Klaus-Martin Meyer: Enrique, you are co-founder of pentian.com. Would you please introduce yourself and your platform to the Crowdstreet readers?
Enrique Parrilla: As strange as it may sound, books have been my life since before I actually knew how to read. I was fascinated by the fact that my parents would sit and seem to extract endless knowledge and entertainment from these seemingly unfathomable objects. I wanted to join in the fun and they would let me sit with them while they read. I thought it was nothing sort of magical that these undecipherable signs in front of me would actually construct words and stories. I asked for some books of my own of course. My parents obliged and starting getting me comics that I –still- could not read. I remember flipping through their pages and making my own dialogues based on what I thought was going on through the pictures.
The situation did not last long of course. I was a very early reader and as soon as my mother felt comfortable enough letting me walk the 500 m from my house to the local library I started spending serious time there. I finished every single collection of classic comic books on site: Tintin, Asterix, Spirou, Yoko Tsuno, Lucky Luke and many more. When there were no more comics I switched to the precursors of what is now known as YA. The Famous Five, The Secret Seven, then on to Science Fiction: Isaac Asimov (from whom I read every single title ever written) and Arthur C. Clarke amongst many others.
Reading was such a coveted activity for me that when I misbehaved that my parents would punish me by taking away any reading materials. Such actions were circumvented by having secret stashes around the house: inside the toilet water reservoir, under different pieces of furniture and so on. Many years later my mother admitted that she always knew about the secret stashes, but that she allowed the clandestine reading because she could not bear the idea of taking away reading when so many parents struggled to instill the habit on their own children.
Reading took my interest towards both technology and science fiction. “I, Robot” introduced me to artificial inteligence and the world of evolved intelligence. John Von Neumann’s books on game theory and computational intelligence gave me this vision that one day we would all be connected through a giant network of computers that would provide services and entertainment beyond anything we could comprehend at the time. Years later I won a slot at a school competition in Stuttgart where students from all over Europe tried to come with innovative ideas to deal with the growing problem of traffic congestion in the European cities. When I postulated that in the not-too-distant future a computer network could be used to provide not just entertainment and better movie watching experiences than the ones we could have at home, but also telemedicine and much better social interaction than the ones we experience now to the point that we would no longer have to get in a car and congest the roads to do the things that required us to congest the roads I was pretty much laughed at by one of the European commissioners. He was very polite about it saying something like „Today we heard great ideas, some that can be implemented and some that are curious fantasies“
In 1995 I went to the University of Houston to study Electrical and Computer Engineering (the final selling point was of course the five-story library). In 1999 joined Luminant Worldwide Corp. as a “senior” Internet consultant and barely 18 months later I started my own consulting firm: Lantia.
Lantia provided consulting and development services to the oil, health care, and technology industries. We became very good at dealing with what is now known as big data. We created great software platforms that solved very expensive problems for the utility industries. Fast forward 10 years to 2005 when my brother Ivan started a small publishing press in Spain. I saw the problems he was having managing his metadata, connecting to online distributors such as Apple, Google or Amazon, consolidating sales reports and calculating royalties and taxes for an incredibly complex ecosystem such as the publishing industry and I said “I can help with this, this is what I do”.
I sat down with him and other industry leaders, I asked them what their problems were, and then we designed a software solution that eliminated 95% of the manual work they had to do. Business quadrupled in a couple of quarters and together we started a couple of self-publishing imprints.
The self-publishing business was a complete success, but it pained me to see great works that were not seeing the light of the day because the author could not afford to come with the costs of production out of his own pocket and no traditional publisher would back them up. I was particularly struck by an incredibly beautiful children’s book from a single mother. It had beautifully detailed illustrations, a great story and a very touching message, but full color, large format, and hard cover made for a very expensive setup. We struggled to find a way to introduce these authors into our model. None of the existing crowdfunding platforms and companies out there solved the actual problems that we faced. Kickstarter and Indiegogo are nothing more than financing platforms. They give you money and take a percentage of the funds raised, but it is still up to you to execute the project. Additionally, the backers have no guarantee their money would be used for the actual purpose of the book and with nothing in return it amounts to little more than a charity operation.
Klaus-Martin Meyer: Why is it a good idea that you enrich the reward based crowdfunding model (which is already known in the world of literature) with an equity based component?
Enrique Parrilla: Several reasons. First, unlike in traditional crowdfunding platforms, we create an incentive for the backers to actually analyze the available opportunities beyond funding a friend of a family member. Second, it makes a literary agent of virtually every user of the system. If you have the ability to discern what the next “Harry Potter” will be not only will you make that book a reality and get bragging rights, but you will actually financially benefit from it. Last but not least, there is a very important viral component to it. When fifty people are financially vested in the success of the project instead of just one all of the sudden you get a social network fifty times larger promoting the book. Each backer of your project becomes a marketer.
Klaus-Martin Meyer: What will be the better deal for the author: your model or the „kickstarter“ version of crowdfunding?
Enrique Parrilla: Without a doubt ours.
Kickstarter just gives you a chunk of cash. It is like going getting a government subsidy for your book. It is free money, but you still have to figure out how to bring the book to market. You have to finish your draft, get a layout for different ebook and print versions, design professional covers, create all the different formats for each electronic and print channel, and possibly distribute an initial run, not to mention managing sales, royalties, and taxes. Instead, we take care of everything. We ensure the book will be made because we do not outsource any of the processes. We provide the author with 40% of the net sales, which is a much higher amount that you will ever get through from a traditional publisher, and we create a financial connection between the author and its readers, which continues to keep them engaged and looking forward to additional titles from the same writer.
Klaus-Martin Meyer: Can you tell us a little bit, how the user and authors are adopting your platform.
Enrique Parrilla: We are tremendously satisfied with the platform. The biggest challenge for us was to come up with an extremely simple way to explain what is otherwise a rather sophisticated concept. We spent a very long time diagraming the process, cutting anything that was not essential and plastering our walls with posters full of boxes, arrows, processes trying to understand the questions and first-time user would have. We then had to go and figure out a way to implement all of it. Some of the technical, financial, and technological solutions that we have deployed are incredibly complex. I very much doubt we could have done this 5 years ago.
When we launched the company in May of 2014 in New York we were immediately flooded with book proposals. At some point we had a backlog of 300+ books. We increased our staff across both sides of the Atlantic and have now put through it around over a thousand books through the platform and are actively deploying new features and languages. 40% of our users come from South and Central America, 30% from Spain, 25% from the US and 5% from the rest of the world. This has truly become a global service with users from over 30 countries. We use RAD (Rapid Application Development) for our software, and we are constantly improving the platform with user requests and new scenarios that are brought up about once a month.
Klaus-Martin Meyer: What are the most important milestones for pentian.com during the year to come?
Enrique Parrilla: A German version of the site of course. Germany’s has a very long tradition of extraordinary literature and an internal market that demands quality books. Spanish was very important for us because of the number of markets that share the language. English books are read by hundreds of millions of people across a market that spawsn three continents, but German is the largest internal market in Europe and a source for translations and rights that can be carried all over the world. We have already started the process of getting a legal presence over here and launching a section of the site that caters to its readers and backers will be a great milestone for us.
We also are getting ready to sign some rather well-known authors. Some of these negotiations are still confidential because special conditions have to be met, but keep an eye on the news for some rather significant announcements from American and South American authors. We are going to turn this industry upside down and hand over to the authors an unprecedented amount of power and influence.