Verkada Lead Investor’s Fundamental Errors

By John Honovich, Published Feb 05, 2020, 08:52am EST

The man behind Verkada’s stunning $1.6 billion valuation, Aydin Senkut, has been talking up many fundamental errors he made in the investment.

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From fundamentally misunderstanding Honeywell and Hikvision to even Verkada itself, he has made one daring bet.

But that does not mean he will wind up losing money on this risky deal. Inside this note, we examine his errors and, despite that, why his money may help himself and Verkada.

Please **** ** *****

****** ******** **** ******* did *** **** *** money ***** ***, ** he******** ** *** ********:

* **** ** **** one ***** *****: ******* was *** ** **** of ***** ***weren’t ******* *****. They had plenty of runway from their previous funding.

*** ***** **** *** or ******** ***** ******** ahead ** **** **** would **** **** ******* a *** *****.We ****’* **** ** **** and they didn’t want to go through a formal process. [emphasis added]

** ********* **** ** giving **** **** **** high *********. ******* *** not ******. ** **** can *** *** ***** sooner ** *** **** valuation **** ******** *****, take ** ***.

*** **** ** * thing ** ******* ****** 2020, *.*., *** *** Information's ****** ******:******* *******’* *** ******: Outsized ****** *** *********** Offers.

Marketing *** *** ** *******

** *** **** *********, Senkut ******** ****:

*** **** ****** ***** anything ** *********. *** this ** ********* ******* the *******-****** *** ** really, ****** *****.

** ***** ** *** thing ******* ** ************ the **** ** ** physical ********, ** ** spending ***** ** *********. Not **** ** **** give **** **** ** thousands ** **** ******** at * **** ** a ******* *******, *** they **** *** ************** on ****:

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*** **** **** ***** millions ** ****** *********. For *******, *** ** their ********* ******** ********* spending * *******-******* ******* per ******* **** ** Google:

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******, *********, ******* *** 50+************** ******* ** ********:

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***, ** ******,****** **** $*** *** referrals*** ****** ****** *** Verkada:

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*** ******** ** ********* plus ******* *** *** returning **** ***** *******:

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******* ** ******* ***** they *** ******* **** are ******** ** ************* amount ** **** ***** and *********.

Hikvision *** *********

**** *** ***** ***** at * *******, *** want ** ******* **. Senkut *** **** **********, *********:

*** ***** ****** ************* is *** *** **** market **. ********* ** valued ** $*** *******-****. There’s * ******* ******* that’s **** $** *******. The *********** ** ** the ********* ****** *** all ********* ** *** world? ****** **** **** market ******’* ** ******.

********* ** ********* ****************** '********' *******. **** a ******** ** ********* does *********, **** **** of *********'* ******** ** aerospace, *** *** *** industry, *** ***** *******. People *** *** *************** what *** ****** **, they ****** ********** **** Honeywell ** * ************ that **** **** ******, most ** ***** **** nothing ** ** **** Verkada's **** ******* ****** 'building' ********.

*** *** ******* ******* he ** ********* ** is *********, ***** ** currently ****** ** ~$** billion ***. ********* *** this ******* ********* *** 3 *******:

  • *** *** ********** ******* it
  • *** *** ********** ****** or ******* ******* ***********
  • *** ***** ****** ********** are ********* ********, ***** driven ** *** **********.

*********'* ********* ** ** fundamentally ********* **** ******* that ***** ** ** sense ** ******* **********.

***, *** ***** *** are ********* ***** ********* inflated *** ***** ****** valuations,**** *******, * ******* in ******, ***** ******* *******, founder *** **** ******* and ** ***** ****. They ***** **** * half-billion-dollar **** *********. ** the ****, **** ***** be ***** ** **** 1/10th **** *********.

Investor ******

********* ** *******, ******'* vision ** '*** *** buildings ** *** *****':

**** *** ** ******* is ****'* **** ** only ***** *********. **'* just *** ****'** ******* started. ****'** ***** ** start ****** ** **** and **** *** ***** to ****** *** ********* system *** *** *** buildings ** *** *****

Still *** ***

***** ** ** ****** that ******* **** "****** the ********* ****** *** all *** ********* ** the *****" ** **** half, ** * *******, or * ***** ** the *****. *** ******* and ***** ********* ** not **** ****.

