Cobalt Fairy Letter 2023 ed.

19 Jan 2024

Hello all

What a year it was. Although I consider myself to have an above-average business acumen, nonetheless I find myself to be wrong quite often. Cobalt Fairy's 2023 projected performance is the perfect example of me being wrong about the company's potential.

It's fairly common for a company that's entirely based on creative content as is ours, as it grows bigger and has more output, the revenue or profit per unit to go down.

Here at Cobalt Fairy, a key metric we live and breathe about is what we call the Revenue (and Profit) per new Release. Imagine if you were a painter. If you created one painting per year, you'd be solely focused on the quality of that specific painting. Now let's imagine that you paint two of them. Your focus and attention would either have to be cut in half per painting, assuming you'd paint them in parallel, or devote half the time to each, in case you're painting sequentially.

In principle, our business isn't very different from that. As per our mission, we strive to produce as many quality pieces of literature art as possible, taking the unit economics of our industry under consideration.

For 2023 we had a moderate increase of new releases in mind. Compared to 2022 when we had 208 releases, in 2023 we had an increase of ~16% closing the year with 245 new amazing releases. Consequently, our sales increased to $1.6M up from $1.1M compared to 2022.

So, here comes the fact that proved me wrong. At the beginning of 2023, I assumed that by increasing the total number of releases would bring the Revenue per new Release down, considering that our team would have to spread their attention and time across more pen names and book releases. On the contrary, though, numbers got better. Our Revenue per New Release went up from $5.7k to $6.5k for 2023 despite the increase in total number of releases.

How can that be explained?

My best guess is that as the number of releases goes up so does the expertise of the whole team. We were very careful not to leave quality slip away. We didn't cut any corners when it came to publishing books of very high quality. We're always focused on finding the best writers available, who under our guidance, will be able to produce very captivating and engaging titles.

Case in point, many of our books won Amazon's All-Star performance bonus which was considerably up compared to 2022, and that speaks volumes about our stories.

Our team also grew by a few team members, which brought an entirely new set of challenges as well. Our hiring and training processes had to become even more robust and streamlined to support this growth. But despite the more extensive hiring process, our motto remains true. Hire for attitude and train for skill. In my opinion, our strongest competitive advantage is Cobalt Fairy's culture. We're a company of very kind, thoughtful, mature, and of the highest work ethic people, I've ever known. Without the right character, no amount of training can help. On the contrary, hire a person with the right character, train her right and you can see wonders happening.

And that's what 2023 was. A small wonder.

I couldn't feel happier and more grateful for the amazing team of individuals we've put together over the years. From our author managers, designers, the operations team, web developers, and back office. This team of 15 amazing people is the engine behind our amazing growth. I'm still surprised how this can be, but each year I see us become more thirsty about our company's growth and prosperity.

We also intend to expand into the Western Romance category as well. That was an endeavor a couple of years ago didn't work out for us. This year with new people to back it up, I feel more confident that we'll be able to publish much better books. Let's see.

For 2024, I intend not to repeat the same mistake. I feel more confident than ever about Cobalt Fairy's strengths and potential and I think we'll be able to improve across all KPIs. More releases and better stories will lead to increased Sales per New Release.

As it stands true for every business:

More sales equals more money, equals more investment in new talented people, and better systems, which leads to a better quality product and happier customers.

Until next year.

Best Regards,

Roberto Zanon

Founder and Owner of Cobalt Fairy LLC