August CEO Jason Johnson on opening the smart home of the future

Verge editor-in-chief Nilay Patel chats with August CEO Jason Johnson about smart locks and the challenges of integrating various technologies within a smart home. They discuss whether every company needs to be a data collection company, and why it's so difficult to be a hardware company in tech. Learn more about your ad choices. Visit podcastchoices.com/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Speaker 00

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• 1:02Nilay Patel?

  Hey everybody, it's Ian from The Vergecast. On this week's interview episode, we have Jason Johnson. He's the CEO of August. We caught up last week at CES. August was there. Last year, August, which was an independent hardware startup that I met about six years ago. Last year, they sold to a huge Swedish lock company called Asa Abloy. They make millions of locks, basically. The brand you're probably most familiar with is Yale. But Jason was here at CES. They announced a new Yale lock. They announced a new super high-end luxury lock from another Asa Abloy brand called M-Tech. August is basically becoming the software platform for a huge lock company. They integrate with Google Assistant. They integrate with Amazon Alexa. They integrate with Apple's HomeKit. And we talked really about the future of the smart home, what it means to work with all three platforms at once, how hard it is to work with the platforms

• 1:47Nilay Patel?

  or architect it very differently, and the future of how you're going to get in and out of your house. Jason is super candid. He's super real. It was a great conversation. Check it out.

• 1:58Nilay Patel?

  All right, we're here with Jason Johnson. He's the CEO of August, the very well-known smart lock company. I say very well-known because I am an August customer, so everybody I know is aware that I have these products. But it's CES time. You announced some new locks today.

• 2:11Speaker 03

  So people are probably familiar. A year ago, we sold to the world's largest lock company. It's a giant conglomerate out of Sweden that has a lot of brands. And we are actually launching more August-enabled locks from our parent company, so Yale. So we have a new Yale lever lock we announced yesterday. And then today, we announced several locks under the M-Tech brand, which is a more premium luxury line of hardware and locks for homes.

• 2:38Nilay Patel?

  Yeah, so the story at CES this year seems to be like, it's always smart home. It's been smart home stuff for two or three years. Obviously, getting in your house is like a core smart home use case. But it's really a story of interoperability between all of these platforms. We're seeing it's not an Alexa world, or an assistant world, or a HomeKit world. Every device seems to support everything. Is that what you're seeing too?

• 3:02Speaker 03

  Yeah, for me, the role kicked to this top of the week was the Apple announcement with Samsung, LG, and Vizio. And then, of course, Apple Music a few weeks ago with the Echo devices. I mean, what we're seeing is this idea of having a closed garden, which Apple has sort of epitomized that over the years. This idea of trying to be your own closed garden is just not going to work for consumers. Consumers want the devices, and they want all of the services and communication between those devices to work. And it's all about optionality.

• 3:32Nilay Patel?

  So you're seeing, even with your products, consumers, you can't just sell a HomeKit lock. It has to support all three?

• 3:38Speaker 03

  Absolutely, right? We certainly have customers that have fully embraced Alexa, some fully embraced Google Assistant, Google Home. And then you have people that are diehard HomeKit fans, and people that want to go across all of them. They want to mix and match and use whatever they want. We have to be flexible. We have to play Switzerland.

• 3:56Nilay Patel?

  Yeah, we've mentioned HomeKit a few times. That's Apple's smart home platform. It kind of runs on the phone as opposed to in the cloud like Google and Amazon. So we met years ago at the Code Conference. You had your first device. We've, you know, talked about extremely wonky like Bluetooth standards. Are you still playing in the game of this industry is not ready for what we're trying to do? We're still, are you still solving the technical problems that you and I started talking about years ago? Or is that stack mature and now you're solving these like interoperability philosophical problems?

• 4:28Speaker 03

  I mean, when you and I first met, right, Bluetooth 4.0, that the BLE thing had just, it just happened, right? You're just getting BLE into into devices. Before that, you had to pair. It was always this pairing process where you connect your Bluetooth device to to something like your phone. And then BLE changed all that. And what I mean by that is that, as you know, you can issue a, an August key to a friend. It's going to stay at your house for the weekend and they don't have to pair to your August lock. It's just the key is on their phone and they show up and boom, they get let in without doing any kind of a pairing process. That was brand new. Also, when we met that first time, smartphones weren't fully adopted yet, right? Right? So there was this big question, is everybody going to have a smartphone so they can use these types of devices for the home? And of course, we know, we know here we are six years later, we know exactly.

