This is another article in Security.World’s Company Grows series.
We were fortunate to catch up with Pierre Racz, Founder, President and CEO of Genetec and chatted about how Genetec has grown over the years. Pierre Racz is not your typical growth company CEO in that he is first and foremost an engineer. He has a master of the underlying technologies, however, he has a keen sense of the market, where he and his company, Genetec, fits into the marketplace. Racz also is atypical in that he has been able to stay current on new technologies, grow his company past the pure entrepreneur stage, and now runs an industry leading video management software company.
Racz has also seen a lot of changes in the last 20 years since he started Genetec. The first major change was the acceptance of digital video over analog video. Initially, there was resistance toward digital because of the lower resolution and higher latency (especially with Pan/Tilt/Zoom (PTZ)) that it had at the time. Overall PTZ control was not as smooth and the resolutions were expensive to obtain. This has completely changed today as analog is now considered to have the lower quality video signal with HD and –more recently– ultra HD signals being better.
Another change is the overall sense of the importance and willingness to pay for software. Twenty years ago, hardware companies were giving software away. It was initially a struggle to get people to pay for software.
“Now, companies realize that software has true value,” stressed Racz. “Hardware has value too, but it’s a different type of value.”
The next hurdle was to get people to understand that a system that has both hardware and software, for all its advantages, it is like a garden that must be maintained.
“You need to continually weed and maintain this garden. You must rotate the crops and put in continuous effort. Ultimately, people now see value in the software maintenance agreement, which was initially resisted by the hardware community as well,” explained Racz.
The latest change in the industry is that, while many people were initially skeptical about the use of “The Cloud,” the Cloud is now picking up in a serious way. This is due to the fact that it addresses things that have been bothering people in the industry for a long time, namely the cost of maintenance in a system.
“So, we have seen all kinds of things that people do to try to reduce the cost of IT, including outsourcing it to foreign countries,” Racz said. “But the better approach —that we have now days— is the Cloud.”
Racz explained, “People who do the Total Cost of Ownership (TCO) calculation, including cooling electricity, securing the premises where the hardware is located, and putting in appropriate firewalls around that equipment, have found that it is actually more cost effective to do many of these functions in the Cloud than to roll your own. And it will become more cost effective.”
“The best analogy I can come up with is electricity. 100 years ago, people had their own electric power plants and they had their own engineers to manage their power plants. But today we are essentially using cloud electricity. Through wall sockets, we’re getting highly reliable, very clean—in terms of electrical noise—power,” shared Racz. “And it is a lot more cost effective that this be provided as a utility. The same thing is true of computing power.”
And this becomes even more compelling as we move from retention periods of 1-month to retention periods of 24-months. It becomes prohibitively expensive to manage those pieces of equipment on your own premises.
When we asked Racz what he attributed to occurring over the years that has brought GENETEC to the position it is today, he supplied a few things that have contributed to the company’s success.
“I think the main one is our software centric, IT approach to security. Initially this was a complete surprise to the industry: to take an IT approach to security,” he said. “Just as telecommunications and computations have merged, now physical security is also being merged into the overall ecosystem because there are many of the same threats and many of the same assets that you need to protect. So, taking an IT approach gave us a competitive advantage.”
The other item helping Genetec succeed is culture.
“We have a very IT-centric culture. We have a relationship between talented software designers and an active user base. While this type of business approach does not work well for box moving and distribution, it works for us,” Racz said. “Because we have this high touch with the end-users and collaborative approach, we are able to learn about their operational challenges and, in many cases, come up with solutions to their challenges.”
The way this will accelerate in the future is that more and more companies will ask suppliers to engineer business outcomes and the amount of money they pay will be based on the quality of those outcomes. You cannot do this with an arm’s length customer relationship. You have to have a very close relationship between purchaser and supplier.
When we asked Racz what he remembers about GENETEC in its early days that others may not remember thought of a couple of funny items. “I remember being told by the New York Transit Authority that the world would never go to digital because of the resolution and latency problems. Then, 10 years later, we became the standard for New York.”
“I also remember -in the early days- people asking us: ‘Where is the video switching matrix?’ And our answer was: ‘the network is the matrix,’”
Racz continued, “I remember forward thinking people who saw that going digital enabled them to use new topologies that were unavailable before. One such customer was a large gas utility in Canada. They needed to have emergency control centers, and they wanted to distribute them and have back-ups. Using analog was prohibitively expensive. They wanted to locate two control centers on either side of the Saint Lawrence River. With analog, it was out-of-the-world expensive, but, with digital, they were able to set up the system they wanted.”
“It also dawned on people that, with digital, you could start sharing the infrastructure. So, cameras that were initially only used by security people are now used by security, emergency management, marketing, and operations people,” Racz said.
