‘We just like going for it. We’re workers’
Monday, June 5, 2017
Earlier this year, Aron Priest and Andy Smith, joint managing directors and co-founders of the UK’s largest online trade printing business, Solopress, sold their circa £21m-turnover Southend-on-Sea operation to Onlineprinters, one of Europe’s largest online print firms.
In a classic tale of rags to riches – well, budgie smuggler-wearing press minder to doyen of the online print world anyway – Priest shares some of the lessons he’s learned on his and Smith’s journey from jobbing printer to one of the UK’s most admired online print businesses.
Darryl Danielli How did you get into print?
Aron Priest My dad, who works for me now, was a printer and so was my grandad – he’s still around, he’s 96 now. So, it was in my blood I guess. My dad was a hand planner and around the time I was getting ready to leave school, he had this brainwave that he would tell this company, who wanted him, that he would join if they took me on too.
Sounds like a good plan in theory?
Well, the second part of the plan was that at the last minute he would tell them he couldn’t join and, funnily enough, when he told them, they said ‘Well, we’re not having your son then’. So on the eve of my GCSEs, in 1988, I found out I didn’t have a job to go to. So, I got out the Yellow Pages and started calling local print firms and joined Del Print as an apprentice machine minder. But I wanted to be a planner, like my dad, because he’d told me to get into scanner operating.
Sounds like you might have dodged a bullet though?
Looking back now, I did. So I joined Del Print and they had a Multilith 1250 with a T51 head and they started to train me on how to run it. It was six months of absolute hell, trying to learn how to run two colour jobs – sometimes even four colour – on it. Then, one day, everything just clicked and I started to enjoy it. After five years at £50 a week, I joined Grainger House on £235 a week.
It was a no-brainer. But the conditions were awful. Then I got asked by Wednesday Press to [join them] and go to Germany to be trained on the first Heidelberg that was coming to this area. But I got a bit of a bad vibe about the business, so I didn’t go, but I said that I would go there at night and learn this new machine to keep my options open. Lo and behold, I’m working away one night and I look up and there are my bosses from Grainger House. So they come down and ask what I’m playing at. I explained it was my own time, I was just trying to advance myself and I wasn’t being paid. But they said to get used to that, because they were merging Grainger with Wednesday. The boss of Grainger put his arm around me and said to me ‘Look around, I don’t need you so much anymore’ and that was the kick I needed to start my own business.
So that’s how it all started?
I spoke to a few people, found an old unit down the road that was £1,000 a month and bought an old Solna.
How did you finance all this?
I went to the bank, with no real business plan, told them what I wanted to do, and explained that I had a promise from my father-in-law, who had a business selling auto parts, that he would give me all his printing. But in the end he didn’t, he stayed loyal to his old printer and not his son-in-law – so I opened with zero customers.
Unfortunately, I still have to talk to him now, but I’m sure he regrets it somewhere in his cold, cold heart [laughs]. I’m joking, he’s a lovely man, but it was tough. I used to ring myself to make sure the phone was working. My asset list, if you could call it that, was a £300 Wohlenberg guillotine and an £18,000 Solna 425. But the Solna needed £6,000 of work, so an engineer I knew, Andrew Clarke, a really lovely guy, said he would do the work and I could pay him six months later.
But it must have been a scary time: mountains of debt, a broken press and no work?
I was devastated. On the day I opened this bloke popped his head round the door and asked what I was doing, so I told him I was starting a print company. He asked if I had any customers and when I said no, he said ‘Is there something wrong with you?’. Well that was Andy Smith, who became my business partner [at Solopress]. He was in the unit next door in a company called Autoprint, so over time we became friendly. He was waiting for an insurance pay-out, to get back into business, so one day he asked me ‘Do you want me to cut some grids for you?’.
It was still tough though, on your own, even with Andy’s help?