• 5:13Nilay Patel?

  Was that six years ago?

• 5:14Speaker 03

  Yeah, yeah.

• 5:14Nilay Patel?

  I was like saying like three, I'm just like aging myself down. I'm like, oh, it was just a couple of years ago. Six years ago, you started doing this. What is, what's the biggest change along the way? Is it, is it the voice assistants?

• 5:23Speaker 03

  Certainly, the voice assistants gave a big, a big lift to to smart locks and the overall smart home category. You know, you, you get one of these devices. I mean, they're, they're virtually free. I mean, let's be honest about this. Google and Amazon would give all of us a free speaker with microphone. If, if you could do that, you can't do that. It turns out people devalue things if they're free. But they would give us all one for free to get us all hooked.

• 5:46Nilay Patel?

  I'm shocked that Amazon every year is like, thank you for being a Prime customer. Like, here's another one.

• 5:50Speaker 03

  Right, right. But, you know, they're heavily discounted, right? They're heavily discounted. And the reality is, once you get one, you know, you want to find ways to use it. And so people, they buy a connected light bulb or a smart lock or, or something else they want to use with it. And they find out, hey, this is really a great way to interact with my house, right? My favorite use case is nighttime, right? I mean, I used to have this routine going around my house and I turn off all the lights. I turn down the thermostat. I make sure all the doors are locked. And now I just, I just give one voice command. It's, you know, it's peace of mind.

• 6:18Nilay Patel?

  Yeah. All right. I'm asking you this question for my producer, Zach, who says his dream is to leave the house and not have his wallet, not have his keys, just have his phone. You can do that now. If you have an August lock in your door, you can probably leave the house with just your phone. Do you see that all coming together? Like, here's one thing that's like your little identity and it's gonna be your keys and your wallet. Is that, is that like the big dream?

• 6:40Speaker 03

  Yeah, and, and, you know, and, and I do that today. I have my, my, my phone and, and I don't, I don't carry keys anymore. I don't, I don't even carry cash. I think the phone or a wearable is a great authentication tool for, for access control and for payments and other things. But let's get away from that. Like, how about, how about we move to a, to a whole new level of authentication that requires me not to have anything other than just me?

• 7:01Nilay Patel?

  Yeah, it's terrifying.

• 7:03Speaker 03

  It's terrifying.

• 7:03Nilay Patel?

  And it's a little bit, there's a demo here on the show floor. Have you seen it? It's a video wall and it's a big camera and it's just literally as people walk by, the AI is like, man, 35, woman, late twenties.

• 7:15Speaker 03

  Wow.

• 7:16Nilay Patel?

  And it's, and then it assigns you a code and every time it's, it's for retail, right? It's like tracking people in a retail store. And these demos have been around for a long time, but they're doing it at scale at CS. And you can just see how you would put all those cameras around your house and be like, where is everybody right now? And it's like, wait, I kinda want that. Like, I could, like, I could see it, like, where, like, hey Siri, where's the kid? Like, you can feel it exactly. And then you're like, wait, that's terrible. Siri went off.

• 7:42Nilay Patel?

  Are you seeing, do you see those strands coming together in your work?

• 7:46Speaker 03

  Yes, we have certainly been working on, you know, facial recognition and we see it as, as a future technology. It's, it's still a ways off, right?

• 7:53Nilay Patel?

  Yeah.

• 7:53Speaker 03

  But it's getting better and better.

• 7:55Nilay Patel?

  Do you feel the, the sort of any threat from the, you know, Amazon Key is here? They're gonna, they're gonna sell you a bunch of stuff and put a camera in your house and the delivery driver can put the stuff in your garage. And, you know, they're Amazons, they can be like, you know, we're gonna try half-assed facial recognition. We have enough AWS instances to pull it off. Like, we can just horsepower it. Do you, do you perceive that as a threat? Do you think the user experience there is good enough?

• 8:16Speaker 03

  I mean, we, we have, we have locks that work with Amazon Key and, and, and that's, you know, it is a futuristic, you know, way of managing access for services to the home. I mean, Amazon certainly has the cameras and has the ability to do the vision processing. If anybody was to introduce that, you know, I think it could be them.

• 8:32Nilay Patel?

  Yeah.

