Speaker: Welcome to The Heart-Led Business Show, where compassion meets commerce and leaders lead with love. Join your host, Tom Jackobs, as he delves into the insightful conversations with visionary business leaders who defy the status quo, putting humanity first and profit second. From heartfelt strategies to inspiring stories, this podcast is your compass in the world of conscious capitalism.

So buckle up and let your heart guide your business journey. 

Tom Jackobs: Welcome to the Heart-Led Business Show, where we dive deep into the business side of passion and purpose. And today we're rolling out the red carpet for the remarkable Kris Austin, co-founder and CEO of Draft2Digital, one of the world's largest digital publishing and distribution platforms for self-published authors and independent publishers. Since its founding in 2012, Draft2Digital has grown to support over 300,000 authors from around the globe. Who have collectively released over 1.1 million titles. Wow. With a business that beats with a heart of gold, Kris has a treasure trove of insights to share about leading with heart in the entrepreneurial arena. So welcome to the show, Kris.

Kris Austin: Thanks, Tom. Glad to be here.

Tom Jackobs: I'm really excited to have you here as well because, you know, I've self-published a couple books and I know a lot of the audience likes to write books and publish books. So I think this will be a really good introduction to the audience, but also to get your side of, you know, the heart part of running a business.

And of course, the first question I always like to ask is, what's your definition of a heart-led business?

Kris Austin: Yeah. To me, a heart-led business is one in which has a mission to help and serve people. All the people you interact with including your employees and your vendors and partners and your customers. What can we do to better people's lives?

Tom Jackobs: I love that. When you're putting the people first, you can't go wrong with that.

Usually.

Kris Austin: Yeah. I assume you could take it to too much of an extreme, but for the most part, I think that people first will serve you well. 

Tom Jackobs: And have you ever been in a profit led company before starting this company?

Kris Austin: Um, I had never run one, but I had worked in one. The first jobs I actually had were at university which was a nonprofit obviously. And then my second job was, was really in IT consulting. That was a profit driven company. But I actually learned a lot about how to treat people with dignity and respect working at that company.

So I think I, I learned a lot from the leadership there. 

Tom Jackobs: Oh, that's good. And, I spent a good amount of time, like 12 years I think in corporate work. And it was all, it was oil and gas, so it was completely profit driven. 

Kris Austin: Mm-hmm. 

Tom Jackobs: And it was completely different. I, I, I went to work, collected my paycheck, and went home. And versus being in a heart-led business, I find that I work harder because of the purpose behind it. And the pay is like the cherry on top. Most of the time. 

Kris Austin: And that's what I want to do with Draft2Digital I've always wanted to do is make it so that the people who work here, they want to work here. I want them to be excited about their jobs and their missions and the goal of what we're trying to accomplish so that they enjoy their work.

I, I've told all of our employees over and over again that I want you to enjoy your job, and I don't want you to stay here just for the money. I want you to also enjoy working here. 

Tom Jackobs: Yeah. How do you create an environment then for the employees to enjoy their work. Of course, there's days that you're not going to enjoy your work, but how do you create that environment to allow that to happen?

Kris Austin: Yeah, so it first really comes down to how you treat people in general, just so a culture of respect and caring and empathy. Recognizing that we're all human beings and we all have our difficulties and struggles in life. It all just starts right there. And so when employees have some personal thing come up you don't get upset at them.

You do what you can to support them. And the same is true for your customers when weird things happen in their lives and they need some help. And It's just showing that people are people and it creates a culture of where we actually care about each other. In the company, we care about the other people we interact with because you, we know we're gonna support each other.

And so it's the whole culture thing. It's not any one specific thing. It's just being able to say, yes, we can accommodate you during a hardship in your life. And they, they feel it and they understand how important that is. 

Tom Jackobs: Yeah. Especially when you bring that care in and a lot of employees don't always realize that they can actually go to their employer and get that care. I've noticed that from my own staff. Sometimes they're a little afraid or intimidated to express, any issues that might be coming up.

