Proxy | WeWork’s unknown billion-dollar prospect

Tipped by Forbes among the next wave of billion-dollar companies, many people have never heard of Proxy. Clients include WeWork, Uber and Accenture. The always-on identity signal in your phone uses low-energy Bluetooth to open doors, turn on computers and much more. Paul Unger met co-founder Denis Mars to talk privacy, facial recognition and ambitious roll-out plans.

What is it?

Proxy is the ‘identity signal for everything’. a set of keys in your phone. Not merely for opening doors, although it does that with any existing door access system you might have, but also for turning your Zoom video conference on when you enter the room, and in due course, linking with your car, your home, ordering your Starbucks when you enter the coffee shop.

Denis Mars, one of the two Australian ex-pat co-founders of Proxy, now based in San Francisco, explains: “At Proxy, we’re trying to represent humans in the business place using a smartphone to emit a signal that securely represents you so systems and devices can detect it.

“All we’re trying to create is to be able to walk up to things and have a frictionless experience, a hands-free experience, for everything with which you interact.”

How does it work?

Uses a smartphone’s ability to emit a low energy Bluetooth signal, on which Mars and his team build the software protocols needed to communicate with hardware around the user to generate the desired “passive” experience – calling the lift, switching on your computer – when you move into the area.

Mars says there is no need for a database or even Internet connectivity. “People use their phone to essentially create their proxy accounts. Their proxy is very much what the name is trying to say, so it is your digital proxy and, in there, you have the controls. You have ‘cards’ that emulate things you have access to and, in those cards, you’ve got certain settings that you can set up there and then you can also have multiple different identities. You could have your Gmail account if it’s personal or your work account or your Starbucks account eventually where you are choosing what version of yourself things are detecting. You might need to know my name and that I like my coffee but you don’t need to know where I live or anything else about me, so all that’s designed into your proxy account system.”

Client list

After developing the initial technology “in the lab” Mars quickly wanted to take the product on site and “build it in the wild”. Through connections made during a stint on the Y Combinator tech startup programme in 2016, Mars began working with Uber, WeWork and Dropbox. “We wanted to be on their door, on their systems and every day testing it and improving. We spent time doing that because we really wanted to get to a point where people just don’t have to think about it anymore; it’s just this thing that works for you and just removes another one of those things that you don’t have to think about. So once we did that, we launched in March of this year officially so that’s when we put up our website and started opening up for more customers.”

As well as occupiers and operators, Proxy is working with landlords and developers including Boston Properties. Proxy now works with more than 60 companies around the world.

Business model

“We’ve been taking revenues since very early on. It was one of our tests – to make sure there’s a business model here. Cool tech is cool but if you don’t have the business model with it, you’re going to struggle or eventually you’re going to have to compromise and maybe sell ads later. And we didn’t want to do that.”

Proxy raised $14m led by Kleiner Perkins, alongside Coatue Management, Y Combinator and WeWork.

Client fees range according to scale of deployment. “It depends on the size and it also depends on the speed of roll-out. Because we’re dealing with large companies, they can start with one building, which is like a small expenditure, or start with multiple buildings in one area. And it can go from $100,000 to a global deployment which could be in the millions.”

Revenue is forecasts between $10m and $20m in 2019 and, says Mars, the business is “very profitable”.

Mars co-founded teleconferencing business Bitplay, which was sold to Jive Software. His partner at Proxy, Simon Ratner, was part of the team behind video annotation firm Omnisio, acquired by YouTube.

Privacy

“We were very concerned about how the online world is going to spill over into the physical world. Are we going to have the same sort of tracking and everything else where you can’t walk down the street without some sort of system tracking you? We thought ‘Well, what can we do to try to put something out there to help with that?’ With facial recognition coming around, privacy has kind of gone backwards. Remember the days when we used to say ‘don’t use the same password in all your websites’ because all it takes is one crappy website to be hacked and then they’ve got your password and they can log into that really hard bank account of yours? Your face is that one password; the same face that you’re using everywhere.”

Under Proxy, a set of privacy principles means users control their interactions and own all the data about themselves.

Competition

WeWork bought Waltz, a door access system, at the start of the summer. How does Proxy relate to that as a supplier and investee of WeWork’s? “WeWork’s growing so fast that they have a lot of challenges. One of their challenges is every new building they go to has a different landlord, has a different access system down at the base and they need to integrate to all of them and that slows them down and so Waltz has done a great job integrating to a whole bunch of them and so they’re going to help with enabling WeWork to scale a lot better and have this universal credential so that a member can get into a lot of different buildings which also benefits us and that way we can move much faster as well and deal with them faster. So there’s a lot of pieces in there so we’re not trying to be an end-to-end replacement. We try to represent the human side and do a really good job of that.”

Rest of 2019

“The big push is to get through all these customers that we’re committed to.

“We know that the end of this year the goal would be to get a certain number of the companies fully deployed. We’ve already got buildings in London (WeWork’s Devonshire Square), in Shanghai, in Beijing, in Tokyo and it’s just the start of what we have to do so that means we have to now start having global exposure and ability to service.”

Another step towards that $1bn valuation.