IoT Lessons: How Software Opened the Door to Smart Locks

ABOUT THIS EPISODE

Yale has been manufacturing locks since 1840. Put another way, they have hardware on lockdown.

Software, on the other hand, has been a relatively new addition to the company’s repertoire.

In this episode, Jason Williams, President of August Home, Yale Real Living, and Smart Residential Global Accounts, shares his thoughts on the journey his company has been on since they started manufacturing smart locks and the lessons they have learned along the way. 

We discuss:

  • The story and strategy behind acquiring August Home
  • Lessons from learning the language of software
  • Reasoning behind entering the smart lock space
  • Advice for companies starting their IoT journey

Follow Yale Real Living and August Home on Twitter:

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We needed to be prepared for whenyou know that the momentum really hit and this connected home space, the smarthome space, really took off. You are listening to over the Air Iotconnected devices and the journey, brought to you by vary. In each episodewe have sharp, unfiltered conversations with executives about their IOT journeys, the mistakesthey made, the lessons they learned and what they wish they'd known when theystarted. Welcome back to over the Air IOT connected devices and the journey.My name is Ryan Prosser, CEO very, and today we're joined by Jason Williams, president of August home, Yale real living and smart residential global accounts. We've talked a lot on this show in the last few weeks and monthsabout hardware. Is Hard. Today we're going to be talking about software.Is Hard. Jason, thanks for being on the show. Yeah, Ryan, thanks for having me excited to be on over the air with you,cool man. So, you know, I think a lot of people areprobably already familiar with Yale, probably already familiar with August. You guys arekind of the Og's of the IOT space, but for the you know, forthe few folks out there that aren't as familiar. Give us Yale,August, give us the story, Thirtyzero Foot of you. Yeah, soYale's been around forever. We've been making door hardware, door locks, forover a hundred and eighty years now. August not quite so long. Augustwas an acquisition we had late in two thousand and seventeen really focused on smartlocksand and that IOT space. We've been together now for four years and youknow, it's been a real great marriage between hardware and software, which Iknow we'll talk about a little bit more in a minute. So yes,we will, indeed. So it's so. You mentioned August. I think it'sa really interesting part of the journey. You guys have been doing hardware since, I don't know, some like in the middle of the nineteen centuryor something. It seems like was when you guys kicked off star. Softwaremuch newer for you guys. We talked with a lot of people on theshow and then, of course, at very that understand hardware deeply. Softwareis a new as a new piece of this. You know, they're lookingto add intelligence or connectivity to the device that maybe they've been making for acentury or more. What is Wik? You tell us about that journey andlike, let's pick up the story prior to the acquisition. I know thatyou guys went into it with one mindset around software. Can you talk aboutabout that? Yeah, I'm and I do want to. I do wantto say one thing. I mean, you know, we're trying to talktalk about software being hard, but hardware is absolutely hard. So all that, all the other podcast you've had about that are absolutely right. We justhave happened to do it for a long time and so we've gotten really goodat it. So so, yeah, let's let's go back and really,you know, the story begins for Yale back in two thousand and nine.That's really when we decided that we wanted to start the journey and get deepinto the the smartlock space, you know, and you know. So we kindof laid out a strategy and that strategy, you know, really revolvedaround getting the best hardware that we could produce and and the I think weexecuted really well on that. When it comes to software, number one,we procrastinated a little bit, to be honest with you, and we decidedto choose a path forward that was not super software intense and it really wasaround partners. We wanted to partner with the folks that were kind of growingup and evolving in this smart home space that could help us bring our productsto market and get the most out of them. In the funny thing was, I mean it wasn't Amazon or Google or apple in those days right.It was, you know, smaller companies that you know, you probably hadnever heard of back then. You know some somewhere in the security space.Alarmcom was one that was just kind of getting started. Control for was anotherone, more in the CDs space, and so really we were led onthose partners. That that first you know year or two years that that wewere in the market. We launched our first smartlock with Yale and September oftwo thousand and eleven, and you know,...

