The traditional textbook publishing model no longer serves the
interests of students, educators, and authors. Textbooks are too
expensive for students and too inflexible for instructors. And
authors, the major, initial source of value in the industry, are
increasingly confused by faster revision demands and their
compensation for those revisions. Flat World addresses all these
industry pain points.
Jeff Shelstad
In 2007, two textbook publishing industry veterans, Jeff
Shelstad and Eric Frank, started a privately held company, to be a
new and disruptive model for the college textbook market.
Traditional business textbook publishers carry a portfolio of 5 to
10 titles per subject and charge premium prices for new textbooks,
an average of $1,000 in textbooks for a college student’s first
year, according to a recent General Accounting Office (GAO) report.
FWK’s strategy aims to turn the traditional model on its head by
providing online textbook access free to students. FWK earns
revenues by selling students the digital textbooks in alternate
formats, print and audio initially, and also by selling highly
efficient and mobile study aids. Despite the fact that professors
have rated the academic quality of FWK textbooks as equal to or
higher than that of textbooks from traditional publishers, the cost
to students is a fraction of current market prices due to the
efficiencies of the FWK business model. Moreover, with FWK’s
platform, instructors who adopt FWK books for their classes are
able to pick and choose the material provided to their students,
even if it is from earlier versions of textbooks that have since
been revised.
Shelstad and Frank previously served as the editorial director
and the marketing director, respectively, at Prentice Hall, a major
U.S. publisher of educational materials and a division of Pearson
PLC. They resigned from Prentice Hall in January 2007 with plans to
start a higher education publishing business together. During the
first several months, they met with many students, professors,
authors, advisors, and potential angel investors. Shelstad became
the CEO; Frank was the chief marketing officer. They also added
David Wiley as the chief openness officer.
Asked why he started FWK, Shelstad said, “I was convinced the
college textbook publishing industry model was broken.” He added,
“When more and more students are running from your core product,
you have a problem. For example, many leading business school
textbooks sell in the college bookstore or on various Internet
sites for $150 or more. Students by and large don’t see that value.
So they search frantically for substitutes, and the Internet has
made the availability and pricing of substitutes very obvious.” In
its first term (fall of 2009), FWK had 40,000 students using its
textbooks. This steadily continued to rise as faculty discovered
the low-priced alternative that combined quality and affordability
for their students. As of January 2013, FWK has published more than
100 books, with faculty customers at more than 2000 institutions in
44 countries. As a result, more than 600,000 students have
benefited from affordable textbook choices that lower costs,
increase access, and personalize learning.
Media attention regarding the fledgling FWK was generally very
favorable. Social media experts also gave the company accolades.
For example, Chris Anderson devoted a page to the FWK business
model in his bestselling book ”Free: The Future of a Radical
Price.” Moreover, early user reviews of the product were also very
positive. For instance, an instructor who adopted an early FWK
text, Principles of Management, noted, “I highly recommend this
book as a primary textbook for…business majors. The overall context
is quite appropriate and the search capability within the context
is useful. I have been quite impressed [with] how they have
highlighted the key areas.” At the same time, opportunities to
improve the Web interface still existed, with the same reviewer
noting, “The navigation could be a bit more user friendly,
however.” FWK uses user input like this to better adjust the
strategy and delivery of its model. This type of feedback led the
FWK design squad to improve its custom Web interface, so that
instructors can more easily change the book.
Further changes occurred in late 2012, when the company
announced it would no longer offer free online access to its
textbooks. Moving from “free to fair” (the entry point for students
is now $19.95) was a difficult but necessary decision. On its
website, the company explained:
“As the transition to digital has changed student buying trends,
the free format has become a barrier to our long-term growth and
ability to offer a fair and affordable model that works for all our
customers, from individual students and instructors to our
institutional partners.”
In December 2012, the company announced the appointment of
Christopher Etesse as CEO. Etesse is a former senior executive and
Chief Technology Officer with Blackboard Inc. Shelstad will remain
with the company in a strategic role as Founder.
Only time will tell if the $30 million invested in FWK by 2012
will result in the establishment of a new titan in textbook
publishing or will be an entrepreneurial miss.
Based on information from United States Government
Accountability Office. (2005, July). College
textbooks: Enhanced offering appear to drive recent price
increases (GAO-05-806). Retrieved April 22, 2010, from
http://www.gao.gov/cgi-bin/getrpt?GAO-05-806; Community
College Open Textbook Collaborative. (2009). Business reviews.
Retrieved April 22, 2010, from
www.collegeopentextbooks.org/.../business.html; Personal interviews
with Jeff Shelstad and Eric Frank.
Discussion Questions
- Which competitive advantages do open textbooks seem to
possess?
- Which learning styles might be most effective for individuals
in entrepreneurial firms? Explain your answer.
- How might the extensive textbook industry experience that open
textbook founders possess help or hinder the company’s ultimate
success or failure?
- If you were one of the founders, how would you prioritize how
you spent your time in the first weeks on the job after getting the
venture capital funding?