Denver: It is always interesting and inspiring to speak with a social entrepreneur who has done remarkable things to make the world a better place. But it can be exceptionally rewarding when what they have done is so simple, yet so meaningful: Put a brand new book in the hands of a child who otherwise would have never known the pleasure. My next guest has had that privilege millions and millions and tens of millions of times over. She is Kyle Zimmer, the Co-Founder and CEO of First Book. Good evening, Kyle, and welcome to The Business of Giving!
Kyle: So grateful to be here! Nice to see you.
What we focus on is the need for physical resources to elevate educational opportunities so that every kid has a chance. We focus on books – that’s the heartbeat of what we do – but we have a broad range of resources that we provide now to over 300,000 sites.
Denver: Despite the extraordinary, some might even say “legendary” success of First Book, there are still a number of people out there who haven’t heard much about it. So give us a quick overview of who you are and what you do.
Kyle: First Book is now an international organization. It’s a nonprofit social enterprise, and what we focus on is the need for physical resources to elevate educational opportunities so that every kid has a chance. So, we focus on books, of course – that’s the heartbeat of what we do – but we have a broad range of resources that we provide now to over 300,000 sites.
Denver: You got started on this back in 1992. You were a corporate lawyer in Washington D.C., and you were volunteering at Martha’s Table. What did you see there that inspired you to set out on this quest?
Kyle: It was a long time ago, of course, and it was a critical period in Washington’s history. It was the middle of the crack epidemic, so the city was as violent as it had ever been. I think during those years, we were the “murder capital of the world.” I had been raised that you have a responsibility to get out there and to help in the community, so I started tutoring after work at what fundamentally was a soup kitchen at that time. I would go in, and there’d be 50 or 60 kids from the neighborhood, and the kids were doing every single thing that you want them to do. They’re doing everything right. They’re coming in off of dangerous streets. They are looking for adult intervention, and every night I would sit there with them, and I would think, “Boy, I’m not an educator; I’m not a teacher, but I could make these hours so much more meaningful if I just had books.” And that really started me on the journey of beginning to figure out why there weren’t books.
We always knew that with a problem this gigantic that we needed something that would affect the whole nation and that could be scaled. That meant that it had to be on a business model footing that was sound, that was strong, that was scalable, and that made economic sense.
Denver: I always like to speak to social entrepreneurs about the beginning of those journeys, and I would be very curious, Kyle, as to whether when you started out, if you had a vision for the organization, an idea of where you were going and what ultimately it would become? Or were you simply just putting one foot in front of another… getting a couple of books here, give them to a kid… or to a library… or to the local school…. and building it out as you went along?
Kyle: Well, there’s probably a combination of both. I think there were fundamentals that we were absolutely committed to. One is that we wanted a broad systemic change. We were never about the business of building a local organization. We always knew that with a problem this gigantic that we needed something that would affect the whole nation and that could be scaled. That meant that it had to be on a business model footing that was sound, that was strong, that was scalable, and that made economic sense. On the other hand, I never would have guessed 25 years ago the exact mechanisms that we have come to, and that is part of the exciting part of building a business in the social sector and in the for-profit sector.
Denver: I don’t think anybody can appreciate the success of First Book without understanding how the publishing industry traditionally works and how you have been able to forge a relationship with them… to disrupt that industry. That has been to the mutual benefit of everyone involved. Explain that.
Kyle: It is essential to understand the publishing industry, and what we all know instinctively is that it’s one of the oldest industries in the United States. That has some wonderful traditions and some wonderful benefits, but it also means that those early design decisions about the industry are not necessarily that helpful to our current situation that the country finds itself.
So, there are some fundamentals. For example, the publishing industry is a consignment model. What that means is that if you’re a publisher, you send the books that you publish– that you manufacture– out to the retail space, and if they don’t sell, they come back to you at your expense. And so, that creates a tremendous wave through society because it means that those 25% to 30% of the books that are returned–that’s a huge percentage. So if you know that 25% to 30% of your inventory is coming back, well, you have to build those costs into what does sell at retail.
So, what we’ve ended up with is an industry that’s producing $18 picture books, and that really means that they are constrained in their market to only the people who can afford $18 picture books, and that’s probably the upper 5%.
