Making Mobile Magical = Selling Without Sales Reps

When the world flipped from desktop to mobile, consumer brands made an often painful, but highly profitable pivot. It stood to reason that high-velocity B2B software companies could likewise take advantage of the big shift to mobile. Platform trends make for disruptive go-to-market models, right?

Many tried, but few have succeeded. SafetyCulture is one of the few that thrived. At TCV’s annual growth offsite, David Yuan, GP at TCV, caught up with Luke Anear, CEO and founder of SafetyCulture, to talk through his path. Luke is not only building a disruptive mobile-SaaS company. He’s also one of the most interesting entrepreneurs. Over dinner, he shared his career as a private investigator, nearly losing his shirt as a spec boxing match promoter and working as a videographer for Tony Robbins.

For an inside story on how SafetyCulture reached high-level scale and a compelling market position on the back of a mobile-first product, settle back and click play.

 

Dave Yuan: I’m a general partner at TCV. I’ve been passionate about this conversion between consumer, internet and enterprise software go-to-market models. We’ve been exploring this intersection for the past decade. This past Summer I had Luke, the founder and CEO of SafteyCulture, join us at our offsite and talk through mobile first. SafetyCulture’s reached a high-level scale, great growth, and a really interesting market position on the back of a mobile-first product, monetization, and go-to-market strategy. Hey, Luke. Thanks for joining us today. Good to have you this Summer.

Luke Anear: Thanks, David. Yeah. Nice to be chatting to you.

David Yuan: Well, I know the topic for today is mobile, but before we jump into it, give us a snapshot in SafetyCulture.

Luke Anear: SafetyCulture created the checklist app that allowed teams to be able to do inspections and take photos and build workflow around maintaining standards in the workplace. And originally, it was based on purely safety and helping people go home at the end of the day, but today it’s across quality and really anywhere that teams are trying to maintain a high standard in the work they do. I think it collects about 400 million responses a year now through the app, and we’ve built a pretty interesting database now which allows us to benchmark and understand how well teams are managing risk and also how they can improve performance.

David Yuan: Awesome. Can you give us a sense of size? You know, customers or whatnot. Just so folks know the level of scale you’ve reached because it’s been impressive to watch you grow.

Luke Anear: Sure. We service about 70,000 organizations, and the team– we’ve got about 280 people on our team and we’re in most of the developed countries around the world. And people use us across all sorts of different industries from transport and logistics, to hotels, to Starbucks stores making sure they’re clean and look good every day. It’s a pretty broad spectrum of customers that we interact with.

David Yuan: That’s impressive. Okay. Well, the topic is mobile. On the consumer internet side, obviously, over the past 5, 10 years, we’ve gone through this often times painful pivot from desktop to mobile. But generally, that’s where the world is on the consumer side. Mobile is everything at this point, or at least for right now. Why hasn’t that happened in the enterprise software market?

Luke Anear: I think the people who buy software are typically still taking directives from management and it makes sense that they want to be able to get certainty from what they buy and so that’s based on traditional sales processes, people promising a lot with their software and then quite often they’re not quite coming to fruition over an extended period of time. We’re really empowering more operations and field-based people to do their jobs better and once they get traction with that, then it’s hard to stop. So I think we’re seeing more and more examples of that, but there’s still a long way to go. Enterprise is slow to adopt things. There’s a lot of stakeholders and so, I guess, companies like SafetyCulture being able to Trojan Horse our way in and then navigate through that process without having to be negotiating and trying to sell software to anyone. It’s a pretty fun time.

David Yuan: Absolutely. You’re obviously successful now but when you were getting going, when you were getting started, why do you think Mobile First would work as an approach for your product?

Luke Anear: I think you go back to around 2011-2012 when we started looking at this. It was really the point where everyday workers now had this computer in the pocket.  We heard the term before but when you think back, the iPhone came out in ’07, and it took three or four years really for people who weren’t sitting in front of computers to get that level of penetration. It was around 2011 that we went, “I think the timing is right for us to provide a tool that everyday people can pick up and build a workflow and start implementing”. The hypothesis was would these people be comfortable enough to even download software.  It turns out most of them, because they had never been involved in buying software and they didn’t know the rules about buying software and using software. And so they just would do it and other people would tell each other that that’s what they’re using and so word had spread. It’s worked well for us.

