Verkada has the fastest growing video surveillance sales organization ever.
In less than 2 years, they already have more salespeople in the US than any video surveillance manufacturer save for companies that have 1,000+ total employees and has been in business for a decade or two such as Avigilon, Axis, Genetec, Hikvision, Milestone.
We have been tracking their growth over this time, including speaking with their management and present this report that examines their growth and strategy including:
How they have grown their sales team (and spreadsheet of sales team members)
Why they are focused on inside rather than field sales
Why "sales always own the relationship with end customers"
How their sales organization compares to Arcules, Avigilon, Axis, Eagle Eye, OpenEye and more
What deals they have won (based on us FOIAing various government contracts, totaling nearly $2 million)
How fast their revenue growth is and what level it is at
I guess if you continue to do things the way everybody else does, the best you can expect is to get the same results everybody else does. Trying something radically different might get you much worse results... but it might get you much better ones.
I had the pleasure (pun intended) of meeting with a few of their team at ISC at the requset of one of my team members. All I can say is I have NEVER met a more arrogant person (co-founder) in my life, just the mear arrogance that came from him and thier statemetns about how there are no barriers they cannot overcome may me run for the hills. While I wish them the best of luck, IMO they will only continue to make traction in verticles like Education and others where its an easy out and check box for the IT guy who dose not know any better while drinking the Jim Jones Juice from the Firehose.
The major manufacturers are all pulling for Verkada to keep growing. Manufacturers all would love to sell direct, but nobody wants to make the first move. However, if they are "forced" to do so, due to outside competition and lost deals, well then integrators will just have to understand they had no choice.
Don't think I am joking, this could be the company the industry has been waiting for.
Based on the high annual costs that the pure subscription model carries, I think it'll be hard to understand the sticktoitiveness of this company. Seeing as how many organizations begrudgingly pay or choose not to pay the annual cost of just keeping software up to date, I anticipate a rather high percentage of customer churn for Verkada, especially for the bigger customers.
When a more traditional VMS can come in to budget-challenged organizations, like schools, and show a rather high ROI for switching over, I predict that many will choose to walk away. Include the fact that these traditional products often offer a much higher degree of functionality and camera choice, I just don't see their customers sticking around for long periods of time.
This will require a constant flow of new customers to replace those that bail, and that's always a hard obstacle to overcome. Time will obviously tell, but I think we are still at least a few years away from any type of tipping point before pure cloud surveillance becomes widely adopted for medium to large organizations. We will have to see if their investors are willing to wait it out, and if their large sales staff is willing to deal with the aggressive sales culture that will be necessary to maintain the revenue stream.
Or I could be totally off...just my personal opinion based on almost 20 years in the industry.
The big difference with Verkada is if you "choose not to pay the annual cost of just keeping the software up to date", the system stops working when your contract runs out.
I think Verkada (and their investors must understand this) are working a sales model from their past startup building experience (which was in IT, not video surveillance), which literally made them billions of dollars.
Lastly, having competed with Meraki in the SaaS space for many years, they are not going to be signing many customers up for 1-year contracts. 3 year to 5-year contracts will make up the majority of contracts, especially in the K12 school vertical.
10-year contracts as well. I don't know what Verkada salespeople put in the water they offer to end users, but I want to get whatever it is. Signing a 10-year contract with a company that is only 2 years old is fundamentally stupid.
Fundamentally... I agree with you, perhaps not for the same reasons.
However, extrapolating some of the numbers from the quotes in our report, 3-year contracts are being purchased for ~$280 ($93/year), while 5-year contracts are being purchased for $350 ($70/year). I'm sure Verkada salespeople are pointing out the fact that for only $70 more than the 3-year price, they can get 2 more years of subscription (only $35/year!!). So the counter-argument is "Unless you really think you're going to switch your system in 3 years, signing a 3-year contract is stupid". I'm not advocating for this, I'm just breaking down the numbers.
In the FIOA reports posted there are not any 10-year contracts, so we can't say what the discount schedule is for those, but I think it's fair to say the sales pitch will be similar.
This also starts to touch on the "no one buys SMAs" discussion/argument.
