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Company Perspectives:

Our primary objective is to take care of our customer. We are proud


of our ability to serve him or her in a timely and helpful manner and
to provide consistency and high quality at a reasonable price. We
develop long-term relationships that promote mutual growth and
prosperity. We value initiative, productivity, and loyalty, and we
encourage independent thinking and teamwork.

History of Kinko's, Inc.


In 1995, Kinko's, Inc. was the leading retail provider of document
copying and business services in the world. Kinko's had more than
830 outlets in early 1996, located in every state of the union and
four foreign countriesCanada, Japan, South Korea, and the
Netherlands. It was providingphotocopies, quick printing and
finishing services, electronic document distribution and production,
mailing services, and time rentals on personal computers, usually at
any hour of the day or night. About 145 locations had a special room
for conducting videoconferences. A private company, Kinko's does
not release its sales figures.
Serving College Campuses in the 1970s
Kinko's Copies Corporation was founded in 1970 by Paul Orfalea,
who gave the company the nickname given to him for his curly red
hair. Self-described as mechanically inept and dyslexic, he was a "C"
student at the University of Southern California, from which he
graduated in 1971 with a degree in finance. By then Orfalea had
observed, "If you can't fix things and can't read things, then you
can't get a job." He apparently never looked for one, later telling
aForbesinterviewer, "I'm sort of unemployable. I'm basically a
peddler."
Seeking something to sell, Orfalea fixed his eye one day on the copy
machine in the university library. Applying what he had learned from
a marketing course that studied product life cycles, he decided,
"This thing here is going to go for a long time." With funds from a
$5,000 loan in 1969 from the Bank of America, cosigned by his
father, he leased an 80-square-foot former hamburger stand in Isla
Vista, near the campus of the University of California at Santa
Barbara, and rented a smallXeroxcopier, charging customers four
cents a page. He and a few friends also sold about $2,000 a day

worth of notebooks and pens out of the makeshift store, wheeling


the copier out on the sidewalk when the premises became too
crowded. He supplemented his income by going from one dormitory
room to another in the evenings, hawking his wares from a
knapsack.
When this business proved a success, Orfalea decided to open other
stores on other college campuses. Since he did not have funds to
finance them and did not want to franchise them, he formed
partnerships with owner-operators, retaining a controlling interest in
each. These partners were other students who scouted locations
along the West Coast, sleeping in theirVolkswagenbuses or fraternity
houses. Publicity consisted of flyers stuffed in mailboxes; orders
were taken and delivered personally.
Some of these Kinko's pioneers still were owner-operators many
years later. Jim Warren was a surfer who met Orfalea at a keg party
and was persuaded to take the enterprise to the Southeast. He and
his wife rented a small storefront near the University of Georgia in
1978, where they kept a fire extinguisher handy because the copier
they leased tended to burn paper. By 1995 Warren was president of
Southeast Kinko's Inc. and a part owner in about 120 Kinko's
branches from Delaware to Florida. Tim Stancliffe opened the first
Midwest Kinko's in a 175-square-foot space near the University of
Colorado. In 1995 he was president of K-Graphics Inc., which owned
and operated 90 Kinko's outlets in Colorado, Iowa, Kansas, Michigan,
Missouri, Nebraska, New Mexico, South Dakota, and Wisconsin.
By the mid-1970s, Kinko's was providing custom publishing
materials for colleges, an innovation extremely popular with college
professors. By the end of the decade, the company had 80 stores,
averaging 400 square feet in space, located primarily near colleges
and universities.
Reaching Out to Small Businesses in the 1980s
By the early 1980s, Kinko's Copies was no longer content simply to
copy documents for students. "At the time, no one was offering a
low-end alternative to typesetting in the document duplication
market," a marketing executive for Kinko's Service Corp., the chain's
support arm, told a Computer World reporter in 1987. To exploit this
emerging business opportunity, the company began to install
typewriters in its shops.

This decision was soon rendered obsolete by the spread of personal


computers. Kinko's then considered buyingIBM PCclones, but opted
for Apple Computer's Macintosh in 1985 because it was easier to
use by customers who wanted to create documents without help
from Kinko's employees. Another Macintosh advantage was that the
documents created could be reproduced on Apple's high-quality
LaserWriter printer. By mid-1987 almost one-third of Kinko's roughly
300 outlets were offering desktop publishing services. Kinko's also
began selling university-developed educational software for the
Macintosh and Apple II computers in 1986.
In 1989 Kinko's Graphics Corporation, operator of about 100 of the
chain's copy shops, was slapped with a copyright-infringement
lawsuit by eight textbook publishers for copying book segments of
as long as 110 pages without permission. A federal judge found the
company guilty in 1991 and assessed $1.9 million in damages and
court fees. Kinko's Service Corporation then agreed that none of the
stores would photocopy textbook anthologies in the future without
permission for all copyrighted material.
Kinko's opened its first 24-hours-a-day, seven-days-a-week, outlet in
Chicago in 1985. According to the president of Kinko's of Illinois, the
company made this decision when people "started knocking on the
glass after hours, begging us to let them in." Soon more of Kinko's
storeswhich numbered 420 at the end of the decadewere
operating around the clock to accommodate people who had to
produce documents such as manuscripts, screenplays, opera
librettos, resumes, posters, fliers, and wedding invitations. A 24hour Kinko's was installed in the lobby of Chicago's Stouffer
Renaissance because foreign executives staying at the hotel wanted
to communicate across time zones with headquarters at home.

