Following a torrid period when his beloved Printed.com could have ended up in the arms of another, founder Nick Green looks back on an “exceptionally hard” year, while looking forward to bigger and better things for the £17m-plus turnover business in 2017.
Jo Francis Remind me, how did you first get involved with print?
Nick Green Michael [Green, Tangent Communications chairman, and the uncle of Nick and Tim Green] owned a business called The London Digital Printing Group, which he bought as an investment in the 1990s. It was a small, short-run on-demand printing business. I think it was one of the early Indigo adopters and it moved down that digital path. In 2002, Michael approached Tim and I and asked us whether we were interested in going into business together and taking over the day-to-day running of this business. We thought about it and decided to take the plunge.
And that was appealing, even though you were both doing trendy internet-based things at the time?
It was an exciting opportunity to try and build something, and have a bit of ownership as well. When I look back on it, very early on I remember being invited to an event by HP, where there was a talk about how data was starting to change the world of print. The idea of personalisation was exciting, and it began to be about where we could take the business.
So, fast forward to where we are now… obviously this has been an eventful year. When did you and the other directors decide it was the right time to take Tangent private? How did it come about?
It wasn’t a particular moment in time. Obviously AIM had gone through quite a bit of a roller coaster where lots of people were de-listing or going private. So I think the notion will have come up a number of times over the years. And in particular the share price had fallen as low as it did, sometimes these things almost surface by themselves. It became the most logical next step.
It just sort of evolved?
I think I would say it did, yes. We’d had shareholders who’d asked us that in the past. Up until February/March 2016 it hadn’t seemed the right thing to do. And then it did become the right thing to do.
And the background to that is a period of disappointing results. Tell me about that.
There’s no doubt the business didn’t perform as well as hoped. There are definitely different pressures when running a private company. You can make decisions differently when your news cycle is not pressured by announcing what you’re doing every six months. And there was a period of time when all of these things were on our side – the share price was 17p back in 2007. Clearly there were things that we could have done better in the business, but at the same time you can’t ignore the fact that the profits were not there. And once you fall into those AIM cracks it really can bounce you around.
I have to ask you about Goodprint. That acquisition, in 2012, seems to have been a pivotal moment. It was such a successful firm and so profitable and you paid so much for it.
In the end, I would say that Goodprint had historically been built around a low price coming in and a high price coming out, a bit like you saw with businesses like Ryanair, EasyJet and even Vistaprint. And a lot of people wanted to change that environment. If you remember Vistaprint went through a massive change in their business model. And we didn’t do that fast enough at Goodprint and it impacted its sales, and the costs per click on Google were particularly high. And in the end it was like a perfect storm of things that were moving against us. Second, we learned that it was very consumer oriented, so the time it takes from that first to second purchase is very long, so you have a challenge to your business that way. It just didn’t go the way we hoped.
Back to taking Tangent private. Did you have any inkling there could be a rival bid?
It’s always something you consider. I feel very passionate about the business and you know it might appeal to other people as well. But our shares had been low for some time and we hadn’t had any approaches. It didn’t seem like anyone would be waiting.
And then there was the hostile approach from Writtle. What was that whole period like?
It was obviously an uncertain period. We knew they were a serious company that had the potential to follow through with what they were looking to do. And we were very clear that we didn’t want to lose the business either. So in the end it would come down to the shareholders.
Is is helpful that Michael is also a psychotherapist? Were you able to lie down on his couch at any point?
No-one was lying down! It was all of us sitting together looking at the business and working together. It’s something we all took very seriously and considered very carefully.
And you won the day. It was an amazing show of faith for Michael to stump up the best part of £12m.
Both Tim and I have been involved in Tangent since the very beginning and been shareholders throughout. We’ve both invested money – we raised money to buy Ravensworth and for Goodprint. This was no different. The money that funded the acquisition, both Tim and I participated, as we have in the past. We’ve always put our money into our careers, it’s never been solely Michael. It would be wrong to say that he is not the majority investor, of course he remains that. But we both invested in this.
How involved is Michael?
He’s always on the end of the phone, keen to talk, give advice and his view on things. We don’t have the same structure now as a private company so you adapt.
And under that new devolved structure you have a complete focus on the Printed.com side. What are your plans for the business?
2017 is really going to be quite a pivotal year for us, it will start with the launch of our new website. Not just redesigning the site, we’re also rebuilding all the infrastructure so we’re going to be launching our own API, which will be a global part of the company. It will have some really exciting technical features where people are going to be able to call off individual components and bolt them into their own APIs. So we’re super-excited about some of the technical advancements we’ve been working on, we’re testing it with beta customers now.
Will that go live in early 2017?