...those partners really helped us get tomarket and it wasn't until, you know, probably two thousand and twelve, two thousand and thirteen, where we really started saying that, hey,you know this, this partner strategy is great, but we need to weneed to control our own destiny here to a certain extent, and that's reallywhere where software came in came into play. You know, we at that timekind of sketched out a plan where, you know, we did have togo and create our own, you know, mobile applications, our ownback end infrastructure with servers, and you know, the reality is we didn'treally have anybody on on on the team that was a software expert. Youknow, we hired some folks that had, you know, been in the spaceand kind of understood it, but not not really the expert. So, you know, we set off and, you know, we went and workedwith a I think, a great little company that that helped us kindof you know, design that software. And what we realized was it ittook. It needed to take a lot more than that. Right. Wereally funded. We funded two to three people, you know, as kindof the two guys in the garage type concept. In you know, wekind of took some time. We probably took longer than we needed to.What we came up with was something that worked. It was it was okay, but it wasn't a world class software, piece of software that could scale upto millions and millions of users in billions of transactions on a regular basis. And that's where I mean, you know, we realize and it waseven before we got that in the market. We realize that we weren't going downthe right path fairly early and I think that was part of, youknow, our salvation, if you will. Was it that we knew we screwedup early and we, you know, set off on a parallel path,and that parallel path is really what led us to acquiring August home.Back at the end of two thousand and seventeen, we identified this iot startup, the Siliconton Valley based company, that they were quite the opposite ofY'all right. They had their foundation in software. They had, you know, let's call it eighty a hundred software engineers working for for them and theydevelop this world class platform. You know, they were they were pretty good atand doorlocks to right, they are pretty good at hardware, but softwarewas really what they what they excelled in. And so, you know, weset out, we acquired them and, you know, from two thousand andseventeen to today, it's really been about driving their software into the Yalehardware around the world. Within twelve months we had our first Yale lock inthe US driven by August. was called Yale connected by August, and thenover the last twelve months we launched platforms in Europe and Asia, both utilizingthat same platform, and you know, we couldn't be any happier now thatyou know we are on the right path and and we have what we thinkis the best solution in the world. But it there were some bumps inthe road. It was not easy and you know, we learned the hardway that software is is hard. It's more than than those two guys inthe garage. I mean it's a it's an entire organization inside of Yale andin August that that is getting that job done today. Yeah, you know, I think the the acquisition story is fascinating. What like talk a littlebit about the integration of those two cultures? You know what we hear a lotis, you know, hardware doesn't lend itself supernatural truly to this agilethinking. That a lot of or methodology that a lot of software practitioners liveand breathe by. How have you guys blended these two cultures? You've gotthis hundred and fifty year old hardware company that has, you know, alot of rigor and discipline around building excellent products, and then more of alike Silicon Valley, you know, tech infused software and IT'S DNA company.What has it been like stitching those two together to get the most out ofboth of them? It it. First of all, it's an ongoing process, you know really. I mean if you kind of take a step back, if you look at US Avoy,...

...the way we approach acquisitions, there'syou know, I mean we've bought hundreds of companies over the years. Imean you can argue that Usabloy, you know, while we make lots ofdoor locks, our core competency is acquisitions, you know, and in a lotof cases, you know, those companies operate on their own for,you know, for many years. With August it was it was a littlebit different because we bought them, you know, for you know, areason, right, and that was leverage and software to drive the Yale Lock. So you know it. We did kind of leave them off on theirown for the first year or so and then at the end of two thousandand nineteen, actually not too long before covid is, when I took onthe responsibility of leading the August business as well, and that's really when thatintegration started, not only kind of from an engineering perspective. But you know, sales in marketing as well. But if you if you look at theengineering integration, it really goes beyond kind of what we're doing in the USbecause that I'd mentioned, that was kind of a global transition right to bringthat platform into into those regions. So it was it was much harder thankind of what it seems like on surface, because we had engineering organizations multiple placesin Europe and Sweden, where Ossable, our parent company, is headquartered.We've got some core engineering in Soul Korea and we've got pieces of engineeringin the US, but we've got engineering all over the world and so thatin and of itself, disintegrating the engineering teams was a massive undertaking. Andthen the complexities you mentioned. You know, how do we how we get allthese people that were focused on mechanical locks to understand how to incorporate thesoftware development process into into the planning cycle and things like that? And youknow it absolutely, as I mentioned, is a work in progress. Youknow it is a learning process every day and you know that. I thinkthe good news is where or kind of mate, we're definitely making that thatprogress and you know we're getting over those speed bumps and the folks that havebeen mechanical, mccannom mechanical, their whole careers are starting to get up tospeed and and start talking the the software language. So, you know,I'm happy with how things have progressed and you know, it's really going tostart increasing our kidence of product development and the more we get get down thatbath. So you mentioned mechanical folks and if I use the word software language, I know your educational background, you know, back into when in college, you have a degree in mechanical engineering. Any any learnings you can share asa professional that you've absorbed in this process, you know, becoming kindof fluent in software, so to speak, that have pushed you in unexpected directionsto make you a I don't know, add some texture to how you approachbusiness problems or think about developing technology driven solutions? Yeah, I think, and actually it's even, you know, kind of to me higher up inin the and the hierarchy there. It's really dealing with the people,right, because you know the people that have created these these mechanical products andyou know, with companies that have been around for hundreds of years, Ithink are very different from the people that are, you know, out inSilicon Valley that are starting up companies that work in that type of environment.And so for me I've grown a lot just figuring out how to adapt toa different culture and how to bring these cultures together. I mean, it'sbeen a really chat and a really big challenge, I think, for meand and the leadership team and and you know, I'd say that's been kindof my biggest growth with respect to kind of learning the language. I meanit's, you know, making sure that you sit back and you listen tothe people that that know what they're talking about, that know what they're doingright. I mean, I I don't need to be the biggest boys inthe room. And if I'm sitting there with with our CTO, Christopher nowand he's talking about, you know,...