Still boggles my mind. For multi- $100K projects, I'm sure a CFO-level executive and/or board members are involved. The risk factor for committing 10 years to a 2-year-old company and buying hardware that is 100% valueless on day one of the system going live if the service is canceled is an insane risk from a financial perspective, especially when there are several lower-risk substitutions out there.
Vivotek should start a service. $100 per Verkada camera to flash or replace the programmable chip with Vivotek firmware so it can be used with other VMS in case you don't like the Verkada service or they go out of business.
On a unit basis, the average camera (i.e., hardware including built-in storage) is being sold for ~$600. The average recurring license sales price is ~$100 per year with an average 3-year term (i.e., $300) sold to start.
They are manufacturing in relatively low volume and it has storage inside but still, I don't imagine the BOM is more than $200, so they are making some money up front and then they got the locked-in annuity.
my point is not one of cost, but instead one of funding.
I just checked all the links to the documents in this section and except for the Steamboat Schools contract, the expenditures were for hardware only - i.e. no earmarks for recurring licenses.
2 different larger contracts had 3 yr licenses for an insignificant number of cameras in comparison to the total cameras purchased.
what I am getting at is that all of these govt/school customers (except for Steamboat) only allocated funds to buy the cameras - and they will now need further funding to pay for the 3yr licenses for all their cameras they spent all their appropriations on.
I'm not sure I'm following you. Every document included in the Deals They Have Won section except the document sent by Godley ISD (we have FOIA'd that information as well and will add it when it is received) includes a line item for licensing. Where there are 3-year licenses, the customer would incur that cost every 3 years. Where there is a 5-year license, the customer would incur that cost every 5 years.
In each document, the number of licenses the customer bought matches the number of cameras bought (except the quote for Steamboat from Rhize, which for some reason is down one license). I've included some marked up excerpts below:
in the three bids you list, the middle one you listed is Steamboat - which is the only one that accounted (in line item) for 3 yr licensing for all their cameras in the expenditure.
the first bid you listed was Zionsville - which only paid for licensing for 20 cameras (your document 1) - even though they actually bought 500+ cameras (your document 2) - where there is no line item for the 5 yr licensing enjoyed by the first 20 cameras they purchased.
the last bid you listed is for Kiona-Benton (in two parts) which includes a bid for 64 cameras with no line item showing any licensing (your document 1) and 8 cameras purchased separately - with the line item 3 yr licensing (your document 2).
the Zionsville and Kiona-Benton gigs were the two I was referring to here:
"2 different larger contracts had 3 yr licenses for an insignificant number of cameras in comparison to the total cameras purchased."
I got the term wrong here for Zionsville - which had 20 cameras with 5 yr licensing out of their 500+ cameras instead of the 3 yrs that Kiona-Benton paid for licencing of 8 out of their 72 cameras.
No worries. Yes, the others match as well. All except Godley ISD, which did not provide license information in response to the original request (follow-up request filed), and Steamboat, which is one license down.
On the one hand, I am thrilled to see a new player who doesn't care to play by the rules. On the other, I am deeply concerned that taxpayer money is being spent on a system with this level of lock-in. I can't believe that none of the "dinosaurs" couldn't put together a much more affordable system with a much lower level of lock-in and better functionality too.
Perhaps the raison d'être for Verkada is that we (the senile old men of the industry) truly are dinosaurs; thinking that 10 seconds of latency is a huge problem, and pointing out that the playback not completely in sync. Perhaps a lot of these hard requirements are just us doing things the way we used to. It's likely that people are just getting sick and tired of the old systems and their "enterprise level configuration and price". They just want something that shows the camera live, records when it needs to, and allows the user to play back every once in a blue moon when something happens. Sure it would be nice to have lower latency, better sync etc. but the ease of use, peace of mind, just carries more weight.
The video quality (or encoding problems) is not something they can ignore though, but on the other hand I've just spent half an hour looking at a camera that had a shutter-speed so slow that you couldn't tell who was walking by.
Why do they remind me of the early mass marketers of alarm systems and how the industry thought they would destroy values, etc.
