What is it like being tased?
So, it's really interesting. It's terrifying while it's happening because you lose control of your body and there's like these waves of energy. Five seconds while you're being hit with a taser seems like a very long time. And I had long enough to like have this philosophical realization about what it must be like for people who can't control their body. And then the current was off.
But when it's off, it's off. Like you're right back to normal the second it's off.
Am I the only person who thinks that there's a great content business in body cams? There's just so much good content that comes out of these things. Like, is that just crazy? It's not just valuable from a social perspective, but it's like there's a ton of entertaining content.
Well, there was a company that, remember Live PD?
I don't know if you remember that.
There was a show that did just Live PD on Friday nights. They were...
Cops. Remember Cops? This kid I went to high school with, his dad produced Cops on TV. Yeah, I guess it's always been interesting.
Yeah. So Live PD was the new version of Cops, and their twist was that it was live, so people would tune in on weekend nights because like, oh, I want to see what's happening, like a live sporting event. But then they got cancelled after the George Floyd incident. You know, I think the production companies were afraid to be sharing, you know, pro-police. So we actually ourselves had done Axon Studios for a period of time to try to do exactly what you're talking about, like a live content business out of the body cameras. But it's just, you know, you got to know your corporate DNA. We are too pro-police and we're like, you know, we're a big corporation that wasn't going to do the edgy things you would need to do to make that a great content business.
But I think it's there for somebody to do it.
Yeah. Well, YouTube works. Going all in...
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Rick Smith, CEO of Axon, welcome to the All-In interview.
It's awesome to be here. Thanks.
I'm glad we could make this work out. I know we had talked about having you come out to the summit and got delayed, missed that window, but I'm really glad that this has worked out. You know, your business history is fascinating. I would love, if you're okay with it, maybe to go back a little bit to the beginning of the business. Your company used to be called Taser. I think we all remember the original Taser name and product, but maybe you could take us back, like we could do a real quick recap how the company got started in the early days.
Yeah. So, we started in the early 90s. So, this is the only job I've ever had. Started in '93 in a garage in Tucson. The sort of lead-up to that is I was in graduate school in Europe and a bunch of the European students were saying they were afraid to come to America because of all the gun violence they were seeing on TV. And I would tell them like, you know, look, that's not everything is like what you see on the news. And one of them asked me if I knew anyone who'd been shot and killed. And it just struck me. I was like, wow, actually I do. There were these two guys that played on my high school football team that were shot and killed in a road rage incident. And we knew a couple friends of the family. By the time I added up, it was like maybe five or six people. And the thing that struck me was why is it that like bullets are still a thing in 1993, much less 2026. And what I mean is like it's a pretty old technology, right? I mean, bullets have been around for many centuries. And the simple insight was if we had Captain Kirk's phaser, like people would choose not to kill other people because they'd have a more civilized way to stop somebody who's threatening them. And one thing led to another. I discovered this device called the taser had been invented back in the 1970s by a NASA scientist who lived in Tucson, Arizona. I found him through his patent filings and one thing led to another. I just called him up and I said, 'Hey man, whatever happened to this tech? It seems to me like this is something the world could use.' And shortly thereafter, he invited me down to his house, and here I am, this 23-year-old kid and this 73-year-old man. It sounds like, I don't know, a comic book sort of plot. But we started in his garage to build new tasers.
And I can tell you at the beginning, everybody thought I'd lost my mind.
In fact, I have a great video of Emil Michael, who is one of the leaders at Uber. He's now the Under Secretary of War. Came to visit me when he was 23 and they filmed a spoof video making fun of me just how crazy this idea was that I was going to go make electrical weapons.
So you found the inventor of the taser device through a patent filing, go and visit him and buy it or license it and form a company around it.
Yep. In fact, I convinced him to do it with me, to come out of retirement and sort of show me the way. So, we were building the first tasers in his garage from parts from Ace Hardware. Because the first thing we had to do was to get federal government approval that the new taser would not be considered some sort of illegal weapon. And that would require a regulatory approval. As I look back, you just don't realize how fast you move when you're a startup relative to the rest of the world. Like we built our first prototype in 30 days from go. You know, now I've got 6,000 people.
'93. And you started a company right away and built the first prototype with your own money.
