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[February 10, 2014]
Hold The Phone ; Smartphones Are Opening Doors For Local Firm [Intelligencer Journal (Lancaster, PA)]
(Intelligencer Journal (Lancaster, PA) Via Acquire Media NewsEdge) Staff Writer firstname.lastname@example.org The key idea behind a young local company puts smartphones to a new and novel use.
And the firm hopes some recent investments - including one from the state - can help open doors to a new market.
ECKey's namesake product turns a smartphone into a key for getting in and out of offices, parking garages or large apartment buildings.
The system, which pairs a phone with a small reader attached near a door, utilizes a mobile phone's Bluetooth signal to untrigger a lock.
"It's another thing you're going to do on your phone," said Paul Bodell, the company's president and chief executive officer.
The five-employee company, which set up shop last summer on West James Street, got a $75,000 investment in December from state- funded Ben Franklin Technology Partners.
This follows an August 2012 investment of $150,000 from the public-private partnership that backs technology startups in the Keystone State.
"I think this makes a lot of sense," said Pam Martin, a Ben Franklin portfolio manager who oversaw the ECKey investment.
Martin said Ben Franklin typically invests in only about 15 percent of the companies that seek its backing.
The ECKey investments are in the form of preferred stock and convertible notes.
The money from Ben Franklin is a sliver of the investments that Bodell has been securing for the young firm.
Ben Franklin's $75,000 was part of a round of investments that totaled roughly $937,500.
Martin said ECKey stood out because it demonstrated a unique technology product that's based in Pennsylvania and has a good market for potential growth.
So far, that potential has been ECKey's biggest selling point.
Actual sales are "still very small," Bodell said, with around 1,000 of the units getting into the hands of customers so far.
Bodell declined to disclose the firm's revenue.
He added that while the company isn't profitable yet, it is "in pretty good shape and moving in that direction." One of the first customers was Egis Capital Partners, a New York City firm that has offices overlooking Bryant Park.
An ECKey reader was installed on the company's door about six months ago, with about 50 employees now using their smartphones to get in and out of the building.
"We feel like this adds a convenience and also just an element of cool," said Ashley Larson, a principal at the private equity firm.
Larson said putting ECKey on one door cost about $1,100, or about a fifth of the price for a traditional card-based system.
"It is sort of the perfect marriage of convenience and added security," said Larson, pointing out that while people may lend someone their security card, they are loathe to lend their phones.
Egis Capital Partner is also an investor in ECKey, putting "less than $5 million" into the company, according to Larson.
"We obviously really believe in the business," she said.
For Bodell, belief in the technology took him from just an admirer to the leader of the company that was founded eight years ago in New Zealand by Nick Willis.
Bodell, who in 2006 was working for a company that made security cameras, got to know Willis through industry events and learned about his idea to turn phones into door keys.
When Willis' effort to bring the technology to the United States stalled, Bodell stepped in as an investor.
Bodell eventually dissolved the New Zealand firm and reincorporated it two years ago as a Delaware-based company with headquarters in Lancaster.
"I saw there was an opportunity to use a technology that you're already dealing with on a daily basis, namely your phone," he said.
Since taking over, Bodell has been pitching the technology to a variety of possible investors, while getting used to being rejected nearly 90 percent of the time.
"It's pretty tough," said Bodell, 50, of Manheim Township.
ECKey readers utilize Bluetooth, which is a type of short wavelength radio wave that is widely used in phones and wireless devices such as video game controllers and the computer mouse.
Since even old flip phones typically have Bluetooth capability, users don't need to upgrade to make it work.
And, for users who don't have a phone, ECKey also offers a key fob that can be used with its readers.
To open a door with a phone, a user must have their phone registered in the system so that when their phones Bluetooth signal is recognized, the door will be unlocked.
ECKey also has an app that can be used to electronically "send" an encrypted key to someone else, giving them access to a building.
Bodell says that system - which is covered by one of the company's patents - could make "picking up keys" for a vacation home as simple as opening an app.
While the systems could be used in homes, ECKey is focusing on the commercial market.
ECKey's hardware is made by SMT Manufacturing Group in Hellam, which also handles its logistics and fulfillment.
ECKey sells through dealers and "certified partners" who install the devices.
One of those dealers is Exton-based Protection Bureau.
"We love the product. It works great," said Mark Petrucelli, a sales manager at the firm.
"The coolest part about it is that nobody loses their phone anymore; you always have to have your phone." This natural attachment to one's smartphone could ease the headache of people seeking replacements for lost security cards.
Petrucelli said his company has made one sale and has a couple other prospects.
One of ECKey's certified partners is LowV Systems of Mechanicsburg, which installs fire, security and building automation systems.
"I think it is a great concept," said Dan Briner, a project manager for the 18-person firm.
Nevertheless, despite pitching ECKey to about a dozen potential customers, Briner has yet to make a sale.
"I'm not sure if it it just too new or if people just have their doubts," said Briner, while adding: "I think it is just a matter of time." (c) 2014 ProQuest Information and Learning Company; All Rights Reserved.
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