Editorial by Kristen McLean
Startup lesson learned: people outside of publishing don’t understand publishing.
And why should they? It’s a profoundly irrational industry, full of complexity, with historically low margins, and enough gatekeepers to defend Fort Knox.
This presents some serious challenges for those of us working on new solutions for the future of the industry.
Not only do we have to manage the usual challenges — coming up with a compelling business idea, convincing early stage funders to buy in, and getting to revenue before running off the cliff — but depending on prior industry knowledge, we also need to navigate a bewildering thicket of industry-specific challenges.
Factors like a huge & disorganized data infrastructure, the glacial speed of decision-making, and no real culture of rapid prototyping or investing in innovation create frustrating barriers for startups who must move much faster than the industry at large. #StartupLife is already one of the riskiest undertakings ever—being a publishing innovator requires a massive dose of moxie, the patience of Job, and the survival instincts of a cockroach.
And this challenging environment isn’t lost on institutional funders. There are precious few professional investors or funds who are focusing specifically on publishing, even though it’s a $28 billion (in the US, or $120+ billion worldwide) industry ripe for disruption.
The mainstream venture funding community seems to have three opinions about investing in publishing technology:
- “Publishing is dying. We’re not investing.”
- “Publishing is too complex — we don’t have the expertise, we’re not investing.”
- “We think you have a great business idea, but publishing is low-margin. We’ll never get our 20x 30x 100x exit, so we’re not investing now. PS. Let us know if you ever get to the consumer side.”
As my friend George Slowik, the owner of Publisher’s Weekly, drolly observed, “Innovation in publishing is a long play.”
And that’s precisely why the industry itself has to think seriously about creating, vetting, and supporting its own specialized startup environment. It’s how we will innovate innovation at a time when we need it the most—and those who get involved will be in a terrific position to reap the substantial rewards when that “long play” pays off.
How Will We Do It?
Let’s create a neutral, overarching umbrella organization focused on nurturing new models & fostering innovation specifically for publishing. A core mission of this organization would be the development of new models of education, community, and industry-wide conversation that build bridges between innovators and the larger publishing economy.
Let’s get publishing innovators teaching other innovators about what is working in real time — less talking from the stage, and more hands-on workshops and round tables to share practical strategies at all levels of the industry. Let’s think ground-up instead of top down.
Let’s focus on “less noise, more signal.” Or, to put it another way “Less talk, more rock!” Let’s put a higher emphasis on measurable goals and tangible successes, with fewer theoretical conversations and prognostications. Let’s focus on paths to better profits, deeper insights, and direct conversations with our customers. Let’s stop guessing and start measuring and evaluating our business ideas.
Let’s create (at least one) specialized accelerator for publishing startups. This would allow us to vet the best, most disruptive ideas and entrepreneurs, and then to back them up with a rapid download of key industry knowledge, mentorship, and resources. We want to grease the wheels so they can move further, faster with expert guidance and some seed-stage funding.
Let’s develop a sophisticated pipeline of bridge funding for companies that prove their concepts. Most successful exits of publishing startups will come from a sale or rollup within the industry. Raising at least one professionally managed fund that invests in these promising companies will solve the VC dilemma, give industry stakeholders a manageable way to invest in innovation, while managing risk and getting in early on the next best thing and a huge potential return.
What Will We All Get Out of It?
- Screening & nurturing of the best ideas
- Direct download of specialized industry knowledge
- Accelerated innovation
- Bridges built between innovators and the establishment
- The potential for a very high return on investment at every level
Kristen McLean is a book futurist, a consumer zoologist, and an idea omnivore. She is also the founder and CEO of Bookigee, a Miami-based tech startup that builds disruptive products and analytics for the book-publishing ecosystem. Kristen is an eighteen-year veteran of the book business with a wide range of experience including retail, marketing, and consumer research. As leading industry analyst, she speaks all around the world about the digital transformation of books and reading. Follow her on Twitter @BKGKristen.