On April 18, 2017, in Fresno, Calif., Kori Ali Muhammad walked up to a Pacific Gas & Electric truck and shot the employee inside. After Muhammad killed his first victim, he kept running. He was on a mission to kill white people, he said later. He shot at a man standing on a nearby street corner, but missed. Muhammad kept moving. He reloaded. He killed another man.
He ran into the parking lot at Catholic Charities, where he killed again.
Police caught up with him near there. “He was in custody within 4 minutes and 13 seconds,” Police Chief Jerry Dyer said at a news conference later. “Kori Muhammad would be outstanding today if it wasn’t for shots-fired detection.”
After struggling for more than two decades and facing criticism over the years about its cost, Shot Spotter, a Newark, Calif.-based company that public in 2017, became steadily profitable in 2019.
Its story illustrates how hard it is – and how long it takes — to build a company with a do-good purpose baked in. Its raison d’etre is not to prevent mass shootings, though it could lessen the impact. As much as we’d like to see a simple solution for that, it doesn’t exist. Rather, what Shot Spotter does and what it has eventually succeeded on is the idea that it allows police to respond to the violence of gunfire.
“The gun distracts from the idea that people require a level of service and a level of care,” said Ralph Clark, the CEO, who grew up in Oakland, in a neighborhood plagued by gun violence. “Shot Spotter is a tool to build normalcy in at-risk communities.”
The company reported third quarter revenue of $10 million, up from $9.2 million the year before. Net income totaled $446,00 up from a loss of $1.4 million the year before. It was the company’s second straight profitable quarter. The stock is trading at about $28 – it fell from a $58 high as investors anticipated a period of slower growth.
Shot Spotter enables police, when they choose, to get reports of shots fired in a much shorter time frame – in Chicago, within 20 seconds instead of seven or eight minutes, according to chief of police. That allows police to build trust with the community and gather evidence (spent bullet casings) to begin to trace guns that could be used in crimes.
Clark is the entrepreneurial CEO who, starting in 2010, turned the company, which has about 100 employees, slowly into a profitable operation. In 2019, Clark was named an entrepreneur of the year for Northern California by Ernst & Young.
The Fresno shooting is a clear case of ShotSpotter’s benefit, but Clark doesn’t like to bring up the Fresno case because doesn’t want to contribute to the idea that there is any simple fix to America’s gun violence problem, or that mass shootings are America’s gun problem.
Shot Spotter doesn’t even sell to the school market, though it would probably be successful there (it does have contracts on about a half-dozen campuses.) School shootings get headlines. But marketing to schools means marketing based on fear.
“We’re not going to go after the K-12 market,” he said. “The idea of extracting dollars from them for an event that was so rare didn’t feel right. “
The Real Story
But the real story of gun violence happens in minority and disadvantaged communities, the places where kids are most often shot, where gunfire comes through walls and gunshots are more common than hail. According to Giffords Courage To Fight Gun Violence:
Nowhere is the gun violence crisis more evident than in our underserved urban communities, where homicide rates often reach 10 times the national average. Young black men are especially vulnerable—the chance of a black American family losing a son to a bullet is 62% greater than losing him to a car accident. In fact, black men make up just 6% of the U.S. population, but account for 51% of all homicide victims.
What would help also would be for people in the communities where gun violence is prevalent, to identify and testify against super criminals – the small handful of people who actually will use a gun.
“Probably the biggest insight into gun crime is that most of it is committed by super criminals. Did you ever watch the show, The Wire? I’m talking about that character, Omar. There are a lot of guns. There are very few people willing to use them,” said Clark.
One prominent criminologist, David Kennedy, estimated that only 5% of people were associated with 75% of homicides in one city where he worked, Cincinnati.
Clark’s big insight – and the sales pitch that is turning ShotSpotter around – is any gunshot is a potential trauma that police should respond to. And, he says, if police departments use it well, ShotSpotter helps police establish more trust in communities when they respond to reports of “shots fired.”
In the 72 cities that ShotSpotter tracks, there were 75,000 gunfire incidents in 2016, compared with 54,699 in 2015. Police would respond to a single gunshot in Georgetown, he says, and ought to do so in Baltimore.
Clark believes the potential market for Shot Spotter is 1,400.
How ShotSpotter Came About
The technology behind ShotSpotter was born when Dr. Robert Showen, a physicist working at the Stanford Research Institute, had an insight: could radio waves be used to detect and map gun shots?
This was in 1994. East Palo Alto at the time was riven by violence. “There was a big national problem. I had the ability to maybe tell police where the gunfire was,” he remembers. “I wanted to help.”
