Smashwords landed at #122 in a field of 5,000 companies within the Inc. 5000, and was named the #1 fastest-growing media company and the #3 fastest-growing San Jose Metro area company.
Inc. Magazine bases its ratings on three-year revenue growth. With audited revenue of $706,000 in 2010 and $22 million in 2013, Smashwords showed 3,019% growth.
Credit for this achievement goes first and foremost to Smashwords authors and publishers. Nearly 100,000 indie authors and small independent presses today utilize Smashwords as their ebook publishing and distribution platform. We provide you to tools, and you publish amazing books that bring reading pleasure to millions of readers. It's because you entrusted your books to Smashwords that we've been able to share in a small piece of your success.
I've been singing the same tune for six and half years. It's great to see authors embracing their new-found freedom, believing in themselves and serving readers with high-quality, low-cost ebooks. It's great to see how the rise of indie ebooks has fulfilled the dreams and changed the lives of so many Smashwords authors.
This milestone also wouldn't have been possible without the hard work of my team at Smashwords. From vetting to service to finance and engineering and marketing, every Smashwords team member comes to work with the single-minded purpose to serve writers. We're here to provide you a competitive advantage in the marketplace. We exist for you.
We realize that every Smashwords author works with us by choice. We're thankful you choose to do business with us. We strive to reciprocate by giving you full access to our ever-growing and ever-improving suite of tools that connect you with readers. We offer these tools without cost and without exclusivity.
When you choose to fully distribute with Smashwords, you're directly supporting our ability to invest in the development of new tools, new distribution and new capabilities to help you reach more readers. As long as you work with us, we're here to work with you.
The Smashwords business has been profitable for over three years, and we've managed to maintain this profitability while reinvesting in the business to give you competitive advantage. This is a low margin business, which means we must make difficult decisions every day to prioritize our resources. It means we cannot and should not try to be all things to all people. We're focused on the logistics of connecting ebooks with readers. When prioritizing resources, we ask, "what will give our authors the greatest aggregate benefit?"
How We Got HereI'm often asked how we got here, wherever here is. I suppose here today is the milestone we're celebrating. Smashwords is an Inc. 500 company.
As most Smashwords authors know, I was inspired to start Smashwords after my wife and I wrote a novel together. Despite representation from a top tier literary agency, publishers were unwilling to take a chance on it. The experience led me to realize that publishers held too much power, because they alone decided which writers graduated to become published authors. They decided which manuscripts became books, and they decided what readers could read. My vision for Smashwords was to turn everything upside down and give all the power to writers and readers. Give writers the freedom to publish what they want, and give readers the freedom to read what they want.
Although only in my wildest dreams did I dream Smashwords would reach such a milestone, I never expected it. In fact, I knew the odds were stacked against us. I thought the business would most likely fail. In the darkest days early on - those days when on a good day we were earning only $1.00 a day in commission - the thing that kept me going was my belief that the world needed a Smashwords. I had faith that if I could give all writers a chance, and few of them would break out and change everything for all writers.
We've traveled a lot of ground in six and half years. We've overcome numerous roadblocks, experienced our fair share of growing pains, made our fair share of mistakes and took a lot of bullets. We've also received a lot of love, and that sustains us more than anything. We've had the good fortune to work with amazing authors and amazing retailer business partners.
The business has been entirely self-funded without the assistance or interference of venture capitalists or outside investors. This has given us the freedom to build a business around some very simple if not unconventional principles which guide how we manage the business. I'll share them now for the first time.
Smashwords Business Principles
- Every writer is special, and holds the potential to contribute something worthwhile to the culture of books.
- Every writer should have the freedom to publish at no cost.
- The worth of a writer's book cannot be measured by sales alone.
- The money should flow from reader to author. We only earn commission if we help authors sell books. We believe this aligns every fiber of our business - every motivation, every decision and every action - with the best interests of our authors and publishers.