“And you can modulate this sharing based on situational requirements. After all, while in crisis mode, you don’t want marketing people to use the cameras. But when things are normal, it’s a waste not to let the marketing team use the cameras to gain insight that adds value to their programs—ultimately, digital enabled sharing.”
Sharing within an organization led to sharing outside as well. With proper security, sharing can and is occurring between different agencies and organizations, something that was impossible with analog in the past.
We asked Racz how GENETEC got started. “In year zero, we were ten people. And now, in year 20, we are 950.” And today, what makes GENETEC a vendor others want to partner with?
“I think the culture of knowing that great software is made only when you have a close cooperation between a handful of talented designers and an active user population makes us much more responsive to the needs of our customers,” Racz added.
“The best thing that has happened —and it has happened over and over— has been when our end users figure out ways of applying the technology that the designers never imagined. And then the designers are able to improve the features to be able to enhance the modes of operations that the end users invented.”
When asked what Racz saw as the #1 achievement in getting GENETEC to where it is today, Racz offered, “We have always bet on Moore’s Law from the mid ‘60s, which stated that the cost of computing power will fall every 18 months. This meant that initially, when video compression was necessarily of low quality because high quality video was unaffordable for the security industry, we knew that the price would drop in the future and we bet on that.”
Because the cost of computing power continues to go down, Genetec doesn’t worry about what they can do today. Instead, they look at what they can do in the future with this ever-decreasing cost of computing power. And this is one of the engines that drove GENETEC to where they are today.
We asked Racz that when he started GENETEC, did he have any mandates about specific goals or achievements for his company and he replied, “When we started Genetec 20 years ago, I first off stated ‘we will never be more than 50 people.’ Then I said ‘we will never be more than 100 people.’ Then I said ‘we will never be more than 200 people.’ And that’s when I stopped with such statements.
“Our plan was always to be the best at writing software. We hadn’t chosen the application – we were just honing our craft. And, at GENETEC, we are a bunch of craftsmen,” Racz proclaimed. “Initially, we were building dispatch software for trucking companies. The video management software was a side project that I started with one of the other engineers. We were using the revenue generated by the dispatch software to fund the video management software.”
By a series of accidents of history, the video management software has become the most important part of GENETEC’s revenue. In fact, they exited the trucking industry over 15 years ago and now they are dispatching security guards and not dispatching trucks.
When we asked Racz what market areas he was looking at to grow the company further and where does he see the company’s next opportunities, we came back with that “We have a large strike force with 950 people. Over a third of our engineers are doing R&D. As such, we have been able to segment the company into a series of small internal well-funded start-ups that are addressing individual market segments.”
He provided an example where GENETEC has an application group that is concentrated on airports. They apply all GENETEC technology from the point of view of an airport. This means the engineers use video in the ways that an airport uses video. The engineers use access control the way an airport uses access control and license plate reading the way an airport applies that technology.
Similarly, GENETEC also has a law enforcement group, a retail analytics group, and an identity management group. Therefore, these groups are able to address specific markets with significant focus. With this structure, GENETEC is able to continue with the agility of a small company but with the resources of a large company.
Looking at the growth of GENETEC we asked the CEO what he plans for the future of GENETEC. “I think that, in general, we want to participate in the current change that is happening in the software industry. I’ve been writing software for 36 years, and one of the things that galls me is how we put up with low quality software,” Racz replied passionately. “Low quality software results in two types of malfunctions: accidental malfunction and malfunctions that are induced by ill-intentioned people.”
Then Racz delves into an area that he has become very vocal about within the industry and significantly sober about within the company. “The rising level of cyber criminality is poisoning our lives. There is now a renewed focus on the quality of software. 10 years down the road, we’re going to see software that is much more reliable. And security is going to improve to the point where we will not be worried about phishing and passwords. We will be able to manage all of this in much more transparent ways and will be able to use technology with less concern for cyber security.”
Racz passionately continued, “We intend to lead the way there. An example of what we’re doing is that we’re implementing Google’s zero-trust architecture in the network. This is a departure from the traditional concept of placing a firewall around your enterprise and assuming that everything inside that firewall is trustworthy. This doesn’t work anymore as people bring their own devices into the network.”
If these devices become compromised, you end up compromising your whole network.
“Zero-trust architecture is a way of architecting your system with this reliability reality in mind. At Genetec, we are not only building our own internal systems around this but we are also teaching our customers how to do it themselves. We’re going to make cyberspace a better place to live in the future.”
Racz told us that he doesn’t see any big name merger or acquisition of Genetec anytime soon and that he has no plans for taking GENETEC public. He enjoys running the company and engaging the technology at the core and he is adamant about making a difference in the industry.
If you spend any time with Pierre you get caught up with his passion, his intellect, and his technological insight. I, for one, am betting that the next 20 years of Genetec will be even better than the last.