People - September 2006

Ex-Red Hat CEO bets big on bookmaking
by Chris Richter

Bob Young left his job as CEO of Raleigh-based Red Hat Inc. in 1999, just after the maker of Linux operating-system software went public. But he didn’t leave behind his open-source ethos.

Lulu Inc., the Morrisville-based publishing company he started in 2002, enables authors of any stripe — including those whose books might sell only a handful of copies — to see their work printed and marketed. Just as open-source software allows users to change how it operates, authors who use Lulu control the entire publishing process, from editing to how a book is pitched to customers.

That isn’t the only difference between Young’s company and traditional publishers. Unlike conventional vanity presses, it does not charge an initial fee. An author uploads a book to Lulu’s Web site, where it is immediately available for sale. Lulu outsources the printing and produces copies only as they’re sold.

Authors decide how much profit they want from each copy, then Lulu adds a 25% commission and the production costs. Among the top sellers on Lulu’s site are such titles as Maximum SAT and How to Become an Alpha Male. Also for sale: CDs, DVDs and calendars.

Young, 52, is a native of Hamilton, Ontario. Early in his career, he started a company that leased computers and another that published newsletters about the technology business. He bought what is now Red Hat in 1995 but severed his ties with the company when he left the board last year.

Lulu has grown quickly. Young expects at least $15 million in revenue this year. That’s up from $5 million last year and $1.6 million in 2004. It has 60 employees and has opened a London office. The company also is experimenting with online video. Earlier this year, it launched lulu.tv, a Web site similar to the popular YouTube.com.

Young says Lulu’s publishing efforts should be of no concern to the likes of HarperCollins and Random House. After all, eBay did not spell the end for old-line auction houses such as Christie’s and Sotheby’s. It simply made a wider variety of products available at auction. “A big, popular publisher is looking for 100 authors who will each sell 1 million books,” Young says. “If they can sell 100 million books a year, they’ve made a lot of money and their shareholders are happy. … We’re looking for 1 million authors who are going to sell 100 books each.”