Tom Hoenig and the $600 Billion Bailout

Abstract

In 2007, after raising nearly $1.5 million in seed money, Eric Frank and Jeff Shelstad quit their jobs and founded Flat World. Together they had nearly 30 years of combined experience working for three large textbook publishers: Pearson, McGraw-Hill, and Cengage. Their objective was to create a company that published open textbooks (i.e. textbooks that could be accessed electronically at no cost) in addition to selling educational supplements and learning aids. Eric and Jeff believed that the college textbook market was dysfunctional in a number of respects. They believed that Flat World’s business model addressed these dysfunctions and had the potential to disrupt the industry status quo. In this case, Eric reflects on the company’s business model and wonders whether or not the company is doing all it can to develop the capabilities it needed to survive.