Orfalea, Paul

(1947-)
Kinko's, Inc.

Overview

In 1970 Paul Orfalea opened his first copy center in a small store near the campus of the University of California at Santa Barbara and put his nickname on the door: Kinko's. Over the past 30 years one store has grown to over 1,000, and Orfalea has gone from being a near dropout due to his severe dyslexia to a highly successful, if somewhat eccentric, businessman. Kinko's stores function as temporary, high–tech offices for the creative, the self–employed, and small businesses—offering a wide range of copying services, high quality laser printing, and document management. Kinko's also rents computer time and offers e–mail, faxing, teleconferencing, and other services.

Personal Life

Paul Orfalea (pronounced Or–fa–la) was born in 1948 to Lebanese parents who owned and operated a factory in the garment district of Los Angeles. Orfalea's childhood experience was plagued by his inability to learn to read. As a second–grade student in a Catholic school classroom, Orfalea could not recite the alphabet. "We were supposed to learn to read prayers and match letter blocks to the letters in the prayers," Orfalea told author Jill Lauren (20 True Stories About People with LD). "By April or May I still don't know the alphabet and couldn't read. I memorized the prayers so the nun thought I was reading. Finally she figured out that I didn't even know my alphabet, and I can remember her expression of total shock that I had gotten all the way through the second grade without her knowing this." Orfalea's parents paid his brother and sister $50 to teach their brother the alphabet but the project failed and so did Orfalea. He flunked second grade; when he repeated the grade the following year he still was not able to master the alphabet or learn to read.

After that experience Orfalea's mother began a mission to discover the source of her son's learning disability. She took Orfalea to numerous clinics and colleges for testing. The resulting diagnoses were varied. For two years Orfalea worked with an eye doctor who, believing Orfalea's problem stemmed from bad eye muscles, coached Orfalea through eye exercises. A speech teacher suggested that Orfalea had a lazy tongue. He spent his vacations in summer school. During the school year he found himself assigned to a variety of special groups and spent the third grade in the class reserved for mentally handicapped students. According to Orfalea, in the third grade, the only word he could identify was the. He would follow group reading sessions by making the jumps on the page from one the to the next.

Finally Orfalea's mother found a highly respected remedial reading teacher who was the first to understand and diagnose Orfalea's dyslexia. "Back then," Orfalea told Wired.com, "they didn't even have a word for 'dyslexia.'" Despite finding the correct source of Orfalea's difficulties, his school performance did not improve. In constant trouble for his rebellious attitude and poor performance, Orfalea was expelled from a succession of high schools and failed the ninth grade. He did, however, begin to adjust to his situation. "By the time I was 15 or 16," he told Lauren, "I could get by in a class with reading. But I could never spell. I was a woodshop major in high school, and my typical report card was two C's, three D's, and an F. I just got used to it." Still, he has painful memories. For example, according to People Weekly, Orfalea recalled a school administrator telling his mother, "Maybe he could enroll in a good trade school and learn to lay carpet." After quitting his after–school job at his father's factory because someone had commented on his inability to read, Orfalea began earning money by painting addresses on curbs.

Orfalae eventually made it through high school with a low–D average, graduating eighth from the bottom in his class of 1,500. "To be honest," Orfalea confided to Lauren, "I don't even know how seven people got below me." Fearing that he was unemployable and might end up drafted into the Vietnam conflict, Orfalea enrolled in a junior college. The following year, thanks to his parents' financial ability to pay the tuition, he became a student at the University of Southern California. He majored in finance but never took his studies very seriously as his dyslexia kept him from ever completely mastering the written word. According to Forbes, Orfalea reminisced about his first college philosophy class: "I said, 'God, I don't understand any of that.' I put my pen down and said, 'I'm never going to make it in this world'." Not all his experiences were bad. A professor of an investment strategies course, once he learned of Orfalea's learning disability and stopped taking note of Orfalea's continuous spelling errors, realized that the content of Orfalea's paper was close to brilliant. It was a shining moment in a lackluster academic performance that consisted primarily of taking classes from professors known to be easy graders.

While he attended college Orfalea made extra money by operating a roadside vegetable stand near his parents' home. Even though Orfalea continued to perform poorly in school, he had a natural interest in business and was infatuated with current affairs, often discussing events with his parents. He learned about business from Donald Gogel, a stockbroker and friend of the family. Occasionally, Orfalea would skip school and show up at Gogel's office where Gogel would tutor the youth on various aspects of business, stocks, and investing. Well before Orfalea graduated from college with a C average, he had decided that he would go into business for himself. Because he figured no one would hire him, Orfalea figured he'd have to be his own boss. He was also heavily influenced by his parents who were self–employed, as were many of their family friends. He attributes much of his success in life to his parents, who were always supportive and never demeaning. As People Weekly noted: "What saved a curly–haired boy nicknamed Kinko from despair was his own cockiness and a mother and father who refused to accept his teachers' insistence that their son was as dumb as a stone." "Without my parents," Orfalea said, "I'd be a skid row bum right now." Referring to the amount of money spent on tutors throughout Orfalea's school days, his parents joke that they've spent $50 for every word their son has ever read.