Denver: Yes, 5% to 10% is what I would guess.
Kyle: That’s right. So, we really focused on the two big pivot points that we recognized in the industry: One is: What do you do with that excess inventory that’s coming back? And two is: What do you do to lower that price point so that we can get books… we can flood books into that base of the economic pyramid.
First Book National Bank accepts millions and millions of books that are brand new, undamaged, beautiful books from the publishers– that have been returned to the publishers as unsold inventory– and we make those books available for free through an online site… the only thing people pay for is a shipping and handling cost of about 55 cents to 60 cents per book.
Denver: So what did you come up with?
Kyle: Well there are two big models for First Book as a result. One is called the First Book National Book Bank; that’s the oldest of the two. We went to the publishers and said, “What happens to all of those books that come back to you?” Because sometimes it’s just market fatigue; sometimes they hit “Reprint” one too many times, and the market life of the book is gone.
Denver: And nobody can predict what’s going to sell or not either.
Kyle: Exactly. And so they were as stumped as anybody about how to use that inventory in a powerful way. Because what they had been doing is– with every great and good intention– they would try to respond to every Mrs. McGillicuddy who would contact them and ask them for 10 books for their after-school program in a church basement. But that’s a wildly expensive and inefficient system.
And so we stepped into that space and built something called the First Book National Book Bank. What that system does is: it accepts millions and millions of books that are brand new, undamaged, beautiful books from the publishers– that have been returned to the publishers as unsold inventory– and we make those books available for free through an online site called the First Book National Book Bank. The books remain free; the only thing people pay for is a shipping and handling cost of about 55 cents to 60 cents per book.
Denver: And the other thing you did is that you tried to buy books not on consignment, but you guaranteed the purchase. And you did it in bulk. But in order to do that, you had to build up a pretty extensive network of nonprofit organizations and educators. How did that come to pass?
Kyle: The model I just described is the First Book National Book Bank. The second model that you just touched on is called the First Book Marketplace, and that is a brand-new model for the industry. We started it about 10 years ago, and what we did was we went back to address that price point issue– that $18 picture book issue. We went back to the industry with a business proposition. We said to them, “We would like to crack open a brand-new market for you, but we have to craft this in a way that’s unprecedented in the United States.” And so we– First Book– will aggregate the market at the base of the pyramid.
What that means is reaching out to Title I schools, to pre-schools, to after schools, to Head Starts– every place where kids are gathered who are from low income families. And we will certify those groups to make sure that they really are serving kids in need. And then we turn to the publisher, and we said, “We will buy large-scale purchases of books we hand select that are not excess inventory books.” These are brand new, top-shelf books, often award-winning books. “But we will purchase them on a non-consignment basis, on a non-returnable basis.” And so our business design knocked every risk and every expense that we possibly could.
Denver: Oh, you hit their sweet spot.
Kyle: We did. When you say the words “non” and “returnable” in publishing—
Denver: They lean forward.
Kyle: Choirs of angels start singing. It’s true. So, we’ve been able to build up the First Book Marketplace. It now offers about 6,500 titles at any given time, and the average price of a paperback book on this site is about $2.85. And importantly, that includes shipping.
I think one of the fundamental things about First Book is we write business plans. We sharpen our pencils, and we sit in front of our computers, and we make sure that as we put a model together, it makes sense for everyone sitting around the table. Because the economy is unpredictable. A model has to survive the ups and downs of an economic cycle.
Denver: That’s absolutely unbelievable. I don’t want to pass by that too quickly. That is really extraordinary, what you did. What most people do is they take the given model of an industry, and they accept that model. Then they work really hard around the edges to get a little concession here, and a little concession there. You essentially have inverted that model and created a new market. How did you do that? That is truly extraordinary.
Kyle: Thanks. We’ve worked really hard on it. I think one of the fundamental things about First Book is we write business plans. We sharpen our pencils, and we sit in front of our computers and we make sure that as we put a model together, it makes sense for everyone sitting around the table. Because the economy is unpredictable. A model has to survive the ups and downs of an economic cycle. We also make sure that we pilot, and that we take the time to make sure that when we put the wheels on the wagon, that it really is going to function. And so, as we’ve built these things, the early phase is slow and methodical. And then we blow the doors off.