David Yuan: That’s great. I imagine when you were getting started that the first step was getting individual use, so getting that download. And we have seen quite a bit of that level of traction. But very few companies get the broad adoption that SafetyCulture has achieved within a company or organization. How did you do it? Was it intentional? Was it organic or a mix of both?

Luke Anear: Probably a little bit of luck in there as well. We focused pretty much on solving a specific problem for the workers out in the field trying to do their job, trying to manage risks so, it’s kind of like the field manager, is probably the person we targeted. And, essentially, they became our champions. They were our salesforce in a sense where they would all of a sudden feel that they’ve got this new superpower, and they can share that across and up and down through their business and that one thing would lead to another. Because they were able to articulate the benefits so well internally, they could steamroll over the top of IT policies or any of the normal barriers. We’re not going to stop using this. You guys are going to figure out how to make it work because we love it.

That was really the secret to our growth, that we were empowering those people. They had asked us for slide decks to present to their management. We still get asked that all the time from people like what materials can I use to present? It’s a marketer’s dream where you’ve got people who are your customers, who are working hard for us to roll it out because it makes their lives better. And that was really quite something I hadn’t seen before, when we saw that happening.

David Yuan: So I understand it, people are looking for help from SafetyCulture to present to the internal procurement folks or help to actually present the work that they’ve created in SafetyCulture to be consumed by upper levels?

Luke Anear: Interestingly, from a growth point of view, they’re pitching our software to their internal management. They’re literally doing pitches. They’ve got the decks up and they’re saying, “Here’s the company. Here’s how many users they have. These are the companies that use it. These are the use cases.” And then they bring their own use case in and “this is how we’re using it. We want everyone here to be using it.” It’s just a phenomenal thing to kind of watch. You kind of pinch yourself and think: How did ever even happen? Because we never had salespeople and, yet, these people were using our products and selling it for us.

David Yuan: Absolutely. I played around with your product a little bit. It strikes me, that there’s that elegance to it. The product really works well for an individual user, but it feels like the more people on SafetyCulture in my organization, the greater the power. And so how do you incent that team adoption?

Luke Anear: The path to getting them to adopt it across their team gets accelerated when we get more people doing it, particularly early on. That’s been an area that we were focused on in terms of onboarding and getting people up to speed as quickly they can, inviting other people on their team. That’s when things start to move. Frankly, if they’re a three- or a four-person team, they’re never going to experience incredible benefits from it compared to 1,000-person team. We want to help them get to 1,000.

David Yuan: That’s where you set the paywall.

Luke Anear: Yes, we move around the paywall and look at different things. You see churn come down once it gets stickier once more people are using it, and that’s when the value increases for them. So we focus on getting them to that point.

David Yuan: Are there other elements of the paywall? One, obviously, is users, which we describe, where the trade-off is monetization and adoption and churn, like you just walked through, but are there other elements of the paywall that you either experimented with or currently employ now?

Luke Anear: We’ve tried usage limits and things like that. We still have a usage limit for users in terms of how much they can collect and store, but I always try and push the free line out on that. And we’ve played around with a certain number of inspections and things like that and then you hit a paywall. But I try not to put shackles on the experience as much as possible. There are companies that try and extract money at every opportunity, and then there are companies that want to see you do well, firstly, and then we’ll give you opportunities to pay for more. And I think we take that seriously. It’s not something that we kind of sit back and say, “Let’s get at every dollar we possibly can.” We always leave quite a bit on the table from that point of view because we value that experience more than we value getting every dollar that we can.

David Yuan: Absolutely. Can we double-click a little bit on that because I think a lot of companies aspire to have that customer intimacy and insight but as you scale, it can be quite difficult to capture those voices in a way that cuts through at all. Are there specific things that you guys do to make sure you stay close to the customer voice on this like paywall on product and other aspects?