...software in the challenges, you knowI'm going to give him the floor, I'm going to listen to him andand I'm just going to absorb and so it's just been an it's been alot of learning for me. It's been and ongoing process there and I againmoving forward just surrounding surrounding myself with the right people that that are experts andletting them kind to do their job and do their thing is, as Ithink, the right, right place for me. Let's talk about product marketfits, something we're sort of obsessed with a very what you guys, likeI said, you know, Yale is kind of the Og's of the smarthome space. You guys got in really early real and have established a prettydominant place in the market for the product that you build. What were thesignals early on that were, you know, that caused Yale to say, Hey, let's go do this and then, as you were doing it, hey, you know, here are the products and features or direction to takethis product. I mean, I smartlock is a complicated thing to build,but a fairly uncomplicated idea. You know that? I mean I think there'sa lot of value there. That seems pretty self evident. Was it soself evident that you guys just said, let's go, this is an obviouslygood idea, or was their market research what will cause you? What werethe signals that actually cause the business to say, let's invest now, let'sinvest more. You know what it can you talk about that process a littlebit? Yeah, and I've got to give credit to to the executive teamat it Assabloy, because they brought me into bring Usabloy in the US intothe smartlock space back in two thousand and nine. And if you remember atthat time, I mean the housing market was in shambles, right. Ithink two thousand and eight, two thousand and nine was was that housing marketcrash and you know, people in the building industry, I mean companies thebuilding industry, were laying people off left and right. Yet the the leadershipteam at it, Assa Abloy here in the America's were we're setting their sightson building a team to, you know, get started in this down market sothat once it turned around, you know, we were ready to enterthat smartlock space. So I think that's first and foremost, just having theforesight to kind of look beyond the the existing situation and, you know,play some bets in the future. And I think if you look at whythey did it, I mean it was it was pretty obvious, right.I mean there were there were some big trends going on and and you know, I think we all know, a smart home has been trying to bea thing probably for forty or fifty years, right, but you know they're there. was starting to become this technology swell in technology adoption. Really,I think you look at smartphones, right, I think was one of the bigthings that, you know, really kind of signaled that this was goingto be a thing, as people were walking around with Com peuters basically intheir hands. And so yeah, I think I think we, you know, we placed a bet and said that electronic locks, smartlocks, were goingto be the future. Not only were they going to be in the futureand residdential, but also in commercial that's the other thing to know about Assaa boy, our parent company in the America's I mean we've got a hugecommercial business where we're you know, we've been selling electronic locks into, youknow, universities and hotels, multifamily housing, apartments in electronics have been kind ofa thing there for many, many years. So there were some signalsin the commercial markets as well. So you know. So I think,I think that's why we started off on the journey. You know, Ithink what what kind of made us successful was there was there was a lotof patients within within the executive team, at it awesomely right. They sawthe vision, they knew this was going to come and, you know,and it was going to take some time right and it wasn't necessarily Yale thatwas going to make things happen, but we needed to be prepared for when, you know, that the momentum really hit and in this connected home space, the smart home space, really took off. You know, I wantedto ask you about your journey a little bit so that I think the theproduct journey that that's that's a fascinating story,...

