VistaPrint Limited

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VistaPrint Limited

MADE IN FRANCE; REMADE IN AMERICA, 1995 TO 2000

FREE SAMPLES NET BIG RETURNS

PRIVATE TO PUBLIC

OFF AND RUNNING

PRINCIPAL OPERATING UNITS

PRINCIPAL COMPETITORS

MADE IN FRANCE; REMADE IN AMERICA, 1995 TO 2000

As a former consultant to Microsoft, Robert S. Keane knew his way around the Internet. He had a B.A. in economics from Harvard University, an M.B.A. from France’s INSEAD international business school, and had worked as a graphic design consultant for small businesses in Europe. Based on his knowledge of the desktop publishing software market, Keane believed online printing would not only be a successful business enterprise but possibly the future of small-job printing needs.

Keane came up with a business plan and sought financial backers for an online printing company, VistaPrint.com S.A. One of his early investors was his father, Kevin Keane, chairman of the Buffalo, New York-based Mod-Pac Corporation, a printing company that specialized in conventional printing services. The younger Keane hoped his start-up would benefit both businesses: VistaPrint’s online services would attract thousands of small orders and Mod-Pac was equipped to process them.

In addition to his father’s support, Keane hoped to lure several larger investors from the venture capital market. Initially, few caught on to the idea. However, Sofinnova Partners, one of France’s leading venture capital firms, believed the printing industry was ready for a change and agreed to provide funding for VistaPrint. Olivier Protard, managing partner at Sofinnova Partners, later told the European Venture Capital Journal (November 2005), “When we funded VistaPrint, the company consisted of one American guy with a French colleague in a small, cramped office.” Over the next decade, VistaPrint raised a total of $65 million from investors including the London-based Saffron Hill Ventures and several East Coast firms including Highland Capital Partners, Windspeed Ventures, and Window to Wall Street.

While investors were optimistic, European customers were not buying. Because Sofinnova had a presence in the United States, Keane and his major investors decided in 2000 to move VistaPrint’s operations to Massachusetts. The new company, VistaPrint Corporation, became part of the Boston start-up scene and concentrated its efforts on U.S. customers and tapping into American funding opportunities. Just five months after the company’s relocation, VistaPrint had 40,000 customers who had accessed and paid for its online printing services. In turn, the company was able to raise additional funding to expand its services.

As the digital age gained momentum, e-printing services were relatively widespread. Web sites such as iPrint.com, mimeo.com, and Kinkos.com all offered online, self-service printing. VistaPrint set its business apart by offering 250 free business cards to its customers for trying its service. Customers who sampled these cards paid a $4.95 delivery fee, and accepted a VistaPrint advertisement on the backs of their cards. More than half the customers who tried the business cards returned as paying customers. Customers who reordered paid only about $40 for 500 or $50 for 1,000, remarkably lower prices than at traditional printing companies. While VistaPrint’s pricing was similar to their online competitors, customers valued the opportunity to sample the product before placing a larger order.

FREE SAMPLES NET BIG RETURNS

VistaPrint’s sampling program was one of the keys to its early success and the company was in the black by 2001, just one year after bringing its operations to the U.S. printing industry. As customers returned and placed orders for higher quantities, VistaPrint began offering additional products such as letterhead, envelopes, postcards, return address labels, and magnets.

Although sampling programs could be costly, VistaPrint was able to keep costs at a minimum through a proprietary software program, VistaStudio. The desktop publishing application, set up on a browser rather than a server, significantly reduced response time and allowed VistaPrint to provide a three-business-day turnaround on orders. The software allowed users to choose from thousands of professionally designed templates and 70,000 graphics in VistaStudio’s image bank, or upload their own designs. According to Inc. magazine’s “Best of the Web” September 2000 issue, a panel of CEOs who tested nine self-service online printers praised VistaPrint’s “user-friendly approach” over that of its competitors.

While VistaStudio allowed the company to quickly process orders by the thousands, VistaPrint needed a printer who could keep up with their growing demands. In September 2002 Robert Keane worked out a ten-year exclusive with his father’s printing company, Mod-Pac, to print all of VistaPrint’s North American clients. As fate would have it, Keane’s younger brother, Daniel Keane, had graduated from Dartmouth University and joined their father at Mod-Pac Corporation. The Keane trio prospered, for a while.

For over a year, Mod-Pac and VistaPrint enjoyed mutual success. VistaPrint’s revenue increased substantially, leaping from 2002’s $16.9 million to $35.4 million in 2003. In addition, the company raised $30 million in venture capital. Mod-Pac, too, benefited from its alliance with VistaPrint: the Buffalo printer’s revenues climbed as did profits as well as its stock price, from $4 in March 2003 to $18 in August 2003.

COMPANY PERSPECTIVES

VistaPrint Limited (Nasdaq: VPRT) is the leading online supplier of high-quality graphic design services and customized printed products to small businesses and consumers. VistaPrint offers custom designed, full-color, low-cost printed products in small quantities. Over 8 million small businesses and consumers have already chosen VistaPrint for products ranging from business cards and brochures to invitations and thank you cards.

