At the end of last year I caught up with Mike Rottenborn, CEO of Hybrid Software Group and discussed the history of the company and where he sees it going forward.
Rottenborn holds a Bachelor of Science degree in Electrical Engineering from Virginia Tech and a Master of Science degree in Computer Science from Villanova University. He began his career as an electrical engineer with DuPont Printing and Publishing.
After DuPont, Rottenborn joined Artwork Systems in 1996 as vice president of Marketing and Customer Service to focus on prepress workflow software for packaging and commercial printing customers. The company had been founded by Guido Van der Schueren in 1992 who is currently the executive chairman of Hybrid Software Group. Rottenborn says that he learned a lot from Van der Schueren.
In 2007 the three co-founders of Artwork Systems – Van der Schueren, along with Peter and Bart Denoo – sold the company to Esko, where it became EskoArtwork.
Rottenborn left the company that year and set up Hybrid Software as a platform to integrate MIS, W2P and workflow software, with the company quickly becoming an Esko reseller. In 2011 Hybrid Software parted ways with Esko forcing the company to develop a new strategy. Rottenborn explains, “We discovered that an integration company has to control at least one of its main products or you are just going to be four guys in a garage. So we had to become a workflow company very quickly. And because Esko terminated the relationship it removed any restrictions so we went from a partner to a competitor.”
Consequently, Hybrid Software started working with Global Graphics Software, using Global Graphics’ Harlequin RIP as the basis for its CloudFlow RIP, which is part of the modular Cloudflow packaging workflow, which also includes the Packz PDF artwork editor. Rottenborn says that CloudFlow was cloud-aware from 2012 on, noting that “The cloud can mean a lot of things to different people” and adding that the company is launching SaaS versions as My Packz and My CloudFlow. He explains, “There is a lot of collaboration in the industry so people have different roles. So keeping files in the cloud is not just for an automated workflow, but to edit them as well.”
In the meantime, Global Graphics had expanded through acquisition, starting with font developer URW++ Design & Development GmbH back in 2015. Justin Bailey, CEO of Global Graphics, takes up the story, “We had an embedded variant of the Harlequin RIP that would go inside an office printer which renders with PCL and that requires fonts. So we needed a PostScript and PCL font set and URW had both so it was a natural fit to acquire them. But we could see the decline in the office print space and we wanted to focus on industrial inkjet and labels and packaging which had exponential growth.”
Rottenborn continues, “We sold the Font foundry in May 2020 because fonts in the PDF world aren’t very strategic anymore. URW had a great business designing fonts and we got a very good price for it.”
In 2016 Global Graphics acquired TTP Meteor and renamed it Meteor Inkjet. The price included £1.2 million in cash with a further figure of up to £3.6 million dependent on revenue and payable ten years later. Rottenborn explains, “Meteor was bought at a time when we didn’t have much cash.” He adds, “We will take growth wherever we can find it. And Meteor’s value proposition was always based around software.”
In 2019 Global Graphics acquired Xitron, a US-based company specializing in prepress solutions, for $4.5 million in cash. Xitron had worked with Global Graphics since 1991, developing highly successful workflows based around the Harlequin RIP, with solutions for driving a huge range of devices including imagesetters, proofers, platesetters, inkjet printers and digital presses. It has also added support for drive electronics and can drive Memjet printheads directly.
Rottenborn explains: “Xitron was the biggest Harlequin reseller so all the profits Xitron brought in now come to the group and they get the RIP for free. So there is a transfer price on paper.”
Hybrid Software Group
Throughout this time, Global Graphics and Hybrid Software moved closer together. Van der Schueren, who had joined Hybrid Software as chairman of the board in 2011, also became the chairman of Global Graphics in 2015. Eventually this lead to Van der Schueren’s company Congra, which owned Hybrid Software, acquiring a majority stake in the Global Graphics Group, and then Global Graphics subsequently acquiring Hybrid Software in January 2021. Today the two software companies are part of the overall Hybrid Software Group. Rottenborn became Chief Executive Officer of Global Graphics PLC in January 2020. In October 2021 the Global Graphics group changed its name to Hybrid Software Group with Rottenborn continuing as CEO of the group.
He says that bringing the two companies together doubled the headcount and tripled the profitability, adding: “Global Graphics software was and remains the heart of the group.” This move gave the group complete control over its underlying RIP software as Rottenborn explains: “The biggest corrugated companies don’t really know how to do prepress. So Hybrid became a turnkey workflow that’s linked to the press. And HP pushed us to do that and we get a license on each one that’s sold. So they are selling the packaging software and the RIP together now. So the more OEMs we have the easier it gets to compete against Esko and others. And the big difference is that we own our own RIP and that’s a big step.”
In 2021 the Hybrid Software Group acquired the German software company ColorLogic GmbH, which had developed a range of software for dealing with color management that’s sold to both end users and OEM vendors. This includes Colorant, for measuring and optimizing colors, CoProA, for creating printer profiles and ZePrA, a color server. There’s also DLS, standard device-link sets, and a set of SDK modules that vendors can use to easily integrate various aspects of color management, including a Color Management Module, device link and ICC profiles and a color transform module. This also plugged a gap in the Harlequin technology, which had originally been developed for CMYK printing.
Rottenborn noted, “The Color Logic is the most accurate for doing ECG color support. And they have some end users but most of their revenue comes from their OEMs. We had an agreement not to do any due diligence on their OEM contracts so we didn’t know who they were when we bought them and we are still finding that out. And the technology and OEMs was more broad-based than we thought.”
Last March the company bought Creative Edge, which was set up in 2013 and had developed the iC3D software that’s used for creating on-the-fly 3D images of packaging designs that can be used as virtual mock-ups, including for labels, bottles and point-of-sale displays.
Rottenborn continues, “The last acquisition was IC3D. There were several different companies bidding for them. Some were customers and some were competitors. They didn’t sell it to us for the money. Private equity can always pay more but they saw a future for themselves and their products. All of these companies have their same management and same name as when we bought them.
He adds, “IC3D was the last company we needed to have a full featured DFE.” That DFE is the SmartDFE, which the company has been developing over the last couple of years. However, that’s a separate story that I’ll come to next month.
Most recently, the group bought the assets of Quadraxis, which produced 3D software. Rottenborn says, “And now we can assure the customers of Quadraxis that there is a future. So I can see us expanding a little further in the product branding space.
Quadraxis had developed technology in 3D scanning and image processing that will now be incorporated in to other products from within the Hybrid Software Group’s portfolio, which also includes other 3D applications such as iC3D and Met3D.
Rottenborn notes, “The 3D space is our biggest growth in terms of number of leads.” But he points out that potential growth is not the same as actual revenue, adding: “60 percent of our revenue this year will come from labels and packaging. Less than 10 percent of our revenues are coming from 3D but that will grow. We can grow our share of the market in CtP but we are limited by how fast the market is converting to digital and that’s still slow.”
He says, “We have a couple of other acquisitions on the back burner but their expectations are not realistic yet. But I don’t think that 2023 will be an easy year for anyone.” Rottenborn adds, “So our future is to continue to push the group as a brand. We are just starting to learn how to cross sell a little better.”
Not surprisingly he’s optimistic about the company’s future, pointing out that the competitors, are mostly strong in a particular area, such as Adobe for RIPs, Esko for packaging, GIS for printheads and EFI for DFEs, adding, “There’s no company that has the breadth of solutions that we have.”