It was in 1991, shortly after the Velvet Revolution, when one of the first Slovak software houses saw the light of the day. Michal Hrabovec was only in his second year of the university studies when he and his friends founded ANASOFT, a Slovak software pioneer that has been around since.
What challenges they faced? How did they averted the almost-inevitable bankruptcy? Why they are transforming from a project-based company to a product company? Why Michal thinks that automation is good for employees?
The story of ANASOFT told by its founder.
How old were you in 1989 when the revolution arrived?
Have you been thinking about leaving when the borders opened?
I’ve never thought about it. Shortly after the revolution, I went to Canada for six weeks, to work there as a student. It was an experience you can’t learn anywhere else. During my university studies, I was in the US two or three times, already for business purposes, because we founded ANASOFT in our second year at the university in 1991. I found our customers in the US. But I didn’t feel like I need to live abroad.
When we speak about life as such in its beauty, broadness, and complexity, I must admit that I don’t know any emigrant who’s happy. And I know a lot of them, many people from my generation left. Sometimes I get a chance to meet them and only sometimes they truly are happy and that’s usually because they found a Slovak community. To me, I received the most out of my community here. Mainly from the Elam club in Mlynská dolina, where I grew up.
You founded one of the first IT companies after communism in Slovakia during the college. Why did you go for the technical cybernetics and not a management degree?
When I was sixteen, during the deepest communism era, I started to earn money doing IT. I trained adults how to work with a computer. My parents bought me Sinclair, one of the three iconic home computers and I started to code. I liked it very much.
Therefore, it was only natural to proceed with my studies at the Technical University. Don’t forget I started my studies during communism and there was no opportunity for entrepreneurship back then. That came after my first year at the university, after the revolution when all the doors start to open for us.
Have you already known back then that you’ll become an entrepreneur?
I don’t think I gave it a lot of thought then. As a young man, I wasn’t thinking about what I want to be in 10 or 15 years. I don’t think you ever ask such a question at that age. A young person tries to go on and on as best as he can but at the same time, he doesn’t know where he’s going. We were just a group of friends from the Elam club around IT and suddenly we began to receive offers from the market where some companies were willing to pay for coding.
That’s when you founded ANASOFT?
Kind of. We started to code for money. To be able to do that, we needed to create our own company. The orders we got were more and more complex and we realized we needed more people. It made sense to cooperate under one brand. Gradually, we got busier and busier, we engaged more of our classmates until the time came and we created a private limited liability company.
That’s how ANASOFT was born at the students’ dormitory. We were the first ones to have phone lines, cars, and more computers than the university itself. Our classmates did their master thesis in our company. We all made it work and it gave a special dimension to our youth.
What did the companies want from the IT guys in 1991?
If I remember correctly, one of our first clients was a housing association in the Old Town of Bratislava. They were quite progressive and wanted to computerize all their paper documentation, therefore we needed to code everything from accounting to payments record. Everything.
It’s been 26-27 years now. When you look back, what have been the biggest challenges What was the most difficult part?
There were two very dramatic moments. The first one was when after two years the original ANASOFT founded by six friends from the Elam club basically ended. Three of us finished school after two years, one left to live in the Netherlands, another one went to live close to the Hungarian border and so on. We basically split up. However, there were two of us who knew that this is what we wanted to do, this is what we liked to do. The head of Elam club Stano Čekovský got on board, he’s still our CEO now, and another partner joined as well and we started the company all over again.
And the second dramatic moment?
The second serious downfall was in 1999 when the company went almost bankrupt. But let me first get back to the beginning when our clients wanted us to do everything for them – to install computer networks, to provide them with computers, to create software, to train their employees. We had a division of 12 people who were in charge of networks.
However, the market works in a certain way. If the demand is too high, the product or service starts to commoditize. That means that things that are complex and expensive are suddenly simple and cheap. To give an example: 25 years ago, we had to develop accounting software.
