New Kastle Owner to Keep Growth Mind-Set
Monday, January 29, 2007
A. Gene Samburg was a young engineer at Westinghouse in the 1970s, installing security systems in high-risk locations, when a Washington real estate developer told him his offices had been broken into over Thanksgiving weekend and asked if Samburg could help.
"He called me and said, 'If you can secure Camp David, and if Westinghouse can provide things to the White House, can't you figure out something to do for these office buildings?' " Samburg recalled. Westinghouse didn't want to operate the complicated system required, Samburg said, so he went into business for himself.
Thus was born Kastle Systems International, the Arlington-based company that produces and operates the ubiquitous Kastle keys and the security systems that surround them. Today, Kastle keys provide access to 1,800 buildings in the United States and Australia, and nearly two weeks ago Samburg sold his company to Washington venture capitalist Mark D. Ein.
The price was not disclosed. "I'm not going to buy a plane, and I'm not going to buy a boat," is all that Samburg, 65, would say. He said he wants to use some of the money to secure the future of his four grandchildren, and he plans on being at his desk in the corner office on the 12th floor of the company's Arlington office building for years to come.
That's fine with Ein, who plans to keep Kastle's low-key, family culture intact while growing the business in the United States and abroad.
"It's just one of those unique opportunities that you rarely find in life, where you can get involved with a company that has a solid business, a long history, but still so much room to grow," Ein said. "Gene built this company one step at a time, with a long-term view, and that's the mind-set that we're going to take forward."
Kastle keys open some well-known doors (including the Watergate in Washington and 4 Times Square in New York) and they come in several shapes and sizes. The oldest in circulation is a credit card-size model that gets swiped through a reader. Another looks like a blue tongue depressor from a doctor's office and is pushed into a slot. The state-of-the-art Kastle key works when it's waved within a few inches of the lock.
Samburg took the name Kastle from a modular-housing business in which he'd been interested. ("Every penny counted, so I didn't want to spend another couple of hundred dollars finding another name.") He expanded the business, building by building, to dominance in the Washington region, where, he said, it now serves nearly 70 percent of the commercial office buildings above 70,000 square feet -- much of it Class A, or high-end, space. It has been consistently profitable for the past 34 years.
Public reports have put Kastle's annual revenue at $50 million or more; Samburg did not dispute that figure.
Kastle's profits come not only from producing keys and security systems but also from operating them. The company's chief asset is the expertise it has developed in three decades of running hundreds of buildings, and Samburg says its main competitors are landlords who buy a Kastle security system and run it themselves.
Every couple of weeks, an employee gets "plaqued," which means they get a check or a company-paid vacation to mark their employment anniversary. The plaques start at 10 years and occur every five years after that for the rest of their career. The plaques grace a wall in each department, which Samburg refers to as "the Longevity Wall."
The company headquarters occupies seven floors, or about 60,000 square feet, in an unobtrusive office building that, it happens, is not Class A office space. Like the company's other offices -- in Chicago, Dallas, Los Angeles, Philadelphia, New York, Houston and Sydney -- it's filled with pictures of clients' buildings. (The small Sydney office was opened because one associate moved to Australia.)
The headquarters also houses Kastle Systems' remote operations center. Known as the ROC, it hums around the clock with Kastle operators who follow clients' calls for service on flat information panels the size of widescreen TVs.
"We may be handling somebody trapped in an elevator, . . . a fire alarm, calls where we're calling people back to re-enable fire panels," Samburg said, glancing at the screens. The letters on the screen denote the city, such as CH for Chicago or NY for New York, and the number that follows identifies the office building.
"We're able to manage what's going on without going over and hanging over people's shoulders," says Samburg, adding that Kastle wrote the software and developed the system to operate the ROC. "It's all proprietary."