The Founder of Kinkos Paul Orfalea

Summary Notes


In the podcast episode, the host revisits an inspiring interview with Paul Orfalea, the founder of Kinko's, who overcame dyslexia and ADHD to build a billion-dollar business. Orfalea's unconventional and superstitious behavior, such as avoiding black cats and meticulously retrieving a dropped dime, is highlighted alongside his innovative real estate acquisitions and talent attraction methods. The host also discusses Paul's conversation with Patrick, host of "Invest Like the Best," and recommends listeners tune in to both Paul's episode, "It's About the Money," and his own favorite interview with Patrick, "Passion and Pain." The episode delves into the importance of customer perspective, the value of simplicity in business, and the emotional challenges faced by entrepreneurs, including Paul's own struggles with anger management and the difficulty of walking away from the company he nurtured for 30 years. Paul's story is a testament to the power of perseverance, the significance of customer-centric business practices, and the personal growth that can come from entrepreneurship.

Summary Notes

Republishing of the Podcast Episode

  • The podcast was originally made 565 days ago and is being republished as a bonus episode.
  • The host believes listeners will find Paul's life story inspiring, highlighting his journey from being labeled 'dumb' due to dyslexia to becoming a billionaire.
  • Paul's ideas are considered both counterintuitive and valuable.
  • The host also promotes a conversation between Paul and Patrick from the podcast "Invest like the best," which is both humorous and informative regarding Paul's business success.

"I originally made this podcast 565 days ago, and I wanted to republish it as a bonus episode for two reasons."

This quote introduces the rationale behind republishing the episode and sets the stage for discussing Paul's life story and its inspirational value.

Paul's Conversation with Patrick

  • The host highlights a conversation between Paul and Patrick, the host of "Invest like the best."
  • Listeners are encouraged to follow "Invest like the best" and listen to episode 299 featuring Paul and episode 292 featuring the host's own story.

"The conversation that Patrick and Paul had will make you laugh, and you'll learn a ton about how Paul built a multi-billion-dollar business."

This quote emphasizes the value of the conversation between Paul and Patrick, suggesting it is both entertaining and educational.

Paul's Life Story and Business Acumen

  • Paul's life story is described as "amazing," transitioning from perceived failure to extraordinary success.
  • The host shares an anecdote about Paul's unique approach to real estate investment and his superstitious nature.
  • Paul's attention to detail and financial savvy are highlighted through his meticulous retrieval of a lost dime.

"Paul says to me, hey, do you want to come out with me? I need some local information about rental reits."

This quote introduces a personal anecdote that illustrates Paul's character and business methods.

Book Discussion: "Copy This"

  • The book "Copy This," co-authored by Paul and Anne Marsh, is introduced.
  • The book tells the story of Kinko's creation and Paul's unconventional thinking.
  • Paul's struggle with learning disabilities and his ability to turn perceived deficits into strengths is a central theme.
  • The book aims to inspire entrepreneurs and those dealing with learning disabilities.

"And it was written by the founder, Paul Orfalea, and his co-author, Anne Marsh."

This quote provides the title and authors of the book being discussed, which delves into the founding of Kinko's and Paul's personal challenges.

Paul's Early Life and Educational Struggles

  • Paul was expelled from several schools and performed poorly academically, yet he achieved great business success.
  • He encourages rethinking learning disorders as opportunities and criticizes the educational system for its one-size-fits-all approach.
  • Paul relates to historical figures who also had learning difficulties but achieved greatness.

"Of the eight schools my parents enrolled me in, four expelled me."

This quote highlights Paul's troubled educational background, setting the stage for his later success despite these challenges.

Paul's Business Philosophy and Management Style

  • Paul's management style focused on being present in the stores and identifying successful practices to replicate.
  • Despite his inability to operate machinery, his sales skills were pivotal to Kinko's success.
  • Paul's family background in various businesses taught him the importance of customer service and financial prudence.

