CASE STUDY >
Securing data around the globe
Written by: Milan Duda
Photo: Tomáš Kubeš

	Martin Sýkora

While many firms need large product portfolios to ensure success on a given market, two products were enough for Kerio Technologies to shine brightly in the IT world.

KERIO IS MAINLY associated with the development of the WinRoute product line, and its story is strongly reminiscent of many large, successful software companies like Microsoft. In 1997 two computer enthusiasts - Martin Viktora and Tomáš Hnetila - founded MT Net essentially from scratch. Another partner, Stanislav Kolář, joined them later. At that time the firm was already well established as Tiny Software and enjoyed enormous success around the world with its firewall WinRoute. In 2000 WinRoute earned the prestigious ICSA certificate, which attracted the interest of clients with the highest security demands, such as the US Air Naval Systems and Amadeus, one of the largest travel reservation companies in the US.
It was partly for these reasons that the partners decided to set up their own branch in California's Silicon Valley, a well-known incubator for computer technologies, and by the end of 2002 in Cambridge, England, as well. The company was divided into three smaller firms, and Kerio continued in the Czech Republic under the new brand. "There were opportunities immediately to do business on several markets, and the company had to be divided in order to serve them," explains Viktora, who currently manages the US branch. An important moment in the firm's history came when, in the face of the rapidly developing market, it became necessary to transform WinRoute Pro's initial success into a stable business strategy with good long-term prospects. "We focused on small and mid-sized firms, and subsequently equipped our products with properties that these customers required," Viktora comments. The change in focus allowed Kerio to abandon direct sales and build a global distribution and dealer network.
Other major turning points included the acquisition of a McAfee license for integrating an antivirus solution, and a business partnership with Apple. Additionally, the company also benefitted from the sale of its second product, Kerio MailServer, which is essentially an alternative for ordinary computer mail clients like Microsoft Exchange. But it is also suitable for the Linux and MacOS minority platforms, which account for over 30% of its sales.

Benchmark - High-quality secure products at competitive prices - Standardized "packages", not project solutions - Specific target focus - Avoidance of global firms to allow for direct customer care

Clear motivation
As Kerio grew, so did the number of its employees, of whom there are now over 100. Seventy-five of them work in Plzeň, where all product development is concentrated, with 18 in the US branch and nine in the British branch. Fortunately, personnel management matched the firm's growth, and still plays a very important role in Kerio's operations. "I have a fixed idea that if I have satisfied employees I'll have a good product, which means satisfied customers and thus satisfied owners," says Martin Sýkora, the firm's executive director. The power of Kerio's already well-running personnel and motivation system lies mainly in its simplicity, according to its creators. "Everyone can see it, and knows that accomplishing something means progressing in the benefits scheme or an automatic pay increase," Sýkora adds.
The success of this motivation scheme is borne out not only by the firm's development, but also by independent expert evaluations. This year for the first time the firm took part in the Hewitt Associates ranking of the Best Employer in the Czech Republic, and subsequently in central Europe. "I wanted to know what we had accomplished at Kerio in a year and a half," Sýkora says. The curiosity of the head programmer in Plzeň paid off, as Kerio came out on top in the questionnaires, and the firm's strategy also won an award for the best personnel project at the Credit Suisse Employer of the Year competition.
However, according to Sýkora, efficient management came about slowly. "Until 2003 one of the owners ran the firm, but it grew from five people to 55." So Kerio encountered its first crisis, when the original owners were unable to manage their company's growth. "Clear competencies and a clear structure were lacking. Employees were unclear as to whom they reported to. A principal change was finally pushed through - the creation and filling of a director's position," says Sýkora, who took on the job in 2004.
Kerio's revenues are currently growing at a year-on-year rate of 65%, ranging between USD 5 and USD 10 million per annum (the firm doesn't publish exact sums). In the revenues structure, the US led for the first time last year, while the Czech Republic remained in second with a 30% share - as opposed to 80% a few years ago. Other important customers include the Netherlands, France, and the UK, but the firm is active in over 70 countries around the world, either over the internet or through a network of over 200 distributors, and about a half a million customers use its firewall. Despite these results, Sýkora doesn't assume that the firm will eventually become one of the world's leading players: "For example, MailServer faces huge competition. There are about three leading companies on the market, starting with Microsoft, which control about 90% of the market," he says. "We're behind them, among companies that split up about five to seven percent of the global market. But that's enough to grow and occasionally make yourself known to the world."
Kerio doesn't foresee any unexpected boom in the near future, but rather expects to maintain its current rapid growth rate and focus on the expansion and developement of the base team. "We see further opportunities in the segment of companies with 50 to 1,000 employees," says Viktora, confirming the firm's strategy to date. Sýkora also has some projections. "In three or four years we could have about 200 employees, the lion's share of whom will be programmers, as is the case today," he says. "We'd like to resolve the time zone problem. In order to cover the entire world with uninterrupted technical support, we need a branch somewhere in the Pacific Ocean region - it doesn't matter if it's in Australia or China," concludes the director.

David vs Goliath Kerio's StrengTH lies in targeting a specific type of customer - namely those with an aversion to huge, monopolistic firms. "We can't compete directly with Microsoft, it's impossible, so we want to climb into the market through smaller clients," explains Martin Sýkora, the firm's executive director. "We've found we can't offer our product to huge customers like Amadeus, as that requires huge service provision demands. We don't shun large firms, as they provide us a certain form of advertising, but we don't go after them," the director adds. On the other hand, he goes on to explain why the firm provides samples of its production on its website free of charge. "Free versions have always given us a huge customer platform for testing. We thereby get valuable feedback for improving our products," Sýkora points out.

Healthy employees The Kerio personnel program doesn't motivate with pay raises alone, it also offers other bonuses. For example, employees get five weeks of vacation, claim contributions towards sports activities, or purchases from Kerio dealers at wholesale prices. Other benefits are training, education, and personal development, outdoor company events, and the so-called vitamin program. "This simply means that from the end of October to the end of March there's a huge basket of fruit at the reception desk," explains Sýkora, "Every day something different - apples, kiwis, oranges, or bananas. In October we also have some employees innoculated against the flu," he says, adding that thanks to such programs, the long-term absenteeism rate is under 1%.