In two of the few interviews granted by Keter Plastic owner Sami Sagol over the past 12 years, he spoke openly with "Globes" about the daring that led him to computerize garden furniture production lines, including the white plastic chairs so identified with his company, and paved the way for the giant exit in which the company was sold yesterday to the BC Partners fund for $1.7 billion. What really interests him, however, is brain research, and he spends a huge amount of money on it. Using the profits from Keter Plastic, Sagol has founded brain science research centers at hospitals and universities throughout Israel.
In July 2004, when Keter's value was only $700 million, the company scored another success by acquiring French company Allibert at the bargain price of $20 million. Shortly afterwards, Sagol, interviewed by reporter Vered in "Globes" publication Firma Magazine, was still aiming high, saying, "In another decade, Keter Plastic will be worth $3-4 billion. I'm on the way to becoming world number one."
Ramon Rivlin: How did you feel when little Keter from Jaffa bought French plastics company Allibert, a leading brand name well known all over the world?
Sagol: "We're very proud that we're capable of buying from Israel international companies with major brands, making them ours, and improving their business situation. The expectations were that we would make it profitable, also using the advantage of the know-how and competitiveness they get from Israel."
Later in the interview, Sagol said, "It's a feeling of achievement, that we're capable of digesting such a large company. This deal was very big, but the idea is to continue the process of acquiring companies of this type."
Where will you be 10 years from now?
"Keter will be an international company. Today, it's worth $700 million, and if everything goes well, and if my age and health allow it and I'm still relevant, Keter will be worth $3-4 billion. Once upon a time, I wouldn't have believed that it was possible to create companies like this in Israel, because Israel is small isolated country. It's a creation of the Jewish people, which decided to create something better here than what could be created in the Diaspora. Unfortunately, and this is a little sad, we didn't succeed in completely realizing this dream. The expectations were bigger, at least for me personally. In this aspect, I'm worried that we didn't manage to create here the same dream of the Jewish people to establish in Israel a better society than in the Diaspora. The Jewish people in the Diaspora has a much higher average education than the Jewish people living in Israel, and is successful in all areas - business, science, and art. The problem is that some of the great achievements in Israel are in the defense field, possibly at the expense of the areas in which the Jewish people has excelled in the world."
Nevertheless, what barrier was removed in the breakthrough of Israeli companies?
"A technological core at a very high level has been created. In plastics, there are talented people who have excelled. Companies like Teva Pharmaceutical Industries Ltd. (NYSE: TEVA; TASE: TEVA), Check Point Software Technologies Ltd. (Nasdaq: CHKP), and Comverse Inc. (Nasdaq: CNSI) showed that it was possible to sally forth into the world and be relevant on an international level. To be number one is very significant to me, because it generates a selection, excellence in a narrow field. Relevant international companies began to emerge in Israel. A company that wants to be international has to focus on a sub-niche. A revolution took place in Israel in 2000 there was a very big currency appreciation against Europe. The euro was low, and the shekel rose. The competitiveness of our products fell dramatically. Other than that, the atmosphere was that Israel was planning to develop high tech, and that the new work force, the young people would go there, not to the traditional industries. I saw how the young people left us one by one for high tech in search of salaries and yields."
Do you feel pressure?
"As soon as I began to realize the situation, I started examining Keter's options for entering high tech. In 1999, I entered an e-commerce deal. I started leading an e-commerce project, and I felt that it was the future of Keter and Israel. But then came 2000, high tech collapsed, and the intifada broke out. I remember the crisis that followed the attack on the Twin Towers. We sat here next to the table. We started asking ourselves whether Keter had a future in high tech. We realized that something was going to happen in the world. The intifada came on top of that. I was very alarmed by these two events, so I went back to focusing on Keter Plastic's industry, and tried to put myself in a survival mode. We started cutting expenses, and focused on developing export markets, because we saw signs that the Israeli market was becoming smaller because of the intifada."
What happened then?
"Fortunately for us, the currency began to devaluate versus Europe. When the exchange rate changed relatively, Israel acquired a competitive advantage. Keter began developing markets in Europe, and to invest in developing products. The company went into an increasingly competitive mode, while at the same time we improved management in Keter and focused on products designed for Europe. First we had two companies, one in the Netherlands and one in the US. In 2003, we decided that the move outward was no accident and we decided to focus on Europe in a process that became much more structured."
So why manufacture at all in Israel?
"My interest is also the nation's interest. There is unanimity of interests, not a contradiction, even if tactically, it sometimes appears that there is a contradiction."
Do all these acquisitions make you happy?
