The education content industry (textbooks and beyond) is a strange place these days. There are generally two kinds of companies operating in the space right now: large conglomerates (think Pearson, McGraw-Hill, Cengage, Macmillan) and startups with outside funding. We are one of the very few outliers: small, bootstrapped, and not a startup. Not infrequently, as I look around at our competitors, I am struck by how weird we are.
But weird can be good. In fact, almost every day I am thankful that my company is small, especially in an environment that is begging for innovation. Begging? That word is not too strong when you consider that one in four students opts out of using the assigned textbook. In other words, a quarter of users don’t find enough value in their text to rent or purchase it.
Far from being a hindrance, being small and independent in any industry can fuel innovation. Here are just a few reasons why it works for our company and for me as the owner:
- I am accountable to no one but myself, my employees, and our customers. There are no investors pressuring us to deliver results so that they can cash out and no shareholders demanding a higher stock price.
- We can build for the long term. Without shareholders or investors, we can operate on whatever calendar we choose. Is it going to take us 3 years to be profitable with a new product or service? 5 years? As long as we have the capital on hand to make that decision, we can do so.
- It’s easier to pivot. With so many industries in the midst of upheaval, businesses of all shapes and sizes have to be nimble. The fewer stakeholders you have to answer to you, the faster you can change direction.
- We can create marketing campaigns of verve and boldness. While large companies can obviously create jaw-dropping marketing and advertising campaigns, they also by necessity have to walk a fine line: Anything too bold can set off a firestorm and potentially turn off customers and investors. By contrast, a small and independent business can say what needs to be said without packaging it in gauze.
- I can still have a life. When I started my company, one of my goals was not “Work 90 hours per week.” I didn’t long for 7-day workweeks, no vacations, and no time to spend with loved ones. I purposefully created a business that didn’t require those kinds of sacrifices. A different entrepreneur might well make different choices; more power to him/her.
Being Small Enables the Best Kind of Growth Strategy
Don’t get me wrong: I’m not suggesting that growth is bad. After all, growing your business is a big part of the fun.
I’m just saying that being independent gives you freedom on many levels—to take risks, to innovate, to create the kind of company culture that you want. At the same time, there are significant downsides to taking another path. In his excellent “Thinking Entrepreneur” blog at the New York Times, Jay Goltz said it brilliantly:
“The words growing and business are often said together like soup and sandwich. Why would you want one without the other?… It makes sense — until it doesn’t make sense. It really comes down to priorities. Do you want to take outside capital and the ‘partners’ that come with it? Do you want to take on more risk? More employees? More travel? More stress? More potential aggravation?… I have learned one important lesson of entrepreneurship: Just because you can, doesn’t mean you should.”
Be in It for the Right Reasons
To my mind, the main reason to take a careful approach to growth and eschew investors if possible is that you can run your business according to your own guiding principles. What are the “right” reasons to be in business? Each owner has to answer that question for him- or herself. If one of those answers is “to become filthy rich,” that’s fine. But it might also be true that your reasons will include things other than money: freedom, flexibility, altruism, community, even sanity.
So I say: Be different. So what if your annual revenues would be the equivalent of a rounding error for your largest competitors? So what if Tom Peters is probably not going to write his next book about your company? Follow your own path. Let your freak flag fly high and proud.