But the ones that have, it's, we had some employees that had some deaths in the family and they had to take a month off and that's fine. You take care of family first. That's our philosophy here as well.

Kris Austin: Absolutely. That's why that's happened to, to us. We're big enough now that's happened and I always tell, I just I don't want you worrying about work right now. We're gonna keep paying you, take care of what you need to take care of. We'll be here when you're ready.

Tom Jackobs: Yeah. That, That's really great. So, I skipped over this part, but what got you into the book publishing business?

Kris Austin: Um, as I mentioned earlier, my background's actually in computers and IT, and technology in general for as long as I can remember. But a college friend of mine was, is an author and he was trying to get his book published and through the traditional means, which are the type of things where we all can probably imagine it, where you're basically pitching.

Um, Your book to agents who will then decide to pick you up and then they have to pitch your book to publishers. The chance of getting through that process is extremely slim and and quite disheartening I would say.

Starting around 2007 or literally in 2007, Amazon came out with the Kindle.

Which is an ebook reader. So the ability to read your books digitally that really changed the game for publishing. It made it so that the barriers to having your book published and distributed to readers was reduced quite significantly. So you could very easily get your book to readers without requiring yourself, you know, to buy a thousand copies of a print book and stick it in your garage.

Which is pretty much what would happen and we would tend to call that Vanity Press publishing or something similar. And authors would literally spend thousands, tens of thousands in some cases to get their books published in that way. But the digital ebook revolution really made big by the Kindle ebook reader.

I love those. I've used them so many times. I still, I read one every single night and

But my author friend realized and learned about this process getting his books onto Amazon's Kindle platform. It's a self-publishing platform but eventually Barnes and Noble and Apple and others followed um, accepting self-published titles then became the challenge of a technical challenge.

It became of, how do I get my book from a Word document into a ebook format 'cause all these require specific formats. And this is a huge technical challenge for most people. My background's in computer science. We had another mutual friend we went to college with, who's a software developer as well, and the two of them actually got together and created a tool set that would convert books automatically from these Word documents into these digital they're called EPUB format.

Basically made it really easy. And at the time the competition was smashwords.com they had a 30 40 page word document manual. Basically here's how you use Word to format your document to make your book look good so we can convert it for you. And we decided that was too many steps.

This tool set was the style guide was about two paragraphs long. It was very short, and we created software that would detect your chapter headings. And so we could format your book automatically for you would automatically put pages in the book at the front and back for you. And a whole lot of technical minutiae.

 um, so we really decided to build a company around that. This friend of mine came to me and he said, Hey Kris, do you want to be CEO of this company? And I'm like, I don't know anything about running a company like I, but I am the curious type. I'm the type that really likes to learn things.

And I said, I don't know, maybe. And I'm working at this IT consulting firm doing really well. And I have a 3-year-old son and a six month old daughter and I'm like, Hey, you want to quit your job and start with doing this other thing? It's very risky. But we decided to wrap a company around this sort of conversion process um, which at this point now is a very small amount of what we do for authors where we distribute books everywhere through all the retailers and libraries and most of the world.

And uh, we consolidate sales reports and make payments and it's just a quite a complicated running thing. We have 34 employees now.

Tom Jackobs: Wow.

Kris Austin: Supporting all these authors. But that's really how it started is, hey, how can we reduce barriers for authors so they can get their books to their readers?

And so the authors can realize their dreams, whatever those dreams might be. 

Tom Jackobs: Wow. Well, quite the origin story. 

Kris Austin: It's not small, it's weird, unlikely process, who gets into a running a business just all of a sudden like that, it's probably not common. 

Tom Jackobs: Oh, and it sounds like you're the reluctant CEO that really stepped up to the plate and actually delivered. So

Kris Austin: I enjoy it. It's a lot of fun. So it's just a, it's a technical problem in my mind. I think through it analytically. 

Tom Jackobs: Yeah. that that's great. And so early on definitely 2007, 2008 not great years to start businesses. With the crash and or the recession.

