Startup Advice: Ignore Market Size, Focus on This

By John Honovich, Published on Aug 15, 2012

Startups and investors focus heavily on how big the market is - Is it $10 billion, $20 billion, $41 billion??? By contrast, both would be better ignoring market (and even segment) sizes because of 3 specific and somewhat unique barriers in the surveillance market:

  • Long Product Lifecycles / Long Sales Cycles
  • Conservative buyers
  • Fragmented channel

Indeed, even the most succesful surveillance startups show natural limits for any company. In this note, we dig into these issues and provide recommendations.

Revenue Targets

Past history shows that even given 7 years, no surveillance startup has reached more than 1% of the global market. Indeed, even companies that are widely considered to be financially successful (Arecont, Mobotix, Milestone, Genetec, etc.) reached even 0.5% of the market.

Here are rule of thumbs for surveillance startup achievable annual revenue after 7 years:

  • $20 million USD - solid success
  • $50 million USD - excellent success
  • $100 million USD - incredible success (the Facebook of surveillance)

Projections beyond these level require either a miracle or some explanation of how the company is not only revolutionizing technology but business practices in the surveillance market.

If a startup's funding levels and business plan assumes revenue levels significantly in excess of these metrics, the likelihood the company implodes is severe.

Barriers to Revenue Growth

For a deep treatment of this, see our "Recommendations for Surveillance Startups/Investors" and "Mistaking Surveillance Startup Success" reports. Below is a synopsis of the key elements.

Long Product Lifecycles

Get Notified of Video Surveillance Breaking News
Get Notified of Video Surveillance Breaking News

Decisions on new products typically only come once every 7+ years so only a very small portion of the market is up for grabs in any given year.

Long Sales Cycles

Even if a company wants a startup's products and is ready to replace existing systems or expand, it can easily take 6 months to a year to secure budgeting, approvals, etc.

Conservative Buyers

Startups are always surpised how seemingly 'minor' features become dealbreakers. Even if a startup has one great new thing, if it's missing any of a dozen 'minor' things, it can cause ongoing rejections (see: TimeSight's failure).

Fragmented Channel

The channel is incredibly fragmented - both geographically and structurally.

Look at VMS software. Software is supposed to be a winner take all market but what is the market share of the 'behemoth' VMS software providers - 6% or 7%? And each country seems to have their own home grown VMS provider that is a top provider domestically but an afterthought nearly everywhere else.

Easy for Rivals to Respond

Because of the slow and fragmented nature of the market, it gives time for incumbents to respond. A startup cannot feasibly blitzkreig surveillance incumbents and flip the market in a few years. Look at a 'huge' winner like Axis whose path to market leader (and ~6% global market share) was a 15 year marathon.

The Right Expectations

For a startup, it doesn't matter how big the surveillance market is because almost no surveillance startup can reasonably generate more than $25 or $50 million in annual revenue even 7 years later. Startups and their investors would radically reduce risk and error by taking these guidelines to heart.

Comments : Members only. Login. or Join.

Related Reports

Directory of 97 Video Surveillance Startups on May 20, 2020
This directory provides a list of video surveillance startups to help you see...
Fever Camera Sales From Integrators Surveyed on Jun 01, 2020
Fever cameras are the hottest trend in video surveillance currently but how...
Directory Of 150 Video Analytics Suppliers on Dec 17, 2019
This directory provides a list of video analytics providers to help you see...
Intersec 2020 Final Show Report on Jan 21, 2020
IPVM spent all 3 days at the Intersec 2020 show interviewing various...
Mexico Video Surveillance Market Overview 2020 on Oct 20, 2020
Despite being neighbors, there are key differences between the U.S. and...
Facial Recognition: Weak Sales, Anti Regulation, No Favorite, Says Security Integrators on Jul 07, 2020
While facial recognition has gained greater prominence, a new IPVM study of...
Pivot3 Mass Layoffs on Mar 27, 2020
Pivot3 has conducted mass layoffs, the culmination of grand hopes, a quarter...
Startup Videoloft Presents Cloud Storage on May 27, 2020
Videoloft presented offsite cloud storage at the May 2020 IPVM Startups...
The Booming Multi-Billion Coronavirus Fever Camera Market on Apr 21, 2020
The market for elevated body temperature detection cameras, aka 'coronavirus...
Startup Visual One Presents Object Detection and Smart Search on Aug 26, 2020
Visual One, a Y Combinator backed startup led by a PhD in machine learning...
Mobile Access Control Usage Statistics 2020 on Sep 21, 2020
Most smartphones can be used as access control credentials, but how...
IPVM For PR / Marketing People on Apr 29, 2020
Since IPVM does not accept advertising nor sponsorships, etc., PR / marketing...
Video Analytics 101 on Mar 16, 2020
This guide teaches the fundamentals of video surveillance...
Sunell Panda Cam Body Temperature Measurement Camera Tested on May 14, 2020
Sunell is far less well known than its gargantuan domestic competitors Dahua...
FLIR A Series Temperature Screening Cameras Tested on Jun 04, 2020
FLIR is one of the biggest names in thermal and one of the most conservative....

Recent Reports

ISC Brasil Digital Experience 2020 Report on Oct 23, 2020
ISC Brasil 2020 rebranded itself to ISC Digital Experience and, like its...
Top Video Surveillance Service Call Problems 2020 on Oct 23, 2020
3 primary and 4 secondary issues stood out as causing the most problems when...
GDPR Impact On Temperature / Fever Screening Explained on Oct 22, 2020
What impact does GDPR have on temperature screening? Do you risk a GDPR fine...
Security And Safety Things (S&ST) Tested on Oct 22, 2020
S&ST, a Bosch spinout, is spending tens of millions of dollars aiming to...
Nokia Fever Screening Claims To "Advance Fight Against COVID-19" on Oct 22, 2020
First IBM, then briefly Clorox, and now Nokia becomes the latest Fortune 500...
Deceptive Meridian Temperature Tablets Endanger Public Safety on Oct 21, 2020
IPVM's testing of and investigation into Meridian Kiosk's temperature...
Honeywell 30 Series and Vivotek NVRs Tested on Oct 21, 2020
The NDAA ban has driven many users to look for low-cost NVRs not made by...
Ubiquiti Access Control Tested on Oct 21, 2020
Ubiquiti has become one of the most widely used wireless and switch providers...
Avigilon Aggressive Trade-In Program Takes Aim At Competitors on Oct 20, 2020
Avigilon has launched one of the most aggressive trade-in programs the video...
Mexico Video Surveillance Market Overview 2020 on Oct 20, 2020
Despite being neighbors, there are key differences between the U.S. and...
Dahua Revenue Grows But Profits Down, Cause Unclear on Oct 20, 2020
While Dahua's overall revenue was up more than 12% in Q3 2020, a significant...
Illegal Hikvision Fever Screening Touted In Australia, Government Investigating, Temperature References Deleted on Oct 20, 2020
The Australian government told IPVM that they are investigating a Hikvision...
Panasonic Presents i-PRO Cameras and Video Analytics on Oct 19, 2020
Panasonic i-PRO presented its X-Series cameras and AI video analytics at the...
Augmented Reality (AR) Cameras From Hikvision and Dahua Examined on Oct 19, 2020
Hikvision, Dahua, and other China companies are marketing augmented reality...
18 TB Video Surveillance Drives (WD and Seagate) on Oct 19, 2020
Both Seagate and Western Digital recently announced 18TB hard drives...