Verkada Lead Investor’s Fundamental Errors

By: John Honovich, Published on Feb 05, 2020

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

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.

*** *** ****** *******’* stunning $*.* ******* *********,***** ******, *** **** ******* up **** *********** ****** he **** ** *** investment.

**** ************* **************** ********* and ********* ** **** Verkada ******, ** *** made *** ****** ***.

*** **** **** *** mean ** **** **** up ****** ***** ** this ***** ****. ****** this ****, ** ******* his ****** ***, ******* that, *** *** ***** may **** ******* *** 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 ****:

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

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

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

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

******* ** ******* ***** 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)

Undisclosed Manufacturer #1

02/06/20 03:20pm

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

Avatar

Michael Gonzalez

Integrated Security Technologies, Inc.
In reply to Undisclosed Manufacturer #1 | 02/06/20 05:08pm

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

Undisclosed Manufacturer #1

In reply to Michael Gonzalez | 02/06/20 08:25pm

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

Undisclosed Integrator #7

In reply to Michael Gonzalez | 02/07/20 03:36pm

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

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

Undisclosed Manufacturer #2

02/06/20 05:24pm

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

Avatar

Ross Vander Klok

IPVMU Certified | 02/06/20 05:46pm

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

John Honovich

IPVM | In reply to Ross Vander Klok | 02/06/20 07:49pm

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

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

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

Undisclosed Manufacturer #1

In reply to John Honovich | 02/06/20 08:26pm

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

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

Undisclosed #9

In reply to Ross Vander Klok | 02/10/20 09:33pm

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

Undisclosed Distributor #3

02/06/20 06:16pm

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

John Honovich

IPVM | In reply to Undisclosed Distributor #3 | 02/06/20 07:25pm

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

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

Undisclosed #8

In reply to Undisclosed Distributor #3 | 02/07/20 04:00pm

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

:)

Remiel Feng

ENS Security
02/06/20 06:48pm

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

John Honovich

IPVM | In reply to Remiel Feng | 02/06/20 07:31pm

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

Undisclosed Integrator #5

In reply to Remiel Feng | 02/06/20 10:10pm

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

Avatar

Ross Vander Klok

IPVMU Certified | In reply to Undisclosed Integrator #5 | 02/07/20 12:46pm

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

Undisclosed Manufacturer #4

02/06/20 09:06pm

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

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

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

John Honovich

IPVM | In reply to Undisclosed Manufacturer #4 | 02/07/20 02:45am

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

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

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

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

Undisclosed Integrator #6

02/07/20 02:22am

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

John Honovich

IPVM | In reply to Undisclosed Integrator #6 | 02/07/20 02:40am

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

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

Avatar

Rick Caruthers

Galaxy Control Systems
02/07/20 12:53pm

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

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

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

John Honovich

IPVM | In reply to Rick Caruthers | 02/07/20 05:21pm

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

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

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

Remiel Feng

ENS Security
02/07/20 05:55pm

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

John Honovich

IPVM | In reply to Remiel Feng | 02/07/20 06:11pm

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

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

John Honovich

IPVM | 02/07/20 06:01pm

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

Remiel Feng

ENS Security
In reply to John Honovich | 02/07/20 06:15pm

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

John Honovich

IPVM | 02/08/20 04:54am

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

Undisclosed Manufacturer #10

In reply to John Honovich | 02/10/20 10:54pm

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

Undisclosed Manufacturer #11

02/19/20 04:02pm

*** *****:

*******'* ***** ** ********* 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.

John Honovich

IPVM | In reply to Undisclosed Manufacturer #11 | 02/19/20 05:20pm

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

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

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

Undisclosed Integrator #7

02/19/20 04:57pm

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

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

Undisclosed Manufacturer #11

In reply to Undisclosed Integrator #7 | 02/19/20 05:18pm

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

Undisclosed Manufacturer #1

In reply to Undisclosed Integrator #7 | 02/19/20 06:41pm

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

John Honovich

IPVM | In reply to Undisclosed Manufacturer #1 | 02/19/20 06:46pm

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

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

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