Two days ago, Kornit Digital announced the acquisition of Custom Gateway, a UK-based provider of cloud-based workflow solutions for on-demand production business models. To acquaint our readers with their organization, we sat down with their CEO and founder, Andrew Talbot, to ask him some questions.
Kornit Digital: As this may be your introduction to a great many who use or are considering using Kornit systems, what would you like to say about your own background, what you bring to Custom Gateway, and how you see Custom Gateway supporting the on-demand textile marketplace?
Andrew Talbot, Custom Gateway CEO and Founder: Custom Gateway first started providing workflow systems for companies interested in adopting the on-demand business model back in 2012, and we’ve been working with customers using Kornit equipment since 2014. It has been clear to me that on-demand was the future for the apparel and home decor markets for many years now, and our vision has always been to be at forefront of “enabling on-demand.”
The supply chain is highly fragmented, with lots of companies big and small providing services, and for some time it has been clear to us that companies prepared to invest in Kornit technology make the best customers for us and where we can add the most value by both improving their workflow and I would certainly call myself an on demand or digital workflow evangelist.
KD: You’ve been with Custom Gateway for more than 8 years. What changes have you seen in the on-demand marketplace in that time, and how has Custom Gateway grown?
AT: We have grown naturally as the brands and retailers have started to realize the potential of on-demand to increase choice whilst reducing costs. Our fulfillment customer base has evolved as the brands and retailers have started to increase their sales.
Online marketplaces like Amazon and specialist sites print-on-demand sites like RedBubble, Zazzle, and Society 6 have all helped prove the business model works and we are now finding almost all major brands and retailers want to adopt some element of the on-demand business model.
Our business has seen growth rates of over 50% year-on-year for the last three years; we now have brands and retailers coming to us as they can see we have become experts as enabling on-demand.
KD: Can you name a few key solutions Custom Gateway has introduced in that time, and the impact they’ve had on the marketplace?
AT: We have introduced many new initiatives over the last few years that have helped enable on-demand. Among them are our Shopify app, the artists portal, on-demand stock products, and new native app platforms.
KD: What was your impression of Kornit Digital prior to engaging in acquisition discussions, and why do you think they moved to acquire Custom Gateway at this time?
AT: It’s clear to me retailers and brands will drive more on-demand business, and Kornit has become the clear market leader in production technology. But I think it’s also clear a lack of suitable workflow was holding back the market, so they wanted to be able to solve that problem, hence the acquisition.
KD: How do you think Kornit’s company culture will mesh with, and complement, Kornit’s?
AT: It was interesting to see just how aligned our cultures are when we reviewed them. We love the “bonding matters” concept as it summarized the importance of building a partnership with customers and staff, and both companies are pioneers, both focusing on enabling on-demand.
KD: How do you see the pandemic economy changing your industry?
AT: In all corners of the world, e-commerce sales have increased during the pandemic, and with many companies needing to watch every penny, on-demand is a perfect fit. It can only accelerate change by reducing risk, increasing choice, and plugging supply chain shortages.
KD: What kinds of businesses do you cater to, beyond digital DTG printers, and how might this acquisition create new opportunities for those customers?
AT: The acquisition will provide more investment in the platform, with the aim of making it easier for brands and retailers to engage with the best fulfillment resources, be they apparel or home décor-related. The focus is on softlines, but ultimately the technology works for hardlines or even just stock products, too.
Kornit Digital CEO Ronen Samuel also joined us to elaborate on Kornit’s view in making the company’s first major acquisition.
KD: Why did Kornit choose Custom Gateway?
Ronen Samuel, Kornit Digital CEO: Custom Gateway’s software solution is the only modular platform that includes all the components brands and fulfillers need for a comprehensive, end-to-end workflow. Their robust and functionality-rich cloud platform is suitable for both business-to-business and business-to-consumer models, and handles every step for efficient on-demand production. It connects the front end and the back end in a way that enables customers to realize the full efficiency, scalability, and profitability benefits of digitizing to meet e-commerce demands.
