250 Cameras, Zero Customers, $3.5B Outcome

When Filip Kaliszan's first 250 cameras arrived at his garage in summer 2017, he had a moment of panic. "Oh shit, I definitely can't park my car, and most of my cash that I had on hand is now sitting in my garage on these cameras, and I have 0 customers."

Fast forward seven years, and that garage-based startup has become Verkada—a $3.5 billion physical security platform serving 20,000 customers globally, including 60 of the Fortune 500. Kaliszan, the co-founder and CEO, has built one of the fastest-growing enterprise software companies by transforming an industry stuck in the past.

In this candid interview, Kaliszan reveals the counterintuitive decisions that fueled Verkada's explosive growth: why running out of money was the best thing that happened to them, how they literally locked engineers in a basement to build new products, and the "biggest fuck up" that nearly derailed their culture.

Filip Kaliszan: I'm very much a builder. I came to college and I didn't know, like I think many students, I didn't quite know what I was going to study. I took some computer science classes at Stanford. What I loved about it is I could take ideas and I could talk to friends about ideas and seemingly with very little effort, you could turn those ideas into something practical, write some application, and it would just kind of work and achieve something.

Back in 2006, 2007 when I was an undergraduate student, it was very surprising to me that here in Silicon Valley at Stanford, the way you choose classes was through this big book. Everyone was making some kind of sheet on the side to see how to fit and take all the best classes to meet all the requirements to graduate. It seemed like in 2006 that should be online, that should be digital.

We built this tool called CourseRank as a class project. It was very much a web application. We launched it and first it was my roommates, then it was the people on the floor of the dorm that were using it, and then the floor below and the floor above started using it, and then it started spreading across campus. It's extremely exciting. You're just sitting there and refreshing Google Analytics and seeing how many users you're getting.

Filip Kaliszan: By the time we were graduating, the vast majority of students in the undergraduate class at Stanford were using our solution. I think it was 7,000 or maybe 8,000 undergraduate students at Stanford using it, which felt like a big number to a 21-year-old at the time.

From the CourseRank days, one of the key lessons was learning how to work effectively with the small group of people who are my co-founders. When you go through school, you don't necessarily know what is the sweet spot—what is it that you are good at and what someone else is good at. My co-founders and I, we all had strong opinions. We all thought we were experts on every single topic.

You learn from that experience who's good at what. You learn to develop trust for each other and you learn that it's really important to delegate things as opposed to own everything directly. Really the dynamics of how to work with a team effectively and then how to scale that team was maybe one of the key lessons at CourseRank.

Filip Kaliszan: We were going along and building the tool and getting it deployed to more and more universities when the team from Chegg reached out. I think it was the CTO who reached out to me. In my mind at the time I thought, hey, our company is still so early and so small, and it wasn't making any money yet. I didn't really think it was plausible that they would want to buy it for a meaningful amount of money.

This was a very particular point of stress in my life—I was 22 at the time, but I knew I could build something here. I knew I could build something bigger, and I knew I had to say no to Chegg initially. We sat around essentially as founders with one of our advisors and had to decide on how much it would take to sell the company. We came up with a number thinking there's no way on earth Chegg is going to pay that number, but the conversation continued and over time, the numbers converged enough that ultimately we decided to pursue that path.

Filip Kaliszan: It was the first company that Chegg had bought. When they bought me, they were just about 80 people. The first thing they said is, 'Filip, just keep building CourseRank within Chegg and keep scaling it up.'

What I didn't expect, but what was very fun and very cool to learn, was they wanted to buy more companies. Chegg was transforming itself from a pure textbook rental business to a suite of digital student services. One of the crazy things for me—and I was very young at the time—they said, 'Hey Filip, we bought you, you know what that feels like. Help us evaluate these other acquisitions.'

There I am, 22, I've never bought anything, not a company for sure, and next thing I know I'm doing diligence and meeting teams and evaluating how this might fit with that and how we would bring the products together.