Luke Anear: Yeah. Like engagement metrics are probably the strongest signal on that. And you want to see at what points do people get their real sort of aha moments or wow moments. And building the experience towards those moments, that’s kind of key, and so understanding and breaking down what are the points where people achieve a certain level of interaction so that we can either accelerate the time to that moment or increase the peak of that moment. People remember the peaks of the experience and that’s what brings them back. And sometimes it’s simple things. It’s often not necessarily what we value. It could be a PDF report, for example, that’s got photos in it. That’s the most basic thing from a tech point of view. But from our customer’s point of view, they used to take photos on their phone and then type stuff up in Microsoft Word and then put it all in. And now magically, it kind of happens.

David Yuan: That’s great. If the broader topic is mobile, it leads us down a line of thinking, which is providing discreet value or utility value or great experience through individual user. As we talked about, as you deploy more broadly into organizations, you start bringing teams online. When you think about the features or the product experiences that really drive joy for an organization, are they different than the specific user experiences or are things like analytics or benchmarking?  Do they become more central? How do you think about the overall organizational experience to complement the user experience?

Luke Anear: I think collecting data for the sake of it is no one’s outcome. And so it’s about, what are the decisions we can make with this data? How do we get the insights? Or how does this make us more intelligent or smarter? That’s ultimately the goal. And the more that we can do that proactively and the less burden that we place on the organization to have to understand the data and make sense of it, the easier it is for them to be able to adopt it and share it. For us, collecting, having an incredible front-end user experience, is part of it. That makes it easy to collect information. But then how do you take a position on what information is important? And I think we’ve seen a lot of BI tools and stuff, where people can pivot and do all sorts of stuff with their data, but I don’t think that’s enough anymore. And for us, it’s about understanding our customers, so that we take a position on what data is going to be most valuable to them. And then we shape the experience around that and really serve up those decisions for them on a platter. They essentially want to know, our customers want to know, what’s working well across their teams today? What’s not working well?

And importantly, what do we do about that? Understanding just those three basic questions drives a lot of the decision-making for us around how do we present this information back? And how do we make it easy for them to get the insights that help them run their business? And make it easy for your customers to get value from that data and those insights. That takes a deep understanding of the customer to do that. And also, when you do it well, it increases the competitive barrier for other people to come in, because a lot of them just take the easy way out and go, “Let’s just allow everybody to pivot, however they want to pivot the data.” And that just creates work for our customers. They’re like, “Don’t create work for me. Make it easy for me.”

David Yuan: I love it. The same intensive focus on consumer experience at the individual user level extending into the team level and ultimately the enterprise level. That makes a lot of sense. And do you see that progression as SafetyCulture is adopted in your customer? Do you see that progression naturally mirroring monetization? Is there a certain point in which that you realize that experiences gone from the individual now to the team, now to the organization, where it does make more sense to consider different paywalls or different levels of monetization?

Luke Anear: Yes. And it also gives you opportunities to add value layers on top of that. We can mix that data with other data sets. We now do IoT and sensor-based hardware as well, which collects data that we layer in on top. When you sit back and take a position on what’s valuable, you’re then in a great place to decide what else is relevant, and what else can we provide that’s going to be helpful? A lot of thought goes into that, and our customers have got other data that’s valuable. And we’ve mixed data with customer satisfaction data, and we can see uplifts in CSAT when people are doing regular checks and inspections. It becomes multi-dimensional.

David Yuan: We’ve talked about being super intentional about the user experience from individual users to team to organizations. We’ve talked about monetization along those same dynamics. Let’s shift gears a little bit to go-to-market. So, initially, most bottoms-up premium models are all marketing and, primarily, organic marketing. When did you get the conviction to start really leaning into paid marketing, if you have, and when did you start thinking through hiring that next layer of expense, those inside sales reps? You’re moving from a very organic business to more a traditional software model over time, so when did you know that it was time to start putting some money to work?

Luke Anear: I think we’re still getting there actually. We haven’t spent a lot on acquisition and that. We do a little bit on content and things, but I think we’re still at the beginning of that journey. I probably can’t offer much in that sort of area, but in terms of inside sales, we have in the last 12 months, had people who are now focused on our existing customers and helping them get more value and expand and accelerate their path to value. We now will pick up the phone and chat with people. We never used to do that. I think for about the first 40,000 organizations, we never picked up the phone and spoke to them unless they specifically wanted to talk to us about something.