• 8:32Speaker 03

  Uh, Google as well, though. I mean, Google has, it's, it's been a lot of effort there. And I think, I think the Nest cameras were the first to actually tell you all your family members and when they're, when they're in, in the house.

• 8:41Nilay Patel?

  So it's funny, you make one specific category of things. Do you feel like it's harder or different to work with each of these providers in that category? Cause you don't have the full suite of products. So do you, when you, when Google comes to you or Amazon comes to you or Apple comes to you, do you think? Okay, this is what we want to do. We can push back on them and make them work the way we want to. Or is it, do they tell you what to do and it's different and you have to negotiate it? We like, Dieter and I just spent some time with the Sonos people. We like, we're watching, we're looking at Google Assistant, which is delayed. And it was just like very obvious that the stuff Amazon wanted them to do and the stuff Google wanted them to do was like different. Do you, do you perceive that as well?

• 9:21Speaker 03

  Well, on the lock side, I mean, we, we actually worked with each of the three companies to define the lock profile for their platform. So we were the first smart lock on all three. So because you're the first, you get to work with them and it's very friendly and it, and it's been a great relationship. You know, I will mention something I haven't, I haven't mentioned publicly before. Working with Apple, with HomeKit, of course, Apple would like us to see us add HomeKit capability to our cameras.

• 9:45Nilay Patel?

  Yeah.

• 9:46Speaker 03

  Well, that's a whole different level of complexity and business challenges that the locks don't have, right? So it's been a great relationship with them, you know, on, on locks. You know, cameras has been a little more of a challenge.

• 9:56Nilay Patel?

  What's more challenging about cameras?

• 9:57Speaker 03

  You know, one of the, one of the great things about HomeKit, of course, is that, is that things work locally, right? You don't have to be connected to a cloud. And for it to work locally and the way that Apple architected HomeKit, it's very intensive. In fact, that it requires a couple of simultaneous video streams and always having this uptime. When it comes to video, HomeKit is a challenge. And that's why you've, you know, you've seen very, very few HomeKit cameras so far. Now it's going to change because Apple's becoming more flexible, trying to work with folks like us. And one more challenge too, of course, is for all of us that, you know, work with HomeKit, we also have to support all of the Android users, all the non-Apple people out there, right? So we have to make sure that by putting in something like, like one of these technologies into our device, we're not disenfranchising the other half of users out there.

• 10:42Nilay Patel?

  And that share, especially internationally now, because you're part of the bigger company.

• 10:46Speaker 03

  That's right.

• 10:46Nilay Patel?

  I'm sure that's something you're thinking about even more. What specifically, there are two simultaneous video streams?

• 10:51Speaker 03

  Yeah, yeah. I, I can't remember all of the latest specifications for video implementation with HomeKit, but there is, there is a set of requirements that, that is a, is a challenge to implement technically.

• 11:01Nilay Patel?

  Yeah. You know, I have a doorbell cam. It doesn't seem like that's going to come to that doorbell cam over time.

• 11:06Speaker 03

  Intentions were there. I remember Ring, Canary and August. All three of us said we were going to add HomeKit to our cameras and all three of us have not. And then even people like Arlo, who have like one or two models to support HomeKit and then the other eight models don't, right? There's, again, you know, It's a challenge and you know, don't get me wrong, I love HomeKit, right? I everything in my house is HomeKit enabled. I'm a big believer. Whereas when you deal with Alexa and Google Assistant, everything is 100% cloud-based.

• 11:33Nilay Patel?

  Yeah.

• 11:33Speaker 03

  Right? Which makes it so much easier to implement.

• 11:36Nilay Patel?

  There's a little bit of like Alexa can just like do some UPM stuff. And it seems like that cloud round trip actually slows you down. And that's a piece of the user experience. I don't think anyone talks about enough with these smart platforms that it actually you get a better user experience if it's all in your house.

• 11:52Speaker 03

  Yes.

• 11:53Nilay Patel?

  Cause you're not round tripping to the cloud, especially the video stream and then like experiencing that lag.

• 11:57Speaker 03

  Yes.

• 11:58Nilay Patel?

  Do you see that? Are you pushing on that like, hey, where should a lot of these smart slush? They live in your house on premises or should everything be in the cloud?