********* *** ***** ****** notwithstanding, *******'* **** ******** still *** **** * good ******.

** ******* ***** ***, e.g., **** $* *******, it ***** ** ************* for (***-*****) ***** ************ / ******** ********. *******, Verkada ** ******** ** unprecedented ******-**, ****-********** *******. Virtually ***** ************ ****** control *** ***** ************ business ** ***** ********* on ****** ***** (**** a ***** ** *****, sell * ***** ** more ***** **** ****, etc.), ******* ** *********.

********* ** *******'* *********, to *** ******** ** Verkada's **** ********, ******** the **** *** ** that ***** ** ** get *** ***** *** marketing ****** ** *** as ******** ** **** as ********.

**********, *** ****** **** fully ********** *** ********* of ******* ****** **** this ***** ***, ** the ********, *** ********** of **** ***********, *** power ** *******'* ***** machine *** ***** ******* Valley's ***** *** ***** to ********, **** *** them * *** ** customers.

*** **** ********* **** can *** ***, *** more **** *** *** them ** *** ****** control ** **** ** whatever **** ******* **** next, *** **** ****** these ********* **** ** with ******* ** **** and ****** ** *** cost *** ********** ** moving *** ** ***-**-*** Verkada ****** **** ** practically ***********.

*******'* *** *** **** knows **** ******* **** **** ****:

******* ** ************* ******. That’s *** ****** ** the ****** ** *** system. **** ******** **************, there’s *significant ******* ********** from the customer: she has invested both in the hardware and the labor to physically install a system throughout her buildings. [emphasis added]

******, ******* **** *** need ** ******** ******** of ******* ** ** worth ******** ** *******. The *********** ********** **** flow **** *** ******-** Verkada ***** *** *** potential ** ** *** most ********** ***** / access ******* ****.

*** ** **** ***** helps ******* ** ***** up *** ******* ******, Verkada's **** ******** *** very **** **** **** times *** ***** ****.

Comments (34)

*** ******* *** ** Mr. ******'* ***** ******* please? * **** **** swampland ** ******* **** he ***** **** ** invest **. ** ***** not ** ***** **** now, *** **** ** drain ** *** *** up * ******** **** it **** ** ***** millions. ******* ** *** is *** ***** *****, and ** ***** **** this **** ** ********** might ** ** *** alley.

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**** *** **** *** product?

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*'* **** ******** **** the *******, **'* ***********. I **** ***'* ***** they **** * **** term ******** ***** ** this ********.

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**** *** **** *** product?

*** ******* *********?

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* ***’* **** ** again, *** **** ******* I *** ******** **** someone ******** ********** **** low *** ************* *** installed * *** ****** Verkada ****.

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***. ** ** ***** to ** *** *********** people *** ******** ***** on ****** **** ***'* come ***** ** *************. I ***** **** ** fundamentally *** ******** ** venture *********** ****** *****?

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**** ***'* **** ***** to *************

** ********, ******* ********* is ***** ****** **** on *** ****** ***** you *** ***** ****** be ******* **** **** happen. **** *********** **** out ****** *** *** few **** *** **** runs **** **. **** Verkada ** * '***** slam'? ** *****. **'* bought ******* * ***** ticket *** *** **** of ** **** ***.

*** *******, *** ********* comparison ** **** ***********. On *** ***** ****, he **** ** ** TechCrunch, ***** *** **** interest ** ***** *** diligence ** ****** ******* questions. '******** **** *** *****'. ******** **** *********. Maybe ******* **** *********. Or ***** ***.

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******* **** *********

*'* **** ** *** the ********* ******** *** that ***

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**** **** *********** ****.

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*** **** ******* ****** have **** * ***** booth ** *** *****.. you *** ****** **** it...lol

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*** ***** ***** ******** is ***********.

* ***** **** *** right ***** ****. *** wait * *** ***** a **** ** ***** hundreds ** ********* ** dollars ** **** **** to ****** ** *****? Verkada ** *********** ******* a ***-**** ***** **** online ** *** ********** heavy ****** ***** *********** campaigns.

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*** **** ***** ** you **** ** **** 2 ***** **** ******* out ****** **** *****?

