Unlisted & Unlimited: Xtend-ing a sense of security

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Francis Seaw started Xtend Services Sdn Bhd on the premise that the other security companies in the market were not tackling the problem as well as they could. He thought he could do a better job with the right mix of prevention, detection and response. Today, he runs one of the most successful security companies in the country.

SECURITY solutions, such as alarm systems and CCTVs, are for the most part considered expensive and out of the reach of ordinary people. But rising crime rates and a general feeling of insecurity have made such systems more desirable than ever before.

Many, however, are reluctant to purchase such equipment, which are useless by themselves if they do not come with a monitoring and response service. Most people have seen at least one video captured on CCTV of a robbery in progress where the assailants managed to get away.

So, security is a more complex issue than just some cameras or security guards. It is a holistic concept ranging from surveillance and detection to having systems in place that alert the cops, who hopefully can arrive at the crime scene in time.

At least, Francis Seaw thinks so. That is why he set up Xtend Services Sdn Bhd to tackle the problem in a more holistic manner.

Seaw believes that a proper security system encompasses three key parts — prevention, detection and response. Malaysians, however, are obsessed with the prevention phase, he says, as they put up grilles, stainless steel gates, barbed wire fences and threatening signs.

“We are the most ‘grilled’ nation in the world. If you go to Singapore, you don’t see half as many grilles,” he says. And yet, Singapore is considered one of the safest cities in the world, which means the approach to security should comprise more than just elementary prevention.

When Seaw set up Xtend in 2004, he was determined to approach security in a more comprehensive manner. In a high crime rate environment, attention should be paid to detection and response, he says. There must be devices to detect who has broken into a house and alarm that can be triggered if one is trapped in an unsafe situation.

He gives an example of how all these came together in a chilling incident that could have gone so wrong. “One night, burglars broke in and tied up the entire household of a particular family in Sungai Long. One of the burglars attempted to rape the daughter, and when the father protested, they beat him up. They were using our system and our people got there in time with the police to save the girl. Think of what could have happened otherwise.”

Jack of some trades

Seaw studied law while working as a sales executive to support himself. He graduated at the age of 21, after which he dabbled in things like writing ISO 9000 procedures for manufacturing plants and conducting management training before joining Tyco Fire Security & Services (M) Sdn Bhd in 1997, his first “real” job.

He worked with the company, which initially dealt with fire detection and prevention products and services, for several years, rising through the ranks to become general manager. A year after he joined Tyco, its parent company acquired ADT Corp, which deals in electronic security services for homes and businesses. That was how Seaw learnt about the security services industry.

There was talk about promoting him to a regional role, but he refused as he was afraid he would lose touch with his customers on the ground and be less involved in the daily operations. Also, Seaw was not content to work for someone else forever. He liked working with security solutions, but felt it could be done better. ADT had been doing the same thing the same way all over the world and he did not see much room for innovation if he stayed on with the company.

“Companies like ADT, Secom and Chubb typically only look at prevention and detection. But you need to look at the final layer, which is the response,” he says.

Among other things, Xtend has integrated Rakan Cop, the community police programme that was formed to help combat crime, into its system. “If the client presses the panic button, a pre-determined text will be sent to Rakan Cop. The police will then respond because a member of the public is calling for help,” he says.

Seaw has taken great pains to stress that Xtend has not tied up with the police force, but rather is helping the public with a programme that is already in place.

Although he had figured out his business model and knew what he needed to do, it was not easy for him to get funding. While his idea made sense, as far as the banks were concerned, he was an unknown quantity and had not run his own business before.

Seaw had some savings, which he could use for his branding and marketing campaigns, but what he needed was funds to buy the necessary equipment. So, he applied to Lembaga Tabung Angkatan Tentera (LTAT), a fund established by a government statutory body to provide retirement benefits and a savings scheme for armed forces personnel.

It seemed like a good fit. After all, the armed forces are concerned with national security. Here, he was proposing a system that provided individuals and companies with security. Also, the company could hire the military men after they had retired and make use of their expertise.

The LTAT was impressed and invested RM10 million in his idea. Seaw used the money to buy the equipment he needed. Today, the fund has a 26% stake in Xtend.

