Retail  October 1, 1996

From surfboards to corporate IPO

BOULDER — Propped up against a wall of Tim Stancliffe’s office is a competition surfboard, signed by the managers of all the Kinko’s stores he oversees. Next to it are framed photos of a younger Stancliffe riding the crest of one of California’s famed Big Sur waves.

But these days, you’re more likely to see Stancliffe in a business suit rather than a wet suit. He views the change with a combination of trepidation and optimism.

Kinko’s, the company Stancliffe has worked for 21 years, is going public. The process has thrust Stancliffe and the three other Kinko’s founders into the very world that as 20-year-olds they vowed they would not be a part of.

Stancliffe, a private businessman who shies from publicity and has granted almost no media interviews, is being honored as the Entrepreneur of the Year at this year’s Esprit Entrepreneur ’96 awards banquet on Oct. 10.

The awards banquet wraps up a full day of company tours, a luncheon and educational workshops, as well as a good deal of business networking.

Kinko’s was founded in 1970 in Santa Barbara, Calif. by University of California-Santa Barbara grad Paul Orfalea. Orfalea, nicknamed Kinko as a child because of his curly hair, set up a “quick and dirty” copy shop designed to cater to college students who needed copies fast and cheap.

Five years later, he hired Stancliffe, then a 23-year-old U.C. Santa Barbara graduate. Stancliffe went to work for Orfalea because he knew he would never be what he calls the “stereotypical Business Bob.”

“It was like a grand crusade,” Stancliffe says. “None of us types (at Kinko’s) were good candidates to work for Xerox or IBM. We wanted to do it a different way. We don’t like command or control.”

But what separated Stancliffe and Orfalea from the ’60s flower children they grew up with was although they didn’t want to do business the conventional way, they still did want to do business.

“We weren’t an offshoot of the ’60s — power to the people and all that BS,” Stancliffe says. “What we wanted to do was respect the people. I believe with every pair of hands you get a brain and a heart.”

And that’s Stancliffe — a mixture of a brain and a heart.

“All my business friends think I’m very naive,” he says. “I trust people. I don’t want to lose my innocence.”

Five seconds later, he adds, “But I’m hard-nosed. I know where the bottom line is.”

So Orfalea and Stancliffe set out to treat their employees right, but at the same time to never forget, as Stancliffe jokes, “When you’re looking inward, your butt’s facing the customer.” Orfalea encouraged promising employees in the Santa Barbara shop to set up Kinko’s of their own, and financed them out of his pocket.

Orfalea suggested Stancliffe set up a Kinko’s in Boulder. Today, Stancliffe is president of K-Graphics, a privately held partnership headquartered in Boulder that owns and operates 90 Kinko’s Copy Centers in Colorado, Iowa, Kansas, Nebraska, Michigan, Missouri, New Mexico, South Dakota and Wisconsin.

Other ex-Santa Barbarans and their disciples own a total of 833 Kinko’s nationwide and 18 overseas. Altogether, there are 130 owners, each of whom operates a sub-chapter S corporation under the Kinko’s trademark. Decisions are made by consensus, encompassing everyone from Orfalea and Stancliffe to the brand new store clerk in Des Moines, Iowa.

That loose structure has served Kinko’s well, until recently. Five years ago, Kinko’s decided to, as Stancliffe puts it, “ride the giant wave up” of three megatrends: proliferation of the personal computer, corporate downsizing and digital technology.

In other words, Kinko’s chose to become more than just a copy shop. They began courting Fortune 500 companies that had decided to do away with in-house graphics and communications people. They set up a corporate program, with an account manager assigned to each customer, as a way for companies to outsource their printing and communications needs.

They targeted home-based businesses and fledgling entrepreneurs by buying PCs and offering them for round-the-clock hourly rental at local Kinko’s. They introduced color copying and fax and shipping services. They hired technically literate employees and paid to update existing employees’ computer skills.

And, most ambitiously, they embraced digital technology. In the last year, they teamed up with Sprint to offer a worldwide network of 150 videoconferencing sites, which allows companies at as many as seven different sites to interact via video. Six months ago, Kinko’s introduced Kinkonet, which allows a user to electronically send a computer file to Kinko’s, where it is produced, printed and then delivered from the Kinko’s nearest the document’s final destination.

“It’s a complete paradigm shift for us,” Stancliffe says. “The level of technical expertise has to be enormous. There’s a lot more up-front work.”

And a lot more up-front money. Stancliffe won’t list Kinko’s sales figures, but says the company barely turned a profit last year. Although it’s estimated Kinko’s holds about a 25 to 30 percent share of the $5 billion to $6 billion retail copy market, companies like Xerox and OfficeMax are making organized assaults on that market share.

Kinko’s also wants to expand, especially internationally, and has a target of 2,000 stores by 2000.

So Orfalea faced the inevitable. Kinko’s needed capital. Last summer, he chose New York investment firm Clayton, Dubilier & Rice to take a 30 percent, $200 million stake in Kinko’s. As a result, the company is planning to go public, potentially by the end of this year, but more likely in 1997.

The problem is those 130 sub-chapter S corporations. That’s where Stancliffe comes in.

Stancliffe is Kinko’s people person. Although he will be the company’s central region president when it goes public, he eschews the formal title. (“I want to be like the idea kind of guy — freewheeling. Does that exist in corporate America?”) His job for the last six months has been to try and roll up the S corporations into one company, in preparation for going public.

“Our strategy for rolling up business is to stay true to our cornerstone — sharing the wealth,” he says. For instance, Kinko’s plans to offer small shares of stock to each of the company’s 22,000 workers. Kinko’s already offers profit-sharing to workers, along with health insurance, vacation and sick pay for all full-time workers, and starting salaries above minimum wage — $6.50-$7 an hour in Boulder.

“This roll-up will be a real test for our principles,” Stancliffe says.

Stancliffe currently spends four days a week on the road, talking to and negotiating with the S corporation owners. In the process, he finds himself running smack into corporate America.

“We’re bogged up in regulation stuff. We’ve got more lawyers than Carter’s has pills,” he says.

Although Kinko’s may be going corporate, Stancliffe believes not only is it still important to keep the company’s commitment to its people, it’s also key to keep Kinko’s entrepreneurial philosophy intact.

“We’ve never been like Tom Peters — ready, fire, aim. We’ve always been ‘fire, fire, fire,'” Stancliffe says. “We still need to take big risks — we cannot lose that — but more calculated big risks.”

At the same time, Stancliffe recognizes, “20 years ago, we were a bull—- organization. We need to be better planners.”

As for Stancliffe himself, despite the current corporate headaches, he considers himself lucky.

“It’s important to have fun, and I’ve had a 21-year ride. I love going to work in the morning. Ultimately, I’d like to give that back. I’d like to mentor people in the community.”

Then he laughs and blushes. “God, that sound so pompous,” he says.

BOULDER — Propped up against a wall of Tim Stancliffe’s office is a competition surfboard, signed by the managers of all the Kinko’s stores he oversees. Next to it are framed photos of a younger Stancliffe riding the crest of one of California’s famed Big Sur waves.

But these days, you’re more likely to see Stancliffe in a business suit rather than a wet suit. He views the change with a combination of trepidation and optimism.

Kinko’s, the company Stancliffe has worked for 21 years, is going public. The process has thrust Stancliffe and the three other Kinko’s founders into the very…

Related Content