• 12:05Speaker 03

  I personally think, you know, there's benefits to both, right? The cloud guys, you know, Alexa and Google have done a great job of reducing latency. I'm just shocked by how fast you can say, you know, Alexa locked the front door and how fast it happens. I mean, it's, it was surprising to me the first time I saw it. It still is a surprise to me. And I actually just left a meeting. I just had, I just had a meeting with the Alexa team and I got the, the 2019 roadmap and the things they're working on.

• 12:27Nilay Patel?

  What is it?

• 12:28Speaker 03

  And yeah, I mean, I'm not, I'm not going to totally blow my, my, my NDA, but, but I mean.

• 12:33Nilay Patel?

  So you're saying there is a roadmap for 2018 in Alexa?

• 12:35Speaker 03

  I, you know, without blowing it, I gotta tell you, I'm, I am so impressed with that team.

• 12:41Nilay Patel?

  Yeah.

• 12:41Speaker 03

  How they've thought through these exact kinds of issues that you just brought up and, and they, they have fully thought it through. And they have a whole strategy for how to, how to improve it in, in every way. It's, it's spectacular how, how much they're doing.

• 12:54Nilay Patel?

  Yeah. Again, the story of CES as a consumer shows, like you guys have some new consumer products you can sell. Other people here with consumer products, but the story seems to be people like you come here to meet with people like the Alexa team and the assistant team to plot out the future. Is that balance shifting for you?

• 13:09Speaker 03

  You know, it's convenient, you know, back to HomeKit. I remember, boy, it was five years ago CES. I remember the, the Apple team said they wanted to meet with us in our suite and they wouldn't tell us what it was. This is way before HomeKit was, you know, was announced in public and, and they, you know, they gave us, they gave us, you know, a sneak peek. Obviously they knew about August, but I think it was really convenient for them to go visit a handful of people. And you know, I'm sure that, I'm sure if I could guess, you know, Phillips Hugh and others were also part of that little, that little tour that the team did when they were out here. It's, it's a very convenient place to, to basically see everybody.

• 13:42Nilay Patel?

  Yeah.

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• 14:51Nilay Patel?

  So let's talk about August specifically. One thing that is really interesting to me is I met you. You were literally like a startup founder with a hardware startup six years ago. Those are not guaranteed wins. Like, we cover a lot of hardware startups. You guys did phenomenally well. A year ago, you decided to sell to the big company. Asset Abloy. Is that how I'm pronouncing that correctly?

• 15:10Speaker 03

  That's right, yeah.

• 15:11Nilay Patel?

  What does that decision like look like for you? Like, how do you decide, well, it's time to go be a part of the big thing?

• 15:15Speaker 03

  You know, it certainly wasn't, wasn't easy. We've always had a lot of vision for what we could do with August. And that's part of why the name is, is sort of a, what they call in, in marketing speak, an empty vessel that can do a lot of things with the, with, with the term August. But, you know, what we found was, particularly when it comes to access control and managing, you know, the home and people and services in and out of the home, that there's a lot of different ways people get into the home, right? There's a lot of different locks, right? So obviously, you have a deadbolt on the door to your house. And, and most Americans do. But many people don't have deadbolts, or they have they have a lever lock, or a knob lock, or a mortise lock, and there's there's all kinds of configurations. And then if you live in a multifamily building, and I get into the building, right? And we couldn't solve

• 16:00Speaker 03

  all of those, because a lot of those are actual mechanical, you know, physical metal problems. And so we we really had a choice. Either we could partner with a whole bunch of companies that make all that stuff, or actually become part of a company that makes all that stuff.

• 16:15Nilay Patel?

  Yeah.

• 16:15Speaker 03

  And it just so happened that at the at the time that Ausabloy approached us to purchase, so so did two other companies. And so it all happened in a kind of a fury of we're like, OK, well, I guess we really should think about this. And even even I sat down and we talked through it. And we thought, you know, we could do a lot of fun stuff with Ausabloy.

• 16:34Nilay Patel?

  Yeah. So are you now like the software provider? You said announcements here are not August announcements, right? They're Yale announcements, or M tech announcements?

• 16:40Speaker 03

  They are. They're not August products.

• 16:42Nilay Patel?

  Are you? Is that real? Like, even inside the big company, it's their products, and they're just running your stack? Like, do you have like contentious partner meetings, like internally? Or is it just one big happy family?

