HOW GRM WENT FROM STORING BOXES TO BUILDING A TECH BUSINESS THAT’S WINNING IN CHINA
GRM traces its roots back to 1980, when Israeli immigrant Moishe Mana started a company called Moishe’s Movers in New York City. Noticing that his commercial customers were stashing file boxes in expensive mini-storage units, he started Jersey City, NJ-based GRM in 1986. Today, its 1,100 employees produce more than $100 million in annual revenue, and it’s an international player in the document-storage business. A decade ago it started offering digital information management. The company maintains 15 warehouses in cities across the U.S. and more than a dozen overseas. GRM’s 7,000 customers include JetBlue, Memorial Sloan Kettering, the NFL and the city of New York. In 2011, Israeli entrepreneur Avner Schneur joined as CEO to expand GRM’s digital business. Trained as an industrial engineer, he moved to the U.S. with a medical imaging equipment company and later founded Emptoris, a data-analytics firm he sold to IBM in 2011. In this interview, which has been edited and condensed, Schneur, 61, talks about going digital and breaking into China.
Susan Adams: Were GRM’s customers eager to switch from physical storage to digital?
Avner Schneur: Ten years ago, people thought you had to keep a hard copy even if you had a digital version. And there was no really good software that could manage full enterprise content. For example, in human resources, you need payroll data but also a lot of other records like employment history and background checks, which can still arrive by fax. Health care is also really messy, with X-rays and celluloid and pathology reports. We give companies software that can manage all their files.
Adams: Storing cardboard boxes in warehouses seems like a totally different business from developing software. How did GRM make the transition?
Schneur: We bought a software company called Visual Vault that managed documents. We expanded its basic product and we got its amazing group of people. Also behind our business of putting boxes on shelves, we had a bar code inventory system that ran on sophisticated software.
Adams: Where is your growth coming from?
Schneur: Health care is our biggest vertical. We also do government, legal, real estate, insurance, energy and engineering.
Adams: How long do most companies hold onto documents?
Schneur: It depends on government regulations, which can vary from state to state and country to country. For pediatric records, it’s 21 years. For pathology, it’s forever. We still have massive numbers of boxes spread across the U.S. and internationally.
Adams: Do any companies still do physical storage only?
Schneur: A lot of small and medium-sized businesses do, the ones with 10 accountants, the insurance agency, the small architectural firm, the clinic with 20 doctors. Obama created huge momentum in the transition to electronic medical records, which is happening over 15 years. But a lot of doctors still scribble on paper.
Adams: Is there any good reason to store physical documents?
Schneur: If you’re a law firm and you have 20,000 boxes with 2,000 pages in every box—that’s 40 million pages—and the only reason you’re keeping it is the regulations say you have to keep it, we don’t recommend that customers scan those documents. It costs money for no return.
Adams: Are you still building warehouses to store documents?
Schneur: Yes, building and renting. We just finished building a warehouse in Lima, Peru.
Adams: What advice do you give small businesses?
Schneur: The transition can be easy. At Staples you can buy an online document management system for small businesses for $50 or $100 a month. They’re licensing our software. To get from soup to nuts is a big transition but to get to 80% digital storage doesn’t take much time.
Adams: Aren’t you playing on a crowded field with big companies like EMC? How can you compete?
Schneur: We used the cloud from Day one, and we can tailor our solution to your business.
Adams: Doesn’t everybody say that?
Schneur: You could say we came late to the game but our software was built directly to the cloud. Others were on client servers and then modified to the cloud. And I believe we have amazing analytics.
Adams: When added your digital business, did you have to let many of your warehouse workers go?
Schneur: The warehouses are still there. The problem was the account managers and the sales force. We hired a bunch of specialists and put them in every office in the U.S. and internationally. They trained our people, who had long relationships with their customers.
Adams: Do the sales people make as much money selling digital information management as they do selling physical storage?
Schneur: They’re making more money on the digital side.
Adams: What’s the difference in price between your digital and physical offering?
Schneur: Storing a box on a shelf costs a few tenths of a cent per month. The cost of managing information depends on the number of users, and the amount of information you’re managing.
Adams: Which is more profitable for GRM?
Schneur: Information management. When you store a box, you need a building, a truck, you need shelving, a sprinkler system. My margin on the software is way higher than on the box.
Adams: Is it that difficult for companies to set up their own document-storage systems in the cloud? Why do they need you?
Schneur: We invested $35 million to create the software we use. Do you want to do that yourself? Good luck.
Adams: How tough is it to do business in China?
Schneur: Extremely difficult. The market is very suspicious of foreigners. In the U.S., every box you store is open and you can scan documents. In China, every box is locked. Sometimes we’re asked to build a cage and put the boxes inside. The Chinese regulations are very different and you can’t put information on the cloud outside of China.
Adams: What find of competition did you face in China?
Schneur: We were competing with companies that kept their boxes in the basement. China is still the only place in the world where a lot of big companies keep storage in house. Digital storage in China is still in its infancy.
Adams: Are you the biggest player in that market?
Schneur: From what we know, revenue-wise we’re the biggest.
Adams: Once you sold Emptoris to IBM, I’m guessing you didn’t need another job. What brought you to GRM?
Schneur: After the sale, I played golf. Then Moishe Mana called me. His CFO is a good friend of mine. Moishe said, we need help. I’d already done some consulting with him and I love growing companies. When I came to GRM we had double digit millions in revenue. Today we’ve passed $100 million.
Adams: What are the most unusual things you’ve stored?
Schneur: We have floors with humidity and temperature control where we store all the tiny pathology samples from hospitals, like drops of blood and bits of human tissue.