Mike: Hey, Adam, how you doing?
Adam: Doing great, nice to talk to you.
Mike: Tell us about Canary.
Adam: Canary is the first smart home security device for everyone. It is the easiest way to do security from the site of a home. It’s a single device that’s beautifully designed that contains HU video and audio, temperature, humidity, air quality sensors, 90 vision, motion detection and more and it streams the data to you, directly to your cell phone, where you can view any time what’s happening in your home. If something happens out of the ordinary, then we send an alert directly to you where you can take action on it, whether it’s alert the police, set off the siren in the device itself, or notify your neighbor. It just turns home security into something that’s very complicated today into something that is plug and play, almost like a toaster.
Mike: I want to talk to you about how it compares to other solutions on the market, but first I’d like to ask you how you came up with the idea and talk a little bit about the development of the product.
Adam: I came up with the idea about two years ago and spoke to anyone that I could about it. One of the first people I connected with was one of my co-founders, Chris Rill. Chris is an energy who used to build embedded electronics for the US military, like sensors on military vehicles and also had co-founded a software start-up, so he has an amazing view across both hardware and software.
He and I got together and worked really to solve very personal problems. Like for instance, Chris, when he was living in London, had gone on vacation, come home and his apartment front door was gone and in its place was boarded up with cardboard and plywood and he only found out later that the police had knocked down the door because they thought someone was in distress inside. Nothing was missing but being an engineer and he got a little paranoid about the situation and built his own security system. He said, “Wow, if Canary had existed when I was living in the UK, I would’ve just bought one and wouldn’t have built my own. We need to work on this together,” and we started working on it together.
Mike: Don’t you have a background in security yourself?
Adam: Yeah, my background is, the last 15 years I’ve spent in security, so it’s both building security solutions for companies, like large companies, banks and financial institutions and others, as well as built a non-profit in the security sector, which works with schools and religious organizations and helps them do security and connect with their local police departments and trains them free of charge. So my experience kind of stretches from the small, from small schools to the large, you know, multinational corporations, and this is the first time I really explored security from the home on a very personal level.
Mike: This box is packed with all sorts of like inputs. The camera is obviously the most obvious and you have all sorts of sensors in there. Walk through those, how many total are there and tell us about why you decided to put all these different sensory inputs into this box?
Adam: Yeah, there’s over a dozen sensors and sensing components within the device. The reason is, we really wanted to, A) Complete simplify the experience of security, and B) Give you all the relevant information you need to help know what’s happening within your environment.
From a simple vacation point of view, we saw the market was full of all these DIY kits, you go to Lowe’s and you buy this complicated kit of sensors, box of sensors, which very, very few people are actually going to buy, install, and have a good experience with. We said, “This is crazy, we don’t want a box of sensors, we want something better that is much easier.” By putting all the sensors in one, it gives a very, very good sense of what’s happening in your home.
If you’re looking after your family, it could be your child or it could be your elderly parent. You’ll know, you can see them, you can feel what’s happening by seeing the air quality and the temperature and the humidity. Is this person comfortable, is it a safe environment? If anything should happen out of the ordinary, like a fire breaks out or temperature spikes of other kinds or a flood will cause a change in humidity in all the sensor levels, you’ll know about it immediately from wherever you are across the world and can take action on that.
Mike: I think you would admit that this is pretty vastly different from the monitored security solutions out there that are what I would call heavier, they’re installed, they’re obviously monitored. Do you think this is a replacement in some instances or how would you kind of respond to someone who would say, “This is a lot different than something I would get from ADT,” for example.
Adam: It’s very different. If you want sensors on all your doors and windows, that’s not what we’re doing. We also think that those systems generate probably 99% false alarm rate and so even though you have more sensors spread across the home, the experience from people is generally so bad that people are just becoming used to getting fined by their local police departments or the police just not responding because they assume it’s going to be a false alarm and that’s become the norm. That to us is just crazy, that that’s the norm for security, that you’re going to be fined because it’s going to be a false alarm? That should not be the case.
What we’re doing is a much better way and in many regions, like in the US, we do have planned monitoring. On top of actually having the alerts come to you, you also can have monitored security, which in many cases will give you discounts on your renters or homeowners insurance.
