Micha Kimchi, CEO of lock specialist Mul-T-Lock, discusses the importance of R&D and scope for new ideas in an ever more security conscious and technology savvy marketplace. He also reveals the “product that today we believe is going to conquer the world in the same way the smartphone changed the way we live.”
The Israeli economy represents one of the best performers in the world, among the 37 most developed economies. The IMF projected that in 2015 Israel will grow more than the US, more than Germany, and other heavyweights in the world's economy. What explains, in your view, the resilience and the success of the Israeli economy?
Mul-T-Lock is indeed a company that operates worldwide, it exports to many, many countries. This was the opportunity that a very big corporation in Sweden, called Assa Aboly, saw in Mul-T-Lock, the fact that we are a multinational company. The Assa Aboly group is the biggest corporations in terms of physical security for commercial and residential companies. The only company in this huge corporation that is mainly export, 80% of its business is export, is Mul-T-Lock, and there are over 200 companies in this corporation. That's the uniqueness that the Assa Aboly group saw in Mul-T-Lock, an Israeli company, based here in a city called Yavne, that produces locks, keys and other access control solutions for almost any country in the world.
You ask why? The answer, which you've probably heard before, is set in the DNA of the Israelis and the innovation culture. There's a lot to say about how we grow up, and the fact that we always need to reinvent ourselves from scratch all the time. We've been a country for only 67 years and you see for yourself how advanced this country is in so many areas, from infrastructure, communication, agriculture and tourism to defense, and of course so many other areas.
That's what I see also for the future, that's the resilience that is part of the Israeli people, the fact that we need to invent ourselves all the time. We are a small country, surrounded by a very complex geopolitical environment, and we need to protect this small area. Not going into too many politics, but this is a fact of life. This is a very unique situation for a mature country, although we are in an emerging area, we are a mature country. We are probably the only one with an advanced political system, with a democracy, with a court system and a public system which is run in a very advanced way, such as the big Western countries like the US, the UK, and Scandinavia.
To what extent is R&D important in your company?
The R&D in terms of percentages is the highest in the group. We have about 3% invested in R&D. The R&D has always been a key element of our business. Locks and keys seem to be a very traditional product, but you can compare it to the software business where you develop a software and then immediately the antivirus is there for that same software. So it's the same thing for locks and keys.
You develop a lock, you develop a key; this key has to work 100% of the time. When you come to your house, you want to open the door, you want to have a seamless entry to your house. You don't want to be stuck at the entrance. Therefore, the quality of that interface between your physical belongings and yourself needs to be at the highest quality, highest accuracy. We tend to say that the accuracy of the parts within a lock, such as the cylinder, is equal to the aircraft industry. We are talking not only of the mechanical, traditional products that we all know, like old classic keys from the monastery, but we're also talking about lots of innovative products as well. Today more electronics, more electro-mechanics, more digital components all go into the key. For example, the WATCHLOCKTM, has both a SIM card, a GPS and its a mechanical lock, that can be installed on almost any mode of transport. Let’s say a container gets driven from point A to point B, and you want to know when the lock locked or opened at any given time within a geofence that you program. It will tell you where it is at each certain point. There's so much thought and testing that goes into the product, and it comes from the R&D.
Our R&D team are experienced engineers that come from universities mostly in Israel. There are four universities in Israel, and another five very advanced colleges in Israel which operate by very high standards. The Technion in Haifa, Beer Sheva University, Tel Aviv University, Jerusalem University. They are all very high in international grading in engineering, electronics engineering, mechanical engineering, and software engineering. These engineers are growing their experience in the advanced defense units in the army and are introducing the highest, most innovative technologies. These are all integrated into our R&D team.
As a company and from your point of view, which is the business that is growing more in the world generally?
We are a company that cannot say we are only in one market or vertical. We focus our business both on commercial and residential sectors. For homes, it's residential, for the homeowners. For us at the home, that's one element. The other element is for commercial uses, for businesses. But we feed each sector. If you see the lock at your business, you want to have this lock at your home. You see at the home, you take it to the business. It all works to feed almost every locking need you can imagine.
The card is only one credential, but today we are introducing a new product where you don't need carry anything around with you. Imagine there's no card, no key, you have your finger, that you can open the door at your house. This was inspired from the commercial business. Using your voice as a credential, maybe later. Now you can open the door with the finger. Once you saw this only in science fiction movies. All that is now becoming a reality. I get into my house with the touch of my finger. It's becoming more and more simple.
In terms of your strategy for the future, do you focus on both residential and commercial sectors?