"My job was to get out and find what people were doing right and then exploit it."

This quote summarizes Paul's hands-on management approach and his focus on positive reinforcement and scalability of successful practices.

Embracing Flaws and the Role of Paul's Mother

  • Paul acknowledges his human flaws and emotional extremes, which contributed to Kinko's growth.
  • He discusses the importance of self-awareness and the need to address one's dark side.
  • Paul credits his mother for her unwavering support and for instilling a positive self-view against external negativity.

"My hope is that anyone who picks up this book will come away with new insights into how to better run their business and to cope with and capitalize on what others consider their flaws."

This quote reflects Paul's intention for the book to provide both business insights and personal empowerment.

Entrepreneurship as a Path for the Unconventional

  • Paul advocates for entrepreneurship as an accessible avenue for self-realization, regardless of one's background or academic success.
  • He emphasizes the value of providing a service to others and the freedom entrepreneurship offers to specialize in one's strengths.

"The only hope for me was to go into business for myself."

This quote underscores Paul's realization that entrepreneurship was his best option due to his unique challenges and skill set.

Paul's Early Business Ventures and the Genesis of Kinko's

  • Paul's early jobs and his family's influence shaped his understanding of business and customer interaction.
  • The idea for Kinko's was born out of a practical need for copying services during Paul's time in college.
  • Paul's perseverance despite numerous setbacks is a recurring theme in his story.

"It didn't take long for me to conclude that I was basically unemployable."

This quote captures Paul's self-assessment that led to the creation of Kinko's and his entrepreneurial journey.

James Dyson's Autobiography: The Value of Stubbornness and Perseverance

  • James Dyson's autobiography emphasizes the importance of stubbornness and perseverance.
  • Dyson built his first vacuum cleaner from cereal packets and masking tape without understanding the technology fully.
  • The book illustrates overcoming self-imposed barriers and the idea that one can learn necessary skills over time.

"It's all about the value of stubbornness and perseverance."

This quote highlights the central theme of Dyson's autobiography, which is the persistence and determination required to achieve success.

Paul's Copy Shop Venture: Identifying a Market Need

  • Paul noticed a business opportunity in a university copy center while observing the busy production of legal paperwork for the Charles Manson trial.
  • Without a business plan or market study, Paul trusted his instincts that a copy shop would be profitable in an area with no existing services for students and faculty.
  • Paul set up his first copy shop near the University of California at Santa Barbara with low overhead costs, demonstrating the potential for high profitability.

"I didn't write out a business plan or study the market, but my gut told me I could make money selling what came out of those machines."

Paul's instinctual decision to start a copy shop without formal planning showcases his entrepreneurial spirit and ability to spot a market need based on observations.

Selling Relief from Anxiety, Not Just Copies

  • Paul understood that his service provided more than just copies; it offered a solution to customer anxiety regarding technology.
  • This insight is similar to how Steve Jobs approached personal computing and how Johnny Ive viewed the simplicity of Apple products.
  • Kinko's success was tied to understanding and addressing the emotional state of its customers, particularly their stress and urgency.

"We weren't so much selling copies as we were assuaging anxiety."

This quote explains Paul's realization that his business was successful because it addressed the underlying emotional needs of his customers, not just their practical needs.

Business Philosophy: On the Business, Not In the Business

  • Paul advocated for a business philosophy where one should oversee and guide the business rather than be consumed by its daily operations.
  • He believed in the importance of thinking strategically and delegating tasks to maintain a clear perspective and make better decisions.
  • Paul's approach included aphorisms and maxims to encapsulate his business wisdom, similar to Charlie Munger's style.

"Make sure you're on your business, not in your business."

This maxim conveys Paul's belief that business owners should focus on strategic growth and oversight rather than getting bogged down in minutiae.

