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Talking through my hat


Released every Tuesday, Talking Through My Hat explores bookish businesses and the fantastic people who create them, looking at why business are started, how they keep going and where we can take them in the future. I'm John Pettigrew - a hat wearer, a recovering editor and the creator of Futureproofs. To avoid missing anything, why not subscribe at Apple Podcasts, Spotify or wherever you get your podcasts, and follow me on Twitter?

Jul 24, 2018

Justo Hidalgo co-founded 24symbols 8 years ago, and this 'Spotify for Books' contender is still around and successful. In this week's podcast, we talk about how books really can compete against Angry Birds, the importance of continuing to provide ways for people to easily find and read books, and of balancing your work and home life.

In the episode, Justo mentions several great business books in passing so I thought I'd list them here for you.

  • Hacking Growth by Sean Ellis and Morgan Brown (Amazon / Kobo);
  • Scaling Lean by Ash Maurya (Amazon / Kobo);
  • The Founder's Dilemmas by Noam Wasserman (Amazon / Kobo);
  • Venture Deals by Brad Feld (Amazon / Kobo);
  • New Venture Creation by Geoffrey Timmons (apparently out of print but available from Amazon).

Transcript

 (This is a bit of an experiment - let me know if you like transcripts!)

John: [00:00:35] Welcome back to Talking Through My Hat. Today I'm talking with Justo Hidalgo, CEO and co-founder of 24symbols, the subscription service for ebooks. He's also an author, a university professor teaching product strategy and innovation. And I just discovered he's also a radio host. So thanks for talking to me today Justo.

Justo: [00:00:53] Yeah. It's a pleasure to be here.

John: [00:00:56] Yeah, so 24symbols has been around for over eight years now, which is quite an achievement. How've you distinguished yourself from all the other e-book subscription services that have come and gone in that time? What's kind of unique 24symbols thing?

Justo: [00:01:10] Well if I really knew [laughs] I would probably sell the idea. Oh yeah the idea's still the same. You know, it's a subscription service for ebooks as you said and other kinds of cultural and entertainment assets like comic books and audiobooks. I believe that the reason we are still here is that since the start, it was very clear for us that these was a long race. That it was gonna take time and that we needed partners to work with us so very very very early in the state as soon as we could we started talking to partners especially in the customer acquisition stage. You continue having the amount of people that wanted to read and that we were unable to reach just because of our size.

John: [00:01:53] Okay. So which sort of partners were you kind of linking up with there?

Justo: [00:01:57] Oh but mainly right now is mobile carriers. We started having relationships with them in 2013 I think. These are typically launch and relationships both in terms of getting their relationship to work - you know very well how it is to work with big companies!

John: [00:02:11] Yeah.

Justo: [00:02:12] Yeah. And then of course they need some time to work. So right now we're for example in Latin America in a few countries, also in Germany, and we are also working with having some others. In some of the cases, some regions didn't work. We tried and it didn't work. In other cases, well the unit economics didn't work. You know in some countries for example, where the price of ebooks is too high but they are very used to very low-cost services. Well that's fine - we'd love to work there but that's very difficult. And also we're also started to diversify, to try to find other areas where books are necessary - for example transportation companies, hospitality companies, you know. Anywhere where someone can spend some time reading, we are trying to be there.

John: [00:03:00] OK. Yeah. It's the hard thing about business, it's not building a product. It's finding someone to use it. And I think this strategy of working with people who have lots of customers who they need to find interesting things for, like mobile phone companies and as you say trains and hotels and stuff. I think that's a really interesting way of doing that.

Justo: [00:03:20] Yes I mean, what we do is very straightforward. I mean we want, as someone from my team always says, we want to feed people books. You know, people want to eat this that we offer. But the difficulty is that being a generic service, a horizontal service, you need to provide a very good value proposition. We have 24symbols the B2C service that allows you to do whatever you want. But then of course you have to look for other ways to reach the people that may not know that they want to read. And this sounds like a very, you know, commercial or product-ish but it's the truth you know what we found it with more carriers, we're finding it in other verticals that people, you know they find out that you know, instead of playing Angry Birds, they can read some books sometimes.

John: [00:04:07] Yeah well that's the thing, isn't it, that we say, you know, that books are now in competition with all forms of entertainment but they always were. And, you know, there's something there that people have always liked, so it's gonna be really great. So it's fantastic to find that you're finding this place for yourselves, this way of reaching customers and stuff through these partnerships. Why did you first create 24symbols? What was the big idea where you thought, I'm going to do this mad insane thing and an e-book business.