I just worked and saved. I used to sleep there sometimes. It felt like I never went home properly for the first couple of years, which was made worse by the fact that I started the business the same year my first daughter was born. I shaved all my hair off, so that was one less thing to worry about and I used to work in swimming trunks because it was so hot. It was nuts, but no-one saw me...
Apart from Andy?
That’s true, but he already thought I was nuts.
When did you and Andy start working together properly?
Andy’s story is that he started out in the early 1990s, working with his dad. They had a Multilith in their garage and then moved into a shop; they got their orders from Exchange & Mart, but Andy’s forte was computers and he was doing all the artwork. But they never really moved out of black and white leaflets. Whereas all I knew was four colour. So we combined our knowledge and skills, and one day he said ‘Seeing as I’ve done all this cutting for you, will you let me do your film?’. So I stopped using the place that did my film. Then in 2003 I bought my first factory on this site, Unit 4, 185m² for £54,000.
Which sounds cheap even for then?
[Laughs] Well, when I was walking around with the estate agent I got the first whiff of why – we’re near to the council dump and sewage works. It’s a million times better now, but back in the day it was truly awful. But, before I moved, Andy said anywhere I was going, he was going. So, he moved with me and I became his landlord.
But you were still running them as separate businesses?
Yes, but it was growing so quickly that Andy started do all [pre-press]production and I was solely on the machine. We had a deal that when Andy’s work became 50% of my turnover, we would merge. So when that happened, in around 2004, that’s what we did. It was then that he told me that he had a silent partner, Greg Ralph, so the three of us got together and created AGA Print [which traded as Solopress]. At that stage we weren’t online, but Greg was a great salesman.
So when did you get your first online order?
2005. And we went from 35 staff to 65 really rapidly. It got crackers; we were just growing and growing, at least 30% growth every year. Then in 2008 the credit crunch happened, and it went down to around 12%.
Still not bad. What was driving the growth?
It was purely organic.
So you were riding the crest of the online wave really?
I suppose. When we started online there weren’t many people doing what we did. So the click charge was super low, but if we knew then what we know now, then we could have smashed it – we could have been the Flyeralarm of England.
Was most of your business around London in those days?
Predominantly, but now it’s all over the British Isles. London was our hub then though, that’s why we had all the vans. I organised the deliveries for the drivers; I would get in 5am, write all the deliveries out, help put the boxes on the vans.
But it sounds like you were working as hard around that time as you were when you started?
I probably was, we both were. Up until 2012 it never stopped, because it was our baby and we couldn’t let go. It wasn’t until around 2012 me and Andy came off the factory floor.
So recently? How big were you in 2012?
Around 100 staff.
But you don’t mean you were still on the machines until then?
Not print wise. But we were in the mix with the guys – because we knew how to cut, fold, stitch, make plates, do artwork, print we just jumped in wherever we thought we were needed. I’m not going to lie, I don’t think we could do that now.
What changed in 2012 then?
Well, we bought Greg out, because the business didn’t need a salesperson by that stage. He was visiting customers, opening accounts up, but in truth it was for next to nothing really because by then the focus of the business was online.
Were you all equal partners at that stage then?
I owned some of the factories, the business owned others, but we were all equal in the business itself. So we bought him out. But the accountant we used at the time had been deferring the [the tax on the] units we had been buying, so that year we also got hit by an Inland Revenue bill of just shy of £1m and this was just six months before we bought Greg out. Our bank, NatWest, to their regret, wouldn’t lend us the money. So, I remortgaged the house, we bought Greg out, and got a new accountant. The business really started to fly after that, and it showed me how important it was to make sure that you had the right accountant in your corner. Because you can be the best business person in the world, but if you really want to grow you have to make sure there are no weak links.
£1m, nightmare. Have there been any other scary times?
Yes, we nearly went bust.
When Woolworths went under, we got knocked by a firm called DSR, because they got knocked by Woolworths. In one week alone at the end of 2008 we got hit for £100,000.
