In a recent exclusive with Josh Constine of TechCrunch, Verkada announced its latest round of Series C financing which will accelerate expansion across product offerings and team growth. While the company is only 3 years old, it has quickly become the trusted security provider for over 2,500 organizations--25 of which are Fortune 500 companies.
In this interview, Filip Kaliszan, CEO and co-founder of Verkada, shares how Verkada has disrupted the enterprise security industry and why the company is committed to making every commercial building software-driven by 2025.
Philosophically, why did you want to build Verkada?
First, all four of the co-founders are engineers, and we love creating new products to solve big problems. I always had a dream to build what I would consider an impactful technology company.
Secondly, a few years ago, both Hans and I experienced the challenges with existing enterprise video security products, but from different angles.
In Hans’s case, he had a break-in at his previous company in 2012. When his team went to the security system to figure out who had taken 50 iPads, he found that the video hadn’t been working for months. When he shopped around for a better solution, he discovered there wasn’t a product on the market that would effectively solve his problems. A few years later, when he was looking around for a new business idea, he went back and tried all the enterprise security products again. Nothing had changed! It’s unusual to find a category that is both A. huge, with many people needing these systems, and B. has such a clear and obvious need for better products. This insight got him excited.
In my case, it was 2012, and I had just sold my first company. I bought a house and I wanted to install security cameras both inside and outside. I wanted to buy the best, so I decided to buy a full-feature enterprise solution to put on the perimeter of my house. To my great disappointment, even though these systems cost a lot of money, the product wasn't particularly good. Much of that view was colored by me being a software person forced to use a hardware-based solution.
The “best” enterprise system was insecure from a cybersecurity perspective. It was clunky to use and didn't meet my needs. This was the first spark in thinking about video security and the enterprise. The market lagged behind the progress seen in the consumer space, where someone could buy high-end cameras with cloud-based software to protect their home.
Fast forward a few years, and we were astounded that this same antiquated technology I remembered buying when I installed cameras in my house back in 2012 was still being sold to airports, hospitals and schools. That seemed like a big problem, and that's what we went after solving.
Where did you and your co-founders come from / What were you doing before this? / What made you qualified to start this company?
I have three co-founders alongside me at Verkada. Two of them, Benjamin and James, started my previous business with me. We started CourseRank, a consumer software venture, while still at Stanford. We learned a ton about building a web application, and we sold that company to Chegg.
My fourth co-founder Hans previously founded a company called Meraki, a networking business, which got acquired by Cisco. Hans brought the expertise of creating hybrid hardware/cloud software products for the enterprise market, as well as building sales and marketing teams at scale.
So among us, we felt like we had the expertise needed to build great software, hardware and an enterprise market strategy, coupled with the fortitude required to create something out of nothing.
How did you build out your solution to the problem? What are the main features/functionality of the product?
Today, every other company in this industry builds cameras. And that hardware is part of a more substantial hardware-first security infrastructure.
Our approach is entirely different. We started with identifying the customer need: “how can I best protect my building and enterprise?” From there, we designed a software-first solution that happens to also have a hardware component.
How do you make money? / How do you sustainably achieve growth? / How many sales/active users do you have? Any other core metrics around revenue and growth?
Our mission is to be the essential physical security software layer for every building, and the foundation of a larger enterprise IoT infrastructure.
Currently, our technology team is creating solutions that address one of the top concerns of today’s businesses: how can I keep my assets and employee safe. We started with security cameras because it solved an immediate need, and the technology was woefully behind. We make money by selling both hardware and cloud-based software licenses.
To achieve growth, we’ll need to move faster and out-innovate our competitors. We’ll do that by continuing to move into adjacent product lines and markets. We’ve built an efficient sales and marketing engine, and the efficiency of that team will only increase as we add more products that cater to the needs of the same buyer. Ultimately, our platform and products will be the foundation of a broader building ecosystem and create opportunities we can’t envision today.
However, the core reason we’ll succeed is stellar engineering. That’s where we’re investing today. And that’s what takes us to a multi-billion dollar business.
What are your retention metrics? What causes people to cease using the service?
For today’s businesses, security is not an option - it’s a necessity. Unless a customer has a compelling reason to switch to another platform, Verkada is exceptionally sticky. That’s due mainly to the nature of our system. With security infrastructure, there’s a significant upfront commitment from the customer: she has invested both in the hardware and the labor to physically install a system throughout her buildings.