By mid-1994 almost all Kinko's outlets were open all the time.
Manhattan's five stores filled at night with students and business
people who rubbed shoulders with punk rockers and anarchists
designing, copying, and faxing posters. Each of the five had its own
cat as amascotand dispensed coffee from a machine at no charge.

"Your Branch Office" in the 1990s


The Kinko's of the 1990s had graduated beyond a low-tech service
for college students. The company began opening stores averaging
7,000 square feet in size in suburbs and business areas. These
stores aimed to attract small-business owners seeking more
advanced document copies, which were sometimes oversized, in
color, or bearing sophisticated graphics. In a nationally advertised
television campaign begun in 1992, small-business people were
urged to use Kinko's as "your branch office."
By 1994 Kinko's had added sophisticated color copiers, high-speed,
high-volumelaserprinters, and facsimile machines, leasing rather
than buying in order to conserve cash and avoid commitment to
equipment that rapidly became outdated. Kinko's shops also began
leasing conference rooms. In 1995 only 15 percent of Kinko's sales
were still believed to be college-oriented, with large corporations
accounting for another 15 percent, miscellaneous community retail
use for 10 percent, and small or home-based businesses for 60
percent. The number of Americans estimated to be working from
home in 1995 was 40 million, up from about 28 million in 1989. The
number of businesses employing between five and 100 persons
grew by almost 40 percent between 1980 and 1994. Typically, such
customers prepared documents in their offices, then brought them
to Kinko's for the professional look made possible only by using
quality printing equipment.
In 1993 Kinko's introducedvideoconferencerooms to 100 of its 725
outlets. Bidding for trade from entrepreneurs, telecommuters,
traveling business people, and local representatives of corporations
based elsewhere, the company made a huge investment in this new
technology. For $150 an hour, customers were offered a room with a
large-screen television monitor, avideocassetterecorder, a camera
with wide-angle and zoom capabilities for focusing on a group or
individual, and a device resembling an oversized television remote
control. U.S. Sprint provided the equipment and high-speed
telephone lines for the voice-picture-data network. Kinko Service
Corporation's president said he believed that families might take
advantage of a half-price holiday promotion to use such facilities for
"video reunions."

By 1995 new Kinko's stores were, on average, four times larger than
the ones they replaced. This was due in part to the space needed for
an ever-increasing inventory of high-end service equipment. (The
Xerox 5090 high-speed color-printing machine, for example, nearly
filled an entire room.). The company also installed Kinkonet, a
system enabling companies to send in orders by computer, with
Kinko's distributing the finished product, such as a training manual,
to points all over the United States.
A Kinko's outlet typically offered the following services in 1996: full
and self-service copying, including four-color copies; desktop
publishing, including laser typesetting and printing; onsite
Macintosh and IBM computer rentals; office supplies and stationery;
finishing services such as folding, binding, collating, and stapling;
custom printing services; facsimile transmission; and mailing, pickup, and delivery service. FedEx drop boxes were installed in all
Kinko's locations. Some outlets also offered one-hour photo service
and videoconferencing. Kinko's considered customer service of such
importance that each location was being "mystery shopped" on a
regular basis, with anonymous shoppers grading the store on 29
different points of customer service and store atmosphere.
A New Direction for Kinko's
Even while Kinko's retail niche as a full-service copy shop was
secure, new marketplaces were needed if the company wanted to
continue to grow and prosper, and especially if Orfalea was to take
his company public. During the latter half of the 1990s, Orfalea
began shifting Kinko's marketing strategies and re-organizing its
corporate structure.
His new business plan called for actively soliciting business from
Fortune 500 companies. A newly created outside sales force hit the
ground running, knocking on company doors across the county in an
effort to bring in new corporate accounts.
In order to raise capital for this expanded growth and to keep outlets
outfitted with the latest office technology, Orfalea took a radical
step in 1996: selling a one-third stake in the company to Clayton,
Dubilier & Rice (CD&R), a New York City-leveraged buyout firm, for
$220 million. Up until this time, Orfalea had sole ownership in
approximately 110 outlets and a stake in all others, which in

essence were joint ventures held in partnership with 130 owneroperators.


