What it takes to be a Successful Entrepreneur: DukeGEN sits down with Jeff Shelstad of Flat World Knowledge

By: Sarah Ryan; Published September 14, 2009

Jeff co-founded Flat World Knowledge on the back of a 20 year successful record in higher education publishing. He’s held positions of increasing responsibility in sales, marketing, editorial, and senior management. Jeff has personally acquired some of the most successful business textbook authors in print today. Most recently, Jeff served as Editorial Director at Prentice Hall Business Publishing, a division with annual sales in the hundreds of millions. Jeff received his Executive MBA from Duke University in 2004. In this interview, he recounts what led him to start his own venture and offers advice for those looking to do the same.

Did you always know that you wanted to get involved with a new venture, or was there a "light bulb" that came on one day?

I had been dreaming about starting my own publishing venture for many years. I initially started writing business plans in the early 2000’s as I enjoyed the intellectual challenge of bouncing ideas around and seeing what it would take to develop various ideas into real businesses. The real trigger for me to formally launch the venture was the realization that the three main customers in the higher education publishing space - authors, professors and students – were all becoming increasingly frustrated. When your paying customer (the student) is searching frantically to avoid the transaction, I became convinced this was the opportune time to launch a potentially new and disruptive business model.

How did you balance your full-time job with the pros and cons of launching the venture either full or part-time?

I never envisioned a part time effort. The dream was too big. Yes, jumping off the train of full-time employment is hard. As stated above, it took a very strong belief and recognition that customers in the industry were not happy and there had to be a better way to serve them. I also had tremendous support from my wife (she is also in the industry) and a good partner (Eric Frank) to start Flat World Knowledge.

Eric and I enjoyed the process of debating and bantering about how the industry could be improved. We shared many of those ideas while still at Pearson and they were often receptive. But increasingly it became clear to at least us that remaining in the industry and being bound to the existing publishing framework would not permit the creativity required to attempt to change an industry. Pearson was supportive of our efforts and even offered to fund our venture as an in-house project. At that point though, we did not have a clear plan and business model and thus it felt artificial to ask someone to fund something that did not exist.

What we committed to do was to get out and engage with those three sets of customers (authors, students, and professors). We thus resigned together in January of 2007 and traveled extensively for six months. This was our intense listening and brainstorming period.

How have you funded the business and what have you learned from that experience?

Eric and I agreed to put in a good chunk of money for the first year of operations. This funded that extensive travel, allowed us to establish the business legally, got our first authors signed and writing, and enabled us to rent an office. In December 2007, we raised our first angel round to begin our alpha process with students and professors. That angel round also allowed us to hire our first employee, Brad Felix as Chief Technology Officer. After completing our alpha research with 100+ faculty and 2,000+ students, we proceeded to produce our first four beta textbooks. That required a second angel round in September of 2008 to fund the production of those books and the use of them at 20 schools and with 500+ students.

At that point, we had to decide to “play it safe” or “swing for the fences.” All signs were pointing to the chance that we might be on to something. So with the momentum of the business behind us, we went for institutional money. We were fortunate enough to close an $8M Series A in February of 2009.

How have you approached building a team?

For the first twelve months, it was just me and Eric. Fortunately, we have very complementary skill set which I believe is important in identifying a co-founder. Eric and I have tremendous confidence in our ability to attract and manage authors and sell the resulting product, but we did not have the technology and platform expertise. We always knew our first employee would be a CTO. Brad brought that.

Having a board of advisors has also been critical to our success. One often reads that advisory boards are overrated for start-ups but we did not follow that advice. Our advisory board had strong entrepreneurial success and deep contacts in the funding community. We would not be where we are today without the help of our early advisors.

What do you attribute to the success of the business thus far?

Eric and I both believe that the ability to execute trumps ideas. So our success has been based on our strong publishing fundamentals on the front end, and a very intuitive and creative business model to support those fundamentals. For us it all starts with world class authors and great textbooks. Without great authors, we cease to exist. We treat our authors very much as partners, which I know sounds trite but with us it is true. Our authors, if they perform, own options in Flat World Knowledge. That’s pretty unique. So the 50+ authors that have signed on with us are excited and want to help us change an industry.

Our next customer, the professor, gets 100% control of content. That is very unique. S/he can delete and rearrange at the sub-chapter level, can annotate in their own comments and content, and can use a version of the book they adopt as long as they desire. Also, because they are choosing a very affordable option for students, they can be a “hero” on the first day of class.

Finally, the student gets choice, all of the way from free on-line to many affordable options off-line. So they clearly see the value.

And honestly, we have also benefitted from luck. To get Jeff Timmons as our lead advisor was lucky. Jeff did not have to take this risk or commit this time, but he did. His offer to engage us early on with the venture capital community was prescient, as we made several contacts in those early meetings that bore fruit once we were really in need of money in late 2008.

How important is passion for you?

It’s vital. It would have been far easier to stay in my role at Pearson, but I had lost the passion for the way the publishing business was done. I was still passionate, however, about motivating a great author to write a great book. Once Eric and I figured out a business model that could scale the acquisition of great author talent, we became even more passionate and the dream to change an industry was born. Now the fun has begun.

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