There are some very compelling examples of established markets being transformed by a single innovator. Think about what Amazon did for shopping, what Netflix did for movies and, in the b2b space, what ServiceNow is doing for back office workflows. The IoT industry is more than 40 years old, but until recently most companies that strapped a device to a physical asset got little more than some binary data with almost zero value. Samsara, a new entrant to the enterprise tech space, is poised to change that.
Although most enterprise applications can trace their roots back to materials planning software and the need to support manufacturing operations, the overwhelming majority of investment and development in enterprise tech has been geared towards white-collar workers in back office environments.
Billions of dollars have been pumped into transforming finance operations, improving HR functions and revamping sales channels with virtually every effort to ‘digitally transform’ focussed on workflows in the office rather than on the frontline.
‘Business process redesign’ are the bywords for SaaS vendors who promise to revolutionise an enterprise’s fortunes by using an ERP to close-down accounts a few days quicker or by connecting customer data in a CRM. While these ‘behind the scenes’ technologies are an important component of the overall transformation journey, it has always surprised me that so few customers start with the part of their business where there is the straightest line to ROI – their physical operations.
Sure, if you make a finance process more performant you will get greater visibility into the data and that will help to make better decisions. But where is the greatest opportunity to drive efficiencies; in an invoicing procedure or in a global transport network that has hundreds of moving parts spread across countless geographies?
It is the physical component of the enterprise where there is the most potential for technology to have an impact.
Add to this the current macroeconomics of supply chain disruption, soaring energy costs and a concerted effort to drive sustainability and it becomes clear that for organisations in all but a few industries, it is the physical component of the enterprise where there is the most potential for technology to have an impact.
One tech vendor that has seized the budding opportunity for this underserved market is Samsara – a relatively new company that floated on the NYSE in December 2021, just six years after its inception. It raised more than $800m in the IPO and was valued well above its high estimate at nearly $12bn. Trading under the appropriate ticker of ‘IOT’, Samsara uses a mix of hardware and software to track, monitor and analyse physical operations with IoT and GPS sensors, AI-infused cameras, motion detectors, a connected operations cloud and an app.
Samsara already has 15,000 core customers with more than 800 spending $100k per year and is generating in excess of $550m ARR by servicing an industry that it estimates has a TAM of more than $50bn. To find out why Samsara is different to the many other IoT companies already in the market, I spent the day with Sanjit Biswas, CEO, at their new London office.
“We have the capability to make physical operations more efficient, safer and sustainable,” said Biswas as we kicked off the interview.
“These three challenges are not distinct from each other because they all are data orientated. If you combine the right technology and the data you can make a meaningful impact on all three issues.”
Sanjit Biswas is an academic and an engineer by trade. He founded his first business straight out of MIT and later sold it for more than a billion dollars to Cisco. That company, Meraki, designed and built the original concept of WiFi (before it was called WiFi) and popularised a ‘Free the Net’ movement in San Francisco which delivered access to the internet for citizens and businesses. Today, Cisco Meraki is used globally by the world’s biggest organisations for resilient and secure cloud-enabled networks.
After selling up and taking a short hiatus from work it wasn’t long before Biswas went back to the drawing board and started to look for inspiration and a new opportunity – he found it in the unlikely arena of videogaming.
My business partner and I had already started thinking about another venture. We were really interested in industrial workflows and how the world of physical operations was connected but it wasn’t until I caught up on 10 years of missed videogaming that I started to appreciate the possibilities. Meraki had taken a decade of my life and the last time I had seen a video game the graphics were really bad. The next time I looked I couldn’t believe how advanced they were and in a strange way that gave me a new lens to look at what was possible. Because of my computer science and AI background at MIT I started to think about how these advanced technologies could be used on cellular networks and what other applications the technology could have. I’m an engineer at my core and I love the idea of solving problems and using whatever knowledge and expertise I gained along the way to basically try to have some impact – that’s what motivates me.”
The topic of motivation is always one that I am keen to explore whenever I meet an exceptionally wealthy individual who decides that beach life isn’t for them. What inspires a billionaire to go back to the drawing board and start over? What lessons can be carried forward from previous experiences? And what pillars do you build a new company around when you have a blank canvass to start from?
“We have the capability to make physical operations more efficient, safer and sustainable.”
Samsara has grown rapidly from a start-up to a public company with a huge valuation in a very short space of time. There are some sharp lessons in the market for any new entrant to consider and designing the blueprint for an enduring brand is very different today than it would have been 20 or even ten years ago. Founders who wish to build a company that can grow like a unicorn and prevail over the long-term have several pitfalls to avoid and certain characteristics to galvanise. One of the biggest challenges for any hypergrowth organisation is to embed guiding principles from the start so that when everyone is running at 100 miles per hour there are some anchors to hold it all together and to focus teams and individuals on the mission.
“One of our core values is that we build for the long-term. Being public means we have this X-ray of our progress every 90 days, but our strategy is much more focussed on longer term objectives – like embedding customer success in everything that we do, around building our culture and creating an environment for teamwork and collaboration. It takes time to build the right kind of company – look at the likes of Oracle and SAP – they are 40 or 50 years old and see the impact they have on the world today. We invest and plan for a longer term future so we can have the same kind of impact in years to come. These are all things we took away from our previous journey. And now we have thousands of people focussed on a single mission built around these fundamentals.”
