Bob Young was glad he wasn’t in Canada on Thursday.
“I’m in North Carolina, and from what I gather today is a better day to be in North Carolina (weather-wise),” laughed the Hamilton, Ont.-born chief executive of Lulu.com and the founder of Red Hat Software Inc.
Lulu.com announced Thursday its official entry into the Canadian market, offering a localized version of its portal that sells self-published books, videos or other products. Lulu releases 2,500 new titles a week by unknown authors from around the globe. Authors charge as much as they want for their work and receive 80 per cent of that price, while Lulu takes the other 20 per cent. By offering thousands of items in small runs, Lulu has taken in US$16 million this year.
Young spoke with ITBusiness.ca about how he’s grown Lulu since it was launched three years ago.
ITBusiness.ca: What does Lulu’s Canadian presence consist of?
Bob Young: It actually represents two different things, though tightly related. All U.S. Web sites tend to be U.S.-centric by definition — the U.S. is the world’s biggest market and you tend to focus on U.S. sales tax issues and language and everything else. And yet people in countries other than the United States – we’re willing to tolerate U.S.-based stories or catalogues, but we don’t like it. The French refuse to buy from U.S. Web sites. The Canadians hold their nose and continue to buy things. So when we talk about launching Lulu in Canada we’re talking about a Lulu Canada-branded Web site where we spell colour with a “u” and we understand how GST works and charge it or don’t charge it as the situation requires. And we meet our delivery standards. Up until now we’ve run our site and actually sell quite a lot into Canada, but we do so by making our Canadian customers suffer a little bit because it takes a couple of extra days to getting it across the border and all the rest of it. What we’re talking about it making our Canadian service the absolute equivalent of our U.S. service by having a Canadian-focused sales team and Canadian offering.
ITB: So do you form partnerships with outside firms to handle that logistics work?
BY: Yes, we do a lot of that. We’re very much a 21st century company in that we try to have as virtual a company as we can. One of the launch elements we’re talking about is we actually have offices in Hamilton where we employ engineers and have marketing executives targeted at the Canadian market, but also with a sort of a world mandate, as a lot of Canadian offices have.
ITB: But you’ve had that presence in Hamilton for a while, right?
BY: Yes and no. It was sort of run as a division of the Tiger-Cats, this MRX marketing organization. But we’re actually repositioning that substantially and moving MRX away from the Ti-Cats and into Lulu, but what we realized was that our Internet skills that we had been building in MRX applied much more to the Lulu market place on a global basis than it applied to the Ti-Cats just in Canada. So, for example, we have a Web site building team in Canada. We started off building Web sites for football teams and then for hockey teams. The more we looked at this, we realized we should be building Web sites for publishers so they could be using Lulu more effectively. There’s a lot more leverage to that.
ITB: A lot of people wondered how you would deal with all the intellectual property and copyright issues around the content in Lulu. What have you learned over the least three years?
BY: Well, our sort of mission statement is to empower creators. But when we say that we don’t mean for you to give away your creation, the thing you’ve been working on for several years. We mean that you can get paid for it. You can give away stuff on the Internet fairly effectively. That’s not Lulu’s role. Lulu’s role is to help you sell your content on the Internet. That’s the products and services that Lulu is trying to build. We’re trying to create a market for the next generation of content creators to be able to bring their content directly to the marketplace instead of asking permission from other publishers or being forced to give away their content for free.
ITB: Are there any attributes that distinguish a successful Lulu author?
BY: They both have something valuable to say and they have an audience who is interested in what they have to say. And this example applies particularly to what you guys, your audience is interested in, which is technology builders. Whether you are a software company or a hardware company, the big challenge you’ve got is you’re revising your technology on behalf of the needs of your customers. Meanwhile the traditional publishing model is you come out with release 2.0 of software and you print 1,000 manuals because you think you’re going to sell 1,000 copies this year. But then, three months into the year, as some customer points out a feature that you should build, you release that as part of your standard offering, you’ve obsoleted the other 750 copies of the manual. By working on a print-on-demand service such as Lulu, suddenly you don’t print 1,000 copies. You have your customers come to Lulu to buy books one at a time. Then as you revise that book, literally five minutes after you hit “publish” on the revised copy, the customer gets the most current copy of the manual. They’re not getting the copy of the manual you printed a year ago that you have to stick some addendum pages in when you ship it.
ITB: What’s been your reaction to the patent issues facing open source companies and the Microsoft-Novell partnership?
BY: Yeah, well, there’s been two trends in software which is really interesting to me. One is this phenomenon – and Red Hat has been at the leading edge, and I’m very impressed with what my colleagues there have been able to achieve, which is selling software as a service instead of selling software as a bunch of CD-ROMs. It’s been such a boon because you’re no longer expected to worry about revision levels themselves, you’re now signing up with a partner which makes the software work, kind of like magic. Both models – the idea where you’re using software on someone else’s site or what Red Hat is doing with software as a service . . . those are just a huge boon to IT professionals. Your VP of IT no longer has to have nearly the same number of system admins as he did a few years ago.
The IT problems from a patent and copyright point of view is equally interesting. As far as I’m concerned, the patent system is broken. It’s amazing how creative our industries are at coming up with workaround to the broken model. The fact that software is so easily patentable means that almost all of us are breaching someone’s software patent almost all the time.
What you’re seeing with IBM’s partnership with Red Hat, and Oracle all the other firms about a year ago (is) where we get to share all of our patents between us, is just a workaround. It’s a way of giving companies like IBM and Red Hat the ability to sleep at night. Suddenly you have this huge inventory of patents you can use to protect yourself from the other big patent pool owners. It’s a bit like nuclear deterrence, and it’s a really stupid solution, but at least it’s a solution and it allows the consumers of software to get the latest, most innovative software without having to worry about SCO-like lawsuits.
Having said that, the Microsoft-Novell deal is one that I think was somewhat unnecessary and a poor decision by Novell. Microsoft stands for basically the opposite of the open source software movement. I don’t mean that Microsoft doesn’t provide value to their customers. I don’t want to be as ideological as that. People are paying them whatever it is now, US$80 billion a year. They’re getting some value for that. It’s just that the whole point of open source is giving your customer control over the technology he’s using, and Microsoft earns almost all of its money by doing all of this work for the customer, so Microsoft genuinely doesn’t believe the customer needs to have control over the software they’re using and many of its customers will stand beside them and say that.
For Novell, a company that’s staking its future on its Linux distribution – I see these things with a particular bias, of course. My bias is I’m an old typewriter salesman, and I tend to look at these things from a marketing perspective than a technology perspective. And when I see a confusing brand statement, I think “Geez, that just doesn’t make sense.” That’s the problem with a Novell-Microsoft partnership is it will just confuse the hell out of the Novell customers and it doesn’t do anything good for Microsoft customers. I just don’t see any value in it to anyone.