Denver: Yes. Well, very, very good advice, and certainly a lot of empathy on your part! I don’t think people understand that, particularly in the nonprofit sector. They’re always so concerned about what their needs are. The publishing industry is not an easy industry, and when you can put yourself in their shoes and think about what their concerns are… and then address those concerns, it really does open up completely new pathways.
Kyle: Well, you’d be surprised. The publishers have been unbelievably supportive.
Denver: I know they have.
Kyle: And one of the reasons, when you think about it: What industry, what business person wants to have their market constrained to 5% or 10% of the market?
Denver: Well, until you came along, it was publishing.
Kyle: Well, that’s right, but they were unhappily constrained. And so I think approaching them with an open door, and inviting them into the building process… so they feel very free to say: “This will work for us; this will not work us. ” And we started working those formulas out together. Because in truth, although my heart is with the child and wanting their teachers to have every resource they need, a side benefit to doing this right and well is to have a flourishing publishing industry… and to opening those markets up wider than they’ve ever been, so that we have an intellectual life as a country that’s even broader.
More than 90% of human protagonists in children’s books are white, and they’re affluent storylines. It’s very alienating to never see your culture reflected, to never see the struggles your family has… or the great times your family has, or the foods… just anything about your life. To never see it reflected in reading material is a real barrier.
Denver: Well said. As you were aggregating these nonprofit organizations, you obviously heard what their needs were, and what their concerns were. One of them was the fact that some of the titles that were being presented were not diverse enough. And you started out on a journey along those lines as well. Tell us about that.
Kyle: We do talk with our network– our group of teachers and educators all the time. We survey them constantly. We now have more than 300,000 of them, and we’re growing by 7,000 a month. So, it’s an extraordinarily active group of dedicated heroes. As we were speaking with them– sometimes in focus groups, sometimes in formal surveys– they uncovered for us the fact that they were really struggling to see the cultural diversity, the family structure diversity, and the storylines– the content– that really reflected the children who they were trying to reach.
When you look at the data behind that, it very much reflects what has been observed by researchers. More than 90% of human protagonists in children’s books are white, and they’re affluent storylines. It’s very alienating to never see your culture reflected, to never see the struggles your family has… or the great times your family has, or the foods… just anything about your life. To never see it reflected in reading material is a real barrier. So we took that information, and because our buying has gotten so robust, we were able to reach back to the publishers and say: “What about this?” And our “what about this” was called “Stories for All.”
And so, for example, we got instant reaction that our network wanted a bilingual The Very Hungry Caterpillar, and that’s a book that I can probably recite… and you can probably recite. But the problem is that there was a Spanish edition, and there was an English edition, but there was no bilingual edition. That’s very reflective of the market. If you’re selling to the upper 5%, and somebody wants Spanish, they’d buy both books. But in our market, they’re really working hard to afford even one. And so we went to the publisher and said, “How about if we buy 30,000 copies?” And what do you know? The bilingual edition came roaring out, and we’ve now pushed through 115,000 copies of that book. Same is true for Goodnight Moon. We’ve done these kinds of things. We’ve backed new authors and bought the first 10,000 copies of their books. Lots of things to try to use market-driven forces to affect change and to elevate diversity in the marketplace, rather than anything that would not be sustainable.
It’s equally important for kids who are not from those cultures to see other cultures and other lifestyles. It elevates empathy; it elevates respect. It makes it easier for us to talk about cultural differences and racial differences.
Denver: That’s right. And I think you’ve made the point, too, that diversity in storytelling is really important for all children.
Kyle: That’s right. It’s equally important for kids who are not from those cultures to see other cultures and other lifestyles. It elevates empathy; it elevates respect. It makes it easier for us to talk about cultural differences and racial differences. And that’s a very difficult topic area, so we’ve got to get past it as a country.
Denver: Let me ask you about e-books. How does that factor into your business strategy? And is there a qualitative difference between a child reading or being read an e-book, as compared to a physical hard copy book?