Because we’re a fairly low price point, it doesn’t make sense for us to try and have someone closing every sale. We’ve always got to sort of separate that out and make sure that our organic growth engine is strong. And that makes everything else easier. If you’ve got a product that sells itself and that can be adopted and self-served, then when you come to talk to a customer they’ve already got their own case study. We’re very conscious of that. We never want to be just saying, “Well, let’s just build out massive amount of salespeople,” and that becomes your growth engine. For us, it’s all about the organic adoption and then expanding that adoption and making sure that they’re getting maximum value from it. That’s a conscious choice and something we’re continuing to find a balance on.

David Yuan: You’re the envy of probably 90% of the software world, to be a product-led go-to-market, that’s fantastic. In terms of your customer success and customer support, it sounds like you think about those heads or that expense on a return-on-investment basis. But my guess is you aren’t actually compensating them on sales. Are you assigning quota to your customer success reps or is it purely organic?

Luke Anear: Not for the most part. There are a couple now of account execs, two or three or something. But all the rest are just focused on helping the customer and doing what they do. So yeah, there’s probably a place for it, I think, as we continue to grow. And talking particulars, we never actually sold a big, upfront deal, in terms of 1,000 seats or something, until just probably seven months ago was the first time we’d even done 500-seat deal. It was always only just one user and then they expanded up to thousands. And now that we’ve got companies that come to us and say, “Look, we want to start with 2,000 users.” That’s where the account execs can have that conversation and it makes sense to have a quota for them. But that’s a new area for us.

David Yuan: The beauty of your business, and as we talk through it becomes more and more explicit, is that SafetyCulture is following a different playbook. It’s a different software business model. As you think about the mobile opportunity and the bottoms-up opportunity, do those apply to traditional application software companies? Are there things that a traditional app company can learn from SafetyCulture, or is it really a grounds-up business model and grounds-up product model?

Luke Anear: That’s a good question. What we’re seeing from a lot of the established desktop or legacy players is that they’re trying to extend their software to mobile. And I think at best all they’re going to do is sort of keep their current customer because their current customer wants them on mobile. You’ve got a lot of luxuries on desktop. There’s more real estate. You have typically people who sit in front of a computer for at least a good part of their day. Those luxuries don’t exist with mobile. People are on the move. They’re out and about.

Where we see companies struggle is when they’re simply extending the functionality, or even a reduced functionality, of their desktop experience. You need to be able to step back and think about that user as a different customer. You’ve got to break down what they do in their day, what their outcomes are, and how can we do that. And that may be an extension of some of our software. Or it could be a completely different experience.

We want to get them out of our app as fast as we can with the outcome they want. Whereas a lot of the time, people think about trying to keep people in their software for longer. We’re trying to help them get on with the things they need to do, and that means get them in and get them out so that they can get on with their day.

David Yuan: Absolutely. If it is a truly generational shift and it’s a new category of application companies, who else is doing this well? Who else besides SafetyCulture do you look to, do you admire, that inspires you from a mobile product standpoint?

Luke Anear: I think for enterprise software to do well, you’ve got to solve a particular problem. There’s an Aussie company, Canva for Work, which is a design experience for teams. They’re doing great. There are obvious ones like Intercom, where I can now see what customers are saying and how we’re interacting with them. I can deal with stuff. And then you’ve got other guys, Trello, which is part of Atlassian now. I think there’s a mix. But I think the key thing is not necessarily to follow some of these others. Canva for Work is very different to us, as is Slack and Intercom, and so while there might be similarities in some of the functionality, the outcome that they deliver, those peaks and those moments for customers are completely different. There’s a few around that we looked at. But I think that the biggest clues will come from your customer base and understanding that more than admiring what other mobile-first companies have achieved or mobile experiences are on offer.

David Yuan: Good point. You’re a global business. SafetyCulture is a global business, but you were founded in Australia and as we look at product-led software companies, a preponderance of them are actually coming out of Australia and New Zealand. What’s going on? Is there something in the water? Is there something foundational going on in your neck of the woods that make for these beautiful UI product-led business models?