Justo: [00:04:34] Well I think there are many many reasons. First, personally, I always wanted to build a company, so I come from a family where my parents always ran small businesses, and I kind of grew up seeing their difficulties, the challenges, the hard work.

John: [00:04:50] A realistic view of what it might be like.

Justo: [00:04:52] Yeah yeah. But at the same time, how my parents built something from scratch providing value to the community. You know they started with a drugstore and they started building driving schools - one and two and then three, before they retired. So, for me, it's part of my memories where I had to take chairs from my house to the driving school because suddenly there are lots of people in their theory classes. And then the opposite when there's some competition coming up and there are some struggles there in the family, but I always kind of looked at my parents to see how hard they work and is like: this is cool. But then I start, you know, I did my Computer Science degree, I started working for companies - always small companies but always like with a salary - and I always had, like, yeah this is good but, you know, I want to try to replicate what my parents did in a new way you know, of course, because I had other abilities, you know, my parents...

John: [00:05:50] You've got to work on your own skill set than.

Justo: [00:05:52] Exactly. My parents were great salesmen and I'm different but I know Computer Science. So that's kind of my first reason. Then, more specifically, 24symbols - technology. In other companies I worked for technology was basically an end, you know, so I spent many years working in a tech company doing data integration stuff, which has been really valuable for me afterwards in 24symbols. And I really enjoyed it. I got my PhD there. All that stuff. But I had the need to build something that people could use as a final result. Basically, what we were building there was a tool to build solutions. And I wanted to be that solution. And then I would say that the third reason is that thinking about that and related to what I have said this act of of the "Spotify for books" at that time. Everything I really wanted, it merged technology of course because at that time creating a cloud reader subscription service with all the cloud DRM was technologically quite challenging. At at the same time it was books, it was basically giving people books to read, which is something I've enjoyed all of my life. So, you know, these three things plus working with my colleagues at that time, my partners that I had worked with them in the past. You know, one of them was a previous student of mine. With another, we had been like 15 years working together - made a lot of sense. So he was kind of the final push as to say: This makes sense. Then of course from a business perspective it looked like people were talking (and you know that because you were at that time very deep) talking about you know subscription services in publishing. There were many doubts but there was also many good opportunities and we decided to give it a go.

John: [00:07:37] So how did you form that initial kind of team, the co-founding team, the people who have, hopefully, the same kind of vision, of passion, that you did? How did you build that group?

Justo: [00:07:48] Yeah I think that, typically, most of the decisions we make here while creating a company, and you know that very well, John, is pure serendipity or random. But some of the decisions you make are quite thought out. And in this case I think we kind of gave it a good thought. It was basically the four of us initial partners who came from the same company, that B2B tech company I mentioned. So we typically had, you know, coffee or had lunch together and talked about books. Most of the times were business books, but some of the time it was narrative, and we kind of shared this love for books. So at the beginning we would think, you know, of moonlighting projects of bringing American books, business books, to Spain and getting the rights and translating them and, you know, basically becoming a publisher.

John: [00:08:38] Yeah.

Justo: [00:08:39] I think it is good for the publishing company that we didn't do it! [Laughs] We would have been a horrible publisher, I believe. But that kind of started to say, maybe we should do something about this. And this idea came in early 2010 about the "Spotify for books". And then I remember very well the presentation of Steve Jobs with the first iPad. And that was the moment where it was like, Wow, this is the future. I mean that was our bet. And then it's when we start thinking, OK, with us four, does that make sense? It kind of makes sense - I mean, we have sales people, all of us were technical people. But you know, one of us very high experience in sales and marketing, the CTO had very deep down experience with with this technology, had experience with product and also had lived in the United States for a while doing product management and sales and marketing, so that we kind of had most of what we needed. And of course we missed the publishing side. So that's why one of our first - we tried to, and we found our one of our first investors to be part of the industry in Spain.

John: [00:09:53] So, your co-founding group, as you say, you're all technical people so you're presumably all together writing the product, but then sharing out all those other roles as needed, kind of thing.

