Meter raises $170M to deliver networking infrastructure as a service — no capex for customers

cooking. We love it. Congratulations to Larry Ellison. Larry's listening to this. I'm sure he follows TVPN. It's just fantastic news. Oracle's deeply underrated. It's a fantastic company. Been in founder mode for decades and continues to be on an absolutely they basically own Abene. They do. They do.

And they're getting Yeah. The Stargate project would not be happening without them, I'm sure. So, we have our next guest coming into the studio in the TBP and Ultra. Welcome to the stream. How you doing? What's going on? I love the background. Very cool. How you doing? Hardware. Our hardware.

It's almost like you're in the hardware business. Yeah. Yeah. Yeah. Break it down. What's What's behind you? What do you do? Yeah. Uh we are a networking company and our hardware behind us is our power, routing, switching, wireless, old school stuff that powers the internet. Incredible. Uh break down the news today.

Uh and John, get the Okay. Okay, I'll get it ready. What happened? What happened? What? Uh we we we raised a new round of financing to go build even better hardware and scale up operations and physical world stuff. And how much did you raise? We raised about 170 million. There we go. Hit it, John. Congratulations.

Best part of the day. Congratulations. Um, talk about give give some backstory on on the history of the company, kind of the different stages, what it took to get here. Sure. So, so we got started actually quite a few years ago.

And what's interesting is networking is one of the largest parts of technology, but almost no new companies get started networking.

um you know networking supports multiple hundred billion dollar market cap businesses but almost all of them got built through acquisition nobody sat down and said hey we'll build the entire stack together cohesive operating systems hardware APIs firmware so so we got started a few years ago uh building out the entire stack um the COVID and supply chain years were tough because we couldn't get any hardware out of it but the last few years for us has just been really about delivering great products to customers just like scaling it up across throughput, bandwidth, products, integration.

But at the end of the day, I think, you know, nobody really thinks about networking unless you're working on it or a day like this, which causes errors and takes down, you know, something like 15% of the internet or something like that. What's going on?

What what we we've been live the entire time the issues have been happening. Can you give Can you give us a quick update on on what you think is happening there? The the production team is stressed right now. They're sweating right now. Sweating because you guys are up.

There are rumors that you guys took down the internet. Oh yeah. Everyone work together. Just just watch TV today. Yeah. Yeah. Exactly. Exactly. Well, I think the really interesting part about networking is most of the issues actually happen because of like configuration errors. And today that's one of the causes for it.

Um because it's you know disparit hardware systems, software systems that don't really work together and they're made by many different vendors etc. today was one of the reasons for not the entire reason but one of the reasons for it was like network configuration errors.

Wild um you guys have a a it seems like you basically have every scale up on the planet as a customer already. Uh is that close to true? Uh are you working towards it? What what's kind of the full range of your guys' customer base? Because is the job finished or is the job not finished or it's just getting started?

Just getting started. Are you quoting Kobe John and saying the job's not finished? Yeah. Um so so our customer base I think is actually quite interesting.

We we do have a lot of the tech companies and folks that are scaling up as customers but probably our most interesting ones are like the manufacturing facilities, warehouses, schools, u folks that go build like ISPs and data centers and um life sciences labs.

All of them sort of need connectivity and internet and networking to do whatever they're doing.

Um, and you know, probably my favorite part in the last five, six years is looking at all these different types of amazing businesses that have nothing to do with Silicon Valley, but sort of are the underpinning of our economy and how things get built and all the interesting work they're doing from, you know, battery manufacturing to hydrogen cells to when one of us buys something online, how quickly does it get there because there's some great business out there actually doing it, but it's all automated and then they need networking.

Um, so our customer base definitely is. We have a big swath of some of the great tech companies, but it's really fanned out everywhere throughout the economy, too. Walk me through some of the work you're doing around hardware innovation, software innovation, business model innovation, like what's most important?

What's been most acceleratory for you? Yeah. Uh, and and kind of uh break those down in terms of priorities and and where you're investing and what you're most excited about. So I actually think uh those things are all interconnected because it's what's incentives are what drive everything.

So if you look at legacy companies, what they're trying to do is build hardware for X dollars and then sell it to you for X plus whatever margin they're trying to hit. And so there's two ways these legacy companies can make money.

Either by charging customers way more than the value they're getting or by making hardware with cheaper components and less quality components, etc. Mhm. For us, we don't sell hardware to customers at all. Uh we just sell the whole thing as a service, which is also very new.

I know rest of us that work in Silicon Valley, like that's sort of kind of given in how we buy things. Yeah. But doing hardware and enterprise networking that way was fairly new and we we were the first people to sort of do it.

But that actually drives incentives on where you go invest because we are not trying to squeeze the last 10 cents out of a component. We tend to go make very different choices in hardware on what sort of components that we use, how are they laid out, how is it built, what are we optimizing for?

Hey, something costs another $10. Let's go do it. But what's the end customer thing like? And then the better hardware that you have, you're enabled to go build better software. And this loop sort of hits.

And so our business model is that not only do we build the hardware and software, we actually deployed and maintain it ourselves too. We're fully vertically integrated.

Uh I know I know a lot of the tech companies don't want to touch the real world things, but you know the whole messiness of racks and cables and manufacturing. We go do not just the pretty parts of it, but also the underbelly if you will of actually going and deploying all of it.