Filip Kaliszan: I was on the product team, and part of my responsibility was integrating and bringing some of those products together. I remember at the time thinking, oh this is going to be so easy. These things make sense, you're just going to piece them together, it's going to work.

The obvious lesson learned from that experience was that integrating acquisitions is extremely difficult. It is actually very hard to make different teams learn how to work together, make their products integrate tightly and look like one product to the end customer. I learned a lot about the tactics of how you execute that on the product side, but perhaps even more importantly, the dynamics of the teams—how do you get the people working together and how do you get everyone excited to build this new thing that's a sum of these different parts.

Filip Kaliszan: When we set out to start a company which ultimately became Verkada, my co-founders and I took a year off essentially. We gave ourselves 12 months to explore ideas and talk about these ideas and prototype and build these ideas. The key thing was being very open and sharing our thoughts with a lot of people, ranging from prospective customers to investors to friends to family, really seeing what resonates and what makes sense.

Some of the criteria for starting Verkada was we wanted to find a problem that's large enough and has a large enough market. The market for video security at the time in 2016 was just about between $15-20 billion of annual spend worldwide. I think school safety is a big issue that many schools are tackling—schools are refreshing a lot of the infrastructure they have for safety, and that became another segment of the market that became very powerful for Verkada.

When we were sitting in my living room and we were exactly $0—four of us co-founders—that $15 to $20 billion of annual spend felt massive and certainly big enough to build a meaningful business around.

Filip Kaliszan: The first prototype for Verkada was very quick. It was a camera that was based on a Raspberry Pi computer that you can buy on Amazon—that was the very first thing we did. I think we built maybe 60 or 70 of these, and that was literally us in my living room assembling these together.

We wrote some very basic, very rudimentary software to stream video and store video, and one of the first things we did was we built these and we gave them to friends. We gave them to anyone who would be willing to install it basically. The whole purpose was just to learn about what are the challenges—what doesn't work about video streaming? What happens when you have more than 10 or 20 cameras in a single location behind a maybe not so great internet connection?

Filip Kaliszan: I remember when we placed our first manufacturing order, our manufacturing partner told us that the minimum order size was like 250 cameras. I think it was summer of 2017—five pallets of cameras arrived from our vendors in Taiwan. We didn't know where to ship them, so they shipped into my garage.

I looked at it and I had this moment of like, 'Oh shit, I definitely can't park my car, and most of my cash that I had on hand is now sitting in my garage on these cameras, and I have 0 customers.' So it was definitely that reality check moment.

Filip Kaliszan: Once we had the product working, there is this moment where you have to decide, is it ready to ship. Being a product person and being an engineer, you always want more, you always want it to be better. In 2017 when we were launching our first cameras, I felt like there's not enough features. I felt like the features that were there, I could think of all the bugs. So there's this natural incentive to delay, delay, delay and not launch the product.

One of the things that worked really well in our favor, which in retrospect I really appreciate, is we didn't have very much funding. The line of running out of money was not far in the distance and ultimately that's what forced us to launch the product. I think had we had more money, we probably would have kept working on it in a silo inside the company, but because our runway was limited, we were forced to launch, and I think that was one of the best possible things and decisions we could have made.

Filip Kaliszan: You start shipping the cameras to customers and very quickly you get feedback about the things that resonate, the features that make sense, the features they care about. It turned out that we had a lot of ideas of things we wanted to build and the overlap between what we wanted to build and what the early customers really liked, it wasn't a perfect overlap.

Hearing that early feedback and those stories really drove our product roadmap and how we developed things and I think ultimately allowed us to more quickly get to the successful product that we ship to the market today.

Brandon DeVito (Head of Product): Some of the things that's been interesting for us is how we scale new product categories. We started out in cameras 6-7 years ago, and when we expanded into access control, we actually had a couple of false starts. We staffed the team and they would get distracted—these were some of the founding engineers and they'd get pulled back into working on the core product.