• 16:51Speaker 03

  You know, being a Swedish company, I got to tell you, the culture is just really egalitarian. They're just really nice, non-confrontational. Everybody's nice. It's like, you know, I probably swear more than anybody else in the whole company. I'm probably the most cantankerous. So August is a separate company that I'm still CEO of, and I run. And we still make August products. In fact, we have we have several new products under the August brand that that we'll be announcing in the coming weeks and months. But as you suggested, based upon what we announced this week, the August technology, right, our embedded technology, our August access cloud services, and our mobile app, all of those are now being added to the various portfolio companies. So that you if so that if you have any of these these

• 17:35Speaker 03

  locks, you can use the August app, and and and you can control all of your different locks within the August app. For six years, we've had people say to us, hey, I don't have a deadbolt on my front door, or I want to lock the my closet, or I have my the door to my wine cellar, or maybe the door from the garage into the house. But it's just it's just a knob or a lever, right? Do you make that? And we've always said, no, we don't. We don't make that. Well, now now I have that, right?

• 18:01Nilay Patel?

  Yeah.

• 18:01Speaker 03

  It's a Yale branded product. It's called the Yale Assure Lever Lock. You know, for me, it's I'm now able to deliver these products that people have been asking for for years. And and and also Apple has thousands and thousands of these SKUs that we can August enable and and literally solve every single type of, you know, access challenge.

• 18:19Nilay Patel?

  Do you think you need to expand your portfolio beyond just locks? I mean, obviously, you make the doorbell camera, which I guess is a doorbell and a camera.

• 18:26Speaker 03

  Yes.

• 18:27Nilay Patel?

  But then you look at the rest of the smart home ecosystem. Are you thinking, well, I need to make more security cameras. I need to make smart plugs. I need to make a microwave. Like, it's pretty trivial to make some of these products on these platforms. Do you think you need to expand farther? Or are you like really focused on just the one line?

• 18:42Speaker 03

  Well, you know, as a as a global, so the company is is the leader. Right, we're literally number one and number two in just about every country on the planet. Right, so we are the leader in access control and locks. And and and not just residential, also for for corporations, right? Our H I D business, most most corporations, you know, your key card, your key fob is all is all ours as well. So so that is what we do, right? We really do that well. But but there are things that are related to access, right? Like cameras and and and other security types of products. And so and so, you know, you'll see some some more of that from us. In fact, in the UK, we actually have a full blown, you know, security system, right?

• 19:25Speaker 03

  Just just competes with, you know, ADTs and and and the likes. It's a it's a Yale branded, you know, security system that's very, very popular in the UK.

• 19:34Nilay Patel?

  Yeah.

• 19:34Speaker 03

  Maybe we wouldn't do that in the US because there's plenty of great security systems. In fact, we partner with with most of them. So, you know, it's a country by country decision.

• 19:43Nilay Patel?

  Really? Country by country?

• 19:45Speaker 03

  Yeah.

• 19:45Nilay Patel?

  And that's just like what's happening in the market, what's happening culturally?

• 19:48Speaker 03

  Yeah, what's happening culturally and what is the need there?

• 19:51Nilay Patel?

  So I bought a first generation lock. I bought the and I upgraded to the HomeKit lock and then I bought your latest one. And the one complaint I always had was like this cloud platform is a little slow. It's a little. It's all like hazy sometimes.

• 20:03Speaker 03

  For for for remote control when you're when you're away from home.

• 20:06Nilay Patel?

  Yeah, you open it and it's then you got bought. And then like three months later, I was like, everything got a lot faster. Was that just like you were able to just like write a bigger check to your cloud provider? Like, was that was that related? I've been dying to ask you this because I it's I noticed it. It was like perceptibly faster about three months after your acquisition.

• 20:26Speaker 03

  You know, I'll tell you, that's fine. I never I never shared this. I'll tell you exactly what it was. It was right after we were acquired, we made a decision to stop working on new physical products. And just like the entire software team was focused on how do we just improve our backend and our cloud services?

• 20:45Nilay Patel?

  Really?

• 20:45Speaker 03

  And and and the team had been asking for several years to do that.

• 20:49Nilay Patel?

  Yeah.

• 20:49Speaker 03

  But of course, we're always racing to put out new products and new features. And this was that chance to have kind of a breathing room and and frankly, grow up a little bit, right? Go from being a startup to being an established company and and have everything be revamped on the backend.

• 21:03Nilay Patel?

  It's so funny.

• 21:03Speaker 03

  Glad you noticed.