Justo: [00:10:04] Yeah. So, building the product, like coding, it was our CTO Angel. Then I worked in the product and, you know, the data architecture. And then one or the other worked on the product management and product design but the four of us were able to give insight. It's about, you know, we could have very detailed discussions about, I don't know, I remember one discussion about the cache, you know - the book cache - how the information was going to be kept secure or whatever. And so we were able to - but then each of us had very specific roles, which changed completely as, for example, I was going to be focusing a lot on product but, you know, since we launched at the London Book Fair in 2011, it was clear that because of my English, because of all the things I could do that my other partners couldn't do, I was going to be more like PR.

John: [00:11:02] Yeah - the public face for the English-speaking world.

Justo: [00:11:04] Exactly. And that's that's very funny because out in Spain, it was very clear that one of my partners was the CEO at the time. Everyone knew my partner but nobody knew me. But, you know, outside in the English-speaking world, it was the total opposite. It was like, So you're not the CEO? No, but that doesn't matter! You know, so, and he also talks to me!

John: [00:11:27] So you kind of mentioned that you started off with you that little group of you, you were a kind of a book group effectively, and one of the things you did was talk about business books. Is that how you've gone about learning to run a business yourself? Do you go to books, is it kind of web sites and stuff these days? Anything particular that you found useful? Or are you more of a, kind of, throw it up in the air, try it and see what happens?

Justo: [00:11:48] You learn from everywhere you can. I mean, I have a very small anecdote about that, you know, then we can talk about books. So, we got accepted by Seedcamp, which is a London-based accelerator that was here in 2012. So one of the incredible things about Seedcamp is that, I think it was a Monday, I said something to them. I said, you know, since we're Spotify for books, I would like to meet someone from Spotify. You know, it would be great.

John: [00:12:16] Yeah.

Justo: [00:12:17] So, two days, they got me a VP, a vice president of Spotify, talking to him, and the meeting was five minutes - five minutes. It was, like, you know, we're 24symbols blah blah blah blah blah. "Oh yeah?" So he just put the hand on my shoulder and said, "Quit." [Laughing] Sorry, maybe my English is, I speak too fast. Let me explain that again. 24symbols... "Yeah yeah, you're like Spotify but for ebooks. Quit." So this is something like, OK. "So you want to be like Spotify for books, right. What's your background - technical this and that? Yeah OK. So it's great but only take into account one thing: if you are successful, you are not going to be a tech company, you are not going to be a content company, you're going to be a law firm." So, basically Spotify is the best law firm in London, in Europe. OK. So that's going to be your role. You're having a huge understanding of the law. Huge understanding of the relationship with publishers. Yeah that's going to be 24symbols so, you want to go for it, that's it. And for me those five minutes were huge in understanding where I was getting into. We're not a law firm at all but it's true that that, for many years, that's basically what I've done. I've basically learned to negotiate contracts with publishers before we tell other people. So these things are what I learn from. But also of course, you know, I'm more like a product guy so books like the classic "Crossing the chasm" or "The Innovator's Dilemma" or "Made to Stick". But there are also some very recent ones that are really good like Sean Ellis's "Hacking Growth" or Ash Maury's "Scaling Lean", which I don't know how it's going in sales but I think it's much better than his previous one, "Running Lean". And then from a business perspective there's a really good one called "The Founders' Dilemmas" from Noam Wasserman is really good for founders. I'd really recommend it.

John: [00:14:20] Yeah, I found that really helpful at the beginning, just to get your head around some of the things that are coming your way.

Justo: [00:14:24] Exactly and what it means to be together in a company with your partners. And of course for example Brad Feld's "Venture Deals" is absolutely key in terms of negotiating deals with VCs or business angels. And maybe a lesser known one is called "New Venture Creation" by Geoffrey Timmons. It's from a course at Stanford University - it's a huge book, it's really huge, it's a thousand pages, but full of good information for someone who started a business. So basically, my part of the business plan was written with this book open. Because there are so many good information.

John: [00:15:03] So as we think about business and product and stuff, and when you think about it, you look back on eight years and the ways you've grown and changed and stuff. When you think about the next eight years, or eighty years or whatever it is, how do you think about that and where you want to be? And if so, how do you plot that kind of work?

