By Karen E. Klein (Bloomberg) From selling typewriters in his native Ontario, Canada, in the 1970s to wrestling with Microsoft (MSFT) in the 1990s as the co-founder and chief executive of open-source software company Red Hat (RHT), Bob Young has been a fiercely competitive serial entrepreneur. His latest venture is 9-year-old Lulu.com, a website that revolutionized self- publishing by automating the process of creating, printing, and selling books. Young says Lulu had $35.9 million in revenue last year and is approaching $40 million in 2011. Now he’s preparing the 130-employee, Raleigh (N.C.) company for a challenge of its own: Online bookseller Amazon’s (AMZN) recent entry into the publishing arena.
Q: The publishing industry is on something of a roller-coaster ride right now.
A: We are in the midst of a remarkable few years. It’s a phenomenon we all saw coming, but you never know if a transition is going to be a gradual progression over 10 years or it’s going to happen with a sudden spike.
Q: Are we experiencing a spike?
A: There’s a new generation of electronic devices that’s exploded in the past few years — the Nooks, the Kindles, the iPads — that are enabling casual reading to move online. Going back to LexisNexis in the 1970s, people have been delivering content electronically without ever putting it on paper. But now, it’s the romance stories and the books you traditionally read on holiday that are available. Now, instead of buying mom a book for Christmas, you’re buying her an iPad.
Q: What does that mean for the future of physical books and the viability of the print-on-demand business?
A: We operate equally well across all devices at Lulu. And we still ship physical books; it’s still a growing business for us. For instance, we sell books to people who worry that what they put on their computer isn’t going to be readable in 20 years.
Paper is a great storage mechanism for knowledge; it’s the one we’re most comfortable with. One of the benefits of the Kindle is that you can read it in bright sunlight. Well, a book you can read in any kind of light. It’s hard to beat paper, pencil, and an eraser when you’re interacting with a document or you’re taking in knowledge that a teacher is trying to convey.
Q: Does that mean you have hope for the endangered corner bookstore?
A: I sure as hell hope there’s a future for the neighborhood bookstore. If I have half an hour to kill and I have a choice of a coffee shop, a clothing store, or a bookstore, I’ll be hanging out in the bookstore.
The way I see it playing out over the next 10 to 20 years is, the total value of the publishing industry is actually going to go up. If publishing in North America is a $100 billion annual business, I think it’s going to be $150 billion. But $100 billion of that will be electronic. That means the paper version is going to go from $100 billion to $50 billion, and half of all the jobs in the paper publishing business are going to go away.