What were those early years like as you were, building obviously a heart-led business, but also needing to support your family as well as the family of the other two folks as well.

Kris Austin: So it was terrifying. And to clarify, we started in 2012, so 2007 is when the eBooks started, but the 2012 timeframe, things were obviously looking better in the economy, but I wasn't even thinking about the economy. I was pretty young then.

And I had a stable job, so I didn't even think about it. But what we had to do though was we worked on it for about six months, like in our spare time in the evenings and stuff, we kind of started in March, 2012. We weren't getting anywhere. We were doing stuff, but nothing was getting done.

We were never gonna finish. And by about July or so, I was like, one of us is gonna have to start working full-time if we're gonna actually get this thing off the ground. And we essentially scrounged up enough money to pay me for four months which August through December with the plan to be that we will have launched a product and started generating revenue by that point.

And so it was just me, and also I had a requirement for myself that I had promised to my family that I wouldn't work more than 40 hour weeks. Generally. I wasn't gonna over be one of those overworking parents that was just constantly working. And so we also did it with working 40 hours a week essentially.

Tom Jackobs: Wow.

Kris Austin: And 

Tom Jackobs: unheard of.

Kris Austin: Yeah. And but we launched it at the last week of that year very last week of December. We needed authors to provide us example document. We needed way more documents so we could test our software. And so we just put out a feeler out into the author community asking if anybody wanted to try out this new system.

And immediately we just, we had dozens of authors coming into the system. And their books were selling. These were books that readers were wanting to buy. And by the end of January, we had enough money that we could hire the second one of the co-founders, and then by February we had another one.

And by March all four of us were working there. So the money we got was a little bit from our own savings and, but we also raised money from friends and family with short term loans basically that we would all personally guarantee to our own family members. And it was only, it was about $40,000 by that point.

So that's about what we started off with and we paid all that back within a few months. And everything took off from there.

Tom Jackobs: So in the, in those early days, you were just doing the ebook translation from word to the ebook.

Kris Austin: Yes. 

Tom Jackobs: And so were, were the, authors paying you a fee for doing that, or were you taking a cut of the profits after.

Kris Austin: Yeah. Yeah, so our actual business model is we accept everything um, with no upfront fees. You can use our conversion and distribution software for free. That doesn't cost anything. However, when you sell a book we do keep a cut. It's about 10% of the list price of the book. For most retailers and for libraries is something a little bit different.

We wanted to align our business with the needs of our authors basically. So what we say is that we only make money when you make money. So we're not selling authors a service. We're trying to help authors succeed and then also, and we make money that way.

So if authors are succeeding, we are succeeding. And about 40% of our authors have sold books in the last six months. About 60% haven't sold anything in the last six months through our system. So it shows you there a lot of overhead of books not selling.

But we don't wanna make money off of monthly fees to authors or anything like that. We want 'em all to have a chance. And so we offer the service for free. And the ones that will succeed and we'll benefit in that way. And the models worked very well for us.

Tom Jackobs: And so now, now you're doing both print, are you doing the print on demand and that type of self-publishing as well?

Kris Austin: Yeah, so this was a huge project that it was so enormous. It's almost hard to stress how much pain this was. So digital books fairly straightforward for us. But I realized about, I guess at this point, six, seven years ago, that most independent authors didn't have their books in print. Even the really popular ebook authors, their books just weren't in print.

And a relatively new technology has come around called Print on Demand, which are just a fancy printers that can print books one at a time at a cost effective rate. And it's not really a whole printer, it's generally a whole lot of people involved too. They print these and they cut them and they put 'em all together.

Very impressive. Um, Work. But print on demand is essentially when you're a reader, you just go and buy a book and at that moment the book will be printed and then shipped to you. So you can buy a book from Amazon or Barnes and Noble this way. You could even go to your local bookstore and order a book from them.

And they'll order it through through the print partner who will then print it and ship it to the bookstore so that you can go pick it up. Print on demand is amazing. It means you as an author don't need to buy anything upfront. You don't have to buy books upfront. It's all handled. And to us, it's just a digital problem still.

