ustavo Lembert loves reading and wanted more people in Brazil to get into a reading habit. Together with Tomás Susin, Arthur Dambros Álvaro Englert and Pablo Valdez, all in their early twenties at the time, he started TAG: a subscription-based book club promising both a monthly surprise and an incredible literary experience.
How did you get the idea to start TAG?
Back in 2013, we started to discuss how to make people read more. We liked to read a lot, and we had the habit of discussing what we were reading and recommending books. How could we have a business that would encourage people to read more? We knew that Brazil is not the most fertile ground for readers. In some way, we wanted to innovate within a market with little innovation and few startups. The entrepreneurial ecosystem rarely looks at the publishing market, and that’s when we started to ask ourselves how to do that.
From our analysis of business models – I’m talking about 2013 – the subscription-club model was starting to take off. It was something that interested us: it has a lot to do with reading and habit formation. If a person receives a book every month, they’ll have an extra incentive to read it. It’s not really new: in the eighties, in pre-internet Brazil, there was something called the Book Club, and they reached 800,000 subscribers. They ended up closing for corporate reasons, but they were very successful.
We started TAG when it was already possible to buy any book online and receive it in a few days, so we focused on experience: the book you receive has to be a better experience. The support material, the discussions, the exclusive edition, the cover, the treats, the surprise...
It’s a collector’s experience, right? Attachment to the book is part of the habit too. How easy was it to start selling the books?
Our first year was challenging. We thought about giving up several times. It took a long time to get traction. The first month wasn’t so bad, we wanted to start with seventy subscribers – I don’t know why that was our goal. We started with about sixty-five, most of them friends and family. We had maybe five or ten real subscribers.
I remember the numbers were like five new customers in one month, seven new customers in the next month, then seven new customers, then ten…. It was very slow. The first six months were really awful in terms of sales.
What were some of the challenges in getting new subscribers?
The first was that we are an online company with physical books. Our portal, platform and store are virtual. So we were basically an ecommerce that had no expertise in digital marketing. We started without mastering the digital marketing tools, without really knowing how to position ourselves. Our growth was organic, word of mouth; we tried to attend some book fairs, but it took too long. The only thing that kept us confident was that our few subscribers really liked it. People would send us these beautiful emails saying how much that book had changed the person’s month or how much they’d liked the content. We realized that we had few subscribers, but they loved us. And we were like: we have to tell this story to more people.
In the second year, we started a heavy PR effort, calling all journalists in Brazil, sending them an email to tell our story. It was the first moment of growth; fortunately, the journalists were interested in our story. We closed 2014 with five hundred subscribers, which is not a lot in terms of revenue. Then we started to dedicate ourselves a lot to digital marketing, and that was the turning point.
And when did TAG start getting traction?
2016 was already a year of great growth, and 2017 was also a spectacular year. In 2018, we launched our second club. Before, we had only one club, TAG Curatorship, with a curator recommending their favorite literary fiction book every month, like Peruvian author Mario Vargas Llosa. With TAG New Releases, we focused on bestsellers not yet published in Brazil. We see what’s popular in Nigeria, Germany and Israel; our team is always mapping books that are doing well.
Did you have any experience in publishing before you started TAG? Interestingly, the startup came up in a crisis within the editorial market, especially in Brazil, with colossal publishing houses like Cosac Naify closing doors in 2015.
We admired Cosac a lot. Our dream was to have books like theirs, that people consider a work of art. They were our reference in the market. We needed to have their standard of demand and quality. Modesty aside, I think we did it. We were concerned with the aesthetics from the beginning, which our subscribers valued. But, to answer your question, we didn’t have any experience in the publishing market, and, without a doubt, that was difficult. At the same time, I’d say this was also a huge benefit, because we didn’t have the editorial market vices.
We faced a lot of resistance. The publishers called us “the Southerners with the book club subscription,” even when we had over twenty thousand subscribers. It was a struggle to get deals that made sense to us. To assemble a model that would stand up was very difficult, but, as I said, this ignorance of the market was what made us feel confident, and we did not pay attention to the criticism and disbelief.
What were the best decisions so far?
Regarding the product, I think the best decision
was to do things our way. Simply put, that means having our own editions, with a product that looks the way we want. I think that’s permeated all of our decision-making.
Speaking as an entrepreneur, I think having our own way of working is part of TAG’s DNA. The market didn’t believe in a book club, and it didn’t believe in having an exclusive edition, but we still chased it. We’ve always been suspicious of prejudices. Why can’t literature be linked to technology? We launched an app aimed at making people read more. We have always avoided simply replicating the structures and systems and ways of working of more traditional or established companies.
Tell me more about the work culture at TAG.
We don’t have to reinvent the wheel in all cases, but we’ve always seen ourselves like this: we have to be a cool company like a startup with the pace of a startup. Our people have to enjoy reading and believe in the product. I think we’ve always sought our way of doing things. In many moments, I wonder: could we act like so-and-so? Can we go down their path? But no, let’s do it the way we think will please our team the most, that will make people happier, that will create a more fun environment.
That’s another thing: we started the company in our early twenties. Our culture has always been very close to our hearts. There was never a dress code or a way of behaving. It’s a company, it’s for profit, and it has to be very serious, but it also has to be a lot of fun. The people have to be friends, they have to be close, and they have to feel at ease. And that, I think, permeated our entire history.
Our goal is to make people read more. We dream of a country where people talk about books the same way they do about movies or TV series.
What is the best part of working in Porto Alegre?
First, a well-qualified workforce. Sometimes we talk to people from other places and they have difficulty finding young, lively people. We never had that. From internships to junior and senior vacancies, talent is abundant. People here are incredibly talented, and they work hard. It’s a group that is willing to dedicate themselves a lot to the companies. The cultural scene is quite rich too. The book fair is huge. The authors here in the South, several were our curators in the beginning, supporting us in the beginning.
What was the best learning in terms of expanding the team?
There’s a bad side to things going so well. Growing the company and the team, and getting more investments, was a sequence of many victories. We focused on the team: doing as much as possible as well as possible. We didn’t really look at profitability, margins and making processes more efficient so we could scale faster. Instead, we were “swelling.”
Instead of stopping and investing in process automation, for example, we hired three more people to do it a certain way. Our team got bigger than it should have been. And after the pandemic, when the market suffered a retraction, our team was swollen. We had to make some reductions, and it was a very difficult time for us. It’s a matter of prioritizing and looking at how to become more efficient and autonomous in specific processes. That was the primary learning.
What professional advice would you give to entrepreneurs just starting?
Choose your cofounders wisely. First, I highly advise you to have cofounders; it’s very difficult to bear this alone. It’s important to share the achievements and bitterness of entrepreneurial life, which will necessarily come. It’s fundamental to have cofounders, but it’s also fundamental to choose them well. It’s a marriage, you know? It’s a relationship that needs trust to agree and disagree.
What are your top work essentials?
Notebook and a portable coffee mug.
At what age did you found your company?
Twenty-two years old.
What are your most-used apps?
TAG’s app and audiobook player.
What’s the most valuable piece of advice you’ve been given?
Never underestimate one percent of your company.
What book has most influenced your career?
The Hard Thing About Hard Things, by Ben Horowitz.
What positive habits have you cultivated?
Constantly seek professional development through books and courses.