoring and Company Store Fights Back Against DIY Alarms]

John Honovich

IPVM | In reply to Undisclosed Integrator #6 | 02/18/17 01:22pm

Where do they pivot to and how do they move upstream?

Can they offer smart home? I don't know SimpliSafe well enough to say but that seems to be what the incumbent alarm companies are doing, e.g., Vivint now being literally 'Vivint Smart Home' and leading with smart home packages. For example, Simplisafe offers a camera now but could they also add a thermostat, etc.?

John Honovich

IPVM | In reply to Undisclosed Integrator #6 | 02/18/17 01:35pm

They spend a balls ton on advertising everywhere which is fueling the majority of their growth.

Can anyone make an educated guess what their customer acquisition cost is? That would be the key metric.

They are fairly big now so they certainly spend a 'lot' of money on advertising but if relative to their total new customers they acquire, it is say $50 or $100 per customer, that would be entirely reasonable.

Thoughts?

Charisse Allen

02/23/17 10:05pm

Can a Simply Safe system be monitored by any Central Station? Or just a Simply Safe Central Station? If you sell a system that can only be monitored by your central station....why would you ever need to lock in your customer.

Brian Rhodes

IPVMU Certified | In reply to Charisse Allen | 02/23/17 10:57pm

Can a Simply Safe system be monitored by any Central Station? Or just a Simply Safe Central Station?

Only SimpliSafe central stations can only be used. They use several, with COPS being the biggest, but Amcrest also being an option. Users are limited to one or maybe two choices based on where they live and whether or not they use video.

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