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These Two Guys Built Dropcam To Catch A Dog – And Just Sold It For $555 Million

These Two Guys Built Dropcam To Catch A Dog — And Just Sold It For $555 Million

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JULIE BORT TECH  JUN. 21, 2014, 9:34 PM

Dropcam founders Greg Duffy and Aamir Virani

The story of Dropcam is a classic tale of Silicon Valley success.

Late Friday, Google’s Nest announced that it was buying Dropcam for $555 million in cash.

Dropcam is a five-year-old San Francisco company, founded by two engineers from Xobni, Greg Duffy and Amir Virani. (Xobni was an email inbox app sold to Yahoo in 2013 reportedly for more than $30 million.)

Dropcam is a simple internet camera that people can set up to watch their homes or places of business. Then they can pay for cloud storage for the videos if they want. The company says that 39% of its customers pay for its cloud.

But Dropcam started out as a side project to help Duffy’s dad, who was trying to find out which of the neighborhood dogs was leaving droppings in his yard, according to the history posted on Dropcam’s website.

Greg’s dad kept fiddling with webcams but couldn’t get them to work right and didn’t want to store the huge video files on his hard drive.

Duffy and his friend Virani thought they’d stumbled on the next big idea, a home surveillance camera that turned on when it detected motion and would store the videos in the cloud.

Sadly, none of the investors they talked to were interested in funding them until they talked to tech pioneer Mitch Kapor. He kicked in the seed money. Duffy and Virani, who wrote most of the original code themselves, created the product and Dropcam launched in 2009.

Kapor is known as the founder of Lotus Development, which made an early spreadsheet for the PC known as Lotus 1-2-3. That app helped launch the personal computer revolution. He went on to become a VC and today his Kapor Capital has provided seed money for an impressive list of companies (AngelList, Asana, Bit.ly, and Uber, to name a few.)

In the early days, Duffy and Virani packed and shipped every Dropcam sold themselves.

With Kapor on board, they had far less trouble getting new rounds of investment. Eventually they raised nearly $48 million beyond the seed round, including a $30 million round about a year ago.

And this week, they walked into the arms of Google Nest, and a half-a-billion-dollar exit.

Dropcam has never disclosed its revenue, but as Re/Code’s Liz Gannes points out, it is regularly listed as the top-selling security camera on Amazon, and it recently started being carried in retail stores like Apple and Best Buy. It became popular as a baby monitoring cam.

And yes, Duffy’s dad caught the dog and, apparently, still has the video to prove it.

 

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About bambooinnovator
KB Kee is the Managing Editor of the Moat Report Asia (www.moatreport.com), a research service focused exclusively on highlighting undervalued wide-moat businesses in Asia; subscribers from North America, Europe, the Oceania and Asia include professional value investors with over $20 billion in asset under management in equities, some of the world’s biggest secretive global hedge fund giants, and savvy private individual investors who are lifelong learners in the art of value investing. KB has been rooted in the principles of value investing for over a decade as an analyst in Asian capital markets. He was head of research and fund manager at a Singapore-based value investment firm. As a member of the investment committee, he helped the firm’s Asia-focused equity funds significantly outperform the benchmark index. He was previously the portfolio manager for Asia-Pacific equities at Korea’s largest mutual fund company. KB has trained CEOs, entrepreneurs, CFOs, management executives in business strategy, value investing, macroeconomic and industry trends, and detecting accounting frauds in Singapore, HK and China. KB was a faculty (accounting) at SMU teaching accounting courses. KB is currently the Chief Investment Officer at an ASX-listed investment holdings company since September 2015, helping to manage the listed Asian equities investments in the Hidden Champions Fund. Disclaimer: This article is for discussion purposes only and does not constitute an offer, recommendation or solicitation to buy or sell any investments, securities, futures or options. All articles in the website reflect the personal opinions of the writer.

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