In working with publishing startups, investors play an important role in funding or coordinating compatible ideas in different parts of the publishing stack. When evaluating potential partners, funders can benefit from expert publishing advice.
Amazon, the dominant online retailer, started as a bookseller. Among consumers, it is known for breadth of selection, speed of delivery and competitive pricing.
For publishing startups, the company falls somewhere between a relentless competitor and their most likely exit strategy. Amazon can be friend or foe, for the same reason: it owns solutions across every aspect of the publishing stack.
A startup that competes against Amazon, even in a single area like social reading, also competes against all of the other value-chain components Amazon can put in play. Get noticed by Amazon, and something is likely to happen.
Investors can help startups overcome this by funding or partnering with compatible ideas that fill in the missing functionality. That’s still an uphill battle, but there are areas, like discovery and recommendations, where Amazon continues to fall short.
Finding the right companion ideas depends on answers to three overlapping questions:
- Are these other companies a good fit with the one we’ve invested in?
- Do their ideas or approaches solve an important problem?
- Can their approaches scale?
The answers to these questions are not always self-evident. Publishing is not one business, but several, with different stacks for trade, scholarly, professional and education publishing. Even K-12 and higher-education publishing are different from each other.
A successful investment considers the startup, the publishing supply chain, trends in underlying markets, formats, consumer tastes and the likelihood that Amazon will respond in due course. These are all areas in which expert advice can help investors make the right funding decisions.