Samsara suing a C-suite of swindlers

Samsara seems pretty miffed that competitor Motive (KeepTruckin) repeatedly accessed their platform to copy their features, then faked research showing them as better.

Samsara brought the receipts and went public with it all in a big way, creating a special website with all their proof collected. After investigating why they faired so poorly in some “independent research” that Motive published, they dug deeper to find that Motive had been using a number of fake accounts to access their platform over the past 4 years in order to copy website design and products. As part of that, they uncovered in-cab footage of Motive’s CEO and CPO using their Video Safety product under false pretenses.

Samsara founders wrote a blog post on “Motive’s Culture of Theft and Deception” that noted:

"In 2022, while investigating a deceptive third-party benchmark report about our products that Motive paid for, we discovered a comprehensive, years-long campaign by Motive to copy Samsara – from our patented technologies down to our company mission statement. … This information is not coming as a surprise to Motive today. We contacted Motive’s Board and CEO about this misconduct and told them to knock it off. However, the company responded by denying any wrongdoing and doubling down on its theft and deception campaign. In fact, Motive’s Vice President of Product continued to access Samsara’s platform even after we raised the issue to Motive’s Board and management. "

While I am not sure of the legal remedies, it’s certainly embarrassing for the fleet mgmt startup, who was backed by VCs like Index Ventures, Scale Ventures, IVP, Kleiner Perkins, and Google Ventures – many of whom are on Motive’s board.

The legal outcomes are uncertain, but I think Samsara went fully public with all this for a reason, to highlight Samsara as the innovator and Motive as the copier. This lawsuit and public lambasting is probably more to get these accusations out in front of those VCs (on the board) and Motive’s customers than anything. It’s pretty embarrassing to uncover the CEO, CTO, CPO, and others in the C-suite actively involved, with actual footage of them plus details on the 20K times they accessed the platform over 4 years.

Samsara Sues Motive Over Vehicle-Tracking Technology Patent Infringement - Bloomberg?

A story on this in Bloomberg had some details on the startup, which was last valued near $3B in mid-2022 as it had $250M ARR growing 70%. (Compare to Samsara at $607M ARR growing 59% at the time.)

Let’s hope its not too much of a distraction.

-muji

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Wow…thanks for this, Muji!

I saw the notice of the lawsuit earlier today as I was trying to figure out the price action, but I hadn’t had time to read the details.

There’s another reason for making this so public (or at least another benefit. I can’t say whether it was a reason). I want to highlight what you’ve said, these guys were caught on Samsara’s cameras using their video safety product under false pretenses.

The ability to protect their customers from bad actors is a key selling point, especially in parts of Mexico and other places where getting from point A to point B intact is dicey at best. Highlighting the footage of the competition unethically, if not illegally, using their video safety product to do harm showcases why the feature is so important. It isn’t just theft of product off a truck or an attack on a driver that Samsara can help protect.

Maybe I’m misunderstanding, but it looks like the C-Suite Swindlers at Motive just cut their own ad for Samsara. It was Samsara’s safety feature that caught them.

I also love the window into Samsara management this provides. Samsara gave Motive every opportunity to privately deal with it. No response. Management matters.

JabbokRiver
14.43% position in IOT

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We can agree that this is embarrassing for Motive, but I’m not so sure that anyone on the Motive side will be exactly embarrassed about it. Let’s consider each audience:

  1. management and board members: nope, they care about winning in the market far more than they care about how they win
  2. customers: the trucking industry is a rough and tumble place. Motive looks foolish for getting caught but not for actually stealing IP.
  3. employees: this is where it starts to sting. Anyone on the team who wasn’t already clear about the doubtful ethics of senior management just got a loud wakeup call. More bad news on this audience below.
  4. prospective employees: even more stinging – who wants to tell friends and family they just took a job at this company, and immediately have to fend off questions about this crap?
  5. prospective investors: the biggest worry of all. Motive’s last round of funding was May 2022, raising $150m at a $2.85b valuation. This lawsuit, if it goes all the way, could easily cost $50m-$100m in legal fees, etc. So Motive is likely to need more investment – but what new investor wants to see their money go towards fighting a lawsuit, especially where the evidence against the company looks strong? That’s not what they’re investing for; they’re investing to see the company get bigger and go public or get acquired at a nice markup. So no new investors are likely to step forward.

Will the existing investors double down on supporting the company? Probably yes – but the valuation (already reduced because of the interest rate change from May 2022) just got even more reduced by this lawsuit. After all, none of the existing investors will pass up a chance to take advantage of the weakness in the company’s position.

What’s the implication of a reduced valuation? More staff departures, especially staff hired more recently, whose stock options will now be underwater (higher strike price than the new valuation). Many Bay Area private companies are in the same boat right now, due to the interest rate cycle re-emerging, but Motive will be particularly affected due to the added blow from the lawsuit.

Will this mean that Motive will be particularly, ummm, motivated (sorry!) to settle out of court? We can hope so, for the sake of Samsara shareholders! (I’m not one)

ActonUp

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I too feel the moral outrage! And also:

The fact remains that a competitor has a detailed blueprint of $IOT’s business, solid VC backing and is generating and growing revenue.

…If Motive survives this and continues as a long-term going-concern, IMO they could be a viable threat to $IOT’s margins, so the situation is worth monitoring.

$IOT Marketing guys can (rightly) claim the mantle of “innovator”, but that may ring hollow to potential customers if Motive is offering a (very) similar service for 20% less, or whatever.

Another sad truth is that plenty of wildly successful companies got their start stealing IP and otherwise playing dirty pool.

Long $IOT 6%-ish

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I read this earlier today and had on my to-do list to investigate further.