The Importance of Marketing and Delegation

  • Paul enjoyed marketing and delegated operational tasks to others, which allowed him to focus on growth and innovation.
  • He engaged in grassroots marketing efforts, such as handing out flyers and selling pens and pencils, to generate business.
  • Paul's strategy involved experimenting with different product lines and focusing on the most profitable ones.

"There's no better way to stay on your business than to think creatively and constantly about your marketing."

This statement emphasizes Paul's focus on marketing as a critical component of staying engaged with the strategic direction of the business.

Organizational Structure and the Value of Experimentation

  • Kinko's had a unique organizational structure with numerous individual partnerships, allowing for a variety of business experiments.
  • Paul encouraged autonomy among partners and coworkers to foster innovation and best practices that could be shared across the organization.
  • This decentralized approach was compared to natural systems, where multiple experiments lead to diverse outcomes.

"It's very analogous to what nature does, right? There's no top-down hierarchical systems in nature."

The comparison to nature illustrates the effectiveness of decentralized experimentation in business, as practiced by Paul at Kinko's.

Gaining Perspective and the Power of Incentives

  • Paul took time away from his business to gain perspective, which led to renewed ambition and the idea to open a second store.
  • He stressed the importance of time off to allow for creative thinking and life-changing ideas.
  • Paul also focused on creating a culture of shared ownership and profit-sharing to motivate coworkers and align incentives.

"Do what you need to do to get some time off. Let your soul catch up with your body. It could change your life."

This advice underscores the value of stepping away from the business to gain clarity and inspiration for future endeavors.

Management Philosophy: Empowering Coworkers

  • Paul's wife provided a definition of management that resonated with him: the goal is to remove obstacles.
  • He rejected the term "employee" in favor of "coworker" and "partner," emphasizing empowerment and shared success.
  • Profit-sharing was implemented to instill a sense of entrepreneurship and ownership among all workers.

"I didn't want employees... I wanted coworkers who would be empowered, entrepreneurs."

This quote reflects Paul's philosophy of treating workers as empowered partners in the business, fostering a culture of entrepreneurship.

Profit Sharing and Employee Incentives

  • The founder built a successful company by sharing 50% of profits with store employees.
  • This profit-sharing model is not unique and has been implemented in various industries throughout history.
  • The idea is that such models can be highly effective across different domains and should be remembered and considered.

"Every store, he'd split, like, 50% of all the profits with the people that worked in the store."

This quote emphasizes the founder's approach to profit-sharing as a core aspect of his business model, highlighting a strategy aimed at incentivizing employees and aligning their interests with the company's success.

Business Simplicity and Growth Strategy

  • The founder believes in keeping business simple and focusing on employee welfare and customer service.
  • He drew inspiration for expansion from playing the board game Risk, learning that geographic progression isn't necessary for growth.
  • With 15 stores and no master plan, the company took a flexible, opportunistic approach to expansion.

"Our plan for expansion was a pretty simple one... In risk, the object of the game is world domination... There was no reason to expand in a neat geographic progression."

This quote illustrates the founder's unconventional strategy for business expansion, inspired by the game Risk, which informed his disregard for traditional geographic boundaries.

Financial Prudence and Company Culture

  • Paul emphasizes the importance of saving money, frugality, and avoiding debt.
  • He values these traits in his partners, believing that spenders won't be cautious with store profits.
  • The culture of frugality extended to personal sacrifices, like sleeping in cars to save on hotel costs.

"We were really frugal... We'd sleep in our cars to save on hotel rooms... I'll never do business with people who can't save money."

This quote highlights the company's culture of financial prudence and the expectation that partners should embody the same values, demonstrating the belief that personal financial habits translate to business operations.

Personal Adversity and Resilience

  • Paul shares personal struggles in his book, including ADHD, dyslexia, and the tragic experiences of being molested and losing his first child.
  • He openly discusses these challenges to give readers a full understanding of his character and resilience.

"Our firstborn son, Ryan, died of a congenital heart defect... You just try to come to terms with them."