Yeah, it was friends and family. My dad was a serial entrepreneur. And he had had one successful company in Silicon Valley. So he knew a lot of the VCs, but no VC would touch us, right? We weren't the internet in the late 90s. It was right in the peak internet boom. And again, everybody thought we were this sort of oddball thing. And I'm actually pretty proud now that we've seen enough success that, and with the changes in the world, that defense and policing technology is now much more mainstream than it was back then.
But this was a handheld taser device. What was the market initially? Was it to sell into police forces? How did you think you were going to go to market? And what was your first sale?
Yeah. No, our first market was consumers. So, you know, police could buy the original taser, but due to basically the original taser was a firearm, but it looked like a flashlight. That puts it into this category 2, which is like a sawed-off shotgun, which effectively makes it illegal, very hard to buy, but police could still buy them. So, our theory was if we made this new taser weapon using compressed air instead of gunpowder, it would not be a firearm, and then people like my mom could go buy it to defend herself. And she had recently bought a gun around that same time. So we started in the consumer market and we struggled and we didn't really succeed. And what we heard from consumers was, hey, if this thing, you know, really works, why aren't the police using it? And so we basically realized we need to go prove this works in policing. So after seven years of struggling and failing, we pivoted into the police market in late '99, and that's when the business took off. But like MacArthur of the Philippines, I will return to the consumer market once we have proven with police that the taser is as effective or even more effective than a gun. And that will happen in the next five years.
And so you spent seven years developing the market, trying to find product-market fit, all off of friends and family money. What was keeping you in it? Was there a point where you said, 'Hey, I'm going to throw in the towel. We should go do something else with my life.' I mean, this is kind of a classic entrepreneur, you know, how many times are you willing to pivot question.
Yeah. So we had two failed product launches. And then in 1998, I was visiting some of my friends up in Silicon Valley who'd taken jobs, you know, at companies with dumb names like Yahoo. Of course, they were all making money hand over fist. It was the internet gold rush. And here I just failed on my second product. And I remember going to my dad, it was him and one of his friends that were funding this. And I said, 'Look, I think we should just shut it down. You know, we failed twice.' And my dad looked at me and he said, 'Well, you know, it would have been nice to figure that out a couple years ago because we owe Silicon Valley Bank about $2 million. I have $500,000 and I'm on the hook. So, if we shut down, the bank has taken everything. So, we have no choice. I'm putting my last $500,000 in.' And the other investor was a guy named Bruce Culver. Shout out Bruce if you're watching. Bruce matched him. And so that was going to be the last $1 million we would ever get. We would have to survive on it. And with that, we managed to design, tool, manufacture, and launch the police taser and then shoestring it along to cash flow, break even, and eventually an IPO two years later.
So, you go public around the end of the dot-com boom, right? So, the market's kind of tanking generally and there's an opportunity because you guys now have revenue. You're selling into what? Police forces. That's the primary market at that point.
Yeah, it was. And actually looking back on it, it was just an alignment of the fates. So yeah, the internet bubble popped in 2000, and in late 2000 an investment bank came to one of our training events and they basically were like, 'Oh my gosh, you're not internet. You guys make a physical product. You have real revenue. We're taking you public.' And so we went public specifically, I think, because banks needed deals and we were not internet. And we went public at a massive, about $12 million valuation.
Wow. And that was a big outcome though, right? Like you guys owned 100% of the company. You didn't have VCs or institutional guys on the cap table.
That's right. I mean, we were a tiny, tiny market cap to go public, but because of that, you know, we ended up being the highest return I think that investment bank, Poulsen out of Oregon, ever had. And for us, like I'll tell you, for me, it was just such a relief that we were able to raise enough money to be able to pay off some shareholder notes so that I knew my dad wasn't going to end up in the poorhouse. That was to me the biggest relief, is not destroying your family. And then everything from there has been gravy.
How do you cross that chasm? Those early days, you show up to a police force, you've got this handheld device that shoots out these electrodes that go into someone's skin and zaps them and they fall to the ground when they get incapacitated. What was the way that you kind of got these guys who had never heard of or seen anything like this before to make those first POs? How do you start to get those orders to come in? And was there a moment where suddenly enough police forces had this where everyone was like, 'We all got to have this,' and then the market just kind of took off?