Fast forward a couple of decades and more systems are installed at a faster growth rate than before. I won’t include the new DIY changes.
Maybe some enterprising company will continue to follow these FOIA methods and put together a leasing offer for these customers as the known renewal dates and costs are published. Replace the cameras with industry standard devices and storage for the same payment.
In theory, by the time it’s ready to renew the connectivity is in place and functioning. Install some $79.00 cameras that exceed their current offering and either local storage on a VMS or a Cloud service that uses them.
What percentage of the current sales force at Verkada does anyone expect to be there 2 years from now?
If you are surmising anything above 10% you are dreaming.
The inverted percentage of sales people (in comparison to industry incumbents) is just one part of their Silicon Valley Losing Money By Design strategy (this early).
This is also why most of the people they have hired have no industry experience. They aren't looking for consultative sales people at this point in their infancy - instead, they seek those Gecko-o-philes that can dial for dollars and bamboozle the weak-minded into buying the pitch they are selling.
and what is their primary pitch?
that everyone else (who have ever offered surveillance and security for decades) just want to @#$! you out of your money - and they are the only ones who aren't trying to do that.
I'm sure that it is convincing to a few - but I'm also glad I have no investments in the success of their scheme.
That said, it is the Silicon Valley way for salespeople to move every few years so even if you are not right about 2 years from now, in 3 - 5 you likely are.
They aren't looking for consultative sales people
This I agree is the greatest concern. They may think they are consultative but they don't know the domain at all. It is not to say they are not smart nor that they could not, you just cannot be a real consultative seller with a few months in an industry.
i'm glad you mentioned Anyvision - because they are using a similar market entry strategy: massive sales hiring on the front end to blitz the existing market with their 'new' thing. All VC funded.
Anyvision is just further along in the cycle, and lots of those that were originally hired have figured out the game and moved on.
When I mention how many current sales people will still be at Verkada in 2 years, I was referring to the fact that massive sales side cuts are part 2 of this kind of market entry scheme. whether the company is honest about it up front to the (generally green) people they sign up to start blitzing - or not.
Once the foot is in the door, then you pivot to a more industry friendly stance (cough - moving to channel sales) and pretend you can now be trusted by the incumbent channel players.
Secondarily, and only tangentially-related: I find it difficult to take a Director of Sales for any company seriously when they use a Christian Bale American Psycho head shot as their IPVM avatar.
Anyvision is just further along in the cycle, and lots of those that were originally hired have figured out the game and moved on.
Disagree. Anyvision is 'earlier', still trying to figure out how to sell $2,500 facial recognition software licenses. Verkada has figured out their sales model (which is a lot easier since (1) they are selling something customers are used to buying - cameras / recording, (2) pricing is in the same range as existing Western offerings, and (3) they are leveraging inside / telesales to close most deals).
I think that it might be worthwhile to check in with these schools a year post-installation to see if they feel they made the right choice. Based upon previous IPVM reviews of the product I am not certain how pleased clients would be with tremendous latency. I have clients that complain about a half second of latency and complain when a PTZ is not instantly responsive. 10-20 seconds is far too much for them. Having done work in schools in the distant past they are far less discerning than other types of accounts and higher end clients frequently require features Verkada does not appear to currently possess.
Sadly, at least in my area anything would be an improvement. Our schools have almost no surveillance and what is there is VERY old analog stuff that is not even pointed in a useful direction any more due to being smacked out of the way by people. Heck as a parent I have to provide dry erase markers for the teacher and my student as well as copy paper.
you misunderstand. My statement is LITERALLY anything would be better than what is currently in place. I was not making use of the word to really mean there could be improvements I mean that any change to the security to the schools in my area would be welcomed. They have fathers volunteer to walk around the school and playground as the "security" because there is no room in the budgets for protecting our children.
My best guess is that they are making a small gross profit on each sale but losing money overall since they are scaling up so fast (e.g., they are hiring ~5 salespeople a month, there takes some time to ramp up, etc.).