- We serve our authors and publishers by working to enable a diverse and vibrant global ecosystem of multiple ebook retailing channels.
- We believe it's in every author's best long term interest that we promote broad and diversified distribution.
- We believe in the value of a great distributor. We believe distributors will become more important in the future, not less so. A good distributor provides efficient digital logistics for the benefit of authors, publishers, retailers and readers alike.
- We constantly strive to become a better distributor.
- We believe that authors who leverage the full benefits of a distributor will be more successful over the long term than those who do not. Distributors help authors spend more time writing and less time on distribution. It's about time management. Time is every writer's most precious asset.
- We believe past success is no guarantee of future success. Success must be earned. The moment we stop innovating and adding value to the publishing and distribution experience of our authors and readers, we lose our right to exist.
- Innovation is messy. We promise we will blaze new trails and take prudent risks.
- We will always strive to work in the best interest of our writers.
- We will make mistakes and we will learn from our mistakes.
- We will help and encourage our retailer partners to improve their businesses for the benefit of our authors, publishers and their readers. We also appreciate when our retail partners do the same of us.
- Our development will be guided by our authors, publishers and retailers.
- If we add more value than we earn in commissions, we have a future that is without limit, because the talent, creativity and capability of our authors is without limit.
- Our authors and publishers are not our customers. They are our partners, our clients. We do not sell them anything, we service them. We will not accept money from them. We will not employ salespeople and we will not sell publishing packages.
- We believe the future of publishing is bright because books are important to the future of mankind. As long as writers have a chance to publish, readers will want to read.
- We are in a relationship with you, the author, publisher, reader and retailer. We will be honest in all our dealings with you. The ebook business is entirely dependent upon trust. When trust is deserved and reciprocated, great things can happen.
- We will never forget that we serve at the pleasure of our authors, publishers and retailers.
Where to From HereSmashwords and the indie community we serve are in the same boat. We've built a great business, but I don't expect the torrid growth to continue. As I predicted in my 2014 projections, the ebook market has slowed and sales are likely to be lower this year than last.
Prior to starting Smashwords in 2008, I spent almost 20 years doing PR and strategic communications consulting for venture-backed Silicon Valley tech companies. Working in tech, you come to expect cyclical swings of boom and bust followed by boom again. The survivors of the shakeouts emerge stronger and more vibrant than ever. A shakeout is coming, not just for the ebook industry but for authors as well. Things will get tougher from here.
Ebooks never go out of print. There's a glut of high-quality reading material out there. The growth of in the number of ebooks published and forever immortal on digital shelves will probably outpace the growth in reader eyeballs, and therefore the capacity of readers to consume this content. In other words, every one of us will face more competition in the future. The average book in the future will sell fewer copies, not more. The easy days are behind all of us.
Yet more books will be read than ever before. The opportunity is there for all of us.
I thrive on challenge. The new business realities don't change how we run the business. It's an environment where author production (the number of titles published each year) and author quality will be the key determinants of success. If you're an author, it's about time management. How will you increase your production, quality, discoverability and desirability? How will you increase your capacity to serve your readers?
For Smashwords, it's about innovation. We will continue focusing on innovation. We'll build new tools and capabilities that give our authors an advantage in the marketplace. It's not only a business strategy, it's a Darwinian necessity. Every one of us, whether we're a retailer, a distributor, a publisher or an author, must add value to the reader's experience otherwise we fail to live our dream. The spoils will go to those who innovate, adopt and pioneer best practices, and who persevere through the darkest days. If you're an author - even a New York Times bestselling author - you've had those dark days where you wondered if you had the will to carry on.
Think back to our early days at Smashwords when were were taking in only $1.00 a day yet losing thousands of dollars a month. We kept going because we had this crazy idea that the world needed a Smashwords. Well, your readers need you. Serve them. Your best work is ahead of you if you persevere. I hope you invite Smashwords to join you for the ride!