:)

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* ****** *** ***** lead ********** ** *****, throwing **** ** ***** into ********* *** ** very ********* **** ***** are **** * *** qualified ***** ****** **** to *****. * **** wonder **** ************ **** have **** ********** *** integrators...

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**** ***** *** **** a *** ********* ***** handed **** ** *****

* ***** *****'* ***** reason ** ******* **** have * *** ** leads. **** ***********, ******* can ****** ********* ******* spending *** **** *** lead **** ************ *********. Let's *** **** *** a **** - ****'* a ***-**** ****** ****, with ***** *** *** certain *********** ** ******* some **** ******* ** the ******. **** ******* that's * ****** **** + * **** **** probability ** ** ******* in ****** ******** *** years ** **** **** expansion ***** ** **** cameras *** **** ********* licenses.

* **** ****** **** relationship **** **** **** installers *** ***********...

**** **** ** ****** to *******? ** *******'* CEO**** ****:

***** ****** *** *** relationship **** *** *********

*****'* *** *********** **** love ******* *** **** does *** ******. ******* is ************** ********* ***** deals ********** *** ***** are ********* ********* *** there **** *** ***** to ** ****** *** install / ***** ******* work.

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**** ** **** ****!

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* **** ****, ** wife ***** ****, ** brother ** *** ***** his........ **** *** *** too ************** ** *** they ***** ** ***********.

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** ***** ** *** thing ******* ** ************ the **** ** ** physical ********, ** ** spending ***** ** *********.

"******** *****" ** "******** money***********" ** *********?

******* ******** - *** implying ** ** ** isn't *********.

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***********" ** *********?

***’* *** **** ***** twice ** **** ** acquire * ******** ** the **** ******* ******* in *** ********. ** be *****, * ***’* know *** ** * thought **********.

**** ****** *** ****** it ******* **** ****, unlike ***** *********** ***********, that **** *** *********** locking ** * **** long **** ****** ** profits. *** *** ********* at ******* *** ***** up ** **** **********.

***/***, * ***** ***** customer *********** ********* *** sound ***** ** *** long **** ******* ********** expected, **** ** **** are ****** **** ******** a ******* * **** -**** * ******* ** 2020, ****** * ******* Salesperson

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* ** ********* ** Verkada's *** ******** ** like **** ** ***** companies - **** **** the ******** *** **** on *** ***. ***** Verkada ****** ***** **** their *******, **** **** you ** **** *** promise ** *** *** exciting ******** *** *********** hardware.

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***** *** ************ ****** Verkada’s ***** *** ****** recurring ******* ******* **** do *** **** ** provide ********** *** *** video ** ****** **-****.

****, *** ***** ** virtually ******* ** ** much ***** **** *** residential ***** ********, ********** if **** *** ********** to *** ***** *** access.

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**** ** * ***** article ** **** ******* to ** * ******* situation ******** **** *******..*** saying **** **** *** the ********* ****** **** WeWork *** ** **** point *** **** ****** profitable, *** **** ****** profitable *** ****** **********.

*** ***** *** *** Enabled **** ******* *** the ****** ******* - WSJ

**** **** ***** *** some ** *** ****** most ********* ****** ***** were ***** **** * risky ********** *****...

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**** ****** *** ******* are ********* ********* ***, from **** ******* ************* I **** ** ******'* business *****, *******'* ***** is ******.

*** ********** ** ******** markets **** ***** ** hyper-scale ******. ****** ** an ******* ** ** failing, ****** ***** *** many ****** ***** ** works.

* ***** ******* **** because ** ***** ** grab **** ****** ****** else ** ***** *****, knowing **** **** *** land ** *****, ** will ** **** *** it ** ** ****.

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***, ****** ***** ******* Verkada ***** ***** *** cameras, ** ***** ******* OEMed?

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******, **** ******* ***** own ******** / ******** and *** ******** ************ by *******, ******* ********* ******* *****.

***, **** *** *******'* most ****** ****** *******. They ****** *** *** importing **** **** ******* which ****** ********* ** how **** **** *** actually *******:

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***** *** **** * fair ****** ** ********** here ***** *** ************* of *******'* *********.

