HotShot is a compact system that heats fluids to 65 degrees centigrade and then sprays them at specific intervals to quickly remove snow, ice, bugs, and road grime from car and truck windshields.One cold and snowy winter’s day in 1994, …
This was an entirely new experience for him and it took him a few minutes to realize that the only way to get the ice off was to painstakingly scrape and chip it off the windshield by hand in freezing temperatures. This, he thought to himself as he shivered in the cold, is ridiculous. He then began to ruminate on how it was possible that humanity has developed the technology to reach the moon, but still hasn’t figured out a way to automatically and simply clear windshields of snow and ice.
With this in mind, Franco dropped out of law school and devoted himself to finding and marketing a solution to one of the thorniest problems dogging the auto industry in years. On his return to Israel, he met Vycheslav Ivanov, a new immigrant from the Soviet Union, who had worked for the Russian space agency.
Together he and Ivanov set up Microheat in 1997. Eight years on, with Ivanov serving as the company’s Chief Technical Officer, Franco and his company has finally solved the problem and achieved his goal. Microheat has not only developed HotShot, an intelligent heated washer fluid system for clearing and de-icing windshields, but the Michigan-based company has signed agreements with General Motors, and virtually every other auto manufacturer in the world.
The first cars with Microheat’s technology are now in American showrooms, the company is planning a large Nasdaq offering for next year, and by 2009, Microheat’s CEO, Gary Pilibosian, believes that virtually every new car in the world will have this technology.
HotShot, which was first introduced to the market at the APPEX show in Las Vegas in 2002, is a compact, easy-to-use system that intelligently heats fluids to 65 degrees centigrade and then sprays them at specific intervals to quickly remove snow, ice, bugs, and road grime from car and truck windshields, rear windows, headlights, and radar sensors.
The technology, which enhances a driver’s visual safety, works at the touch of a button. Fluid is heated for up to 30-40 seconds, depending on outside temperatures, and then sprayed on the screen. Only the amount of fluid needed for the actual spray is heated, and the next shot is automatically pre-heated.
The small unit, which runs off the car’s electrical system, can be retrofitted on any vehicle and is located between the wiper fluid reservoir and the spray jets. It works independently from the vehicle’s defroster and radiator so it will be operational long before the car warms up.
Interest in Microheat has been high from its earliest days. In 1998, Peter Neustadter, an Israeli entrepreneur who has also invested in MobilEye Vision Technologies, another promising Israeli automotive company, invested $1.5 million in the company. In 2003, he took control of Microheat from Franco, helping turn it from a startup to an OEM supplier. Franco, now 35, remains on Microheat’s board of directors.
Since Neustadter’s first investment, a total of $42 million has been invested in Microheat, including an $8m. round that is now being finalized. Investment has always come from private sources – there is no venture capital fund investment in the company.
As early as 2000, General Motors (GM) took an interest in Microheat and began testing the technology rigorously in both desert and arctic climates, including Canada and Alaska. GM gave Microheat the status of a tier 1 partner, an unusual accolade for such a small company. GM also demanded that the HotShot system be designed so that it could be tailored to any GM model.
A year later Microheat moved its headquarters from Netanya in Israel to Farmington Hills in Michigan, part of greater Detroit, America’s automotive homeland. HotShot is now manufactured there, and a small four-man R&D team continue to operate in Israel. Today, Microheat employs 67 people in Michigan, half of them engineers.
In 2003, GM signed its first purchase order with Microheat. In March this year, Microheat began shipping the system to GM, and in September, GM began selling to US customers two new models with HotShot installed – the Cadillac DTS, and the Buick Lucerne. Ten other GM models that incorporate the technology are now in the pipeline, while 20 global auto manufacturers are currently testing HotShot.
“General Motors is the leading auto manufacturer for innovative technology,” Pilibosian told ISRAEL21c. “If GM picks up a technology, all the rest of the companies follow.”
Today, Pilibosian says that Microheat has signed cooperation agreements with virtually every auto manufacturer around the world, including Hyundai, Ford, Nissan Motors, Volvo, Mercedes-Benz, BMW, Kia Motors, DaimlerChrysler, Audi, and Fiat. Deliveries of the product to BMW will begin in February next year, and to Hyundai in August.
In 2004, Microheat signed an agreement with Webasto, a German company that specializes in aftermarket distribution and installation, to bring HotShot to 50 countries for aftermarket installation. The product has already been approved for European sale.
Recent market research conducted for Microheat by automotive research firm, J.D. Power and Associates, shows that consumers perceive advanced windshield cleaning systems, such as HotShot, as a desirable feature for their cars and trucks. According to the research, eight out of 10 consumers surveyed believe that such a system provides both convenience and safety benefits to drivers. In other research carried out by the firm, consumer interest in advanced windshield cleaning systems ranked among the highest of approximately 40 emerging technologies studied.
HotShot is to be advertised in GM’s clips and advertisements as the ‘next big thing’. Some experts in the auto industry suggest the agreement with GM alone could bring Microheat as much as $90 million in revenues over the next two years.
A product like this begs competition, but HotShot is strongly protected with four patents and 27 patent applications. This, says Pilibosian, makes it very difficult to copy. “During every round of financing there was very aggressive analysis of patent strategy,” he explains. “People always challenge our patents, but no one can engineer around them. The strength and breadth of our patents will keep us secure.”
Microheat is now positioning itself for a public offering during 2006. The company is already working with a number of US investment banks, and the market value of the company has been quoted at $500m. “This is a realistic figure,” says Pilibosian, though he declines to reveal the company’s current sales figures.
Pilibosian estimates that by 2009, the Hotshot system will be installed in 11 percent of the world’s cars and that by 2014, it will be a standard feature in all cars, like intermittent wiper blades.
This is a huge market. This year alone, some 73 million new cars were manufactured, and the windshield and headlights market together are worth about $8 billion a year. These are substantial markets with a lot of potential, but Microheat has plans to go far beyond them. The company is now exploring the possibility of developing similar heated fluid products for other markets, such as commercial and private buildings. “Anywhere someone needs hot water,” explains Pilibosian.
This is a much larger market than windshields and headlights combined.
“We are in a very exciting period,” admits Pilibosian.