The story
Delrina was founded in Toronto in 1988 by Zimbabwean expatriate Bert Amato, South African expatriates Mark Skapinker and Dennis Bennie and American Lou Ryan. Delrina was Bennie's third major entrepreneurial start up after co-founding Mission Electronics, a high-end home entertainment equipment producer, and Aviva Software, which became Ingram Micro Canada. Delrina's business strategy was to "establish technical and market leadership in niche markets", which it accomplished with its electronic form and PC-based fax software. A year before the firm was incorporated, Amato and Skapinker had quit their jobs to start work on an electronic forms product which would eventually become PerForm. Both would later meet with Bennie, who was then the co-founder and CEO of Ingram Micro Canada before becoming CEO of Carolian Systems International, a firm that made business software for Hewlett-Packard. Bennie facilitated an initial seed investment of $1.5 million CAD to finance a new start-up company, "Delrina", to develop this idea. In return, Carolian received 51% of Delrina's shares, Dennis Bennie would become chairman and CEO, Mark Skapinker President, and Bert Amato CTO of newly formed Delrina Technology Inc.
Delrina's initial corporate headquarters was located in a small office on Mount Pleasant Rd. in Toronto. A sales office was set up in San Jose, California which became its worldwide sales center run by co-founder Lou Ryan. From its Toronto headquarters, the company expanded by establishing branch offices in Kirkland, Washington; Washington, DC; and Lexington, Massachusetts. Other offices were later established in the United Kingdom, France, and Germany.
Origins of PerForm
Delrina's initial product offering was an electronic forms application called PerForm. Amato and Skapinker came up with the idea for the product while working as consultants that what their clients wanted was a way to fill in forms electronically, rather than an easier way to create paper-based forms from a computer. There was significant and long-term uptake of electronic forms products within governmental agencies both in Canada and the United States, the latter spurred on in particular by the requirements of the Paperwork Reduction Act to reduce the total amount of paperwork handled by the United States government. One of the firm's early major software deals included a multi-year agreement to sell PerForm to the U.S. Navy in 1990. Soon after the software was installed on Compaq laptops that accompanied U.S. troops during the First Gulf War, where it was used to requisition "everything from Coca-Cola to privies". Other significant volume sales went to 3M and Rockwell International. What helped set apart Delrina's electronic forms from its competitors in product reviews included its easy-to-use interface, its extensive development tools, and its comparatively low price. It also scored highly when it came to workflow and routing functions as well as security features. In early 1991 InfoWorld selected PerForm Pro
as its "Product of the Year" in the electronic forms
category, and PC World Magazine gave the product its "Best Buy" designation. PerForm proved to be successful in its niche, effectively capturing the retail market by 1993.
In the early 1990s Delrina made deals with value-added resellers like NCR and GE Information Services who had the staff to customize the product to the needs of corporate customers looking to move away from paper-based forms. The forms products sold well and the annual revenues for the firm grew steadily; 1989 annual revenues (in Canadian dollars) were $5,630,393, in 1990 they were $8,759,623, and by 1991 they were $11,894,474.
Struggle for profitability
Despite the growing revenues, the company struggled to make a profit. Heavy expenditures—primarily marketing along with research and development costs—drove the firm's losses from $500,000 from 1989 to $1.5 million by the end of the following fiscal year. For fiscal 1991 it posted a net loss of $1.7 million.
Needing an infusion of funds, in April 1991 Bennie managed to raise $7.7 million in a private placement.
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The firm subsequently sought to find ways to more widely distribute its electronic form software, with Bennie saying in May 1992 that "we've barely scratched the surface of our market".
