The Internet of Things is a $6B market that has revolutionized the way we think about home and office security. For years, office security was only granted via legacy physical access and Openpath Securities is looking to change this by using cloud-based technology to rethink the security infrastructure of an office. Employees can now access the office through their smartphones. In addition, Openpath builds customized solutions to fit any business’s access needs and this is especially helpful for rapidly growing companies or companies with facilities in various locations.
LA TechWatch spoke with Cofounders James Segil and Alex Kazernai on how they are innovating the access control market and their latest funding round for the startup founded in 2016.
Who were your investors and how much did you raise?
The founding team, which also consists of Phil Goldsmith, Samy Kamkar, and Rob Peters, led the company’s $7M funding round, along with participation from Upfront Ventures, Sorenson Ventures, Bonfire Ventures, Pritzker Group Venture Capital and Fika Ventures.
Tell us about Openpath’s product.
Our flagship product, Openpath Access, enables employees to quickly and securely enter the office using their smartphones. Access methods include:
Mobile Unlock: Employees unlock their phone or Apple Watch, open the Openpath app and click to ‘enter’ when they reach the door.
Touch: Employees with the app simply wave an arm by the door’s sensor to trigger access. Once their mobile phone authenticates them, the door opens right away.
Remote Access: Administrators can unlock or lock doors remotely.
Guest Pass: Employees can text visitors a cloud key for temporary or one-time building access.
Scheduled Locking: Administrators can set schedules for any entryway, ensuring that, for example, doors remain open during business hours.
First Unlock: Administrators can keep doors locked until the first person enters the building in the morning.
Lockdown: If anyone in the office notices suspicious activity, they can simply click the lockdown button to secure any door in an instant.
Openpath’s mobile access methods can be done with single factor or two factor authentication. For example, administrators can require a user to authenticate with Face ID or biometric fingerprint before entering a secure facility.
The Openpath system simplifies access control so that business owners and managers can spend their time focused on what matters most: running their businesses. For employers, the flexible system simplifies the process of onboarding new employees, and when it’s time for an employee to move on, revoking office access is just as simple. Unlike traditional systems, Openpath Access is cloud-based, meaning it easily scales with the business enables administrators to manage access remotely.
What inspired you to start Openpath?
We previously cofounded EdgeCast Networks, a global content delivery network that grew to over 1,000 employees in ten years, resulting in several office expansions as well as international branch openings. Traditional access control was a major pain point during this period of rapid expansion: we had so many badges we had to keep track of to get into all our offices and data centers. The experience was so inefficient and frustrating, we became inspired to build a smarter security system for the modern workplace using mobile and cloud technology.
The access control industry has not evolved in decades. As a result, too many organizations still use legacy physical access technologies that are closed and have
limited ability to integrate with IT infrastructure. We realized an opportunity to apply mobile and cloud technologies to access control, and over the past few years, built an easy-to-use suite of software and hardware that better suit modern workers.
How is Openpath different?
Unlike traditional systems, Openpath Access is cloud-based, meaning it easily scales with the business and seamlessly integrates with platforms like G Suite and Office 365. Patented SurePath Mobile technology ensures reliability and quick entry via Bluetooth, Wi-Fi and LTE, while encryption shields against cloning, sniffing and key copying. The system gives administrators more control than ever before with scheduled locking, custom zones, user-level permissions and lockdown capabilities.
The Internet of Things completely revolutionized the home security industry, and we are now using this powerful technology to innovate the long-stagnant, $6B access control industry.
Openpath is ideal for any company looking for a more modern access control system. Our customized solution can be tailored to suit any business’s needs and has proven to be particularly effective for companies with facilities in different locations, those that are growing rapidly, and businesses who want to grant access to vendors remotely.
What’s your business model?
We charge one-time fees for hardware and have a monthly subscription fee for cloud software and customer support, but do not charge per user – our app is free. By selling direct and working closely with deployment partners who install our solutions around the U.S., we are able to keep costs low. Our hardware cost is dependent on the number of doors a customer has in their office.
Smart Reader costs $250.
Smart Hub costs $700. The Smart Hub is a wall-mounted control board that connects to the reader and the internet and powers the system. One SmartHub can control up to 4 doors.
Service subscription is $50 per door per month – though that price begins to drop when a customer has over 10 doors.
How quickly do you see the price of hardware falling for your solution?
We are focused on the commercial market selling to businesses and landlords. In the commercial market, the price of hardware falling isn’t as much of a contributing factor as it is for the residential market. For commercial grade quality hardware, one has to meet a certain standard, and builders and business owners are less price sensitive to the hardware costs and instead care more about the quality of the product and service.
What was the funding process like?
The founding team has been fortunate enough to have achieved considerable success with their past entrepreneurial journeys, having founded EdgeCast Networks, Knowledge Base and HostPro. As a result, we led our own funding round. Having had terrible experiences with traditional access control in the past, we are all passionate about this business and its potential to improve workplace efficiency in offices across the country.
What are the biggest challenges that you faced while raising capital?
We are lucky to have done well in our prior ventures and therefore able to initially fund the company ourselves. We were also lucky to have the support of many investors who have worked with us or known us over the years who were eager to support our latest initiative. Therefore the fundraising process this time around was quick and efficient which allowed us to spend all our time focused on building the business.
What factors about your business led your investors to write the check?
The opportunity to improve the commercial access control space is huge. There hasn’t been any innovation in the industry in 40 years, and our solution offers businesses a more streamlined solution better suited for the modern lives of employees, office manager and business owners.
What are the milestones you plan to achieve in the next six months?
Now that we launched Openpath out of stealth mode, we are focused on customer acquisition.
What advice can you offer companies in Los Angeles that do not have a fresh injection of capital in the bank?
We strongly believe in the benefits of bootstrapping and self-funding for as long as you can. When you’re powered under your own steam, you have the flexibility to fail fast, figure things out and get to a place where you really feel confident about the business opportunity, product and strategy. Once you have those things lined up, that’s when you can most effectively raise money and do so at a valuation that feels fair to both parties.
Where do you see the company going now over the near term?
Right now we are focused on customer acquisition. Feedback from our beta customers over the past year has been fantastic and we are eager to bring modern access control to businesses everywhere. You can watch case studies from some of our beta customers, including Invia Robotics, Wonder, First Media and Team Liquid on our website.
What is your favorite LA bar, when you need to kick back and relax?
We live all over the city – from Santa Monica, to Manhattan Beach to West Hollywood so we end up going to lots of different places. Lately we’ve been doing most of our business meetings at Salt in the Marina Hotel as you can have drinks and food overlooking the water.