Kobo buzz burst at the seams yesterday when news surfaced that the Toronto-born ereader company was acquired by a Japanese web retailer for over $300 million in cash, providing a windfall to struggling bricks-and-mortar business Indigo Books & Music but bleeding some of the Canadian out of one of the country's bigger recent tech successes.
One of the more interesting discussions to be raised from yesterday's storm came from Dan Morel on StartupNorth.
In his article, Dan says he's "miffed" about media's coverage of Kobo, the result of "lazy journalism." According to Dan, Kobo isn't the child of Indigo, but rather the creation of entrepreneur Mike Serbinis, who started his first company in 1997 and joined Indigo in 2006 upon his return to Canada.
The story goes on to suggest that Mike lobbied Indigo way back in 2007 on the idea of ebooks (April 2008 marked the launch of Shortcovers, an online ebook store and mobile app). That year, ebooks counted for just 1.2% of all trade book market share (it was 0.6% in 2007). This put Indigo in an advantageous early-adopter position, as that percentage would triple to 3.3% in 2009 before skyrocketing to 9% in 2010.
In 2007 and early 2008 it was NOT obvious that ebooks would be a big factor, and that Indigo should meaningfully go after the ebook space … So Mike Serbinis, within Indigo, stared at this in 2007/2008 and said “Indigo should enter the ebook space”. Wow – those are some big brass entrepreneurial balls.
Serbinis then goes on to do the unthinkable. At some point in 2009, he see’s the only way for Shortcovers to get critical mass adoption is to launch its own hardware. Whattt???? [sic] Shortcovers is a software company. Serbinis is a software exec – CIO & EVP Online at Indigo. Indigo is a brick and mortar retailer. They have ZERO hardware background. That’s a big-ass, high-risk pivot folks!!
Dan points out that Kobo, which launched in July 2010, came after many ereaders were already on the shelves. But Kobo, according to Dan, racked up $100 million in sales in its first year, a staggering number, particularly with just $16 million raised—and, moreover, that most competitors (such as the Alex Reader and Skiff Reader) turned out to be nonstarters. As Dan concludes:
This is a wild and crazy story entrepreneurial story full of big risky moves. Its a story of an entrepreneur doing things that only great entrepreneurs can do. And its a rare story in Canada, and as such a story that deserves proper coverage.