Mike: One of the things about false alarms, I do think with motion cameras, there’s possibilities for lots of false alarms and be it your dog moving, and so how do you overcome that because I think that could possibly happen even with your solution as well.
Adam: While the first major innovation that we’ve done is simplify the hardware into the one device, the second one is really involved in the intelligence on the software side, so our core team here in New York is software and we have computer vision and machine learning experts, really truly world-class experts who their role is to develop a system that is smart in understanding what’s happening in your environment. Understanding the difference between a person and a pet or understanding the difference between just light flickering with inside the home or someone walking across the screen.
We can do that by first of all, understanding what’s happening in the picture, which is really what computer vision is, so what am I seeing at any given time? Also with a combination of all the sensors, we can use one sensor to verify what another sensor sees. We can use the infrared motion sensor to verify if there is actually heat, if there is activity in the environment, not just a flickering light which causes alerts in many other camera-based systems that you’ll find out there.
Mike: That makes sense. One of the things with security is, it’s been stuck at this anywhere from 20-25% penetration in the US at least, around traditional monitored security. One of the things I’ve written as I’ve written about this market a little bit is, if that’s the case, if it’s around 25%, I still think that 100% of the US households want to feel safe. When I think about this market and I think about lower-cost solutions that may not involve contracts, for example, people in apartments, I think that there’s an opportunity with lighter solutions to move and increase the addressability market for security. Is that one thing you see happening where there would be people who would never traditionally think of buying security that you can potentially attract with what you’re offering?
Adam: That’s exactly right. We also offer a device where there’s no monthly fee that’s required when you buy the device, there’s no installation. You simply put the device on a table. To move it from room to room or from house to house is as simple as picking up a six-inch tall device. It becomes so easy to do that it truly is designed for any type of living space.
In the US, for instance, there are almost 40 million occupied rentals, which is about 40% of the market, and that market is completely open, there’s nothing that’s been geared and built for that market of people to actually have security. We agree with you that current solutions aren’t there for people, in fact, they’re not there for me. Before we built Canary, I personally was not interested in home security because I thought it was cumbersome. Why would I want 30-year-old technology and very basic sensors spread around the home that are going to cause nothing but false alarms? I didn’t want that. Even though I’m someone that thinks about security often, I’m also of the age of people who want something better and that’s technology focused, that’s software focused, that isn’t just reliant on old hardware. So that’s what we built.
Mike: One of the things that I’ve often thought about is in the world of the past, you almost needed monitored solutions, because there wasn’t the technology to notify you and then allow you to take action, if you’re remote and away from your home. Today there’s these technologies, for example, that can auto-send you text, can let you observe via a monitored video camera, and see yourself. One of the things I wonder about is, can the person who owns the home or owns the place or rents it, can they replace the call center person who would previously have monitored that and initiated a call to action, for example, to 911 if they thought this was a bigger issue? Does that make sense?
Adam: That’s exactly what we’re doing. That’s exactly right. The alerts come to you and they’ll always come to you first and you can designate who that “you” is. If it’s you, if it’s you plus a spouse or kids and if you don’t respond, then you can also designate who your back-ups are, so your back-up is your neighbors or your sibling who lives across the country, it doesn’t matter, it’s all through technology.
Mike: Do you think there’s a generational mindset where, I think 20s and 30-somethings and even some 40-somethings are probably okay with displacing the home monitor person in the call center, whereas I think maybe generationally, you might see people who are older who this is like a vastly different world in terms of moving from monitored solution to I’m going to be the one who monitors it myself through these technologies. Do you think there’s a generational bridge there that you can maybe bridge more easily to the younger generations versus older?
Adam: I think you’re largely right that generally as you advance technology, like we have that younger generations and populations are more comfortable with it. That being said, we went into this assuming that most of our market would be what our focus was, which was apartment renters or small homes or people that don’t really need or want sensors all around their home. What we’ve been hearing more and more are from a wider spectrum of audience who we weren’t even considering in the beginning, like people who own homes and who have even larger homes and have been paying these $50, 100 a month bills to their security companies for years for no value and they are just sick of it. They say, “I use a smart phone every day, I can just connect from my iPhone or my Android to my house, that’s unbelievable.” We make it simple that anyone can actually set that up and in mere seconds—of course I would want that. We’ve been hearing this more and more from a wider group of people, which makes us believe that perhaps this solution is even more universal than we really thought. If someone can own a smart phone and use a smart phone, then they can use Canary.