Today, there are companies that offer accounting services in the cloud for free. This is the impact of commoditization. They then look for a different business model in order to make money. The specific commodity’s price – accounting – went down to zero. That’s if we talk about the software business, it can be different in other areas, of course.
Naturally, IT went the same road, the complex things got simpler. Regular building companies started to install computer networks as a part of their everyday work agenda. Our computer network division lost their jobs basically overnight. We couldn’t get any new order because of our price. We didn’t notice the change.
Why haven’t you noticed anything?
We were growing fast and the management lost touch with regular employees. They knew long ago, but no one ever asked them about their opinion. For a long time, they met builders with the optic cables and welders. We, as a management, have never asked them and they never thought about telling us. Naturally, this division started to pull us down very fast. We didn’t have work for them nor any money for their salaries or payoffs.
How did you manage to tackle the situation?
I was traveling abroad, and we managed to get orders from abroad as well as from our partners for whom we developed software. When we got into this hard situation, I came to see them and told them that we have a problem but also that I have a vision. The vision was that ANASOFT will be a software house, and I would need money to fulfill the vision. What I needed was to close the division professionally and take a new breath financially.
They knew me for several years already and trusted me. I managed to sell 5% of the company to a partner from the US and 5% to a partner in Germany which was basically a miracle because they could do nothing with such shareholders right. But it was all about trust. They believed that I will always treat them right.
And we work together like this even today, the structure hasn’t changed in 18 years.
Correct me if I’m wrong but your orientation changes slowly from a project company to a product one. Why?
I would say that it’s a natural market development. As I’ve mentioned before, where the demand is high, the market gets commoditized. If we are to survive in the future, it’s absolutely crucial to find our markets and products. We can’t be a software house that codes everything for everyone. That is something nobody will need anymore. Companies that need to cover a part of their processes have many possibilities with implementing already existing solutions. We want to offer a product that leverages all our know-how from the previous projects.
Which product lines are the most essential? Where do you see potential?
We see potential in the industrial and logistics area and in the digital transformation of businesses especially if they require handwritten signature.
Can you elaborate on the signature solution?
Signatus turns any mobile device into a powerful business tools. It is a solution that removes paper from the equation and digitizes business processes. We know how to create the familiar experience of handwritten signature combined with secure distribution of a signed document.
The application allows for businesses to guide their customers, allow them to modify document or click checkboxes, so the process is fast, removes paper from the equation and the customer has full control of the document he is signing. The EU and US legislation is catching up with such solutions and we see global potential for the project. Samsung believes in it as well and is supporting us at their showrooms and exhibitions across the world.
What’s the current phase of the product?
Signatus has been on the market for a few years now with successful implementation at various financial services providers, logistics and utilities services.
Currently, we are building our global partner network and implementation channels. For some companies, it’s not easy to stop using paper. There are a lot of processes build around paper. Our goal is to give them a solution to make paper obsolete and create lean processes. The benefit of Signatus is its fast deployment which can be done within a week. This allows us and our partners to pilot and test in the real customer’s environment.
However we sometimes see conservative lawyers walking on the safe side when implementing such solutions. Our partners and us are tackling this with educational campaigns and on some markets legislative studies to support e-Signature solutions.
We have also worked with forensic experts on answering questions on proofing one’s consent.
When we look at the second product line called EMANS, is this something like an ERP software?
Smart Industry solution EMANS started as a production operational system, a system uniting ERP and automation based on the principles of cyber-physical production systems and the concept of Industry 4.0. Most of the time, ERP works on days and orders basis – it says what needs to be produced. Automation works on milliseconds, lines, robots and container management. EMANS bridges these two worlds as well as physical and virtual environment.
It’s a piece of code that allows enterprises with a huge problem with working force to get people into the manufacturing process much more quickly. Before, newcomers needed to attend a long training where they learnt what are they going to produce and how. Today, EMANS guides all the production processes in detail so the employees will not make any mistake and they know exactly what to do and when.
