Some of you are familiar with Inkwell—I founded it as part of the curriculum for the Founder Institute. I had come to FI to see what I could do with the idea, and that idea carried me through to graduation.
Inkwell was going to be a crowdfunding platform specifically for authors.
With the rise of self-publishing platforms, it’s hard to get noticed. Inkwell would provide tools for authors to raise the funds from their fans directly for the purpose of investing in the preproduction of their book to increase the chances of their success. It would also provide a trusted network of professionals to help them with production.
Where Inkwell went wrong
While at the Founder Institute, in the week in which we built our financial projections, I discovered that the numbers weren’t looking good. I delayed for a bit, hoping that I could find a way to make it work, but ultimately I was not positioned to make it happen.
One of the stories we hear about crowdfunding platforms is that it’s somewhat of a crapshoot. I can’t think of a single project I have backed that has delivered on time. Costs always go over, things always take longer than expected.
The only way to avoid this is to have deep domain expertise in the product which is being produced. By nature, this is not the case with most crowdfunding projects. The power of these platforms is that someone with minimal background can break into a market with the help of popular demand.
Not providing expertise in the market to support the authors would mean not providing anything meaningful beyond what established platforms are already providing. However, providing that expertise, via a network of professionals, really meant that Inkwell would be more of a publishing house with a technical side than a technological platform helping authors – not my domain expertise.
However the numbers did start to look interesting if I played with specific variables:
More authors. Unfortunately, this isn’t very practical, or interesting. If you look at the Kickstarter Stats page, of all time, there have been 27k publishing projects launched with a total of $66.27m successfully raised. Kickstarter takes a 5% fee that’s $3m in revenue from publishing.
But that’s over the past six years, and they’re at the top of the game. Even if Inkwell could replace them in the publishing market completely, that’s not a very high ceiling for an expected growth. It’s not bad money, but remember, that’s revenue before expenses. For a one- or two-man team, numbers like that can be nice. But to make something like that happen would take a team. With a ceiling of $1m per year in revenue that’s not all that interesting for investors, and could only be considered a labor of love project if bootstrapped.
Successful books. This is the model upon which publishing houses are built. Invest in a slew of books, some break even, a few make it big, the successful books support the publishing of speculations. This is not unlike how VCs and other investors work.
Sadly, now that sales stats are more accessible than ever, publishers are leaning towards supporting the more popular books, which tend not to be the books with staying artistic power.
Implementing this model in Inkwell would mean retaining some of the rights of the book once it was published. I, however, wanted Inkwell to be a launch platform for authors to get picked up and published from, empowering them. Dipping into the dwindling pot of revenue from books would be just another way authors were getting screwed—a fundamental principle I was building Inkwell to prevent.
The way around that would be to publish the books entirely myself. Basically, I was looking at starting another publishing house, while I was interested in creating a technology platform that happened to deal with authors. A classic founder/startup mismatch.
How it could work
I’m not saying that the model is impossible to get right. It would be very wise for a publisher to create such a platform as a discovery engine for them and a support engine for their authors. Authors would benefit from being able to raise money to produce their books, even if they are only self-publishing. If done right, it could break even, and provide a good way to get first dibs on talented authors finding their voice and fanbase.
But as a standalone project, it would be difficult to make viable due to the naturally small margins. Increasing those margins would dig into the author’s needs, which went against the whole reason I wanted to start Inkwell in the first place.