"For a short time, because of the acquisition, the analysis, and the decision making. There is definitely great excitement when you do something bit; you feel we're going in the right direction, but it doesn't last, because you immediately have to go back to work, and make the company you bought profitable. 90% of the time, I'm abroad, and it's not because I'm on vacation: I have to manage a large company now in France, which has six plants in France and two more in Belgium. This is company that's working now without a CEO and without managers for its business units. A difficult and complex management process of daily hard work is beginning now."
Is it still hard for you, after you have been living in the plastics industry for years?
"It's not hard for me. There's work in it, a lot of daily exhaustion, but there's no emotional exhaustion. A lot of problems arise every day that have to be solved. Just looking for a CEO was extremely difficult, because we have no environment in France that can help. Many times, we traveled and saw a lot of candidates, and eventually chose one of our competitors as CEO. He left his company and came over to us. It's a compliment that he believes we can make the company profitable."
Today, Sagol is now 73 and married to Tova, with four children. When he was young, he wanted to be a scientist. When he reached the junction at which a person must choose what bus to ride, and with which vistas, experiences, challenges, and achievements he will spend his life, he chose to be an industrialist. There was a family business, and he and his brother Itzhak were the second generation. For him, this decision was the right one, and despite being a successful, prominent, and valued industrialist, what really interests him is still brain research, in which he invests a lot of money.
"When I was young, I wanted to be a scientist, but at age 19, I reached the conclusion that I wouldn't be a great scientist who will change the world. Maybe I saw that people who were more successful than I were incapable of turning the world around. Science is a job of one drop after another in the ocean. Every once in a while, along comes an Einstein or a Newton who changes the world. I'm not sorry about it today, but I'm definitely attached to science, in values, too. I worked on the subject of computerization for years. I brought computerization to Keter on the basis of a model connecting the world of plastics with computerization. People laughed at me for dealing with computers in a factory in Jaffa."
What did they tell you when you left everything behind and went to Arizona to study the new findings in brain research?
"I find the new world riveting. I go to conferences that talk about innovation in science, about awareness and science. At the last conference I attended, they said that there was no objective world. Our concept is subjective according to our personal awareness. It's like Einstein said - the external world is also relative to something else."
"Gut decisions are also good"
In a different interview with Lady Globes in February 2010, Sagol spoke at length about this area of interest, his frequent meetings with brain researchers in Israel and overseas, the good connections he takes care to maintain with students and doctoral candidates specializing in brain research, and enthusiastically reading every study on the subject published anywhere in the world.
Lady Globes (in the 2010 interview): Does all the enormous knowledge you have accumulated in brain research directly affect what you do in life and business?
"I think so. As soon as I see the advanced studies and understand what happened, it gives me perspective."
Do you feel that it gives you more control?
"The argument is that making decisions, including business decisions, is not a rational matter, and that's how it should be. Gut decisions are also good. If everything were rational, it would be less successful. It has been known from brain science for a long time that decision-making is not really a rational process. What's really interesting is that you can follow the flow of information, and see exactly how almost any information coming from the eyes or ears has to first pass through the sensitive areas of the brain. Most decisions are filtered through the sensitive areas. Maybe we aren't as rational as we think we are."
When you make a decision, you know better than anyone else that it's not necessarily rational. Does that help you to do things differently?
"The knowledge leads to different behavior. There's an effect. The more you learn, the better you're focused. In the brain, too, you see areas that develop through the knowledge acquired. It physically affects the brain structure. That certainly affects behavior."
Brain researcher Prof. Fred Travis claims that tension physically destroys brain cells, and the brains of people in senior positions, like you, for example, sometimes look as perforated as Swiss cheese. Do you try to neutralize tension?
"I'm in favor of calming down sometimes, but tension also has an advantage - it introduces elements of achievement and warns against dangers. Many studies show that tension harms brain cells. The chemicals and hormones created in the brain as a result of tension destroy live cells. Prolonged tension over years can destroy a great deal. Today, fortunately, I'm far less tense than in the past. I don't want to remember periods in which I was much tenser."
"We become wiser with age, so why remember a period when we weren't as smart? One brain researcher told me that she would like to study the brain of people from a young age until a more advanced age, and see how the brain changes. That could be interesting, but you can't live long enough to do it - too bad."
What have age and experience changed in you?
"Something clearly changes with age, and you see it in research: the ability to identify patterns increases, and the speed at which information is processed decreases. What do I mean by patterns? The brain learns to spot hazards, opportunities, pitfalls - just like an experienced doctor learns to spot a problem with just one glance at a patient. It's the same in business. There are many patterns I've learned to spot with the years, and now I know to beware of them."
Published by Globes [online], Israel business news - www.globes-online.com - on July 22, 2016
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