Yes, we focus on both residential and commercial because we are a global player. We can't just say, for example, in Tanzania, that we are only residential. Why? Because there isn't still any awareness in emerging markets for higher security in the residential business. The awareness is more in the commercial business. Other places, such as Asia Pacific, Hong Kong, Korea, Singapore, and the US, they are much more advanced and aware of the need for better or higher security in their houses, for their belongings, on what they want to protect in their house. Because what is this business? It's all about protecting your essentials, your valuables, your loved ones. You need to have some kind of awareness of what is high security. Why do you need to replace your lock once every few months or once every few years? People used to install their lock 30 years ago and keep on with that same lock. Most people still do. They're not aware of all the technologies that exist today. The bad guys can today come into your house, you wouldn't even know it. You would not see any forced entry. So you need to improve your physical locking.
How do you see the evolution of this market in the US?
North America is one of the biggest markets in the world. I personally was stationed in New York for three years. I was responsible for developing the US market for Mul-T-Lock. I learned how amazing this market is. I spoke earlier about awareness around high security. In the US market, you will find everything. I learned that you cannot generalize about the US because it's so big. You can't say one thing about New York and it's the same for everywhere else. In the US market you can find a wide variety of security needs, and people are aware of the advanced products, advanced solutions, that are out there in the market, such as opening your lock with your phone today. One thing I did find that was similar across the US was that Americans are the most advanced in wanting to use their smartphone, an app, or tablet to do everything. It's a fantastic opportunity to introduce products that will synchronize and integrate with these nice gizmos like the iPhone, iPad…
At the same time, the commercial business in the US is also blooming. There are so many opportunities for us: the homeland security, the awareness from the government for improving and guarding goods in transit from one point to the other. There is such a big need for security and security devices that this is an endless market for us.
If you had to choose a project or a product which in your opinion would be the next big thing of the company, what would you choose and why?
We are already in advanced launch and introducing an electromechanical lock called ENTR. This is the lock of the future. It appears in the inside of the door. From the outside, you see the same lock. This is the product that today we believe is going to conquer the world in the same way the smartphone changed the way we live.
And this can be bought anywhere?
Yes, we are showing this product and selling it through our distribution channels globally to the residential market. Our vision is that this will replace the traditional lock and key. You would not need keys anymore. You will become seamless in terms of the need to hold keys. You will go out of your run, you will go out for your groceries, you'll go out with your child; you don't need the key anymore. Your child doesn't need a key anymore. They come into the house. It's fully seamless, but still high security. That's the difference. There are many cheap products in the market that know might replace a lock, but they're not providing a physical security, a good or reliable high security solution. This is what we stand for, the highest level in standards, meeting the standards in each region of the security needs. With this lock, you will be able to connect to it from your phone, you will be able to open up with your finger, with a tag, or with a different credential. You can program it... if somebody needs to come to your house, you can program ENTR from your phone who can enter the door, and in which time frame. You say, for example, the cleaning service. They want to enter the house from eight to nine, so you can program a code that will be relevant only from eight to nine. After that it expires, and they cannot come in anymore. This is what we think is going to change the way we lock our houses.
You can tell from your phone, for example, my friend calls me, "I'm at your door." "I'm not there, go on in."
Oh yes, definitely. By the way, already today we provide a camera on the door, that once you push the camera it rings. The camera is from the inside; you don't see the camera, you see only the hole in the door. You push the button to ring, it's a guest, it takes a picture, the picture pops up on my phone, and I know who's at the door. I can provide them access to my home from my phone if I want to or not.
In terms of distribution, for example in the United States, I suppose you have distributed your products through your subsidiary and your channels. Are there any partnerships you would like to highlight?
Our distribution model is very clear: Mul-T-Lock is a company that works through a dealer network which is our locksmiths partners. What we do is we develop our network. We are, as I said earlier, a company that has 80% of sales exporting from Israel. We have over 20,000 selling points around the world with partners that are Mul-T-Lock certified. This is our distribution channel, and partnership. We sell through them, because we don't have the power or the budget to develop marketing campaigns in each of the countries that we sell in. We develop the relationship with those partners, who then are responsible for developing their sales in their neighborhood.
You've been heading the company in the United States, as you mentioned before. I would like to know, now that you are back here, what drives you? What is your vision for the next few years, for the short-medium term?
I’ve been in this company for almost 15 years. I started as the COO of the company. Before that, I worked as a consultant for the company. I know the company in and out. My vision is to continue to grow this business, to stabilize the partnerships with our distribution channels, to have every person in the world know who Mul-T-Lock is. I was traveling in East Africa, and the awareness of the brand is amazing. I was walking in a flea market in Tanzania, and someone recognized a pin on my suit as the MTL muscleman. The muscleman logo is probably Israel’s most recognized brand in the world.
I want to continue to develop that awareness, that's the vision. Grow the sales, and introduce our amazing innovative products to our customers as well as to our sister companies. We are recognized in the group as an innovative R&D center, which comes back to the beginning of our discussion why Israeli companies are so innovative: the capability of our team here is really recognized by the group.