The investment by CD&R served as the catalyst for Orfalea to
restructure the company. The process began by rolling up what was
often described as a "hodgepodge" of vastly different partnerships
into a single corporate entity and centralizing all management
functions at Kinko's headquarters in Ventura, California. Corporate
conformity quickly took hold as all Kinko's retail outlets were made
to look like each other. The different, sometimes funky, dcor of
individual outlets was replaced with a uniform appearance;
moreover, all Kinko's would offer the same menu of services.
Other changes were less visible, but no less significant. For the first
time since its inception in 1970, a board of directors oversaw
Kinko's. In mid-1997, Orfalea was replaced as CEO by Joseph Hardin
Jr., former president and chief executive of Wal-Mart's Sam's Club.
Orfalea remained involved with the company's management,
quickly embracing his new duties as the chairman of the board. It
required changing his focus from the day-to-day operations to what
he describes as "company ambassador" responsibilities as Kinko's
continued to expand overseas. In a rare interview withYour
Companymagazine, Orfalea reflected on the change as a positive
one. "Now that I'm not as wrapped up inside the business, I can go
outside and see the bigger picture. I can observe how Kinko's fits
into society and the global economy. Besides trying to figure out
what foreign markets we should tap, I can constantly strategize and
worry about how viable the organization will be in five years. That's
the important stuff."
Into the Next Century: Sixteen Billion Copies a Year and
Counting
As the 1990s came to a close, Kinko's held its own as the world's
leading provider of visual communications services, document
creation, and copying. In 1999Fortunemagazine selected Kinko's as
one of the "100 Best Companies to Work for in America," an honor
Kinko's would also earn in 2000 and 2001. One of the chief reasons
for making the list, according toFortune,was Kinko's philosophy of
equality for its employees, such as the fact that each of the 1,000plus branches shares its profits monthly among its co-workers. The
company also received accolades for its efforts to conserve. In

addition to using energy-efficient lighting in accordance with the


EPA's Green Lights program in nearly all of its U.S. branches, 90
outlets in 10 states are also powered by renewable resources. For
example, in the year 2000, six percent of Kinko's energy demand
came
from
renewable
energy
sources
such
as
solar
arrays,windmillfarms and geothermal plants.
In order to boost its Internet presence, Kinko's bought a majority
stake in Liveprint.com, a small Web company based near
Washington D.C., in early 2000. It invested an undisclosed amount
in the 65-person Liveprint.com so it could "bring the power of the
Internet to small business and home offices," creating what the
company likes to call its new "clicks and mortar business center
solution." The result is Kinkos.com, the virtual Kinko's, which is
hoped to coexist nicely with its physical brethren.
With annual revenues estimated at about $1 billion and 1,100
locations across the United States and worldwide, including
branches in Australia, Canada, Japan, the Netherlands, South Korea,
and the U.K, many speculate that Kinko's is ready for its next big
step: an initial public stock offering. As of May 2001, Kinko's was still
a privately held company, but things can change quickly, especially
since dot.com IPOs have fallen out of favor with investors. Plans also
continue for further branch expansion. CEO Hardin reports that
Kinko's is opening about 100 new branches a year. Currently, it is
estimated that Kinko's produces 16 billion photocopies a year. That
number will surely continue to rise as more of the world becomes
hooked on Kinko's 24-hour office services.
Principal Subsidiaries:G & S Corp.; K-Graphics Inc.; Kinko's
Graphics Corp.; Kinko's Northwest LP; Kinko's of Illinois; Kinko's
Service Corp.; Southeast Kinko's Inc.
Principal Competitors:Copy Max; Kwik Kopy; Mail Boxes; Etc.;
Office Depot; Staples.

Chronology

Key Dates:

1970:Paul Orfalea opens the first Kinko's in Isla Vista,


California.

1975:Kinko's opens its 24thbranch.

1979:Kinko's has 80 branches in 28 states.

1985:The first 24-hour Kinko's outlet opens in Chicago.

1989:Kinko's has 420 branches across the country and in


Canada.

1991:A Federal judge finds the Kinko's company guilty of


copyright infringement in a lawsuit filed by eight textbook
publishers.

1992:Kinko's opens international branches in Japan and the


Netherlands.

1996:Over 850 Kinko's branches are in operation worldwide.

1999:Kinko's is selected byFortunemagazine as one of the


100 best companies to work for in America.

2000:The Internet site, www.Kinkos.com, is launched, creating


a new "clicks-and-mortar" business division for the company.

Additional Details

Private Company

Incorporated:1970 as Kinko's Copies Corp.

Employees:25,000

Sales:$2,000 million (2000 est.)

NAIC::514210 Data Processing Services;


Business Services (including Copy Shops)

561439

Other

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