Many people will write the history on why Ring became an enormously successful company and why it became a real-world unicorn in a world when many startups are anointed that merely on paper. Since I had a ringside seat to the company before it really existed all the way through the end I thought I’d offer my version and what I think it means for our future.
If you don’t know, Ring offers home security products that started with a video doorbell, then video floodlights, outdoor stickup cams and now in-home security features that innovate in-home security alongside outside protection. It is an LA-based company that was recently acquired by Amazon, which you can read more about in this incredibly well-researched article.
But why did Ring succeed when the entire market kept saying that Nest was going to be the winner? Why did Ring become an enormous success when it produced a hardware product and the market keeps saying, “hardware is too difficult to scale?”
Here are my views …
1. Founder, Founder, Founder
At Upfront we talk regularly about how 70% of our investment decision in Seed and A rounds is the quality of the entrepreneur and 30% is the quality of the idea. Of course we have to believe that there is a viable market, a differentiated product offering and a chance to build something defensible but if you do those basics right you still get crushed without an amazingly talented founder.
The minute your company reaches its peak acceleration in terms of growth is when all of the sleeping giants wake up to compete with you and will spend massive amounts of money to keep you from capturing a growth market and other talented entrepreneurs will raise large amounts of venture capital as people start to see value in the market.
Jamie Siminoff is not only one of the single best true entrepreneurs in Los Angeles, he’s amongst the best we’ve worked with in the country. We first met Jamie when had had a startup called Simulscribe, which transcribed voicemail so you could read your messages rather than listen to them. It was a novel concept well before the major players did this for you. He launched a business called Unsubscribe, which helped consumers deal with the deluge of email lists that one gets signed up to and get rid of them all. Throughout all of this we saw a tinkerer, a problem solver and a completely obsessed leader who was competitive and wanted to win.
When Jamie told us he was going to build “Doorbot” (the name prior to Ring) and he explained to us that it was a video security doorbell sold at mass-market prices to bring security to homes that have never been able to afford them — we were sold on the concept immediately. We funded the seed round, the A round, the B round, C round, D round and E round. We would have gladly followed Jamie (and Josh Roth, the CTO who is phenomenal and we’ve also known for a decade) right through an IPO if we could have. Jamie is truly a visionary and a focused executioner.
Were we SURE that consumers would buy a video doorbell? We were CONVINCED Dropcam (then Nest) wouldn’t mobilize a competing product quickly if it did sell? No. We weren’t sure. But we were sure that Jamie would be maniacally focused on improving the product, marketing the dream to consumers and out-maneuvering the slower-moving competition. He did all of these and more.
I should also say a huge thank you to my partner Greg Bettinelli, as Ring was amongst the first deals he ever funded and along with GOAT, thredUP and some of the other great deals he’s led for us — his insights and track record are looking stellar.
2. Single-purpose beats generic
One our biggest beliefs about Ring and frankly many of the other companies we’ve backed in computer vision (Nanit for baby monitors, Osmo for kids education & games, Density for people counts) is that focused computer vision beats generic use cases. Sure, general purpose cameras or laser tracking can be put up anywhere in your house, business or yard but they don’t solve specific problems well so eventually consumers stop using them.
With Ring it became your doorbell so of course you always use it when someone’s at your door. It has computer vision that sets off a motion detector when somebody passes in front of its field of vision so that you know when there’s somebody in front of your house even IF they don’t ring the doorbell. Importantly you can set “zones” so that it only triggers when somebody is only 10 feet from the house in front where perhaps cars might otherwise trigger the system whereas you can set the left and right field of vision to 30 feet so that intruders are picked up more quickly if they’re in a zone they shouldn’t be in (you can see some visuals in this old TechCrunch article from 2014).
Generic cam’s could never match the security use case as well as Ring could and when consumers went online or to a store to find our product the offering was very clear. Where you see cameras on Amazon and think “cool, but what would I really use it for?”— you would immediately understand a video doorbell use case.
Then Jamie built “stick up cams” to allow you to protect the perimeter of your house and floodlight cams for night time that screwed into existing floodlight sockets, making installation a piece of cake.
3. Consumer value
Once Jamie realized that he could not only sell tens of millions of dollars of home security cameras he also realized that he could get customers to sign up for a monthly subscription to keep the videos in storage in the cloud and review them after the fact. Jamie’s ethos led him to price at just $3 / user / camera / month at a time when traditional home security companies’ monthly fees were so unaffordable. He really thought about helping middle-income families. We had this discussion many times and with Jamie it wasn’t a marketing slogan — it was a personal mission.
A critical component to building a successful business is being able to capture ongoing revenue from consumers who feel they are getting incredible value and continue to feel good about paying. Having recurring revenue allows you to keep the original purchase price down, which in turn increases sales. In addition to the service where you can watch old videos being very compelling, the fact that Jamie has provided this service at such an affordable cost has been a large part of the appeal.