Related, even though their selling price is not that low, they are evidently paying sizeable commissions up front:
That will reduce profits short term but makes motivating and attracting salespeople much easier. And the investors want recurring revenue, that is the end game so if Scott Miller got a $100,000 check, great for him, but that probably means Verkada stands to make a million dollars over the life of their locked-in cameras.
Of the various concerns and criticisms I have of Verkada, the fact that they are losing money today is not one of them. That is how venture-backed startups work.
As a sales engineer I have received a lot of cloud platform demos. Even the well funded companies are trying to figure out how to sell 'cloud' based video surveillance which almost always seems hampered by bandwidth. Sure, they will install a network drive or some patch to try and make up for the bandwidth limitations but a lot of these products are buggy, incomplete, or reducing bandwidth to unacceptable levels. Cloud makes sense for software but I have not yet seen a video solution that blew me out of the water. Anymore than 10-16 cameras and Internet upload speeds clog up. So how can they do an enterprise play that really works like a local installation? For the time being the security integrator's job is safe. Silicon Valley is probably going to keep pushing to find an inroad, but I am not losing sleep over it any time soon.
I don't see how a technology company who has a disproportionate amount of salespeople versus support or engineers will survive. Innovation is key, both to grow and to keep students safe. The rest of the industry is working on crime prediction, speed of awareness and efficiency while Verkada's main goal is to keep investors in the game. I also feel that is is more expensive, complicated and slower to grow when selling directly to end users and alienating the massive sales force and expertise of distribution, rep firm, and integration partners. Scaling while handling the entire channel themselves is going to be a massive undertaking. It is nice to see disruptors as it been a long time since any change in the industry. I'm betting on Qumulex being the next positive disruptor out there and forcing Verkada to change. Converged cloud access and video, but open to hardware that can be utilized with a different head-end if end user wants to change.
Scaling while handling the entire channel themselves is going to be a massive undertaking.
They are proving the opposite. By cutting out the entire channel they are growing faster. It's not the product right now, for sure. It's that they figured out how to short circuit the 'massive undertaking' of getting buy-in from traditional players - large integrators, distributors, etc.
I'm betting on Qumulex being the next positive disruptor out there and forcing Verkada to change.
I think Qumulex has a short of doing very very well (discussed here). I do not think they will force Verkada to change because they are opposite approaches (from a channel and 'solution' perspective). What will be interesting to see is when and how Verkada hits resistance.
The problem with AI is not just the tech. Another issue is that you need to train the (neural) network. The more data you have, the better. This is why Amazon is looking at your Ring camera, listening in on conversations etc. It's not because they are Peeping Toms. They are gathering training data. Now, there's a bunch of non-AI ways to analyze video - the most simple is the delta-comparison between pixels that everyone supports, but I don't think Verkadas pedigree gives them any advantage in that area.
Apart from the training data, you also need some horsepower. Ring sends its video to a server with "unlimited" power, while Verkada doesn't (that's their USP), so they need the power on the device. Do they have it? I don't know, but my guess is that they don't - ideally, they would need to update the model on a per camera basis, but computing the coefficients for the AI is an extremely expensive operation, so - again - not something that I think the camera can do on its own.
I am on the fence on the direct-to-end user model for IP video outside home/DIY installs.
The video surveillance industry reminds me of plumbing; Sure, you can do a bit here and there on your own, but the important stuff you leave to the pros. And when you need to get your boiler replaced, 99.9% of all customers will not give a damn what parts are going into the boiler, what brand it is and so on. But hopefully, people won't "rent" a boiler, pay an annual fee, and risk waking up in a freezing home, because the company running it went out of business.
Companies that buy Verkada are companies that get a completely bespoke heating system installed, that will incur a substantial recurring cost, with the argument that they don't have to worry about the pipes or radiators. If you want out, you need to replace all the pipes and all the radiators, because you can't get any matching fittings anywhere.
I think the reason people fall for this kind of model is because it seems to reminds them more of getting Office installed than a boiler in the basement. With the boiler, and your surveillance system, from time to time, you need actual, physical maintenance of your systems. Covers need to get washed, sometimes cameras need to be replaced, moved, etc. Sure... you can get almost anyone to do that work, but I (foolishly) prefer someone who has a lot of experience in doing that kind of work.