Because I suppose when you get the size you were, you can’t be forensically over every part of the business?
You really can’t. 2012 was when we realised that we couldn’t carry on micromanaging. It was the most difficult thing and, yes, I know everyone says don’t work in your business, work on it, but when it’s something you’ve created that’s really tough. But by coming off the floor in 2012, we immediately saw the fastest period of growth in our history.
I was going to ask you about that, looking at the growth trajectory of the business – it almost looks like you were running it with a view to selling, was that always the plan?
No, not at all. We just like going for it. We’re workers, we’re not from university – we’re a press minder and a graphics guy.
So when did you first think about selling the business?
A couple of months after we bought Greg out, we got a phone call from Michael Green.
As in Tangent chairman Michael Green?
I don’t know how he got my number, but he called me on my mobile. He invited me and Andy to meet with him at his Mayfair apartment. So we went along and he told us that he wanted to buy the business. He invited us to go up to Ravensworth in Newcastle to see their production and meet the team properly. I have to say that was probably one of the best things we ever did, because Andy was taking notes all day on how they did things. Then when we got back we looked at what we needed to implement or change and then, almost immediately, we took off again as a business. In the end, after around six months, the deal fizzled out. But that was the first time we had ever thought of selling.
But it got you thinking?
For the first time it made us realise that we needed an endgame. Everyone kept asking us what it was and we always just said ‘we just love going for it’, but we started to realise that wasn’t good enough.
At that stage were you just focused on ploughing the profits back into the business to fuel growth?
That was one of the mistakes we made over the years, we just keeping paying our loans back as quickly as possible. We just kept bullying our accountant into clearing our debts. He was only a small accountant and, we basically outgrew him. Looking back we needed someone to push back and tell us what we should be doing, which is exactly what the new accountant did.
What else did you learn from the sale process though?
If I can give one piece of advice to anyone looking to sell their business it would be this: learn about EBITDA, learn how you can improve it, find out how to capitalise your business.
So how were you running the business up to that point?
I promise you, it’s laughable, we just used to have our accountant come in once a year and we would sit in front of him and ask him ‘how have we done?’. And he would say ‘really well’ and we would just say cool, brilliant and go back to work.
But you knew you were doing well?
Of course. But we never had any money in the bank, because we were laying out for another unit, or another machine, every time the wages got paid out we had a sense of relief and that was probably the case right up to 2012. It was then that our new accountant said we had to change the mechanics of the business – learn that paying things off quickly isn’t always the best thing and that loans can be good, cash is king. And after Michael Green showed an interest we started to get lots of calls about selling, which was when we met Ben Thorne of [M&A advisors] Altium, and he said he could put people like Cimpress in front of us, which made our ears prick up.
Was this around the time Cimpress was buying lots of companies?
Yes. So we signed up with Altium and when you put pen to paper it’s a big deal, because you’re admitting to yourselves that you’re ready to sell.
What changed your minds?
Our ambition I guess. To take this company to be international and, well, ‘mega’. We’re a printer and an artwork guy, so we knew we needed some strength in depth – because we love this company and we want it to keep growing and we want to protect the staff that got us here. Altium put us in front of Cimpress and Onlineprinters. The Cimpress team were really nice, but we really hit it off with Onlineprinters, they were just like us – but 10 times bigger. So we went exclusive with Onlineprinters; went into due diligence and then it just stopped.
When was this?
2015. Then, later, we saw that TA Associates had sold Onlineprinters to [another investment firm] Bregal, so we were a bit deflated, but we’d been there before so we dusted ourselves down again and decided that this could be a good opportunity. So over the next few months we thought if we’re going to go for it then let’s really go for it and consolidate our production and look at getting some B1 machines.
You’re B2 at the moment?
