In 2004, Alexander Fernandes founded his high-definition video surveillance company Avigilon. Just seven years later the company floated on the Toronto Stock Exchange and since then their share price has soared by almost 250%.
Speaking in a phone interview this week to mark 12 months since the IPO, alongside an announcement that Q3 revenues were up over 69% on 2011, Mr Fernandes told me how frustrations with the quality of video surveillance led him to found Avigilon.
“I really feel that video surveillance if you have a grainy, blurry picture is of little value. I just feel strongly – in fact that’s why I founded the company because I was a user of video surveillance – I just felt that the video was absolutely substandard and I was literally shocked, dumbfounded that airports, nuclear power plants, military bases would be relying on grainy, fuzzy, low-quality, analogue, low-resolution, highly-compressed video systems. I was absolutely amazed that this could be the state of affairs.
“And so, I think that bringing the video surveillance industry to full HD quality is really the greatest innovation because at least now the video is usable.”
Complete HD surveillance systems, not just cameras
Avigilon’s position as one of the more highly regarded companies in the surveillance industry has come from a clear belief in high definition video being of vital importance.
I asked Mr Fernandes what innovations he sees for the video surveillance industry in the coming years.
“The one that’s at hand, that’s first and foremost for the next four or five years is really redefining the industry – moving it from analogue to fully HD solutions.
“Not just HD cameras, but HD software, VMS that can actually record that video. So many recording solutions do heavy compression on the cameras and in the process greatly diminish the value of HD cameras.
“So the surveillance problem is not one of uniquely just cameras or recording software, it’s having that complete solution, whole environment where the video is captured with high clarity, but that the data is properly compressed and managed in an effective way so that it’s not utilising too much bandwidth and then storing that video so that it can be viewed post-incident for investigation purposes.
“That’s really the main thrust of what we’re trying to do here, is to get the industry out of this analogue rut and into HD.”
I pressed Mr Fernandes on why the surveillance industry was so slow to adopt HD? There are three main barriers: cost, lack of compatibility in standards and the issue of performance – driven by recording systems not designed for HD.
“We designed the first end-to-end security surveillance system specifically for HD,” says Fernandes.
Five-year plan to reach revenues of $500m
And the company see the take-up of HD solutions as key to their five-year plan. By 2016 Avigilon aims to reach revenues of CA$500m a year, making them one of the largest video surveillance manufacturers in the world.
As a CA$100m company today that would mean quadrupling their revenue in the next four years. Is this realistic?
“Absolutely, I’m not one to set unattainable goals. It’s certainly ambitious, but it’s definitely within reach. If you look from a historical standpoint we have a compound annual growth rate up until the end of last year of over 125%.
“Certainly, we only need to achieve something slightly less than 50% annual growth over the next four years. We’re doing that already at a rate of CA$100m today and so in order to quadruple our revenue in four years we need about 50% annual growth which is actually less growth than we’ve had over the past five years.
“And it’s certainly achievable. There are three growth initiatives that we outlined at our IPO that we plan to continue executing to get us to CA$500m.”
Those three arms of their global sales strategy are:
- Expanding into new markets, including the Middle East;
- Increasing their market share in existing domestic markets (US, Canada, UK) where they estimate they have less than 1% market share;
- The expansion of their business development group that works exclusively in fixed vertical markets – such as airports and casinos.
Mr Fernandes outlined their plan to become the largest video surveillance company around.
How?
“Our plan to do that is simply to provide our customers with better products that cost less.”
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