Sure, mega-installations can maintain their own systems, but that's not what Verkada seems to be aiming for.
Sure, mega-installations can maintain their own systems, but that's not what Verkada seems to be aiming for.
They are most definitely aiming for us. We just refuse to get "locked in" been there done that and won't be repeating, at least not while I am here. We get a few forwarded emails a week sent to us from people in our corporation with Verkada sales and C-Suite people touting MIT engineer designed systems, etc. I have let at least three of them know that our business and it's subsidiaries are not interested but they still keep blasting emails out to anyone they can find. I am sure many others in my position at "Mega-Installations" get the same emails.
The product seems wildly inappropriate for large scale installations, but I can't fault Verkada for trying. and I probably should have expected them to try and shove their product down as many throats as possible.
A few things are certain:
* The feature-festival is coming to an end, and users will favor ease of maintenance/installation over shallow functionality that is hardly ever used. People are increasingly waking up to the realization that we're basically using these extremely complex systems as very, very expensive VCRs - except, its 100x more difficult to use. The lack of settings on Verkadas cameras is actually an advantage. I think a lot of people fail to realize that in their critique of the system. The exhausted use of "enterprise level" as a euphemism for "expensive and cumbersome" is also drawing yawns from the audience.
* Decision-makers are going to be lured in by the promise of "as simple as an iPhone" made by hotshot engineers from MIT and Stanford. If they're paying big bucks for a system, they want that new Tesla smell. They're annoyed with spending a small fortune on something that leaks oil, needs constant care, and nursing. The old crap always seem to require costly upgrades, suffers mysterious outages for extended periods of time, loses evidence, is a nightmare to operate and so on. When you're not hot for the Tesla, it's because you are (in Verkadas words) "a dinosaur". Maybe they don't see lock-in as an issue unique to Verkada, as they are effectively locked into their current solution due to the cost of transitioning.
* I predict you're going to be hard pressed to find actual Verkada users with anything negative to say, that you can use to sway the higher-ups. If someone plunks down a cool million on a system, you're going to tell everyone the same thing: "this was the best damn investment ever!". You're not going to admit to the world that you were fooled by a shiny box. You might get a couple of anonymous posts here and there, but that's it. If it's really bad, people will ask for their money back, they may have to sign a non-disparagement clause to make that happen -> no negative press.
I like the principle of the Verkada solution, but I hate proprietary systems. That said, I'm convinced that it can and will improve: fix the encoder issues, improve call-up times, better sync playback - a feature we've convinced ourselves is crucial, but.. <insert meme of Thor saying "is it though"> and so on. And without a bunch of dinos riding their tailcoats, they can move pretty fast too.
It's almost an indictment of the usual suspects that Verkada is getting this sort of traction - it's interesting times for sure.
You're correct but to be clear, almost every sale we have goes through a free trial process and our prospects generally try 3-4 solutions before they end up buying Verkada. Verkada's solution is actually more beneficial as it scales across a large organization rather than the opposite. While we still have some tweaks to work on (stay tuned), the platform we've built allows for rapid innovation compared to other infrastructures.
What triggers the cloud back up? Are you saying everything is backed up in the cloud automatically for 30 days? Is the the man stream or the low res stream? Verkada tells customers they use zero network bandwidth so how are you telling customers you use little to no bandwidth but are backing up 30 days of video in th cloud?
Also most NVRs/DVRs allow for recording in two places so not sure how this is a huge advange for Verkada.
Under the bandwidth section you can enable cloud backup per camera (there is a warning that it "will consume a significant amount of bandwidth"), and have a choice of enabling full video resolution backup. You can also restrict backups to only running at a specified time range.
I'm not suggesting it is or isn't a problem or contradiction, just directing Michael (who owns a Verkada camera and has given me useful feedback/information in what he's found) where to find the option to enable.
Many NVRs that are stored in a central & secure location backup to cloud like S3..etc. If I walked up and smashed a Verkada camera, i doubt anything would make it to cloud. Maybe a snapshot but there wouldn’t be time to trigger a backup via tampering.