Yes, in the first quarter, so that’s a very big step for us. The second thing we’ll be doing is launching our new site. There’s going to be some new features on there, and one we’re really developing at the moment is all around growing our customers’ businesses. We plan to bring a completely new way for customers to shop and buy designs – almost a marketplace. Our plan is to have a more ‘professionals/trade’ side of our business and we are very much focusing on how we can grow that side of our customer base. We’re also building multi-currency multi-language so the 2017 roadmap involves expansion to other contries.
You don’t do that at the moment?
We ship to other countries, we don’t print or market in other countries but we’ve been building up a network over the past six months. And we plan to bring that into 2017 where we have found a partner for North America, for India, for Australia and obviously Europe we’ll run out of Newcastle. We see that footprint coming on line in 2017.
It’s been a really busy year for you.
For me this year has been an exceptional amount of work going into rebuilding a new fully mobile site, with new features and new structures around it that will be the bedrock for the coming years. That’s what I’m really excited about.
Do you do all your own production?
When we first started the business we were purely digital printing but today 10%-15% is non-digital. And one of the routes we’ve gone down is starting to work with partners. So I believe we’ve got a fast-growing online business with more and more customers looking for a wide product mix. The way I want to develop that is to go to partners who are better at handling their specialist areas, whether it’s packaging, laser cutting, long-run printing or special finishing techniques. Basically go to them and say ‘I want to drive volume into your plant, I want to team up with you. Can we link our APIs together or work with you if you don’t have them?’ Our benefit is the speed at which we can bring on big new product areas. We can add their products straight into our ordering wizards.
That’s your special sauce then?
The way we designed and built the new website will allow us to bring new product extensions quickly into the new site. That was a goal from the beginning. In the early days if we wanted to, say, add a new photography collection it would take three-to-six months to design and develop. I want that to take weeks. That’s the goal of the new site. It’s exciting.
How will you balance developing something so comprehensive that’s also easy-to-use for customers?
I had a fascinating experience a few weeks ago. We did some user testing and did eye tracking measurements on the new site, seeing how quickly people got from A to B. It was the most fascinating experience. The goal was to see whether our new designs allow customers to get through that process, super-fast and super-easy. You can do quite a lot of pre-testing to build up your confidence that what you’re building will work. You’re right, will we have a bigger website, yes. But hopefully it will almost feel smaller because of the way we’ve put it together.
I can think of some websites that seem to have become too big, it becomes confusing and difficult to use them. How do you keep it manageable?
I still to this day get all the emails that come in to our Printed.com ‘contact us’ query page. It allows me to understand what our customers are saying. You realise, when you see these emails, that the world of print is just enormous. On the one hand, you can’t cater for everyone. But you can make it easy for people to navigate their way through print. It’s why we have so many paper stocks compared to anyone else. Even from the beginning we didn’t prescribe the quantities people had to order, if you want 306, order 306, not 250 or 500. We want to offer choice and be flexible. Having the Printed.com URL also makes us a destination site and it’s easy to remind people about and refer other people to it. And one of the fastest growing parts of the business this year has been our bespoke section, it’s generating double-digit growth month-on-month.
How does that work?
It’s for people who want something different from what’s on the site. Which might involve working with partners.
How many partners are you working with now?
Probably four or five live partners and a few we’re building up a relationship with.
How do you control it, though?
We have monthly meetings, reporting, quality issues, etc. They have to meet the same standards that we achieve on our site. We’re trying to put more work into the capacity that exists in our industry and generally speaking that seems to me to be a good thing. One of the partners is soon going to be allowing us to massively reduce delivery to times due to their ability to print things fast. I hope that over time, as the business fundamentally doubles in size, the amount of work we’re putting around really will grow. And as long as our customers are getting that benefit, I think it’s a win-win for everybody.
So your partners are amenable?
They seem to be. It’s taken time to grow our customer base to buy non-digital products from us and realise we do an awful lot more. I always loved Moo’s old slogan ‘we love to print’, I’m not sure why they changed it. For me, I do love printing. I think it should be huge. I love Printed.com and I’m completely committed to it, which means I’m completely committed to printing. I get people coming to me via LinkedIn saying ‘I’ve heard about your partner programme can we work with you’. I think we will be pushing more of that work around. We will be investing, but over the near term there’s a lot of opportunity for us to be a successful creator of work rather than trying to be the best at everything.
Do you intend to build up a network of specialists?
