“Saturdays are good for blogs, I get the most hits”, says Richard Charkin, who is an active blogger himself. Another experience of his: “If you don’t blog every day, you lose your customers.” And looking at this blog, Richard really writes very regularly and then also very substantially. Given the fact that on the sidelines he has the job being CEO of Macmillan, it somehow lets me pale in my occasional indolence in not always writing that regularly.
Just returned from a very inspiring breakfast with Richard in Munich where we initially went off to talk about India. Macmillan is very strongly established on the Indian subcontinent, with its subsidiary Macmillan India being a major schoolbook publisher and running a very successful publishing business process outsourcing (BPO). We were exchanging thoughts on what role India will play in digital media, namely internet and mobile in the future and what the specific challenges existed for a publishing house if it wished to be somehow part of that game. At this point, as Macmillan India is a publicly listed company, I have to point out that of course Richard at no point made reference to concretely planned activity which by any means might have implication on the stock price. It was a breakfast where we spoke on a very broad and generic level.
We were coming from different lines of argument, but arriving at pretty similar conclusions: On the one hand, India still has to prove that it is able to create consumer-centric digital services which might have the appeal to scale globally. Second, an effect which might at the first glance appear like a turbo-charge to foster exactly that: India is presently being flushed with Venture Capital. Evalueserve, a business intelligence firm, observes in a report that 44 US-based VCs are rushing to invest on average US-$ 100 mn, with a strong focus on the sectors mentioned above. Nominally this adds to US-$ 4.4 bn. Yet, this value still has to be corrected by the purchase power parity, something that also for instance “The Economist” regularly does, by a factor of 5. Doing the maths, one ends of with US-$ 22 bn to pay for management, staff, development resources and marketing power in India in order to get a company off the ground. For me this means that way too much money is chasing way too few great concepts and also not enough capable entrepreneurs to execute.
In the nutshell, a publisher is not a VC in the first place. And the VCs are already there in abundance. So running into a head-on competition by throwing just even more money into the ring, will certainly lead to a bloody red ocean. But a publisher has other assets and capabilities a VC does not have: setting-up businesses, building operations itself and using the multiplying forces of its existing ventures. So in my view, a kind of hybrid which combines the deal-making capability of a VC with the institutionalized hands-on skills of, say, an incubator could create a marketplace that VCs are not able to address. See in that regard the similar arguments of Terry Garnett on the higher end of the buy-out investment market about which I wrote a few days ago.
Clearly, Richard and touched upon a whole variety of other topics: cricket, the future of on-demand printing in books and e-publishing. On the latter, Richard is more skeptic than me, arguing that to a vast extent a consumer buying a book has similar motives like buying furniture: you want to have it, touch it and see it – but not necessarily read it :-) I decided to give myself a try when I will be in the U.S. in two weeks where I will buy the Sony Reader for $300 odd. But I was also pretty franc saying: “I give myself a likelihood of 60 % that after three months this thing will be lying useless in the corner.” In that case Richard would have proved to be double right: e-books don’t work and the gadget would have become a sort of decorating “furniture” of its own kind.
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