Carlow’s Netwatch taps into US demand for remote security

David Walsh was quick to see potential of remote security monitoring

David Walsh, founder and chief executive  of Netwatch:  “The downturn was a time of opportunity for us.” Photograph: Brenda Fitzsimons

David Walsh, founder and chief executive of Netwatch: “The downturn was a time of opportunity for us.” Photograph: Brenda Fitzsimons

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“The hardest thing about doing business in the US is getting on that first flight over there,” says David Walsh, co-founder and chief executive of the fast-growing digital security firm Netwatch.

“Making the decision to go was the toughest thing of all but we figured that if we couldn’t make it in Boston, then there really was no hope for us,” he adds.

Netwatch brought in big guns for the company’s launch into the US five years ago, with Taoiseach Enda Kenny officially opening the firm’s office there. It also had another trick up its sleeve in former Boston police commissioner Kathleen O’Toole, who had become a director of the company after discovering it while in Ireland working as the first chief inspector of the Garda Inspectorate.

“We made a big splash in Boston and that helped us secure some early important wins with the likes of MIT,” says Walsh.

If ever there was a company which has proven that being based outside of a major urban centre need not hold you back, it is Netwatch. Established by Walsh and Niall Kelly in late 2002 in Carlow town, the company, whose main markets are in Ireland, Britain and, increasingly, the United States, has recorded phenomenal growth since.

“We’ve 56 quarters completed and have grown in every one of those quarters without exception. Even the recession failed to stop us,” says Walsh.

Netwatch uses a combination of high-quality security cameras and intelligent software to monitor client sites and detect suspicious events. It currently monitors in excess of 330,000 cameras across the globe for over 3,200 businesses.

Crime prevention

It claims to have prevented more than 40,000 crimes since it was founded nearly 15 years ago.

The company raised €19.5 million in an investment round co-funded by BDO Development Capital Fund and Bank of Ireland in July 2015. It is forecasting a 40 per cent rise in revenues this year, with over 70 per cent of turnover now coming from the US.

“I spend a lot of time abroad and have already been over to the States several times so far this year as that’s where all the action is happening for us and we’re making some really great inroads in our target markets there,” says Walsh, who may have left Kerry for Carlow many moons ago, but is certainly in no danger of losing his accent anytime soon.

“I expect to be spending even more time in the US over the next year or so as we’ve built a good sales infrastructure there, acquired some really iconic clients, which is critical in that market. And we found there’s a large number of companies interested in becoming strategic partners who might end up reselling our system to their customer base. We’re expecting exponential growth Stateside,” he adds.

US revenues alone rose by 113 per cent in 2015, a year in which overall sales jumped 20 per cent from €9.3 million to €11.2 million. New contract wins increased by 45 per cent from €11 million to €16 million that year.

While 2016 accounts have yet to be published, Walsh says revenues were up 32 per cent on the previous 12 months.

Headcount has also increased significantly in recent years with the company increasing its workforce by 17 per cent to 140 in 2015. It announced plans to create a further 85 jobs last October.

Brand ambassador

The man from Castleisland was originally only meant to be in Carlow for a few months, but having spent a significant chunk of his life there he’s become something of a brand ambassador for the town and county, with Netwatch sponsoring the local rugby club and GAA stadium.

Walsh even served a two-year stint as the president of its chamber of commerce.

He has been living in his adopted homeland since 1989 and he’s almost as proud of it as he is of being a Kerryman.

“I genuinely don’t believe we could have achieved what we have if it wasn’t for the fact that we’re in Carlow,” he says. “We’ve invested heavily in the local community and it’s paid us back in spades. We’ve always flown the flag for Carlow and it is part of our DNA. We depend on having high-quality people in the company and most of them are sourced from the nearby institute of technology,” Walsh adds.

One of eight children, Walsh grew up in a farming family in north Kerry, later attending De La Salle College in Waterford and eventually ending up at University College Dublin where he studied agricultural science.

“There were 11 of us including my grandmother living in a small cottage in Castleisland and those years shaped the rest of my life. My parents were incredibly positive people and we all grew up genuinely believing we were the luckiest family in Ireland,” he says.

The decision to study agricultural science was largely due to Walsh not really knowing what to do, but thinking it would be useful to have the qualification when he moved back to Kerry. It wasn’t to be.

After completing his degree, Walsh took a job in Fethard, Co Tipperary, with Ovamass, a bio-science start up. It was a spin-out from UCD that specialised in the area of in-vitro fertilisation of bovine embryos.

Early career

After the company ran out of money a year later, he moved to Borris, Co Carlow, to work for feed machinery firm Keenan Systems (which Alltech acquired from receivership last April). Walsh spent over 13 years at Keenan in roles including group sales director and managing director of the Irish operation.

He would likely have spent many more years with the firm until an incident involving a friend led him and Niall Kelly, a former co-worker, to establish Netwatch.