Kyle: Well, we are ecumenical at First Book. We really believe that reading is great in whatever form it takes. We just, in fact, this last year, in a partnership with the White House and the New York Public Library and DPLA, we put out the largest ever pilot giving brand new e-books out—I think the last time I checked– we gave out over 3 million codes.
Kyle: Yes. It was really substantial, and I know that it was a hugely important asset to the teachers who were able to get those codes and get them into the hands of kids. I do know that researchers are conflicted sometimes about the value of e-books. I know that it depends very much on the design of the e-books. Sometimes the bells and whistles– where you hit one button versus another, and your e-book bursts into a song– in the early years can be– some researchers feel– that’s a distraction.
But our view is that we leave those decisions in the hands of the experts. We know that some teachers find them wonderfully powerful; other teachers are less inclined. And all we want to do is make sure that every teacher… serving every child who is struggling in need… gets everything they need to succeed.
Denver: Speaking of some of those teachers and some of those other frontline workers whom you listen to and assess the feedback, you’ve heard that there are some other things that are needed beyond books. And you have ventured into some other areas. Tell us about those.
Kyle: This is a really fascinating newer avenue for First Book. We have, in our surveys and our work with our network, begun exploring what non-book resources they need. Some of the feedback is sort of obvious, I will say – school supplies, backpacks – and so, of course, we have begun supplying those on the site. You will see those on the site. But some of the feedback has been tragic and important for us to listen to.
One is food. These are the people – they’re caregivers, they’re teachers who see the kids and know who’s hungry, who’s struggling, and it was an overwhelming response when we ask the question about food. And so we started putting some non-perishable foods on the site – so granola bars and things in that category – and they just flew out of the warehouses. Because when you’re a teacher, kids are falling asleep when they’re hungry. They’re misbehaving when they’re hungry. They’re not going to read. And so that has been an extraordinary new step for us. And also things like winter coats. When the temperature drops, attendance drops. And so anything that is a barrier to getting that education, we want to be there for them.
…every time there’s a significant need for a physical resource that is a barrier between what is in existence right now and equal opportunity to quality education, we will be there. A direct linkage.
Denver: Were there any internal concerns about “mission creep”? You’re doing something so well, and now you’re venturing into some other areas… People will say, “Now, watch your step here!”
Kyle: It is something to always be aware of, certainly. But I think the important boundary line for us is that we are only focused on resources that are barriers to education. And so, if not having a winter coat means that that child is not going into that classroom, then we need to get a winter coat to that child. So, we will not be selling washing machines and wedding rings. But every time there’s a significant need for a physical resource that is a barrier between what is in existence right now and equal opportunity to quality education, we will be there. A direct linkage.
Denver: A direct linkage. That’s a line in the sand that you’ve drawn.
Kyle: That’s exactly right.
Denver: Well, First Book has some very deep and truly mutually beneficial corporate partners. And I think one of the reasons for that is the way in which you approach it. It’s a little different than a lot of nonprofit organizations. Why don’t you give us your overriding philosophy as it relates to your corporate sponsors.
Kyle: I think part of this is based in the fact that I was a corporate lawyer, so I know what it feels like to be on that side of the desk. We really approach every partnership by asking, “What can we build together that meets our needs certainly, that elevates and expands our mission, but also addresses the needs of the corporation?” I want to live in a world where businesses flourish that get active in social issues, so I have to make sure that on my side of the table, that it is of value to the corporation. And we’ve had great partnerships that have allowed us to do just that.
Denver: You’ve had a lot of them. You have KPMG. You have Pizza Hut. You have Ford. You have JetBlue. Let me ask you about one specifically that fascinated me, and that’s with Molina Healthcare. Tell us about that initiative.
Kyle: That’s a fabulous partnership. One reason why it’s fabulous is it’s gigantically broad. They give us strategic guidance. They have gotten involved in research with us, with our network. So for example, they came to us and said, “If we hold hands and do a thorough survey with your network, we at Molina Healthcare can learn brand new things about the pressures and the struggles in the lives of our patient population. And you, First Book, will be able to learn new categories of interest and concern for the educators and the kids in those classrooms.”
