Few companies have mastered the art of mass customization. Doing so requires sophisticated technology and a deep understanding of digital business. On this episode of CXOTalk, we learn about mass customization fromRobert Keane, CEO, of Cimpress, the parent company of well-known printing brand Vistaprint.

Robert founded Vistaprint in 1995 to provide small businesses print tools to market their business. Robert’s vision for Vistaprint emerged from his experience with the development of a retail kiosk design and printing system as well as from his knowledge of the small business desktop publishing software market.

In 1994, Cimpress founder Robert Keane wanted to give small business owners access to the same high-quality, custom-printed products that bigger companies (with bigger print budgets) enjoyed. 20 years and over 200 patents later, Robert continues to lead Cimpress, which is now the world leader in mass customization and a remarkable success story that has gone from startup to over $1.5 billion in annual revenues.

Video Transcript: Mass Customization and Digital Enterprise with Robert Keane, CEO, Cimpress / Vistaprint

Michael:

(00:02) Digital business, digital enterprise, digital transformation very important topics today and topics we talk about a lot on CXOTalk. And on episode number 131 of CXOTalk, were talking with a genuine pioneer in creating a digital business. My guest, Robert Keane is the CEO of Cimpress which most people know as Vistaprint that’s the well-known brand and we’re going to be talking about digital business today. Robert how are you?

 

Robert:

(00:42) Very well Michael thanks for having me.

Michael:

(00:45) Well thanks so much. So digital business and mass customization, I guess mass customization is actually the right term to use isn’t it?

Robert:

(00:53) We certainly see ourselves as world leaders in mass customization which is where we focus as a business, yes. 

Michael:

(01:01) So Robert tell us about Vistaprint and Cimpress and briefly your professional background.

Robert:

(01:12) Well let me start me start with my professional background. Most of my career I’ve been founder and CEO of this company, of Cimpress and what we are is the world leader in mass customization. People aren’t typically familiar with that term so the way we describe it is the ability to produce with the reliability, the quality and the affordability of mass production. While individual orders where each and every one embodies a personal relevance that’s very inherent to a customized physical product.

(01:45) And through decades ago and even today it’s relatively difficult to have something that’s personally customized and at the same time affordably and available in very very small quantities. That’s where we as a business focus.

(02:03) We use technology throughout our business in every aspect of the value chain to do that, and you break the tradeoff between which traditionally was a requirement to either procure in very high volumes at a low unit cost, or to pay a very high unit cost if you wanted a small quantity.

Michael:

(02:22) So you had the idea of Vistaprint when you were actually an MBA student.

Robert:

(02:30) Yes, actually it was not Vistaprint at the time. We were a company by the name of Bonne Impression.

(02:36) I went to business school in France and I founded a company in Paris in 1995 and we grew and focused on helping small business do graphic design from their desktop – this is  in the 94’/95’ time period. The internet existed but I wasn’t very well aware of it. it was using PC’s, you had 286 style computers with desktop publishing and laser printing which was a new technology at the time.

(03:06) But helping people produce, once again, very small quantities of customized product at the time things like multi-paneled flyers from their desktop. And in 1998/99, we moved over to the internet and at that time we changed our brand name to Vistaprint and we came into the US market in 2000.

Michael:

(03:32) So Cimpress is now your upper level brand, and Vistaprint is one part of Cimpress. So tell us about Cimpress, the company size. Give us some context.

Robert:

(03:47) So for listeners or viewers in the US, Cimpress is very much known first and foremost by the Vistaprint brand. In fact we have eight or 10 different brands in Europe and more than half our revenues are with other brands, and about 55% of our revenue is outside of the US.

(04:06) So as a company our vast fiscal year we did just over $1.5 billion in revenue. We have about 6000 employees in 20 countries around the world, and we’re a very unique combination of both company culture but also company capabilities of competencies that mix broadly three capabilities together, software development, manufacturing high volume productions and systems and very importantly e-commerce and direct marketing.

Michael:

(04:44) And who is your target market?

Robert:

(04:48) So depending on the brand we have different target markets. So the Cimpress wide company level are revenues that are slightly more than half our revenues, may be 60% come from small businesses with less than 10 employees. But we also have significant revenues for personal applications of what we call home and family applications, everything from personalized. Everything from personalized calendars to holiday cards, or other types of customized products, and then many larger sized corporate applications as well.

(05:19) So our customers are companies or people individually who want low volume customized physical products.