Yeah. So, I mean, this is one of those things where, look, you just don't overcomplicate life. We didn't have enough money to do anything fancy, and the main thing was we had solved a real problem. So the early generation tasers were not powerful enough. Like Rodney King was shot with an LAPD taser and it did not work, and they went to the batons with catastrophic consequences. So taser had a terrible reputation in the late '90s, and it was deserved, because I'd sent several demos of our first generation product that also didn't stop somebody who was focused and aggressive. They could fight through the pain. So the thing we had done was we had basically done some animal testing to go tune the amount of nerve stimulation so that it would actually paralyze somebody. Once we did that, the launch was pretty simple. We didn't have money for a big ad campaign. We hired a former Marine and put him in a Winnebago going around the country with a $100 bill, and he would go into a police department, explain to them what we're doing. And up until then, non-lethal weapons were seen as kind of snake oil. Like, yeah, pepper spray hurts, but you can fight through it. We had the first weapon that could actually stop somebody. And cops are an interesting crowd. You know, there's a fair amount of bravery, shall we say. And so they weren't afraid. They're like, 'Okay, you think this will work? Fine. Let's give it a try.' And we would offer them $100 if they could come and take it. And we'd hit them. They would fall down. They'd dust themselves off and go, 'Oh my god, that was way more powerful than I was expecting.' Some would try again. And then immediately they saw the value. I mean, I can't tell you how many times I've had cops tell me, 'My gosh, like this would have prevented me from shooting someone or getting in a knockdown drag-out fight with a very dangerous person.' So, the value prop was so simple. We just had to convince them it worked. And we did that with very simple demos. And from that you could see suddenly purchase orders started coming in, and we could track where Hans was going across the country, our trainer. And you know, within a year we hit cash flow, break even.
And then you had like a decade where the stock kind of stayed in the same range, didn't it?
A lot of people think like, okay, you go public, this thing's going to take off. We're on some growth trajectory. But again, after how many years? Seven years of being a private company, eight years of kind of getting to that point of having an IPO, you then spent another decade kind of with this valuation in this range of a couple bucks a share, right?
Oh, yeah. No, actually, let me give you... it's more exciting than that. So seven years of like, are we going to survive? We can't pay the light bill. Then we go public in 2001 and the next four years are insane. We're growing at like, we're tripling every year. In 2004 we were the number one performing stock in the world. I have the Wall Street Journal article on the wall on a one- and three-year return basis. We were number one.
That was the year Google went public.
Yeah. Yeah. I mean, we were on fire. Then what happened in late 2004? We got hit with an SEC investigation. There were allegations we'd lied about the safety of our products in order to pump up the stock price. Now, we could do a whole hour on this. There was a short-selling attack. We had big short positions in the stock. My personal assistant was actually a mole for short sellers who was selling... it was crazy... sending internal documents to short sellers that were giving them to the New York Times, who was then disclosing they were getting internal confidential, material non-public information from short sellers who were somehow getting it out of our company. So that was miserable. 2005, our stock dropped from $33 to $7 a share. And it was, yeah, it was miserable. I mean, you're wondering if you're going to survive. Our customers are police, so they stop buying from us. They're like, 'Look, dude, you're under federal investigation. Like, I can't go to my city council until this is over.' So, ignoring my lawyer's advice, I walked into the front offices of the SEC office in San Francisco with boxes of documents and said, 'Hey guys, I want to help you complete your investigation because I may go out of business if this drags on.' And then that's when the long doldrums began. Like the stock never fully recovered from there. And we were...
What happened with that investigation? That investigation, you moved on from it.
Oh, yeah. I mean, they don't give you a gold star when they're done and tell you good job. They just say no findings and they move on, which is as good as it gets.
Turns out though, what doesn't kill you makes you stronger. In that case, we had gone from zero lawsuits to hundreds of lawsuits. I mean, we were being sued obviously by shareholders. We were being sued by plaintiffs of anybody who got shot by a police taser was now suing the police and us because we were all over the news. And we did a couple things there.
What's your market cap during this time?
It peaked about two billion in late 2004 and then it was back to about a hundred million.
So you get hundreds of lawsuits when you're kind of like a hundred million dollar market cap company that you're dealing with.
