A familiar business venture -– quality and affordable educational course packets -– became a thriving company for a young entrepreneur.
The course packets are collections of articles and book chapters compiled by instructors, which are sought out at campus bookstores and copy centers every semester. Bassim Hamadeh revamped the quality of print, offered copyright management services along with a student-direct delivery model into his start-up business.
Hamadeh, CEO and founder of University Readers, spoke Wednesday at California State University, San Marcos, with students who are all too familiar with the deep hole book expenses put in their pockets.
Hamadeh shared his entrepreneurial development with the “In the Executive’s Chair” class. It was not too long ago that he sat in the classroom as a student --Hamadeh graduated from the University of California, San Diego, in 1996 and recently received his MBA from Stanford University in 2005.
University Readers started as a part-time venture when Hamadeh was an undergraduate to help pay credit-card debt. He was also disappointed with the quality of course packets that were tagged with high prices.
In addition to the dissatisfaction, the method of delivery Hamadeh experienced at the campus copy center was not proficient. He recalls waiting in line for two hours before learning the material he wanted was not in stock.
“I got to the front and someone hollers from the inside, ‘Hey, History 10 course pack sold out,’ and that’s the one I wanted and I had been in line for hours. It was just so frustrating,” he said.
Hamadeh believed he could deliver better service and products. The business began by posting fliers and recruiting fraternity brothers to distribute the course packets. University Readers now has a student-direct delivery model that offers access to materials online in the form of a PDF file, in addition to shipping to campus bookstores or the location of choice.
While running the part-time venture, Hamadeh was studying for a structural engineering degree. University Readers continued to run part-time until 1999 when he quit his eight-year engineering career to focus on the growing business.
The company currently has 25 full-time employees with anywhere between 15 to 20 part-time workers, depending on the season. Hamadeh said University Readers will have approximately $4 million in sales for 2007.
While the company is “not extremely profitable right now,” he said, University Readers never had to raise outside capital. Also, there is also no debt on the balance sheet because the company generates enough cash today to drive the growth rate, he said. Instead, Hamadeh is focusing on investing in the company’s growth.
“As the business grows and becomes more sophisticated, the next agenda item for us is to build a formal advisory board,” he said.
By actively seeking mentors, Hamadeh is growing professionally with the business. He encouraged students to do the same by advising them to work in an established business setting.
“I’m smart enough to know that I don’t know (everything),” he said. “And that I can learn from a lot of people who have done it before and who would like to take a younger entrepreneur under their wings and help me.”
The challenges Hamadeh has encountered starting the business include copyright issues and ethical dilemmas, which he said tends to be gray areas. He said copyright clearance is something many copy centers fall into trouble with.
The biggest challenge University Readers has is in copyright education, Hamadeh said. Since copyrights are intangible it doesn't make taking without paying seem as bad, he said.
Hamadeh said it is key for professors to understand that someone else’s content is property and if another party uses it, it needs to be paid for.
Although some people argue prices are too high, Hamadeh said they could demand cheaper publications and professors can boycott certain publishers.
“There are ways of doing it in a legally and ethically responsible way,” he said.
In the broader spectrum of the business, Hamadeh looks to the recent challenges Cornell University had with The Association of American Publishers (AAP). Cornell revised their policy after the AAP became more stringent with the use of digital course materials.
Campuses are cracking down on things such as illegal downloading and Hamadeh asked, “What’s to keep them really from cracking down on (all forms of) intellectual property?”
He believes an official lawsuit keeps the posed question from becoming a reality.
“There hasn’t been a university that has been officially sued yet by a publishing organization about copyright infringement ... and so I think it will take that lawsuit for precedent to set,” Hamadeh said.
A direct company challenge Hamadeh has encountered is maintaining his core values as University Readers continues to grow. The four values of the company are customer centricity, passion, excellence and commitment, which are guidelines he hires and fires by.
Hamadeh has also found delegating responsibilities to be difficult as he gives up old responsibilities while obtaining new ones.
A leader, Hamadeh said, should have humility and lead by example. Also, the power differential should be removed. During University Readers meetings, either none or all of the employees, “wear the CEO hat.”
Hamadeh said part of his success was serendipitous and he continues to move forward with guidance and goals.
University Readers will be seeking new markets to delve into, such as custom publishing in the non-academic market and publishing professors' original works as affordable materials.
“There’s no doubt that the publishing process is broken,” Hamadeh said. “In general, textbooks are $120 to $150 … they are usually obsolete by the time you read them.”
The company recently put together a biology textbook in black and white, an economy version that was sold for $49.95 at San Diego State University. Hamadeh cites being national gives University Readers a larger scale to keep operating costs low.
Hamadeh said University Readers couldn’t continue to grow at its current rate with its existing infrastructure. The company is currently working on a “bulletproof model” in order to continue to be more efficient and sophisticated for years to come.
* View Bassim Hamadeh's class discussion here.
* View an interview with Bassim Hamadeh here.
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