In early 1992 word leaked to the press on a possible merger between WordStar International Inc., and soon after both firms made public the fact that they had signed a letter of intent on a merger deal. However, just over a month later word came out that the merger talks had fallen through, at the time cited to differences over "complex legal, accounting and management issues". WordStar, whose share of the word processing market had by that time fallen to 5% (from a high of 80%) was seeking Delrina's advanced technologies while Delrina was hoping to utilize the other firm's established global sales network. Despite the failure of the merger talks, Bennie said soon after that "we're still convinced that a larger sales force would give us the kind of marketing clout we need. I still believe that it's possible for us to become a global operation". Not long after WordStar merged with Spinnaker Software Corporation and SoftKey Software Products Inc. to form SoftKey International. Delrina subsequently signed deals with Wallace Computer Services, UARCO and NCR Corporation in an effort to gain greater sales distribution of its products.
Development of WinFax
In a deliberate attempt to diversify the business, The Company chose to move into the fax software market with its WinFax product. Software developer Tony Davis (another South African expatriate who had moved to Canada) was initially hired as a consultant to work on the forms line of products in the late 1980s, soon afterwards becoming part of that team. In his spare time he developed a prototype of what would become the first WinFax product, with the agreement that Delrina would be its publisher. In 1990 Delrina devoted a relatively small space to this new product at that year's COMDEX (a computer trade show), under a sign that said simply: "Send a Fax from Your PC". It garnered the most attention of any Delrina product being demonstrated at that show. This interest convinced the founding partners of the commercial viability of the product. Tony Davis went on to sell his product idea to Delrina, and stayed on as its lead software architect and designer.
The initial version of WinFax only worked on fax modems containing a specific chipset, and was only capable of sending faxes; it could not receive them. This was remedied with the launch of the WinFax PRO 2.0 product during the summer of 1991. One of the key factors that differentiated this version of WinFax from other fax software packages of the time was the deliberate attempt to make the program compatible with all fax/modems. Prior to the introduction of WinFax PRO 2.0, competitors concentrated primarily on building software that would only work with a single brand of fax/modem hardware. At the same time that it launched its WinFax PRO 2.0 product, Delrina also announced an OEM version of the same product designed to be bundled with new fax/modems. Within a few months, eight modem manufacturers had agreed to bundle this OEM version (called "WinFax LITE") of the program along with their own product. By the summer of the following year this number had grown to 50 OEM partnerships with various fax-modem and computer system manufacturers to bundle the "LITE" version of Delrina's WinFax software with their own products. By February 1993 this number had grown to over 100 OEM partnerships.
Bundling the LITE version of WinFax proved to be lucrative for Delrina. Whenever a person used the program for the first time and submitted their registration information by fax to the company, Delrina would subsequently mail the user an upgrade offer for the PRO version. This sales technique proved to be very effective, and the firm ended up making most of its sales from these upgrades.
In order to reach Apple computer users in this marketplace Delrina acquired Solutions Inc. and their BackFax software for the Macintosh platform in December 1991, which would become "Delrina Fax Pro". A version of the program was also designed for use in DOS ("DosFax PRO") which was launched in June 1992.
Initially looking for ways to further improve its electronic forms software, in November 1991 Delrina had attempted to buy two associated firms that produced Optical Character Recognition (OCR) software, with the intention of incorporating OCR functionality into its forms products. The acquisition deal fell through, though by Fall 1992 Delrina had made a deal with Caere Corporation to include its AnyFax OCR software within its products. This functionality was incorporated into WinFax PRO 3.0 in late 1992, and subsequently in FormFlow Despite the agreement with Caere, the subsequent version of WinFax used Xerox's TextBridge OCR engine instead.
Based on strong sales of WinFax, by October 1992 Delrina posted its first profitable quarter in three years. At the same time, the firm also announced its intention to acquire other software firms that sold into the consumer software market.
Acquisition of Amaze Inc.
In October 1992 Delrina acquired Amaze Inc., based out of Kirkland, Washington. The firm created daily planner software, providing time management features while providing some humour by featuring licensed cartoon strips like Cathy, Bloom County, B.C. and The Far Side. The firm became a wholly owned subsidiary of Delrina in a deal which also paid down Amaze's $3 million (U.S.) debt and placed two of the firm's directors on Delrina's board. These two individuals were Rowland Hanson, former VP Corporate Communications for Microsoft and George Clut.
