Sunday, May 29, 2011

Female Internet Hero Eileen Gittins' Expansion Plans for Blurb

Eileen Gittins likes to take photographs. In 2003, she had what she thought was a great collection that she wanted to use for a book to give 35 friends and family members.

One little problem ? the price tag for doing that would be a jaw-dropping $10,000. Gittins thought that given the technology available at the time, it should not be so hard to produce that book. She set up Blurb to solve that problem.

One of the first questions Gittins decided to address is whether there was a business opportunity in solving this problem.

To answer that, she decided to focus on three questions (her answers to each follow):

  • Was the market opportunity big enough? After numerous face-to-face meetings with potential customers, she concluded that there was an unmet need for the service she wanted to offer. And she believed that the rise of social media and digital cameras would make it easier for people to create and promote their books.
  • Could the company make money on ?a book of one?? She decided that by analyzing the costs of the current publishing model and reconfiguring those activities ? for example, by outsourcing book production ? Blurb could lower the costs of producing a book significantly.�
  • Would she go to jail? Gittins realized that if there was a chance that Blurb might be sued for copyright infringement the company would never be able to raise venture capital. Thanks in part to her conversations with legal experts about the Digital Millennium Copyright Act, she concluded that her potential legal liability would be small.

Blurb has gained considerable market traction. By 2010, it had delivered 1.4 million books to 74 countries on five continents.

Blurb has 725,000 paying customers ? it typically charges $12.95 for a 40-page book and it pays authors between $8 and $10 per book in a markup. By the end of 2010, it paid a cumulative total of $2 million in such markups to its authors.

Turning Blurb into a real company took cash and Gittens has raised $19 million worth since 2005. Blurb?s investors include�Anthem Venture Partners and Canaan Partners.

Now that Blurb is profitable and has ?double digit millions? in the bank earning zero percent interest, it has been turning down�interest from venture firms.

However, recent changes in the industry are spurring Blurb?s desire to expand globally ? and such expansion will require significant capital. Gittins pointed out that in the last several years, eBooks and tablets have emerged as important form factors for consuming books.� Moreover, Gittins believes that 45% of the volume opportunity will come from outside the U.S.

To capture that global opportunity, Blurb initially entered the French market where ?there is a huge cultural love for photography.?� Blurb localized the web site in France and printed books in the Netherlands. Its French site grew 101% in seven months and Blurb will be launching a localized version in Germany in June 2011.

Over the next 18 months Gittins wants to expand even more. Blurb is now considering opening up into the so-called BRIC countries as well as expanding operations in Australia, New Zealand, and Canada.

She also wants to develop ways for customers to distribute their books on Apple (AAPL)�iPads and eBook platforms like the Barnes & Noble?s (BKS) NOOK and Amazon?s (AMZN) Kindle.

To achieve these goals will require Blurb to double the number of its engineers and designers from 40 to 80 and to create teams that can go into the new countries and build a local version of Blurb effectively and quickly. And financing all this will require more capital ? Gittins hopes to raise at least $25 million in June 2011.

Gittins is spending a significant amount of her time on the team and company culture. She pointed out that when she built her initial team, she knew she would be setting the tone for the company as it grew. To that end, she wanted to make sure she could hire very experienced people who she and their staff would be able to trust.

When she hires, she looks for people who have a passion. Gittins is passionate about photography but she would be happy to hire someone with a different passion ? say, para-sailing.�

In Gittins? view, passion is important because Blurb customers are passionate about publishing their books and she believes that Blurb employees must share that passion in order for the company to succeed.

As Blurb reaches for global growth, that passion is likely to help Gittins achieve her ambitious goals and generate a return for her investors.

This article was written by Peter Cohan at Forbes Woman, a The NextWomen partner.� See their website here.


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