The Internet-of-Things (IoT) industry has promised a lot over the past decade or so, but has largely remained a fragmented landscape, which hasn’t delivered on many coherent or meaningful use cases to date. That’s not to say that they don’t exist, they certainly do, but the implementation of connected devices that provide impactful data-led use cases at scale have been few and far between.
This is part of what makes Samsara a compelling company. Instead of providing a piece of the IoT puzzle, Samsara is selling physical operations organizations a full stack in the cloud - from the sensors themselves, through to cloud-based applications - and is going to market with proven outcomes.
Samsara’s offering also feels like it’s coming to the market at an opportune time, where the world of physical operations - which includes everything from supply chain to logistics - is seeking to find new efficiencies, as the macroeconomic environment places organizations under extreme cost pressures.
With this in mind, we at diginomica got the chance to sit down with Samsara CEO, Sanjit Biswas, to discuss how customers are getting to grips with transitioning to a data-enabled business model. By way of background, Biswas and Samsara CTO John Bicket founded the company with the proceeds from selling their previous venture, cloud network management firm Meraki, to Cisco in 2012.
In other words, this isn’t the pair’s first rodeo and they have experience in scaling a company that is solving real industry problems. Biswas says that Samsara was founded when he and Bicket began learning more about the world of physical operations - an area they recognized they have an impact on. He explains:
As we left Cisco, we were kind of trying to figure out what we wanted to do. And our default path, honestly, had been to go back to academia and finish our PhDs and do research again. But the two of us were really motivated by impact.
One of the things we saw with the Meraki was that when people started using products that work, that work you do can be used by millions of people. It's very rare to find that kind of leverage. And so we liked that feeling of impact.
Then we started thinking about: where could we have an impact? We were fascinated by this world of infrastructure. We were curious about everything. We were looking at, how does the electricity grid work? How does water flow to our homes? How do supply chains work?
This was in part triggered by some of the work that Biswas and Bicket did at Meraki, as many of that company’s customers were also in the world of physical operations. The pair saw back then that those customers felt like they were stuck in the 1990s, where the world of digitization wasn’t benefiting them yet. The industry still carries out much of its work using manual processes and pen and paper. Biswas says:
We realized, no one was building technology for them. So that's kind of what got us into Samsara, which is focusing on this world of IoT, but for that buyer, this world of physical operations.
Samsara started out by providing fleet management solutions to small and mid-sized trucking businesses, connecting sensors in vehicles to its management software in the cloud to help track mileage and other performance indicators. This was guided by early conversations the founders were having with the food and beverage industry.
Most of its usage comes from the transportation sector, connecting into various transportation management systems, helping companies streamline compliance, routing and dispatch. The company has experienced rapid growth and in its first set of post-IPO results shared that it is now tracking more than half a billion dollars in ARR, with 806 customers spending more than $100,000 annually.
Commenting on the company’s early use cases, Biswas says:
We were basically thinking about who could use sensors and IoT technology. We thought temperature sensors were a good one to start with. We built them and brought them into the market and basically found these food and beverage suppliers.
They were the ones who told us about trucking. They said that the sensors are great, but we would love to know where everything is, where everyone is, if we're meeting our customers on time, that kind of thing. And so that's how we found a way into that industry.
Since then, Samsara’s Connected Operations Cloud has expanded beyond food and beverage, and travel, and is reaching areas that include supply chain, construction, warehousing, amongst others. Simply put, whilst the applications and workflows may need adapting, the ‘physical operations’ element is what Samsara specializes in.
Biswas agrees that ‘IoT’ as a concept has suffered from marketing hype in years gone by, but that Samsara is set to benefit from the market now being ready to adopt, which is partially being driven by COVID-19, and because Samsara is ofering a full stack for buyers.
Commenting on why IoT has previously struggled to gain momentum, Biswas says:
I think every technology wave has a huge timing element. Think about the hype cycle around the cloud, it kind of felt like it was a marketing buzzword, but now it's everywhere, right? Same thing with smartphones. People were very excited about them as the iPhone came out, now we all have them in our pockets, we can't get rid of them.
So I think with IoT, there was absolutely a hype cycle that took off, but the applications weren't there. Now I think the buyers, the people that can use the technology, are ready. And they're pulling on it. They're saying: I want visibility in real time of what's going on.
We focus on enabling the customer. It used to be that companies that were doing IoT would just provide a bunch of Lego building blocks that the IT team would have to piece together. But most of these buyers don't have a big IT department. So we found if we could make an application, basically just make it easy for people, that was the unlock. That requires a little more work on our end, but it is more likely to be successful.
Buyers are ready
Part of the Samsara story is that the technology is now ready, with the vendor offering ready-packaged solutions for buyers, but also that it is feeling a pull from industries that are coming under increasing pressure to do things differently. Biswas admits that a decade ago Samsara’s pitch would have faced far more resistance from buyers.
