Samsara, a $5.4 billion IoT startup that laid off 300 employees and raised a down round in May, is betting its business on customers in ‘industries that are ramping up to support the economy’

  • In May, the $5.4 billion Internet of Things startup Samsara laid off 300 employees, or 18% of its workforce amid the coronavirus pandemic.
  • It also raised a $400 million down round, lowering its valuation from $6.3 billion, although it’s still one of the most valuable venture-backed AI startups.
  • Samsara is now targeting essential industries like warehousing, manufacturing, pharmaceuticals, and agriculture by building products that help with monitoring worker safety – an area where the company has seen higher demand.
  • Visit Business Insider’s homepage for more stories.

Samsara — the 5-year-old startup that sells connected devices for industries like manufacturing and construction— felt the impact of the coronavirus crisis firsthand.

Back in May, the Internet of Things firm laid off 300 employees (about 18% of its workforce) and raised $400 million in what’s known as a down-round: The new funding lowered its valuation to $5.4 billion, down from $6.3 billion last September (although it’s still one of the most valuable venture-backed AI startups today). 

While Samsara’s customers in areas like public transportation and travel have taken a hit, it also has clients in “essential businesses” like food and beverage distribution, manufacturing, energy, oil and gas, and construction. So, in the last few months, the startup has shifted its focus to targeting those industries with its business unit called Connected Worker, which it launched last fall.

“In this environment, a lot of projects are put on pause,” says Aidan Madigan-Curtis, vice president and general manager of Connected Worker at Samsara. “We’ve been focused on those industries that are ramping up to support the economy right now.”

How Samsara is supporting essential industries during the coronavirus pandemic

Samsara has honed its focus on businesses that are still highly active, like warehousing, manufacturing, pharmaceuticals, agriculture, and logistics. 

“We do a lot of outreach for customers in our target industries,” Madigan-Curtis said. “What’s pretty interesting about the environment right now is we expected more negativity than there was.”

In hazardous jobs like construction, Samsara’s IoT technology — which includes cameras and sensors — can recognize if employees are wearing safety gear like hard hats and operating equipment correctly. It can also alert employees if they’re walking too close to dangerous equipment. Companies can see all this data on dashboards in real time. 

Read more: A new study from Microsoft finds that businesses are rushing to use the Internet of Things — an exec explains why it believes it can win in the market

“Both that worker and the company want to know that worker is safe,” Madigan-Curtis said.

What’s more, even when there are fewer workers on site because of the pandemic, Samsara’s products can provide visibility into what’s happening on the work floor, Madigan-Curtis said. 

For example, the San Francisco-based coffee chain Philz Coffee are using Samsara’s AI cameras to monitor if employees are adhering to strict guidelines, like wearing face masks and staying six feet apart at all times. 

“That concept of being able to be remote is also really important right now so people can stay socially distanced and have a strong sense of what’s going on in their environment,” Madigan-Curtis said. 

The future of Samsara’s business 

Samara views May’s layoffs as “a hard decision, but definitely the right one for the business,” according to director of communications Lindsay McKinley, who added that the cuts were so deep to ensure that the firm would only have to have one round.

Many of the employees who lost their jobs worked in frontier markets, like Europe, that had a longer path to profitability than others, or worked in areas highly-affected by the pandemic, like recruiting, events, and field marketing.

“Basically the way we approached it was setting Samsara up for the long term,” McKinley told Business Insider. “No matter how long a recession lasts and how bad the economy gets that we can reach profitability on our own without a need to raise additional funding.”

With a recent round of funding, the company hopes it can weather the pandemic and eventually reach profitability. So far, it’s made some steps to get there. For example, from January to May, the company grew its customer base by 50% to over 15,000 customers.

Now, Madigan-Curtis says her biggest challenge has been scaling the company and its supply chain as quickly as it needed.

“We hit a vein,” Madigan-Curtis said. “I think it came through quite a bit of listening to what our customer needed. That resulted in a lot of traction.”

Do you work at Samsara? Got a tip? Contact this reporter via email at rmchan@businessinsider.com, Signal at 646.376.6106, Telegram at @rosaliechan, or Twitter DM at @rosaliechan17. (PR pitches by email only, please.) Other types of secure messaging available upon request. 

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