So we actually took them from our old offices on 3rd Street here in San Mateo, put them in the basement, gave them really crummy snacks and said you can't come back up until you ship a product. We took the CTO, one of the founding engineers, and had them build a product. They moved very quickly and started out with Raspberry Pis and horribly ugly LED lights that were flashing, and then we progressed and started testing with customers and finally got to final industrial designs.

That progression of actually living the experience using our tools and our products very early on was something that we've mimicked. The ability to create a team that's wholly formed—the startup within a startup is a little bit trite, but really thinking about how we can create a pod that's self-sufficient and can go after a big market.

Filip Kaliszan: We really believe in an in-office culture. Building physical products, building security cameras or access controllers, you actually have to touch it. Even thinking about our badge readers, the scan distance is something that we test and we live and we dogfood on a daily basis. It's always been a fun combination of having engineers and product people and the sales team all under one roof and working together to build these products, but also really experience what it's like to live and work in a Verkada managed or secured building.

It's a lot about the touch points that make being at work fun and exciting. If you come to work and you're energized by your colleagues and you look forward to seeing them and working with them—we've done a lot of subtle things. On the different floors of the building, the snacks are different. The drinks are different. So if your favorite snack is on floor 11, you're going to get some exercise running up and down stairs, but also you're going to bump into fundamentally different people. All of these types of elements contribute to the energy and to the experience that the employees have.

Filip Kaliszan: One of the probably biggest fuck ups I had in the journey of Verkada was back in 2019. The company was maybe just about 200 people and the team was growing very quickly. We had this moment in time where we had a few people on the team who engaged in inappropriate, like gross, disgusting behavior.

This was raised and came to me, and we thought about it. It was the first time that I encountered that type of situation. I thought I could first principles my way to an answer, and the mistake was really, we didn't send a clear message. We didn't part ways with those individuals, and that led to a lot of confusion on the team as to who we are, what's our morality, how do we think about these things.

That particular problem, the solution in retrospect, which is very obvious, is when you have folks on the team who don't behave accordingly, don't represent the culture that you want to build, you just make a change.

Filip Kaliszan: The other learning was once the company started scaling and once you get to hundreds and then eventually thousands of employees, it's really important for me but also other folks on my team, other leaders in the company—everybody understands how they're perceived by everyone else.

When you're a startup and you're 5, 10, 15, 30, maybe even up to 50 people, everybody knows each other. Once you reach that scale where it's hundreds and then thousands of employees, you can't expect to know who you are unless you invest effort in communicating who you are.

For me it was a lot of tactics—everything from small group lunches and get-togethers with groups of employees that I might not otherwise interact with to more frequent all hands meetings and more thoughtful all hands meetings. All of that serves this idea of communicating to the whole team and ultimately who we are as individuals. It's just extremely important.

Filip Kaliszan: When you start a company, you're just under constant pressure and it's self-imposed, really. But you need it, because building something takes a tremendous amount of work. Many things fail. Especially in the early days, very much every day you're thinking like, 'Oh my gosh, is this thing going to work or is it not going to work.'

Definitely along the journey, there's certain points in time where something went sideways, a feature that you thought was going to work didn't work or is taking longer to build. The journey of building a business and building a startup very much requires some level of persistence.

The way I describe it is things are always either good or bad, and it's cyclical and it happens from the early days of the company, but it happens even now. The company is big, it's 2,000 people, it's well funded. I always tell folks, charge up energy and store the energy and store the positivity when things are good because you never know what's going to happen. You never know when something like COVID happens or when the markets turn—those things are out of our control.

Having the energy and the ability to persist through those tough times and the ability to really continue executing with a level head as things go up and down is ultimately one of the key things to long-term value creation.

Filip Kaliszan: My first advice is probably try building something and spend a lot of hours building things. As with everything else, if you think about getting really good at a sport or getting really good at playing piano or getting good at something, the same is true—if you spend a lot of time honing those skills and you just keep building up that scale and building up those experiences, I think that is one of the core skills that I found to be extremely helpful over the many years that I've built products.