There are people out there who really understand how to get the best out of a printing press, or a foiling machine, one of my team was telling me about a foiling company producing amazing quality and detail. And we can put that in front of our circa 50,000 customers. One of our partners got a new laser cutting device recently, it’s like something out of James Bond. When people think about printing and think it’s old-fashioned and boring, I tell them to go and look at this laser cutter. If we can bring that alive on our site and make those products accessible to the masses, it will transform the way people talk about it. That’s why I get excited about it. Creative printing, I love all that. And that’s why I read all those emails that I get from customers, it helps me understand what they’re interested in and what their problems are. We also use Zendesk, we record all of our calls and this allows me to listen to what our customers are saying. There is a lot of information coming in to our business every day, telling all of us what’s going on. Are they happy or frustrated? Is there a problem, is there a pricing issue, are products missing in terms of what they want to get? We have so many of the answers in front of us. You don’t have to look very far to massively grow the business.
You’re in a very competitive space, though. You have some enormous competitors and Cimpress is doing something similar in opening up its API. How are you going to plough a successful furrow?
I think the UK market still has a lot of growth in it. When I look at the size of most of my competitors – putting Cimpress aside because they’re obviously so significant – I believe we’re scratching the surface in terms of the number of people looking to buy print online. I feel super-relaxed that there’s tons of growth out there for all of us. You’re right, in that you do need to offer some sort of distinguishing reason for people to buy from you.
With our new website will be some new features again. I certainly don’t worry about the competitive space. Although at the moment Google is the big winner. The cost of advertising has risen nearly 100% this year.
That’s interesting. The competition for these key Adwords seems to be pushing the price up.
Interesting and painful.
Give me an example.
You could have been starting this year with an average cost per click of £1.50 for some keywords and you’re now paying £3 for the same word and same volume.
How do you handle it? That’s a lot of money in a low-margin business.
80% of our revenue comes from returning customers. We foster relationships with customers who have a lot of recurring requirements. So we might not make money on the first purchase, based on product margin and the cost of acquiring the customer. The returning customer model is one of the reasons Printed.com has always been profitable.
So you focus your efforts accordingly.
Data is critical to us. Every week I sit down with our analysts and product and marketing director and review all of the statistics. We look at that data and use it to make decisions. If the number of customers ordering postcards is dropping, we’ll analyse why. You’ve got to be able to respond quite quickly to what’s going on in the market. Maybe a competitor is doing a sale on leaflets. You see these shifts when you get into the layers of the data. People might think it’s quite simple, you build a website and people come and shop. It really isn’t. You have to work hard.
Tell me about your customers. Who are they?
They tend to be small businesses. Our biggest segment is creative customers, both companies and individuals. They’re probably about 20%-25% of our business. Also printers and print managers, and retailers. Probably our fastest growing segment has been retailers over the past 12 months. We launched a retail collection, to make it easier for people to navigate. It’s one destination for retailers with everything they need. We also have collections for events, education and charities. When we see in the data a growing number of people from a particular segment, we create a collection to make it easier for them to use our site. Wedding stationers are also a massive vertical for us. And we have a significant charity programme that allows our customers to donate their reward points to charities, they can use the points to get free print.
How many customers do you have? How many do you want?
We have 50,000 active customers. I want more customers, but they have to be the right customers.
Are you doing all your production up in Newcastle now?
Outside what we put out to partners, yes. There’s a 4,650m2 facility there and about a hundred staff, many of them long-standing employees. They’re really nice people and they take a real pride in their work. We started a friends and family programme about a year ago offering jobs to those people first. And we’ve kick-started a scheme with schools to create a sort of intern programme. We’re a local employer and we’re employing more rather than less.
And Ravensworth continues as a sub-brand?
Yes, it’s very much continuing. Selling to small businesses, as well as large corporate clients in the property market.
How is the business performing? In the final set of Tangent results you made a big writedown in the value of your software. And operating profits were down 65%.
It’s a reset. When I look at the next 12 months for Printed.com, operating now in the way that it is, this business is absolutely on track to be profitable and growing. The other parts of Tangent will be as well. Businesses go through cycles. I can certainly say that Printed.com is in a strong position at the moment.
So when we see your maiden Printed.com results, what are your expectations for those?
This is one of the differences between being private and public. Right now my focus is very much on launching the new website and putting the foundations in place to be a big player in this marketplace. We are choosing to reinvest those profits that we’re making. What I believe we can be is a much bigger company, I believe our marketplace is going to be a lot bigger. And now we don’t have the same pressures that we had before.
How much will you save by not being a PLC?
We won’t know until the end of a full year but it will be hundreds of thousands of pounds for sure.
What about continental competitors. They’ve become very big in the UK. Is there an advantage in being a UK producer?
