Smart access is a hot topic these days, following Amazon’s recent acquisition of smart video doorbell Ring, and with the continued rollout of new applications for the technology as an important ecommerce enabler. Primary portfolio company Latch, the first enterprise access management platform for the multi-family residential market, has been at the forefront of many of these discussions as it continues to develop innovative partnerships with highly impactful partners, including national multi-family builders, couriers and ecommerce leaders, including Jet.com and AirBnB.
In typical Amazon fashion, its entry into the smart access arena certainly has the potential to be a game-changer. Given the potential seismic shifts in the market, we sat down with Latch CEO Luke Schoenfelder, who is not only a brilliant designer and proven founder, but also incredibly thoughtful and provocative in his outlook on the smart access industry from a macro level. Here, Luke offers his take on the evolution of the industry over the last five years, the long-term implications of smart access on human behavior, the impact of Amazon’s acquisition, and more.
You began designing Latch back in 2014. We’ve now had four more years of evolution in the connected home market. What were you guys right about from the beginning, and what were you wrong about?
We found a very specific problem and tried to solve it comprehensively for a very defined customer. That was the right thing to do. Early on, we got a lot of pressure to become an all-encompassing IoT platform for enterprise customers, and we consciously resisted that. I believe that great products can eventually become platforms, but that platform-first plays rarely work. That’s because there is just so much complexity involved in solving even the “simplest” problem well. For our first product alone, we had 37 pages of user stories! That’s just how complex these things are when done right. The secret is hiding that complexity from the user so that it feels really simple even when it’s not. A lot of companies in IoT have pursued too broad a vision, and we just don’t think that’s is a winning approach.
We were wrong about how much time and money it would take to get the product up and running. We legitimately thought that we could ship a first version of our products with $5M (and maybe we could have), but we ended up raising an additional $20M to really push the products into the market. While this wasn’t the plan, I think it was important that we recognized our mistake and resourced up to tackle the challenges we faced.
You’ve always said Latch was fundamentally a platform to let people in, not keep people out. 10 years ago, it would have been unheard of to give complete strangers access to our home for the sake of delivering groceries, walking our dogs, or cleaning the kitchen floor. Do you think technology, plus our insatiable desire for convenience, are fundamentally changing the trust equation, and behavior more broadly?
Absolutely. Even less than 10 years ago, it would have been unheard of to get in a stranger’s car or sleep in a stranger’s home. But now brands like Lyft, Uber and Airbnb are widely accepted and trusted.
The same will happen with access. That’s why we’re focusing our automated delivery programs on in-building deliveries, not just in-unit. We’re closely watching consumer demand for in-home deliveries and services, and our current suite of products are already optimized to meet that demand as it arises. We believe that there is going to be a broad range of use cases, environments and comfort levels with these types of experiences, and we want to accommodate a full range of capabilities.
Access control is all about tearing down the barriers between personal space and service providers to bring more convenience to our lives. How do you think about the end game for this trend? What’s an example of the “big picture” you see that the rest of us are not even imagining today?
There are enormous implications for smart access that go far beyond simply living more convenient lives. As we grow the deployments of Latch systems, we will fundamentally change how the cities of the future function. For example, smart access could lead to a drastic reduction in urban traffic congestion. How? One of the biggest causes of traffic congestion today in cities is trucks having to make deliveries during peak hours, forcing them to block traffic and clog major roads. If a building has smart access, these deliveries can be made during off-hours, both making routes more efficient for the shipping company and also reducing a primary cause of congestion. This has environmental implications as well; idling trucks are a major source of carbon emissions in urban areas. With smart access, these trucks reduce their idling times and thus their carbon emissions.
When Primary first invested in Latch, we believed in your vision that the enterprise space – large owners of multi-family residential properties – was going to be where the money was as this market evolved. Now you’ve done fascinating deals with the likes of Jet.com, AirBnB and others that seem to validate that thesis. But changing locks is a big, expensive deal. What do you think needs to happen to convince multi-family building operators to make the switch to smart access control?
I think we’re already well on our way there. What I think will really kick smart access into higher gear is when people recognize the potential for the software. That’s where the real value is both for Latch and for the property owner. Everyone understands the hardware component, but new clients tell us they’re most excited about the visual audit trail, the ability to manage access remotely, the added security and other software features that they experienced once the system was installed. It’s an invaluable asset for any property owner or manager, and once that sinks in, it’s a no-brainer.
The 800-pound gorilla has moved. Amazon bought Ring for over $1 billion. What does that mean for you guys? Are you scared, excited, or both?
We’re excited about it, not just because these acquisitions aren’t direct competitors (they’re consumer products primarily designed for single-family homes), but because Amazon’s entry into this general space brings immediate attention and legitimacy to what we’re doing on the enterprise side. Compared to single-family homes, apartment buildings have much more complex needs that many consumer products don’t meet. Latch is squarely positioned to meet those needs and activate these dense spaces for retailers and service providers. We’re in a very unique space, and we’re excited about what the future holds.
You’ve done an amazing job of defining the next generation of access control over the last four years. What can we expect from Latch 5 years out?
Even though we’re the primary player in full-building smart access on the enterprise side, we’re just getting started. Most hardware products take three years to go from a napkin sketch to a customer’s hands, so essentially everything we’ve released to date was developed years ago. There are so many new and exciting opportunities and capabilities we’re excited to bring to our customers in the coming years!