Michael:

(05:30) So when you came up with the idea, how did you identify this particular niche, this particular need?

Robert:

(05:41) Well going back to my professional experience prior to going to business school, I was in a company for about seven years that was in a variety of OEM original equipment manufacturing, engineering and design and keyboards and displays and we got into kiosks, which is back in the late 80s the idea of kiosks and ATM is an example of a kiosk. It was really still new at the time.

(06:07) And it was a dot com before it’s time and we were losing a lot of money and we couldn’t get funding, but it was really trying to use a network to – and a modem-based network to address e-commerce and today it is called e-commerce, that is the ability to enable commerce remotely across a screen and across a network. And again it was economically a failure.

(06:34) But one of the most interesting applications we tried there was to do things like baby announcements and party invitations, where the customized products would be designed onscreen, and once-a-day the modem would send those up to a centralized digital production facility.

(06:54) And it really struck me at the time of how strange it was, there was this huge dichotomy between high-volume production and specifically print, if you think a (unclear? 07:04) box and you laid it out flat and it is about the size of a baby announcement, but it cost 100 times less per square inch than that baby announcement.

(07:14) So I was fascinated by this what I called at the time an arbitrage opportunity of producing in huge volumes the (unclear 07:24) box model at pennies per square inch, but the cost in micro quantities that was you know 100 times that.

(07:34) And this idea that somehow digital technology and what we call DIY, do it yourself, self-service where the customer is doing the design and the work for themselves rather than then coming face-to-face with a sales approach could somehow transform that.

(07:52) And so I left that company in 94, and in 95 I had the good fortune that when I was at business school, one of my classmates that I became friends with had left Microsoft, and she was very familiar with the Publisher, the desktop publishing software from Microsoft.

(08:09) I started working for that team as a consultant out of their Paris European headquarters, based in Paris, and those combination of experiences before going to business school and working with Microsoft Publisher really reinforced this idea that there was a huge gaping need of low volume customized print. And over time we expanded that into many other areas, signage, or customized apparel or the like.

Michael:

(08:41) But clearly there’s a significant gap between recognizing this opportunity and having the technology that’s needed in order to execute that. So and I would think that gap would be a very large gap in this case, so how did you take this idea into reality.

Robert:

(09:05) I often say it was a dimmer switch that was faulty. It wasn’t a lightbulb switch that I just flipped on one day and said that we have the idea. So over a five/six year period, between 95’ and 2001 we were trying many different models or sometimes getting to break even, sometimes falling back into significant losses, funded first by venture capital in 97 through the dot com crash. And that was our corporate background, but from a customer value proposition and a digital delivery model we were testing many different things, some of them working, some of them not.

(09:36) And so again, it was a multi-year flirtation with bankruptcy and eventually we started realizing that it was a combination of delivering a desktop publishing software, which was used in the browser. And at the time in the late 90’s writing a software application to run in the browser was still very new, and really using what we called computer integrated manufacturing, which is harnessing the power of software and information technology networks to automate the flow of information that allows individual processes to exchange information with each other. The schedule activities initiate actions and control that throughout the manufacturing process.

(10:21) It was this combination of the backend software management of the production with the frontend delivery of a desktop publishing through the internet browser that finally clicked. And between when we launched that in the August/September 99 it was zero revenues. By 2003 we hit 35 million revenues and by 2010 we hit over 670 million in revenues annually all organically. I think last year we did 1.5, so I wish I could say it was some brilliant idea. It was really the school of hard knocks and (broken audio possibly developing? 11:03) business models around this core customer need we recognized which was being unfulfilled.

Michael:

(11:11) So your business model is all about mass customization. Tell us about mass customization.

Robert:

(11:24) Okay, so again I mentioned before through producing the reliability in quality and the affordability of mass production. We all can buy mass produced products which are great quality which don’t cost a lot.

(11:35) And if you want to get anything from a custom car to a custom suit to a custom sign to anything else which is individually designed and produced the unit cost goes through the roof. And what’s happening is the reason for that is not your local printer or your local sign shop or bordering company is making a fortune. There is a huge amount of setup costs which are associated with customized products. So what you need to do is one, set up the physical production for the machine for each job in a conditional model.

(12:10) And secondly even more importantly, you’ve got to get an enormous amounts of information from the mind of the customer, and sometimes it’s not even well organized information to the point of production and through to the delivery.

