Every so often a you meet a startup team who have an interesting story, sometimes positive and inspiring, and sometimes of hardship and challenges. Konstantin Klugman along with his son Alex and two other members of the team, run MRPEasy. The company provides MRP services, manufacturing resource planning, for small to medium sized manufacturing firms around the world.
They offer what they describe as a traditional service, originating in the 1970s. The core function of the software to assist resource planning, data gathering, stock control, purchasing and forecasting, as well as managing shop floor operations and real time reporting. For many years these services have been dominated by large companies. Current incarnations of the classic applications, the German system SAP and Microsoft’s Dynamics AX, are heavily customised, have long installation processes and very expensive licenses. SME haven't the resources to use them, so MRPEasy plugs this gap.
They are SaaS (software as a service) and work in the cloud. Small companies don’t need to invest in servers and administration, the software is a one-size-fits-all and is fully written in-house by Konstantin, Alex and their team. They are nearing 100 customers in key English speaking markets such as the UK, US and Australia, and have the software and instructions available in Russian for the growing Russian market.
This is all very well, but the story gets really interesting when you look at how they arrived at this point. Both Konstantin and his son Alex have been through the very same software engineering course at TTU in Tallinn, Alex recently graduating and his father over 25 years ago. As with many of us, Konstantin’s working life has taken many turns, he explains:
“Historically I changed my speciality, I worked as a software developer for 6 years, and after that my specialisation was big machines. Programming for machines like IBM’s 370 for example. When Gorbachev’s ‘perestroika’ began and Estonia become independent, then unfortunately the big plans for computing machines, they stopped, because for political reasons the Russian market disappeared.”
Qualified in software engineering, without any opportunity for work, he had to make a change, and fast:
“I was about 27 years old, and with my friends we decided that we’d start something else. At first it was a publishing business, which quickly turned into a paper supply business.”
For ten years he sold paper from Russia and Europe until selling the company in 2000 to Stora Enso, who were at the time, the second largest producers of paper in the world. But his heart was always in IT, he goes on to tell me:
“My wish was to come back to IT. I started the company SoftMedia, but because I was out of IT for around eleven years, it was impossible to re-enter the field. So I started with websites, some primitive content management systems, after that it was internet shops, then more and more complex web software.”
They lived very well off the company until the fallout from the 2008 crisis finally hit them, they turned to developing products, including MRPEasy. This opportunity presented itself though being asked by Enterprise Estonia to train small company owners, through a series of seminars, how to choose the right software.
“What I got from that, is that people from manufacturing companies were asking the same question in all the seminars, ‘Hi guys, thank you for a nice seminar, we now understand how we should choose MRP software, but could you recommend any?’ Well we couldn’t! We started to looking at each other and we realised that the cheapest option available at the time was around $100,000 with installation, impossible for SMEs to implement,” he says, a glint in his eye returning with the memory of that day’s realisation.
In 2012, his son Alex was in the middle of his Masters degree and needed a topic for his thesis, so they decided to use it to research and, “agreed that it should be connected with what we do in the software company, that it would be interesting to do a related project, and we gathered several friends who were managers of production and manufacturing companies and started putting all the blocks together.” Having sat and observed until this point, his son Alex adds: “This question was from real life, not something abstract, everyone is a winner, if we find the project isn't viable, at least I have a completed and authentic thesis!”
Having read and been inspired by Eric Ries’s ‘Lean Startup’, they decided to get a minimum viable product to market. So, psychologically they were prepared for the difficult first months. Now the future looks bright, they are an intelligent and focused pair, willing to compromise their own paths in life for the company, the rest of the team, and ultimately each other.
“MRPEasy was a long time in progress, and a culmination of all the parts of our lives,” says Konstantin, fully aware of the importance of past fates, those whose paths he crossed and the gravity of the gesture by his son, who sacrificed his freedom to choose his own topic of study for his fathers dream. The strength of their family clearly a key player in the future success of the company:
“Our vision is that we will be the obvious choice for small to medium sized manufacturers, to be their resource planning software, we want to be a global player and achieve a viral effect so that the customers will come to us.” The final word from Constantin, looking over to his son Alex, who approves with a nod and a proud smile; a truly modern interpretation of the classical family business.