# Ring Financial Model

Wi-Fi video doorbell (sold as "Doorbot") that lets homeowners see and speak to visitors via smartphone.

- Canonical: https://finamodel.com/startups/ring
- Excel download: https://finamodel.com/startup-models/ring.xlsx
- Category: Hardware/Deep-tech
- Model type: Unit-economics / DTC
- Funding round: Series A
- Funding: $4M
- Founded: 2014
- Geography: US (Amazon-centric distribution implied by slide 7).
- Customer: B2C

## About the company

Ring created Wi-Fi video doorbells that let homeowners see and speak to visitors through a smartphone. Its consumer-security proposition combines connected hardware with cloud-enabled video and potential service subscriptions, creating an installed base that can generate revenue after the original device purchase.

Hardware distribution and brand awareness drive unit sales, while subscription attachment determines recurring value. The economics must also absorb device manufacturing, retail margin, shipping, cloud-video storage, customer support, and acquisition costs; warranty and privacy expectations can materially affect contribution margin.

Model doorbells sold, ASP, installed base, subscription attach, service revenue, churn, and replacement activity. Include COGS, retail margin, logistics, cloud storage, support, warranty, marketing, and CAC. Unit growth, gross margin, subscription penetration, retention, storage cost, channel mix, and acquisition efficiency should drive scenarios.

## What's included

- 5-year monthly revenue build with stage-appropriate growth assumptions
- Full P&L, headcount plan, and operating-expense schedule
- Cash-flow statement, runway, and burn-rate tracking
- Valuation via exit multiple with a DCF cross-check
- Returns analysis with MOIC and IRR
- Unit economics including CAC, LTV, payback, and cohort retention

## Product & value proposition

- Hardware device: smart video doorbell connecting to smartphone via Wi-Fi.
- Tagline: "the doorbell for smartphones".
- Brand positioned at Apple-level quality/complete customer experience.
- Competed against large consumer electronics OEMs (Apple, Samsung) as the stated competitive frame.
- Slide 7 shows product listed on Amazon at ~$199–$249 price point (Amazon listing visible but exact Doorbot price not legible; iPhone 5s used as a scale/context comparator).

## Revenue model

- Hardware unit sales - single SKU (Doorbot video doorbell).
- Primary channel: Amazon e-commerce.
- Implied ASP: $199–$249.
- No subscription / recurring revenue mentioned in deck.
- No accessories, bundles, or cloud subscription tier referenced.

## Traction & metrics

- 20,000 units created, sold, and shipped.
- $5 million annualised sales run rate.
- Both figures achieved within 18 months of founding.
- Team grew 6x; now 40 team members (28 engineers).
- Slide 8 (earlier state): team was 6 members vs. Apple's 75,000+ employees - used as contrast/narrative device.

## Competition / moat

- Stated competition: Apple, Samsung, and large consumer electronics OEMs.
- Moat thesis: (a) mission-driven brand, (b) hardware is a mature/stable industry with no "fail whales" - iterating fast via field-deployed units.
- Critical expertise spread across 10 domains equally weighted (~9–11% each): Electrical, Firmware, Industrial Design, Mechanical, Cloud Systems, Mobile UX/UI, Video Processing, Customer Service, E-Commerce, QA.
- Moat is execution + brand, not a network effect or proprietary platform.

## Team & funding ask / use of funds

- Team: 40 members total, 28 engineers at time of deck.
- Prior state shown was 6 team members - 6x growth.
- Investors: First Round Capital, Upfront Ventures, CRV, additional undisclosed funds.

## Recommended financial model

- **Archetype + why:** Hardware DTC P&L model with unit-economics build-up. Revenue is entirely hardware units × ASP; no SaaS/recurring layer present. Model needs to track COGS, gross margin, and channel economics (Amazon fees) as key profitability levers. Eventually a subscription layer could be added if cloud storage is introduced, but that is not in this deck.
- **Forecast horizon & granularity:** 3 years monthly (Y1–Y2 monthly, Y3 quarterly is standard for early-stage hardware). Hardware cycles are 0.5–1 year per slide 13; model should accommodate SKU refresh cadence.
- **Key drivers & assumptions:**
  - Units sold per month: 20,000 units in ~18 months implies ~1,111/month average; ramp to be modelled from current run-rate.
  - ASP (Average Selling Price): ~$199.
  - Revenue = Units × ASP.
  - COGS / hardware gross margin: ~35–45% gross margin.
  - Amazon channel fee: ~15% of ASP.
  - Customer acquisition (marketing as % of revenue): ~20–30% at early stage.
  - Headcount: 40 now, 28 engineers; opex driven by headcount growth trajectory.
  - Product cycle: new SKU refresh every 6–12 months.
  - No subscription revenue modelled [per deck].
- **Scenarios (Base / Bull / Bear - which variables flex):**
  - Base: unit growth at current run-rate trajectory, ASP flat, gross margin 40%.
  - Bull: faster retail/channel expansion (beyond Amazon), ASP premium SKU, gross margin expansion to 45%.
  - Bear: supply chain / component cost pressure, slower sell-through, gross margin compresses to 30%.
- **Required sheets / outputs:**
  1. Assumptions - all drivers in one place with scenario toggle.
  2. Revenue - units × ASP by month, revenue build.
  3. COGS & Gross Margin - BOM, manufacturing, fulfillment, channel fees.
  4. Opex - headcount (40 current), R&D, sales & marketing, G&A.
  5. P&L (Income Statement) - gross profit → EBITDA → net income.
  6. Cash Flow - burn rate and runway (critical for VC-backed hardware co).
  7. Dashboard - revenue run-rate, gross margin %, burn, units shipped.

## Frequently asked questions

### Is the Ring financial model free?

Yes. The Ring model is a free Excel download with live formulas.

### Can I change the assumptions?

Yes. The workbook is editable and its live formulas recalculate when assumptions change.