Luke Anear: I think the simple answer is probably we never had the money that you guys had in the U.S. and so we just had to figure it out. And we didn’t have that kind of luxury of time and great investors that would just be backing us from the beginning. We had to really get traction and prove out a business model before people would even take any notice of us. I think that’s played a part for a while. And then there’s a couple of other factors as well. We never had the experience or the talent, really, in Australia. No one really had the belief on how you could scale a company from your garage. You’d hear about it, but it was always in the U.S. Now there are more examples, people are starting to realize what’s possible. And we’re also seeing a lot more talent coming back to Australia that had left. There’s 24,000 Australians working in the Bay Area. You’re seeing more and more of those come home. And then we’re seeing other people from all around the world realizing that there’s now a pretty healthy tech community, and it’s like doubling every couple of years. Sydney’s got at least twice as much talent as it had two years ago and we’re seeing that continue. It’s a number of factors all coagulating together to make it a better outcome for us all, but we’re still going to work hard. And as much as people think we’re out surfing at the beach all day, we’re doing some long days and hard work to get it done.

David Yuan: Absolutely. The good news is, the market certainly has noticed and I’ve been taking that 14-hour flight for the past five years looking for companies like yours, so the world has noticed. And congratulations to that whole ecosystem. This has been awesome, Luke. Really appreciate all the great thoughts.

Maybe stepping back from business a little bit, you lived a super interesting life in addition to being a successful entrepreneur. Taking a step back from SafetyCulture, what are you most interested in the business world or even outside of the business world?

Luke Anear: Well, a couple of things. I think travel is so accessible now to everyone fortunately, compared to previous generations, that your ability to go and experience different culture or different part of the world is greater than ever. I think that’s super exciting. I have a very curious mind, I love learning from different people, and cultures, and stuff. So anytime I can get exposed to the way other people doing things, that’s something I always look for. In terms of a broader business world, I think it’s great to see the amount of wealth that individuals are amassing, Bezos and different people, and even what we saw Warren Buffet doing with Bill Gates. I think to see them now harnessing that and channeling it towards solving really complex and big problems around the world that perhaps governments in the past would take responsibility for but just can’t anymore. I think to see that and these examples being set for everyone that’s following, is something that I look up to and think that’s making the world a better place. I think the more social conscious we become and the deep desire for people to want to improve the world around them, and make life better for other people, I think more of that that’s happening, the better. It’s just a great time to be alive.

David Yuan: Absolutely. 100%. Luke, thank you so much for your time and your thoughts. This is fantastic and congrats on all your successes at SafetyCulture.

Luke Anear: Thanks, David. Much appreciated.

 

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The statements, views, and opinions expressed are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”). TCV has not verified the accuracy of any statements by the speakers and disclaims any responsibility therefor. This interview is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed. The TCV portfolio companies identified, if any, are not necessarily representative of all TCV investments and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visit www.tcv.com/all-companies. For additional important disclaimers, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/.


Silver Peak Announces $90 Million Investment From TCV to Accelerate SD-WAN Growth

SANTA CLARA, Calif. — Silver Peak®, a global leader in broadband and hybrid WAN solutions, today announced a $90 million strategic investment from TCV. The investment enables Silver Peak to expedite execution of its go to market expansion plans and cement its position as a global leader in SD-WAN and cloud-first WAN edge solutions. TCV is one of the largest providers of capital to growth-stage private and public companies in the technology industry and has backed industry-leading companies including Airbnb, ExactTarget, Genesys, Netflix, Rapid 7, Redback Networks, Splunk, Spotify, and Zillow. With the investment, TCV general partner Tim McAdam will join the Silver Peak board of directors.

As applications migrate to the cloud, it’s become clear that enterprise networks must evolve in order for geographically distributed companies to benefit from the increased agility, flexibility and simplicity the cloud promises. Users connect to applications via the Wide Area Network (WAN), which was originally designed when applications resided exclusively in the data center. To truly realize the full benefits of the cloud, enterprises need to move beyond legacy router-centric approaches that are manual, error-prone and ineffective in a cloud-first environment. Only Silver Peak delivers all the necessary functions of the new WAN edge in a single device – advanced SD-WAN capabilities, routing, security and integrated WAN optimization – that simplifies the WAN edge, delivers new levels of agility and automation, and improves productivity.