And we do this all without any capital cost to customers and only marginal cost on operating expenditure compared to how talk about that.

talk about why a a CFO would want to have opex versus cap you know capex in this type of scenario and is that kind of a driver around decision- making it it is but it depends on the business right so if you have businesses that are peown for example you actually want it to be capex and so our our contracts can hit the books as a lease so it doesn't hit their operating margins they get an e bit of boost that happens too but ultimately What customers actually care about is do I have to take a bunch of capital and buy hardware that the moment I buy it it's a depreciating asset then I have to pay a bunch of money to go install it and then every four or five years I have to go buy new hardware cuz some new technology comes out etc or if this hardware goes bad I have to go replace it myself that's the part CFOs care about that we remove entirely which is instead of having to go spend massive amounts of capital and operating expenditure to kind of fix all this stuff.

We take all that on and sort of take on all the risk instead of the customers. Then that contract can be actuated as opex or capex depending on what their business needs. Talk about uh meters business. You're doing a lot of things. You're doing hardware software.

You have I'm assuming a network of you know team all over the country that are you know helping with installs. talk about kind of the efficiency of the business and and uh I'm assuming you know this new $170 million round is is you know a testament to the the strength of the core business.

Yeah, it's a really interesting core business, right? Because you're right. We get to go design hardware, make software, and then we build these racks like the one you're seeing behind us and then actually go deploy these by the hundreds for some customers everywhere.

And we're not just in United States, we're in Canada, we're in Europe, everywhere in the world hopefully by um next year. And the operational parts of it are super challenging.

Um if you can imagine a data center in the middle of nowhere um or manufacturing facility, uh there's legacy hardware that's old hardware in there. You have to go kind of sort of fix that and then you're integrating it, but then you're putting in this new entire rack.

So what what's sort of important for us is you know it's like a a duck swimming in a lake. Um uh the customer doesn't see all the kicking that happens underneath to kind of deliver this to them. And our work is always tying these things in together. Why are we building the hardware? How is the software getting built?

How are we deploying it and maintaining it? And then any issues we see on one end should then be a loop back to how we build better hardware. What choices are we making?

You know just this morning bunch of my colleagues were arguing literally what type of ports where should go so it's easy for install and and that loom is a new way of thinking in networking infrastructure even though after computing and CPUs and Intel networking is the oldest and largest uh part of all of technology.

So uh you you I mean you you you you design, develop, manufacture, make this network equipment, you're deploying it as a lease on a more rental basis. Does that create a capex problem for you? Like how are you thinking about your the way your balance sheet is growing and developing?

Uh is debt going to play a role earlier than it might at most other companies in your business because of the structure of what you're building? Yeah, this is a really interesting question.

So, if you looked at historically how networking hardware got built, somebody built it for, let's say, $500 and bomb cost, but by the time it ends up in a customer's hands, it's like $5,000. So, networking companies have enjoyed tremendous margins. So, you should start there at any time.

Uh second, what we also try to do is a lot of our customers because we're dealing with physical spaces, whether it's in retail or manufacturing or data centers, anywhere, the buildout times are predictable, right?

Because there's a certain date you're trying to hit when a data center goes live or a manufacturing facility goes live or a school goes live. So a lot of our manufacturing can be predictive towards that. Unlike other hardware companies, we don't have to hold massive amounts of inventory without knowing where it's going.

We do have issues on like trying to figure out exact timing there. We're not always perfect, but we can do that. So, to answer your question, we actually use debt a lot more and plan to use a debt a lot more to scale up what we do on deploying with our real estate partners.

A big focus of what we also do is not only do we directly sell to customers, but we also go partner with real estate firms to just include meter in as a default. Uh, and that's actually where the name meter comes from.

If you look at a building, there's electricity, there's water, there's cell phone lines, there's power meters, water meters. This should be more like a utility. Why is it that we're all struggling to kind of wrangle it uh to get it into working in any type of space?

So for us the debt and where that plays in is a little bit on hardware but a lot of it also on deployment and actually getting it out to the world and the pace of which we can do expecting a customer and some sort of discounted cash flow expectation of 12 18 24 months from now.

Talk to me about um the the the kind of like wheelhouse customer for you or the wheelhouse deployment. Um, sounds like, you know, apartment building makes sense. Scale up startup office makes sense. It's probably overkill for the home office. You might just want to get a an Amazon arrow uh mesh networking system.

Uh, at the same time, you know, you look at Google's campus, it's uh it's absolutely massive. Uh, are you going one direction or the other?

Are you maxed out or are there specific oddities that you can kind of illuminate on what it'll take how you'll have to change the business or scale to satisfy a a client like Meta's Silicon Valley campus which is multiple buildings and probably one of the most complex networking infrastructures you know in America.

Um, is this something where you can just kind of copy paste your current solution so many times and it all fits together or will there be new uh technical innovations that you need to hit to actually service someone at that scale? I think the answer is both.

But we already doing customers at that scale and more uh for example bridgewater who's the largest in the world runs on meter um uh as an example.

Uh but I think we will go to continue even more technical advancements to hopefully bring new things that legacy folks just can't do or won't do or can't think of and uh sort of implement.

But I I think overall what's really interesting about networking is that nobody gets to do custom networking if you will because it has to go work with the rest of the world.

Generally when you look at enterprise companies they end up building some sort of Frankenstein thing of what they started off with that becomes a custom thing for each enterprise customer. For us any enterprise customer has to then go work with the rest of the internet.

So they don't get to do their own protocols their own things. So largely there are things on the margin but largely whether you're a Google or Meta or Bridgewater or a school customer or large universities that we do all of them use the same internet if you will. Uh and this is also the same in like data centers too.

Um what you would find in majority of nonGPU data centers is not that different what you would find in a