Verkada, grats on the school systems win deployment posted above, makes me think about where you are geographically located. Since you are in the bay area perhaps you can transform Oakland Unified School District and save them from the past $$ dumping 20million into Cisco VSOM hardware and cameras. Or you can tackle Hayward Unified School District with their aging 2000+ Sony Ipela / Onssi crisis? Want more east bay? perhaps you can knock of Richmond Unified with their 2 year old Genetec upgrade using existing outdated Arecont cameras...and slow networks switches that renders as useless as the vicon system it was built on. Any pen test on Richmond unified will show that even janitors can access video...and watch...innocent people. Damn shame.
School systems are easy big box direct sale promises. Bay area that is, black tea...texas gold..Jed Clampit.
Verkada's only problem is that your technology is so easily bought out, not everyone at the table will eat when Amazon, Google or Azure(microsoft) come at you. What if you build a base so large that a bigger fish must eat you? Think about all the BS you just sold your end users, are you prepared?
Will they keep the name Verkada? or just fart it out?
Aggressive acquisition is not backwards compatible, congratulations on Verkada growth but the wolves are at the door in 8 months or less(tick tock i see you lick chops)...but if you get hacked like a B then what is left? 1=0 is false.
Verkada...please join a CTF conference, allow us to have a choice by participating together, publicly fully transparent. Give the community on the most intrigued, persistent noobs a stage to handle all your pen testing with a wild wild west flair. You have nothing to lose yet everything to gain.
Release something to the wild, before the wild releases on you, conveniently and unorthodox like a wild bloom flower.
Defcon would love to see a Verkada hackstation, you could probably make some of us fall in love, should you succeed.
The simple fact is - technology is becoming increasingly more advanced and complex for consumers. We all know someone who has bought the wrong security system. Their strategy of using a salesperson to explain their value is a luxury many others simply cant afford. To me it's a winner, the only issue I see is if they have continued success someone may leap frog them. But what a refreshing approach I wish them well.
We have worked with them and were excited in the beginning. After a few installs, we will not be working with them anymore as they are the shadiest company we have ever worked with. If you are using their proprietaty cameras and paying their price, you better have trust in them and we have none. Good product, terrible company.
Can you be more specific about "the shadiest company we have ever worked with"? I suspect that they are, but would like to understand the depth of the shadiest. They just called out IPVM as stone age....in the post below.
They were talking to a potential customer and told them they would offer deep discounts to earn the business. The client asked how and Verkada mentioned they would be discounting the revenue the dealer received to help get these deep discounts. This means they were going to reduce my margin without letting me know, keep in mind I've signed up as a dealer and this would have been my first project.
To defend them, it would have been 100 cameras and likely would have been some RMR to help in the long run.
I have had major camera manufacturers do the same to me. They cut a national discount with an end user that we had been doing business with for over 20 years and then expected our company to eat the entire discount. After some negotiations they agreed to split the reduced cost.
I received an email for a “free camera”, so I responded with an excerpt from the free IPVM article about their shortcomings, and this was his response:
That is IPVM's opinion as they're stuck in a the stone age. Would you be willing to take a 30-min demo call to see for yourself? More than happy to address all of this, and any other concerns that may arise. We have more than a few reference customers that can attest to their success - whether it be manufacturing or retail use-cases.
We do have a unique approach, there's no denying that. However there's a great deal of value with our approach. Next Monday and Tuesday are fairly open if you're interested in a demo.
It seems our industry is following the strategy of politicians, don't address the message but shoot the messenger. Don't offer a valid argument but make disparaging remarks about those with an opposing view. This has happened on IPVM 3 times lately. I find it extremely distasteful and shows a major character flaw. But what do I know, I am one of the deplorable cavemen and one of the ignorant few.
We’ve designed our program with high-velocity lead generation and sales in mind, and we sell exclusively through channel partners. The program is limited to a select group of expert partners who are passionate about bringing a new generation of physical security systems to market.
All I can say is if the end user doesn't know any better then they will continue to be successful. The challenge with channel sales is to many manufacturers spend to much time on the channel and not enough time and money on getting end user clients to pull through the channel.