“It’s rare that we see an opportunity to disrupt a massive, entrenched $100 billion technology category supporting mission critical applications and communication,” said Tim McAdam, general partner at TCV. “After researching all the players in the multi-billion-dollar SD-WAN market and speaking with enterprise CIOs, it is clear that Silver Peak has the most complete solution, clear market differentiation and traction, and a unique vision for the future of the new WAN edge. We look forward to working with the team to rapidly grow the business.”

“With more than $100 billion spent on the WAN every year by enterprises, much of it on technology that pre-dates the cloud, Silver Peak has an enormous opportunity as we deliver disruptive new WAN edge solutions for enterprises,” said Silver Peak Founder and CEO, David Hughes. “TCV has a proven track record for identifying high-growth markets and investing in those innovative companies with the right solution and the right team in place to achieve market leadership. Our partnership with TCV will help accelerate our growth trajectory, increase our competitive advantages and extend our market leadership. We are excited to work with the TCV team.”

J.P. Morgan served as exclusive placement agent to Silver Peak on the transaction.

About Silver Peak

Silver Peak is a global leader in broadband and hybrid WAN solutions. Silver Peak offers a high-performance SD-WAN solution that provides secure and reliable virtual overlays to connect users to applications with the flexibility to use any combination of underlying transport without compromising application performance. This results in greater business agility and lower costs. More than 3,000 globally distributed enterprises have deployed Silver Peak broadband and hybrid WAN solutions across 80 countries. Learn more at silver-peak.com.

About TCV

Founded in 1995, TCV provides capital to growth-stage private and public companies in the technology industry. Since inception, TCV has invested over $10 billion in leading technology companies and has helped guide CEOs through more than 110 IPOs and strategic acquisitions. TCV’s investments include Airbnb, Altiris, AxiomSL, Dollar Shave Club, EmbanetCompass, EtQ, ExactTarget, Expedia, Facebook, Fandango, GoDaddy, HomeAway, LinkedIn, Netflix, OSIsoft, Rent the Runway, Sitecore, Splunk, Spotify, Varsity Tutors, and Zillow. TCV is headquartered in Menlo Park, California, with offices in New York and London. For more information about TCV, including a complete list of TCV investments, visit https://www.tcv.com/.

© Silver Peak Systems, Inc. All rights reserved. Silver Peak and the Silver Peak logo are trademarks or registered trademarks of Silver Peak Systems, Inc. in the United States and/or other countries. All other marks may be trademarks of their respective owners.

Contacts

Silver Peak
Danielle Ostrovsky, 410-302-9459
dostrovsky@silver-peak.com

or

TCV
Katja Gagen, 415-690-6690
kgagen@tcv.com


10X: What 5G Means for Consumers and Enterprises

Depending on where you look, the number of connected devices, or ‘things’, out there is now in the region of 8.4 billion.  That’s a large number, but it’s barely the start.  By 2020, Gartner expects this total to jump to over 20 billion.

Importantly, this staggeringly fast growth of connectivity for consumer and enterprise use cases necessitates a high-performance network infrastructure and services and 5G will help take the industry to this next level.

In an era where just about everything will be connected—from the familiar smartphone to the connected robot, car or enhanced media distribution—there is a demand to share more wireless data.

3G arrived at the millennium, bringing us a major step forward in wireless connectivity speed. It offered connection speeds of around 380Kbps. The arrival of 4G networks built on that to deliver up to 100Mbps—the performance level many of us are familiar with today.

Even though 5G will be 10 times as fast, it won’t replace 4G in the same way that 2G (and gradually 3G) have been superseded since 4G’s arrival. 5G and 4G will work in complementary fashion to handle different types of traffic most efficiently. 5G remains in a technical trial stage as the standards for mobility and network interoperability continues being developed. Early commercial deployment is expected to start in late 2018. Yet, once the standards are set, there’s no turning back – 5G will be a catalyst for new applications and new opportunities that are just waiting to be imagined.

At the leading edge of this industry is Cradlepoint, an international market leader providing wired and wireless connectivity and networking solutions for distributed and mobile enterprises. Founded in 2006, the company has been at the forefront of providing 3G and LTE networking solutions for enterprises.  The company was first to market with LTE routing solutions. It now has 18,000 customers worldwide and has shipped more than 1.7 million cellular routing platforms.

