Already a Bloomberg.com user?
Sign in with the same account.
Demand Media Inc
Barnes & Noble Inc
When Kevin Gao quit his consulting job at McKinsey three years ago, he knew he wanted to start his own business. The trouble was, he was expert in only one thing: getting a job at McKinsey. Relatives and friends kept seeking his advice on landing a job in consulting. “I’m fundamentally a little bit lazy,” says Gao. “So I thought, why keep answering the same e-mails and phone calls if I can just really do it once?” Gao, now 27, wrote down his thoughts on interviews, case studies, résumés, and cover letters in a 90-page tract he called The Consulting Bible and began selling the e-book at $25 apiece. Last year, he says, the title made more than $100,000, and the book’s unexpected success got Gao thinking. “There are millions of people out there like me who have interesting knowledge about all these random topics,” he says. “But to market a book online there are a thousand steps that I had to figure out through trial and error.”
That line of thought led Gao to create Hyperink, a kind of middle-brow content mill that launched on Oct. 26. Similar outfits such as Associated Content (YHOO) and Demand Media (DMD) — which went public earlier this year and now trades at a market capitalization of about $500 million—pay cheap freelancers to write a few hundred words on perennial questions, like how to tie a Windsor knot, then sell ads next to the articles. Critics say such companies spit lots of low-quality information onto the Web. Hyperink pitches itself as a way to achieve the same kind of massive scale for publishing expert advice. It’s raised $1.2 million from venture capital firms, including Andreessen Horowitz and Lerer Ventures.
Hyperink has been in trial mode and selling volumes since January. It now has more than 150 e-books, including guides on how to get into Harvard Business School or market Android applications. There are no ads; e-books sold through the site typically go for $25 and between $2.99 and $9.99 when sold through e-bookstores for Amazon’s (AMZN) Kindle, Barnes & Noble’s (BKS) Nook, or Apple’s (AAPL) iBook. (The more expensive versions sold through the site include videos and other extras.) Gao says the average Hyperink title that went on sale in January has already earned back its production and marketing costs and is profitable. The plan is to churn out thousands a month.
To reach that kind of volume, Gao and five full-time staffers in San Francisco have created software to predict in-demand topics. The algorithm takes in datasets, such as recent book sales figures and popular Internet searches, to determine what kinds of titles to produce. They then hunt for what they call “domain experts” by advertising on Facebook, enlisting consultant-for-hire services such as Evisors, and simply calling around.
The pitch to authors: You can have a finished book in a matter of weeks, rather than the months or even years it can take at traditional publishers. Authors who compose a book on their own get half the revenue, after vendors such as Amazon take their cut. For those who are too busy—or are just bad writers—Hyperink will find a freelance ghostwriter (on Craigslist, mediabistro.com (WEBM), or JournalismJobs.com) to do a two-to-three hour interview and then write the book. The interview questions are influenced by the same data-sifting software that picks the topic in the first place. “If we’re talking about dog training, we have a good understanding of the types of breeds people would be interested in,” says Gao, “so we make sure we cover those breeds when we’re creating the book.” The expert behind the book receives a 25 percent cut, with a smaller amount going to the ghostwriter. For now, Hyperink doesn’t pay advances.
“It’s an intriguing option for someone who has never written anything,” says Albert N. Greco, a marketing professor at Fordham University and co-author of The Culture and Commerce of Publishing in the 21st Century. “But the bottom line is the odds work against anybody who does this.” He points to data from the book-tracking firm R.R. Bowker on the more than 3 million new titles published last year. “If you publish a book today, you’re going to be one of 8,473 for the day. What sort of attention can you possibly get in the marketplace even if this company does a spectacular job?” Hyperink says it markets its books by making sure popular key words appear in product descriptions online and in e-bookstores run by others.
While Hyperink aims to produce meatier content than a content mill, it also plans to be nimbler than a traditional how-to publisher—a market currently dominated by John Wiley & Sons’s For Dummies series. “There are experts around the world that have not yet written the book on how to work with papier-mâché or how to cook with oil,” says Scott Weiss, a general partner at Andreessen Horowitz who took part in the decision to invest in Hyperink. Instead of College Admission Essays For Dummies, Hyperink can produce 30-to-50-page volumes on the admissions process at hundreds of different schools. “Probably 800 people a year would buy How to Get Into Amherst,” says Weiss. Gao won’t reveal whether that would be enough to turn a profit but says Hyperink is “focused on that long tail of publishing.” If his model works, it will grow a lot longer.
The bottom line: Hyperink has raised $1.2 million from Andreessen Horowitz and other investors to create a nimble online publisher.