Aug 21, 2023 · 1h 1m · how-i-built-this
Kinko’s: Paul Orfalea
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gold bands on the timeline = statements, start to end. Hover to read, click to jump. CC turns on captions
In this episode of How I Built This, host Guy Raz interviews Kinko's founder Paul Orfalea about turning a single walk-up photocopier shop into a multibillion-dollar global retail powerhouse. Orfalea details his unique equity partnership model, delegative leadership style, key strategic pivots through technological and legal challenges, and his core philosophy on emotional detachment in business.
How this conversation actually went
Every chapter scored 0–10 on four independent dynamics. Hover any point for the reasoning behind the score. Guy holds 45.4% of the talking time here. How this is scored →
Guy as informed peer 5.1 Guest teaching 5.3 Guest disagreement 2.3 Guy pushing back 1.5
speaking balance: gold is Guy, purple is the guest (3 minute bins)
Sharpest disagreement ▶ 44:40 Debunking the love your business myth
Paul forcefully attacks conventional entrepreneurial sentimentality, declaring that claiming to love your business is absolute bullshit that destroys objectivity.
Hardest push from Guy ▶ 28:53 Challenging the informal expansion as fly-by-nightGuy directly challenges Paul's expansion model, pointing out that entrusting the entire brand across America on informal handshakes sounded haphazard and fly-by-night.
Biggest teaching moment ▶ 38:27 Explaining 24-hour retail customer psychologyPaul educates Guy on retail consumer psychology using data from Sheetz, demonstrating how offering round-the-clock availability doubles daytime revenue by signaling total reliability.
Guy holds their own ▶ 54:02 Demonstrating command of Kinko's corporate rollupGuy cites precise figures on Kinko's 851 global stores, employee numbers, and the specific $200 million private equity deal terms, showing deep command of the business history.
the scores for every segment, with the reasoning behind each
| Chapter | Topic | Guy as informed peer | Guest teaching | Guest disagreement | Guy pushing back | Why |
|---|---|---|---|---|---|---|
| Paul's Early Struggles, Family, and College | 5 | 4 | 2 | 1 | Guy Raz demonstrates strong background knowledge on Orfalea's early upbringing and family ventures. Orfalea cheerfully explains his philosophy on school grades versus practical money skills. | |
| Discovering the Business Potential of Copying | 4 | 5 | 1 | 0 | Paul explains his core entrepreneurial insight comparing rotting produce inventory to stable paper stock and seeing long lines as pure profit. Guy prompts and validates the narrative smoothly. | |
| Launching the First Kinko's in Isla Vista | 5 | 6 | 2 | 1 | Paul educates Guy on how Xerox's delayed invoicing provided interest-free float capital that funded his launch. Guy inquires into the exact economics and mechanics of the 100-square-foot walk-up shop. | |
| Early Profitability and Ambition to Expand | 4 | 4 | 1 | 0 | Orfalea outlines how complementary product lines like pens and film processing secured immediate cash flow. He shares his mother's decade-by-decade career advice to explain his long-term expansion ambition. | |
| Mid-Show Break and Episode Preview | 5 | 5 | 2 | 1 | Guy highlights Paul's costly expansion into offset commercial printing in Irvine. Paul openly details his total lack of mechanical ability and the vital lesson of sticking to high-margin copying. | |
| Pioneering Academic Course Packets | 5 | 6 | 3 | 2 | Paul explains creating course packets by wandering university reserve rooms and dismisses standard franchise models with colorful imagery. Guy probes into why Paul preferred equity partnerships over franchising. | |
| Scaling to 80 Stores and Back-Office Operations | 6 | 6 | 3 | 6 | Guy pushes back directly by characterizing Kinko's early expansion as haphazard and fly-by-night. Paul embraces the label while schooling Guy on how centralizing bank reconciliation and removing operational obstacles guaranteed control. | |
| Paul's Delegative Leadership Style | 5 | 6 | 3 | 2 | Paul explains his extreme delegation, closed-door policy, and managing partners with a velvet glove and steel fist. Guy asks how Paul balanced firm leadership without losing partners to local copy competition. | |
| The 24-Hour Operating Revolution | 4 | 7 | 2 | 1 | Paul explains the counterintuitive psychology behind 24-hour operations inspired by Sheetz convenience stores, showing that all-night access doubles daytime volume. Guy connects the psychological insight to his own student experiences. | |
| Looming Threats: Superstores and Laser Printers | 5 | 7 | 5 | 2 | Guy questions why Paul felt constant insecurity amidst massive growth in the 1980s. Paul passionately dismisses the romantic notion of loving your business as absolute bullshit that ruins objectivity. | |
| Elitism vs. Common Sense and Money Motivation | 6 | 5 | 4 | 3 | Paul contrasts educational elitism with practical working-class intelligence, stating he was purely motivated by money. Guy astutely reframes this chip on the shoulder as Paul's greatest competitive engine. | |
| Coping with Personal Tragedy and Family | 4 | 4 | 1 | 0 | Guy gently guides the conversation to the tragic loss of Paul's first son, Ryan. Paul reflects candidly on the awkward emotional burden of consoling well-wishers and the value of public funerals. | |
| The Copyright Lawsuit and Strategic Pivot | 6 | 5 | 2 | 1 | Guy details the 1989 textbook copyright lawsuit that forced Kinko's to settle. Paul explains how losing that case accelerated their strategic transition into corporate computer workstations and branch offices. | |
| Private Equity Buyout and FedEx Acquisition | 7 | 5 | 2 | 2 | Guy demonstrates precise knowledge of the private equity acquisition terms and subsequent FedEx sale. Paul describes the painful dynamic of remaining chairman without authority before his eventual buyout. | |
| Life After Kinko's: Teaching and Philanthropy | 5 | 4 | 1 | 1 | Guy poses the classic How I Built This question regarding skill versus luck. Paul attributes his entire career primarily to luck, restlessness, and an optimistic view of human nature, alongside his current philanthropic work. |
Statements from this episode (23)
Paul Orfalea: Children need either academic skills or money skills
“I think in raising children, you have one of two choices. They better be good at school, get an accountant, lawyer, whatever, do a profession, or they better be good with money. And my parents encouraged me with money skills, saving, what to do with your money…”
Orfalea: Avoid perishable inventory; paper does not go obsolete like cucumbers
“And overnight, my inventory rotted, my cucumbers, my corn, and I looked at the Xerox machine, and I thought, man, that, that paper does not go obsolete. That inventory stays there for months and months at a time. And I thought, I don't want to be in a business…”
Orfalea: Disorganized Xerox billing provided a 90-day float to fund Kinko's
“Xerox was so screwed up in their invoicing, it gave me an enormous amount of float. I wouldn't get a bill from a Xerox machine for say, 60 days, 90 days after it was installed. And I didn't have to put up any money to get it.”