Teaming with two engineers, Dr. Robert Calhoun and Jason Dunham, “Dr. Bob,” as he is affectionately known, bootstrapped the company for five years. The first contract was with Redwood City; ShotSpotter had expanded to four others.
That’s where it was when Gary Lauder came along. His involvement, strangely enough, grew out of his love of maps. Lauder, the grandson of cosmetics giant Estee Lauder, is a philanthropist and, though he doesn’t advertise it much, a venture capitalist. He makes a handful of $1-2 million investments each year (last year, he made eight), he told me an interview over the summer. He was an early investor, for instance, in Palantir.
He also collects maps. As he was scouting for maps to buy one day in 1998-99, he ended up in the map room of the U.S. geological survey in Menlo Park. He noticed a sign on a bulletin board that led him to Dr. Bob’s work and ShotSpotter.
Lauder, who has had a long interest in technology, got in touch and asked if he could invest. “I like radically different technology that can make a big difference in the world,” he said. “Before me was this opportunity to make a big difference … how could I not do it?”
Lauder’s initial investment of a few hundred thousand dollars and his patience over the next decade enabled Dr. Bob and the company’s CEOs to try – and fail – with a few business models, including one that required cities to buy the technology for $250,000 and train police to use it.
Lauder pulled in a handful of other venture capitalists. His initial investment of a few hundred thousand grew over the years as more rounds followed. But by 2008-09, it was clear that the business model wasn’t working.
A friend of Lauder’s who was at the Socrates Seminars Lauder sponsors at the Aspen Institute recommended the CEO of a company he’d been involved with, Ralph Clark.
Clark spent a few months in the office before he took the job. In part, that was because he wasn’t sure he saw a way to make the company grow or become profitable. As part of that process, he attended a gathering of the National Association of Black Law Enforcement Officers. When he realized how many police departments there were, he had the lightbulb moment: “I realized we had to sell to the smaller departments,” he said.
He approached the board of directors and told them he’d take the CEO job on the condition that ShotSpotter could shift to a lower-priced subscription model. (He also tried other ideas to generate revenue along the way, including data services).
Clark saw the company needed to drop the price and provide support, alleviating the problems that arose when officers didn’t know how to use the technology. First, he dropped the price to $40,000; now it’s $60,000 annually.
Some critics have questioned whether the public payments from city budgets for ShotSpotter are worth it, and asked for a full-fledged study to show the connection between the technology and a reduction in crime or shots fired.
No Easy Answers
Clark, having been burned by a few critics, stays relentlessly on message. ShotSpotter is a tool to build trust, he says. “Why don’t people ask those questions about other technology police use, like a database that tracks license plates?” says Clark, who grew up in an Oakland neighborhood that struggled with gun violence. In fact, he’s maintained good relationships with the NRA and gun control groups by emphasizing the neutrality of the technology.
More than 20 years after they first collaborated to bring the ShotSpotter technology to market, both Lauder and Showen have stepped away to an extent. SpotShotter went public in 2017, and Lauder resigned from the board. His total investment over the years was $18 million.
He and Showen have begun collaborating on other applications of the radio wave technology: detecting blast fishing and rhino poaching.
“Gary is sort of the hero in this story,” Showen said. “He now has provided significant funding to enlarge our anti-rhino poaching and blast fishing.” The former is in South Africa’s Krueguer National Park and the latter in Malaysia, where Showen hopes to train local law enforcement to detect the illegal activities.
Meanwhile the company named a unit of measure after Lauder. Like a pascal or a hertz: 100 shots a year in a square mile is a “lauder.”
And Clark, meanwhile, is continuing to navigate the tricky work of making a gun-shot detection company grow. He’s been on NRA TV. He also works with former Congresswoman Gabby Giffords gun control organization. And he continues to bring his own beliefs to bear, which is that if we could refocus the conversation away from guns to service in those underserved communities, we would make progress.
Shortly after he was named CEO of Shot Spotter, Clark went on a ride-along in Baltimore. “I’d never seen a fresh homicide,” he said. “I wanted to be legitimized.”
He saw a boy, 14 years old, dead on the street. He looked up to see the neighbors watching, people sitting on stoops, unperturbed. “I saw a 10-year-old boy riding his bicycle. I thought, if a 10-year-old could have no empathy … If people understood the cost of gun violence, that we are traumatizing children … “
I asked Clark later by email if he thought that 10-year-old child is tomorrow’s super-criminal. “I am too much of an optimist and civil rights activist to project/profile onto a perfectly innocent but clearly traumatized child,” he said.