PRIVATE TO PUBLIC

By July 2004 Robert Keane made a surprisingly bold decision to cut all apron strings. He decided having his own printing plants was more profitable than relying on Mod-Pac’s services. With a $22 million cash payment, Robert Keane dissolved his printing agreement with father and brother and moved all printing operations to the Netherlands and Canada. VistaPrint opened a 54,000-square-foot printing plant in Venlo, Netherlands, and began shipping products to Europe in the spring of 2004.

In 2005 VistaPrint had a workforce of 400, over five million small business clients, and had built a 68,000-square-foot printing plant in Windsor, Ontario, to serve North American markets. Its two printing plants cut costs and expedited service by combining orders into “gang runs.” Though the plants received more than 10,000 orders per day, another proprietary software program called VistaBridge sorted similar orders into the same batches for printing on the company’s 40-inch presses. Production labor took as little as 60 seconds per order, allowing VistaPrint to process thousands of small orders at the same time, rather than separately processing each individual order.

Rapid production turnaround, financial stability, low overhead, and a growing customer base set the stage for an attractive initial public offering (IPO). In September 2005 VistaPrint conducted an IPO of 10.02 million shares at $12 each. Within two months the stock had climbed to $19.74 per share. VistaPrint ended fiscal 2005 (June) with $90.9 million in revenue, a 55 percent increase from 2004’s $58.8 million. Mod-Pac, the family business run by Daniel Keane, struggled to replace the business it had lost from VistaPrint. Its stock tumbled to $11 per share as VistaPrint’s approached $34 in early 2006.

Although Daniel considered legal action against Robert and VistaPrint, alleging he was a coinventor of VistaPrint’s technology, the younger Keane also thought about competing directly with VistaPrint by entering the online printing market. Ultimately, Daniel Keane went in another direction, telling the Buffalo News (February 9, 2007) his goal was to strengthen Mod-Pac’s “commercial printing business by building ties to printed products distributors and industry groups.”

OFF AND RUNNING

VistaPrint’s success was due, in part, to the uniqueness of its printing technology. While printing was an ageold industry, Robert Keane had taken the basics of graphic design and printing and changed them to meet the needs of 21st-century businesses. Keane estimated the small business/home office market was valued at $19 billion, telling Graphic Arts Monthly (August 2006), there were “38 million self-employed individuals or clients at firms with fewer than 10 workers in the U.S. and Europe.” Providing affordable printing services to these customers was a quick and easy process with VistaPrint’s proprietary software programs, technology so valuable the company applied for patents to protect it.

VistaPrint added a full-time patent attorney to its staff and had acquired 12 U.S. patents by 2006 with more than 40 others pending worldwide. The company also continued to attract new customers through e-mail newsletters, advertising weekly and monthly specials, and tailored marketing campaigns to its established clients. As a result, by spending $13.3 million in advertising for fiscal 2006, VistaPrint ended the year with revenues of $152.1 million, an increase of 67 percent from 2005. Additionally, average daily orders increased 50 percent for the fiscal year from 15,000 orders in 2005 to 18,000 in 2006. The company also enjoyed continued success on the stock market with its share price rising to a high of $37.75.

Though many online businesses came and went in the dot-com era, VistaPrint succeeded in a volatile market by developing groundbreaking technology that offered customers a high-quality, low-cost alternative to traditional printing services. As more small and home businesses abandoned brick-and-mortar printers for the ease of the Internet, VistaPrint’s services grew to meet clients’ needs. The invention of self-service, online printing had forever changed the conventional printing industry.

Jodi Essey-Stapleton and Nelson Rhodes

PRINCIPAL OPERATING UNITS

VistaPrint B.V. (Netherlands); VistaPrint España S.L. (Spain); VistaPrint Jamaica Limited; VistaPrint North America Services Corp. (Canada); VistaPrint USA Incorporated.

KEY DATES

1995:: Robert Keane launches VistaPrint.com S.A. in Paris, France.
2000:: VistaPrint Corporation is incorporated in Waltham, Massachusetts.
2001:: An offer of free business cards helps Vista-Print acquire 85,000 new paying customers.
2002:: The company reincorporates as VistaPrint Limited with executive offices in Bermuda.
2004:: A new 54,000-square-foot printing plant opens in the Netherlands.
2005:: VistaPrint goes public on the NASDAQ.
2006:: The company’s stock price triples, reaching a high of $37.75.
2007:: VistaPrint is awarded its 13th U.S. patent.

PRINCIPAL COMPETITORS

AlphaGraphics, Inc.; FedEx Kinko’s Office and Print Services, Inc.; Microsoft Corporation; Office Depot, Inc.; OfficeMax, Inc.; PrintingForLess.com, Inc.; Staples, Inc.; Taylor Corporation.