Michael Shaw is founder and CEO of Interface Security Systems, a leading provider of innovative business security, remote managed video monitoring, networking infrastructure, and video analytics solutions that provide restaurants and other hospitality businesses with next-generation technology and 24/7 management.
Shaw began on this career path in 1973, when he founded a Sonitrol Security Systems business in New England, which then became the platform for a new enterprise that he co-founded called SecurityLink Corporation. The company went on to become the sixth largest electronic security company in the country through several strategic acquisitions and organic growth. In 1995, he started Interface, which has grown from a local St. Louis security systems integrator to a national provider of mission-critical managed services. This evolution of Interface and the comprehensive technology services it now offer have closely tracked increasing customer expectations. What started off as basic alarm monitoring and physical security needs expanded to video verified alarms and sophisticated interactive remote video monitoring. In order to effectively run all of the new tools and applications in a store, customers needed a secure network infrastructure platform. Customers also needed to optimize their network connectivity to support new applications, gain actionable business insights, and reduce IT costs.
First off, congrats on the whopping $60 million equity financing transaction that closed in January. How are these funds being used – particularly, in terms of facilitating Interface’s growth strategy and strengthening and/or expanding your overall capabilities?
Thank you. This capital infusion will enable us to continue to stay ahead of the technology curve and invest in product development, new technology infrastructure, scaling operations, and launching new strategic partnerships. We will continue to invest in new technologies like video analytics and AI and strengthen our relationships with key strategic partners.
The new funding round was a follow-on investment from existing investors. What do you think gave them the confidence to make further investments in Interface?
Our investors believe that this new capital will catalyze the growth phase that Interface is already in. We are strongly positioned to help businesses integrate the management of their security, managed networks, and business intelligence, particularly as we emerge from the global health crisis. Our investors feel confident that this growth capital ideally positions Interface to take advantage of opportunities in areas where we have a demonstrated track record of success.
What was the original vision for Interface? How has that vision changed — or not changed — as the company has grown?
My original vision for Interface has endured through the years – to quite simply build a successful industry-leading company delivering exceptional, highly innovative cutting edge solutions backed by a dedicated team of professionals. Our core principles at Interface are those of Transparency, Accountability, Consistency, and Relentless Support. Even as we have grown over the years in terms of the number of customers we serve, the size of our team, and the array of services we offer, our core mission to deliver next-generation innovative technologies, customized services, and a superior customer experience has remained unchanged.
The world has changed a lot in the 25-plus years since you launched the company. What are some of the biggest changes you’ve seen when it comes to security systems and managed services, particularly in the hotel and restaurant sectors?
The hotel and restaurant industries are hyper-competitive, and the only way for these businesses to thrive is through innovation.
New business models rely a lot more on applications that promote self-service, touchless interactions, online ordering, curbside pickup, and home deliveries, to name a few. It is hard for restaurant and hotel owners to stay abreast of the accelerating rate of technologies. They need to rely more on Managed Service Providers like Interface, who can come in and holistically evaluate their needs and deploy comprehensive next-generation technology solutions. Security these days is not just about securing a physical location; it’s also about securing people who may be working alone outside the confines of the restaurant or hotel, having a secure network architecture to support new applications, and protecting the business from cyber fraud. That’s why we believe businesses should consider a managed service provider who can integrate and manage diverse systems to uncover insights that are otherwise not available when operating in silos.
What types of hospitality businesses are likely to benefit most from your security systems and managed services?
We work with restaurant and hotel chains with distributed physical locations who are grappling with the complexity of dealing with multiple vendors for securing their business, connecting their locations, and gaining actionable business intelligence.
As a fully managed service provider, we secure restaurant and hotel locations, provide a reliable network connectivity platform that supports online services and new applications, and deliver real-time business insights to streamline operations.
We have the ability to take an integrated view of all aspects of customers’ operations. This is a game-changer for our customers. For example, our video verified alarms save a lot of money for restaurants by completely eliminating false alarms. Similarly, our POS exception reporting service can pinpoint suspicious transactions or fraud by sifting through millions of transactions and tying them up with video evidence. When we deploy our interactive remote monitoring service that can act as Virtual security guards for restaurants and hotels, we also ensure that the underlying network architecture is able to support video and other high bandwidth applications. Our video analytics services can then aggregate data from existing security systems to gain actionable customer insights.
Can you provide some examples of how hotels and restaurants are currently utilizing your solutions and services? Any recent success stories you can share — stopping thieves in their tracks, for example?
We have two Command and Control Centers in the US to monitor over 65000 customer sites, and we handle about 6 million security events every year. As you can imagine, our teams have seen it all. From opportunistic shoplifting attempts to organized gangs running sophisticated robberies.
One of our customers is Panda Express. With more than 2,200 locations and 41,000 associates, they are America’s largest family-owned and operated Asian dining concept. Challenged with losses at the point of sale (POS) and growing false alarm penalties, the company turned to Interface to help them dramatically decrease shrink and resolve security inadequacies. To address the false alarm challenge, we installed a next-generation IP Interactive Monitoring system with live video and two-way audio, which offers a virtual, guard-like level of protection in every Panda location. This way, our monitoring center operators can instantly verify any alarm from a Panda store with live streaming video, eliminating false alarms. This saves Panda Express in excess of $100K a year in false alarm fees.