KD: How do you anticipate this acquisition changing Kornit, and why is this good for the industry (and perhaps current customers)?
RS: Custom Gateway’s product roadmap is highly aligned with ours, designed to fulfill the shared vision for on-demand textile manufacturing. Our companies have partnered for several years now, and have seen how well these technologies complement each other in real-world operations, most notably in shared strategic accounts like Fanatics and Printful, two businesses that have provided extremely successful examples of what digital on-demand production can deliver.
KD: Custom Gateway is Kornit’s first acquisition of note. What does that choice say about Kornit’s long-term intentions for the marketplace?
RS: Our guiding principle is addressing the customers’ needs, and providing an invaluable solution for making their business more efficient, more agile, and more sustainable. If we do that, it proves our worth to the marketplace and investors alike. Custom Gateway offered clear and immediate benefits in terms of giving brands and fulfillers the process visibility, control, versatility, and reliability to thrive in an on-demand economy, and we know that because we’ve seen it in action. It’s both the safest bet and the most significant disruption Kornit could execute.
KD: “Hardware plus software” has long been a standard approach to acquisitions, across all forms of business technology. Do you see this as the beginning of what some might call a Kornit “stack,” whereby the market comes to view Kornit as a one-stop shop for all things “on-demand production?”
RS: I do believe Kornit is leading the charge in digital transformation for textile goods, most notably in the fashion industry, but also home décor and various types of accessories, including applications we may not even anticipate yet. Eight months ago, we hadn’t given much thought to protective face masks as a key driver for our technology, but demand for that type of expression has exploded in light of the pandemic, and driven increased investment from several of our customers worldwide. That kind of versatility demonstrates the value our technology provides, and supplementing it with additional resources is critical to continuously proving such value. So yes, bringing Custom Gateway into our portfolio certainly reflects the sense that we can, in fact, be that “one-stop shop” brands and fulfillers look to for the long term.
KD: A lot of business leaders might argue the pandemic economy is a time to take conservative measures, but choosing this summer to make Kornit’s first real power move seems an exercise in boldness. What made this the right time to execute our acquisition strategy?
RS: The pandemic economy has accelerated consumers’ move to online purchasing, an ongoing trend that was in clear evidence beforehand. Online purchasing means consumers expect more variety, and coupled with fulfillers’ real concerns about inventory risk and waste, that’s a perfect storm for driving on-demand production—and Kornit plus Custom Gateway is a perfect storm for supporting those producing on demand. With this acquisition, we’re delivering precisely the end-to-end production workflow those producers need at this moment, and it fits any supply chain model they have or aspire to—centralized, dispersed for proximity production, or any model in between.
KD: How do you think Custom Gateway’s company culture will mesh with, and complement, Kornit’s?
RS: Custom Gateway is led by a knowledgeable, innovative team that is a tremendous resource for our organization. Our teams share a similar work culture reflecting similar company values. We consider our people to be our strongest asset and believe their personal and professional growth are key to organizational success.
KD: Did Custom Gateway’s existing footprint, both as a UK-based organization and one with customers and support across the globe, play a role in your decision to acquire them?
RS: That they have relationships with several of the world’s most prominent brands certainly doesn’t hurt, but the driver was definitely their software platform, and the talent behind it. The UK is our largest market in the European region, so having an organization there may well supplement our operations in Dusseldorf, but Kornit and Custom Gateway are both global operations with a grand vision for transforming the industry in total. Sharing that ambition, and having the world-class products to back up that vision, is what ultimately made this the right step forward.
On Wednesday, August 19, Ronen Samuel will be leading a “fireside chat” to discuss the particulars of Kornit’s Custom Gateway acquisition, what it means for the marketplace, how it creates new capabilities and opportunities for the on-demand textiles industry, and why their combined solutions will be key to mastering production in the post-pandemic economy. Register today to reserve your place, and learn why this news represents a major step towards digital transformation of the textile industry.CONTACT US