Fourth Generation Printer Grover Daniels Acquires Boston’s Copy Cop Chain

By Cary Sherburne, Senior WTT Editor

June 20, 2005 -- I learned at the AIIM/On Demand show that Grover Daniels, in a little publicized move, recently acquired Boston’s Copy Cop chain from its founder, Michael Gerstein. Born as a Boston based black and white printing company in the early 60's, Copy Cop started out with one storefront, one employee and a bicycle. Today, largely due to the vision and leadership of Gerstein, Copy Cop's retail and production facilities provide a variety of customized and personalized printing solutions in both black and white and color to a range of local, regional and national enterprises. Daniels’ acquisition of the operation marks a new era of vision and innovation for Copy Cop as he brings to bear his extensive industry experience on driving growth into the future.

Daniels’ great grandfather founded Daniels Printing in Boston over 125 years ago, and the company was run as a very successful family business until its sale in 1999 to Merrill Corporation. Specializing in financial printing, Daniels Printing grew to be a respected local, national and even international presence in that space.

Coincidentally, Mr. Daniels recently wrote a Letter to the Editor of WhatTheyThink, commenting on Robert Burton’s attempted hostile takeover of Cenveo, a thoughtful piece well worth reading.

It seemed like a good time to get caught up with Daniels to see what he has been up to since Daniels Printing was sold, what he plans for the future of Copy Cop, and to see what perspective on the industry he has to share with us.

WTT: Mr. Daniels, thank you so much for taking the time to speak with me today. We are very interested to learn what you have been up to in the last several years. I remember feeling more than a little sad when your fourth generation, very successful family owned business in the Boston area was sold to Merrill Corporation several years ago. What were some of the dynamics that led up to that sale?

GD: The dynamics were pretty clear to me when we decided to sell in 1999. Many things were happening at the same time that we foresaw would affect our business over the long haul. The roll-ups were heating up dramatically, and because they were happening fast and furiously, all of my father’s contemporaries’ privately held companies were being snapped up and becoming part of these publicly traded institutions that only seemed to care about market share. From my perspective, they were giving work away to fool Wall Street and justify the roll-up strategy. We knew that we weren’t going to be able to compete, as we had for 125 years, on quality, integrity and value.

At the same time, Bill Gates and Steve Jobs were pushing hard to deliver more capability to the desktop, as were Quark, Adobe and the like, shifting control from the printer to the customer. And finally, the Internet created a whole new way for our customers to communicate. Put all of that together, and the printing industry was going through a lot of change. At the time, as I gave talks in various venues, I was warning the industry they were going to need to change. But no one cared to believe me or knew what to do. The industry had lost its way and was going to be dramatically changed. I just didn’t feel our company was in the best place to be able to lead the change and that these changes would hurt us more than help us.

We didn’t sell to a roll-up company because we didn’t believe in them. We sold to Merrill Corporation, who was basically adding capability to an existing business, and they only laid off three people when they acquired us in April 1999. We did it the right way, and I think the industry continues to pay the price for its ill-considered consolidation strategies.

WTT: What have you been up to since then?

GD: I had a five-year non-compete. During that time, I spent a lot of time with my family. It was a great opportunity. Not many fathers get to spend dedicated time with their wife and children, bringing the kids up in their formative years. My youngest daughter was eight when I sold, and my oldest daughter was thirteen. My oldest is attending Lehigh in the business program this fall, and the youngest is starting high school. It was time to do something, and the opportunity with Copy Cop found me at the right time.

WTT: Tell us about your acquisition of the Boston-area chain of Copy Cop stores from Michael Gerstein.

GD: The opportunity for Copy Cop is to lead the New England market in digital printing and online publishing. We have the best locations in the greater Boston area. There were some locations in the suburbs that were not core locations for our customers, so we closed those. My feeling is that Copy Cop has an opportunity to lead in the Boston community with the combination of short-run color printing, short run black & white, and using the Internet as a tool to drive certain business segments.

WTT: What are some of the things you have done to enhance the business since you became involved?