Panda had also implemented a customized, exception-based POS reporting system, which notifies management whenever a suspicious transaction occurs at the register. Interface took the tool a step further by integrating it with the video surveillance and alarm systems at each of the Panda locations, allowing management to immediately connect to the video of any problematic transaction. The solution enables loss prevention professionals to quickly identify anomalies and prevent shrink. Top offenders from thousands of employees doing millions of transactions can easily be bubbled up to the top. The combination of business intelligence and video surveillance resulted in a massive reduction in shrink and cash shortage at the register.
Interface recently rolled out a new offering that enables hotels and resorts to communicate with their guests via SMS and MMS text messages. How did that offering come about and how does it fit with your existing solutions?
The COVID-19 pandemic has forced hotels and restaurants to offer low-contact services to safeguard employees and give patrons the confidence to travel or enjoy their favorite meal.
In the case of restaurants, many consumers have shown some reluctance to dine in and instead prefer curbside pickup and drive-through options. When restaurants started offering take-outs on a large scale, they realized that a lot of customers driving in to pick up their orders wanted to know if the order was ready. This meant that their phone lines were always busy, causing frustration to customers who weren’t sure if the order was ready or how long they should wait.
In hotels, guests prefer no-contact check-ins and services. Giving them access to reservation confirmation details, answering frequently asked questions about early check-in, late checkouts, and hotel amenities, and sharing room access passcodes are some of the use cases that are tailor-made for text messages.
But one-to-one text messages, as we use it on our personal devices, are not sufficient in these situations. That’s why we launched our business text messaging services. First of all, business text services can be configured to use the existing phone numbers for all locations. Most importantly, it’s designed to send or receive messages at scale on a “many-to-many” model.
Our solution is cloud-based and teams of employees, even those that may be working in a central or remote location, can use any connected device such as a tablet or desktop to track conversations with customers and respond to every customer query. In addition, you have enterprise-grade user management, security, and controls in place to ensure that only authorized employees can respond to customer messages.
Interface also recently launched a low-cost “Virtual Security Guard Monitoring” package that is said to be ideally suited to the needs of hotels and resorts. Can you tell us a bit about that offering?
In the current business environment where margins are under pressure, hiring security guards can become an expensive proposition when you aggregate the costs across multiple locations.
Our virtual security guard monitoring service is designed to offer a sophisticated, interactive remote monitoring service. Our security professionals monitor the properties remotely 24X7 with the ability to initiate 2-way video and audio communication with employees in real-time.
Interface also offers video-verified intrusion alarm monitoring. Our team verifies every alarm event via video and is trained to defuse the situation or seek help from local law enforcement.
It’s a cost-effective solution that gives hotels and resorts advanced security coverage with optional add-on services available on a need basis.
To what extent, if any, did the pandemic affect the implementation of Interface’s systems and services, particularly in the hotel and restaurant sectors, as well as your plans and growth trajectory?
Initially, our customers were cautious about new spending as they were all trying to gauge the impact of the sudden shift in customer preferences. However, it became clear that maintaining the status quo was not an option. Restaurant chains and hotels had to transform their operations by investing in new technology solutions while keeping operating costs low. This meant our customers wanted us to not only implement new technology solutions but also wanted to offload a lot more responsibilities to Interface. This allowed them to focus on their core business and operate a lean IT team.
Let me give you an example of why our customers doubled down on Interface when the going was tough.
We have this amazing innovation called the “Restaurant-in-a-box”. It’s actually a prefabricated network cabinet that is the size of a really small bookshelf that comes with pre-configured routers, firewalls, wireless back up and remote troubleshooting capabilities.
Let’s say a restaurant chain is saddled with a mishmash of network connectivity options and struggling to keep the network up and tackle all the online orders and phone calls, they can just order in the Interface “restaurant-in-box”. We preconfigure the PCI-compliant cabinet and installation takes about 15 minutes on average at a location. There is no downtime for the restaurant, as installations can be done after the restaurant closes for the day.
Once the network is upgraded, our remote teams have the ability to troubleshoot the devices with minimal or no involvement of the restaurant staff. In addition to giving restaurants reliable and secure network connectivity, we make sure restaurant staff are serving customers and not spending hours on the phone with the help desk to resolve network connectivity issues. This is the kind of innovation that helps our customers save costs and improve productivity.
We have also seen an increased demand for our business security services through this pandemic. In fact, we have restaurant and hospitality customers who are expanding the use of our interactive remote monitoring systems for new applications such as automated voice down services for social distance monitoring and mask-wearing, remote audits for food safety compliance, and wearable personal protection monitoring devices for lone or mobile workers. Restaurants and hotels are also requesting for increased perimeter security including external pick-up areas to support pick-up and curb-side models.