The next big AI startup IPO? Why Samsara’s data really is the new oil

Samsara is going toe-to-toe with software and cloud giants in the increasingly competitive world of industrial IoT. Ahead of an expected IPO, its CEO explains its plan to win.

Picture of Samsara office

Samsara's IoT sensors help companies manage industrial equipment with better data.

Photo: Samsara

Samsara entered last year as one of the world's most valuable artificial intelligence startups. But for a minute, the pandemic threatened to change its trajectory.

In May 2020, in the midst of COVID-19's rapid spread across the globe, the Andreessen Horowitz-backed company closed a $400 million down-round that valued the company at a reported $5.4 billion and laid off 300 employees — amounting to 18% of the staff. It remained one of the world's more prominent AI upstarts, but it was a hiccup in an otherwise impressive growth trajectory.

Little did CEO Sanjit Biswas know that, in a few short months, AI startups like Samsara would be battling back investors who wanted to pour seemingly limitless cash into their operations.

"If anyone had a crystal ball and you knew how this pandemic would turn out, they probably wouldn't make the same decisions as what we did back then," he told Protocol.

Samsara turns data from internet-enabled sensors into operational insights. It gained prominence helping organizations and governments manage fleets of commercial vehicles, promising enhanced safety and sustainability. But now, the company is trying to expand deeper into the industrial segment, working with customers to help predict machine maintenance and monitor operations remotely, among other applications.

It is hiring again and preparing to go public as it looks to grow in a market that is chock-full of competitors, from cloud giants and software titans to standalone vendors and fast-growing startups.

"We just haven't seen them train specific models the same way we have," Biswas said of potential rivals like Microsoft, Bosch and others. "Our biggest differentiation is we provide that out-of-the-box experience for these customers."

In a recent interview, Biswas told Protocol about the company's growth and how it differentiates itself from larger competitors.

This interview has been edited and condensed for clarity.

IoT got a lot of buzz. And then it seemed like it went through a cycle where companies couldn't really figure out the applications, there was confusion about the tech, some of it might have been overhyped. What has changed in the last couple of years to change that perception?

It's gone from being a raw technology, or potential technology, to being something very practical and very useful. We work with a lot of waste management companies, who you wouldn't think of as big technology adopters, but they found that putting our sensors on their trucks could decrease their speeding by 58%. It's turning it from technology into an application that has business value.

How do you begin to put parameters around what the future of the business is going to look like?

There is a broad, vast opportunity because there's so much that can be done. That's an opportunity for Samsara, but also a bunch of other companies. So I don't think it'll just be Samsara.

We ended up with an interesting advantage. Because we had the sensors, you could get real-time GPS locations, we could see traffic patterns because we drive 99% of the roads in the US every single day. And as a result, you could be much smarter about how you plan routes, in a way that standalone software just didn't have enough clean data to work on.

That was something that was driven based on customer feedback. It's much more [that] we have this kind of active conversation and the customers show us where the opportunities are.

When you're looking to the future of industrial IoT, what do you see as the most impactful application for end customers?

There's three pillars we're focused on. On the safety side, a lot of these industrial environments — whether they're in the field or in a factory or warehouse — are pretty hazardous. If you can use AI and sensor data to help keep people safe, that adds tremendous value.

On the other side, it would be efficiency and sustainability. A lot of these industries use a tremendous amount of energy to get their jobs done. There's this big push on the [environmental, social and governance] front, and sustainability in general, to improve and cut carbon emissions. But you can't improve what you can't measure. And so for us, we feel really good about providing tools for these customers to get that data and then figure out how they can make their operations more efficient.

Samsara CEO Sanjit Biswas Samsara CEO Sanjit BiswasPhoto: Samsara

Last year, Samsara did a down funding round. Would you still do that given the capital that's available right now?

If anyone had a crystal ball and you knew how this pandemic would turn out, they probably wouldn't make the same decisions as what we did back then. We used the best information we had at the time.

In our previous company, we lived through the global financial crisis. It's just important for companies to be well capitalized so they can continue to serve their customers. And for us, it was less about valuation and more about just making sure the company is in a strong position to keep operating and keep serving customers and scaling and growing.

Knowing where markets have turned out and the enormous amount of economic stimulus, I'm pretty sure the round would be a pretty significant up at this point.

Since the layoffs, how many individuals have you hired?

We have hired about 300 people in the past year and we're continuing to hire.

Are you going to pursue another funding round?

The company is well capitalized, we have a clear path to break even and so we don't need any additional venture capital funding. We're just focused on building products and serving customers.

When you look at what the large cloud providers are trying to do in this space, how do you see it as different from what you're doing? And where are the areas that you might see yourself competing with a company like Microsoft?

Overall, it's been a big tailwind for us, because they provide a lot of great infrastructure. So we don't need to think about scaling databases, for example. Those companies are very ambitious, they're continuing to expand. And, like all big platforms, in some places you partner [and] in some places you compete.

We don't tend to compete directly. We've never, for example, been competing for a deal against Microsoft or Amazon. So that just hasn't come up practically speaking, because we provide a solution that works out of the box, as opposed to a toolkit that their IT team would put together.

Those companies and others are investing pretty heavily in AI and analytics as well. Is there a unique challenge when it comes to running AI on top of this IoT data that would give you an advantage?

We are focused on a few specific applications. So driver safety is a great example. If someone is tailgating or their following distance isn't safe enough, we will beep in the cab. And that involves running an AI model at the edge. If you're Amazon or Azure, you're trying to be broad. You're not just thinking about cameras on roads. We just haven't seen them train specific models the same way we have. And that is about data and being specifically focused on a couple of applications.

When you look at industrial IoT companies like what Bosch might be doing or Honeywell, do you intend to take a more narrow approach than those providers?

We actually use Honeywell and Bosch components in our products. So in some sense, they also enable our technology. It's a little bit more of selling the solution and the application than the raw technology pieces. Our biggest differentiation is we provide that out-of-the-box experience for these customers.

There's quite a large number of IoT startups out there. Are you expecting to see any kind of major wave of consolidation within the sector?

This is a very large market opportunity. In terms of digitization, we're at that 1% mark. There's room for a lot of companies to grow here. We do see consolidation occurring because being a single-purpose company is pretty tough. I see an opportunity for consolidation just in terms of providing more to the customers — like putting everything together in one platform, where you get safety, efficiency, sustainability, all in a single set of dashboards. That makes a lot of sense for the customer.

Do you have partnerships with some of the software providers within this industrial digital twin space like Siemens or PTC? And if not, is that something that you'll have to look to in the future?

Siemens and PTC are not official partners today. We have integrators who could take our APIs and push that data into a PTC receiving system. That's the simplest way to do the integration. But over time, we do want to do more partnerships. If you were to talk to us three, five years from now, you'll probably see we have several 100 partners. And I would expect that we would have had time to stand up the Siemens partnership or the PTC partnership the way we did Salesforce and SAP.


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