In a recent conversation, Cradlepoint CEO George Mulhern explored the 5G opportunity with TCV Venture Partner Doug Gilstrap, an IT veteran and the former CSO of Ericsson.

 

Doug Gilstrap: If we believe everything we hear about 5G, it’s all expected to really start happening in 2018. Is that hype or hope?

George Mulhern:  The technical trials are underway as we speak.  The commercial production testing will start in 2018. There are already many 5G trials taking place around the world and 5G-ready base stations have been deployed by the major vendors. They’re already using some of the new spectrum for 5G both licensed and unlicensed spectrum, and the expectation is that it will be commercialized in 2019 and 2020.

Doug Gilstrap: When (and how) does 5G displace 4G? When will it be the new norm?

George Mulhern:  5G and existing LTE technologies are going to coexist for quite a while.

We’ll start to see some limited early deployments in 2018, and it’ll grow from there—but it’s not going to completely displace 4G.  In fact, some of the early deployments will be based on the LTE core—so they’ll coexist. That’s going to be important for customers because they’re looking for a transition.

It’s not going to be a light switch moment where they wake up one morning and 5G is everywhere. It’s going to be expanding over the next two, three, four years. It’ll be a significant improvement to the wireless capabilities as it gets rolled out.

Doug Gilstrap: Whats 5Gs selling point? What benefits can 5G adopters expect?

George Mulhern: Efficiency. We see 5G offering significant cost savings to operators and end users.

Our customers with many sites, branch locations and IoT needs (buses, police cars etc.), can expect better performance with advances towards 5G. This means no lead time to connect and wait for broadband digs, so any new high-speed broadband connectivity can be met instantly.

Also, with 4G Advance and 5G inter-workings, some of our enterprise customers will have better performance compared to the existing fixed line infrastructure in place today.

For customers with massive amounts of logistics and transportation needs, the new 4G/5G data plan charges plus our hardware and software solution makes the implementation, the monitoring, and the usage tracking affordable. And the productivity gains will be impactful. This technology will be price competitive and offer a variety of physical and logical diversity for all our clients.

We’re seeing the operators charging hard into the mobile enterprise space as the next wave of market opportunity, and we are here, hand in hand with our solutions to help make it happen.

 

Doug Gilstrap: Is everything going to be wireless with 5G?

George Mulhern: Because of the 10X performance improvement, 10X latency improvement and capacity improvement, 5G is going to be a tremendous technology. It’ll be a dominant last mile technology, but I don’t think the wires are going to go away entirely.

It’s like when email first hit, and people predicted the post office would disappear. Email opened the way for a whole host of new applications and capabilities, but didn’t completely displace the older technology, although its role in communications has been significantly diminished.

Any time you get something as flexible as wireless that provides the kind of performance and capabilities people need, I think they’re going to naturally migrate towards that. It happened on the LAN with Wi-Fi. It’s happened in the Personal Area Network with Bluetooth. And it will happen on the WAN as well. I would bet Doug’s paycheck on it…

Doug Gilstrap: Thanks…! Do you expect there’ll be a different take-up in different countries, unlike 4G?

George Mulhern:  The race to 5G is full on right now.  It is likely that many of the same countries who led the way to 4G/LTE will be early to the 5G market.  Carriers in the United States, Korea and certain countries in Europe were early movers in LTE and are investing very heavily in 5G right now.  Japan is also investing heavily in 5G and plans to have the network built out when they host the Olympics in 2020.

5G is very important to the carriers/operators because it opens up a much broader set of applications and markets to them.  The mobile phone market has been a tremendous growth opportunity on the consumer side and especially the evolution to mobile broadband (3G+/4G), but it is saturated, and the operators are now really focused on growth in the wireless side for the enterprise.  Examples include fixed wireless access to the enterprise, which is core to Cradlepoint, and we look to provide solutions for growth in other areas as well.  5G will provide opportunities in Fixed Wireless Access (FWA) for enterprise and residential (video), Internet of Things applications, autonomous vehicles, etc. That hits home for companies like Cradlepoint who can help deliver these new applications and services to the end customer.

George Mulhern: Now, let me ask you, who do you think will benefit the most, consumers or the enterprise—and what industries will be early adopters?