As long as we continue to deliver a great software experience, we’re unlikely to see churn. Once the hardware becomes obsolete, which is generally in the 5-10 year time frame, we’ll need to make sure we’re ready with upgraded hardware. At that point, we should have a whole suite of physical security products, all integrated into our Command platform, that will help differentiate us.
What's your competition from the status quo, direct competitors, and incumbents who could enter the market? / How are you differentiated from them in product and target market? / Why are you better?
Our vision is to build products that enable the protection of a company’s most valuable asset - it’s people. And while we have a lot of competitors, very few are building security products and software the way we are. Most of them are very similar to each other in that they were made decades ago and use on-premise servers at their core. Because we’ve built the product line from the ground up, we are 1. Cloud-native 2. Mobile-friendly 3. Use the latest AI/Computer Vision techniques.
We help security professionals to do their job more effectively by saving time and easing frustrations during investigations. For example, finding specific video clips they need is faster using Verkada. With our tools and analytics, we can immediately show them all the video containing a particular person of interest rather than manually searching hours of footage. Once they have footage they need, they can share the link with their internal team instead of having to download an mp4 file onto a thumb drive. They can also easily view all their video feeds across all their buildings on their iPhone without any funny VPN tunnels.
With most companies increasing their investment in security technology and increasing their visibility into potential security risks within their organizations, the amount of video footage being created is expanding exponentially. Quickly and easily identifying threats in a sea of video footage is a hard task for most people. Our platform can use AI/machine learning to recognize patterns and behaviors that are out of the norm in real-time. This guidance enables security professionals to do what they’re best at - taking action.
And our vision of protecting people extends to their privacy, not just their physical safety. Verkada is designed with security in mind out of the box. The reality is, most enterprise video today is not. So even if a company's cameras are working, they have to ask themselves if the footage is safe.
What are the next steps for the company? Adding specific functionality? What will you spend the raised money on?
We plan to continue with our vision of building products that enable the protection of a company’s most valuable asset - it’s people. If we do that well, we’ll grow Verkada into the premier physical security company in the world. We know that sounds ambitious, but we think it’s achievable.
We started with cameras, a known problem. This spring, we’ll ship our first line of access control products. This is a new announcement we’re making today. We're already beta testing this product line with many customers. We believe that the seamless integration of these different systems -- access control, cameras, eventually other systems in buildings -- in a single, secure software platform will be the ultimate differentiator for Verkada in the long run.
What is the biggest risk for the company? What is most likely to make you fail?
To answer that question, I think we first have to define what success and failure look like for the company. Our goal is to build an industry-leading, long-lasting technology company. To us, anything short of that would be a failure. The reason we think we can accomplish this big goal is the problem space we're solving is just absolutely giant.
To achieve that long term goal, we need to build the most amazing engineering team and deliver products quickly while expanding into adjacent markets alongside cameras.
Of the known risks, it’s probably execution. Our business is built upon great people in every area. We need to be able to find great people and organize them so that we don’t become slow. Security is a business where if you slow down, you’ll lose your edge pretty quickly.
What adjacent markets could the business eventually enter to grow even bigger?
We think a lot about building systems in the context of security. If you think about the global spend on the protection of people and assets around the world, including physical security guards, it's a $100 billion+ per year market. We think there's an enormous opportunity - not necessarily replacing and disrupting the market - but by empowering the people (security professionals, IT managers, CEOs) entrusted with the responsibility of protecting employees and customers.
Safety is going to be a continuing concern. In the future, our vision gives us the flexibility to expand into many other areas. For example, Verkada might be protecting employees and customers by cleaning the air, warming the building, locking the door, or sounding an alarm when there’s smoke in the building.
If we’re successful, most commercial buildings will run on Verkada.
Why do you want this to be your legacy? Why won't you quit?
There are two parts to this answer. First, as founders, we’re passionate about technology and building technology products. That's what drives us, and we're going to keep doing it whether we're solving this problem or another problem. That's just who we are.
Secondly, why solve this problem and not a different one? The problem space we're tackling is both gigantic and meaningful. Safety's a massive concern in the world, and it’s an area that we feel we can be improved with enhanced technology and usability. It’s unfortunate that security is as significant of an issue as it is in the world, but we think that we can make a positive impact. Can we stop crime altogether? No, but if we can mitigate even some outcomes, that's a significant step in the right direction.
Some critics see you as much more of a traditional security camera startup than a software company. What makes you more of a tech company?
We have about 60 engineers, over 50 of whom are software engineers. All of our differentiation is on the software side. Our primary focus is on computer vision, mobile web, apps, firmware, and so forth. Our customers like our system because it has incredible software, and that will continue to be the foundation of Verkada.