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Thoughts on the ButterflyMX Investment

Recently ButterflyMX raised $35M to "meet surging demand for contactless entry in apartment buildings." Well, I partially believe that line. I 100% believe that it is to meet demand. ButterflyMX has been growing in popularity for years. What I think is being somewhat opportunistic is the demand being "contactless entry." That is more marketing speak than anything.

Regardless, what is interesting to me and what I want to discuss here is what the investment means for the intercom category and what it symbolizes as a larger trend or phase change in the multifamily access control industry?

The increased interest of intercoms from the Multifamily industry parallels the Enterprise increased stake in visitor management systems.

Interestingly, they follow a sleepy historical past and similarly have a bright future of solving, and in my opinion, leading the new fundamental use cases presented post-COVID. Let's take a look a both.

Pre-COVID past for both the intercom and visitor management systems:

  1. Seen as a feature of access control systems, not a business
  2. Limited attention from incumbents
  3. (Resulting in) Old technology with a terrible user experience
  4. Innovation by a handful of startups with modest investment
  5. Global market opportunity ripe for disruption

Post-COVID future for both the intercom and visitor management systems:

  1. They are the dynamic user interfaces for access control systems and will drive the specification, narrative, and adoption of historical access control systems that just focused on locking and unlocking. They are the trojan horse.  
  2. There will be a scramble for incumbents to figure out how to participate as the world moves from focusing on card readers and access control cards (also known as the old user interfaces of legacy access control systems). This will also drive the lock companies to look at their models, partnerships, and offerings.
  3. There will be new technology adoption that supports the new use cases like mobile-first, health, and everyone being considered a visitor.
  4. There will be a flush of venture capital cash infused into the market and startups. This will change the narrative and adoption dynamics (e.g., storytelling, channel, metrics, pricing, and much more), resulting in stress being applied to incumbents to respond.
  5. Disruption commenced and escalated. The game is on.

Please do not get me twisted. The investment into ButterflyMX is a testament to the execution by Cyrus and his team. But it is also the canary in the coal mine to what is to come. It is a recognition that the way we interact with buildings, the increased need for a better user experience, and the desire for value beyond the safety value proposition is upon us.