Samsara Emerges as Leader in Industrial IoT
No matter how innovative an idea you think you have, that and $3.50 might get you a small drip coffee at Starbucks. Ideas are worth nothing. Execution is everything. That’s why we’ll often see numerous startups trying to tackle a particular problem with technology. A few years later, a leader will suddenly emerge that hasn’t been at it for all that long, but has managed to dominate their market by growing exceptionally fast. Imagine founding a company in 2015 – just four years ago – and today having 10,000 enterprise customers. Where would you even begin to start if you wanted to scale a company that fast? At a minimum, you would need an experienced leadership team that knows how to execute and has access to a deep pool of capital. One industrial Internet of Things (IoT) startup called Samsara has that and a whole lot more.
Samsara – A Leader in Industrial IoT
Founded in 2015, San Francisco startup Samsara has taken in $530 million in funding so far with more than half of that closing last month in the form of a $300 million Series F round. That latest round values Samara at $6.3 billion making them one of the 40 most valuable startups in the world according to the CB Insights Unicorn List. That’s some pretty impressive growth considering that their previous round of $100 million in December of last year valued the company at just $3.6 billion.
The latest round will help the company hire an additional 1,000 employees in the coming year bringing their headcount to over 2,300 people. If the hiring plan comes to fruition, that means they’ll have – on average – hired 1.26 people a day for five years straight. This past year, Samsara also doubled their customer base to over 10,000 customers. Imagine onboarding 5,000 new enterprise customers in a single year – about 13.7 new customers a day. These impressive numbers point to a company whose leadership team knows a thing or two about execution.
Update 05/22/2020 – Samsara has raised $400 million at a lower valuation than their previous funding round (also known as a down round). According to Pitchbook, they also had layoffs affecting 18% of their staff which should help that money go further.
From 10 to 10,000 People
One of the investors in Samsara is Elad Gil, an acclaimed Silicon Valley entrepreneur who also acts as an adviser having worked with firms like Airbnb, Coinbase, Checkr, Instacart, Pinterest, Square, and Stripe. (Mr. Gil is also the co-founder and chairman at Color Genomics.) His book “High Growth Handbook: Scaling Startups from 10 to 10,000 People,” helps explain how you might scale a company like Samsara so quickly. The job becomes a whole lot easier when you have founders with a successful track record of scaling technology businesses.
The founders of Samsara, Sanjit Biswas and John Bicket, built their previous startup from the ground up, an enterprise Wi-Fi startup called Meraki, and sold it to Cisco for $1.2 billion in cash in 2012. On the board of Samsara sits another man who knows a lot about growth, Marc Andreesen, a famed Silicon Valley investor whose reputation precedes him. You can bet these sorts of people have thousands of ideas floating around in their craniums, but they’re building wealth because of their ability to execute.
What Does Samsara Do?
Samsara’s corporate website divides their business into two broad areas – fleet management and industrial automation – both of which provide the company with 100 billion sensor data points to analyze each year.
Samsara provides a complete software fleet management system along with the hardware needed to connect everything. Six months ago, they released a third-generation AI Dash Cam that is now helping thousands of fleets surface and analyze millions of driving incidents while providing real-time coaching so that drivers can learn from their mistakes. The tools have helped food distributors reduce accidents by 50% and trucking companies build training programs to reduce harsh braking by over 80%. But it’s just a small part of a much bigger platform.
While some fleet management solutions focus on specific niches like vehicle maintenance, ELD compliance, fuel efficiency, or figuring out the traveling salesman problem, Samsara’s offering tackles all these areas and more.
They also provide their own hardware like door sensors, environment monitors, and even solar-powered gateways for tracking high-value assets like tractor-trailers.
Selling to enterprises becomes much easier when your product reduces their costs and liabilities. The website is full of success stories that demonstrate how the product pays for itself. Some examples below highlight how the breadth of platform features stand to benefit each client differently based on their needs:
- With dash cameras and AI-based driver coaching software, Simco Logistics reduced their distribution fleet’s accident rate by over 50%, reducing insurance premiums while helping their drivers come home safely.
