An ancient technology gets a key makeover

Startups are unlocking smartphone-savvy ways to improve ubiquitous hardware that has been around for a millennium.

The race is on to smarten up the keys that lock and unlock the doors of New York City homes and businesses.

On Wednesday, two New York startups—Kisi and KeyMe—announced the launch of apps they believe will give the ancient technology a 21st century makeover. The two are the latest entrants into a growing market that is quickly transforming a little piece of hardware that remains at the center of people's lives.

Brooklyn-based Kisi, which announced the general availability of its service in New York City, allows subscribers to use their smartphones to open and close doors that are electronically controlled. Kisi says its app eliminates the need for building owners, landlords and tenants to give out—and manage—keys as well as cards and key fobs. Doors can be opened with a smartphone, which act as virtual keys that can be access-controlled according to the time of day and other specifications.

"We started out simply not wanting the hassle of administering keys," said Andrew Zarick, CEO of Digital DUMBO, a social gathering and live event business in Brooklyn that is an early Kisi customer. "But it feels so cool to access our space with a smartphone that we found it to be the unique approach to entering an office or meeting space that we wanted to convey."

KeyMe on Wednesday launched an app-based key-delivery service in Manhattan that allows subscribers to store digital copies of their keys and then use those copies to make—and get delivered—backup keys in a jam. The company will also place its kiosks in 7-Elevens across Manhattan and a Bed, Bath and Beyond in Chelsea where users can make on-the-spot duplicate keys, 24 hours a day without the need for the original.

The number of digital keymasters is growing as consumers begin to bite. Palo Alto-based Apigy, creator of the Lockitron system that allows users to lock and unlock doors from their smartphones, says it raised $2.3 million in advance orders; Lake Forest Calif.-based Kwikset is currently accepting pre-orders for its Kevo smartphone enabled controller; and San Francisco-based lock maker August announced an $8 million funding round led by Cowboy Ventures. Vancouver-based Keycafe, which puts kiosks in cafés that allows users like Airbnb guests to check out and return keys, says it's about to close on its first round of funding and plans to launch in New York in mid-January.

"The reception to new ways to manage locks and keys has been explosive," said Greg Marsh, founder of KeyMe, which is based in Long Island City with 15 employees. The company has raised $2.3 million from Battery Ventures and other backers earlier this year.

Kisi, meanwhile, has an eight-person office on Jay Street in Brooklyn. The company won a $35,000 NYC Next Idea prize last year and is internally financed with roughly $250,000 in self-raised capital. Kisi assembles much of their product in Brooklyn. Kisi has less than $1 million a year in revenue.

"The system was built to work with older buildings," said Bernhard Mehl, who founded the company in Germany with Maximilian Schutz and Carl Pfeiffer. "We estimate 70% of all area real estate was built before 1960. Kisi is designed to work with most any existing lock and access control system."

Kisi sells a $349 basic control module, with more sophisticated units that can open more doors, costing $449. Service charges start at $1 per user per month.

"It solves a big problem for companies that have a lot of people coming in and out," said Samir Ajmera, manager for the NYU Poly Incubator located in Brooklyn, where Kisi initially leased office space. "I am not here to be a key cop. As soon as I saw this, I was like 'Where do I sign up?'"

Security concerns

For all the upsides with smart access to buildings, security is a major concern. Kisi, for example, keeps all identifying door information off mobile phones and servers and encrypts all data. And just like low-tech keys, users give codes only to those they trust.

New York's high-rises pose both an opportunity and a challenge as startups try to prove their appeal. "This city takes its real estate very seriously," said Mr. Mehl. "It's the perfect testing ground for us."

Keycafe, which launched four months ago, gives subscribers RFID tags to put on their keychains. Users put the keys in a kiosk and then grant access to the keys to people they trust.

"I was an Airbnb host in Vancouver and had constant issues getting my guests into my apartment," said Clayton Brown, CEO and co-founder of Keycafe. "So that's how I started working on this project. I had disasters where I had to cab people out to my housekeeper [to get keys.] I thought to myself, how could I turn the café across the street into the hotel lobby for my neighborhood?"

Making it easier to rent your home on Airbnb is likely to incense those opposed to the room-sharing site but the founders of Keycafe say it's good for renter and owner—as well as the café, which gets a piece of revenue and potential benefits of added foot traffic. They also say the service could be used by property managers, realtors, dogwalkers, cleaners, contractors, housekeepers and nannies.

"People are used to using keys," said co-founder Jason Crabb. "They're going to be around for a while."

Source: Crain's New York

http://www.crainsnewyork.com/article/20131120/TECHNOLOGY/131129993

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