And so, for example, in the research category, we uncovered really, really insightful findings about the social and emotional learning needs of classroom teachers and after-care teachers. Molina held our hand during that research. And something really important about the partnership with Molina is: they allowed us to experiment together. That’s really unusual for a funder. So we developed a series, a really broad range of responses to what we learned about social and emotional learning. It allowed us to do some things that we knew would succeed, no matter what… some things that were sort of 50-50… and some things that were highly experimental– so that we would both learn and both move the needle together.
Denver: Well, we need a lot more of that in the social sector. And you’re right–there are not a lot of people willing to take that kind of risk. Along the lines of diversity that we talked about earlier, you have undertaken a concerted Latino community outreach effort with Disney.
Kyle: We did.
Denver: Tell us.
Kyle: It, too, was quite expansive, and our work with Disney has been going on for more than a decade. The Latino initiative really was a full-scale push. It went all the way from actively recruiting organizations and regions of the country to join the First Book network– where we knew Latino populations were high. And so we promised, for example, in our contract with Disney: we would sign up 10,000 new organizations. In fact, we signed up more than 30,000. It was terrific!
But we didn’t just leave it there. Disney is deeply committed to elevating Latino content. And so we did some really wonderful work together in increasing the content on the First Book Marketplace site: of Latino-themed books, of authors from those cultures. One thing that’s really important to note is that these were not just Disney books. This wasn’t a corporate play. This was a real “How-do-we-move-the-needle?” action by a company that really cared deeply about this. And so, we were able to add hundreds of titles in that category to the First Book Marketplace which, as we were discussing, is great for our Latino kids, but it’s also great for everybody else.
Denver: Everybody. That’s absolutely great. Let me ask you about your ever-evolving business model, Kyle. You needed capital to stock and maintain inventory for the books you had on your website. You have the First Book Marketplace, which we’ve talked about and that generates its own revenue, I presume. You have corporate partners; we only talked about a couple of those. You have philanthropic donors. What does it all look like? And what does each channel add to the bottom line?
Kyle: It’s wonderfully healthy, and it’s very diffuse. We are based in Washington, D.C. and there is an unhealthy epidemic among Washington organizations to turn to the federal government for funding. We have never done that. We’ve intermittently gotten grants from various federal agencies. But we really have been focused on: How we can create a broad spectrum of revenue sources that will increase the health of the organization over time… And that there be enormous alignment between those revenue sources and the mission.
So, for example, we’re not selling coffee cups to support books in the hands of kids. Our First Book National Book Bank–which is the system that handles excess inventory– that 55 to 60 cents per book shipping and handling actually floats that boat. So, it brings revenue in that sustains that system which last year– just to give you a sense– placed 13 million books in the hands of kids. The First Book Marketplace: there is a mission margin in the $2.85 average cost of a book on that site, and that is increasingly robust. That has been growing 25% annually for the full lifespan of that enterprise, which is in its 10th year. We also know though that from our own survey work– which has been quite extensive– that a full 30% of the groups that are signed up with us cannot afford a single book. These are groups that are very marginal, that are serving the poorest of the poor. And so our corporate partners step in; our individual contributors step in to allow us to reach that population that is struggling every day to just keep their lights on. And so the mix– the blend of funding channels– has really allowed us robust growth, I’m happy to report.
Culture of the organization is paramount because it will affect everything you do… and a lot of things that you can’t do.
Denver: Let me ask you a little bit about your corporate culture. We were talking about it a bit earlier before we got started, and I know that you’re a student of corporate culture. I also know that there are a lot of people who work at First Book who have experience in the private sector. Give us your thinking on it.
Kyle: Culture of the organization is paramount because it will affect everything you do… and a lot of things that you can’t do. It’s been important to us from the day we opened our doors. I believe strongly in team leadership. I don’t believe that having a single lone wolf at the helm of an organization is a healthy strategy; I don’t think it is a sustainable strategy. And so for starters, we have a team of four people at the top of the organization who are really co-equals in running it. In addition, we really work hard to elevate entrepreneurial thinking and to attract entrepreneurs into the organization.
…or it can be people who have tried things and failed. That’s a very important thing…But not stigmatizing people who experiment, people who try new things in the organization… we really work hard at that because that’s the power of entrepreneurial thinking.