John: [00:15:26] Yes, That's a very difficult question! Well, I have no idea! [Laughs] Most of the time, we're trying to continue, I wouldn't say survive exactly but to continue - to thrive and to continue giving them the best product. But it is true that when you see where the industry is going and where the entertainment is going and even what the data for me is. And you know, because of my background, I think a lot about, you know, how this is going to evolve in terms of what kind of entertainment is going to be created. I believe that a service like 24symbols makes sense in the following, you know, five to eight years or whatever. I think a subscription service - the area of consumption instead of ownership - is there. People are consuming more Netflix, more HBO, more Spotify, more Amazon Prime. So we're looking to use that as part of our life. I think in terms of ownership, we're always going to own things and it's because it's an integral part of who we are as a species. So everyone, you know, all of us are still going to have books - I still have a full room of books - but they're going to be the books that are important to us. And it's going to be the same with everything.

John: [00:16:40] I think this is interesting. We often hear "book people" talk about how it's really important that people buy books and own books and stuff, and this terrible, terrible modern thing of subscription is awful. When I was growing up, most of the books I read, I got from the library. They weren't my books. I took them for a week, I read them, and I gave them back. If I wanted to read it again I had to go back, find the book and bring it in. And OK, yes, then you'd find your favourite books or favourite authors and then you would buy those and want to own them for the long term. And I think we get a little bit too obsessed with ownership, you know. Borrowing, subscription stuff, is actually, has always been a really good low-barrier way to discover stuff.

Justo: [00:17:21] Absolutely. You know, of course I have to agree!

John: [00:17:26] Yeah you would, of course.

Justo: [00:17:27] But I don't think this is a fight between, you know, print books or having books. There are some books that we're going to want to have because it's part of our life. And actually we might actually buy a better edition because we want to have it there, but because he has a story. And there's some others like, you know, I read it, that's fine. I have some notes, that's fine. You know, 24 symbols or whoever, you keep that. Just in case. But that's that's how I say to think of a more ahead is, you know. How people or why people read I think is the question to try to solve.

John: [00:18:00] Yeah I think that's going to be a fascinating one. So when you look at the business, when you look at 24symbols, what is it that you find hardest about being a CEO, about running the business being a founder whatever? You know, some things obviously come naturally and, for you I guess from the sound of it, product is your focus and that's what you like. But what are the things you kind of shy away from but still have to do?

Justo: [00:18:22] But still have to do, yes. This is totally personal, I mean, as Justo. I don't like to negotiate. And I know that's that's a horrible thing to say as a CEO. But you know I decided many years ago that I was going to be honest on this. I have to do it and of course, if you have to be hard on a negotiation, you have to be hard. But, man, it's just some people that enjoy negotiating, you know, it's like, No no, we have to negotiate. It's like, no, you know, let's get a deal fast, that's it, you know. And that I have my own issues with that. Then of course you have to learn and I've been successful in some negotiations. But wow, for me that's the hard thing.

John: [00:19:10] That's really interesting. When we were talking earlier, actually before we started the show itself, of this thing of running a business and being a parent. I mean I'm in the same kind of shoes as you with kids and I love that you were sharing a quick story about looking after your daughter while you were having to do a presentation.

Justo: [00:19:31] Oh yeah. Yes. Yes. The thing is that my wife and I, we both have companies so we both are entrepreneurs. She's more in the health side and I'm more in the book side. We have a daughter, an almost 4 year old daughter, and we have to kind of keep a balance of how we take care of that. Because for us taking care of Olivia is a priority. So it has good things, you know. I can take her to school every single morning, no problem. But there's moments where, you know, it's impossible to manage and so this year, this academic year, there's been two occasions where I had to give a talk to, in both cases, like 150-200 people. And I couldn't find someone to take care of Olivia. So I said that to the organisers and in both cases they said, Just come with her. Like, are you sure? It's like, well let's try it. So you know there were some people taking care of her, playing with her while I was giving my talk. But in both of them she just wanted to be with me, so she would be up with me in the final minutes or whatever. But in the first one, she came to me while I was giving the talk - actually the talk was in English so kind of my brain was totally busy with, you know, in general translating everything I want to say. And she just came to me and said, Daddy! Yeah you want you come here? Yes, but I want to go pee. Just like that. Well, can you what with this other person? No no no no, I want to go with you. So I had to ask the audience can you wait for five minutes? [Laughter] And the audience started to clap and, you know, we go. But I was totally embarrassed because for me, you know, this is serious. There's like, I'm giving a talk.

John: [00:21:21] Two halves of your life blending.

Justo: [00:21:23] Yeah. But the audience saw it as, you know, this is life. This is life as well and people are starting to understand that this happens. And I wouldn't rush with her. You know, she did what she had to do and then we came back, and people were clapping again and I finished and everything went well. They invited me to give a talk again.

