George Berkowski is a former rocket scientist turned app developer turned serial digital entrepreneur. In this Q&A, ahead of his keynote speech at FutureBook 2014, Berkowski says why publishing needs to embrace change and why it’s good to cannibalise your business
What can publishing learn from the tech world?
The biggest skill is mostly philosophical: you have to appreciate the only constant is change. You might have to fundamentally reinvent every part of your business, from its business model to production, to interaction, to design, every couple of years—or every week, depending on the scale of what you are talking about.
In my business, software is a living, breathing thing; you don’t put out an app then wait for it to bring in money. You build an app and it evolves with its users. What people want today is sure as hell not what they will want in six months’ time. The companies that really flourish on the customer and business side are the ones who just accept that there will continually be new ways to do things better.
Are there any impediments?
One problem is that I don’t know what publishing is anymore. Publishing is Twitter, publishing is blogging, publishing is magazines and books. To me, this is just different formats to digest two things—information and entertainment—in different ways.
I would argue that big publishers should have a mastery of those formats, and it should be done as a portfolio: a big chunk of information that is digested through different channels. The fact that book publishers don’t do things like magazines or run blog networks astounds me, because to me it’s very similar and it’s converging—and quickly.
One thing a lot of tech companies are doing, and have accepted, is that they have to cannibalise their own businesses in a sort of an ongoing, predictable way. And there is a science to that. Whingeing that you have competitors everywhere and fighting them by using legal and other primitive means only serves to piss off users, authors and distributors, and is really not a sustainable strategy. Publishers should be actively embracing every channel and hiring people who can help them model how this cannibalisation works. Cannibalisation is inevitable, so accept it, and build it into your practice. Build stuff and fail, then figure it out and learn from failure.
What hinders publishers most in the digital age?
Distribution. A big publisher not having the ability to sell its own e-books direct is beyond ridiculous. If you are one of the Big Five and you don’t have a distribution channel that’s of any interest to readers, then you don’t have any relationship with your end user. Why am I [as an author] paying you 90% [in royalty splits]? Apple is only taking a 30% cut, and it is putting me in front of 100 million people. How many are you putting me in front of?
If you don’t have a relationship with the end user, you are going to be completely disintermediated. You will just become content acquirers and polishers . . . I don’t see anything particularly sustainable or interesting in what publishers are offering now. But it doesn’t have to be that way.
You can distribute, you can build relationships with the end user. Particularly in the internet age, when brands can be built up quickly. We’ve seen digital companies become massive brands in just one, two or three years.
What do you think the core of the problem is?
What it comes down to is that publishing is not a culture that has incentives for innovation. You attract the best people by giving them an opportunity to innovate, to transform an industry. Ultimately, you get the upside from them. Whether you make money immediately is not the relevant question, it’s having the possibility of doing so. You are not going to get that by paying people £28,000 a year. Any developer I know who is earning under £50,000 [per annum] is working on the cheap. So how does publishing’s business model support any kind of talent?
You don’t build stellar digital teams by hiring just one or two guys that want to be your head of digital. You need to make a step change. You need to rattle the cage a bit, and that takes some really gutsy thinking by the c.e.o. or leader. You have to get people on board.
You’ve published a book traditionally. How did you find that experience?
What publishing does very well is editorial. I’m not a great writer, but with a lot of polish and structuring, we’ve made a good product. My editor has been fantastic. The marketing? All the publisher has done is literally contacted a handful of bookstores, and did what they usually do. Even in terms of publicity and CRM [customer relationship management], it’s not very good. If a start-up was operating at that level, with those overheads and that level of execution, it would be dead in the water in three months.
We couldn’t even get a free version of the e-book out to reviewers, which was frustrating. You’re kidding me, right? This is 2014, not 1996.
The Bookseller's The FutureBook 2014 conference programme on 14th November promises to have the widest scope and most inquisitive bent yet, in terms of signalling digital directions ahead. Keynote commentary will come from author George Berkowski, WGSN's Carla Buzasi, and -- in conversation with Philip Jones -- Penguin Random House's Tom Weldon. Hurry to secure your seat, as sales will be closed soon.
George Berkowski is an entrepreneur who has built businesses in manned space flight, online dating, transportation and mobile apps. He is one of the minds behind the internationally successful taxi hailing app Hailo where he led the product team until September 2013.