(12:22) And so we think of that also as a per order setup cost and we use digitization and partly standardization of many processes to break those setup costs and make in economic terms we take them from being significant marginal costs to basically being deiminase marginal cost and delete the setup cost.

(12:48) When that happens you can sell very very small quantities very cost effectively, so going back to your question, mass customization is all about the intersection of three different areas. One is, we are very passionate about empowering our customers to make an impression. To do something that is personally relevant and important to them or to their customers.

(13:11) Secondly computer integrated Manufacturing, every step of the process controlled through software. And three what really drives our economic engine, how we make money which is to do huge scale, but to do in very very small quantities.

(13:27) So last year we did about 40 million individual orders, and inside every box that went to any given customer there was two or three customized types of products. Maybe someone ordered a custom embroidered polo shirt, a lawn sign, and 250 business cards and that would all go in the same box.

(13:49 So that means last year we had something like 80 million – a little bit more than that custom setups done, you know well over 1 million per week, and none of that exists in the inventory. It is created or uploaded by our customers across an e-commerce site or one of our multiple e-commerce sites, and produced to order in micro quantities.

(14:10) And that is mass customization. Now, customization exists throughout the world and we are not the first printers in the world and we won’t be the last, and I would say the defining characteristic of mass customization is those three intersections that I talked about. But importantly doing it at huge scale through digital enablement that breaks the cost of setups and in doing so opens up huge new markets.

Michael:

(14:44) So what you’re doing then is based on various stages of custom platforms.

Robert:

(14:54) Sorry I had a little bit of a network issue I heard it was based on various stages of and I didn’t get the full question

Michael:

(15:03) Custom platforms.

Robert:

(15:04) Yes absolutely. So we’ve built a custom platform and what we as a company we grew most quickly and from 200 to 2010 stage with the Vistaprint brand it was incredibly successful, and still today it is a successful and growing brand, well over $1 billion in revenue.

(15:27) But we realized and we actually looked to Amazon as an example of this, Amazon, 10, 12 years ago realise that they had locked into their e-commerce system and incredible infrastructure system which today is known as Amazon Web Services or AWS, and they were able to separate out the backend from the front end and expose the capabilities of the backend as a platform.

(15:57) So the Cimpress strategy is obviously in a different world than the Amazon strategy, but was inspired by that and other platform strategies where we are exposing a common technological and operational backend, which is used by multiple merchants for multiple and applications. Because in our business, like in many other businesses scale drive competitive advantage. But there are many many different applications and brands that need to be addressed through different types of customer needs.

(16:36) Traditionally outside of digital businesses, this is actually a very well established strategic approach to business. Think of the Volkswagen group. They sell Audi, Volkswagen, Porsche, Seat, Skoda. They have many different brands but they produce everything on the same production facilities and the same supply chain.

(16:56) What we’ve been able to do is because the arrival of the internet and because we spent a huge amount of money on technology development, we’re able to take that type of common platform and apply it to customized individually unique products. And again it is very much a platform play. And that’s one reason why we have expanded the number of brands which we have either organically or increasingly through acquisition.

Michael:

(17:25) Now we have an (lost audio)

Robert:

(17:30) And I really apologize because I am not hearing you right now.

Michael:

(17:36) Can you hear me now.

Robert:

(17:36) Yeah.

Michael:

Okay, well we’ve got an echo and I was going to say I will leave you, but then you can’t hear the question. Bu actually it’s me. I’ve done this 100 times and eventually I’ll get it right.

Robert:

(17:59) Okay no problem.

Michael:

(18:00) So we have a question from Arsalan Khan and he asks what kind of (processes did you rethink?) and how did you measure their importance or lack of importance.

Robert:

(18:19) So one I wish I could say that we just stepped backed and figure this all out offsite in the course of a week, but we did a lot of this rethinking over the course of multiple years and especially the 97 – 2001 timeframe, and then we did a whole nod or major rethink about three years ago.

(18:42) So I’ll start with the original idea. We really did have in mind two things, the customer need and really understanding what were the unfulfilled customer needs, and it was in our case quite evident that these small quantities of customized products were very very well regarded and sought after, they were just very expensive.

(19:07) So we want to stick in that need, because of the second area which was the enormous difference in cost of production between high volume and low-volume. So when we started saying what can we do to totally change the – we didn’t use these MBA terms, but if you think back to that and say what was the paradigms we were changing, we were saying what were the ways of thinking about the business in about doing these customized products which were gospel in the industry, but they didn’t need to be the case. And there were many many things.

