The Internet-of-Things (IoT) as a concept has been around for many years, driven by the fall in cost of internet-enabled hardware and the advent of cloud computing. However, for those of us that have been in and around the enterprise technology industry for some time, the progression of valuable use cases and/or companies that have made significant headway in the space are few and far between.
However, Samsara appears to be bucking the trend in this regard, as the connected operations company continues to build its list of high-value customers and its annual recurring revenue hits $607 million (up 59% year-over-year, per its recent quarterly update). Which begs the question, why is Samsara gaining traction where others have struggled?
Speaking with the vendor’s GM and VP of Product, Alexander Stevenson, he believes that Samsara’s success is a result of targeting specific problems for companies that rely on physical infrastructure - and building its proposition from that viewpoint. He said:
IoT as a buzzword has been around for a while. I think the difference, in some ways, was that for a while IoT meant trying to connect all sorts of hardware for the sake of connecting it. If you look at the IoT players around 10 years ago, there was a lot of, ‘Hey, we put the equipment on the Internet’. So there was a lot of ‘we have a hardware thing, and now it's on the internet, somebody do something with it’.
I think Samsa took a different approach here, where it was more: ‘What's the problem we need to solve’? As a side effect of solving for measuring fuel efficiency, or as a side effect of measuring carbon emissions that fleets produce, or as a side effect of a lot of these things, okay, we need to get it online.
Most of the company is not doing that connection to the cloud. Most of the company is doing: what do you do with the data once it is in the cloud? And so I think it has been this sort of focus on solving concrete problems for customers, as opposed to just connecting everything for the sake of it.
We had all the technology for a while to connect stuff, but people hadn’t really found good business reasons to do it…where the value would be. So, I think the difference is that we’ve gone problem first, instead of connection first.
During Samsara’s recent Beyond event in San Francisco we heard multiple stories of how customers are improving driver safety through AI-enabled video tools, or are monitoring equipment to improve efficiency, or are using GPS tracking to get an oversight of their fleets for operational management purposes.
However, the key takeaway from the event is that Samsara is positioning itself as a data platform for connected operations, rather than a company that just connects physical environments to the internet. It is aiming to solve problems for customers through the use of data, which includes third parties, such as Ford or General Motors. Stevenson added:
We're still connecting a lot of stuff and it's progressing but, there's a lot of times where we don't have to connect, we have integrations with major OEMs, so it's just software. It's just you getting the data and then you can visualize it.
We're getting data from different sources that don't require any real, what you might consider, ‘IoT’ traditionally. It's just a cloud data platform for running a connected operations business, as opposed ‘we've connected everything, someone else to figure out what to do with the data’.
Directed by customer feedback
This approach to being problem-led is driven by Samsara’s customer-led approach to product development, according to Stevenson. And what Samsara is finding, he added, is that the people working in industries with huge physical operations have largely been ignored by the software industry. Stevenson explained:
Our product development is dictated very heavily from what we hear from customers. We're going out, having conversations and we're trying to learn something about the world, so we can build the right next thing. It feels like we're talking to customers and we're hearing, ‘’Hey, this is the next big problem and this is the next big challenge and this is what we need’. That’s what has dictated a lot of the big bets we’ve made.
There’s no shortage of problems that folks run into when they’re moving around real objects in the real world.
If you take the type of company that is here at the conference - the physical operations companies, all folks that are in construction, transportation, warehousing, field services, passenger transport - these companies haven’t received the same software attention that consumers received, and that information workers received.
The needs are a little bit different in construction, versus in transportation, versus warehousing - there's specific features or regulatory compliance or other things that change - but fundamentally a lot of the work is the same product. It’s really just understanding that these folks need to travel to be on site, that's why vehicles always end up being involved somehow; all of these folks need to do work once they get there, that's why there's these workflow. Knowing that, starts to solve a lot of problems.
An untapped market
Stevenson said that the target industries for Samsara make up approximately 40% of the total economy, and that those industries with huge physical operations are still largely underserved. And it’s not always the industries that you’d expect to see, such as manufacturing or logistics, that are making use of Samsara’s data platform. Stevenson said:
Take healthcare, as an example. We actually work with a lot of ambulance crews. Ambulances need to track how their fleet is moving, how to dispatch, what's going on, etc. And they have safety cameras, because of course they're often in a hurry, that's a dangerous job. We also do the same power takeoff that's used for when construction equipment is running machinery in the back of their ambulances - they wire into their sirens so they can see on the map when an ambulance turns on sirens and they get that operational overview.
But with such a large addressable market and with customers being in the early stages of using data to address these challenges, it’s inevitable that there is going to be a steep learning curve to enable change. As such, Stevenson is advising that customers start small, learn, measure the benefits, and then move on to the next use case. He said:
I think we're in some ways in the early days of a lot of this. It's sort of a journey, because there's so much you can you can tackle .You could be worried about improving your safety for your fleet, you could be worried about improving your physical site security, you could be starting to do carbon emissions reporting more holistically for your organization.
So rather than drown customers in all this change management, we say pick the thing that's causing you pain now, get things deployed, get the data uploading, tackle the first change, realize the value there and then go to the next one. Just keep biting off new projects and new things to optimize.
During Samsara’s users event last week there was definitely a sense amongst customers speaking, and the conversations I had with customers, that they were there to learn specifically about the data use cases and change management challenges. There were very few conversations about the hardware itself, or the connection opportunity - rather customers were there to find out whether others are seeing data wins and how to get their organizations on side. It’s still early days for this market, but I was definitely left with the impression that Samsara understands the benefit of understanding the use case first, and then following that up with the right technology - rather than leading with technology and hoping that buyers follow. Where it will benefit customers down the line is also leading with advice and guidance on the change management required to deliver those wins, as this will only accelerate its opportunity.