• 21:04Nilay Patel?

  I absolutely noticed. It was like, everything here got a lot faster. And I always wondered, like, do they just write a bigger check to AWS? Like, they're like, well, we got it. Like, here you go. Put us on the faster bandwidth plan, like, stop throttling us. So we talked to a lot of founders, we talked to a lot of hardware startups. It's this is rocky terrain. Is this kind of the path you want people to take, that you like recommend people take? Is there a path for August, like as a standalone company? Especially now, like, I'm looking around CES now and everything is about interoperability. Everything is about leverage against major platform players. Can you do it without the scale of a big company like an Asabla?

• 21:44Speaker 03

  I don't want to discourage the hardware startup founders out there, but the data shows that it's it's pretty hard, right? There's there's very, very few hardware companies, if you will, that we've seen that have been able to stay standalone. You know, Roku so far and Sona so far and GoPro, sure, some great examples that have been able to do it. But the list is really small. And I think you said it well, it's tremendous amount of resources required, right? You have very heavy manufacturing expenses, you have big distribution. Expenses and and scaling, right? So so you know, with software and services, you can scale very quickly at very nice margins. Hardware, as you know, has limited margins and it doesn't scale nearly as fast, which means it's far more capital intensive.

• 22:28Speaker 03

  And sure, it can be done, but ask yourself, do I have to make a piece of hardware to solve this problem? Or is there existing hardware that I could put my technology, my software, my services on to and not have to be in the hardware business?

• 22:43Nilay Patel?

  Yeah.

• 22:43Speaker 03

  Uh, that'd be a far more economically advantageous way to do it. And there's obviously plenty of examples of that.

• 22:48Nilay Patel?

  Yeah, I mean, I just looking around here. I mean, there's any number of very generic smart locks you can buy. And it seems like, I don't know if I trust that vendor. Like, I've never heard of them.

• 22:59Speaker 03

  Every year, every year, we see a dozen new, you know, smart locks at CES and then and then the next year, half of them are are gone and there's a dozen new ones and the following year, the other half are gone.

• 23:09Nilay Patel?

  Five years ago, I came here and, you know, there's like 10,000 MP3 players or whatever, right? And it's like, you know what? You can take a a risk as a consumer on a no name media player. Like a year from now, like that company implodes, the service that ran it dies, the clouds, someone doesn't pay the AWS bill. Right? And like, well, and you're like, throw it in the trash, like move on with your life. When you're building infrastructure in a home, it seems like the bigger players are just going to have the entrenched consumer trust that they're going to continue to be there. Is that something that you had to fight against? It's something you have to build? Like, how do you? Do people even care? Is that just my instinct and solely wrong?

• 23:45Speaker 03

  One thing for certain is that as we add more and more smart devices to our home, that does mean that's more things for us to maintain. Right? And we're busy and and and having to like, you know, maintain all this stuff can can be quite a quite a challenge. And last thing you want to do is put stuff in your home that is going to stop working, right? Because the cloud service behind it is is shut down.

• 24:04Nilay Patel?

  And we see this over and I mean, this is a story that we do regularly. Like X thing stops working because company was acquired and cloud service shut down.

• 24:10Speaker 03

  I think, you know, those of us that are gadget, you know, geeks, you know, we all have drawers of this stuff, right? You know, you take it to Salvation Army, they don't want it.

• 24:17Nilay Patel?

  Yeah.

• 24:18Speaker 03

  I think some of the things that both Amazon and Google are trying to solve for is, is, is cloud services that, that could potentially stay persistent. Potentially, right? They haven't totally solved that yet. But, but certainly Apple's done that with HomeKit, right? That is one of the, that is one of the magic things about HomeKit devices is, is because it doesn't require a, a cloud service operated by the company or, or an app. You could, you could install a, say a HomeKit thermostat and, and that company could disappear. But the, but the Apple Home app would still, in theory, be able to talk to that thermostat and still have it be able to continue operating. And, you know, that is one of the ways to think about making your product selection is, is, is how is this thing going to persist?

• 25:00Nilay Patel?

  Yeah. How does it last over time?

• 25:01Speaker 03

  Yes.

• 25:01Nilay Patel?

  Do you, so you obviously operate a cloud service.

• 25:04Speaker 03

  We do.

• 25:04Nilay Patel?