(19:46) So we had a very good relationship with Microsoft for years, but we were paying 60 – US$70 equivalent for every CD-ROM of Microsoft Publisher, which we would sell at a 20% margin to our customers. And again in 1998, we started saying what if we could do that (lost transmission 20:07)

Michael:

Robert:

(20:15) I went to the CXO ball and I’m back.

Michael:

(20:20) Okay is fantastic. So you then decided okay, how can we do this over the internet.

Robert:

(20:22) Yes and once again it was all around the idea of we focused on what was important was breaking down the marginal cost. Because we understood there was this difference between high volume production and low volume production. We wanted we were very convinced; maybe rightfully wrongly that technology was the answer there.

(20:41) And so every time we could identify something as a marginal sub cost, we would attack that and try to think about how could we use digital technology to break that down. So rather than paying $80 every time we ship the CD that Microsoft had developed, we said what if we can develop our own software which we will spread across the Internet and give away for free. We’re talking on the Google hangouts chat which would have cost millions of dollars in specialized technology 10 years ago, and today it’s a free technology. So there was one area that we said let’s redefine how desktop publishing is done, and especially for small businesses.

(21:18) Secondly we look at how production was done, and digital printing was already coming into the world, and this digital printing refers not to using physical printing plates, but rather having like you can think of your laser or inkjet printers, something that is digitally printed.

(21:35) And there we actually went the reverse. We went to traditional large scale printers that were the large German production presses, and we said how can we apply digital technology to reduce the set up there. And that became an aggregation play. We would aggregate together 150 business card orders onto one large plate, and we would split the setup cost by those 150 different business cards.

(21:58) So but then to do that aggregation of 150 business card orders, which we produce may be 1000 cards deep, that we would be producing 150,000 business cards, that broke up the setup costs, but it required enormous amounts of investment in software technology to aggregate the graphic design of 150 different orders automatically and to do that over and over again.

(22:25) So going back to the question, those two examples are two of many, but we were fascinated by the low marginal cost of a digital business model. With high fixed costs, we as a company spend $150 million a year on technology development. That’s a huge amount, but when you divide it out by 40 million orders, it comes to a few dollars per order.

Michael:

(22:57) Okay, so you developed software that enabled users to essentially do self-service, to create various types of printed items. So that means you must of invested a very significant amount in the user experience because any step along the way, if you have to stop and offer customer support, that’s very expensive and it seems to me it would break your business model.

Robert:

(23:28) Absolutely, so and I would. And interestingly today we work with customers who use desktop publishing programs from Adobe and others and upload to us under brands other than Vistaprint. But one of the keys to the Vistaprint success was very much if you are familiar with Clayton Kristiansen’s models, we very much went to the bottom of the barrel of customers. The customer is no one else wanted to serve. You know, I often said you know we were serving, and we’re still today very probably serve the needs of the dog walkers, tennis instructors, and the independent plumbers and we understood that for those customers, their alternative was bad clipart, printed on a yellow sheet of paper that was folded twice, which became their three paneled flyer.

(24:23) And for these micro-businesses they are already doing desktop publishing, and they were doing a DIY self-service mode. So we said, this goes back to the question of what we were trying to change, and we really saw the enormous opportunity that if we could serve customers who did the graphic design for us, rather than laws like in a traditional printer or graphic designer having to do it for them. We actually took away hundreds and hundreds of dollars in setup costs per order.

(24:53) And very interestingly, that the name Vistaprint came from the idea that you could see, you have Vista of what you’re going to print on the screen. The customers that were doing DIY, actually really love the fact that they had a what you see is what you get rendition of the printing that showed up in their browser.

(25:17) So we actually by focusing on the most underserved segment of the market, these micro-businesses we converted it to a no marginal cost, a self-service model, and we actually got the customers happier because the alternative was using the clipart and Microsoft Word or Microsoft Publisher, which was more complex.

(25:40) Over time today we have several thousand people in customer service operations, but we have people located in places like Indonesia and Jamaica, in India, where we have high-volume customer service operations, which are still relying on the customer to do the vast majority of the work. We are just helping them out when they need it, and I think that’s another example what you see outside of the Cimpress story in many other industries.

(26:11) So when I grew up, when I was young I wasn’t looking for a mortgage, but I imagined if I had gone to get a mortgage in the 70s, I would have sat down in front of a local banker who would have spent time talking to me, and filled out a mortgage application. They would have made their local decision.