Mike: It’s a no-brainer to me that this would be a good solution for the vacation and the rental space market, and I think you talked to that and you talked about the unoccupied spaces. Are you seeing already a lot of interest from that space because I would think people who have multiple places, where they don’t want to pay obviously for security, this would be a good solution for them?
Adam: What we found is we’ve sold thousands of these devices and we query lots of people to find out, to understand our market, what they’re buying it for and we’ve seen lots of very interesting scenarios from, “I’m using it to monitor my second home,” to people who are monitoring their data centers because we’re providing video, air quality, humidity, and other sensors needed for data centers, to people monitoring their horse stables.
It’s really interesting to us to see that this problem of actually connecting to a physical place, like a home, that is a problem that has been so hard to do. It’s possible today, you can get a home automation kit and try to put sensors everywhere or pay someone thousands of dollars to do it for you, but it’s going to leave a bad taste in most people’s mouths because of the expense and the complication around that. Many of these people are coming to us and saying, “I have this reason to know what’s happening in this place while I’m away,” and that place could be many things for many people. In many ways, that is the problem in a deeper level of what we’re solving here.
Mike: You guys went to crowdfund this device, I think you crowdfunded on Indiegogo and I believe almost got $2 million. I think that these are going to be your first wave of customers. Are you taking lots of preorders from people outside of this and where are you in terms of fulfilling those orders?
Adam: Yeah, that’s right. We launched at Indiegogo and we were and still are their most successful campaign ever. We started filling those orders. We told the Indiegogo backers that we’d be shipping in the summer and so we haven’t quite hit our date yet. We’ve started filling to beta testers and plan on shipping this summer to Indiegogo backers first and then we’ve sold thousands of devices in pre-order post Indiegogo as well, so they’ll receive the device second before it becomes available to a wider public.
Mike: I watch the crowdfunding space quite a bit and it seems like the hardware crowdfunding space is getting more scrutiny lately and I think that Panda was talking about a wearable company that was promising things that were crazy. Having come out of that and having been the most successful hardware run on Indiegogo, what are your thoughts on that space? Do you think that there needs to be more scrutiny in terms of what people are promising? People who may not have the exact technology developed or like the pedigree, for example.
Adam: Yeah. It’s going to be incumbent on the public, on buyers, to a lot of this work because it’s really hard for crowdfunding sites like Indiegogo to really verify the thousands of projects they get every day. Sometimes it’s not that hard to find who is behind it. Have these people actually built anything before? What is the background of this and is it even possible? A lot of work and scrutiny is needed and I think that’s why we were so successful on Indiegogo because we have such a strong background in this space and I think that’s why companies like Pebble were successful on Kickstarter, they had done it before, they had built a launch before and it was proven. I think that does leave questions for companies like the one that Panda is focused on now, that can they really actually do what they’re saying? Can we find out really relevant information on the founding team and what they’re doing? Transparency and visibility into the company, this is something that we value here, but I think not everyone does and it’s really important for the public to really understand that before they put their hard-earned money in backing a product.
Mike: One of the things I like about this idea is making security portable. With traditional systems, like I said, I call them heavy. They’re installed, you can’t take it with you, in a sense, if you move. If you look at, for example, the lifestyles of the people who are in their 20s, they may move every 6 months, they may be in one apartment now and they may move the next, people move quite frequently. Is this idea of portable security something that you were giving heavy thought to?
Adam: Yeah, exactly. A lot of these kits try to claim that they’re portable because they use—you can screw it onto the wall instead of hardwire it or it sticks onto the wall. Just that act of actually screwing lots of sensors around your home is complicated enough that if you’re going to be moving in a year because you’re renting, you’re not going to want to do it. It’s just going to make the experience much more difficult. We, from the very beginning, said one of the most important things with Canary is that it’s going to be easy to move from place to place. Whether you do it on a short-term basis, like today I want to watch my child’s room and we go on vacation, I’m going to put it in a more central area of our home, or whether it’s just simply, I’m keeping it in my apartment now and in a year from now I’m going to move it to my next place. Either way we wanted to just simplify that. There’s no reason these days why things need to be hardwired like they are and so everything we do from start to finish with the product is just to make it easy like normal people to install and to use.