John: [00:21:39] So that went very well then.

Justo: [00:21:41] That went well. But, yes, this is what you have to do when you have a startup and you want you to continue engaging and commiting to your family.

John: [00:21:51] So as you look back over the last 8 years or so of running this business, creating it, building it - what have you learned about yourself from doing that? You know, do you still think of yourself as the same person or have you learned more about who you are or have you changed?

Justo: [00:22:08] Yes I think everyone in 8 years changes a lot, you know, regardless of what you do. But it's true that running your business means having to make a lot of decisions, having to do things that you didn't expect that you would do and even enjoying it throughout the process. As I said, I never thought that I could negotiate the things I've been able to negotiate. I came from a career, a professional career, that was basically meant to be an expert in a very specific area. I did my PhD in data integration so I was meant to be that.

John: [00:22:44] More specialist kind of thing.

Justo: [00:22:47] Very specialist. And so even when I decided to be part of this, even my previous boss, who is someone I truly respect for everything he's done, was like: are you sure? You could be a big-data expert and things like that. You know what it's like. I don't know if I would be able to do that, but I want to try this. And it taught me a lot about, you know, having to manage many things at the same time and all that stuff. And then one thing I learned is, for us as for any company, we've had our ups and downs. And I remember, in 2012 we had a very very strong down and I never thought I would be able to have this, well now this word is resilience, right? It's to continue. We were like 15 months without having payments at all, you have no salary. And we are not rich. We don't come from rich families. So we had to do many different things because we believed and that, and for 15 months it was like I don't know how I'm going to do it. Of course sometimes you think, I'm what, 38 at that time or 36, 37. And I looked at my account and it was like, What am I doing? You know this doesn't make any sense. But you know I like this. I think this makes sense to me and you continue doing it.

John: [00:24:06] So what is it that then brings you back every day in the face of those difficulties? It gets very real sometimes doesn't it?

Justo: [00:24:14] Yes.

John: [00:24:15] What brings you back?

Justo: [00:24:18] I think in this case, at least for 24symbols, it's this vision. As I said before, I wanted to build something that could be used by people. And I know this sounds very typical but in my case at least this is true is of course we have our bugs, we have our complaints, but also we have lots of people saying, hey I'm enjoying! I read everyday with you, you know, with your books and this is just amazing. This is just amazing that you are building up a service where hundreds of thousands of people are being able to read and that's what in 2012 and other years it's like, OK one more. There's a challenge there. I remember I had a chance to talk to Ash Maurya the author of "Running Lean" and "Scaling Lean". And we were talking and he kind of agreed with me at that time that we still need to learn more about entrepreneurship like in judo or martial arts. You know, when you do martial arts, this is something you are taught: when you quit. You know, these guys are beating me. Okay so let's quit. You know, that's it. In entrepreneurship, you don't know that, you have no idea. There is no one who can tell you and in our case in 2010 and all the years, we were lucky but we could have not been lucky and we would have been in trouble. So that's I think in terms of knowing or learning more about what it means to build a company or a startup. We still need to learn more about, you know, when to quit, when it's the right moment to say that's it.

John: [00:25:51] We gave it our best shot.

John: [00:25:52] That's it, you know, next.

John: [00:25:56] Well that seems a very topical note on which to say thanks very much Justo for that fascinating conversation and it's been great to hear from you again.

Justo: [00:26:03] It's great you always talk to you John. Thanks so much.

John: [00:26:07] Thanks to Justo for that fantastic interview. I'm always energized when I talk to him because he's got this real passion for just making books available to people. And it's really great, it's been great over years now to follow 24symbols in the way that they have persisted and survived. There are so many companies that have been touted as the "Spotify for books" and they're still here, they're still doing really well and just getting books in front of people. And the fact that, you know, this consumption model of streaming books, of borrowing books, of just having books for a while is nothing new. You know, as I said in the interview, you know, we've borrowed books from libraries for hundreds of years, decades. And this is just the new iteration of that model. So it is great to see people pushing that forward and developing it. So thanks very much to Justo. Next week we're going to be talking to Emma Donnan who is a ghostwriter. If you've ever wondered what ghostwriters do, how they go about things, how they fit into the world of publishing, tune in next week and hear what Emma has to say. Until then thank you very much.