An interview with David Steinberger, WG’91, CEO, Perseus Books Group.
Imagine that you’re doing well in your career. You enjoy your work. What you do matters. You’re the Deputy Commissioner of Bridges for New York City, overseeing the engineering, safety, and efficacy of over 1,000 of its bridges and tunnels. Wow! Yet, you’re eager for a new challenge. A smart place to turn would be the Wharton Executive MBA program. David Steinberger, WG’91, did exactly that, and today serves as a protagonist in the ever developing world of book publishing. As CEO of Perseus Books Group, David leads over 300 independent book publishers to discover, package and deliver words to us, in an increasing array of channels.
The disruptive effect of the digital revolution on book publishing has been widely reported. How do you see it?
The publisher’s job is to bring the book to wherever you find readers. Our role is to market the book, choose its title and book jacket, publicize it, and sell and distribute it. One effect of the digital revolution is to create new opportunities, by lowering the barriers to sales, marketing and distribution. We can connect to consumers in ways that were not possible in the past. Take a book that is not a blockbuster bestseller. In the past, it was hard to get that book distributed to everywhere its more targeted audience is, because the super blockbuster occupies the shelf space in every supermarket, newsstand and airport. Now, with the advent of online selling of both printed books and eBooks, the more targeted books can be available to people, even if it is not in stock at their store. As with any disruptive change, there will be winners and losers. Change is hard. But if you embrace it, there is a lot of potential for growth, because you can reach consumers in a new way. If you step back, you will see ways to succeed.
How did Perseus Books’ strategy develop to meet the digital revolution?
You could see this transformation coming for about 10 years. With online bookselling, the sales profile was skewed heavily to books that sold more modestly, meaning that a bestseller makes up a smaller percentage of online sales than it does of brick-and-mortar sales. This makes sense, because an online retailer can carry every book, and the consumer has the ability to search for every book. That combination makes the digital channel a “long-tail” channel (selling less quantity per title of a larger volume of titles), and we shaped our strategy because of what we saw coming.
When I arrived at Perseus, we already had acquired independent publishers that were operating creatively, independently in different cities, such as Basic Books in New York, Running Press in Philadelphia and Da Capo Press of Cambridge, Massachusetts. We realized that we had developed a core capability in providing services to enable our publishers to be successful, and we began to extend those services to other independent publishers that we didn’t own.
Where does Perseus Books fit in the book publishing industry?
The industry of getting books to consumers in the United States is $10 billion to $15 billion. Roughly one-half of the books are sold by six conglomerate-owned players. The other half is everybody else, and we are the largest service provider to everybody else. The leading book retailers tell us that we are the seventh largest in sales volume, and first in the number of titles that we make available.
Within the Perseus Books Group are 300 independent publishers, which include those we directly own, as well as clients and joint venture partners. Our clients include publishers that have been around a long time, with a rich tradition, such as Grove/Atlantic — a literary publisher, Harvard Business Review Press, Gallup and Zagat — the restaurant guide. But some of our clients are small young publishers, such as Bellevue Literary Press, which recently published “Tinkers,” a Pulitzer Prize-winning novel by Paul Harding that sold 400,000 copies, physically and digitally. We were able to get it in every bookstore in the country and on every eBooks platform. That’s an example of a publisher that has not been around for long and yet has had a huge impact. Our joint venture partners include Weinstein Books, which has the bestseller, Veganist, by Kathy Freston.
Why do independent publishers want to work with Perseus Books?
Our core services are the scale-sensitive parts of the business — pick and pack, warehousing, billing, collections, sales, back office, and distribution. The independent publisher can then handle the part of the business that is not scale-sensitive and that it does best — acquiring the books, selecting the books to publish, editing the book, marketing and generating demand for the book. During the past few years, we evolved our offerings so that we are the leading digital service provider in the industry. We can take an author’s book content and make it available on all the digital platforms, and make the content searchable. When the economics don’t support offset printing, we can keep long-tail books in stock through digital printing, using our branded industry leading service, Constellation. An independent publisher’s book may be as good as or better than any book published by the “big six,” but does it have the marketing muscle, the digital sophistication and sales strength to take advantage of the opportunities to commercialize that book, to reach as many readers as it likes? Our core competency is to enable independent publishers to meet their potential by leveling the playing field with the big six houses.
Do you provide market insights to your independent publisher clients?
We do provide information, again, a scalable service, to our independent publishers. Because we distribute to thousands of different types of booksellers — Urban Outfitters, Pottery Barn, Costco, Target and so on — we can provide intelligence as to what is going on in the bookselling environment, as well as how to succeed in the digital world.
Is it an American trait that we want to read the “new Lincoln biography,” instead of the 20 old ones in the library?
Fortunately, they want to read both. A publisher’s “backlist” — books that have been published previously — is extremely important, because a publisher has the right to the book for the life of the author, plus 75 years. A huge portion of our revenue is from books published in back years, such as Roots — which won the National Book Award, and Gödel, Escher, Bach: An Eternal Golden Braid, which won the Pulitzer Prize.
What kind of people does your industry attract today?
It has always attracted those who love reading. But for those interested in interactive media, it is a great time to enter the industry — because you can create products that have never been created before. From a strategic standpoint, new alliances are taking place. In fact, this past Christmas, we created a bestseller “book app” called JFK 50 Days for the Apple iPad, based on a print book that we did. We collaborated with NBC News for archival footage and with Vook to create an interactive product.
How did Wharton figure into your getting where you are today?
My Wharton education has been a key factor in my career. Before Wharton, I worked for New York City in a crisis management role, which eventually led to my becoming the Deputy Commissioner for Bridges. I realized that I was very interested in management and in turning around organizations, which pointed me toward Wharton. I went for the Executive MBA program, traveling to Philadelphia on the weekends, while I continued to work in the city, and was tremendously interested in what Wharton taught. Some of the key things I learned have stayed with me, especially from my basic strategy class, my basic finance class, key principles of what enables an organization to succeed and what constitutes good leadership. So I appreciate what I learned at Wharton. When I graduated in 1991, I decided to make the transition to the private sector, and felt like management consulting was the right step. I worked at Booz Allen, helping media and entertainment companies. One of our clients was News Corp., which asked me to join HarperCollins, and I became part of the senior management team that turned that business around. Based on that experience, I was given this opportunity by a private equity firm.
You are running a very diverse organization in a disruptive environment, using a nontraditional business model. What kind of discipline and focus is required to do that successfully? It must be a real balancing act.
That is a great question. The balance is between items that need immediate attention and those that need long-term attention. I start every week with a piece of paper listing the long-term items that I don’t want to lose sight of. Right now, I have seven items that will determine whether we will be successful one year or two years from now. Meanwhile, I attend to the 100 short-term decisions, such as major book acquisitions.
You did mention team. Obviously, you will only be successful as your team. We have a mix of people — inside experts with deep industry expertise, and an outside group of people who bring process skills and a fresh perspective. From Booz Allen, I brought my chief operating officer and chief marketing officer — those are outside guys, whereas my sales director has been in the industry for 35 years. It’s the same with my key editors; you try to get a team that has the combination of deep industry knowledge and outside process skills.
What writing do you admire?
Friday Night Lights by Buzz Bissinger. The Happiness Hypothesis by Jonathan Haidt, which I have here on my desk, is extremely insightful and fun to read. Also, I’m a history buff — Lion of Liberty: Patrick Henry and the Call to a New Nation by Harlow Giles Unger. All published by members of the Perseus Books Group, so if you like reading, this is a good place to be!