Berkeley Systems Inc. v. Delrina
One of Delrina's screensaver products was based on the licensed Bloom County characters Opus the Penguin and Bill the Cat. The initial Opus 'n Bill screensaver, launched in 1993, landed the company in court as its Death Toasters module depicted Opus taking shots at a number of flying toasters, a well-known emblem in Berkeley System's Flying Toasters module from their After Dark screensaver.
Berkeley Systems sued for copyright and trademark infringement. The following court case of Berkeley Systems Inc. v. Delrina was fought by Delrina on the basis that a software-based parody should fall under the same First Amendment protection offered to the press.
A preliminary injunction was filed against Delrina in September 1993 which halted the sale of the product, and subsequently forced a recall of it through the court. The case drew political satirist Mark Russell to speak in defense of Delrina, who argued in favour of the screensaver as a valid parody, while the estate of composer Irving Berlin sided with Berkeley. Commenting on the case involving his characters, cartoonist Berkeley Breathed said: "If David Letterman can depict the NBC peacock wearing men's boxer shorts, then Delrina should be able to plug a flying toaster with hot lead".
Judge Eugene Lynch found in favour of Berkeley, citing that a commercial software product was not subject to the same exemptions as parodist literature, and that the toasters were too similar in design. The total cost of the court case and the recalled product was roughly $150,000 U.S.
In the court case, it was also cited that the design for winged toasters was not original and that the Berkeley Systems' design was itself derived from the Jefferson Airplane album Thirty Seconds Over Winterland, which also used flying toasters adorned with wings. Berkeley argued that the firm was unaware of the previous artwork until 1991, and that the album cover's toasters had clocks in addition to their wings. Jefferson Airplane later sued Berkeley Systems in turn for the use of the same flying toaster emblem. The rock group lost the case as they did not trademark the album cover at the time of publication.
The court decision was interpreted by the writer L. Ray Patterson as an erosion of First Amendment rights over the increasing protection provided to copyright holders.
While Delrina lost the court case, the publicity it generated was substantial, with coverage in over a thousand newspapers across North America, resulting in consumers turning out in droves to buy the offending program before it could be recalled.
Delrina subsequently removed the wings from the toasters and replaced them with propellers in order to avoid trademark infringement. The module was also renamed from "Death Toasters" to "Censored Toaster Module". Thanks to the publicity from the court case, sales of this new version ended up being triple what had been expected. Updated modules for this particular screensaver were sold for the next couple of years.
Josef Zankowicz, who managed the firm's publicity during this period, later commented: "We had the feeling that we might get sued—actually, we prayed to get sued. Because by suing us, the number one player in the marketplace opened up the door. Anyone can create an interesting product, spend $10 million and create awareness of it. But it's another thing to create a product and spend one-tenth that amount and create twice as much awareness."
This division of the firm at its height only represented less than 15% of the company's total revenues.
Success of WinFax
The increasing sales of the WinFax product lead to significant growth in revenues for the firm; by 1992 its sales had climbed to $19,208,420, and more than doubling the next year to $48,583,932. The product soon overtook that of the initial forms product in terms of revenues, and within a few years of its launch, WinFax would account for 80% of the company's revenues. By 1994 the firm had sold more than 3 million copies of WinFax, and it regularly featured in the "Top 10" lists of software applications sold during this period.
