Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft (Part 3)

Vaclav Muchna: The three of us started again. I kept 20% and they both got 30%. We started again without really knowing what to do next. One customer came and said that they would like us to develop a software that would secure printing. They wanted to remove 200 desktop inkjet printers and install 20 shared network printers. The problem was that if you print something on a network printer, you have a problem with data protection.

They wanted us to make a system where documents would not print unless you go and swipe your badge on the printer. We developed that and thought that it was interesting. We worked for that customer so we knew that the industry was going towards removing these inkjet printers and work with centralized network printers. We reprogrammed that. The original technology was based on the printers. The print jobs were stored inside the printers. When you swipe your card, the card would send a command to that printer.

What we’ve done is we moved it to server and everything was centralized and server-controlled. That enabled us to bring another feature that we call print roaming. It doesn’t matter where you go. You swipe your card on any printer in the system. Then the server will send your print jobs to that particular printer. Not only is this convenient for users, but part of the value proposition is that you don’t need to install drivers on the workstations. You only have one. If that person moved, it doesn’t matter. It saves work on IT.

People often print and they don’t collect their print jobs. We would delete those electronically. When the print traffic goes through our server, we are able to account and report who prints on which printer and the costs per department. That was a very strong value proposition. We were IT guys. Sales was not our cup of tea. We came back to the customer who asked us to develop that. We asked them if they want to distribute our product. They said yes. We made a general agreement. We worked with that company for years. Then they came with strange requests like, “We want to have access to the source code.” They insisted that they have to have access to the source code. We freaked out.

Sramana Mitra: It sounds like the time you’re describing in the Czech Republic was kind of a banana republic.

Vaclav Muchna: Yes, that was 15 years after the revolution. Things were getting better and better. The entrepreneurial culture and ethics wasn’t strong.

Sramana Mitra: Were you able to get around the situation?

Vaclav Muchna: We freaked out. The problem with that company was that it was a family-owned company. There were other co-owners. The person we had negotiated with was fine, but the other owners wanted access. We basically said, “We’re not going to work with you.” We terminated the agreement. We decided to sell it by ourselves. That required some marketing which is typically tiresome for developers.

We still had that hospital that wanted to buy the solution from us. They wanted to buy the new server-managed solution. We got an order for 20 devices. The challenge we had was that we had to build hardware for that. The printers didn’t have much of a user interface. We had a terminal that was connected to the printer, but the terminal had its production cost. We didn’t have money to produce it. When we were building the solution, hardware was an important part of that. Me, as a software developer, had no idea.

Until today, the entire hardware department is from my colleagues from the high school. Interestingly enough, I figured out that the high school I hated was very important. Without it, I would never make the company.

This segment is part 3 in the series : Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft
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