CANADA 3.0 The co-founder of the Canadian success story advises burgeoning Canadian digital business to establish an international footprint right out of the box

Think internationally, Kobo CEO says

It’s important for Canadian digital media companies to think big — think internationally — right out of the box, Michael Serbinis, co-founder of Canadian success story Kobo, told the audience at the Canadian Digital Media Network‘s Canada 3.0 conference in Toronto this week.

There’s a $250-billion reading market — newspapers, books, magazines — and two-thirds of that is outside North America, Serbinis said. So Kobo — originally envisioned as a software platform for delivering e-books, not a device to read them on — designed a single international platform, rather than perfecting a North American platform and recreating it for other language and countries. That allows the company to quickly roll out local bookstores, gauge traction, and focus more resources where it’s appropriate, Serbinis said.
 
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Serbinis sees the world’s one million bookstores being replaced by four or five international brands, and Kobo wants to be one of those brands. “We’re not in this to be the 18th best e-reader.”

Thinking big means making big bets, too. Serbinis said that four years ago, when he was looking for financing for Kobo, even venture capitalists familiar with the serial entrepreneur’s track record wouldn’t touch the business plan. After all, at that point, e-books made up less than one per cent of the reading market.

“They thought we were crazy,” Serbinis said.

The first publishing deal the company signed, with Random House, took six months to negotiate.

Now, Kobo has deals with 12,000 publishers in more than 100 countries. E-books, meanwhile, make up 34 per cent of the reading market.

Another big bet was the 2011 decision to produce a device as well as a platform. “Becoming a consumer electronics vendor is scary,” Serbinis said. It introduces a host of new issue revolving around supply chains, inventory and quality assurance, No one in the Kobo crew — which had grown to100 from 10 in its first year — had any experience with manufacturing a device.

When Serbinis approached Kobo’s board, “They said, ‘It’s our call. It’s a mistake and you’ll probably regret it,'” he recalled. But launching the first Kobo reader at $149 invoked the Gillette model: Sell the razor for cheap, and make money selling the blades.

The e-book market is only a couple of years into a long-term evolution, Serbinis said.

“We’re really early in this 25-year transformation,” he said. Graphics, genres and use of colour are all still very limited. And publishers can mine reading behaviour in ways that were impossible with a printed product.

India is a billion-reader market with large areas that don’t have the physical infrastructure to deliver books. Digital infrastructure can leapfrog the physical in those areas.

And new readers — children and students — are also an untapped market. The academic market, controlled by a few large companies, is “ripe for disruption,” Serbinis said.

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