Eco Amazon.com rival brings in millions
Better World Books, an online retailer that resells used books and donates some of the proceeds to fund global literacy projects, has brought in its first outside investment to branch out into publishing, book rentals, and international do-gooding.
The 5-year-old company said Monday that it raised $4.5 million in its first round of financing led by Good Capital, an institutional investor that specializes in social entrepreneurship. That money included $2 million from a group of 18 private investors, whose names were undisclosed.
(Credit:
Better World Books)
"Like a lot of start-ups, if we want to continue to accelerate our growth and scale, we want to invest in new business units," said David Murphy, CEO of Better World Books. Murphy said that the company plans to use the money to improve its own Web site and efforts to bring in new books. But future projects include expanding overseas, building up a young book-publishing division, and offering a book-rental service from its Web site.
"It would be like taking a Netflix approach to the text book market," he said.
Better World Books collects books from university bookstores and libraries and resells them, donating an average of 10 percent of the price of the book to nonprofit literacy groups--Books for Africa, Room to Read, World Fund, and National Center for Family Literacy. Some of the books are shipped directly to Africa. The company sells its books on its own site Betterworldbooks.com, as well as retail sites like Amazon.com and Half.com.
The company also offers carbon-neutral shipping, adding 2 cents to 5 cents onto the cost of each book to buy credits to offset the carbon used in the distribution.
Good Capital has offered Better World Books $2.5 million as one of the first investments within its Social Enterprise Expansion Fund. Kevin Jones, co-founder of Good Capital, will join the company's board.
- most of the books that BWB gets would have gone to a different "good" organization if BWB didn't get them
- other companies simply buy books from BWBs' charitable suppliers, which are documented at wiki BWB on the other hand, calls these acquisitions donations rather than purchases. But there's not much difference except...
- BWB pays 10% for its books - industry average is 30%
- BWB doesn't pay for the books up front or even within 30 days - they make their "donation" after the books sell! In textbooks, which they specialize in, this is very seasonal and the average number of days is probably over 60.
- By nationalizing textbook and library recycling, BWB hasn't created more "good" - they have simply moved the "good" from local organizations to itself and its charities of choice. And, UPS gets a lot of the money, as campus organizations tend to send their books by UPS. BWB supplies brand new boxes for this.
- in 2007 BWB has failed to pay on time a $.50 contribution to a supplier of these books - Phi Theta Kappa. They were more than 90 days late, and gave poor responses to repeated queries.
- BWB if they were serious about doing good, would offer some insight into their own bookkeeping, particularly executive compensation. Wiki says that NPR reported they pay $100K+. Having met a founder/exec (Xavier), I can tell you that there is not a depth of experience that justifies this salary. These guys are recent college graduates without other experience.
- In private, Xavier has admitted that it's a bit of a marketing game. He knows his company isn't better at anything except getting books for free.
As the founder (Xavier) who is mentioned in this post, I take particular offense. I've never "admitted" anything like what is mentioned. We've set up a model that creates value for everyone involved: the customer, the literacy organization, the library, and our company. Our core competencies are operations and technology, and we've worked very hard at them. Our employees are some of the smartest, hard-working, and most dedicated people I've ever met. And it works. Over $4 Million raised for literacy orgs and libraries is not a marketing gimmick. I would be overjoyed to see any other company replicate this "gimmick".
I'm afraid it is much easier to blame one's lack of success on the "clever marketing" of another company rather than a lack of attention to one's own business. Better World is very open about what we do and how we do it, and I encourage anyone to contact me directly if they'd like to learn or discuss more.
you can reach me directly at xavier at betterworld dot com
Cheers-
Xavier H.