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Royal Farros wants to change the 500-year-old printing business. Trouble is, so do a bunch of copycats.
By Chana Schoenberger
ROYAL FARROS IS A SLY practitioner of creative destruction. He bought and built up T/Maker, the desktop publishing software company behind the digital graphics package ClickArt, then sold it off for a reported $25 million in order to start the next minirevolution in publishing--eliminating the so-called prepress stage.
Ever since Gutenberg, printers have had long and sometimes unpleasant conversations with their customers about where the type is supposed to go and who's responsible for the typos. Farros' Iprint.com aims to finesse these problems by having customers design their own stationery, business cards and promotional materials on-line. They can choose from a range of colors and fonts--photos can be easily uploaded--all without installing desktop publishing software. Clients do their own proofreading and Iprint sends the work electronically to the printer.
Absent prepress labor, Farros says he can shave at least 25% off printing costs, with savings of up to 50% for small-run jobs that many shops turn down. He has cut his reprint-due-to-error rate to 1%, compared with an average rate of 10% to 15% for many short-run mass-market printers, which usually redo botched jobs for free. Those savings he passes along to the customer. Examples: $43 for 500 color business cards (versus $80 at a print shop); $30 for 10 customized memo pads (compared with about $45).
"We're pioneering a new part of e-commerce," says Farros, the 40-year-old chief executive. Not for long. Suddenly a half-dozen or so Internet competitors--like ImageX.com and PrintOnTheNet.com--have sprung up since he launched his Redwood City, Calif. firm in 1997. Doesn't take much imagination to see why: On-line prepress could strip a lot of costs out of the $23 billion annual market for small-company and consumer printing goods--from corporate letterhead to advertising giveaways like logo-emblazoned boxer shorts.
So what makes Iprint.com--which last year lost $2.2 million on revenues of $1 million--a contender? For one thing, a total of $32 million raised by Softbank, AT&T, Intel and a host of top venture capital firms for about 50% of the company. For another, the company relies on outsourcing for printing and shipping; Iprint.com runs the Web operation but doesn't own a single press. (By contrast, publicly traded PrintOnTheNet.com has spent $215,000 buying two commercial printers.) Instead, Farros charges customers a 25% to 50% markup on the printers' prices.
To hedge its bets, Iprint.com has supplemented its branded Web site with a series of partnerships. Retail chains like Kinko's, Sir Speedy and OfficeMax have contracted with Iprint.com to operate private-label ordering systems on their own Web sites in exchange for an undisclosed cut of each transaction. It's a strategy Farros hopes will make Iprint.com "the Visa of the printing world," with a hand in every on-line printing order.
A challenge that will only get tougher. "Iprint is not unique," insists Linda L. Wilson, a spokeswoman for the National Association for Printing Leadership, an industry trade group. "Even well-established commercial printers are starting to come up with Web sites like this."
Which is why it sure helps to have believers with deep pockets. "There
is nobody close to having a system like Royal has," says Deepak Kamra,
general partner at Canaan Partners, the Menlo Park, Calif.-based venture
firm with the largest stake in Iprint.com. "It's a huge market and
he has the first-mover advantage."