We have seven B2 litho machines as well all the iGens. Anyway, so while I was looking at our options I called Michael [Fries, Onlineprinters chief executive] and asked if we could come out to Germany and have a look at their operation and workflow to see if B1 was right for us. And he was more than happy for us to do that. So we went over and Michael told us how gutted he was that the deal hadn’t happened. We said it was no problem, and that we were looking at marketing ourselves again in April as there had been some other interest, he said ‘Why April, why wait?’. And then said ‘Why don’t we do it now, we wanted to do it before so why not do it now?’. So after four months of accelerated due diligence we signed a deal on 10 March this year.
Was one of the reasons you sold because you both felt you had taken the business as far as you could on your own?
I don’t know, that’s a really tough question. If you’re running your own business then you have to believe in your heart that the sky’s the limit. But if I’m being realistic, our new owners have much deeper pockets than us. It’s a really interesting question though, I believe that with the right people behind me and Andy then we could have maybe taken it further, but when we started talking to Onlineprinters it just felt right, it was a really good fit.
Do you think now was the best time to sell, is the online print market at its peak?
I can probably only answer that in a few years’ time, but the multiples were good and it felt like the right time for me, Andy and the business. And even in the past few months, since the deal, we seem to be growing even faster, and we’re not even starting to feel the benefits of being part of a larger group yet. I think in the next few years the industry will change, more traditional companies will, sadly, go bust, and more people will look online to place their print. So it’s a great space to be in.
But it must be a difficult space too, because it’s such a price sensitive market?
Our margins are good; we know that we’re one of the cheapest around and everything is price driven, but you still need to maintain customer service, the quality of the print and make sure you hit that timed delivery – otherwise you can be as cheap as you want, but people won’t come back. Customer retention is critical, we’re strong on reviews: we’ve had 10,000 Trustpilot reviews and we’re still holding a 9.3 score. It’s about being a trusted brand. It’s like before you came in, I needed to order something, so rather than mess around to see where I could get it cheapest, I went on Amazon, Primed it and I’ll have it tomorrow – knowing that it probably was there or thereabouts the cheapest place. It’s the world we live in now; where trust is critical and speed and price need to be givens.
So you want to be the Amazon of print?
People expect quality, low prices and good service now. I spoke to an entrepreneur when I started out asking for advice and he said ‘Son, it’s about quality, price, service – if you’re missing one of those it all falls down’. And it’s true.
Was that the best advice you ever received then?
One of them, but I think the best was ‘listen to your business’. I used to say, I don’t understand – what do you mean? And the guy clearly thought I was some kind of muppet – it took years before I realised what he meant, and now I live by it.
Any other pearls of wisdom?
Stick to what you know, but don’t be afraid to try new things. Which sounds mad I know, but kind of makes sense. We got into wide-format a while ago and things like roller banners are flying out now. But not everything succeeds – we started a web design company called Soloweb around 2013 and shut it down a year later as it was losing £5k a week. It was an area I didn’t understand – that was a valuable lesson. Customers encouraged us to move into web design, but to be honest we were flying at the time and if they had said they wanted us to cut their hair we might have opened a barbers, that probably would have been easier to make money out of [laughs].
So you still think there’s a lot of potential growth in online print in the UK?
And do you have the capacity to grow on this site?
We do, because we bought Unit 3 just before the sale went through. It’s being renovated right now and that’s another 1,700m².
Will you just be spreading out though or putting some extra machines in there?
I would like to put some new machines in there, I think we could fit another three [Heidelberg Speedmaster] XLs in there.
Have you not made the B1 move yet then?
No we haven’t, because B2 still suits us because of the speed – you don’t have to wait for the B1 grid to fill up. Our model is built on speed, which is where we’re a little bit different from Germany. But you asked about potential growth, there’s no reason that we can’t grow to £80m or even £100m in this country, still nowhere near the size of some of the German companies though.
Final question, you mentioned the endgame earlier, what’s the new endgame?
To continue to grow this company and, by association, Onlineprinters and... Watch this space.
That sounds a little like ‘we just love going for it’ again?