When Audible Founder Don Katz turned 40 years old, he was just getting warmed up.
Successful journalists and authors must master two skills, storytelling and the fortitude, to conquer their self-doubt. And Katz used these skills to write his life's first chapter, becoming an award-winning journalist and author.
But in his 40s, Katz began his second chapter, by founding Audible. Today it's the top provider of audio podcasts, lectures and books.
Believers say Audible is mining a business rich with opportunity. "Audiobooks could be bigger than print books — it's the fastest growing portion of the publishing business," said Richard Sarnoff, KKR's chairman of media and an Audible director from 2001 to 2008. "Don has had an impact on this world that he should be proud of. And his story is one of perseverance."
Rise From Difficulty
Audible, now a division of Amazon, was no instant success story, though.
Building Audible is a tale of stamina, a stock market crash, and technology challenges and shifts. Founded in 1995, Audible went public in 1999, right before the massive dot-com bust. At one point, its stock traded at just 4 cents a share. It took a full 10 years for the company to turn its first profit.
"Storytelling is key to making a big idea into a reality," Katz, 69, told Investor's Business Daily. "But it's also true that great storytellers can delude themselves ... (successful entrepreneurs and journalists) must be "fearlessly honest about what they don't know."
"Don always tried to hire people who knew things he didn't know," said Guy Story, Audible's former CTO and chief scientist. "He talks to people, and he's a sponge."
Lead With Audacity
Katz's idea to start Audible wasn't a single "ah-ha" moment. It was the confluence of several influences. Back as an undergraduate, he studied under the celebrated author Ralph Ellison, best known for his "Invisible Man." From him, Katz learned to "love the sound of well-composed words."
"American literature came from a vernacular storytelling culture," said Katz.
He also has a dyslexic daughter who struggled to learn to read. Her taped audio lessons were cumbersome and far from ideal. Add to that his own frustrations trying to listen to books on tape when running with a Walkman. He'd flip the cassettes halfway through a jog or struggle to find his previous stopping point in an audiobook.
Study Economic History
Katz also tapped his interest in economics. He studied economic disruptions brought on by technology advancements and format changes. Huge shifts like cable TV vs. broadcast and paperback books versus hardbacks made him believe that big market disruptions would occur with tech breakthroughs. And that applied to digital audio and advances in Internet access.
He set off to build a digital audio player and sell digital audiobooks, lectures and other content. And he would not be denied. But he encountered countless nonbelievers. "He had an absolutely unrelenting commitment to making this work," said Story. "For Don, it was a moral imperative that Audible succeed."
Also, he could spin his vision. "Don's training as a good storyteller enabled him to engage the publishing community and to tell Audible's story to consumers," said Sarnoff.
Tap Into Your Passion
Katz's father built a company in Chicago that made and sold guitars directly to musicians, along with a model sold by Sears. But Katz's father passed away from a heart attack at 47 years old. Katz was just 19.
Katz didn't start out pursuing business, though. Instead, he studied English, graduating in 1974 from New York University with honors. He then went on to pursue graduate studies at the London School of Economics, where he was awarded an MSc. While studying in London, he had a roommate who was a rock 'n' roll music journalist. To make extra money, he started writing music reviews for several small publications.
He leveraged another journalism contact to get an introduction to Jann Wenner, Rolling Stone's storied publisher and editor. Many in-depth stories followed for Rolling Stone and other publications. His stories won a National Magazine Award, an Overseas Press Club Award, and he wrote several nonfiction books, which also received critical acclaim and awards.
See Problems As Opportunities
Audible succeeded in building the first digital audio player, one of which is in the Smithsonian. But the foundational technology for digital audio lagged the vision. Katz has said: "We launched the business five years before the market was ready."
Still, Internet-related businesses were hot in the late 90s and dot-com companies were cashing in with IPOs. Katz had questions, but decided to take advantage of the frenzy. Audible went public on July 16, 1999, priced at $9 a share but closed that day at $21 per share. It raised $36 million in the offering.
The dot-com bust came in the spring of 2000. Katz suspects there were 1,500 public Internet companies at the beginning of 2000. But only 140 left two years later in early 2003.
Audible survived. "I knew very well that what was happening in 1999 was a bubble," said Katz. "I knew that the bubble would subside, and therefore I knew not to give away our IPO money."
Gird For Tough Times
Difficult times followed, but Audible kept moving ahead. The company pivoted as the technology to support digital audio evolved. "Any time we hit an obstacle we thought of that as an opportunity," said Story. "If we could solve that problem, we could put distance between us and our competitors."
"Don's a super creative thinker in business, he's able to see around corners. And (he) has the ability to operationalize (his vision)," said Sarnoff.
Today Audible offers more than 600,000 audiobooks, the largest catalog in the world. Amazon announced its purchase of Audible on January 31, 2008, and completed the deal on March 19, 2008. It paid $300 million for the company.
Delight Customers and Be a Great Partner
Katz says part of Audible's ultimate success is its ability to partner with key players. That includes those with vital technology and those who market Audible's players and its subscription service. Ties with talent, too, build its catalog of audio podcasts and books.
"We outpartnered the competition," said Katz, now Audible's executive chairman. Some of Audible's partnerships include Apple, Microsoft, Texas Instruments, Amazon and others.
"By partnering with every company that was going to have a device or chip (that was important to digital audio)" Audible learned about all of the developing parts of the market and had access to early-adopter customers, said Katz.
"Only people who understood what we were talking about were buying the very early audio devices," he noted.
And Audible remains committed to delighting customers. "I decided early on that customer care would be our front-line marketing," said Katz. "We did and we still do. Competitors didn't understand what it would take to really habituate a customer."
Today Audible is focused on selling its audio subscription service and giving customers a stellar listening experience. It has invested in creating compelling audio titles, performed by professional actors. "We created a new job for actors," said Katz.
Pay it Forward, Investing in Newark
Katz is building more than just the business. He's made Audible a key player in the urban revitalization in Newark, N.J., the company's headquarters since 2007. He's also an active angel investor. And he started a venture capital company, Newark Venture Partners. He's paying his success forward with job opportunities for those needing a hand and by coaching startups.
"We're hoping all this really positive stuff we've done has made our culture so much richer," said Katz. "Activate caring" is one of Audible's people principles.
In an audio recording for NPR, Katz recently said: "I've always thought that companies can have hearts and souls. They can have meaningful legacies."
Audible Founder Katz's Keys
- Founded the world's leading audiobook provider bought by Amazon in 2008 for $300 million.
- Overcame and survived the dot-com bust by preserving IPO funds and continuing his pursuit of his vision for Audible.
- Lessons: "Outpartner the competition" and provide outstanding customer service to "habituate customers" to your services.
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