This quote conveys the profound personal loss Paul experienced, adding depth to his character and the adversity he faced while running the business.

Customer-Centric Approach

  • Naval Ravikant's quote about business being essentially about service resonates with Paul's philosophy.
  • Paul consistently prioritizes the customer's perspective, even walking through the front door of stores to experience what customers do.
  • He advocates for removing any subtle hostility towards customers, such as negative signage or policies that inconvenience them.

"I never walked in the back door... I always walked in the front door so I could see things from the customer's perspective."

This quote demonstrates Paul's dedication to understanding and improving the customer experience by physically placing himself in the customer's position.

Learning from Games and Adapting Strategies

  • Paul applies lessons from games like poker, Monopoly, and Risk to real-life business scenarios.
  • He uses these games to develop strategic thinking and adaptability without adhering to traditional business plans.

"He'll learn business lessons from games that he applies in real life."

This quote indicates how Paul translates strategic concepts from games into practical business lessons, emphasizing the value of unconventional sources of wisdom.

The Importance of Saving and Frugality

  • Paul repeatedly discusses the significance of saving money and frugality throughout his book.
  • He associates these traits with cautious handling of store profits and overall business success.

"Spenders won't be cautious with their store profits."

The quote reinforces the idea that personal financial habits are indicative of how individuals will manage business finances, stressing the importance of saving and frugality in partners and employees.

Overcoming Personal Challenges

  • Paul is candid about his personal challenges, including ADHD and dyslexia, which affect his ability to use email and prefer numbers.
  • He finds alternative ways to communicate and manage his business, like using voicemail to spread ideas.

"He can't do email... He's really good at numbers, so he'll pour over, like, the income statements."

This quote illustrates Paul's adaptation to his personal challenges, focusing on his strengths and finding alternative methods to effectively run his business.

Customer Feedback and Continuous Improvement

  • Paul values customer feedback and suggestions as a means to improve the business.
  • He and his team read every customer suggestion, viewing them as valuable intelligence for problem-solving.

"We also relied on the prosaic suggestion box for input from our customers."

The quote highlights the use of customer feedback as a critical tool for continuous improvement and the company's commitment to listening to its customers.

Work Culture and Enjoying Life

  • Paul and his partners believed in taking their service seriously but having fun with everything else.
  • They maintained a work culture that balanced professional pride with enjoyment of life.

"Take the service you provide your customers seriously, but have fun with everything else."

This quote captures the ethos of the company culture, emphasizing the importance of delivering quality service while also ensuring that the work environment remains enjoyable.

Individual Business Philosophies

  • Paul acknowledges that different partners had varying business philosophies and approaches.
  • He respected the diversity of methods, as long as they contributed positively to the company's operations.

"This is why we all did business differently... I hate policy manuals myself... But if our other partners could make use of one... I'm glad that Dave got it written."

This quote shows Paul's openness to different business strategies and his appreciation for the benefits they can bring, even if they diverge from his personal preferences.

Delegation and Attitude Towards Power

  • Delegation is emphasized as a means to avoid being overworked and to maintain a work-life balance.
  • Power is viewed negatively if it equates to excessive work and responsibility.
  • Creative thinking and personal relationships are valued over long working hours.
  • The speaker advocates for being involved in business without being consumed by it.

"Power to me, means having to do a lot of work. I believe in getting out of as much work as I possibly can."

The quote reflects the speaker's belief that power often comes with burdensome responsibilities and their preference for minimizing work to enjoy other aspects of life.

Acknowledging the Dark Side

  • The speaker openly discusses their imperfections and anger issues.
  • Successful businesses are often led by intense personalities, not laidback individuals.
  • The speaker advises against letting emotions govern one's actions.
  • There is an acknowledgment of personal failings and the pursuit of treatment to improve.

"You rarely hear people talk about their dark sides, especially business leaders, which is a shame, because successful businesses aren't usually started by laidback personalities."

