how much of Simplisafe is simply bullshit / comment on DIY February 27, 2019

KEN KIRSCHENBAUM, ESQ
ALARM - SECURITY INDUSTRY LEGAL EMAIL NEWSLETTER / THE ALARM EXCHANGE
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how much of Simplisafe is simply bullshit / comment on DIY
February 27, 2019
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how much of Simplisafe is simply bullshit
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               SimpliSafe's big pitch is that:
    " SimpliSafe protects your home 24/7 without the contract.  No contracts means we don't get paid unless you're happy.  Exactly the way it should be."
               The same advertisement claims:
    "This security system protects over 2 million Americans"
               So what is the SimpliSafe difference?  Well that too is emphasized in the advertisement:
    "If a security company makes you sign a contract, who are they really protecting?"
               So SimpliSafe separates itself from all other alarm companies because it has no contract.  There's two [at least] problems, or falsehoods, with that claim.
               One, there are plenty of [stupid] alarm companies out there that don't use any contract, and
               Two, Simplisafe does use a contract.  Here it is: https://simplisafe.com/terms-of-service
               The Simplisafe terms of service begin with "This is an Agreement ..."  If you think you can get service without agreeing to the Terms and Conditions, think again, because the Terms and Conditions provide:
               "These are the terms and conditions under which we are willing to provide you the Services."
               The Simplisafe contract reads like many alarm contracts except the only remedy for a subscriber not paying is termination of service.  Most alarm companies don't pursue their defaulting subscribers anyway, so this distinction is not particularly significant.  But the contract does contain provisions familiar to the alarm industry, [warning- the provisions are not worded even close to the Standard Form Agreement terminology and I suggest you not copy any of the provisions] such as "no insurance", indemnity, limitation of action, limitation of liability, liquidated damage, false alarms and subcontractors.  
               The essentially false advertising by Simplisafe is detrimental to other alarm companies by suggesting that use of contracts is somehow unfair to the customer.  Any Simplisafe subscriber who suffers a loss because the system didn't work will find out fast just how similar Simplisafe is to other alarm companies when the Simplisafe "contract" is presented.  
               I'm surprised we haven't seen any ads by alarm companies like this:
               "We don't use contracts.  We don't carry insurance.  We're very cheap.  We don't care if you pay us.  Cancel anytime.  We won't raise any defenses if you suffer a loss.  If you can find us, good for you."
               Of course, Simplisafe is easy to find and my guess is that someone is going to find them eventually.
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comment on is DIY a threat
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Ken
               If a customer wants DIY what’s the incentive for a traditional alarm company?  No money to be made on the sale and no monitoring money either?   I don’t get it.
               I hope that you can explain it so I can understand why you recommend that we offer DIY.
John
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Response
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               Easily explained.  Your prospective customer wants some of the bells and whistles, or plain old security and some fire add-ons [residential] but doesn't have the budget for a professionally installed system, at least not for all of the equipment.  Maybe you can sell a hard wired burglar alarm.  The sub wants cameras but won't spring for hard wired cameras.  Why not offer a DIY product, wireless, that you install?  Not all DIY products require the customer to deal directly with the manufacturer, by-passing you for the monitoring charges.  There are plenty of DIY options where you can still be in the middle of the monitoring services [I think - correct me if I'm wrong.  I know that manufacturers are getting into the RMR business and their DIY product will only work with their platform, leaving the alarm dealers out of the equation.  So don't offer those products].
               Certainly many alarm companies will chose one model over another and not mix the two.  So one alarm company may offer only DYI products, hoping to cash in on the monitoring, and another alarm company will offer only professionally installed, hard wired system, professionally monitored.  
               I'm not a marketing expert [or even novice] but it seems to me that you should be offering what your market wants.  Figure out how to make it work for you and be profitable.  
               It's still a little too early in the game to know how much the DYI monitored accounts add to equity.  I don't think the multiple on those accounts are reliably established.  It won't be long before those accounts are on the market and we begin to see multiples for that business, or an EBITDA valuation.  In the meantime those accounts can generate RMR just like a traditional system.
               Most customers can't install the DIY themselves and will welcome someone to install the systems, especially if you're already in the house installing other equipment.  Sure there will be customers that only want the DIY and don't need or want to hear from a professional alarm dealer.  So what, they were never a customer.  Maybe they will be when they get tired of changing batteries.
               Another reason to sell DIY, my last argument in this article, is that if you don't offer it someone else will.  As I mentioned in earlier articles, I'm not suggesting you offer whistles for sale, but technology has changed and it’s continuing to change, and your denial or fear is not going to stop it.  Get with the program.  Luckily the All in One Agreements cover you for traditional and DIY systems.  Don't be simple, use a contract. 
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Ken Kirschenbaum,Esq
Kirschenbaum & Kirschenbaum PC
Attorneys at Law
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