(26:26) Today, you go online, is approved or certainly car loans are approved through a highly automated digitally enabled process with high-volume centers located somewhere around the world, with automatic digitally enabled credit score lookups. And these enormous amounts of processes which have gone from that traditional expensive face-to-face service, to still a very responsive service model but once again reduce the individual cost for processing that order, be it the car loan or the loan side.

Michael:

(27:05) So Robert, then are you to categorize your business, are you then a printing company that realize on technology or are you a mass customization platform developing company, and printing happens to be your thing, your expression or instance.

Robert:

(27:34) Very much the latter, we are a mass customization company which found the first application of that imprinting. So printing is a wonderful market for mass customization. Not all printing, you know I’m drinking from a bottle of water here, mass customization is not good for producing a label on this bottle of water, because the bottled water company produces tens of millions of these a year.

(28:03) But printing is inherently customize, and it serves no purpose for a small business to give a brochure that is produced by the millions and used by thousands of other businesses, because they need something that represents them.

(28:22) Likewise, if you are doing a baby announcement, or a generic picture of someone else’s baby on it, it’s not very helpful. So we talk about being passionate about empowering people to make an impression, this individually meaning structural, physical product creates great customer value in customization.

(28:49) When you combine, economically we do large scale small quantities and we do mass customization, but customization for customization sake in the absence of a clear customer need wouldn’t generate any revenue, or any material revenue.

(29:08) So we see ourselves as a mass customization company first. A lot of these are very close (correlation?) To printing, but we have a very rapidly growing business in things like embroidered clothing for once again very small quantities, so you would like to have your company logo or your CXOTalk logo on a polo shirt or a parka that you wear, we do that.

(29:38) We do customized phone covers for iPhones, for personal applications. We do signage, so there are other products that we’re getting into which are all in close (correlation?) of print. But over time we see many many other applications, packaging, there is a printed product but it is very expensive to get packaging unless you are buying tens of thousands of folding boxes per year.

(30:07) But if you’re a small eBay reseller, and you sell to things week it would still be wonderful to have 50 boxes or 100 boxes a year that have your logo and your brand on that. But you can’t buy 100 custom boxes today.

(30:25) We’re changing that. We’ve got through two of our European brands where we have introduced customized low volume packaging, and it starts in a quantity of 10, so we are looking to markets to say where is this intersection of customer need, and disruptive cost difference between high-volume and low volume. And I guess one third attribute is where can digital technology in our business model break that constraint and fulfil the customer need.

Michael:

(30:57) Okay, so you’re investing quite a substantial sum right now in building this platform, and it sound like as you build the mass customization platform you’re thinking in generalized terms so that you can branch out the business in different directions.

Robert:

(31:17) That’s correct. And the way I describe this is that 15 years ago we understood for the first time that we could take across the Internet thousands and eventually millions of individual orders, and through these processes aggregate them, standardize them, and produce them and have these lower cost and higher quality is we’ve been talking about.

(31:42) But we did that at a time 100% through a single vertically integrated brand and operational experience. So the Vistaprint brand, we used to say we want to automate and standardize every step of the value chain from design conception through product delivery. And so that’s why we had our desktop publishing program in the browser, we had 10 plates and the like.

(32:07) Today we realised that this is the Amazon analogy that we referred to before, that there is just an enormous opportunity to break out of that or competency of mass customization and apply it elsewhere. So we are looking to do that, and also when we look at innovation and our size, we’re getting to a point where for me I spent a lot of time worrying about how can we stay small as we get big. How can we stay entrepreneurial in our culture? And the best way to do that is to keep chopping up our business into smaller squads and teams which are empowered to make their own decisions, and this gets a little bit into some technical details but by using software services and micro-services we are able to use API’s - Application Programming Interfaces, which allow the different parts of our company to talk to each other without actually having to plan together.

(33:06) And you know, planning always looks good on paper but letting dozens or hundreds of teams, individually just pursue their best vision of how to serve the customer needs within the confines of our overall strategy is much more effective. And by moving to a platform approach, we are much more able to do that type of breaking up of what was previously was this monolithic organisation that got into three or 4000 people, vertically integrated and tightly coupled and decoupling that had a lot of advantages to innovation.