This quote highlights the rarity of business leaders discussing their flaws and suggests that intense personalities are common among successful entrepreneurs.

Personal and Financial Vulnerability

  • The speaker shares experiences of financial risk and emotional challenges.
  • Running a business out of fear is discouraged, yet the speaker admits to having done so.
  • There is a recognition of the emotional toll of entrepreneurship and the struggle with one's emotional nature.
  • The speaker sought treatment to improve their quality of life.

"If Kinkos took a dive, as it nearly did at several junctures in its rapid, stepladder like growth, I stood to lose everything."

This quote illustrates the personal financial risks the speaker faced and the intense pressure that accompanied the growth of their business.

Struggle with Anger and Seeking Help

  • The speaker admits to having a problem with anger and its impact on relationships and the workplace.
  • There is an effort to seek help and improve behavior, including couples counseling.
  • The speaker shares a story of a partner's serious illness to demonstrate the negative aspects of their behavior.

"I let my anger rule me too often at kinkos and at home."

The quote is an admission of the speaker's struggle with anger management and its negative consequences in both personal and professional contexts.

Corporate Culture and Bureaucracy

  • The speaker criticizes the bureaucracy and lack of responsibility in corporate settings.
  • A contrast is drawn between the creativity and accountability in the field versus cautiousness at headquarters.
  • The speaker reflects on their own intense dislike of the corporate environment and the emotional turmoil it caused.

"The problem with bureaucracy at most headquarters is that there's so much passing the buck, no one takes any sort of responsibility."

The quote criticizes the lack of accountability in corporate bureaucracies and suggests it is detrimental to company health.

Passion and Tolerance of Genius

  • The speaker discusses the importance of passion in business and the need to stand up to difficult personalities.
  • Anecdotes are shared to illustrate the complexity of working with talented but challenging individuals.
  • The speaker believes in tolerating and forgiving the faults of passionate people.

"As long as a person had passion and gumption, I could forgive a lot."

This quote emphasizes the speaker's willingness to overlook certain negative behaviors if the individual possesses passion and initiative.

Financial Insecurity and Independence

  • The speaker discusses the constant financial anxiety experienced by entrepreneurs.
  • There is a desire for the independence that wealth provides, not just for material comfort but for time with family.
  • The speaker reflects on their upbringing and the positive association with wealth and family time.

"Everything in each of our businesses were guaranteed with a personal signature."

The quote conveys the personal responsibility and risk the speaker took on in their business ventures, highlighting the financial pressures involved.

Post-Sale Reflections and Regrets

  • The speaker shares feelings of loss and identity crisis after selling their business.
  • The emotional difficulty of letting go of something one has nurtured for years is emphasized.
  • The speaker suggests a podcast idea focusing on founders' feelings years after selling their companies.

"No matter what anyone says, walking away from something you spent 30 years nurturing, whether it's a child, a company, or even a hobby, is going to take a toll."

This quote captures the emotional challenge of detaching from a long-term project or business and the identity struggles that can ensue.

Repurposing Life Post-Kinkos

  • The speaker finds a new mission in asset management and real estate investment.
  • There is an emphasis on finding a new purpose that offers fulfillment without the stress of the previous business.
  • The speaker shares their personal definition of success, which centers on family relationships.

"We finally took our chips off the table and let the game move on without us."

The quote metaphorically describes the process of stepping away from the business and moving on to a new chapter in life.

Continuous Learning and Curiosity

  • The speaker encourages asking questions and maintaining a sense of curiosity throughout life.
  • There is a recognition that not all answers are known, and it's important to keep exploring.
  • The speaker reflects on the beginnings of Kinkos and the importance of dreaming and playing.

"All I've ever had was a bunch of questions. When you think about it, Kinko started with a question."

This quote underscores the role of inquiry and curiosity in the speaker's entrepreneurial journey and in life generally.

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