Orfalea is married to wife Natalie; the couple have two children. In an effort to assist other young people interested in business, Orfalea has endowed the Kinko's Chair in Entrepreneurship at the University of Southern California's Marshall School of Business. In 2001 Orfalea committed $8.5 million over the next 10 years to the child development program at the City Community College of San Francisco (CCSF). According to a CCSF press release, Orfalea, who is dedicated to improving the nation's childcare services, noted, "Our passion is to support the best in child development centers and early childhood education in California. We want to help City College become a model for child care in America."

Career Details

In the late 1960s, Orfalea moved to Santa Barbara and commuted back to Los Angeles until he eventually completed his degree in 1971. Although he paid little attention to his college classes, he did find the inspiration for his future business: a copy machine in the university library. "I saw it and I thought, 'This is a cool machine'," Orfalea told Forbes. "I had taken a marketing course and studied product life cycles, and I just thought, 'This thing here is going to go for a long time.'" In 1970 with a loan of $5,000 from the Isla Vista branch of the Bank of America near the campus of the University of California Santa Barbara campus (recently rebuilt after being burned down by protesters in the 1960s), Orfalea leased a one hundred–square–foot garage at the back of a taco stand located on the main road through campus. According to "Our Humble Beginning" found at the Kinko's Web site (http://www.kinkos.com), Orfalea cut a hole in the wall connecting to the taco stand so he could order lunch without leaving his shop. He decided to name his business Kinko's, using his nickname given him because of his curly red hair.

Orfalea leased a Xerox 2400 photocopier, an AB Dick 360 printing press, and a film–processing machine, not sure which machine would attract the most people. Years later Orfalea told Fortune, "Back then I didn't know if the business would become a photo store, a stationery store, or a copy center." It was soon clear that the copy machine was hands–down the most popular machine. To make Kinko's even more attractive to students, Orfalea charged 4 cents per copy, undercutting the university library, which charged 10 cents a page. Before long the place was so busy that on some days Orfalea had to wheel the copy machine out onto the sidewalk to make room for all the customers. He also stocked a supply of pens, highlighters, and notebooks that he displayed on the sidewalk so students on their way to classes would stop to make purchases.

Chronology: Paul Orfalea

1948: Born.

1970: Opened first Kinko's.

1972: Opened second Kinko's.

1979: Kinko's branches totaled 80, covering 28 states.

1989: At the end of the year, 420 branches existed.

1994: Teleconferencing capabilities added to 150 branches.

1995: Kinkonet is launched, providing electronic document transfer.

1996: Kinko's was featured by Jay Leno.

1997: Kinko's was featured on David Letterman; sold 30 percent interest in the company to an investment firm.

2000: Stepped down as chair, took on title of chairperson emeritus; kinkos.com is launched.

2001: More than 1,100 Kinko's branches, located in nine countries, were in operation.

Orfalea developed his business and management philosophy, consistent throughout his career, very early in the life of his company. Because he couldn't read well, from the start Orfalea acknowledged that both business documents and the machines themselves could be better run by other people. He knew that he would have to rely on others to help his business succeed; delegation would be a requirement. According to Rhonda Abrams, author of Wear Clean Underwear: Business Wisdom from Mom, Orfalea referred to his dyslexia as an advantage rather than a disadvantage. "Do you think I've got the motto 'I can do it better than you can'?" asked Orfalea. "No, my motto is, 'Anybody else can do it better...'. It's other people's precious hands that build my business.... Because of my advantage in life, where I couldn't read and had no mechanical ability, I always defined my job in the business as one where things had to run beautifully without me."

Staffing his small shop with his hippie friends who agreed to work for a cut of the take rather than a salary, Orfalea spent his days making copies and his nights hawking pens and notebooks through the girls' dormitory. "I had nothing else to do," he told Wired.com, "and I wanted to meet girls anyway." As Kinko's popularity and business grew, Orfalea commissioned his partners to expand into new territories. Dennis Itule, Orfalea's cousin, established a Kinko's in Van Nuys, California. His friends followed suit, and new Kinko's locations began to spring up in college towns around the nation.

In 1975 there were 24 Kinko's storefronts; by 1979 that number had grown to 80, covering 28 states. A decade later, 420 stores were in operation, and at the end of 2000 Kinko's had grown into an international chain totaling more than 1,100 stores covering North America, Asia, Australia, and Europe. Orfalea, twice a flunky, was running a $1 billion–a–year business and had a net worth of a quarter of a billion dollars. Thirty years after opening the first store, Kinko's was making 16 billion copies annually.

Until 1997 all Kinko's stores were privately owned by individuals or partners. Orfalea only owned one store outright, which served as the parent organization for the entire chain. Rather than selling franchises, Orfalea retained a financial interest in every individual store, which operated as a corporation. By 1997 Kinko's had grown into a 128 corporate relationship, including joint ventures, small companies, and partnerships. To consolidate control and streamline the cumbersome system, Orfalea sold one third of Kinko's to New York investment firm Clayton, Dubillier & Rice for $214 million, who helped reorganize the company under one corporate umbrella, with Orfalea and other owners holding the remaining equity (with Orfalea retaining 34 percent share). Although he has considered taking his company public, it remains a privately held firm. Under the terms of the restructuring a chief executive officer was hired, and Orfalea ceased to take as active a role in daily operations. In 2000 he stepped down as chairman and assumed the role of chairman emeritus, although he prefers the title "chief wanderer," referring to his ongoing visits to Kinko's stores worldwide to keep in touch with his coworkers (never called employees—Orfalea believes it sounds demeaning) and customers.