Michael:

(33:47) This is really interesting, so you are really using the technology to help drive across boundary communication inside various departments or among and between various departments inside the company using the technology as kind of a model to help drive that if I understand what you’re saying correctly.

Robert:

(34:13) Yes especially as you get into the technology, so for a decade, as we got bigger and bigger we’re building a monolithic ball of twine in our software code and everything was connected to everything else. But when you get to hundreds, you know we have 500 software engineers, so to actually understand that if you changed one piece of the code what is that going to do to every other part of the code is incredibly difficult to do.

(34:45) And about 10 – 15 years ago as software at was getting more and more significant in size, people started realizing in the academic world, and then in some of these early leaders like Amazon, the breaking up into individual services which communicate through a standardized software language and a set of protocols other than that, are left totally unknown devices is to figure out you know if they want to use Ruby on Rail or a Microsoft environment or any other thing, or if they wanted to do x and another team want to do y, don’t try to dictate from a centre how to solve the customers need or tackle the technology challenge.

(35:32) Simply dictate the need for autonomous work units or services, which can communicate together in a known way, it is much much more nimble and fast. And we are not there yet. We are certainly very committed. We have been a year, year and a half into this effort to break up, maybe two years. But we already see the more we can break ourselves up into these independent units, the more quickly we can move.

(36:04) And almost counter intuitive, because the larger the company is the more you like to think that you know, sitting in the centre that you can figure out all the optimization you need to do across a large group of people. But it’s actually the overhead costs doing that optimization kill innovation.

Michael:

(36:22) Now what is the impact on the collaboration among the people inside the company, how are you thinking about driving that aspect of it, the organizational aspect.

Robert:

(36:35) People are really excited about this. We talk of returning to our entrepreneurial heritage, and resurrecting our entrepreneurial heritage and people who have been here for 10/15 years say the old companies back. Because people do this naturally in start-up companies to, or 10, or 40 people working in very close quarters and you all understand that you’re on the same team. But you also understand that you have to play different positions, and someone who works here often uses the story of watching kids play soccer, and they’ll all run over to where the ball is everyone on the team. And then the ball gets kicked to the other side and they all run over there.

(37:21) You watch a professional you know World Cup and everyone knows their position. They stay in their position, they work together. So this has allowed people to really play their position, but to also know that they’re on the same team and people really like that we’re getting back to the old speed and innovative culture that we had when we were smaller.

Michael:

(37:45) So how much effort, do you the CEO invest in thinking about this and helping make sure that this happens in the way that you want.

Robert:

(37:56) A lot. I think culture is really important and large companies very quickly can succumb to large corporate culture. And so I spent a lot of time thinking about how to constantly stay small as we get big. But also you know I certainly think the key to be successful is to just simply hire and align great people around a common vision, and then constantly fight to preserve this culture.

Michael:

(38:31) So tell us now about the platform and tell us what’s next. Where are you taking this business and how do you manage the risk associated with moving from printing, keeping the common new platform into other areas.

Robert:

(38:53) Well this is a big job but we are not you know jumping from trying to do you know 3-D printing on our traditional printing. First of all we recognize that we have multiple brands, especially in Europe where we are implementing this first.

(39:16) We have multiple brands and different geographical focuses in different countries around the continent, that are selling under very different value propositions so flyers, business cards, embroidered clothing, signage.

(39:36) So what we are doing just as in the past, we and some of the companies that we acquired to pull off the mass customization trick of aggregating individual orders, within this vertical integrated system. We are now focusing on simply aggregating, what I call a meta-aggregation, aggregating from three or four different brands into the same supply chain network.

(40:01) And so it is not a easy technological feat, but it is certainly no more difficult than what we’ve done for the last decade, aggregating together millions individual orders. So we are trying to focus on early deliverables. We talk a lot about getting out minimal viable products, or minimally viable products. We actually changed that. More and more we talk minimally lovable products because something that’s viable and the customer doesn’t love is not quite the right thing. But we are taking this in chunks, in small pieces and we are not trying to boil the ocean. We see this as a multi-year. And we already are starting to announce the strategy about a year ago there was a lot of early work in disentangling the monolithic current structure that link the frontend to the backend, and not just for the Vistaprint brand but for each of our other brands.

(41:02) That, once it gets disentangled and recreate an isolation layer, technologically speaking between the front and the backend, where we are able to route orders between us and that is already happening. It’s happening in a smaller scale than we need to be a year from now and a smaller scale certainly where we will be in two years but we are already starting to see the benefits from it.

