Kastle Systems Reveals How It Achieved $100M in Revenue, Tips for Success
Execs share how Kastle Systems is leveraging its armory of managed security services to push its riches beyond $100 million.
When Gene Samburg turned the keys to the castle — Kastle Systems Inc. that is — over to venture capitalist and entrepreneur Mark Ein in 2007 he placed them in very capable hands.
Samburg, who founded Kastle Systems in Falls Church, Va., in 1972, quickly established his company as a proven leader and pioneer in remote access control. He also had the laser-sharp vision to make managed services its mantra.
Kastle Fast Facts
» Founded 1972 in Falls Church, Va.
» Employs 500+ associates
» Has 11 core locations in Washington, D.C., Houston, Dallas, New York, Miami, Atlanta, Los Angeles, San Francisco, Chicago, Philadelphia and Sydney (Australia); plus Mutual’s office and central station in midtown Manhattan, Stat-Land’s Staten Island, N.J., office, and Urban Alarm’s Washington, D.C., office
» Operates four geo-dispersed central monitoring stations handling millions of signals each year
» 2017 company revenues exceeded $100 million
» Key acquisitions include: CheckVideo (2013); Mutual and Stat-Land from ADT (2013); and Urban Alarm (2017)
» Markets served include commercial real estate, enterprise business, multifamily, construction sites, law firms, education, scrap & recycling, government, city surveillance
» Solution offerings include access control, video surveillance, mobile platform, visitor management, fire & life safety, environmental control, integrated identity management
Running Kastle Systems as a managed service security business has always been the essence of the company from Day 1. Because the company takes responsibility for the management and maintenance of the systems it designs and installs, Kastle Systems provides a comprehensive set of integrated managed security services.
This gives clients a single, accountable partner for all their security needs. It’s proven a fruitful formula. Shortly after acquiring the company more than 10 years ago, Ein was joined by longtime business associate Piyush Sodha.
A part owner, Sodha serves as Kastle’s CEO and co-chairman while Ein holds the chairman title. Together they’ve made their vision of expansion a glowing reality. Under their watch, Kastle has nearly doubled its revenue and hit $100 million in 2017.
Today, its 500+ employees populate 11 locations. The company also operates four geo-dispersed central monitoring centers. Kastle maintains TMA Five Diamond certification and UL Listings, and annually handles millions of signals.
While most of Kastle’s growth has been organic, January’s Urban Alarm addition is intended to bolster the firm’s residential business. Washington, D.C.-based Urban Alarm brings with it a select market subset of premium residential customers and its mobile patrol and commercial fire services can be leveraged across Kastle’s clientele.
“The acquisition is like pieces of a puzzle fitting perfectly together; our strengths complement each other and together we provide a more complete suite of services to a wider customer base. It’s working out great,” says Ein.
Another key acquisition that helped Kastle reach nine figures (more than a third of which was video-based) last year was CheckVideo in 2013. That same year, the company bought Mutual and Stat-Land from ADT to gain new vertical business.
That included the N.Y.C. Diamond District and high-end marquee retail brands as well as expertise in fire & life-safety managed services, and an operations center in midtown Manhattan. Those businesses have become part of Kastle’s happy, ever-growing kingdom.
The workings of that juggernaut — including a foundation of prescient managed services and specialized proprietary offerings, and best practices in culture, people, training, customer care, management and community — are probed within.
Fortifying a Firm Foundation
In its early days, Kastle was deeply focused on selling managed access control strictly to the large commercial building market. It found a solid niche in select cities across the country, particularly in the Washington, D.C., area, where it quickly built a reputation for being the best of the best.
This didn’t go unnoticed by Ein, a D.C.-area native and Kastle card-carrying customer himself. A graduate of The Wharton School of the University of Pennsylvania, over the course of his 20-year career Ein has led $1 billion of private equity and venture capital investments generating an internal rate of return of 42%.
He knows his stuff and knew Kastle was a keeper. Keenly interested in buying Kastle when Samburg was ready to retire, Ein recalls, “I was instantly interested in investing in the company. In Washington, people equate Kastle with security, and refer to their access cards as their Kastle card. I was a customer and knew that this was an iconic business, so when I had the chance to meet the founder and talk about being the custodian of the company for the next generation, I stopped everything in my life and cancelled all meetings and appointments to go to their offices. I basically camped out there until we got it done. It was already a wonderful company and I saw how it could be even bigger than it already was.”