All of this was deeply rooted in Jamie’s desire to deliver consumer value for middle-income homes across the country. On numerous occasions I heard investors suggest that there was a much higher price point that consumers would pay but Jamie would have none of it. He believed that if he sold low-cost, affordable security solutions he not only would build a mass-market company but he would also earn the right to sell more future products to existing customers, which is always more valuable than signing up new customers.
Ultimately, I believe Jamie’s maniacal focus on consumer value proved to be one of the endearing things that established Ring as a beloved consumer brand.
4. Hardware + Software
The world is filled with investors who will tell you, “We don’t do hardware.” I always thought this was kind of silly because HW plus SW can produce some of the most defensible, enduring businesses if one gets it right. Yes, you have to figure out how to finance inventory and sure, it’s harder to iterate products when it involved physical production — but greatness is never easy and the spoils go to those who solve harder problems.
Just look at the success of Apple. It is fundamentally because they build very compelling hardware that couples with iTunes, the App Store and so forth. I have often argued that I believe Amazon is very well positioned in the long-term vs. Netflix because with its Echo product and Amazon Fire and its emerging tablet business it will offer significantly more touch-points for customers when they go to discover video.
And the advantages in hardware are precisely why Google had to build the Pixel phone and Google Home because if it cedes hardware dominance to others it would have eventually found its core search business eroding.
While many analysts have equated “IoT” (Internet of Things) with wearables, I have long believed that the true value would come more from using cameras, lasers, infrared and sensors to track what is happening in the physical world through the use of technology. Today voice is becoming more dominant as an “input” to computing but in the future cameras and sensors will become even more important.
Jamie was one of the first entrepreneurs I knew to go on Shark Tank. Back when many VCs and entrepreneurs were still dismissing the show as “cheesy” — Jamie understood the mass-market appeal and the massive audience he could reach going on the show. Both the show and Ring went on to be smashing successes and to this date Ring has been the most successful startup to appear on Shark Tank (even though those suckers passed! They could have owned 10% for $700k. If you want to see the original episode it’s here).
While Jamie started the company as DoorBot he knew that he needed a more memorable name to build a consumer brand so as soon as he had raised enough money he ponied up to buy Ring.com, which you could imagine wasn’t cheap. Not everybody was convinced it was worth the money but Jamie was steadfast.
When Jamie wanted to sign on Shaq as the company spokesperson it also cost money. Traditional investors are so focused on “quantitative marketing” that he got a lot of advice that this money was better spent on online customer acquisition. I remember Jamie told me back then, “Mark, when people walk into a store to buy a security camera three years from now there are going to be five of them listing features, functions and gadgets. They’re not going to be able to differentiate one from the other based on product specs but then they’ll see “Ring” and Shaq and have the recognition of the marketing campaigns we ran and reach for our product.” He was steadfast. He was dogmatic. He was self-assured. He was right. See bullet point 1.
Next Jamie told me he planned to sell products on QVC. That was probably one step further away from the Silicon Valley ethos than even Shark Tank! Jamie’s logic was clear — millions of people watch QVC and I will have unique access to them to tell our story that they might not pay attention to in an online ad — so he went on. And although I can’t reveal actual numbers I can tell you that through his first few appearances he sold TENS OF MILLIONS of dollars of product.
6. Viral Adoption / Group Use Cases
Jamie didn’t want to stop at a single household. He believed he could build a “Ring of Security” around your neighborhood. He created a technology version of Neighborhood Watch where people in your neighborhood could share suspicious footage of individuals around their house.
If you have a minute please watch this really inspirational video of how Ring reduced crime in an LA neighborhood by 55%. It’s a really important lesson because when you see the extent to which Jamie went out into the community to drive real change using his product and working with the police you can see what it took to have an A++ founder with a single-purpose device (security) and low-cost solutions for middle-income families helped build a beloved brand.
What does this all mean for the future?
Security is only one of the many use cases for how cameras, lasers and sensors can interpret the physical world and aid us in creating more compelling life experiences. I believe that the keyboard I am typing from and the mouse for navigation is a thing of the past.
Today we are bridging the Human-Computer Interface (HCI) through voice commands but we’re also very clearly moving towards computer vision HCI to improve how humans interact with computing devices. Whereas a doctor can ask you to walk across her office on one date and look at your gait for signs of Parkinson’s or other maladies that cause shuffling — she may not observe the behavior on that date. Camera, lasers and sensors can observe on a continual basis helping us with medical diagnosis.
The future is a computer vision world, from autonomous vehicles to robotics to security, training, education and entertainment. I’m super proud to see Jamie having become a world-class leader in this space and to Amazon for having the foresight to bring on board a tremendous brand, a great leader, an amazing team and for continuing to be … #LongLA.
(Cross-posted @ Both Sides of the Table)