Social and Economic Impact

With over 24,000 employees throughout nine countries, Orfalea believes strongly that a manager's job is to serve the workers in the field so that they are enabled to serve the customers. For this reason, coworkers can buy stock in the company. Orfalea told Sales and Marketing Management, "It's the fundamental right of workers in America to have the ability to own a piece of where they work." Referring to his employee–friendly stance, he continued, "I think it's responsible citizenship; it's just the right way to treat people. You must take care of your precious assets. You take care of them, they'll take care of you." As for other hopeful entrepreneurs, Orfalea's advice is simple: play to your strengths and turn your disadvantages into advantages. As he told Business Week, "Keep your nose to the window long enough, and they are going to let you in."

Kinko's has grown into a lot more than a copy center. Kinko's now offers Internet access, computer access, a wide range of specialized copying, collating, and binding services, e–mail access, and laser printing. Kinko's prides itself on staffing its centers with well–trained, skilled workers who can offer top quality customer service. In 1995 Kinkonet was launched as a platform for the electronic transfer of documents. In 1996 video teleconferencing services were added to 150 sites. In 2000 Kinko's added Kinkos.com, which offers services over the Internet. Large or small orders can be placed via the Internet, which are then electronically distributed to appropriate stores and completed in quick fashion. Orfalea's vision formed as he reacted to the needs of his customers; as needs changed, so did Kinko's services. As a result, Kinko's has become something of a national cultural phenomenon. Jay Leno shot a segment, "My Night at the Copy Shop," and David Letterman tapes a show that features his favorite places in New York City, one of which is a Kinko's store. Kinko's has also been spotted in an episode of Seinfeld.

Like most highly successful people, Orfalea is bright, creative, and a natural leader; he possesses seemingly endless energy and was in the right place at the right time. When Kinko's first opened, seven million people in the United States worked out of their homes; by 2000 that number had swelled to over 40 million. Although at first Orfalea planted most new stores in college towns and catered to students, as the number of self–employed and small businesses grew, Kinko's began reaching out to a new market. Fortune, which named Kinko's to its "100 Best Places to Work" list two consecutive years, noted that Kinko's "has been at the epicenter of the small–business explosion.... Open 24 hours a day, Kinko's has become a clean, well–lighted place where a driven soul can work on a project deep into the night. Millions of small–business owners and fledgling entrepreneurs have made it their second home. Countless business plans have been crafted, revised, debated, and printed on its premises. Kinko's can rightfully claim to be the birthplace of a legion of enterprises." How appropriate, then, is Kinko's long–serving motto: "Your Branch Office That Never Closes."

Sources of Information

Contact at: Kinko's, Inc.
255 W. Stanley Ave.
Ventura, CA 93002–8000
Business Phone: (805)652–4000
URL: http://www.kinkos.com

Bibliography

Abrams, Rhonda. Wear Clean Underwear: Business Wisdom from Mom. New York: Dell, 2000. Available at http://www.businessweek.com.

Cheakalos, Christina, Bruce Frankel, William Plummer, and Susan Schindehette. "Heavy Mettle." People Weekly, 30 October 2000.

"Heroes of Small Business." Fortune, 13 November 2000.

Lauren, Jill. Succeeding With LD: 20 True Stories About People with LD. Minneapolis: Free Spirit Publishing, 1997. Available at http://www.ldonline.org/first_person/orfalea.html.

"Man of Few Words." Sales and Marketing Management, March 1997.

Marsh, Ann. "Kinko's Grows Up—Almost." Forbes, 1 December 1997.

Moore, Pat. "Orfalea Family Foundation Gives $8.5 Million to Child Care Programs at City College." City Currents, 30 April–6 May 2001. Available at http://www.ccsf.cc.ca.us.

Moukheiber, Zina. "I'm Just a Peddler." Forbes, 17 July 1995.

"Original Copy Cats." Wired News, June 1995. Available at http://www.wired.com.

"Our Humble Beginnings." Kinko's, Inc., 2001. Available at http://www.kinkos.com.

"Paul Orfalea to Assume Chairperson Emeritus at Kinko's." Kinkos, Inc., 8 March 2000. Available at http://www.kinkos.com.

Roberts, Paul. "Free Agent, Free Spirit: Why Kinko's Founder Wanders and Wonders." Fast Company, December 1997. Available at http://www.fastcompany.com.

Seaburn, Paul. "Paul Orfalea." Y & E: The Magazine for Teen Entrepreneurs, 2000. Available at http://ye.entreworld.org.

"Why Paul Orfalea Didn't Franchise Kinko's." Business Week, 23 September 1998.