Mimeo, one of the early entrants into the budding print e-procurement market in the late 1990s, and a clear survivor, recently announced the appointment of Thomas B. DeGreve as the new V.P. and General Manager of its Memphis production facility. DeGreve comes from Marietta Corporation, where he was responsible for manufacturing and distribution operations. In conjunction with DeGreve’s appointment, Mimeo also disclosed that the company has recently added 33% more black & white digital printing capacity at its Memphis facility; a third production shift, taking it to 24-hour production; and is producing 2 million pages per week.

This prompted WTT to have a conversation with John Lyons, Mimeo’s CEO, to gain a broader picture of Mimeo’s current operation and plans for the future. Lyons also shared with us his insight relative to what he considers to be the critical success factors in Mimeo’s "clicks and mortar" model.

We caught up with John at Mimeo’s production facility in Memphis.

Topics Include:
- Growing 300% in Q3
- Sales force structure
- Average order size
- Largest customers, HP, Siemens
- Partners FedEx, Toshiba
- Digital equipment vendors

WTT: John, thank you for taking the time to speak with us today. It sounds like things are going well at Mimeo. What can you say about your recent financial results?

JL: First, let me say we are very excited to welcome Tom DeGreve to our team. Not only are we going to leverage his great background to continue to evolve our manufacturing environment, but we are also in hiring mode in Memphis, planning to increase employment there by 20%. Considering the current economic climate, we feel good about our ability to grow the business this rapidly. In fact, our third quarter revenues have increased 300% over last year’s third quarter performance, and sequentially by 40%, compared to our performance last quarter, in spite of the fact that July and August are usually pretty slow months in our industry. We do expect to reach profitability shortly, and we are at or above our business plan in almost every dimension.


WTT: To what do you attribute this growth?

JL: I really attribute this to strong customer loyalty; 60-70% of our revenue in a given month comes from repeat customers, providing a solid recurring revenue stream. We’ve been experiencing that level of consistency for the last year, and the revenue per user has grown as well. In another dimension, we have made tremendous progress with acquisition of new customers, and during 2002 have acquired over 1,000 new users, both from companies we already were doing business with as well as brand-new companies.


WTT: You recently closed a round of financing, in June of this year and discussed it then with our members. Refresh our memory, please.

JL: Yes. We closed a $6.5 million C Series, with participation from Draper Fisher Jurvetson in Redwood City CA; Draper Fisher Jurvetson Gotham of New York; and Hewlett-Packard. We feel that being able to raise that level of funding in a very difficult investment marketplace is strong testimony to our future, and we are pleased with the confidence our investors have shown in us.


WTT: How is Mimeo’s sales force structured?

JL: We have 15 sales professionals augmented with another six people in sales support. The majority of them are physically located in New York City, but we also have offices on the West Coast and in the Southeast. We have found that our offering lends itself well to a phone-based introductory sales methodology, but once the customer reaches a certain size, it is important for our sales professionals to be on-site, so we really have a blend of inside and outside sales activity, with the outside activity being primarily account development. The fact that Mimeo has made tremendous progress in both the growth of revenue from current customers and the acquisition of new customers has proved to us that a phone-based sales approach is effective. Using today’s technology, you can have a great phone conversation with prospective customers, blended with on-line demos, and even run a test job for them. We also use Webinars extensively for training and large presentations.

Our sales professionals are aligned from both an industry and geographical point of view. We have had the most success in financial services, high tech and pharmaceuticals, partly because these industries have a high propensity to outsource non-core functions.


WTT: Mimeo has been an interesting company to watch. Your business model is pretty focused, and while it has obviously been adjusted since the company was founded based on evolving market needs, it has remained relatively constant. Can you talk about some of the things that have – and have not – changed over the last couple years for Mimeo?