Orfalea: Strong consonants make brand names like Kinko's and Xerox unforgettable
“You want strong consonants. Google, Xerox, Kodak. Coca-Cola. So I wanted a business with a strong consonant. Once you heard the name Kinkos, you'd never forget it.”
Orfalea: Kinko's photocopied Molotov cocktail guides for anti-war students in 1970
“I remember Xeroxing For students how to make Molotov cocktails because the anti-war movement was so strong.”
Orfalea: First Kinko's sold $2,000 in stationery on day one
“I sold 2000 dollars a day worth of notebooks and pens the first day of school.”
Orfalea: Original Kinko's store cash flowed in month one
“I actually cash flowed the very first month. I had more money in the bank account at the end of the month than I started with.”
Orfalea shares a decade-by-decade framework for career exploration and earnings
“She said, you know, honey, in your twenties, try everything. In your thirties, figure out what you do best. Forties, make a bunch of money for what you do best. In your fifties, try not to do too much.”
Orfalea: Founders Often Waste Time on Complex Businesses Instead of Easy Money
“I think sometimes we spend our time on the Hardest thing, which was the print shop, where the easy money, the low-hanging fruit was in the copy shops.”
Orfalea: Kinko's photocopied course packets captured 6% of Ohio State textbook sales
“Say at Ohio State, we were doing six percent of the textbook sales by photocopying.”
Orfalea: Local store equity motivates operators better than minimum-wage employee pay
“You can't rely on minimum wage people to have motivation, and so I always figured if I take in a partner, the fact that they have equity in that individual location would make a big difference in the outcome, which is true.”
Orfalea: Franchisors and franchisees are just people flipping each other off
“Franchisees and franchisors are two people flipping each other off all the time. In other words, if I told the franchisee to do something, they would say, well, he's not, his motivation isn't cure. He just wants more six percent from the top.”
Paul Orfalea: Business consists of only three simple things
“You only do three things in business, and it's really simple. Motivate your workers, understand your customers, and balance your checkbook.”
Paul Orfalea: Kinko's store partnerships were generally split 60-40
“I put up, generally, 60% of the money. They would put up 40% of the money.”
Orfalea: True hard work is late-night worrying, not long hours
“Most people will brag about how hard they work, this, that, and the other. What I think hard work is what keeps you up all night long when you're worrying. That's hard work.”
Orfalea: Making himself inaccessible eliminated routine manager interruptions
“I shouldn't be available for those kinds of phone calls. So I became inaccessible and there better be a damn good reason for somebody to call me. And I noticed that the phone, I couldn't get anything accomplished by being so available for phone calls.”
Orfalea: Kinko's avoided franchising to prevent store partners from spinning off rivals
“The reason I didn't choose Franchise-een is If they viewed me as a parasite from the top, they would easily go across the street and do it. But I shared in the profits, and they got a good salary, they had a car, we had a pension plan for the partners.”
Orfalea: Operating 24 hours a day doubles daytime retail business
“If you go 24 hours a day, your daytime business doubles, which is absolutely correct.”
Orfalea: Loving your business is absolute bullshit and destroys owner objectivity
“Is when a business person says, I love my business. That's absolute bullshit. You love your family. You can enjoy your business, but once that becomes a love affair, you lose your objectivity.”
Orfalea: Average frontline workers are consistently smarter than corporate executives
“Well, I was always with the average person and I always felt they were smarter than the executives.”
Orfalea: Kinko's added a core value allowing managers to fire rude customers
“Our first sentence in the philosophy is we, our primary objective is to take care of the customer. But some of our customers are so outlandishly rude, we had to have a mechanism in our values to fire a customer. So we added in the second paragraph, the coworke…”
Orfalea: Acquirers retaining founders is like cutting a tail off incrementally
“When I came back I think when you sell your business, they shouldn't keep the founder on. It's sort of like cut, cutting the tail off an inch at a time, and everybody who was unhappy came to me, and I didn't have any influence or power to do anything about it.”