Denver: And you want people who build things, don’t you?
Kyle: We love people who have built things. It can be small things, or it can be large things, it can be wildly successful things, or it can be people who have tried things and failed. That’s a very important thing. Making everybody comfortable with doing your best work… and then if it succeeds, that’s terrific. If it fails, doing powerful post-mortem, so that we learn from that. But not stigmatizing people who experiment, people who try new things in the organization… we really work hard at that because: that’s the power of entrepreneurial thinking.
Denver: Well, I know you have a hard working place and I know you have exceptionally high standards, but you also have a lot of fun… and probably no more fun on any day than Halloween. What happens on Halloween?
Kyle: Halloween is the High Holy Day of First Book. It is absolutely true. I think this is like our 12th year of silliness on Halloween, and it’s just grown and gotten sillier and sillier every single year. The entire office shuts down at about noon, and we head to a local restaurant that we—now, we’ve got between 85 and 90 people, so—
Denver: It sounds more like a watering hole than a restaurant.
Kyle: I’ll take a pass on that. But, yes, and we have a gigantic competition– costume competition– and with that many creative, smart people coming together in a costume competition, it is pretty funny, I will tell you. And those are pictures that probably will keep any of us out of Senate confirmation because they’re pretty goofy. The year before, I was bacon in a bacon, lettuce and tomato sandwich. Yes, I did bacon pretty well.
I believe that equal education is really the next wave of the civil rights work in this country… because it’s fundamental to almost every other social issue.
Denver: There you go. Let me close on a little bit more serious note, Kyle. And that it really has to do with literacy in the US among children, but also adults. What’s the impact of going through life essentially unable to read? And what remedies or interventions would you be an advocate for to help us better address this issue?
Kyle: This is one of those issues that I was raised to care about. My family believed, and still believes, that education is the key to a successful life. I believe that equal education is really the next wave of the civil rights work in this country, and really because it’s fundamental to almost every other social issue. Whether you’re talking about health care costs, whether you’re talking about juvenile justice issues, whether you’re talking about employability and under-employability, these are fundamental issues that affect the person’s life– which is tragic– but they also affect the life of our nation. They affect our fundamental building blocks of whether we’re competitive in the world economically, but also fundamental building blocks of our democracy. You want a literate population so that they can fully experience the power of their First Amendment rights, the power of the right to vote. Everything that we value and prize as Americans is dependent upon having the ability to read and navigate that. I believe that there’s no more powerful issue in our time.
Denver: What would you like to see done in this regard in terms of policy, or parenting, or whatever it might be?
Kyle: Let me respond with the fact that I tripped over recently. I uncovered a survey of states that reported that 38 out of our 50 states were spending less today on education than they did in 2008. We are 2017 now, and I’d like you and your listeners to imagine any other thing in their life that they’re spending less on now all these years later. I think that says it all. Teachers are underpaid. Our facilities are failing. We’re long past the point where you can wall those problems off and have a successful country. This is– when we talk about building infrastructure– this is where we ought to start.
Denver: Amen. Well, Kyle Zimmer, the Co-Founder and CEO of First Book, I want to thank you for being here this evening. Now, if people want to learn more about First Book… get involved in some capacity– and I know you’re speaking to a number of different audiences here– what would you have them do?
Kyle: Well, the first thing they need to do is go directly to our website, which is firstbook.org. There they will learn a lot about First Book that we haven’t been able to cover today, of course. And also, if they are somebody who volunteers in a program that serves kids in need, or if they attend a church that they know does work in a community, or if they teach school or know a school teacher, they should sign up with us. It’s free. It doesn’t take more than five minutes. We want to make sure that we get everybody what they need, and so that would be great.
And of course, if you’re a company that wants to do powerful work, please let me know. I’m email@example.com and I’d love to hear from you. And if you’re somebody who can afford to donate, remember that every $2.85 on average is a book in a kid’s hand, and so we would love, love, love your support.
Denver: That sounds like a pretty good deal to me. Absolutely great! It was a real pleasure, Kyle, to have you on the program.
Kyle: Thank you so much.
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