My question is why hasn’t Samsara cut off those fake accounts? Four years is a long time, and is this some kind of security flaw in Samsara’s platform, or is this the kind of thing anyone can sign up for and so is kind of public anyway, just with Motive using false pretenses?

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Smorg - They discovered all this in October, that Motive signed up as fake customers several times over the past four years. It seems Samsara kept the cust accts active initially to see Motive’s reaction, which was to lie about it and keep using the accounts. I’m sure they’ve closed them down now, but Motive may have others (as yet undiscovered).

At the surface, I would think signing up as a customer on your competitor’s SaaS platform is probably common – in order to keep tabs on competition.

The problem for Motive is that the in-cab camera captured it all, so Samsara has some pretty valuable proof that they used their products on such and such date, to show that they disassembled their hardware (patent infringe) to move into vehicle safety and equipment monitoring. My guess is that their case is pretty strong, after they cross-correlated all the platform & hardware usage to when Motive announced new products.

In the case of Video Safety, it was announced June 2023.

-muji

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The part that is a bit confusing to me is how can Samsara employees have access to the customers video from trucks. Usually customers prefer not to have their video and other data accessible to employees of company used to provide the service. Is this an explicit service that customers ask Samsara employees to monitor?

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In the automotive business this is called “benchmarking,” and it’s quite common, with whole companies whose primary business is taking apart products to see how they work. It’s not patent infringement by itself- that requires selling a product containing the patented tech.

I’d be surprised if Lyft employees don’t sign up as Uber drivers and vice-versa.

What this may show is that Motive management isn’t quite on the ball, as they should have known about the cameras. It would have been a simple matter to hire some other company do to their benchmarking.

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Samsara is the one providing the driver-facing camera and AI video service atop it to detect things like driver attention, seatbelt adherence, mobile phone usage, etc.

Samara assures privacy guarantees for its customers and their drivers, and has been working to educate unions and drivers on the benefits of driver-facing cameras. They have security features to restrict access to video footage to admins, as well as blurring features to allow customers to use footage safely for their own purposes, like training or promo.

Samsara needs to tread carefully here in using in-cab footage that isn’t blurred, even if from a fake customer. Motive broke the customer terms & services, and I think Samsara stengthed their case with the footage showing the CEO and CPO directly using their product. But we don’t want to see this backfire and be used as a case against in-cab video feeds.

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Yes that was exactly my concern. It was great that they used it to catch Motive, but on the flip side, if I were a samsara customer, all kinds of alarm bells would ring to have learnt that samsara has such control over the privacy of their data.

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Great point, Smorg! At any rate, my read of Samsara’s allegations are that Motive did this more obsessively, brazenly, and stupidly than they should have. But did they do anything illegal? Doesn’t seem so easy to prove. As Ryan Gosling’s character says in The Big Short, if stupid = illegal “I’ll have my wife’s brother arrested.”

Uh…yeah. I really, really hate how Samsara is going about this. The press release and the CEO’s blog post seem mature enough. But this? » Motive Lawsuit

Seems childish. Samsara has reciprocated Motive’s obsessive tendencies. It reads like a short report. The dashcam photo…the repeated “Motive accessed our dashboard X times as of [whenever],” and junk like this:

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Weak. I’m no attorney, but the case Samsara has built seems more quantitative than qualitative. Motive snooped many, many times. But was any of it illegal? Samsara might not be able to prove it, so they gave Motive a webpage to make them look bad. But I don’t think choosing this route makes Samsara look good. Samsara could have been classy about it…quietly sued them (to pile on after Omnitracs did in December https://www.ttnews.com/articles/omnitracs-lawsuit-motive) and put out a short press release and been done with it. But I feel this webpage cedes any high ground Samsara might have had…and now it feels more like the two companies are a couple of pigs wrestling in the mud.

Ok rant over. I don’t want to let my disgust carry me away. Maybe Samsara’s next couple quarters will be business as usual and we’ll forget all about this. But this dings my conviction a little bit. And I have to imagine it makes other investors wonder why they would spend so much energy attacking (ok counter-attacking) a competitor. Is Samsara losing business to them? Sure doesn’t seem like Samsara is hurting in any way – in fact their last several quarterly reports have been super strong…but then, again, why spotlight a competitor for investors to worry about?

Luckily valuation has kept my position a little smaller than my other high-conviction names (none of which had yellow flags until now). But it was creeping back up toward 7% as I’ve (net) added in January, and I would probably be adding at this price…but this news was enough for me to take my recent adds back off the table and cut it to just a 3% position. I very much plan to keep a position in Samsara. But my conviction is lower, at least for now. I just don’t like my companies to be in the news for things like this. Especially when they create the news (i.e. the webpage that, as you can see, frustrates me) themselves.

Bear

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Patent infringement is indeed illegal (although not necessarily criminal). Here are the elements of a claim.

As alluded to in one of the articles, there is another patent infringement lawsuit already pending in the northern district of California that was filed against Motive last October. That one was filed by three companies together: Omnitracs, Smart Drive Systems, and XRS Corporation. The initial parties are listed here.

I don’t subscribe to Pacer, so I can’t see all the details and documents, but the docket shows they are working through initial motions, with some filings as recent as this past Wednesday.

I would think the outcome of that lawsuit would say a lot about Samsara’s prospects for winning theirs, since a prior record of similar illegality would count against Motive in subsequent lawsuits (so long as Samsara and any others checked all the boxes for proving the infringement).

And since there are now two lawsuits (with four companies) making the same infringement claims against Motive, maybe part of the public blitz is to flush out any others that Motive is “learning from.” Like with other kinds of bad behavior, where there’s one, there are usually more.

Anyway, I’m Team Samsara on this one.

(And if you have a Pacer account, do share what you can about the details!)

JR

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