It takes a little while, particularly in a disruptive model like they have, to really get quotas dialed in. I remember seeing similar leader boards in the early days of HubSpot.
I'd be more interested in data around COCA (cost of customer acquisition), TLV (total lifetime value), etc. COCA is probably abnormally high for now, given recent scale ups, and TLV will take another year or two to start to project accurately.
I will admit, I am somewhat surprised by the size of their inside sales team (particularly his comment about the leaderboard "only" showing the top 20 people).
I also would not post full names like that, I know of at least one company that poached a couple of top employees from another company based on seeing them on a leaderboard during an office visit...
Sales usually works in a way where quotas ramp over 2-3 quarters. That said, it's also very common for companies to do 30-50% of their revenue in the last week of each quarter so I wouldn't be surprised if some reach 500-1000% quota attainment including the ones that are fully ramped.
Very unlikely because the connection and video stream is encrypted from the camera to Verkada cloud services, and from cloud services to the web client. They would need to get decyption keys from Verkada, or in non-legal manners. From an effort standpoint, it would be easier and cheaper to just replace the cameras.
More for informational purposes rather than a real life scenario I wonder what the legal aspects are if I purchase the cameras and own them outright. Can I then do with the cameras whatever I want as long as it is all contained within my own network? I would think that if someone has 200 or more of these cameras and gets tired of paying the yearly license fees that it could make monetary sense to pay to have the code decrypted. Based on the HID code being hacked on an ongoing basis I am pretty sure that this video stream could be compromised relatively easily.
Notable new hire - An account executive, Ryan Klasila, based in California "Responsible for developing the Lower Manhattan and Burroughs New York market":
Presumably, he means 'boroughs' (e.g. Brooklyn, Bronx, Queens, Staten Island and well Manhattan too). Considering he cannot even spell it and is based 3,000 miles away, he may have a rough time dealing with 'outer borough' people (source: born there).
I am curious how well the telesales model will scale, especially in NYC.
Here is another gem from the Verkada marketing team. Since when has Avigilon's VMS been $900 a channel? Why are the indoor and outdoor Verkada cameras a lot less then what they advertise on the website? Maintenance costs ?? Who makes this crap up?
It is a really strange comparison on the Avigilon side.
Considering Verkada's limited functionality at this point, ACC Core would provide the best basis of functionality comparison. That would be roughly $8,000 worth of licenses (MSRP), plus some kind of recorder hardware. For under $20K you can get an Avigilon Dell server with several TB of storage that would handle 100 cameras. We'll ignore the cost of network switches, since both products are going to require PoE switches.
Installation costs would be roughly similar, maybe an extra day of labor to install and configure the Avigilon server (I am being generous here), but that would add $1,000 at most, not $8,000 (Verkada's "Installation per camera" line, which appears to be a rollup cost, not a per-camera cost).
Maintenance updates cost seems way overblown, and as Mike pointed out, there is no annual license cost.
The Year 1 cost for the Avigilon system would be no more expensive than the Verkada system, and it would be substantially cheaper in years 2-x, due to no ongoing annual licenses.
If you stick with Verkada's initial line of $40K for an HD NVR, that would very roughly cover the cost of 4 24 channel HD NVR's (plus 4 extra licenses) with ACC Standard instead of Core (an upgrade, and with more features than Verkada). But then you eliminate the erroneous $90K annual license cost, and adjust the maintenance costs to be more realistic and you are still more cost competitive.
Can't comment on the Meraki number.
This looks like an unskilled Verkada new hire did the math, which seems to be exactly the case.
All this discussion, but comparing Verkada to Avigilon is like comparing a Yugo to an Infinity. I would expect the Yugo/Verkada to cost a tremendous amount less considering I would not be seen riding in a Yugo. Futhermore, a Yugo is unlikely to get me to the destination that I need to go to. I hope this post does not indicate my age.
If a Zastava Koral breaks down, you'll need some WD40, duck-tape and a hammer, and you're good to go (and you'll get lot's of experience doing this!). If an Infiniti breaks, you'll wait for hours to get towed, then spend $$$ replacing some obscure and seemingly superfluous, but apparently super-critical controller unit.