Michael:

(41:20) So obviously you at heart are a and correct me if I’m wrong, a business model and a technology company.

Robert:

(41:30) That’s correct yeah, I would say that’s true. And I think these might be the same things, but inherently an entrepreneurial company. So I think great entrepreneurial companies always reinvent what they do, and you don’t need to use technology to reinvent how things are done. But you certainly need to reinvent using business model reinvention.

(41:56) And in today’s world where technology is so powerful and so constantly evolving, I think if you can integrate even if you’re in the printing business or you named in the other business, you can be in a taxi business, but it sure helps if Uber uses technology to revolutionize that. And so we very much do see ourselves as in that type of business, but importantly business models and technologies are in service of entrepreneurial reinvention.

Michael:

(42:27) And you know, we’re just about out of time and so I would ask you advice for others who are looking to build a digital business or who are in established companies looking to undertake a digital transformation. What advice do you have for somebody who has been doing this since your company was founded essentially?

Robert:

(42:53) You know, it is frankly this may not be the answer people want to hear, but I think it is very hard to do in an established business. I was in a very well-run and profitable business back in 95, but it was not a digital business, and it was just very hard to do. And when I started the company, we were born digitally.

(43:16) Every single thing we did was based on the assumption that the technology could transform some aspect of our value chain. And I’m sure there are good examples of companies that have done, but I’m not aware of them. The advice I would say that if you are in a larger business make sure you integrity and protect and allow the digital business that you’re trying to create, or the entrepreneurial business that you’re trying to create, to rewrite rules without being told it can’t be done. Because, the very essence of entrepreneurial value creation is doing what people say can’t be done, and it fails many times.

(43:57) Like I said, we were on the verge of bankruptcy for five years, despite a regular infusion of venture capital money, and it’s not an easy thing to do. So once you get there and it’s just in the DNA of the company, and I’m not sure I have a crisp answer of how to take a non-digital business and make it digital.

Michael:

(44:19) Okay, then I have to ask one follow up based on something you just said, you said you were almost in bankruptcy for five years before it took off. What made it take off, what was the thing that tipped you over the edge, the tipping point so to speak?

Robert:

(44:36) What’s funny we were technology driven all the way through this, but it was the dot com crash and as funny as that sounds in 2000, we had been funded by French venture capital, we had expanded the US market and had the inopportune choice of expanding in 2000 right before the dot com crash came. We could not raise penny more.

(44:56) We were stranded halfway between the US market and the European market and we were about to go bankrupt. And we always had backup, we always had venture company money coming in – venture financing. And the fact that we just could not raise another penny, we had no choice and couldn’t sleep going into the holidays at the end of 2000 and we did radical surgery.

(45:24) I said we have got to survive based on our own cash flow. We had a business at the time that was growing 100%  month over month but we were going to go out of business.

(45:34) So we went from 80 or 90 people down to 25 people, which I think 24 had software engineering degrees and we said, we’ll put all our eggs in this basket, it’s the last throw we had. And we stretched out all our payment terms with our suppliers and by May of 2001 we were cash flow positive.

(45:57) And I had friends who were in the dot com world at that time who were still living of off their 99/2000 funding rounds, or 97 rounds and I think for us to succeed wasn’t some brilliant technological innovation, but the fact that if we didn’t make a business model work we would go bankrupt, and we couldn’t get any more outside funding and that totally changed things. We became much more frugal and things that really mattered. Then that business had been growing at 100% a month was all that was left, and again, in the next two years we reached $35 million in revenue.

Michael:

(46:32) What an incredible story. Thank you so much for taking the time today.

Robert:

(46:38) Well thank you for having me.

Michael:

(46:40) We have been talking with Robert Keane, who is the CEO and founder of Cimpress and Vistaprint which is the band that many people here in the US probably will recognize. And we have been talking about mass customization and what it’s like to be a truly digital business. This has been episode number 131 of CXOTalk and everybody, thank you very much for joining us and we will be back next week. And Robert Keane, thank you for taking the time today.

Robert:

(47:17) You’re welcome.

 

Companies mentioned in this week’s episode:

Vistaprint:        www.vistaprint.com

Cimpress:         www.cimpress.com

Microsoft:        www.microsoft.com

Volkswagen:    www.volkswagen.com

Ruby on Rails: www.rubyonrails.org

Adobe:             www.adobe.com

Amazon:          www.amazon.com