  You know, I look at every other vendor I buy. I'm a sucker for smart outlets, like it's an easy way to like just gauge an ecosystem. So I have every brand of smart outlets. I'm always like, well, your app sucks. This one's slow. Should it, should it be, should it look like that for the consumer that you have a different app for every little device in your house? That then is a cloud service user account that then talks to your Google account or Amazon account or whatever? Or are we actually moving towards that sort of storied place where you have one sort of like middleware solution that just talks to everything? Like smart things?

• 25:37Speaker 03

  I think there's always going to be things that, that, that particular vendor's app does that nothing else can do, right? Like from the August app, there's some very specific features and functionality there. But, but honestly, many August and, and Yale Lock users can, can use the Alexa app or they can use the Apple Home app. Or they can use, you know, they, they can use a smart things app and do a lot of their basic functionality. That means they, maybe they don't open the August app very often at all.

• 26:00Nilay Patel?

  Yeah.

• 26:01Speaker 03

  And, and I think that's fine, right?

• 26:02Nilay Patel?

  I guess I'm just coming at it from the sort of like, how many user accounts do you? It's in a year where it seems like the focus on privacy and data storage and is just higher than ever. Like how many more user accounts to a cloud service do you need? Do you just want one? Should there, should you even have more than one? Remains an open question. And then you look around CES and it's like, all right, do I want a color? Like user account and password and do I want Kohler to store my bathroom data? Like, so I can connect my Google Home? Like, that's a big, it's a silly question.

• 26:33Speaker 03

  Yeah.

• 26:34Nilay Patel?

  But it's a hu- like a philosophically huge question. Like, do you want Kohler to become a data company in this way?

• 26:39Speaker 03

  Right.

• 26:39Nilay Patel?

  Or do you want August to be data company in this way?

• 26:42Speaker 03

  Right. And is that, and is that a core competency for Kohler? Right? You know, to pick on them, but, but it could be any, any type of appliance.

• 26:49Nilay Patel?

  We can pick on any of the toilet vendors you want.

• 26:50Speaker 03

  I mean, do, do they want to be in the business of maintaining a cloud service and a mobile app? And, and, and staying, you know, on feature parity? That's a decision they have to make.

• 26:59Nilay Patel?

  Are you doing any data collection? Are you trying to, do you have like weird stats about, you know, on this moment at 4:15 PM? More doors were unlocked in Sweden than ever before. Are you, are you doing that kind of like big data collection?

• 27:12Speaker 03

  We've always thought of, of the data as really as our customers' data. Right? In fact, in fact, all the data gets flushed every 30 days.

• 27:19Nilay Patel?

  Okay.

• 27:19Speaker 03

  We don't store it. A, privacy, B, it's, it costs money to store it. Right? I mean, it's, you know, when you have, we now have billions of lock openings, right? You know, it's, it's a lot of data. I, I think that there is some value to that data and you, there is some things you can do with it to, to hopefully serve the consumer and make their life better. Certainly the AI companies we've talked about a few times here. I think there's fun things they can do with that data that's actually beneficial to you. And, hey, we've noticed you've been home for a while and, and it's, you know, it's midnight. And would you like us to lock your doors for you? Right? I mean, AI agents could do that based upon knowing your presence and, and the status of your doors. And that's not a, that's not a bad thing for them to have that. Now, they could do bad things with that data. You know, ultimately, everybody has to choose what is the trade off of the convenience and benefits

• 28:04Speaker 03

  of, of sharing data with companies versus the potential risks. I haven't heard a lot of risks, frankly. I mean, I, I know they exist and I'm not saying they don't. And, and you can have bad actors and I won't name any of those companies, but, you know, for the most part.

• 28:17Nilay Patel?

  Oh, I will. Like, I would never let Facebook run my smart home. Like, never in a million years, right? I'm like, I'm a little, I'm eating a little cheese out by letting Google and Amazon into my house in that way. But, you know, like they put out the portal camera and it's like, what does every review say? Like, don't let Facebook put a camera in your house.

• 28:32Speaker 03

  It was probably bad timing to announce that hardware. It was probably bad time.

• 28:37Nilay Patel?

  Right, so I get what you're saying, but does every company need to be a data company? That's like really the the question of the industry right now. Like, can you run a business without some sort of associated data service that's subsidizing cost? It seems like your answer is we can just sell you locks forever and we're fine.

