Jeff Shelstad is Co-Founder and CEO of Flat World Knowledge, and a member of the Higher Education Management Group.
KCH: Jeff, can we begin with a quick description of Flat World Knowledge business model?
JS: Sure. We are very much a publisher of college level textbooks, and with the word “publisher” comes all of the inherent judgment around markets to approach, authors to attract, and product development and positioning. We make all of those judgments resulting in great books by great authors that are as good or better than what is currently available in the college textbook arena. But when we publish our books we diverge from the industry at a sharp angle. Our books are free online and openly available. The free version is a Flat World Knowledge web-hosted book. Being “open” simply means our license allows and in fact encourages derivatives. And we have built the underlying platform to easily enable those derivatives. So how do we make money? Well, we treat the learner as a real consumer, and we provide affordable and attractive alternatives to their free, web-hosted book. Those include bound and printed books (black and white for $29.95 + shipping, full color $59.95 + shipping), print it yourself files by the chapter/book, audio files by the chapter/book, eventually handheld reader options, and more. In addition, we provide study aids (currently flashcards, quizzes, and audio study guides) available again by chapter ($.99 per chapter) or via a complete subscription. Put simply, the learner has many affordable choices on how to consume our content.
KCH: Your timing is good. Cost of textbooks has become a significant issue over the last couple of years (stimulated, in part, by the rising cost of college tuition). And leaders in higher education have taken notice: it was recently reported that 85% of community college presidents were encouraging faculty to “look for alternatives to traditional textbooks as a way to reduce costs” for students. Have these social and political intentions, though, translated yet into new buying habits among college instructors? (Full Report)
JS: Not in any significant way. And we believe strongly that instructors should not have to take a step back in their quality of experience just to address the rising cost issue. We don’t believe many will. We think legislative and authoritative/administration involvement, while nice, is not really a path to change, especially in institutions where faculty independence remains an important goal. In our model, the path to change for faculty starts with a great book and support package. The average faculty member should look at a Flat World Knowledge book and say “this looks like a book I should strongly consider for my course.” Then our business model can kick in – providing unlimited control of content to that faculty person, promising to never force him/her to a new edition, and giving them the chance to be the “hero” with their students. These are all proving to be very compelling value propositions for faculty.
KCH: One of the factors of success in textbook publishing is a robust supply of authors. Has your unique business model impacted your ability to attract high quality authors?
JS: Yes, and mostly in a very positive way. I’ve been acquiring world class authors since 1991. As the industry has evolved from 1991 to today (massive consolidation), I have found the publishers becoming more similar, not more distinct. We’re having lots of fun competing for major author signings. Nobody sounds like Flat World Knowledge. Now it would be naïve to think everyone is a convert. We’re still a very young business. But at the same time, most smart authors are fully aware of the industry challenges, and of course we have thought hard about answers to all of these challenges. We also treat our authors very much as partners, which I know sounds trite but with us it is true. Our authors, if they perform, own options in Flat World Knowledge. That’s pretty unique. So the 50+ authors that have signed on with us are excited and want to help us change an industry.
KCH: Textbook publishing is a unique industry in so far as the publisher’s client (professor) is not the end-user (student). And it appears that the benefits of the Flat World Knowledge model is most clearly realized by the end-user (greater choice; free/low cost). Is this the case? And if so, how does this inform your marketing strategy?
JS: I don’t think our benefit proposition is primarily for the “end user.” When we started this business, we were determined to create a business model that could address the pain points for three primary customers – authors, professors, and students. Without great authors, we cease to exist. We have a proven financial model to reward authors, and we intrinsically reward them in many other simple but significant ways. For the professor, scaling complete control of content is really only available through the transfer of power (open license, open platform) directly to the professor. We believe this transfer of power will allow professors to grow with our content, in most cases slowly modifying our books to expressly match their course. Of course, “free” is the easiest thing to communicate, but we believe student “choice” is the real breakthrough. All of that said, much of the press we have been able to generate as a young company has bubbled up from student activity on campus and their awareness and support of Flat World Knowledge. We continue to believe students will be a tremendous ally as we strive to change this industry.
KCH: You started Flat World Knowledge after holding a number of leadership positions in the traditional textbook industry. How does the life of an entrepreneur compare?
JS: I am not sure I would recommend it for most. I have many good friends in the industry. Most of them have been quite successful and are well compensated. Jumping off that train is hard. For me, it took a very strong belief and recognition that customers in the industry were not happy and there had to be a better way. I also had tremendous support from my wife (she is in the industry and successful) and a good partner (Eric Frank) to start Flat World Knowledge. Plus I am a risk taker and a disruptor. I needed the intellectual challenge to solve something that I felt had to be fixed. But if you don’t have all of these pieces, it’s probably a good idea to stay put.