JL: Let me start with what hasn’t changed. We have three core values that have been consistent from the inception of our company in terms of what we deliver to our customers and the marketplace: quality, cost savings, convenience or ease of use. I believe Mimeo has a strong sense of customer service, and as we listen to our customers, we become more customer-centric and more responsive. That is really the roadmap for our success. Our customer service organization talks to customers hundreds of times every week. On the technical side, our product support and design group is constantly interfacing with customers on performance of systems as they are today and new additions customers would like to see.

My fundamental philosophy has always been that if you listen to your customers, they will give you all the answers. Listen well and execute. And for Mimeo, being an early mover in this market is an advantage in that we have a jump on customer insight that has allowed us to mature and evolve our offerings in a rational, yet fairly rapid, manner.

In terms of what has changed, DocCenter, our secure work space and e-catalog offering, has probably been one of the most significant additions to our portfolio and has allowed us to move from a stream of transactions, or jobs, to a more predictable revenue stream.


WTT: You must have some great customer stories about how your services have "saved the bacon" in a case or two. Can you share a couple with us?

JL: Here in Memphis we have what we refer to as the "Wall of Fame," where we post the unsolicited letters or emails we receive from our customers. Let me just give you a couple of examples.

Siemens wrote to us about a large proposal they were putting together for a $2 million opportunity. They were in the throes of finalizing the document on Thursday for delivery by a Friday deadline. The proposal consisted of multiple copies of a 240 document packaged in a customized binder, and included lots of color graphics. In the midst of producing the final copies, their color printer failed, and they realized there was no way they were going to get this proposal completed and submitted on time if they waited for the printer to be repaired. So they submitted the job to Mimeo, overnighted the customized binders to a Siemens office located in the city where the proposal was to be delivered, and we worked with them to produce the proposal. We shipped the final output so that it was received in time to meet the deadline. This is the kind of response our customers have grown to expect.

In another case, we produced employee handbooks for a company, and our customer service staff recommended that the binders be individually shrink wrapped to prevent the binders from inadvertently opening during shipping. The customer was extremely pleased with the proactive support and the overall quality of the document. Her letter ends with, "Thank you so much for making me look good!"


WTT: What areas do you see in the organization that need improvement and what do you plan to do to address that?

JL: I am very pleased with the progress that we have made in the past year. One thing we could definitely improve upon is our market visibility. We have been in too much of a stealth mode and haven’t spent much time or money on the PR side, instead being very focused on our customers and being of service and value to them. That has carried us to this point, growing our top line revenue. I believe we are now well-positioned to step up our media exposure.


WTT: When your manufacturing facility was initially designed, it was designed to economically produce a large number of small orders. What is the average order size you now process and how has that changed since Mimeo started up?

JL: Our average order size is just under $500. In the planning stages, we anticipated that it could be as low as $70. As you pointed out, the plant was designed to efficiently produce orders as small as $70. Clearly, to be able to operate profitably if that were the average order size, the fewer hands that touch each job, the better our margins would be.


WTT: You recently announced you are producing approximately two million black & white and color pages a week in your Memphis facility. What is the breakout between color and black & white?

JL: For us that generally runs 80% black & white, 20% color in terms of impressions, although as you can imagine, it varies. Many of our documents are mixed, with color covers and some color pages, so the percentage of documents that contain color is much higher.


WTT: Who are your largest customers and what is the value proposition they see in utilizing Mimeo?

JL: We count HP, Siemens, JD Morgan Chase, TD Waterhouse, Pfizer and Morgan Stanley among our largest customers. Going back to what we discussed earlier, there are different motivations for different customers, but our three core values of quality, convenience and cost savings are really at the heart of what customers find valuable.

We are also finding that brand management is a bigger factor with Doc Center. If you are responsible for sales collateral, you know up to the minute what your best sellers are. The consumption pattern for these types of materials is important to sales and marketing professionals, and our reporting capabilities allow customers to easily acquire that type of data. Also, DocCenter has three levels of permissioning that protect against unauthorized modifications to branded materials. Users can either order materials as they exist in the catalog; be authorized to modify certain aspects of these materials for their own use, such as placing a photo or changing an address; or have the ability to modify the contents of the library. This enables sales and marketing professionals to maintain consistency and control.