Business model

Security services are typically expensive and Seaw didn’t want cost to be the reason individuals or establishments did not do the needful. So, he came up with a rental model. Customers could look at the slew of services offered by the company and decide which ones they needed. They could lease rather than buy the necessary equipment outright.

“You can actually rent [the equipment] from us. We will put it in for only an installation fee. Then you pay the [monthly] monitoring fees,” Seaw says.

The company charges RM300 for installation and RM30 to RM800 a month for its monitoring services, which is considered affordable for many households and businesses. It offers five categories of services — managed security, managed critical parameters monitoring and control, mobile monitoring and control, unmanned sites control and response service — and a virtual communications centre.

These services offer a wide range of protection, from residential and commercial premises to vehicles and unmanned sites, such as telecommunications towers and public utilities. The virtual communications centre functions as a one-stop help desk. According to Seaw, the company’s most popular offerings are its burglary alarm system and CCTV rentals.

Seaw has marketed the systems aggressively, especially to petrol stations and public clinics, which are regular victims of crime. And it has paid off.

Today, Xtend has a client list of more than 1,000 petrol stations and public clinics. One of its main customers is national sewerage company Indah Water Konsortium, which has secured its services for more than 2,000 sites across the country.

Xtend started out with only 30 employees and two offices, but it has grown to 160 employees, one call centre and six offices. It offers security to 5,000 sites.

Establishing credibility

Seaw, who is in his early forties, recalls the three challenges that he had to face while setting up Xtend. “In the security business, it is about credibility. How do you establish credibility when you’re starting from zero? Where do you get your funding? How do you grow to a respectable size?”

Starting out was not easy. Security companies rely on recurring income and sign up clients through established relationships. Seaw was an unknown quantity and the banks had little faith in his abilities.

By securing a reputable shareholder in LTAT and well-known clients from the public and private sectors, he started to build his brand and establish some credibility. People signed up because Xtend made it easy for them to do so. The early cash injection from LTAT enabled the company to develop its own products. Also, it was able to lease out security equipment without requiring a deposit from its customers.

“That was how we actually started doing this. In the beginning, we focused primarily on corporations. We have our signage on a lot of petrol stations. A lot of public clinics also subscribe to our service,” Seaw says.

The company has grown to become one of the largest security solutions providers in the country. Now, it is aiming to tap the mass market and secure more residential clients.

Although Xtend has stable cash flow supported by recurring revenue (its revenue was RM15 million last year), it is looking for funding to expand. “We need more money to drive this engine. It can’t be totally internal funding. At the moment, most of our clients are large corporates and we want to reach out to the small and medium enterprises (SMEs),” Seaw says.

Having built the company from scratch, he has big plans for it. He is considering a listing on the London Stock Exchange’s Alternative Investment Market (AIM) rather than Bursa Malaysia’s ACE Market as AIM is more flexible in terms of regulatory requirements.

“We have just started the process and are putting together the paperwork, which should take a couple of months. Basically, I have no deadline for the listing,” Seaw says, adding that post-listing, the company may look at entering the UK market.

“This will involve more than just opening an office in the UK. We will need to know the local conditions before entering the market. For instance, the perception of security here, in Indonesia, Thailand or Singapore are all very different,” he points out.

In Thailand, for instance, it is easier to sell do-it-yourself alarm systems. In Malaysia, very few will buy such systems if they are not linked to a service.

Seaw says the company has plans to go regional, but it needs time to study the requirements of each market within the Asean Economic Community before venturing there. He has also received some interest from companies in the region that are looking to go into business with Xtend, but he has not signed any agreements with them thus far.

For now, the company will focus on doing what it does best and expanding its local customer base. “To do everything [partnership and expansion] at the same time will be a disaster,” he says.

Seaw does not know how big the security industry in Malaysia is as he has not been able to get his hands on concrete data. But he does know that the potential is massive.

“Security is a very big business as most people do not feel secure. If you go out and ask people whether they feel secure, you will find that they don’t. Even now.”

 

This article first appeared in Unlisted & Unlimited, The Edge Malaysia Weekly, on May 11 - 17, 2015.