Writers vs. entrepreneurs, publishers vs. venture capitalists

Henry Oliver asks:

In what ways are writers and entrepreneurs similar? Why doesn’t publishing have more of a VC structure and attitude? Could authorship be made more productive and better quality with VC in publishing and theatre? Are movies better at this?

Publishing has one feature in common with venture capital, namely that most financed undertakings are failures and the most profitable successes can be hard to predict in advance.  Furthermore, publishers are always on the lookout for the soon-to-be-hot, hitherto unpublished author, the next Mark Zuckerberg so to speak.  And books, like software and also successful social networks, are rapidly scalable.  You can sell millions with a big hit.  But here are a few differences:

1. A lot of VC is person-focused.  The VC company builds a relationship with a young talent, and in some cases the hope is that the second or third business makes it, or that the person can be steered in the proper direction early on.  Authors, in contrast, are more mobile across publishers, and the publisher usually is buying “a book” rather than “a relationship with the author.”  Some wags would say that a publisher is buying a title, a cover, and the author’s social media presence.

2. Entrepreneurs commonly have more than one VC, but authors, for a single book, do not have multiple publishers.

3. For the vast majority of books which do not make a profit, this is evident within the first three weeks of release or perhaps before release altogether.  The publisher may drop its resource commitment to the author very quickly, and even yank the PR people off the case.  This further loosens the bond between the talent (the author) and the funders of the talent (the publisher).  In contrast, VC rounds can last five or ten years, with commitments made in advance and possibly a board seat as part of the deal.

4. Venture capitalists will introduce their entrepreneurs to an entire network of supporting talent and connections.  Publishers will edit and advise on a manuscript, but it is much more of an arm’s length relationship, and a publisher might do very little to bring an author into any kind of network.

5. The major publishing houses are clustered in Manhattan, just as the major venture capitalist firms are clustered in the Bay Area.  But the publishers don’t find a pressing need to have their authors living in or near NYC, though for some other reasons that is convenient for the author doing eventual media appearances.

6. Publishers often care a great deal about an author’s preexisting platforms, such as Twitter followers or ability to get on NPR.  Venture capitalists realize that a very good product can overcome the lack of initial renown.  When Page and Brin started Google, they didn’t, believe it or not, have any Twitter followers at all.  In fact, you couldn’t even Google them.

What else?


Writers are more like farmers than "entrepreneurs".

The bulk of "writing" is a commodity. My dad explained romance to me when we were searching at yard sales and good will for books. He noted he had started reading some authers he had been collecting more my mother and sister, draawing a parallel to authors he read, and introduced me to. And he knew I had long read scifi. They are commodities, staples.

The writing in the WSJ, WaPo, NYTimes have districtive styles for the reporting that includes any analysis, - or at least it did, havent read wsJ for several years after the subscription price got hiked so high by Murdock.

Some food, like writing, is exceptional. Thats why you search out a farmer with farm stand, or exceptional restaurant that cultivate farmers, fishermen, etc. And there are still some farmers who develop new unique crops, breds.

And publishing does not require a huge publisher. Exceptional publishers have commonly been small.

The big publishers are like the Krogers, or ADMs, which bridge farmers to the mass markets.

Only the reliable suppliers, whether farmers or writers, are get to deal with the big channels.

And crop blockbusters in my lifetime are the Cavendish which replaced the blockbuster Gros Michel, to the avacado, almonds, the modern chickem, the modern "other white meat". In most cases, a big corporation, Dole, Perdue, was behind popularizing these blockbusters, which became commodities.

Writers turning out the Marvel tentpole hits are a predictible, replicating the surpises of 2001, Alien, Star Wars, etc.

Just as Hollywood studios are generally risk adverse, most VCs are risk adverse, just as the big players in food are risk adverse.

The WSJ doesn't look for unique writers any more than McDs looks for unique potato farmers.

Fellas, he's on the loose again and he has access to the internet.

+1 good one&creepy
how about
fuck harvard
fuck Canada
fuck gender theory
whose dr. mengele this time?
it looks like somebody is likely giving children
gender hormones they don't need& are harmful
now would be a good day to carefully reenvision/define what
these fuckwits are doing with the hormones and the children?
we call ze bias response team
we make zer list
we are waiting?

Just as Hollywood studios are generally risk adverse

He probably means risk averse.

The WSJ price is ridiculous, but you can find heavily discounted subscriptions on eBay.

Hollywood and media in general is in the hits business too. Almost all these industries are related to the idea of the attention economy. Unfortunately for them, attention is a finite resource. There's only so many books, songs, movies, newspaper articles, TV series, apps, sports, games, etc. that a single person can keep up with. My growing pile of unread books is depressing. Only to be outdone by my giant Netflix queue. Can a math whiz from Silicon Valley come up with a way for me to consume 5 hours worth of media in 30 minutes? That's something I would gladly pay for.

I thought the point of consuming media was to pass time and defeat boredom. If you consume in 30 minutes 5 hours worth of media, what are you going to do the other 4h30? If all your free time is already spent on doing what you like (consuming media), you're already winning.

