Jeff Shelstad and Eric Frank spent a combined three-plus decades in the college textbook publishing world, watching editions revised year after year, but essentially delivering the same information.
The cost to students grew and grew.
But so did the power of the Internet.
In 2007, Shelstad and Frank co-founded Flat World Knowledge, a new way of delivering college textbooks.
Shelstad and Frank found a way to ease the cost of learning and also make money in the process. If a student wants a book they don”™t wan to read online, they can order a black and white soft cover; full-color for a few dollars more. If they are looking for a downloadable PDF file, they can print out formatted chapters for $19.99 or buy a single chapter for $1.99. Flat World also sells study aids ”“ flash cards, online practice quizzes with grading feedbacks or executive summaries online for $1.99 each ”“ or $30 to get all options. Audio versions are available as well, for those who like to listen on their iPods or are visually impaired or dyslexic.
“The college textbook publishing market is beginning to undergo the sort of radical disruption the web brought to newspaper music and other content industries,” Brad Svrluga, managing director of High Peaks Venture said in a statement. “Flat World Knowledge is leading the textbook industry”™s transformation with a product that is flexible, affordable, open and suited to the media consumption habits of today”™s students.”
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“Yes, we brought some disruption to the market,” said Frank, chief marketing officer. “Again, the real disruption came from the Internet and its continuing global impact.” Frank said while he understands concerns of publishers ”“ the need to stay financially viable by continuing to customize books every year ”“ “You can”™t deny the power of the Internet and its abilities.”
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Frank described Flat World Knowledge”™s business model: “An accredited scholar signs a contract to write a book and agrees to have it reviewed by peers. Instead of doing an ”˜all rights reserved”™ copyright license, we say ”˜some rights reserved”™ ”“ a creative common license. That license is still copyrighted material, but it gives the end user the right to copy it, change it and derive their own unique book. Teachers can take out chapters they feel aren”™t relevant or insert a project they would like to use in the classroom. No two teachers are alike in style, so our online textbooks allow them to do what suits their needs ”“ delete chapters they don”™t need, drag and drop sections in different order; when they click ”˜done,”™ the program creates a brand new table of contents, a brand new book from beginning to end in the order they want to teach it.”
For students, said Frank, it gets better: “Essentially, the books online are free. It is an open textbook, openly licensed; but if they want to hard copy, they can order a soft cover version in the style and format their professor has chosen … much less confusing and frustrating for students.”
Shelstad and Frank began their Nyack-based company by hiring a chief technology officer and signing a professor on to write their first online book for them.
“We did a ton of testing with students in 2008 and put four books on the platform to use and test,” Frank said. “We started signing more authors and building the platform. By spring of 2009, we hired sales and marketing folks who went out and started introducing our online textbooks. In spring of this year, we had 30 universities and 1,000 students using our books; in six months, we have grown to 480 university classes and 40,000 students using this service.”
Flat World Knowledge, seeking an infusion of angel capital, made its rounds to investors hoping to be chosen from the crowd of contenders. They were in luck: they had a product investors liked and saw the potential in. The two raised $4.2 million in 2009 through three venture capital groups: Valhalla Capital in Washington, D.C., $2 million; Greenhill SAVP and High Peaks Venture Partners in Troy, $1.25 million and $750,000, respectively. “They did their due diligence on us and decided we were a worthwhile investment,” Frank said. “Of the $2 million received from the New York state companies, $870,000 came from the In-State Private Equity Program, part of the state Comptroller”™s Office.”
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Comptroller Thomas DiNapoli, on a visit to Nyack on Oct. 20, toured Flat World Knowledge to see the state”™s pension fund investment at work.
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“We”™re thrilled to receive the common retirement fund”™s investment through our venture capital partners,” Shelstad said. “The investment has allowed us to dramatically escalate growth, which will hopefully lead to a strong return to the pension fund over time. We”™ve added jobs in New York state and are saving students and families a substantial amount on college textbooks.” In the first five years of business, Flat World believes the savings nationwide could grow to $205 million, with $17 million in savings for New York students.
Flat World has 32 titles in development and by next summer 2010 will have 50 titles in development.
In 2008, the state Comptroller”™s Office released a report on textbook pricing that found undergraduates students can spend up to $4,000 on textbooks over four years.
During Spring 2009 trials, Flat World textbooks were shown to reduce average textbook costs to $18 per student per class; an 82 percent cost reduction compared with traditional printed textbooks averaging $100 per student per class.