Mike: When you look at the landscape of security, in terms of like the newer entrants, I mean, it seems like there are folks who have launched, that do self-install, like Simplisafe, etc., in the last ten years and then there’s some other folks out there as well. Do you think that this market is big enough to see a lot of new entrants, as well as maybe the guys who entered in the last five, ten years? I’d be interested to hear how you think that competitive landscape looks and is there room for all of you guys?
Adam: Yeah, first, at Canary we believe we’re doing something fundamentally different from other things that are out there. We see the market as on one hand you have the integrated, you know, like the ADTs of the world, the complicated, like you know, you need the installer to come. On the other hand you have just very basic sensors or things you install yourself, IU DIY kits and like a box of lots of sensors you’re putting around your home. Both of those are kind of not geared toward the common person, so we’re very much in the middle, which is who we just call consumer, so it’s for the average person.
Now to answer your second question about the market, there’s absolutely room for multiple players. If you think of ADT, who is the biggest, and they have seven million customers, that is nothing, that is such a small number of customers that the biggest security company in the country has, that this market is potentially so much larger, but it’s only going to be larger if other players actually provide solutions that people want rather than just trying to create problems that don’t actually exist.
Mike: Yeah. I think that definitely a lot of people see a huge opportunity here. I think just today Verizon announced a re-launch back into the smart home market, which they got out about a month ago with a different platform, back into security where they’re partnering with Alarm.com and doing a 4G centric back call type security solution, which is interesting.
Adam: Yeah, a lot of the Telcos and other utility companies and all this have all been coming out with their security systems, like Verizon’s last attempt, which I think was just closed a few months ago. Many of them aren’t doing well and it’s simply because they’re taking the exact model that existed before and just putting their name on it. They’re using third party products, slapping their logo on it and saying, “Now, here’s our home security.”
Not Verizon, but one of the other Telcos, I was in their store recently where just to get a new sim card for my cell phone, and they were trying to sell their security product to me. It started off by them saying, “Hey, guess what? Do you want a free security product? It’s only $20 a month.” I said, “Yeah, tell me about it.” In less than five minutes I was there, it turned from a free security product to something that was about, I think, $50-60 a month and a few thousand dollars to install with a 3 or 4-year contract. Just by asking questions, “Wait, does this come with it? Does it do this? Can I connect from my phone?” “Oh, if you want to connect with your phone, it’s only $20 extra a month.” It was such a bad experience that I was thinking, they’re really trying to continue this age-old like let’s trick the customer into, by telling them it’s free and then actually upselling them on some ridiculous service that they don’t need. Customers are not dumb, they are going to see through it and they have. It’s why you see some of these companies who have spent millions of dollars in advertising their security systems and you see it going nowhere and it’s exactly because of that.
Really, new solutions are needed, we’re providing one of those, there are others that are providing really great new solutions in other spaces and the market is going to be completely different in a few years from now, from what it is today.
Mike: I think you’re available online, in terms of like your channel, that’s like the main way people could buy you. Talk about how that’s going to roll out from a channel perspective. Are you guys going to move into retail and then what new features we can expect from Canary, if any, in the next year or so?
Adam: After we start selling and shipping to our crowdfunded backers and the pre-order backers, we will be available in wider retail. We haven’t announced yet where, but it’ll be available, especially in the US, to the wide public later this year. There are a number of features which we haven’t announced yet, actually even in this existing device, which over the next month or two as we prepare and start to roll it out broader will bring to light and we’re really excited to share all the things we have done in what we’ve built and all the things that we have planned for the future.
Mike: Hey, well, Adam, thanks for taking the time and telling me a little bit about what Canary is doing. I think it’s an interesting product and I can’t wait to see what you guys do in the future.
Adam: Thank you. It’s really great chatting about it.