#6: thanks for the laugh. I'll keep laughing into the weekend thinking about Bill Gates twitter followers.

So that's it. The bourgeoisie has stripped of its halo every occupation hitherto honoured and looked up to with reverent awe. It has converted the physician, the lawyer, the priest, the poet, the man of science, into its paid wage labourers. Such is life in Trump's America.

From an 'insider's' standpoint (working in the publishing industry), I think you covered a good deal of the contrast, but believe you're underselling the relationship between an editor and author, and are entirely focused on nonfiction authors (understandable, considering your firsthand experience).

An editor / author relationship, especially among prolific and decade-spanning authors, normally lasts just as long. These authors (at times) move along with their editors, rather than swap publishing houses on a whim for a higher return.

These relationships, like VC, are highly valued by the publishing houses, who will attempt to 'poach' a notable editor with established author relationships under the premise that the editor will bring the author along with them.

Some other dynamics that are different - oftentimes authors (especially fiction, again) are signed up for 'multi-book' deals, such that even if a first book underperforms, there's oftentimes a contractual obligation to continue with 1/2/3 additional books.

On the other hands, the auction dynamics of a particularly 'hot' author proposal mirror that of VC, as far as I can tell: frenzied and irrational overbidding citing competitive dynamics and nearly-impossible future performance as the basis for the offer, which is very often written-down shortly thereafter.

Another similarity - the propensity to use 'comps' to explain the potential of an author/title and model its potential results (e.g., 'the next [insert author here]', or [title 1] meets [title 2], akin to the much lambasted 'uber for dogs' joke-but-not-quite-joke in VC. In both cases, the best case version of the result is often cited as evidence of potential success and underpinning the offer.

I took a bit of a different tack on the subject a couple months back - if of continued interest: https://ethanphirsch.com/2018/11/25/publishing-as-venture-capital/

'underselling the relationship between an editor and author'

Generally, writers hate editors, and the fact that no mention is made of editing is probably not underselling, but tactful.

'An editor / author relationship'

I would have said that an agent/author relationship is even more important, particularly when it comes to returns, but there is no question that a distinction can be made between authors and writers. Rowling or King as authors will pretty much get whatever they request, within reason. Someone writing 'Writing for Dummies' won't. And I suspect you are using editor as distinct from copy editor (no one cares much about copy editors and their non-relationships to an author) or editor in a journalism sense, as the person who actually decides what is printed, and has the authority to demand the work to be rewritten to satisfy the editor regardless of what the writer thinks. There is definitely a meaning of editor that is akin to, and hard to distinguish from, publisher in the sense of the person who authors deal with - Jim Baen is a good SF example.

Publishers have outsourced the career development/talent sifting to agents. The problem is that weakens their ties to the author and disincentives the publisher to make true speculative investments in various author in a way that would allow them to grow (as both an artist and a brand). The dirty secret in publishing is that most of the big hits (except for the rare surprise) and reliable bestsellers are by authors that broke big in the 2000s or earlier. Meanwhile, they've also underinvested/wrongly invested in technology and staff that would help them develop relationships directly with readers and that would allow them to more efficiently and opportunistically sell their backlist.

Meanwhile, because agents prove their value/make their money by selling books to publishers, their motivation is to steer authors towards existing publisher tastes, which simply perpetuates the cycle where an early mover in a category (say, vampire romance or YA fantasy boarding school) comes out of nowhere and becomes a huge hit and the pipeline of copycats fed to the publishers by agents soaks up a little but not a ton of the reader enthusiasm that trails in the wake of the hit leading to modest but not fantastic additional revenue. Because no one really knows what creative works (in particular--but also to a certain extent non-fiction) will resonate with audiences in a way that leads to a hit and because (for a variety of reasons, including self-publishing) the mid-list is dying/dead, agents and publishers find themselves stuck in a dance with each other where they know that it's not quite working but can't do the hard things that at least would give them a chance of innovating publishing into a forward looking industry.

I personally think the opportunity is ripe for investment in the category that looks at an author as a partner in building IP that can be leveraged across storytelling modes. The retail print part of the publishing business is rapidly becoming the least important part of it, and yet it's the only place where legacy publishers truly have an edge. Everything else--PR, advertising (esp. digital), IP licensing, audience engagement, design, audio and video storytelling, etc.--are all areas where legacy publishers can be beat (and, not coincidentally, where the best talent and innovative thinkers are found elsewhere).

For awhile I thought that the industry could use self-publishers as a sort of farm team but for a whole variety of reasons, that hasn't (and isn't) likely to work (the primary one being that the right now the self-publishing market--mainly Amazon--rewards mediocre genre works just enough for the authors to stick with that strategy but requires them to publish and market their work at a rate that eats up all of their time).

What else?

When might academics themselves begin to examine the Academic Captivity of American Letters? When might our corrupt and corrupting Media Establishment?

Post-secondary institutions make part of their livings (not the lucrative sports side of university business, granted) from sponsoring MFA programs (how many are we cursed with today across the country? and how many MFA grads is the country overrun with?) to sponsoring the helpful, friendly "writers' conferences" also productive of so little.