************,* *********** ***-**** ** this ****** *** ********* evaluating *******("** ******* ******* ** for *** *******, *** all-in ** **** ** 272 ******* ** *** end ** **** ****"). *** ***-**** ******* not ** ** **** Verkada *** **'* ***** an ********** ***** ** how ******* **** *** a **** **** **** end-user:

* *** *** ** the ******** **** * Facebook **. * *** I ******* ***** ********* cameras *** **** **** a *****

****'* * **** ******* of ***** ****** ** action: ****** ***** ** -> **** ******* -> inside ***** ****** -> free ***** *******. ******* did *** *** **** one *** * ** sure **** *** **** others ***** * ****** very *** ******** ************* use.

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** ***** ** ********* they *** ***** * great ***, ******** ***** digital ********* ****** *** paid ****** ****.

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********** *** * ******* talking ***** *** ********** where*** ***** ***** ** the ********(**** ***********):

***** ******** *** ** be **** ******* ** mil ** * *.* they ****** ** **** percent, *** ******** ****** up *%. *** **** 5% ** * *******? Like *** ****'* **** put **** *******? *** why ** ** ** slim **** *** ***** just **** ** **** when * **** ****?
****, * ****, **'* it's **** *****, **'* something ** ***'* *** that *****. * ****, so *** ******** **, is **** *** ** the ***** ************, ** might ** ********, **** speculating **** *** ***** anything. *** **** *** option ** ***** **** have ******* ** ******* available **** *** ******* can **** ** *** same ***** ** ***** to *** ******, *****?

*** **** ***** ***** putting ** **** ******* is - **** ***** Verkada ** **** **** money? **** ****** ** only ** *** *** only ***** ** ****. But ** **** ***** an *********** *****. **** if ******* ****** ******* $100 ** $*** ******* in *** **** * years? **** **** **** do **** **?

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*** ******** ** **** similar *********** *** ******** automation.

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*** *****:

*******'* ***** ** ********* this:

****** *******, **** * sh*t **** ** ***** reps **** ****** ****-*** end-user *****.

**** ***'* *** *** firms ** ************ *** their **** ***** *** deals ** *** *********** they **** ** **** with (** ***** ** switching ***** ********)

***** ***** **** *** by *** *** *****, poorly ******** ** *********** and *** ******** ****** in *******. **** **** come **** ****, ****** sales, *** - **** from *** *********** ******** market (****** ****, ****** supply *****, ***). *** end ******? **** ** as **** *** ** fast ** ******** *** sell.

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***** ***** **** *** by *** *** *****, poorly ******** ** *********** and *** ******** ****** in *******.

****'* **** *** **** are **** ***** ********* and ********. * *** of ****** *** ** on ****, ********** ** the ****** **** *** poorly ******** ** *** details ** *** ******* / ********.

*** * ******* ******** about *** ** *********** or ******** *** * assure ** **** *********** dismiss **, ** * manner, **** ** ********* end **** **** ******. Leaving ****** *** ******** aside, ** ** ** effective *** ** ***** deals.

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***** ***** **** *** by *** *** *****, poorly ******** ** *********** and *** ******** ****** in *******. **** **** come **** ****, ****** sales, ***

***... ***! **** * minute! **** ** ********'* sales **** ***** ** the **** *** ***** come **** *****, *****, etc. *******, *** ****** path ** ***** ************ sales ** *** ******* printer ********.

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*******. *** *'** **** told **** ******** *** a ***** **** ******* employees ****** ** ****. If **, ***** ****'* why ****'** ******* **** that ***** *** ****** representatives - ** ******* hiring **** **** ***** is ***** **** **** they'll **** *** "******" that **** ***** *** 60-80 **** ***** * day *** ** ****** before ******* ********** *** as ****.

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* ***'* **** **** kind ** ******** ******** puts *** ****** *******, and * **** **** the ******** ** *** revolving **** ** ***** people ******* *****. *******, I **** ***** ***** anyone *** **** ** Avigilon ***** *** *****'* know **** **'* ******* about. **** ** **********, and **** **** *'** heard, *** ******** **** are *** ****** **** trained ** *** **** their *******, *** **** also *** ***** ** what's ***** ** ** the ******.

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*** ******** **** *** all ****** **** ******* on *** **** ***** product, *** **** **** are ***** ** ****'* going ** ** *** market.

****: **** ** ******** from ** ******** **********. At *****, * ******** if **** *** ** Avigilon ******** ******* ********** on *** **** *** no.

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