The passing of publishing giant Tom McCormack makes me recall the interaction he had with my father, Leonard Shatzkin, from the very beginning of Tom’s publishing career.

The bios say he was hired as an editor at Anchor Books, Doubleday’s pioneering trade paperback imprint, in 1959, that being McCormack’s first job in publishing. The Anchor line had been “invented” by Jason Epstein in about 1953. Leonard Shatzkin, from a position called Director of Research, expanded the Doubleday sales force dramatically — it was by far the biggest in trade publishing — and also invented another trade paperback line, Dolphin Books, in the late 50s. Epstein moved on to Random House in about 1958. So, what I know, without being able to ask either Tom or Len for further details, is that Tom arrived on the Doubleday trade paperback scene just after its charistmatic founder had left the company and when my father was Doubleday’s leading pioneering executive.

At the time, and for a long time thereafter (maybe even continuing today), the standard method for managing publishing economics inside a company was the “title P&L”. That method of scoring made each title its own business. You added up all the revenues attributable to a title, subtracted the cost of producing the books and the royalties paid, and assigned a share of overheads as a percentage equal to what overheads are supposed to be overall. If that accounting showed the title with a profit, it was deemed to be successful. If the costs including overhead exceeded the attributable revenues, then the title was “unprofitable; it “lost money”.

Len Shatzkin didn’t see the economics that way. He saw overhead as a “bucket” you had to fill with dollars of margin. If you filled it to overflowing, the company was profitable. If you didn’t, the company was unprofitable. He didn’t see titles as free-standing “businesses”; he saw them as opportunities to provide dollars of margin to fill the bucket. The score to be kept at the title level was whether the title generated dollars of margin or didn’t. Overall company overhead didn’t figure into it.

Shatzkin had a very simple exercise that demonstrated his point. He challenged the management of his profitable company to look at what their economics would be if they ONLY had published the “profitable” titles and had somehow avoided all the “unprofitable” ones. Of course, those that scored “profitable” were a small minority of them. And they, on their own, didn’t come close to supporting the company’s overheads.

What this revealed was that the arbitrary assignment of overhead title-by-title, which seemed entirely reasonable prima facie, was a logical error. Let’s say the assigned “overhead” for profitability was 35 percent of revenue. By the traditional method of keeping score, only the titles that achieved that standard were “profitable”. But lots of other titles — by far most of them, as it turned out — contributed positive margin at some percentage between 1 and 34 percent. As long as most of the titles the company did achieved positive margin, the more titles published the more profitable the company would be.

Tom McCormack applied that understanding in spades at St. Martin’s when he became president of that company 10 years later. From the beginning, he knew that, within reason, the more books he could publish with the same overhead, the more profitable his company would be. He was unique being a publishing CEO who did the math that way. Nobody else did.

Len and Tom only overlapped for two years at Doubleday. Len moved on to start Collier Books for Crowell-Collier Macmillan. But, genius though he was, he was not the businessman McCormack was. After Collier Books had its plug pulled by the parent company while it was still in development followed by a period when he ran production at McGraw-Hill, Len started his own businesses, which included a pioneering book distributor called Two Continuents. But that effort failed, and in 1979 Len found himself picking up the pieces as he embarked on the consulting career that would support him for the rest of his life.

And his first client was St. Martin’s Press, which by this time had become a pretty substanial enterprise with 10 years of Tom applying the structural understanding of the economics that he had learned from Len. That consulting contract, which included putting Len on St. Martin’s health insurance plan, was a lifesaver for my father at age 60.

Over the years, Tom was always very generous in crediting Len with opening his eyes to the reality of publishing economics. He tracked how many St. Martin’s titles recovered their costs and contributed margin, and I believe the normal score was in the high 80s. By far, most titles St. Martin’s published contributed to overhead, and thus to profits, and thus to growth. And publishing more and more titles became a habit at St. Martin’s.

But McCormack was selective about adopting Len Shatzkin’s insights. He focused on the frontlist; Len focused on the backlist. McCormack never bought into the idea of an oversized sales force. And he really exploited subsidiary rights (headed up by Sally Richardson, herself a genuine Force of Nature), which were never a high priority in Len Shatzkin’s thinking.

But the insight, unique among his peers/competitors, that most titles a competent and professional trade publisher at scale in the late 20th century issued actually “worked”, combined with the phenomenal editorial talent Tom possessed, made him able to outgrow every competitor in his incomparable career. And he was a charming and charismatic guy!