Publishers get what they want from their college and university pals, I guess: all those degree programs and conferences aim to steer writers into writing crap fiction that sounds and reads like the crap fiction that publishers (and Amazon) do manage to sell.

What else?

When might academics themselves begin to examine the Academic Captivity of American Letters?

At least according to the recent New Yorker write-up of Dan Mallory, (fiction) publishing appears to be much more personal and non-confrontational.

Maybe writer is to engineer, as publisher is to entrepreneur.

In each case the writer or engineer has skills, but access to a second skill set translates into higher rewards (being or negotiating with the publisher or entrepreneur).

Or alternately the writer or engineer may be a union member or nascent socialist, turning away from those problems and/or skills.

It might be good to distinguish between "New York publishing today" and everything else (NY publishing from yesteryear, or what small presses are currently doing). The old model, for novelists at least, which is what I know about, did mirror that person-centered VC approach. Publishers used to take on writers for multiple books and tried to cultivate a career. The first book might sell 5K copies, the second 10K, and then the third or fourth book would break out huge. If you look back at novelists from the 1960s to about 2000, many of them really broke out with book 3 or 4 -- e.g., Portnoy's Complaint, Sophie's Choice, and on down to The Corrections and Bel Canto.

Somewhere in the early 2000s, publishers started dropping authors after 3 or so books, if they hadn't broken out. That's when you started hearing news reports about "the death of the midlist writer," because those writers still in farm-league-level sales were getting dropped. Then, around 2012 or 2013, the industry started becoming almost exclusively debut- and brand-author-driven -- meaning they still carried the brand name authors and also packed the lists with debut authors. It's anecdotal, but I know more than one novelist whose first book hit the NY Times bestseller list around 2013, but then couldn't get their second (or third) book out.

The current NY business model seems to be "buy 5 debut novels, and gamble that one of them will sell to Hollywood and make a ton of money, and the other 4 will sell 2K copies each and lose money." What's lost is that person-centered, VC approach, which is a gap in the market. The question is why NY publishing houses have this model (other than "they're all idiots in big lumbering corporations"). The analogy that comes to mind is R&D. Midlist author development is very much like corporate R&D, and I know plenty of corporations have cut R&D in recent years, instead choosing to buy small startups rather than invest the time and energy into original research. I don't really understand that move either.

Cultural differences aside, might some of the differences be explained by the fact that the “hits” in VC are just simply bigger than those in publishing? The bigger the hits, the more patient you can afford to be while waiting for one.

Who knew that mentioning the slush pile - https://en.wikipedia.org/wiki/Slush_pile was beyond the pale for the MR comment section.

Or that answering 'What else'? with 'self-publishing' would apparently be so controversial here.

I'm not sure how the slush pile or self-publishing connects with the differences between how publishers do or do not act like VCs . Publishers have mostly outsourced the slush pile to agents, and, as I mentioned above, self-publishing has not turned out to be much of a farm team for publishers.

In terms of the answer to the "what else" as self-publishing: that all depends on what business and creative goals one is interested in. For the most part, self-publishing is really viable only for certain genres and certain types of titles within those ventures. It's also heavily dependent on Amazon. There are/may be some self-publishers who can ladder up to small publisher size, but they are limited in what they can accomplish, especially when it comes to anything that would require major technology investment. As I mention above, the large legacy publishers have either not invested or made the wrong investments in technology. It's crazy to me, for example, that they didn't make a play for GoodReads before Amazon bought it.

'I'm not sure how the slush pile or self-publishing connects with the differences between how publishers do or do not act like VCs .'

Well, only a select few read the comment, but here is the slushpile remark as originally posted -

'Furthermore, publishers are always on the lookout for the soon-to-be-hot, hitherto unpublished author,'

Not really, assuming one is familiar with the term slush pile.

And the comment for self publishing involved Amazon, and its attempt to create lock in as a response to 'Authors, in contrast, are more mobile across publishers'

The class I TA, Entrepreneurial Finance, often uses the Parenting magazine case (https://www.hbs.edu/faculty/Pages/item.aspx?num=6836) to illustrate the question, "who owns and idea?" Magazine publishing in the 1980's is a good example because although the entrepreneur in this case hit upon a great idea and did the leg work to find out whether there was a market there (both on the buyer and advertiser sides), they did not own the requisite parts that capture most of the value, that is distribution.

Publishing is much less like VC than it is like supply chain distribution. Publishers own the relationship with retail and have the ability to get your book where it matters to be seen, whether that is at Poetry & Prose or airport racks. Venture capitalists are famously useless when it comes to actually getting distribution and will pass on investments simply because the entrepreneur doesn't have a go-to-market plan.

Publishing is perhaps unique in that they control both sides of the equation. Farmers do not rely on grocery stores to provide risk capital and neither do biotechs rely on pharmacies to fund their clinical trials. This is why publishing is a much better business than VC, despite similar hit rates. You can "squeeze" the creative talent on both ends of the supply chain.

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