All we gotta do is provide files to our print partner, and then our print partner takes it from there. What I didn't realize at the time was that the print industry is very old.

Tom Jackobs: Yes. 

Kris Austin: It sounds silly when you think about it, but it's very old and very antiquated. And we were dealing with eBooks, which are really new.

And basically we learned really quickly that the industry wasn't quite ready for the volume of books that we could provide it. That the speed of turnaround that authors expect. So in the digital world, if an author wants to change their price. And they can go to our website, put in a new price, so like maybe some sort of promo price.

Within a couple hours we'll have that new price everywhere. It'll just everywhere. You can do your promo really quickly. It'll be live everywhere. In the print world. If you want to change your print book price. It's weeks, months, sometimes. And 'cause the industry is not really built to think that way or to do that in the digital world.

There usually the price would be on the barcode, but thankfully some of that has been resolved where we don't have to put that in there anymore. And the systems are a lot smarter now on the retail side. But really that was a huge struggle. It is trying to figure out how to get the print industry up to the speed that we and our authors really wanted.

And we've been very successful with that. But we had to work at it. We went through two print partners to land where we are at. And lots of software and testing and communication to authors. But it's very, it's our fastest growing part of our business now. and almost 30% of our.

Income now, which is a massive shift in a couple years. And we only have about 10% of our titles in print. The print industry is thriving but and we're getting into authors in there, so yeah.

Tom Jackobs: Yeah. Yeah. My, my first two books self-published Print on Demand as, as well, and the process even then was. Still, the getting the files right, getting the layout correct and the margins and all that. It was a good amount of time doing trial and error.

Kris Austin: And our software will convert an ebook into that print format. Without to author, have them do anything. We handle all the margins, we handle all of that all automatically with our software.

Tom Jackobs: Oh, sweet. Do you do illustrations as well?

Kris Austin: No. Illustrations is a whole nother ball of wax. If you have illustrations in your book and stuff, you're probably gonna be paying a professional formatter to help you out with that. 

Tom Jackobs: Yeah. That's funny. That's what, what a challenge. And I can imagine that, as you built the business, bringing in, worrying about the revenue, but also servicing those both the print partners as well as your authors as well. How do you juggle cause now you have, your investors, your employees, your book partners, and then also your print partners. Like how do you juggle all of those relationships to make everybody happy?

Kris Austin: Yeah. It's obviously a challenge. Um, you know, There's a lot of different people to interact with and, I don't have the time to interact with all of them. Obviously, I have a team of people and it goes back to the beginning of our earlier conversation. You as the leader set the tone for how your company interacts with other people.

And if I treat our employees in a specific way they tend to learn and treat the people. They interact that way. So our vendors and our partners the whole method of how we talk to each other feeds through the whole company. And that means that my employees, when they interact with our partners, they do it in the tone that I would want them to With a respectful tone. We know we don't bully people around. We're not rude to people and, which it's just not the way we do things. And that's 'cause that's not the way I do things. And it really does come from the leadership. If you find that your employees are acting the way you don't want them to, you need to also introspect into yourself and see if you are the one causing that sort of uh, culture shift. 'cause it could be you. It could be you. 

Tom Jackobs: Yeah, a hundred percent. Yeah I've seen that firsthand.

Kris Austin: Yeah. 

Tom Jackobs: Mm-hmm. Early days when I was leading a team, which probably shouldn't have done that. But, we learn from our mistakes hopefully.

Kris Austin: That's all you can do. You have to learn from your mistakes. 

Tom Jackobs: Yeah. So on the business side, how do you juggle still to this day so big business, you have a lot of authors, a lot of print. How do you juggle then making a profit and still being heart-led with so much going on in the business?

Kris Austin: You find all the great questions, Tom. We run on very slim margins. The margins are very tight and we're constantly trying to grow, and so the margins stay very tight. And it is a, it's definitely a balance. You wanna pay your employees well.