The other thing our customers find valuable is that production of these materials by a single plant provides a more consistent level of quality than you might obtain using a network of unrelated printing facilities. We have staff that are ISO and Six Sigma trained, something that would be difficult to do in an organization with hundreds of retail outlets, for example.


WTT: Mimeo has always been reluctant to share information about the configuration of your plant. I am sure our members at WTT would like to understand how your factory is set up, and what some of the design objectives are.

JL: Well, we are still reluctant. We prefer not to disclose our specific configuration. However, I will say that we have invested in Xerox, Xeikon and HP equipment, and our plant is designed for continuous flow, ultra-short-run work and customization, as contrasted to a traditional print plant which is more often than not designed for longer run setups.


WTT: We understand that in establishing your factory, you did not source people exclusively from the printing industry, but rather, hired a number of industrial engineers. Talk about that strategy a little, and perhaps you could tie in the recent announcement of Tom DeGreve, also from outside the printing industry, as the VP and General Manager of the production facility.

JL: I think when you look at who we have hired, people like Tom, many of them have graduate and undergraduate degrees in industrial engineering, a background in manufacturing, and their accomplishments are often framed in terms of reduced cycle time, improved efficiencies, improved delivery times -- things you would normally associate with manufacturing and distribution excellence rather than printing. Those are the ingredients for our success that have allowed us to serve our customers the best.

I need to make it clear, though, that this has not meant the exclusion of print experienced employees, by any means. We have many people on board that have strong print backgrounds, from companies such as R.R. Donnelley and Xerox, and they are an important part of Mimeo. My belief is that the key difference between our operation and a traditional printer is that in addition to people with strong print experience, we have been focused on the manufacturing, industrial engineering and technology aspects of the services we offer.


WTT: In looking at the partners listed on your Web site, it is pretty clear what their roles are with respect to Mimeo – except perhaps Toshiba. Can you elaborate on your relationship with them?

JL: The Mimeo service is bundled with some of their laptops. That has been a terrific advantage for us; we regularly get new customers from that relationship.


WTT: We don’t see FedEx listed as a partner, which we found a little surprising. Can you comment on that?

JL: We have a tremendous relationship with FedEx. I consider them an important partner.


WTT: We also notice you list Xeikon as a partner. Are you looking at any of the newer digital presses on the market, such as the Xerox iGen3 or the Nexpress 2100?

JL: Our posture is that we will continue to look to our three primary technology providers, but we will, of course, keep our eye on market developments and make investments in the next level of color digital technology as our needs dictate.


WTT: Now that HP has acquired Indigo, will you be transitioning that technology into your plant?

JL: Indigo is a great product. We believe HP made a sound investment when they acquired Indigo. We have worked with Indigo technology and will continue to do so.


WTT: We’ve all heard probably more than we ever would want to know about the dot-com bubble and the fact that the landscape is littered with dot-gones. Mimeo jumped in at pretty much the beginning of the boom, but has been a survivor. What are your thoughts about the state of the market today and which companies – or types of companies – are likely to survive going forward?

JL: I strongly believe that this industry is far and away still in its infancy, but it is so clear to me that this is the future of the management, procurement and distribution of print. There is no reason today for companies to print to large inventories and incur the unnecessary costs that result from waste due to obsolescence. Everything else in our world is moving to just in time and reduced cycle times. Why tie up capital in print inventories?

Combining those compelling economic factors with a process that is actually easier and more fun is a winning scenario. Most of our users are not professional buyers of print, by any means. Mimeo provides them with a process for storing and managing documents, and now with DocCenter, sharing their documents across the enterprise.

The companies that will succeed are those that are able to provide exceptional customer service, deliver ease of use and an improved process, as well as clearly articulate the economic value. In today’s market, it is not enough to have cool technology. The companies that will succeed in the future are those that are customer-focused, and are developing technology that solves real business problems and provides quantifiable value.


John, thanks for spending time with us today. We wish you and the team at Mimeo the very best!