Now, however, there is an education process that has taken place in the market around how digital tools can change operating models, but also that COVID-19 has proven to drive continued change. Biswas says:
I think there's been a generational shift. If you think about it, we've all grown up with technology. So we're finding that in this world of physical operations that users are ready to use these applications. But the technology wasn't there, that was missing. I think if we tried this 10 or 20 years ago, it wouldn't have worked, because you'd have to educate people how to use an app. There's been a sort of user education journey that's already taken place. And now we're showing up with the app.
Imagine going to the food and beverage industry 10 or 15 years ago and saying; ‘Hey, let's do this all digitally’. That would have been a big lift, but now it's kind of obvious. The receptivity is there.
On the impact of COVID-19, Biswas adds:
Our customers, those in the world of physical operations, were the essential services and needed to keep running. So when COVID hit, these were the folks running the supply chains, delivering energy, doing all of that work. But they couldn't be out in the field as easily, there was a lockdown.
So for them being able to see everything from the cloud became really valuable. There was this kind of pulling force. I think two years later, what we're seeing is that that experience showed people that they could adopt new technology, right?
Now that they've done it, they’re saying: ‘Hey, that wasn't so bad and this is a big competitive advantage’. They can be 10% to 20%, more efficient, their employees are happier, they’re connected to all these systems. So now they want to know: How do we do more? So we're seeing a lot of expansions.
Samsara also works with and integrates its platform across approximately 200 other adjacent companies, whether that be an insurance provider, a service management software provider, or a company solving compliance issues in a specific industry. These data platforms integrate via API to the Samsara Connected Operations Cloud, again playing into Samsara’s vision for a fully integrated IoT stack.
Biswas doesn’t see much direct competition in the market, because of this broad and fully integrated offering. He says:
In terms of competitors, there have been people that provide sat nav GPS tracking in each market, that's something that's been around since the 1990s. But that's all they did. Or there were companies that would just do driver safety coaching programmes. So if you were a customer, you'd have to cobble together five or 10 different pieces of technology, which again, was kind of a heavy lift.
A lot of these companies didn't want to take it on. What we did is we showed up with an integrated platform. Most of our customers use two or more applications from us. So 70% are using two or more. And then among large customers, it's 90%. So for them, the idea that it's all in one place is really valuable.
Samsara also runs customer feedback loops to better understand the evolving use cases being explored by its buyers, as one would expect from a modern cloud-based provider. This is feeding Samsara’s roadmap and is tied directly to the company’s customer success programme.
Biswas explains that the understanding from buyers around how they adapt their operations, from an experience and data-led approach, is gaining traction. He says:
These customers are trying to figure out, how do I orchestrate my workforce? They have a labour shortage, and so are trying to find people to work these jobs. They need to make them as effective as possible, they need to give them a great experience.
What is that in terms of day to day? It used to be, can we buy a nicer truck for them to drive in? A more comfortable seat, or something like that? Now, what I'm hearing from customers is that they want to provide a better end user experience. So, how do you get rid of a bunch of the paperwork? The kind of tedium of getting started with your shift, so you can streamline that.
They're trying to take all this data and figure out, how do you reduce fuel consumption? That’s an expense, but it's also an emissions area of focus. How do you figure out how to run routes more effectively? Things like that. I think this feedback loop is really powerful and we'll probably set a roadmap for the next 20 years.
I think one of the nice parts about how we sell Samsara is that It's experiential. You try it, you see the system, you see the dashboard, we do a trial, then you buy it, and then you deploy it. So at that point, usually customers are committed to the idea of rolling out the technology, they're just trying to figure out how.
We actually do a lot of training programmes, we call it customer success or customer enablement. We provide rollout tips and tricks on, not just how to install the gear, but really how to make your programme successful. It’s all about how to get people excited about safety coaching, the outcomes that you're measuring. And we found that made a big difference, because sometimes people know what they want to do, but they don't know how to do it.
Ultimately Samsara is going after a market that has been underserved for the past two decades and it is solving tangible use cases for these buyers. The most successful vendors tend to be the ones solving a real-world problem, rather than working backwards from what’s possible with the technology (as has often been the case with IoT pitches). This offering also comes at a time when companies are looking to data as a solution for solving experience and cost pressures. In other words, there’s a real opportunity for Samsara, if it can scale and execute effectively.
I’ll be attending the company’s user event in San Francisco next month, which will be helpful in understanding how customers are using Samsara’s technology, in the real world. The one area of advice I think I’d have for the company though is to not be afraid to sell the big ideas - changing and new business models, ESG, blended physical and digital environments, etc. Samsara has been focused on figuring out the on-the-ground use cases, which was needed, but the market also likes a good story about the art of the possible. And there’s nothing wrong with that if you have the use cases to back it up.