How Blinkist is Building an International Startup from the City of Berlin
Over 30 million in VC funding, 2500 book titles, six million users , three founders and 80 full-time employees. On paper, Blinkist has it all to scale up on an international level. Here is an overview of the ingredients, that would take this young startup to the next level of growth.
"Good to know. Let's start 15 minutes earlier, then," he replied instantly. This is when I messaged Holger Seim, the founder of Blinkist, that I would need ten minutes extra with him for our confirmed meeting. Who else would know the importance of "15 minutes' more than the founder of an app service that lets users read the key lessons from nonfiction books in "15 minutes'. Not only was he punctual, but I suspect he also had a mild alarm set for "15 minutes' before our meeting was about to end.
I knew I was meeting a man who values time- both his and mine. His answers to my questions were focused and humble, yet demonstrated global aspirations comparing Blinkist to the likes of Netflix and Spotify in our interaction. Indeed, meeting a founder talks so much about the company vision, ethics and working style. At the end of our conversation, I had to ask myself - Will this consumer-centric startup operating from Berlin, that has now raised close to $30 million collectively in three rounds of venture capital funding make it in the international battle and pass the test of time as it faces global competition?
The funding is still fresh as in June this year, it raised $18.8 million in a series C round led by Insight Venture Partners, with participation from Greycroft, IBB Bet, and E.ventures. Here are some answers which will help you understand how Holger might use this capital.
The business model: Is it sustainable?
When I first heard of Blinkist, my instant reaction was how is this different from Amazon? Why can't I just read a free book review on Amazon or just google it to know what a book critic has to say about the latest release? So I asked Holger and he said, "First of all, it's important to point out that we don't sell books. We have smart people reading a book and then creating a 10-15 minute review of the book that gives you some key insights, food for thought and makes it easier for you to get the gist of the book. You then make a decision if is it relevant for you and whether you want to dig deeper."
This also means that Blinkist does not infringe any copyright with authors or publishers but rather writes opinionated pieces about the books in the form of a review. People use Blinkist to make an educated decision, and then as an informal learning tool for the topics, they are interested in.
"We create a new market and we help to tap into new audiences who won't read a book because they're not interested enough in certain topics, or they simply don't read books anymore."
Blinkist's goal is not to disrupt the publishing industry but rather to become a leading consumer brand for people who want to fit more learning into their every day. At present, the only revenue stream for Blinkist is subscriptions. The critical question for Blinkist right now, should be whether people want to pay for digital content, if at all, and how much?
Pricing and subscription: Is it a challenge?
From the very beginning, Blinkist has stuck to the subscription model. "In 2012, it was a monthly subscription and it was 4.99 Euros a month and we had 50 books in the library. We looked at other services like Spotify or Netflix and then tried to find a relative value in relation to them that we can sell and did a lot of testing. "
Initially, Blinkist started with single purchases in its business model but soon realized that you have to re-engage people. "If there's a barrier to pay every time you want to read for 15 minutes, it does not work. We changed to subscription modeling and the only thing we've adjusted since then is our pricing and the plans we offered, quarterly, yearly, so keep testing and we'll continue to test."
Blinkist has a clear focus to be a B2C brand. "We don't have any plan ready to be executed to tap into B2B, but there are companies who offer book reviews for other organisations as a corporate learning tool and corporate learning is a big market. We're right now in the consumer market, we want to grow into this category and be a market leader. From that position, we can choose to also move into B2B . We believe the best advantage we can build is to become a leading consumer brand and that will help us tap into B2B if we want to in the future."
Internationalisation : Blinkist's Plan for 2019
Holger is clear that the next big goal for Blinkist is to go international and this will be one of the major focuses of the year 2019. The company has recently hired a head of international growth who will be managing local businesses in the different countries that Blinkist is planning to expand in. The Blinkist product was first launched in the German language in the year 2012 but now the lead language is English. "We still do have the German version, but it's a localization product now. With English as the main language, we can go after users all over the world as in every country there are people who read English. We want to cross countries and really make Blinkist a mainstream consumer brand. Obviously, we have to venture into local languages or the global language in order to foray into local markets. Localization based on language is the keyword for 2019," he says.
Use different marketing channels, continuously improve the product
The first task of the new head for international growth, who is hired and joins from the month of September this year could be to build a different strategy for every market Blinkist is looking to expand into. "Once we tap into new countries, we'll have to see how we grow. Maybe in India, we'll offer monthly plans and find the best mix for the market." Holger knows well that if Blinkist wants to grow its customer base even further, it means immense spending on marketing. "In marketing, if you spend today-- you get returns some months, later. So you need to finance it and make an investment to get returns couple of months later, so you'll always have a cash flow."
That is what sucks in the cash at present for Blinkist. Holger continues, "The other part is to invest in the product and keep improving our product. Whenever I am planning my vision, my main focus is how we can improve discovery and give a better experience to users."
Aspirations to make it big
I think the biggest challenge with consumer-centric brands is, that they do not realise the amount of cash they spend on glorifying their brand, especially when you have investors backing you with the moolah and encouraging you to spend that money. But with Holger, I noticed the matter of money coming in time and again in the conversation, behind it was the urge to make the product better. Blinkist is testing new formats and huge investment goes into not only content and production but also innovation. "Last year, we launched a skill for Amazon Alexa where you can listen to the Blinkist Minute every day. So extending the product to other platforms and simply improving the features, requires time and people, so a lot of the money also goes into that."
Which markets to look at?
The biggest markets for Blinkist are the native English speaking and Germans in terms just of size which includes markets such as U.S., U.K., Canada, New Zealand, Ireland, Germany because Blinkist offers their languages and they have a high purchase power. Then there are markets who are not native English speaking but they have a high affinity to English and India is one of them, India is probably the biggest of them but Nordic markets such as the Netherlands also seem attractive to the company. It's yet to be defined in which order Blinkist is going to tackle the markets. "If you put in a lot of effort and no one pays, then you could also argue that we would rather go after smaller markets who have a willingness to pay."
Competition that should not be ignored
One might assume that the competition faced by Blinkist is just apps like Joosr, MentrBox, 4 Minute Books, 12 Minute App who do book reviews but in my view, Blinkist is competing with every digital content platform, every content that a reader like you or I want to pay for. It could be those extra articles you can read on the New York Times or the Wall Street Journal by spending that money. It is no news that monetising content has been one of the most difficult tasks whenever companies have tried to scale up in the media business. Blinkist does not reveal paid subscribers to its platform but overall it has 6 million users. It has 2500 titles of non-fiction books at present and it adding approximately 50 books each month.
The good news is that Blinkist has all the capital that is needed to scale up, enter new marketing channels and expand into geographies. The founders know what they want and have an army of 80 people to make it happen. The pain points could be getting more and more users to pay for subscription. Holger is clear that the brand only wants to focus on B2C at the moment. However, it is food for thought that ignoring the B2B market at this point could maybe be an opportunity lost for Blinkist? Or maybe not. Holger wants to go step by step and take calculated risks. As he gets up after our meeting, he has a glint in his eye as he says, "These are the things I find most exciting and challenging, the strategies to make it work and making the right decisions as we make our goal to scale higher."