In most cases they’ve bought or teamed up with people in the UK, taken their brand and linked up with a UK manufacturer. That’s why your brand and your positioning has to resonate with customers. I decided from very early on that we weren’t ever going to try to be the cheapest possible player because I knew we would lose. The UK is an exceptionally important marketplace whether it’s cars, phones or print, and everyone wants to trade with us. The interesting thing is, possibly some of the German businesses are presenting themselves, a little bit too mechanically for some of the UK customer base. But you’d have to talk to customers. If you type business cards into Google it’s not immediately evident if it’s being printed in a particular country.
Do you have ‘printed in the UK’ on your site?
We talk about the fact our business and customer service team is based in the UK, but it’s not completely front and centre. We’ve never had feedback from our customers that that would be a reason to purchase.
I sometimes wonder why UK printers don’t make more of that.
It’s a fair question. We haven’t laboured the fact that we print in the UK. I wonder whether the customer, shopping via Google, is thinking about that.
Perhaps you can add that to your data analysis. Even Walkers crisps have incorporated a union flag into their packaging design…
I accept that. You might see us add it to the site. I shall expect orders to go through the roof!
You’re clearly optimistic about the growth prospects, anyway.
The reality is, there is a business out there, in our space, that has a market capitalisation of $2.5bn today [Cimpress]. It’s just incredible. This is a printing company. You can’t tell me that someone else can’t get to half that size. Or a tenth of it.
It’s also interesting that near-disaster for Vistaprint way back turned out to be the best possible thing for them.
It’s a phenomenal story.
They’ve turned into quite the acquisitive force, haven’t they?
There was a moment in time, when a lot of print businesses, St Ives particularly, decided to buy data and marketing services businesses. I think our space, online printers, is going to get attention now. I’d be surprised if over the next 12-18 months those sort of businesses didn’t change hands. Things like that go through cycles. And businesses will look at what Cimpress has done and ask what else is happening in that space.
Who do you admire most in the industry?
I don’t know Robert [Keane, founder of Vistaprint] but clearly it’s difficult not to admire somebody who’s grown a business of that size selling with an average order of $30. I think the guys from Solopress have done an amazing job building that business up. Richard Moross at Moo created a luxe feel on a conventional product, before anybody else. I like the fact that you’ve got people out there that are ambitious, that challenge us all and push us all.
I guess it’s also indicative of the potential opportunity?
I really do believe we’re still scratching the surface. We are so small compared to the number of people in the UK and the potential in this space. That’s why I don’t worry about the competition. There are still tons of people coming into the space who did not conventionally buy print online. The more accessible, and the easier and more interesting you make it – we added velvet soft-touch lamination to business cards recently and it’s flying out of the door. We’re also talking to paper mills about developing our own paper stock for 2017. That was my mission at Drupa. Drupa also shows the size and scale of the industry, and it’s impressive.
Your own stock? Is that feasible?
Yes. What we can do is be creative, which helps inspire sales. Because you’re presenting your customers with something more interesting that they can’t get in other shops. The whole point is to improve the customer experience, because we want returning customers.
Do you do much in wide-format?
Yes we love wide-format. It’s huge for us. We do it in-house but are bringing on a partner for longer runs. We love that product.
Anything else you’d like to add to the offering?
There’s stuff we’d like to add, and things we already do that we can do better. For example our branded notebook offering. We’ve got a lot of things available that are either a bit hard to use, or a bit hidden on the existing website, or we need to market them better. Once we do that we’ll be in a very strong position.
What have been the key learnings over the past year?
You can’t prepare for every eventuality. But we were a team with an objective and a resolute focus. We had the support of our staff which was really important – critical to helping us have the confidence to keep going.
What about that other monumental 2016 happening, Brexit, what are your thoughts on that?
I personally think it will be good for the country in the long-term. I agree with Theresa May: everyone wants to trade with the UK. There will be things that need to get sorted out, but at the end of the day countries in Europe want to trade with us. I don’t think we’ll know until the end of this year whether the uncertainty was short-lived or not. It was a big shock, and shock creates hesitation. The key period will be September through to the end of November. If these months go well, the effects for us will not be that big. But if there was a slowdown and you start to see a run of bad results from retailers, property companies, and businesses, then I think we have a problem. At the moment, we’re ahead of last week, and of this time the prior year. There’s no getting away with it, print is still a bellwether.
In five years, where will you be?
In multiple countries, and a lot bigger. I want to be the destination site for print.
Final question. Did you really think you could buy St Ives?
Way back then? Definitely. We had financial institutions that were totally behind it, and we had a plan. Again, it came round to their shareholders at a moment in time. They decided to support the management. But size doesn’t scare me. You realise that if you’ve got an idea and you’ve got a plan, you can meet people who will back it. I think that’s probably one of the things that Michael brings, he gives us that confidence. Have you got a good idea, can we get support? Okay, go for it. To me, business is like that. Is it a good idea? Go for it, and grow it.