“A friend of ours was a keyholder who raced out to a site to turn off what he thought was a faulty alarm, but unfortunately for him there was a real burglary under way and he was attacked. Hearing about what happened to him led Niall and I to start discussing how there had to be a better way to protect properties, and even more importantly, first responders,” says Walsh.

“Niall, who was working in golf course construction at the time, had a background in electronics and so was familiar with the concept of video transmission technology, although of course it was pretty basic back then as there was no broadband.

“Our initial thinking was we could develop a system that would allow someone to log in if an alarm went off so they could check if the coast was clear before sending someone out to the site. But then Niall discovered a company in Australia that had transmission technology used for military installations that could send you a photo if someone entered a restricted area.

Netwatch claims to have prevented more than 40,000 crimes since it was founded nearly 15 years ago.

“They also told us we could also incorporate an audio warning as well and once we heard this, we thought it was a real eureka moment so we both packed our jobs in and set up Netwatch,” adds Walsh.

Knocking on doors

While some fledgling businesses might start with a bank of prospects gathered from years working in particular industries, the fact that neither Walsh or Kelly had any background in security meant they had to rely on knocking on doors and making cold calls to secure deals early on.

“It was a very simple sales presentation because everyone understood immediately what we were selling, but there was a huge gap between somebody loving the idea and signing a cheque for it,” says Walsh.

“You have to remember this was pre-broadband so we were ahead of our time in many respects, and we were bringing this highly disruptive technology to the security sector, which was extremely conservative. We were told you couldn’t break the existing model but we did – by deliberately presenting ourselves as a tech company, rather than a security firm.

“To this day, our clients don’t really care about the cameras we use but about how the overall solution is delivered,” he adds.

Back then of course, the technology was somewhat basic compared to Netwatch’s current offering. Cameras could move from left to right, for example, but couldn’t really distinguish between a cat, dog or elephant.

The fledgling company achieved impressive success nonetheless, scoring big-name clients such as ESB, Kerry Group and Glanbia within a few years.

Initially, Netwatch focused on getting its name known and then took a decision to start developing its own technology.

“We didn’t have much spare money so we targeted the awards circuit initially to position the company as a high-value proposition and did well in things like the SFA [Small Firms’ Association] and EY [Entrepreneur of the Year] awards and that was great in terms of gaining customers and making contacts.

“While we were going great guns, we figured that to gain a competitive edge and see off any potential competition we needed to invest in our own R&D because there was a limit to how much we could scale the technology we had,” says Walsh.

Netwatch developed an in-house R&D department based on video processing technology, and introduced its own proprietary Cratos software, which is specifically designed to filter out nuisance alarms in order to provide a rapid response to real security breaches.

Technology tweaked

“Our technology has now advanced to the point that we’re doing much more than just looking out for burglars. We have one client in the food processing sector for example, who uses it to identify if production staff are wearing hairnets while on the production floor. The technology can be tweaked to analyse what is deemed to be unacceptable behaviour so its uses have moved far beyond perimeter security,” says Walsh.

It wasn’t long before the company moved into Britain on the back of requests from Irish companies operating there. While it quickly grew there, the recession forced it to look further afield for growth.

“If anything, the downturn was a time of opportunity for us. In January 2008, we brought all our staff together in the organisation because we could see there was trouble coming down the tracks. We told them we were going for broke with a plan to invest heavily by building a new €5 million hub in Carlow, doubling our R&D and marketing budget, and looking to the US and that’s exactly what we did,” he says.

Netwatch now has offices in Boston, New York, Pittsburgh and Chicago, and is concentrating on growing business in three key verticals – utilities/telecoms, aggregates and automobiles.

Walsh doesn’t expect the election of Donald Trump to the White House to impact greatly on the company’s future plans although he says it may lead it to speeding up plans to build a standalone hub in the US.

“All three core verticals we’re in could benefit from a Trump presidency and if our clients grow as a result, then so do we,” says Walsh, adding that the firm’s biggest challenge stateside is finding staff.

With a focus on the US, the company, which considered doing an IPO in late 2015, sees a possible shift away from its traditional way of doing business.

“I find it remarkable that we’ve grown so successfully without ever going down the acquisition route,” he says. “We want to continue to invest for organic growth and to build more strategic partnerships, but acquisitions are also definitely something we’re looking at.

“We did look at doing an IPO but decided we weren’t big enough to do it. If we keep growing at the rate we are and acquire a few companies along the way, we might revisit the idea,” he adds.

CURRICULUM VITAE

Name: David Walsh

Position: Chief executive and co-founder of digital security company Netwatch

Age: 52

From: Castleisland, Co Kerry

Lives: Carlow town

Family: Wife Beatrice and three teenage children, Patrick (17), Clodagh (15) and Christopher (13)

Education: De La Salle College, Waterford; University College Dublin; Stanford University

Something you might expect: David has supported and mentored many emerging entrepreneurs, and he sits on the Enterprise Ireland board

Something you might not expect: A twin, David wanted to be a priest when he was younger.

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