GD: We just introduced lots of new stuff in the last month or two that demonstrates that we are clearly pushing our digital capabilities and web2print services. We have equipment from Toshiba, Konica Minolta, Hewlett-Packard and KIP America, and will be online with simple workflows very soon. The strategy is to put together a portfolio of different types of open digital technologies that will be networked, fast, reliable, and will deliver the predictability and consistency our customers demand. Our DNA is digital, with no offset investments yet.

WTT: When did you get involved and what was your first big change?

GD: I took over in July of 2004 as a majority owner and we are just now finalizing everything. Within two weeks, I did shut down the offset printing part of the company. We did that because we are convinced that toner-based printing will far outrun over time the need for certain types of offset printing. The quality and consistency is there. At Daniels, we had 8-color presses producing 200-line waterless printing, and we couldn’t hold registration easily. Now we have a Konica Minolta at 600 dpi that looks better than anything we could do in the first sheets of register off those presses. It looks to me like the economics of going digital are here, that the majority of the needs of our customers are going to be met by these technologies.

WTT: So even with today’s more efficient presses and offset technologies like DI, you don’t believe offset has a place at Copy Cop?

GD: I think this is where the industry gets a little caught up in itself. Once you are in offset, whether it is DI or otherwise, you are in offset. You are 4-color, then 6-color, then 8-color; you add half web, then full web. It is a sickness. All of our so-called copy/print devices satisfy 90% of the printing that is being purchased regularly. Do you really want a business where you do an RFP with each customer twice a year and compete against every other printer and kill yourself doing it? We have 3,000 customers that walk in our doors every year, with jobs as small as business cards and letterheads to huge projects like one we just did for an engineering firm—600 pages, color and black & white, 50 books. Our configuration is perfect for that type of work, and we didn’t need offset at all. The whole project was toner-based.

WTT: Are you doing anything with large format?

GD: We have KIP America black & white large format devices for digital blueprint work. We have the HP Design Jet 5500 for digital color.

WTT: You mentioned Konica Minolta; I assume you have their 50 ppm device?

GD: Yes. It scans to PDF and finishes in-line. It duplexes 100 lb. cover. It has a lot of nice services and technology built in, and you can easily adjust the color. We have only had it three weeks, and already I can see that its capability and flexibility are wonderful for our markets

WTT: Are you looking at any of the larger digital presses?

GD: We are evaluating the HP Indigo 5000, NexPress and Océ.

WTT: Is Copy Cop set up as a hub-and-spoke operation?

GD: You could say it is hub and spoke, but not in the traditional sense. Because we know digital so well, it is hub-and-spoke as it relates to information as much as it is hub-and-spoke as it relates to the physical infrastructure. The ability to come into the store is still what drives people to Copy Cop. People will call, bring in an order, bring in a file, put files in FTP folders—there are many ways into Copy Cop. But at the end of the day, the convenience of coming into a retail location, well appointed with friendly people who are knowledgeable about digital services, gives us a competitive edge over everyone. No one locally is as digitally savvy as we are, and we will continue to strive to be ahead of the digital technology curve.

WTT: What are some of the elements to your digital services that you see as differentiators?

GD: I was an early adopter of digital technology at Daniels in the 1990s, and I am bringing that leadership to Copy Cop. We are re-engineering the stores and increasing the skill sets of our store managers. 25 to 30% of the people that walk into Copy Cop bring their files on a memory stick. The memory stick is a new way to do business. Early on at Daniels, when someone gave us a disk with a Quark file on it, we panicked. Then eventually, we led the industry. At Copy Cop, every store can take a file from a memory stick; every store can open up an application to look at the documents. Every store can talk knowledgeably to the client to ensure that we meet their needs, with everything from enlarging and reducing engineering drawings, to print and e-mail. I believe that part of the fundamental change in the industry is represented by the USB memory stick. You can’t operate a company like ours without total capability in sticks. You have to speak that language. We also understand blogs as easily as we RIP a PDF. In fact, you and your readers are more than welcome to visit my blog.

