RPI Raises $5M from Huntington Capital, Carves Out Photo Printing Niche in Digital Age
Here’s a company that you might not think would make the pages of Xconomy. But it’s made it, baby. RPI, based in Tukwila, WA, south of Seattle, prints photo books and other custom-designed products like greeting cards, invitations, calendars, notebooks, and posters. That’s right, it actually produces physical stuff for customers.
And today, RPI announced its first major funding round, $5 million in growth capital, in the form of mezzanine debt—a combination of debt and equity warrants—from Huntington Capital, the San Diego private equity and venture lending firm. As part of the deal, Huntington partner Tim Bubnack is joining RPI’s board as a director, and Huntington co-founder Barry Wilson will serve as a board observer.
RPI has an interesting life story, having been a profitable business since 1979. I won’t do justice to its 30-plus-year history here, but suffice to say it found its niche in personalized photo products in the past decade. The company handles development, manufacturing, and fulfillment for retail partners that serve 40 percent of the photo-printing products market. That means if you’ve ordered custom photo albums, posters, or stationary, there’s a good chance that RPI made it and delivered it to you through partners like Walgreens, Snapfish, or Tiny Prints (not Shutterfly though).
Memo to Facebook and online photo-sharing giants: this is a business to watch.
Rick Bellamy has led RPI as chief executive since early last year. He had joined the company in 2008 as a member of the executive team, to help drive the technology portion of the company (more on that shortly). Bellamy is a veteran of Ivey Imaging, Iridio, RR Donnelley, and EPR—which he says launched the first database-driven website back in 1993 (foodnet.com). In a way, Bellamy has come full circle with his new business. “The Internet has created an expectation of personalization,” he says, citing everything from Amazon.com recommendations to the latest iPhone apps.
But what really grabbed me about his business is the idea of “digital permanence.” Bellamy gave an example from his recent fundraising efforts. “One of my tasks has been to seek growth funding,” he says. “Traditionally you do that through PowerPoint, or a memo printed on a laser printer. Because of our business, I created a memorandum in a leather-covered book. I distributed it to private equity groups. When I visit their offices, it’s still on their bookshelf or desk. They won’t throw it away. That’s one story of the power of something physical—it’s very personal and relevant.”
That also raises deeper questions around what consumers will want packaged digitally—electronic books on the Kindle, say, or periodicals on the iPad—versus in a physical medium with a tactile quality. “I compare it to food. When I’m starving and I just want something quick, I go to fast food—that’s like e-readers and magazines,” Bellamy says. “When I want to savor something, I consume a book that I want to keep, and go back to, that’s going to be a physical product… like going to a restaurant and ordering comfort food. Increasingly, we [RPI] focus on color-rich products. There is something about that richness of having something you’re holding in your hands.”
So, back to RPI for a minute: The company had a very tough year in 2008 as the recession was hitting. It had also become a highly seasonal business; almost all of its profits were coming from the fourth quarter (holiday season). It could no longer handle those kinds of swings with its traditional printing methods. It also needed to control its costs and focus on business fundamentals.
In part thanks to Bellamy’s leadership, RPI has increased its profitability in the past year, and its revenues grew by 30 percent in the most recent fiscal year. The company’s profits are now distributed throughout the year, Bellamy says.
The key to all of this is the firm’s relatively recent software-integrated manufacturing system, which started in 2000 and has become a center point in the last five years. Basically, instead of a traditional batch-and-queue process— where stuff piles up at each station and moves from station to station—RPI has slowed down its equipment and processes to better balance the load throughout its factory. It also uses parallel processes to automatically adjust to consumer demand. That way, each product moves through the system in a “continuous flow,” which is more efficient (the term comes from the practice of lean manufacturing).
RPI currently has about 100 full-time employees. Bellamy says to watch for some geographic expansion, in order to be closer to end consumers and be able to deliver products to stores and homes faster. “It’s time to accelerate the growth and broaden the addressable market,” he says. He adds that the new growth funds will be used to focus on product merchandising services, for both e-commerce and in-store, across many brand owners; to invest in the company’s technology platform and licensing so as to reach broader geographies; and to drive more personalization of its products.
Lastly, I asked Bellamy about the issue of trying to survive, and thrive, as a printing company in an increasingly digital age. “People have been predicting the death of print since 1980,” he says. “I don’t believe it’ll be until our children’s children are the ones running the world.”
He points out—and this resonates with me—that people will still need physical stuff to get their hands around, if it’s important enough. “What gets printed will be produced as it is needed,” Bellamy says. “How do you archive the memories and things you’re doing today that will be retrievable in a decade? That’s a real issue throughout society. The ability to retrieve digital memories as technologies and companies change becomes relevant over a person’s lifetime. Most storage sites are not responsible for loss of imagery. Digital permanence is something that will be very important for generations to come.”