- Dohrn Transfer Company saw an 88% reduction in harsh events after turning on gamification in the Driver app and a 50% reduction in idling after implementing a coaching program based on Samsara dashboard reports.
- Cash-Wa Distributing saw a 30% decrease in customer credits paid for improper-temperature claims and a $60,000 annual savings on cellular data plans with Samsara’s built-in WiFi hotspot.
- Moore Food saved over $250,000 after a major accident occurred in which their driver wasn’t responsible. Evidence was produced from dash cam footage in minutes.
- Leading UK-based construction company, Collins Earthworks, uses Samsara’s fuel usage reports to calculate exactly how load weight influences fuel usage on trips, leading to better cost estimates for loads.
- The City of Fort Lauderdale decreased fuel consumption by 5% for their 1,700 vehicle fleet, achieving the carbon emissions impact of planting nearly 20,000 trees while saving taxpayer dollars.
The last example shows how we can save money, save the environment, and make institutional investors wealthy all at the same time. (Turns out that economically viable solutions like Industrial IoT will have a much larger impact on our environment than waving signs and begging for subsidies.)
Even though the founders of Samsara may have sold their last company to Cisco, all is fair in love and war. We were looking to see if Cisco offered their own fleet management tools and noticed how both Samsara and Sprint are buying ads on those keywords.
This is a practice that you’ll often see, cheeky as it is. Google makes money off selling ads to the highest bidder, and this means that your competitor can buy or outbid you on ad slots that appear when someone searches for information about your product. If Samsara can get in front of giant slow-moving companies like Cisco and Sprint, they could be setting themselves up for a future exit from the very companies they compete with today.
The next business segment for Samsara is “industrial automation” which is a topic we discussed before in our article on What is a Digital Twin and Why Should You Care? IoT at scale, Industry 4.0, a digital twin, a flexible factory, call it what you will, it’s the idea that all physical assets utilized by your company are traced and emit delicious big data that you can feed to some hungry machine learning algorithms to ultimately lower costs while increasing output. Saving money by moving your call centers to “emerging market centers of excellence” like Mumbai or Manila is so 2010. Now, it’s all about industrial automation.
“Samsara is a complete platform to achieve the benefits of Industry 4.0 without the complexity,” says the company. Their industrial automation platform comes armed with the usual suspects – machine vision solutions for production environments, a hardware/software asset management system, cold chain environmental monitoring, and real-time machine health monitoring which puts them in competition with a company called Augury we covered in our article on How Predictive Maintenance Can Use Machine Learning. They’re also going up against a whole slew of startups that we discussed in our recent piece on IoT Inventory Management Uses AI for Supply Chains.
Samsara seems to talk about fleet management a lot more than industrial automation, but the strategy makes sense. If they have 10,000 clients and half use fleet management tools, it’s pretty likely they’ll be interested in purchasing industrial automation solutions, especially if they’ve been saving some money. Once you have 10,000 enterprise customers, it’s your CRM system that starts to become very valuable for up-selling additional solutions and squeezing out smaller competitors with clever pricing strategies.
Samsara is a great example of how quickly a company can grow and capture market share through exceptional execution. Sure, they could be selling a $2 product for $1.50, but based on the case studies they’ve put together, it’s likely that profitability isn’t that far away for the company. “Samsara is targeting a massive opportunity — operations represents over 20 percent of GDP,” says their investor Hemant Taneja, managing director at General Catalyst, who notes that the company has created multiple product lines addressing diverse industries and geographies in less than five years while “also executing at a pace that I’ve rarely seen before.” Samsara is a great example of what all venture capitalists know well. No matter how great your pitch deck looks, it all comes down to whether or not they think you – and your founding team – can execute on it.
A tech company founded by a self-made billionaire has an acceptance rate of 0.41%, making Harvard’s acceptance rate of 5% look like a cakewalk. They've deployed more IoT sensors than anyone else, and they're processing 1.5 million transactions a second. It's one of a few IoT stocks we're invested in right now. Become a Nanalyze Premium annual subscriber and immediately access our entire portfolio of more than 30 tech stocks.