...and I think equally interesting is theone that you've been through, having shepherded this company in this product alongsince the, you know, basically the beginning of the from a smart homeperspective. What learnings can you share as an executive, as someone who hasbeen, you know, got into the story quite the Yale story early.So it you know someone's out there, they've just been hired to lead amaybe a different hardware company through its Iot journey and they're saying, Hey,I know I'm early, I know that this is going to be a longjourney. Jason, what else do I need to know? And I hearyou saying it sounds like you're saying, Hey, one thing that's really importantis your executive team needs to have a lot of patients and if you ifthat, if that isn't there, then you right off the bat you're onshaky footing. Is Is that fair? And what else would you say areimportant things to be on the lookout for? Yeah, I think that's that isfair. that. Patients is a big thing in the executive team.Realistic expectations, I think, is another one in that kind of flows fromthe top down and it kind of goes hand in hand with patients. ButI think from from a from a personal perspective, it's, you know,almost check your ego at the door, right, which is, I think, I think, a hard thing for, you know, for some of usto do for sure. But you know, we had set out andwe had a strategy put together and you know we were going to address thesingle family home, right. That's that's where, that's why we built ourproduct, that's where we were focused. But as time went on, itwas it was clearer that smartlocks for more than just about kind of being agadget that fit within the smart home. And and yes, there are definitelya lot of reasons why. You know, people want smartlocks in a single familyhome. Right. There's that convenience, there's the peace of mind and security. That goes along with kind of the digital key aspect of smartlocks.But when you look at some of the other areas that smart blocks have shiftedinto that we weren't necessarily planning for out of the gates. It's really whathas led to a bit of an explosion, in my mind, of smartlocks herein the US and a couple of those areas. One is vacation rental. So you mean you think of an Airbnb who wants to kind of rollinto, you know, Montana Ryan where you are at two o'clock in themorning and they have to drive fifty miles to find, you know, theperson renting you your place and get a key before you can go, youknow, get crawl into bed. You know. It's a big inconvenience.It's a big the consumer experiences really breaks there. It's a smart locks havebeen able to change that. You know, you roll in and you put acode in that you got, you know, three weeks ago, andyou're good to go. Apartment complex is another one. Forever, you know, we've used electronic access control on the exterior. Haven't been used on theinterior doors and it's just cause headaches for management companies out there that have toworry about turnover, which happens at least once a year on average in apartmentstoday. They've got to go in, they've got to change keys. There'sa security issue with with mechanical keys, right, you never know who hasa key to your apartment home or your house. You never know when somebodyuses that key. And so smart locks have just really change change the faceof that industry and you've seen you've seen a whole new industry pop up becauseof it. These property technology companies have crept up over the last three,four five years and you know they're they're selling proposition has really been access control. Now they've built some other things on top of access control, but it'sreally simplifying the experience, simplifying making things more efficient for the management companies.And you know, smart locks have really come along from the right. SoI think flexibility, and it was a long way to say it, butflexibility is really one of the keys. Right, you've got you can't justkind of get on a path and just be so focused on that path.You've got to be willing to make detours and and you know, have branchesoff of that path. So that's that's why I and I guess the lastone is you got to know when to call it quits. Right, yougot to know when to call it quits.

Not Everything you do is going tobe the right thing. You got to know when, when, whenthings are going the wrong way, how to pull the plug. And we'vehad to do that. I mean I think not too many people are willingto admit that. You know, you've had to pull the plug on aproduct or a program. But we got in early with NFC. You know, we started work on an NC lock. I think it was in two thousandand eleven, two thousand and twelve, shortly after we launched our first lock. We thought that was going to be the next big thing. Itwas getting into into all the mobile phones, and so we spent a lot oftime, effort and energy working on it. And you know, bythe end of we are betten on some things. Right, we were bettingon NFC kind of getting put out there by the by the major handsets andusable for access, and that didn't necessarily happen. And not not only that, but if you looked at NFC, it was different across all the androiddevices. It might work great on US Samsun, but work terribly on ona google device back then, and so we just got to the point wherethe user experience wasn't there. We didn't have a technology path forward and reallyit was on the android. Those out there. We couldn't tap into theto the apple side. They were just kind of getting you know, NFCworking with banking at the time, and and so we just we finally pullthe plug. We said NFC is not going to be it not going tobe today. Let's let's switch gears, let's go down the Bluetooth Path,and then we went running down that path, but pulling the plug. If wewould a gritted our teeth and just said that, hey, this hasto be the right path, we we wouldn't have made it right, becausewe're sitting here now in two thousand and twenty one and it feels like finallyNFC starting to gain some some momentum. You know now that apple is kindof crack the code on payments. You know, we'll see what happens foraccess, but it's I think it's finally coming. But five years later,you know, pulling the plug is one of these fantastically valuable topics that alot of people don't want to talk about you know, and and a hattip to you for, you know, give it an example of a thingyou guys had to pull the plug on. We I've found over and over themore rooted hardware is in a company's DNA, the less likely they areto want to talk about it, you know. And we find that softwarecompanies say fail fast, hardware companies say failure is not an option. Andand so, you know, a failure is not an option. They don'twant to admit that it may have ever happened to them. And what itdoes? Of course it does. You know, they're we're driving te youknow. This is how innovation works, you know. So you, likeI said, you guys are one of the big brands out there. Ithink anybody who has a smart home probably has one of your products. What'snext for you guys? What are we going to you know, this episodeprobably going to air and October, November. What can folks expect to see towardsthe end of this year? Twenty Two? Yeah, I think youknow, if you look at what we've done and where we are, Imean we've got great door locks, we've got great software. You know,we've got a scalable solution right now and so, you know, what we'vetalked about for a little while is how do we build on top of whatwe have today? And for us what that means is we want to drivea smart security story right and so that's getting beyond door locks. That's gettinginto things like smart storage. So we launched a cabinet lock last year,which can, you know, electronic lock that could secure cabinets or drawers,valuables in your home, medicine cabinets, you know, keep things away fromthe kids. So we're looking at products in kind of that space. Theother the other big one, and I think could could, you know,be really revolutionary, is, you know, this concept of package delivery and inhome, in home package delivery and home services secure package delivery, andso we started shipping a smart delivery box at Yale, smart delivery box latelast year. Is Well, all of these products tie into our mobile application, the Yale No August App, you know, so you can grant access, you can control them remotely, and...