Where do you see the world going in regards to the automation?
Sometimes I’m asked if it doesn’t bother me that I get people fired as a consequence of digitization and automation. It’s an obvious concern, and I like to answer right away. Frankly, it doesn’t. I don’t wish for anyone to do such a job. For example, a grocery distribution handling is processed in a large refrigerator where it’s 4°C, between 4-5am. We know that in this region, there is almost zero unemployment and who really wants to work, will find a job. Nevertheless, jobs such as this one has high turnover rate and employers struggle to find stable employees for them. Ultimately, we are helping automatize that kind of tasks and positions that are neither pleasant nor creative.
I’m an optimist. I believe that automation and engineering will help make our lives better. Engineering creates value. Some people wrongly assume that there’s only a certain amount of the world’s wealth and therefore it has limited distribution.
So you are saying that the imaginary pie gets bigger.
When it comes to engineering, it surely does. Maybe there are other fields that only distribute wealth. We create it. We don’t take anything from anyone, we give.
What does the future hold for people in terms of getting a job?
People will need to be more flexible when it comes to their jobs. They’ll need to look for their own way to be valuable.
Even if the automation processes are growing fast, there is a lack of workforce and we expect this to continue in the future as well. They will do something else and more creative. The adaptation will be done faster, not like in the past, when the educational system was set up to prepare people to go work in manufacturing. They were taught something they then did for the rest of their lives.
This time is long gone and we should have been preparing our kids to learn more critical thinking at school, to look at things more flexibly, to think in context, and so on. This would be much more useful than feeding them with information that is not unique anymore because automation can give them everything they’ll need to know.
You say, there’s a problem with not enough people, is this also true for ANASOFT?
Sure, it is. If not, that would mean there’s something wrong.
Where and how do you look for the best ones?
I think the way we look for employees changed as well. Today, young people have myriad of interesting choices and they need to learn about us in the best way possible. We, therefore, try to be present at different events or to do our own research projects for which we’ve created our own lab. These are non-commercial projects and young people can try new things from different fields such as neural networks, AI, blockchain and so on.
Where do you see ANASOFT’s place in the future?
We also need to make a step forward in globalization. The world is huge, we’re small, and we need to get our products to the world through our global partners. ANASOFT will remain an innovation hub, a cradle or a framework for new products.
What it means, in reality, is that we will spinoff our projects to individual companies. Maybe we’ll try to merge them with others, maybe we’ll find venture capital that will push them forward. It would make sense to give them their own lives, in the future.
What is the most precious about ANSOFT is its innovative culture. This uniqueness is something we’d like to carry with us in the future also in other aspects of entrepreneurship, whether we work with students, universities or as philanthropists.
What does this innovative culture look like in ANASOFT?
That’s a great and very complex question. I get this question a lot and it’s very hard to shorten it to a few points, it’s more of a combination of several things.
We try to create opportunities for idea sharing. An innovation is usually created when two individual worlds or ideas are connected. We have many different activities that connect the company within. For example, there is a regular event where different divisions share their successes – finished projects, new products feature or research projects. Each employee has access to this event. Sometimes the discussion is so lively that it brings new ideas which appeal to someone who says, “This is a great idea, let’s try it”. We try to connect technologies in certain stages with new, sometimes surprising segments.
The other aspect is that we create an environment where all are equal. We’re all very informal, I have my door always open, as well as our CEO, we meet in the cafeteria and people talk about anything with us. If they have an idea, a question, they know they can come to us. Also, we provide immediate feedback, there are no hierarchic barriers or structures that could limit us.
I read an interview where you claimed that you don’t support individual competition within the team.
In order to build our culture, we try to value team success. Individual success can keep people from distributing information, from developing people around and that’s absolutely counter-productive.
At the end of the day, the client doesn’t care what was done by an individual, what he cares about is the result and that comes from the team. We do value individuals but more because they can develop others not because they are the best.