Doug Gilstrap: I think both enterprise and consumers are going to benefit tremendously from this battle among carriers to get solutions to market first.  We have seen the industry pull in their timelines for 5G from what they were, and they’re currently selling 5G-ready radios and are in 5G trials with many of the largest operators.  We’ll see the commercial first movers with the device versions in the latter half of 2018.

For the enterprise specifically, there are a lot of use cases that will need lots of bandwidth, so operators are utilizing different options across the 5G spectrum such as 3.5 gigahertz and 28 gigahertz because more capacity is needed to meet enterprise needs—and not just speed, it’s throughput as well.

Think of mission-critical applications for the enterprise, where there’s a lot of imaging needs and where a lot of data throughput has to be in real time with no jitter because people are using that data to make decisions. Or think of the oil and gas or utility industries which have remote diagnostics and imaging requirements.

There’s also healthcare where imaging and X-rays need to be shared because professionals are doing their work remotely. It will also be massive for video distribution to the enterprise or to the consumer residential markets. These require high-end bandwidth and low latency for quality of service. Any mission-critical application that requires that fits 5G very well.

On the horizon are consumer applications such as augmented reality, virtual reality, and the autonomous car. If you consider all the sensors and the data transmission that has to go back and forth—from the speed of the car to the cars on the road and changing road conditions—there’s so much going on. It’s low latency and high throughput.

 

Doug Gilstrap: How should enterprises think about preparing for the deployment and adoption of 5G? What are best practices and pitfalls to avoid?

George Mulhern:  My advice for enterprises preparing for 5G would be: Don’t wait.

Start incorporating LTE into your organizations now. With gigabit LTE commercially available on multiple operator networks, you can get much of that performance already. In the digital economy, it’s the companies that can move with speed, agility and gain insight that will succeed. Incorporating wireless into their business today not only prepares them for 5G, but they’ll start to reap some of those benefits much earlier than their competitors.

Doug Gilstrap: How do businesses really take advantage of LTE and 5G? Because it’s not easy. You can’t just say, “Oh, I’m going to implement 5G, and we’re ready to go.” It’s gigabit LTE as well.

George Mulhern: Each customer has their own priorities and strategic goals. We have customers today using LTE as their only WAN source for their branch offices.  Others are using it for temporary networks (a pop-up store for example), or air-gapped networks for security reasons.  Smart City applications like connecting traffic lights, Wi-Fi in businesses, connected police cars, digital signage, surveillance cameras, kiosks, the list of “things” being connected now is endless.

What’s ideal for retail and transportation can be different than what’s needed in the public sector or in financial services, however high speed, secure mobile access fits in with each of these verticals.

It is our view that this next generation of edge networks need to be much more agile and flexible. They need to be able to expand, contract, and incorporate new applications as business needs dictate.  We call it the Elastic Edge.  These networks will be Software-Defined, Cloud Orchestrated, Wireless and much of the time delivered as a service to the customer. Therefore, 5G will be a game changer in terms of flexibility, agility, performance, and cost.

Doug Gilstrap: George, what’s the fastest chipset that you will have in your routers from a theoretical chipset speeds standpoint for 4G advanced next year?

George Mulhern: Today we know that there are many operators that have commercially launched LTE Advanced 1 Gigabit services and our solutions will support this gigabit speed.  As 5G moves above the 1 Gigabit level to 10 Gigabits, so will we, supporting gigabit speeds on our platform in 2018, as those networks become available to the enterprise.

Our goal will always be that our solutions will be able to operate as fast as the networks will support.

 

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TCV is an investor in Cradlepoint and Doug Gilstrap serves on the board of directors of the company.

The views and opinions expressed in the transcript above are those of the speakers and do not necessarily reflect those of TCMI, Inc. or its affiliates (“TCV”).  This transcript is not an offer to sell or the solicitation of an offer to purchase an interest in any private fund managed or sponsored by TCV or any of the securities of any company discussed.  The TCV portfolio companies identified above, if any, are not necessarily representative of all TCV investments, and no assumption should be made that the investments identified were or will be profitable. For a complete list of TCV investments, please visitwww.tcv.com/all-companies/.  For additional important disclaimers regarding this document, please see “Informational Purposes Only” in the Terms of Use for TCV’s website, available at http://www.tcv.com/terms-of-use/