The rapid growth in sales of this product was unexpected, with Bennie quoted in an interview from late 1993 as saying "the success of WinFax really caught us by surprise". With the success of the WinFax product, the company grew rapidly. By early 1993 the number of employees had grown to 250, and by the end of the year to 350. The increasing success of the WinFax product consequently led to significant strains on the firm to handle the increasing volume of calls to its Technical Support department, as each of the over 300 modems on the market at the time had their own nuances in how they implemented the fax data standard. Delrina spent roughly $800,000 in an improved telephone infrastructure in an attempt to get wait times to under five minutes. In December 1993 Delrina hired 40 additional people to help alleviate the growing number of calls to the firm for technical support. By the end of 1994 the situation had improved to the point where noted industry commentator Robert X. Cringely put Delrina in his shortlist of firms providing "exceptional" product support.
In order to further enhance the appeal of its new flagship product, in 1993 the firm established a Communication Services division, designed to tap into the commercial market. The firm started making deals with major telecommunication companies, such as BellSouth and MCI Inc. in preparation for the services the firm was about to offer. In November of that year the division launched its Fax Broadcast service. The Fax Broadcast service allowed subscribers to upload a single fax and a recipient list to Delrina. Systems at Delrina would then send out the fax to the recipients on that list, to a maximum of 500 fax numbers. A subsequent Fax Mailbox feature—which enabled subscribers to remotely access both fax and voice messages from a single phone number—was initially held up following a dispute with AlphaNet Telecom for the rights to the technology. This dispute was resolved by June 1994, though with both sides publicly disputing the story of the other, and with AlphaNet receiving an undisclosed sum in compensation.
By late 1994 the firm was considered one of the fastest-growing software companies in North America, and employed over 500 people, most located at its offices in Toronto. The firm's financial situation improved greatly, and by February 1995 Delrina was reported to have captured almost three-quarters of the fax software market, was debt-free and had $40 million in the bank. The firm was shipping 200,000 units of WinFax a month, and had an installed base of four million users. The cost of doing business had also improved, as the firm's cost of sales was now 25% of net sales, down from 30% the previous fiscal year, improving the firm's gross profits.
Impact of Windows 95
In November 1992 Skapinker met Bill Gates at a Microsoft-sponsored dinner where he asked whether there were any plans to include any fax functionality in their forthcoming operating system (which could become Windows 95). Gates replied that there were plans to include "base-level fax capability" in the next version of Windows, and suggested that Skapinker get in touch with his development staff in order to produce a value-added product for it.
The firm decided to work on a suite of applications designed to be an enhancement on what was to be available in Windows 95. In response to a question about Windows 95, Bennie responded by saying: "We are quite convinced that on top of Windows 95, we can build four different applications and will encompass fax, data, telephony or digital voice, and Internet access". This would later become the CommSuite 95 product.
In 1994 the firm acquired AudioFile, a company that specialized in computer-based voice technology. The company created a product called TalkWorks, which enabled users to use certain fax/modems as a voice mail client.
Seeing a growing business in online communications utilities, Delrina licensed Hilgraeve's HyperACCESS terminal emulator system in 1993, and used it as the basis for the initial version of its WinComm online communications software. The initial version of the product was originally bundled with WinFax as part of the Delrina Communications Suite, but in March 1994 was issued as a standalone product. It was a relative latecomer to the market, which was then dominated at the time by Datastorm's Procomm series of communications software.
Delrina tried to expand aggressively into this market space, first by acquiring the Canadian online bulletin board service CRS Online, and then using it as a distribution channel for free versions of its WinComm LITE and DOS-based FreeComm products in March 1995.
When the Internet was opened to commercial interests in the mid-1990s, Delrina started to expand in this nascent market space with their Cyberjack 7.0 product, launched in December 1995. Created by a development team based in South Africa, it included a Web browser, Usenet news reader, ftp client, IRC and integration with the Microsoft Exchange email program. The program used an interesting variant of the now-common bookmark, using a "Guidebook" to store information for various Internet addresses.
CommSuite 95 shipped later that same month, bundling WinFax PRO 7.0 along with WinComm PRO 7.0, TalkWorks and the Cyberjack suite of Internet components.
From Wikipedia’s article on Delrina, shared under CC BY-SA 4.0.4