Printing money?

26 January 2007

Silicon Valley doesn't usually look to the mountain landscape of Montana for entrepreneurial inspiration. But that's where an award-winning small business has created a new kind of e-commerce set-up

Andrew Field, president of PrintingForLess.com, knows how to do things differently. It's not just that he built a thriving e-commerce business on the edge of the Yellowstone river in Livingston, a small community in Montana, US. Nor is it the workforce-friendly environment he's created, providing onsite licensed childcare and letting employees bring their dogs to work. And it's not even the fact that his path to successful Internet entrepreneurship began in the unusual confines of a car repair shop.

In fact, what really differentiates Field is the way he runs two crucial parts of his business. Firstly, he defied cynicism from the investor community to build a partner eco-system, combining ruthless quality control with a collaborative production model that plays to both the strengths and weaknesses of print industry economics. Secondly, he's created a new kind of customer-facing job that combines sales, service and technical support - skills that are typically found in very different kinds of people.

I spent two hours with Field in San Francisco last week, and as entrepreneurial role models go, you couldn't meet a nicer guy. Neither of us was totally clear why we were meeting - Field isn't specifically targeting the UK market with his service, and I've not felt a burning need to speak with a printer since I last missed my production deadlines as a magazine editor in the 1990s. But Field has a fascinating tale to tell to anyone running their own business.

PrintingForLess.com was initially set up in 1999 at the height of the Internet boom as an online arm of Field's three year-old company, Express Color Printing. Many of the e-commerce start-ups of that era were more about style than substance, with snazzy web front-ends disguising a distinct lack of delivery capability behind the scenes. But Field wasn't a Silicon Valley techie - in fact, he'd previously run a car repair shop and an auto parts distribution business. And PrintingForLess.com was a true 'bricks and clicks' business, a web front-end to a traditional print operation - something that probably helps explain how it made it through the dot com crash.

Over the years, that traditional print business has become more and more unconventional. Take the role of 'Technical Service Representative', a position Field created in 2002. Working in teams of three, each TSR rotates their work between sales, customer service, order processing and technical pre-press print work. The combination of sales and service isn't unusual - lots of call centre reps are trained both to answer questions and upsell clients to other products. But adding the technical pre-press component to the mix is something else. The logic is obvious, however: if people spend time working hands-on in the print process, they'll be a lot better placed to help customers with their sales and service queries.

Not surprisingly, Montana isn't exactly awash with people boasting this kind of skillset, and each new employee is put on a 16-week training course before they come face-to-face with customers. Not everyone makes it. Despite an exhaustive interview process, Field reckons that in each class of twelve, one or two people will quit in the first six weeks or so. After that, the employee attrition rate is highest between eight and eighteen months, before slowing significantly.

As well as creating new types of role, Field has also broken the mould in partnering. Print economics are ferociously tough: margins are low, and to stay profitable you have to keep both your capital equipment assets and your human capital assets busy close to 100% of the time. That's not easy. So PrintingForLess.com follows the airline industry model and effectively overbooks its own machine capacity: unlike the airlines, however, it still meets its customer commitments by passing the work on to a network of printer partners. Work is advertised at a fixed price through a password-secured online system, and it's generally allocated on a first come, first served basis. The 25 partners like the idea because it soaks up their own excess capacity - and since they're only worrying about direct costs like ink and paper, they're also prepared to take a lower gross margin, which suits Field.

The partner model was initially greeted with scepticism by potential investors, who were concerned that PrintingForLess.com would lose control over quality. But despite the fact that it doesn't have a contract with its partners, the company actually exercises closer control over the network than many other collaborative relationships. It receives samples of every job, for example, and if partners don't meet the grade, they're put on a 'performance plan'. Ultimately, if a partner's not working out, the remedy's simple - the company turns off its password.

With 160 people in the company and growth last year of 27 per cent, the model clearly works. There have been mistakes along the way, of course, both in terms of people management and systems. But what Field demonstrates - and what the company has won multiple awards for - is that innovation comes in multiple forms, and sometimes from the unlikeliest places. You don't necessarily need to develop a new technology to make it big - new kinds of processes, partnerships and people management techniques can be just as effective.

By Keith Rodgers, Webster Buchanan Research