This is thanks in part to a booming conference business -- the largest of O'Reilly's events, Maker Faire, a sort of Woodstock for the do-it-yourself set, attracted 70,000 attendees last year -- and thanks also to the company's early investments in e-books. At the nadir of the dot-com bust, O'Reilly launched a subscription service called Safari, which allowed users to pay a monthly subscription fee to read books online. He persuaded his largest competitor, Pearson, to finance the project, and it was launched as a 50-50 joint venture. It now offers e-books from dozens of publishers and attracts tens of thousands of individual consumers who pay up to $42 a month and thousands of corporate clients that pay more. The service contributes more revenue to O'Reilly Media than sales of its printed books in Barnes & Noble stores. (Only Amazon.com represents a bigger sales channel.)
Another promising development has been the success of books sold as iPhone apps. O'Reilly offers a handful of its books as $5 apps -- a very aggressive pricing strategy, given that many of the books retail for $15 on the Kindle and even more in print, but also one that has paid off handsomely, attracting readers from other countries, where O'Reilly books are hard to find. The company has sold more than 100,000 apps in Apple's App Store.
In 2005, O'Reilly promoted his chief financial officer, Laura Baldwin, to chief operating officer and started turning over operational responsibilities. Today, he spends most of his time gathering information -- reading blogs and webpages, checking Twitter, and taking pitch meetings with entrepreneurs. O'Reilly says his process is to look for patterns -- "faint signals," he sometimes calls them -- and to figure out what those patterns say about the future. Then he launches businesses: a conference or a new line of books. He invests in start-ups through his venture capital firm, O'Reilly AlphaTech Ventures.
Gov 2.0 is a case in pattern recognition. When Barack Obama was elected President after running on a platform that included increased government transparency, O'Reilly's thoughts about the relationship between government and technology began to coalesce. He published a book -- Open Government, by Daniel Lathrop and Laurel Ruma -- and launched a conference, at $995 to $1,495 a head, that attracted a sellout crowd in Washington, D.C., last September. Two more Gov 2.0 events are planned this year, along with more books and more plans to get Washington lawmakers to pay attention.
Beyond getting the word out about any particular idea or trend, O'Reilly says he has tried to use his company to demonstrate that being an entrepreneur can represent a means of exploring the world, one that is just as profound as religious inquiry or Greek philosophy or New Age introspection. "Business doesn't have to be separated from the rest of life," he says.
O'Reilly is old enough and rich enough to consider retirement. But if he sold the company today, he is not exactly sure what he would do. A life that doesn't include helping out with the construction of the next transcontinental railroad doesn't sound to him like a very interesting life. "When I imagine what it would be like, it's like, What would I do then?" he says. "Right now, I have this tool that I can use to make stuff happen. If I sold it, I'd just have money."
Over the years, O'Reilly has written many influential essays, which are available on his blog, O'Reilly Radar. There is "Watching the Alpha Geeks," which argues that most important new ideas come from hobbyists rather than from companies or research labs; the essay helped to popularize the theory of user innovation. There is "Piracy Is Progressive Taxation," an argument against the strict enforcement of intellectual property laws. There is "The Open Source Paradigm Shift," which helped catalyze the movement toward free software.
These essays, and others like them, are interesting as artifacts, but the real wisdom in O'Reilly's work is found in the company newsletters he wrote when O'Reilly Media was still small and its influence still slight. The best of these is a short meditation on the nature of business, published in February 1995, just as excitement about the Internet was heating up. Back then, everybody O'Reilly knew was getting rich, and he had been talking to investment bankers about a possible sale or initial public offering of GNN. During a particularly memorable meeting, a banker advised him to focus less on work that was interesting and more on work of the moneymaking kind.
As O'Reilly tells it, the banker chastises him with a metaphor. "You don't fish with strawberries," the banker says. "Even if that's what you like, fish like worms, so that's what you use."
At first, O'Reilly accepts this advice. Who can argue with the idea that customers should get what they want? But as he thinks it over, he begins to see things differently. "[A] small voice within me said, with a mixture of dismay, wonder, and dawning delight: 'But that's just what we've always done: gone fishing with strawberries,' " he writes. " 'And it's worked!' "
It's hard not to read these words as a parable, meant not just for his small staff of book editors but for any person in business -- maybe even for anyone trying to make his or her way in the world. "We seek to find what is true in ourselves...trusting that resonance to lead us to kindred spirits in the world, and them to us," O'Reilly writes. "I like to think that we have the capability to fish with worms when necessary, but in general, we're farmers, not fishermen, and strawberries go over just fine."
Senior writer Max Chafkin wrote for the April issue about Inc.'s test run as a virtual business.
