Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft (Part 7)

Sramana Mitra: Have you started seeing revenues escalate from that yet?

Vaclav Muchna: In the United States, this year we are going to be close to $3 million. Our business has a very long sales cycle. We expect that the bigger revenue growth is going to happen next year.

Sramana Mitra: You said you did $30 million in 2016, right?

Vaclav Muchna: Our fiscal year is from July to June. In the fiscal year that ended in June 2016, revenue was $30 million.

Sramana Mitra: This is all business that you’ve built organically. There is no outside funding?

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Bootstrapping Using Services to an Awesome Business Model: Inspyrus CEO Nilay Banker (Part 7)

Sramana Mitra: You have a tremendous revenue stream. Where are you now? How far along are you?

Nilay Banker: We are getting into the tens of millions of dollars. We are doubling every year in revenue.

Sramana Mitra: How many people?

Nilay Banker: Now, we are close to 50 people. Almost everybody is in the US. We are focusing on international expansion. Right now, most of our customers have their headquarters in the US. We are focusing on expansion to Europe and then Asia-Pacific, as well as Australia and New Zealand. >>>

Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft (Part 6)

Sramana Mitra: What do you do with the venture capital fund? Do you invest in companies in the Czech Republic or in eastern Europe? What is the scope?

Vaclav Muchna: I suggest we take it chronologically.

Sramana Mitra: Sure.

Vaclav Muchna: Today, we are doing a lot of things, but the biggest pie of revenue is from the print management product. Back in 2006, we had another big milestone that opened the German market for us. I mentioned in the beginning of the interview that we have these external control units that were basically terminals that we use for user interaction. >>>

Bootstrapping Using Services to an Awesome Business Model: Inspyrus CEO Nilay Banker (Part 6)

Sramana Mitra: How long did it take you to be able to know that you could actually save money and for you to make money on that gain share model? How long was that process of fully validating the business model?

Nilay Banker: Typically, it takes from 6 to 12 months by the time the customers start seeing benefits. The benefits are multi-fold. There are soft benefits which are in terms of process efficiency and just reduction in head count. We consider those as soft benefits. Then there are the hard benefits which is the draw dollar cost savings through discount management.

It also takes some time for the hard dollar savings to ramp up adoption not only by our customers but, more importantly, by their suppliers who get on to the discount management program and slowly start taking advantage of early payment discounts. In most cases, they start realizing about 75% of the benefits >>>

Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft (Part 5)

Sramana Mitra: It must have been very helpful for you to recruit a bunch of channel partners who would then go and sell that same solution to other major players.

Vaclav Muchna: Exactly. Once they started with us, there was another deal with the headquarters of a central European bank. That helped us to build the relationship through the channel. We took the decision that we would be 100% indirect. Later on, we developed that model where the vast majority of our partners not only sell our product, but they also support it. We only support our partners and they go and support the end customers. If something goes wrong, the customer would call the channel partners. >>>

Bootstrapping Using Services to an Awesome Business Model: Inspyrus CEO Nilay Banker (Part 5)

Sramana Mitra: When did you start selling the product in this whole gain share model? You said that 2008 is when you started two and a half years of services mode while you got the handle of what the problem was and what product to develop. Was 2011 your first year of selling the product?

Nilay Banker: Yes, 2011 was when our first product came out. We started with invoice automation. Then in 2014, we came out with total discounting. It took two to three years for the base product to mature. We got a healthy base of happy and large customers. We focused on the large customers.

Sramana Mitra: How much did you do in 2011, for instance? >>>

Bootstrapping to $30 Million from Czech Republic: Vaclav Muchna, CEO of YSoft (Part 4)

Sramana Mitra: What year are we talking about?

Vaclav Muchna: 2003. In 2002, we launched that web server. We had to produce 20 terminals and we had no money. I tried to go to the bank but, of course, they didn’t let us borrow anything. There were only few VC funds. The VC market almost didn’t exist. The few VC funds that existed said that this was not an interesting project. Eventually, I found a business angel. He lent me money personally – not to the company. You can understand the impact on liability. The interest rate was 40% per annum.

Sramana Mitra: My goodness. >>>

Bootstrapping Using Services to an Awesome Business Model: Inspyrus CEO Nilay Banker (Part 4)

Sramana Mitra: How do you do that? How do you take an internal operation and turn it from a cost to profit center? What did you that was innovative there?

Nilay Banker: That’s a great question. It all starts with making sure that you can achieve process efficiency. Process efficiency, in this case, is how long does it take for you to process an invoice that a supplier sends you and eventually make the payment to the supplier. We started off with that as the core of the solution – helping automate that business process and getting it down from 20 to 25 days to 2 to 3 days. >>>