...so kind of building out, continuingto build out the devices, to leverage of software's really important to us andyou know, I'm excited to talk about some of the the relationships, especiallyin the delivery space that we are we are building better leveraging that delivery boxso there's a tight integration between us and and our delivery partners, so theycan seamlessly get into those boxes, they can lock lock those boxes behind themso that you know, you can order more often, you can order highervalue things and not how that walk off your porch, which is probably aproblem that a lot of us have experience. Maybe not, Ryan, you andyour Montana House. I imagine that's pretty safe up there, but someof us that live in cities not so much. Yeah, we don't seea lot of porsche piracy out here, that's for sure. You mentioned partners. You know. You've been in this space for a while. You knowsmart you personally know smart home space pretty well. Who out there's doing goodwork that we need to know about? Get let's plug somebody here on theretoday. Yeah, I'm going to go back to the the prop tech spaceand I was talking about really multifamily housing apartments. That has seemed such arapid rise in in access control and smartlocks, and really one of our first partnersin that space, company called Smart Rents, that we've been working withfor for several years now. They're CEO Lucas Aldamn, you know, broughttogether a great team, had a great investment strategy were, I think inmany cases he's he's selling his product to do a lot of his investors andyou know, they have really, I think, turned that industry on itshead. And so smart right, I think is a company to look outfor. They recently, think, went public via spack not not so longago. So they're they're off to the races. They're definitely one to watch. Cool, you heard it here. First, smart rent. Last question. You know, we've got a lot of fans out there of the theYale product line. For folks that want to follow Jason Story, how canthey follow Jason? How can they follow Yale? What are some great waysto to keep up? Yeah, as I'm always happy reach out to meat a Linkedin and find my profile there, but also, from a company perspective, at Yale Home and at August home ink on twitter, best placesto kind of keep up with good with what's going on with with Yale andAugust as we continue pushing forward and in the smart home space. Cool.So if you want to keep up with Jason. He's Jason Williams, somewhatcommon name, so probably Jason Williams, come a Yale or or August willget you there. Will Jason appreciate you being on the show? That's that'sit for today. Folks, my name is Ryan. Thanks for listening.We'll see you guys on the Internet. All right. Thanks for having me, Ryan. You shouldn't have to worry about IOT projects dragging on or unreliablevendors. You've got enough on your plate. The right team of Engineers and projectmanagers can change a pivotal moment for your business into your competitive edge.Varies. Close Knit crew of ambitious problem solvers, continuous improvers and curious buildersknow how to turn your ideas into a reality on time and up to yourstandards, with a focus on mitigating risk and maximizing opportunity, will help youbuild an Iot solution that you can hang your hat on. Let's bring yourIot idea to life. Learn more at very possiblecom you've been listening to overthe Air Iot connected devices and the journey. If you enjoyed today's episode, makesure to hit subscribe in your favorite podcast player and give us a rating, have a question or an idea for a future episode? Send it topodcast at very possiblecom see you next time.

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