Nissan is firing 700 workers in Mississippi, sales falling 19% and is in bed with Renault - a company owned by the socialist republic of France!.
Let's not mention Carlos Ghosn...
You could also have picked a German manufacturer, but they are known for terrible quality, high price and cheating with emissions.
If you had picked a Lexus, it would have been a totally different story.
Update: Verkada has an Instagram promotion where they say (or at least imply) they have given away more than 30,000 YETIs for those that have attended their webinars:
We would estimate they have spent at least $500,000 if they have given away that many units as the retail price is $29.99, so that would be over $900,000 retail price, so even factoring in volume discounts it is a half million dollar plus.
What's interesting here is the amount of expense relative to their size. Axis maybe spends $50,000 a year on lanyards - Verkada has spent 10x of that in the same time period on cups. And it is material relative to Verkada's revenue, compared to Axis who is a $1+ billion dinosaur company.
It shows how aggressive Verkada is in spending on sales and marketing, which is an advantage for them so long as it continues to be sustainable / their VCs are willing to fund it.
I can believe it will be profitable. At your early stage, you are making assumptions about how long customers will stay and how much they will expand but given you locked them in :) I think the long term customer revenue will be quite high.
I would actually say what Verkada is doing is a lesson to rivals that they need to spend more on marketing. Sure, you are spending (relative to 'dinosaurs') a lot to get leads in the pipeline, but you can't sell without leads and if you can close them and can handle negative operational cash flow in the meantime, more power to companies like Verkada who do that.
Of course, everyone makes assumptions here. This is SaaS economics, not a hard science. Indeed, if you do not see that, you are blinding yourself to greater risk.
Your customer acquisition cost is based on assumptions of customer lifetime value and willingness to tolerate lower or higher LTV/CAC ratios.
In particular, you are making assumptions about (a) how long an average customer lifespan is, (b) how much profit you make per customer (e.g., what percentage of customers eventually enable the included but costly cloud storage backup) and (c) how much each customer expands their systems, etc.
I'll make a prediction to back up my point. By 2022, one of 2 things will happen:
(1) You'll keep the long customer lifespans and significant system expansions you are assuming but your conversion rate will fall significantly as buyers understand the downsides and competitors increasingly add in cloud connect / remote access standard.
(2) Your customer lifespans and system expansion will decline as you open up Verkada to stop the fall in conversion rates as the market matures and you need to be more competitive to win future new business.
That might be how most silicon valley companies do it but I think marketing should not make assumptions on expansion or anything based on futuristic assumptions in a, b, c. Especially (a) and (c) should be viewed as bonus. 1 and 2 are both long-term assumptions and shouldn't impact quarterly marketing strategy unless they materialize. Right now to marketing it's pretty clear that Verkada's product is substantially superior in ways that are pertinent to the majority of the market and this makes our job so much easier fortunately. We'll adapt as necessary.
Verkada spending at $1 million per year rate on Google adwords, according to LinkedIn profile of marketing employee:
Also, claims a $4+ million pipeline from that. It's possible though there is variation in how liberal salespeople are in claiming things are in the pipeline and what percentage will actually close.
Bigger picture, this shows how much Verkada is spending on marketing. Take that + the million or so on Yeti tumblers + likely millions per year on social media and you get a sense of a company taking the opposite approach to incumbents who still rely more on shows and magazines, etc.
Update: Verkada's headcount growth has stalled, according to LinkedIn:
After doubling in about 6 months, from just over 100 to over 200, in the last 2 months, Verkada headcount is flat. LinkedIn shows a handful of employees exiting but not a large number, most notable is Chris Dell, previously Global Director of Field Sales.
Also, now, for the first time Verkada has a VP of Sales, Ryan Bettencourt, who joined as an RSM less than 2 years ago and was promoted for the second time this month.
How Verkada continues to scale will be interesting as they try to expand into more segments where their product / market fit may not be a strong (e.g., segments that find closed systems to be red flags, require integrations, etc.).