From an operations perspective, Sodha explains that “Anyone could see the prospects for growth and, to this day, we continue to mine the expertise and decades of deep vertical experience of Kastle’s people as a foundation to launch the latest technologies. For example, our CCO [chief customer officer] Tom Radigan has been with the company for nearly three decades, and is leading the buildout of our value-added IoT data analytics and business intelligence capabilities.”
The union of Ein’s business and finance savvy and Sodha’s background in telecom and technology has shaped the growth and direction of the company these past 10 years. Building on Kastle’s success as a leader and pioneer in remote access, they saw the opportunity for a true platform company.
“Kastle had the reputation and highest quality service capabilities, which we saw as key ingredients to its success, and that are common in our most successful investments,” Ein says. “With an eye toward investing in our human capital and injecting new technologies and offerings, purchasing Kastle was a no-brainer. We saw the opportunity to take the business to more places across America and serve more vertical markets. We got into education and multifamily dwellings and government buildings. We broadened our focus within the commercial market in ways that made sense, delivering more products and services to a broader range of customers.”
Slaying With Managed Services
Kastle Systems provides a comprehensive set of integrated managed security services so clients have a single, accountable partner for all their security needs. Its posture is such that providing a complete security management solution not only makes it more convenient, it also ensures that the job is thorough and well done.
“Others in the market might provide some services, but not all the managed security elements that demanding clients require,” says Kastle EVP & CMO Brian Eckert. “For instance, they may install a system but not monitor it. Or they may have experience with intrusion systems but not complementary [and integrated] video surveillance systems. Partial answers put an added burden on managers to coordinate work and manage the project closely. More importantly, partial answers can leave gaps in security plans and create unnecessary risk.”
Eckert maintains the firm is uniquely able to accomplish those goals by partnering with customers, understanding their challenges and acting as an extended security team. “Since we are responsible for the management and maintenance of the systems we design and install, we place a great deal of emphasis on ensuring that we implement the most effective, efficient systems with dedicated service and account managers who proactively work with customers to continually optimize their systems,” he adds.
Kastle brings together access control, video monitoring, visitor management and fire & life safety into a single solution so customers need not work with multiple partners or struggle with maintaining disparate systems themselves.
The company also maintains the hardware, updates software, trains users and remotely administers access or manages necessary IT infrastructure on clients’ behalf. This enables customers to lower their cost of ownership while increasing their protection, and frees up resources to focus on their own business.
Broader Focus Expands Kingdom
Among Kastle’s portfolio milestones realized over the years was the establishment of KastleVideo, a Cloud-managed video surveillance offering that complements the firm’s managed access services, and now contributes more than one-third of revenues.
The company also introduced myKastle, an easy web-based interface for system administrators, which can be directly mirrored by Kastle’s customer service teams for outsourced system management and functionality.
KastlePresence, a mobile platform that now boasts more than 500 sites internationally, was launched in 2016. More than anything, Kastle attributes success to its obsession to make customers happy. The company measures customer satisfaction continuously and has enjoyed year-over-year increases in its already high scores, as measured independently by J.D. Power.
Everything Kastle does is built on and centered around world-class customer service. But it attracts and acquires those customers with innovative, value-added products and the ability to deliver them via a seamlessly integrated solution.
“Early in my career, I learned that dedication to continuous customer-driven R&D, staying on top of market and industry trends, and an intense focus on seamless experiences are key to success,” says Sodha. “We have a weekly C-level product steering committee meeting where we review our technology initiatives and progress in-depth. That is the fanatical commitment we make to stay ahead of the industry and ahead for our customers, making significant investments in company time, resources, focus and energy, all funneled through a market-oriented lens.”
Kastle’s aim is to bring the best technologies together in a fully unified way. In cases where innovation is required, the firm performs its own R&D to invent something new and value-added for the market.
As a leading security integrator, Kastle also supports third-party manufacturers but favors end-to-end control to meet the complex security challenges and needs of its clients. The firm’s partnerships are generally geared toward best-in-class hardware providers whose wares are then integrated into Kastle’s software platforms.
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