Which is very important. Give them good benefits. And you want to also stay profitable. Obviously, if you can't stay profitable, you really can't have a business. You can't serve your customers, you can't serve your employees or help provide for their families without staying at least a little bit on the profitable side.

And it's essential. And so yes, there's, it is a constant balancing about controlling our expenses in a way that we can continue to provide the service we do at a comfortable margin that we don't feel like we're gonna go away anytime soon. And we do talk about it internally, a lot about different ways we might be able to change things.

Right now most of the effort is on the expense side. It's just what can we bring in house, what can we control? We are a software company, so we have a lot of advantages. A lot of companies don't have. We can just create software sometimes to replace downstream vendors and so we, we have some advantages there, but no, I'm not gonna lie, Tom, it's a, it's tight.

It's a struggle. We purposefully have a tight margin. And because we want the authors to be able to succeed in this business where they're oftentimes mistreated. We want authors to be treated properly. 

Tom Jackobs: I had a, another guest that has a hybrid publishing company as well. And so he was explaining how with traditional publishing, the authors have to give up most of their rights and, and most of the profit as well. And there's little control once you hand it over to traditional publishing.

Kris Austin: Exactly right. We in the traditional world, an author is gonna get somewhere between 10 and 20% per sale, depending on a few different things. Through our service, you're gonna get 60%, 70%. Even 75% per sale. And then you get to keep complete control as the author versus selling your rights.

And it's a, it is just a whole different thing and that's why authors tend to self-publishing is becoming the choice of first resort now for a lot of authors. So yeah,

Tom Jackobs: Yeah. Yeah. And a lot of times that can lead to then more lucrative traditional publishing, where now you can have control because you have a track record. 

Kris Austin: A lot of authors have moved into traditional that way because they have more control. They can keep their ebook rights and sell just their print rights, which used to be unheard of. The power that authors are gaining, which is one of our goals, is to help authors gain power in this industry.

It, it is happening. 

Tom Jackobs: That's great. Well, what, what a great service. Our time has come to that point now as well. But how can people learn more about Draft2Digital and the great work that you're doing?

Kris Austin: Yeah, absolutely. So our website obviously is draft2digital.com. We also produce a podcast called Publishing Insiders and you'll see that on YouTube and your general podcast. And we actually have a couple other services to help authors. One's called bookcovers.com which I recommend authors look at.

It's a pre-made book covers, so these are covers that artists have already created. Um, And then you can go there and buy it and it's exclusive to you. So you buy that cover and it's removed from sale and never sold again. And this allows you to get covers for your books at very inexpensive prices, somewhere down to $49. And so for a starting out author, you really should not be spending very much money on publishing your book. It should be no more than a hundred dollars is what I tell authors. So try to find, so bookcovers.com is a good place to get a cover 'cause you need a cover.

Need a good cover. And so yeah we're on a lot of the social media locations as well. And you can find us all over the place. We go to a ton of conferences that are author focused conferences. To help authors. We do a lot of author education, so you'll see us just about everywhere. 

Tom Jackobs: That's great. Yeah. I wish I would've met you, years ago when I had my first book, and that was several thousand dollars to even self-publish with all the book cover and formatting and all that so, what a great service. And thank you for sharing your time and your wisdom about being a heart-led business with us today.

Kris Austin: Of course Tom. Yeah, I really appreciate you. Thank you very much.

Tom Jackobs: Absolutely. And thank you show fans for tuning in today and listening to the show. We really do appreciate it. Make sure you're checking out everything that Kris is doing and we're gonna provide the links to his website and all that down in the show notes. So make sure you go down there into the show notes and check that out. And while you're over there in the show notes, if you see that little rating and review button, I'd really appreciate if you would give us a rating and review. It just helps spread the word about the Heart-Led Business Show and help other people that might be struggling with starting their own passion based business and give them the information in the support that they need to start their passion project. So until next time, lead with your heart. 

Speaker 2: You've been listening to The Heart-Led Business Show, hosted by Tom Jackobs. Join us next time for another inspiring journey into the heart of business.