VCs look the other way as they give $205 million more to Vercada, whose technology has been repeatedly misused • TechCrunch


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Vercada, a six-year-old that builds security equipment — it sells video security cameras, door-based access control, location sensors and alarms, all connected on a cloud-based platform — just raised $205 million in Series D funding. He says it’s an estimate of $3.2 billion.

In total, Verkada has raised $360 million in funding, he says.

On the one hand, it’s easy to appreciate what attracted investors like Lindsay Capital to Vercada’s new round, which also includes Michael Dell’s MSD Partners, Sequoia Capital, Next47, Meritech Capital and Felicity Ventures.

Surveillance is a lucrative industry, and according to Vercada, since its previous funding round in 2020, it has quadrupled its headcount, adding more than 1,000 new employees. Opened six new offices; And it quadrupled its customer base to over 13,000. Among the extensive clients listed on the website are Virgin Hyperloop, the Hartford Police Department and San Rafael City Schools in California.

But boy, investors had to look past the horrors of keeping the company under the same management team and giving away the money. Indeed, numerous reports in recent years (which have become incredibly difficult to find online) have simply steered investors in the opposite direction.

By March 2021, for example, Bloomberg reported that more than 100 employees at Vercada could view the cameras of thousands of its customers, schools and police departments, as well as global corporations such as Internet service company Cloudlar.

According to the report, security at the security company was so lax that Vercada was hacked by hackers, allowing Vercada customers to view all live feeds and archived videos. At the time, that included 150,000 cameras, including Tesla, police departments and hospitals.

A related finding, based on Bloomberg’s interviews with current and former employees, is that while Vercada offers customers a “privacy mode,” certain accounts allow Vercada employees to turn off that feature and view camera footage.

Tesla’s China branch later told Reuters the breach affected only one of the supplier’s production facilities in Henan province, west of Shanghai. Additionally, a Swiss computer hacker named Tilly Kottman was quickly indicted by the US government on multiple counts of wire fraud, conspiracy and identity theft related to the Verkada hack.

Still some damage done. Worse for Vercada, Bloomberg reported weeks later that current and former employees said the lack of attention to data protection was an example of a “secondary and sales-obsessed and larger ‘bro culture’ that tolerates harassment of women and misleading marketing requests.” (Many of the company’s Glassdoor reviews posted this summer paint a similar picture. Despite many overwhelmingly positive employee comments — “A rare startup that has created a perfect growth and culture curve with no injuries comes to mind!” — other potential hires are warned to stay away. “Totally toxic.” environment, filled with sales leadership that prioritizes all the wrong behaviors,” reads one review.)

Meanwhile, both stories pale in comparison to an earlier incident first reported by IPVM, a security and intelligence industry research group, and later confirmed by Vice.

What happened: In 2019, the director of sales at Verkada’s offices in downtown San Mateo, Calif., used the company’s security cameras in the building to take and post photos of female colleagues in a Slack channel called #RawVerkadawgz, in Victoria, against co-workers who had sex with the company. Obvious jokes.

In one incident, a female employee was reportedly filmed with her mouth open and commented on on the channel, which included the sales director and at least one other sales employee.

Such a toxic environment was not only allowed, but encouraged, many workers pointed out to Victor at the time the article was written.

Either way, Vercada’s employees — and investors — had reason to question management’s judgment. Per Weiss, after the Slack channel was reported to the company’s HR team, Vercada CEO Philippe Calizan announced at a company-wide meeting that an undisclosed number of employees working in that Slack channel had been given a choice between leaving or leaving the company. Their shares are down. The deputy was not fired until a report was filed on the matter.

Kalizan, who co-founded the company with two fellow computer science graduates from Stanford – James Renn and Benjamin Berkowitz – will remain at the helm.

Vercada is also rising to the top ranks. In April, he brought in Bill Berry, no stranger to adversity, as general counsel. Berry, who has worked in law for more than 20 years, resigned as Tesla’s vice president of legal affairs at the end of last year.

Pictured above: Verkada cameras.


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