In a new Kindle Single, “Gutenberg the Geek,” Jeff Jarvis argues that the inventor of printing was also possibly the world’s first technology entrepreneur, for he faced the same business and technology challenges as – and caused even more disruption than – any Silicon Valley startup. Here, in an exclusive excerpt for Business Insider, Jarvis lays out the P&L of Gutenberg, Inc. and shows how like many a sad story of the Valley he was done in by his cash flow and cap table:
To reach his goal, Gutenberg needed investment. In the scribal age, says Andrew Pettegree, author of The Book in the Renaissance, the economics of publishing were simple: One scribe produced one book for one customer, usually a rich patron or the church. Gutenberg and subsequent book publishers, on the other hand, had to print first, then find customers. They had to put capital at risk upfront to make or buy equipment, produce type (about 100,000 characters, by one estimate, to feed the printing process so that while one page was being composed, another could be printed, and a third would be broken down), stock paper (230,000 pages’ worth for the first 180 Bibles), and make or buy ink to print the 1,282-page books. Gutenberg employed an estimated staff of 20 — pressmen, inkers, engravers, typesetters, and others — in Mainz’ Gutenberghof and in a second building, the Humbrechthof, which [Gutenberg biographer Albert] Kapr speculates was large enough to accommodate six presses and six composing rooms and also to house workers.
He had to do all this before the first gulden would flow in. Gutenberg needed partners and investment. Enter merchant, book dealer, goldsmith, “ruthless businessman” in Kapr’s words, and early venture capitalist Johann Fust. Before printing the Donatus Grammar book, Fust lent Gutenberg 800 gulden — the equivalent of $150,000 today, [author John] Man says — to acquire equipment, which then became collateral for the loan, a fact Gutenberg would come to regret six years later. Three years on, having paid no interest on the first loan and about to embark on the Bible project, Gutenberg returned to Fust and got another 800 gulden to set up his larger second workshop in Mainz.
Still, Gutenberg’s business needed cash flow. While he spent an estimated year getting his type forged and two years printing the first Bibles, to bring in revenue he also printed indulgences for the church and calendars with monthly exhortations against Turkish invaders. The first completed Bibles were ready to come off the press in 1454. Kapr believes the first run was likely sold out in advance, but that doesn’t mean Gutenberg could collect money for them, not until they were finished and delivered.
Just as his product was finally ready for market, Fust spoiled the day, suing Gutenberg for the money he had lent plus interest: 2,026 gulden. Revenue for the Bibles had not started flowing in, so Gutenberg could not pay. He defaulted on the loans. According to records of testimony held in the refectory of the Barefoot Friars, Gutenberg contended that Fust’s capital came in as no-interest investments; Fust insisted that he was due interest, never paid. Fust also seems to have accused Gutenberg of channeling funds to other purposes — the printing of indulgences that brought in cash; today, that might be called misuse of funds or embezzlement, but then, the rules and business agreements were not so clear. Thus Fust took over the larger of Gutenberg’s two factories and the work of publishing the Bible with Peter Schöffer, a former scribe who had been Gutenberg’s assistant but was also Fust’s adopted son and later son-in-law. Fust & Schöffer next published the Mainz Psalter and advanced the art with decorative capitals and two-colour printing.
Kapr, Man, and others speculate about the balance sheet for Gutenberg, Inc. (in guldens):
- Production of six presses, likely with iron screws, at 40 each: 240
- Typecases, frames, workshop desks: 60
- Rent for Humbrechthof, three years: 30
- Heating and stoves for melting metals: 20
- Production of three hand-molds at 20 each: 60
- Steel, lead, copper, antimony: 100
- Ink: 30
- Paper for 150 copies, imported from Italy: 400
- Vellum (hides) for 30 copies: 300
- Wages, bed, and board for 12-20 staff over three years: 800
- Handwritten Bible for reverse-engineering: 80
ESTIMATED TOTAL: 2,120
Fust invested 1,600 gulden in cash. The rest likely came from Gutenberg’s manufacturing of mirrors for religious pilgrims and other printing products.
So what of revenue? Using competitive prices for scribes’ books, Kapr estimates revenue from the first Bibles delivered as printed sheets (likely before rubrication, illustration, and binding):
- 30 vellum copies at 50 gulden each: 1,500
- 150 paper copies at 20 gulden each: 3,000
ESTIMATED TOTAL: 4,500
Kapr also suggests that Gutenberg may have paid some of his employees with copies. Even so, he should have been able to repay Fust easily. The problem, again, was cash flow (always a matter of timing) and the capitalisation table — that is, the deal structure he had with Fust, which allowed the financier to take over most of the business. In Gutenberg’s fall are lessons for every entrepreneur since — including, sadly, a recommendation for hiring smart lawyers.