I’ve heard the same story several times before but not often with the same level of quiet conviction. Biswas is an understated man, untypical of a tech CEO and that makes a refreshing change. I often think that it’s very easy to be undone by your own success when building a fast growing business – there have been plenty of examples over the years – but that’s not a concern with Biswas and Samsara. His considered nature and thoughtful responses leave me feeling that the story is authentic and the future is bright.
IoT market and customers
Before we get into the Samsara playbook it’s important to make a distinction between the application of its solutions and the chequered history of the IoT industry. First off, some of this isn’t new stuff – ever since Coca-Cola put a sensor on a vending machine in 1982, we have found more and more homes for smart sensors to collect data. The principle of putting IoT devices on physical assets is a mature concept and estimates range from 10 billion to as many as 35 billion such gadgets are currently in use. That figure is projected to rise to as many as 75 billion by 2025 but the plain fact is that no one really knows exactly how many are in circulation – and that is inherently the problem.
“I’m an engineer at my core and I love the idea of solving problems and using whatever knowledge and expertise I gained along the way…”
By far the biggest criticism of the IoT industry by the early adopters of connected technology was they simply collected too much unusable information. Millions of tiny gizmos were strapped to lorries, elevators, cranes, and diggers – even coffee machines – and they all collected binary data that was largely geared towards identifying breakdowns. Whilst knowing if or when an asset was likely to fail did deliver some benefit, the reality was that most machines are pretty robust and the quantity of data collected just to prevent the odd breakdown simply didn’t justify the tsunami of superfluous information. Worse still, all that inordinate data sat in a silo which was disconnected from the broader enterprise. As a result, millions of IoT devices have been switched off or lie redundant – not because they couldn’t collect data, but because the organisations collecting it didn’t have the tools or resources to interpret and act on it.
“You can think about IoT from ten years ago like a huge bucket of Lego bricks with no instructions. They had the potential to be built into something special but you had to be a sophisticated engineer to piece it together. Customers who first used IoT devices didn’t have the time or resources to assemble everything into a useable form. That’s where Samsara is able to step in and provide these applications on a platform where customers can just plugin and get the visibility they need.”
Whilst some of the hardware is the same, it is the way that it is connected through the Samsara Connected Operations Cloud that changes the game completely. Encompassing video-based safety features powered by AI, vehicle telematics, equipment monitoring, site visibility, infrastructure workflows and an app that has a developer community – the Samsara Connected Operations Cloud delivers a holistic platform that can conceivably connect, monitor and optimise virtually any physical asset or process. Samsara has taken a collection of existing technologies and packaged them into a compelling cloud-enabled solution. But it wasn’t always that way, Biswas told me candidly.
“We deployed our first beta product for a cheese making company in the hope that we could help prevent their fridges from breaking down. But it turned out our hypothesis was wrong – the fridges never broke down. Then we worked with that customer to understand what the weakest point in their supply chain was and discovered there was a far better way for us to use our technology.”
That customer now deploys Samsara technology across its fleet of chilled distribution trailers, it uses wireless sensors to give real-time data when cargo doors are opened, it utilises vehicle and asset IoT gateways to provide to-the-minute GPS data and benefits from smart tools to predict when failures may occur and then uses the same intelligent technology to automatically backfill routes that have been disrupted.
“One of our core values is that we build for the long term…like embedding customer success in everything that we do, around building our culture and creating an environment for teamwork and collaboration.”
Another company that has seen huge benefit from Samsara technology is Dohrn, a US warehouse and logistics company that epitomises the sweet spot for this solution. Remember my earlier comment about a straight line to ROI? Dohrn saved $500,000 in year one by optimising fuel efficiency and a further $200,000 on cellular data charges by adopting Samsara’s built in WiFi. That’s the kind of immediate return that is very rare when investing in enterprise tech.
The IoT industry has promised much and delivered very little for several decades. There has been a real sense of a solution for a problem that didn’t really exist – or at least it was only part of a solution for a problem that hadn’t been fully realised. Whilst the concept of connecting assets in physical operations has always had merit, it wasn’t until these disjointed touch points could be harmonised in a single ready-to-go platform that any value could be realised from the data.
Samsara’s proposition follows a path that many other very successful enterprises have adopted. It’s not usually the inventors that change the world, it’s the people who know how to put the invention to use that leave a lasting impression. If you think about the most successful global brands – they didn’t invent their markets, they took an established concept and made it better. In a similar fashion, Samsara has collected up some incoherent tech that has been kicked around for decades, augmented it with their own cloud platform and harmonised it into a solution that is fit for modern commerce. Instead of selling the hardware, the platform and the applications as separate commodities, Samsara is able to bring an end to end solution to the market that has some really interesting use cases and delivers the holy grail for enterprise tech vendors – visible ROI.
Samsara is able to bring an end to end solution to the market that has some really interesting use cases and delivers the holy grail for enterprise tech vendors – visible ROI.
Biswas’ timing is brilliant – if not also a little fortuitous – as global economics are demanding that organisations change how they operate, especially in low margin, energy sapping industries. The emphasis is on how we move things around the world in an efficient, safe and sustainable way and Samsara has a solution that makes investment into optimising these processes very compelling.
It’s no surprise to see several ex-ServiceNow people in the Samsara fold. While the two propositions are very different there are similarities in the respective missions. ServiceNow has tackled the way that work flows across a back office, connecting disparate systems and providing a canvass to coalesce previously disjointed data points. If Samsara can emulate half the success that ServiceNow has enjoyed with a mission to do the same for physical operations, there will be a bright future ahead for this unique company.