• 28:52Speaker 03

  You got to ask yourself as a company, what is your core mission? What are you actually trying to solve for? And where do you want to be, you know, at some point in time? And, you know, back to these, you know, these white goods, these appliance companies, you know, do they really want to be in the on the data business? Right? Or do they just want to make toilets? Which is a very good business.

• 29:11Nilay Patel?

  Yeah. So, last question. It's very nerdy, and I feel like it would be doing you. We've only ever really had nerdy conversations. So we've been up here in the abstract. But I'm going to end with very nerdy August platform questions. Right now, the way August is architected is very different than everybody else. So you've got a Bluetooth lock. If you want to put that on a Wi-Fi, you got to buy an August Connect and stick it in the wall. Then you've got a doorbell cam, which is Wi-Fi that can also act as a bridge. Are you ever just going to do a Wi-Fi lock? Is the technology there yet?

• 29:42Speaker 03

  I mean, from day one, we've thought about a Wi-Fi lock. And we've certainly spent a considerable amount of time and energy looking at Wi-Fi chipsets that would allow us to do that. The challenge is, is a lock has to be able to, more than anything else. Name a system in your house, maybe your thermostat in the winter time. There's a few other things in your house that you need to make sure it works reliably and consistently. And, you know, battery management, power management for a lock is extremely important to us. And having to swap out your batteries every couple of weeks is just not something a consumer is one to do, right? If you got a Wi-Fi lock from us and you had to change the batteries in two or three weeks, you would probably rip that lock off.

• 30:26Nilay Patel?

  Is there like a power to the door standard? Do you get to go, like, are there door federation meetings? I don't know how many this works. I'm assuming, is there like an international door standard body? And you go there and you're like, here's our power to the door standard that we're proposing.

• 30:39Speaker 03

  There is no shortage of efforts to bring electricity. I mean, we actually make, us all that makes door brackets with invisible wires right in the bracket. So you can run wires right through the door, right? To, we have locks, they're commercial, they're not residential. And, you know, we've explored wireless, you know, trying to, and, you know, do that in a safe way.

• 30:57Nilay Patel?

  Well, you've explored wireless power to the door.

• 30:59Speaker 03

  Oh, we've, every, every type of wireless thing, we've looked at it. We've tested it. We have it in our lab. We've actually shown it. We demonstrated it at CS a couple of times. Nothing ready for mass consumer use. When we think we can deliver that with both the power, right? But, but also latency too, right? You know, trying to wake up a, you know, Wi-Fi radio real fast, real time, when it's raining outside and you're standing in front of your door. There's, there's lots of complexities to doing it. So we are not going to deliver a Wi-Fi lock until we think it performs, you know, as good as our Bluetooth locks do.

• 31:29Nilay Patel?

  Do you think about the other standards that are out there? The ZigBee's, the Z-Waves?

• 31:32Speaker 03

  We do. We did end up putting Z-Wave in the third gen August lock. We did add Z-Wave, mainly because the security companies, the big security dealers, they asked us to do that. And, you know, we love ZigBee, right? We have Yale locks that are ZigBee enabled.

• 31:49Nilay Patel?

  Are you going to take over the entire tech stack of this company? Or are you?

• 31:52Speaker 03

  You know.

• 31:53Nilay Patel?

  Is that where it's trending?

• 31:54Speaker 03

  They, you know, like I said, my colleagues worldwide and my team have really enjoyed working together and we have all kinds of exciting projects. I promised I wouldn't spill the beans on anything coming, but there's a whole bunch of new.

• 32:05Nilay Patel?

  Yeah, your PR person.

• 32:05Speaker 03

  New.

• 32:06Nilay Patel?

  She's been typing this whole time. She just looked up at me.

• 32:10Speaker 03

  But there's some really, some really neat products coming, North America as well as around the world. So.

• 32:16Nilay Patel?

  Very cool. Well, we look, look forward to all that. Thank you for coming by.

• 32:18Speaker 03

  My pleasure.

• 32:19Nilay Patel?

  I know we dragged you away from the show for us.

• 32:20Speaker 03

  This is great. Good to catch up.

• 32:23Nilay Patel?

  All right. That was Jason Johnson. He's the CEO of August. Great conversation. We're back from CS now. We're now going to get some sleep, get our bearings. We'll be back with the regular Burgecast on Friday. Hopefully, hopefully everyone will got enough sleep. We'll see you then.

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