WTT: How do you personally keep up with the customers?

GD: I work the counter from time to time because I want to know what’s going on. I talk to customers and go on sales calls. The group of people using our retail services the most are the younger customers who do their work at home or at the office, put it on a stick and want you to finish it for them. That is perfect for us. In the graphic arts world, designers do 90% of the work and it is almost perfect, but there is always something the printer has to do to make it right. It’s the same thing here. It is just that we are printing 50 or 100, not thousands. I like interacting with people to figure out how they are producing their work. .It is the customers that determine what the next wave in print production will be. Printers don’t lead; they respond. We have to learn how to lead. You have to figure out what customers are going to want before they come in. That’s what we did at Daniels. We spent a lot of time understanding customer needs. And that’s what we will do at Copy Cop.

WTT: You mentioned that you are implementing Printable for online workflow. Tell us a little about that.

GD: Printable is a best-in-class ASP solution for organizing your online orders. Printable is the fundamental DNA of our online work. For our blueprint and large black & white format, we have purchased PlanWell. That is to the blueprint market what Printable is to the collateral, catalog and presentation market. It is also an ASP product that is geared specifically for managing blueprints, engineering plans, architectural drawings, etc., via the Internet. As we continue to grow our digital services, I am looking for solutions that are scalable and open, and I am not looking to plunk down a whole lot of money on complicated proprietary solutions. You can’t win anymore with “build it and they will come.” It never worked before and it works less now because capabilities are moving too quickly. If it is open and scalable, I am interested.

WTT: As you look at the printing industry as a whole, and specifically at the quick print segment you are now involved in, what are the key challenges you see ahead of us?

GD: I was out of the industry for five years, after having worked at Daniels for 20 years and understanding the industry backwards and forwards in our niche and in our markets at the time. The industry has already gone through a number of fundamental changes. The financial printing business has changed dramatically since we sold in 1999, as has the generic collateral business. I thought that at On Demand, it was very clear how the suppliers are lining up, with digital publishing being the broad category. The pricing of various capabilities has come way down to allow the industry to affordably take advantage of putting together all the pieces necessary to profitably benefit the customer.

What will probably end up happening is that it will be the smaller companies again who will be able grow their businesses organically Smaller companies can put together better solutions and offer more personal service than larger companies, with Cenveo being a good example of the latter. I also think the industry will continue to consolidate, with offset flat and toner and ink jet growing. I believe that as a printer, anything you do has to take these solutions into consideration. You have to understand them if you hope to survive in the future. And most importantly, your people have to understand how to use them.

I sure wouldn’t want to be an offset printer today with lots of press capabilities. Look at Quebecor selling off its Northeast division, and Burton making his move at Cenveo. My brother Adam is liquidating failed printing companies for a living, and he is very busy selling used equipment domestically and overseas.

WTT: Anything else you would like to add before we close?

GD: If you are in school and you never took a language class, and all of a sudden you are put into French 2, you will never learn basic French. If you are a small printer and you understand how to service your market, you will survive, because you know the fundamentals As printing companies grew through acquisitions and roll-ups, their CEO’s did not understand the capabilities/fundamentals of the business. Understanding printing capabilities is more important then knowing finance and stock valuations.

The big players rolled up the industry but they didn’t consolidate correctly. Some didn’t take out enough cost as they acquired the capabilities. The big companies that are surviving did that. Merrill did that, Donnelley did that, FedEx Kinkos did that. They acquired good companies, reduced costs and made money. The roll-ups, on the other hand, left the names of acquired companies alone, left the various functions alone within each of the acquisitions, like accounting and sales, and then wondered why they weren’t making money every quarter. They took out all of the flexibility and knowledge of well-run private companies with a local presence and now they are paying the price. We look forward to the competition.

This Interview was conducted by Cary Sherburne. She can be reached via email at cary@sherburneassociates.com, online at www.sherburneassociates.com and by telephone at 603-430-5463.

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