by Harrison Howe
What started in 2006 as a half-serious conversation between Jeff Shelstad and company co-founder Eric Frank on a train ride between O'Hare International Airport and downtown Chicago evolved into Flat World Knowledge, Inc., which today is the largest publisher of free and open college textbooks in the world.
Having spent all of his professional life in higher education publishing ('I love the space,' he says) and having personally acquired some of the most successful business textbook authors in print today, Shelstad certainly possessed the credentials to start his own venture. He drew from his background in various editorial and senior management positions in the industry, including those at McGraw-Hill and Prentice Hall/Pearson, to start Flat World Knowledge in 2007.
A proud native Minnesotan and Golden Gopher and Vikings fan 'despite the performance of the football teams,' Shelstad is a 1987 graduate of the University of Minnesota Carlson School of Management and 2004 graduate of Duke University, where he earned his Executive MBA. He currently serves on the Postsecondary Sector Board of Directors of the Education Division of the Software & Information Industry Association (SIIA) and is a frequent speaker at industry conferences and educational forums.
Study.com: What are the origins of Flat World Knowledge?
Jeff Shelstad: I realized the old business model wasn't working anymore. The college textbook industry hadn't adapted quickly enough to the Internet, where so much information was available free or low-cost. Customer frustration was rising along with prices. Most students are working to pay for college and can't afford to spend $200 for a single book.
Also, professors wanted more control of their course content and wanted to be able to easily edit and personalize their textbooks. They also wanted to decide when to switch to new editions. Authors were confused about the future of the industry.
I had a core belief that there had to be a better way to solve these problems and still publish high-quality course materials. I decided to make a go of it with a talented colleague, Flat World's co-founder and president Eric Frank.
Study.com What challenges did Flat World face when it started, and how did you overcome them?
JS: The first challenge was to develop a business plan that would be both sustainable and disruptive enough to make difference. We started by doing some 'selective crowdsourcing.' Eric and I talked with hundreds if not thousands of potential customers around the country. Listening to them confirmed our belief that the market was ripe for a bold new approach.
We also were lucky with our early advisors and partners. We learned a lot about creating a start-up business from some remarkable people, including the late Dr. Jeffry Timmons, professor of entrepreneurship at Babson College, who was known as the 'Johnny Appleseed of Entrepreneurship Education'. The other important challenge was funding. We had invested enough of our own money to last only a year. We closed our first angel round of funding 11 months after starting Flat World Knowledge.
Study.com The used textbook industry is becoming a very competitive market. How do you compare yourself to your competitors?
JS: We don't necessarily compete with the used textbook industry. They provide some challenges to the traditional print bookstore channel, but our core competitors are the big traditional textbook publishers. While our business model is different from our competitors, we're similar in one regard: our textbooks and instructor and student supplements are written by experts in their field and produced using a rigorous editorial development process.
But we're very different from the traditional model in several ways. First, we publish our authors' works under a Creative Commons open license, which legally transfers control to the professor and institutions. This means faculty can modify our open textbooks to fit their specific course or curriculum. They can do things like reorganize the table of contents, delete chapters and sections, insert videos and hyperlinks, upload Word and PDF documents, and add their own local case studies and exercises.
Another difference is our digital-first technology platform. When we publish a book, it's automatically available in a variety of print and digital formats for any device. This 'all formats, anytime/anywhere access' approach provides tremendous flexibility for our customers and also allows us to operate a much greener and more efficient business.
For students, one of the big benefits of open textbooks is having free online access. All they need is an Internet connection and they can start reading immediately using our online reader.
Study.com How do you make money when your books are available online for free?
JS: We generate revenue by selling print and digital formats and study aids. For those who want a physical product, we sell black and white print books for about $35 directly to students or through campus bookstores. In August 2011, we announced an All Access Pass that gives students lifetime access to their textbooks in a suite of formats for $29.95. Formats include an online reader, e-book for the iPad, Kindle, Nook or other e-reader, print-it-yourself PDF, audiobook for an iPod or MP3 player, and interactive study aids.
Study.com You've likely helped thousands of students save money on expensive textbooks. What kind of feedback do you get from customers?
JS: It's gratifying to know that in a little over two years we've saved students millions of dollars in textbook costs. If we only sold to students this business would be pretty easy. But that's not the way the textbook publishing industry works. Our first customer is the institution, or more likely a professor, who adopts our textbook. But educators are among our strongest advocates. They're rooting for us. They've been waiting for a new textbook option that puts them back in control and doesn't break their students' budgets.
Study.com What types of challenges still face Flat World today, and if so how do you address them?
JS: Every company has challenges, especially in this economy. But having a culture of trust and transparency goes a long way in dealing with the day-to-day challenges, as well as the bigger issues.
One advantage of being a start-up is that we're flexible and can make adjustments much faster than large organizations. We're looking to continuously improve our operations and customer experience. We're constantly exploring new technologies that can help us produce quality content more efficiently. It's important to stay curious: how do we enable a higher level of interaction with our content? What new ways can we help professors and institutions improve course completion rates? What are the right partnerships that will expand our market presence?
Study.com What are your future plans for Flat World Knowledge?
JS: We're working on many new things. One of the key areas we're focused on is expanding our institutional licensing partnerships among traditional academic institutions, distance and adult learning programs and for-profit colleges. The licensing model allows us to deliver course content in a much more comprehensive, economical and convenient way that significantly lowers textbook costs. Our licensing agreements with the University System of Ohio, Virginia State University and Indiana University are examples of how institutions and publishers can partner to solve higher education issues like textbook affordability.
Study.com Is there anything else about Flat World Knowledge that you'd like our readers to know?
JS: We believe that education is the black gold of the 21st century. In a flat world, ideas and knowledge are freely shared and accessible to everyone. Educators can control content in unprecedented ways to improve teaching and learning. Students are treated like real consumers and trusted to be in control of their own learning environment. Authors find new global audiences for their works. When you challenge the status quo, the future is always open.
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