Last week, top security industry executives gathered in New York City for the Security Industry Association (SIA)’s annual Securing New Ground Conference. The event featured interesting panel discussions and one-on-one executive interviews with execs from the manufacturing, integration, distribution, and security end-user communities.
One executive interview that garnered attention was with Filip Kaliszan, the founder and CEO of the Verkada. Here are some highlights of the on-stage interview, conducted by SIA Senior Director of Marketing Geoff Kohl:
Kohl: It has been eight years since you founded Verkada...It is probably fair to say that the Verkada of today isn't even the same Verkada as three to four years ago. What has changed?
Kaliszan: It really blows my mind how quickly stuff changes. I joke that it feels like yesterday we were in my living room, hacking together on cameras. Some of that is still true. So, I still spend a lot of my time hacking on cameras, and building product.
But yeah, we've grown from the four of us in my living room, to 2,000-plus people worldwide. And I think it's very interesting how much change we've seen in the last eight years. We were just having the debate about cloud, and what is cloud, and how meaningful it is. I think that discussion was different eight years ago. I think if you look at the market studies, the percentage of the market that's cloud is growing super rapidly. And I think, to some degree, we're driving that.
How did you expand from video into a more multi-solution approach?
If you go all the way back to the beginning of the story (in 2016), where we were sort of looking at what business to get into before we started Verkada, one of the things that I hacked around with was a wireless door control system for a consumer lock. Fast-forward to 2019. Verkada is doing well. Cameras are selling. We're growing fast. I pulled a few of my engineers, and we started hacking together on access control, because we thought it would be fun. And so, we put something together in our own office. We tied it to the badge readers that we had part of our building. And we were like, "Wait a minute." When you tie cameras and access control, and you make that integration really seamless, something magical happens and it's pretty cool.
Then we realized, "Hey, actually some of our customers want it." And so, we turned it into a real product line. That story resonated with the investors. But more importantly, that story really resonated with customers. That was kind of the very natural way that we happened upon the platform strategy, which, of course, then became the next phase of our company's growth.
What about the debate of openness vs. that end-to-end, or I think what you call a unified approach?
I think there is this assumption that we are building this closed ecosystem – that it is closed vs. open. It wasn't ever like that in our mind. And when I say ever, I mean from literally my living room back in 2016. Frankly, we wanted to find a way where we could solve the problems with just software. We couldn't find a way to do that effectively. What we heard from customers in 2016 was they were tired of the integrations, they were tired of things breaking. They want something that works out of the box.
And the way that we thought we could deliver that, was to just own the whole ecosystem. And that was a really tough decision, by the way. It wasn't like, "Hey, whoop-de-do, we're going to build a camera." It's a pretty big undertaking. We built the end-to-end solution. I think we've proven that it works for the customers. Talking about integration, I think where it matters a lot is the large high-end enterprise customers who are doing a lot more with their systems.
The small retailers, they want something that’s turnkey, it works. Boom, it's easy. They can use it. They don't have the budget, necessarily, to invest in the work that's needed to do those integrations. But then we do see it obviously on the high-end of customers, and we're excited about it. I mean, we're continuing to open more and more API, and try to be more integrated in what's out there.
So, looking forward maybe three to five years, where does that take you, to a more open product line or a divergent product line?
Totally. I think it's the same product line. I don't think it's a divergent product line. I think what I expect to happen is, again, it will be a different answer for a different type of customer. For smaller customers with simpler needs, I think the turnkey solution is great. If you're talking about a large city, or a giant campus, thousands or tens of thousands of devices, I think we'll see more and more integration.
Overall, the end-to-end strategy, the platform approach, any impact on the integrators and your channel partners?
I think it was very tricky for us at the beginning, because we came into the world, and we had an approach which was, frankly, very different. We said, "We're cloud, and cloud-first." And that's not how the industry was. We said, "It's not interoperable. There is no settings. You just plug it in. If it reaches the internet, it works." We also said, "Hey, we're going to store the video on the edge, on solid-state media." And everyone thought it was crazy, and it wasn't going to last.
It lasted. It works. We were driving change, and there was a lot of risk, and I think it's natural to resist that risk. For the first few years of the business, it was very hard for us to actually find partners to work with us. But we always knew that working within the ecosystem is critical. The reason for that is, it's all about the integrators. It's all about the distribution channels. That's who has the most touchpoints with the customers. Verkada is only ever as successful as that relation with the partner, because the end-customer consumes our product and the software that we provide with it, but also the experience that the partner and integrator is doing. That ranges from, "Hey, where do I place my cameras?" Expertise on that, getting on site, doing the install, managing it, doing it for years and years.
Audience question: On the revenue share with the systems integrator, how does Verkada work, other than a margin on the product?
Kaliszan: We transact through the integrator, always, right from the beginning. So, we find and build the relationship with our customer in three ways. At the beginning it was two ways. At the beginning of the company, we had no partners. So, we would go out and find customers, and we would do that by means of our marketing team, and then by means of our sales team reaching out, cold calling, that kind of thing.
Over time, we now have three sources of customers. So, those two that I mentioned. And then the third is, of course, some of our partners will bring us deals as they happen. But in 100% of cases, in all of those cases from sort of the early days of the company, the customer always transacts with the integrator. And so, that's kind of how we see that relation.
Yeah, I think, look, some of it is the margin on the product that the integrator can make. But I think, frankly, in many cases, it's additional services that the integrator is selling to the customer. And I think particularly, as we shift into this era of deeper and more sophisticated business integrations, I think many of our partners are seeing that as a great opportunity. Because ultimately, the customer needs someone to do that for them, and we're clearly not the company that's going to do that. And so, that's where the relation is symbiotic.
