Welcome to the Reboot Chronicles, connecting you to the world's top leaders and CEOs rebooting their organizations and themselves with revealing stories to help you prosper in unprecedented times.
I'm your host, Dean Tobias, and as a serial CEO who's led dozens of companies that created thousands of jobs and billions in revenue, my passion is uncovering powerful lessons that can inspire you to reboot your organization, your career, and your life.
Listen and subscribe wherever you get podcasts, or at rebootchronicles.com. I'd like to welcome James Donth, the CEO of Barnes & Noble, to the Reboot Chronicles.
With Chicago roots dating back to 1873, the corporation was officially formed in the 1970s and has seen its fair share of good, bad, and ugly times as it grew into a massive public company.
It later came dangerously close to the common reboot zone of irrelevance, obscurity, and decline, only to be transformed in a back-to-the-future growth strategy that gives control of each store to its local booksellers.
James's reboot strategy seems to be working after 15 years of declining store numbers.They have been on a tear, opening more store locations than most retailers.
Now the largest bookseller in the U.S., with hundreds of millions of books sold, the company has over 600 stores, 18,000 employees, and that have delivered $3.5 billion in annual revenue.
Taken private by Elliott Advisors, James has led the private equity group's other brands, including Paper Source Stationery with over 100 stores, and Waterstones, the largest retail bookseller in the UK with over 380 locations.
James, good to see you.Thank you for having me.It's always good to have a bookseller on the Reboot Chronicles. I'm not sure where to start with you, except maybe I could make fun of my favorite company.I mean, did Amazon kill the bookstore?
They had a pretty good go at it, and came perilously close to doing so, both in the United Kingdom, the United States, and all over.But actually, nowhere actually successfully.Booksellers are sort of clung on.
Unfortunately, in much reduced numbers, there's only one large chain bookseller in the United States, only one large chain bookseller in the United Kingdom, and the same in Canada and most other countries, and fewer independents.
But the worm turned in 2016 in the United Kingdom, 2019-ish here.So we're back, not just as a chain bookseller, but a lot of independents doing extremely well, and more of them.
So the physical bookstores is has returned ironically at the same time as our friends at amazon who continue to prosper and sell an amazing number of books and do so incredibly efficiently.
But they had a brief foray into physical bookstores themselves but that didn't go well for them and that's a relief I think for all of us who sell books out of proper bookstores.
It's the reboot chronicles.You can say what it is.It was a disaster.The, um, but it's interesting.They, you know, they, they have, they are focused on much bigger and better things these days, still selling more books than anyone around the globe.
Every author relies on them to, to, to play the game and hit the metrics.So the bestseller status comes in, but you're right.It's it's two things have happened.
I've noticed is the, um, you know, as a percentage of revenue books is much smaller than it ever was at Amazon.So that's good for you guys.And the timing is, The question is like, is it a trend?Is it like people want the town center back?
Do they want a place to hang out?I mean, what's, there's this resurgence and not just physical books, but the bookstore.
I think it's about confidence on the part of the booksellers.Um, good independence never had any problem.
Um, even in, in the sort of the glory days of the rise of Amazon and then the, uh, Kindle coming through and then, then obviously audio shortly thereafter.
Good independent bookstores did fine they ran confident stores in which the customers enjoyed being and if you look at.
Because I oddly have another hat on which you didn't mention, which is I have my own bookstores, which is just an independent bookstore still.Very famous one, Daunt in London.Yeah, very imaginatively named.
And if you look at that, sales go up every single year.And you'd never know if Amazon even existed.And it will be the same for good independents everywhere.
So if you're confident and you run a really good bookstore people enjoy coming to it of all ages and that's extraordinary there's very few other retailers that appeal to everybody but we do.
And I think it's that return to confidence that's allowing physical bookstores to do well.In the case of Waterstones and Barnes and Noble, we just sort of got back to basics.
And as you mentioned, we've let our stores have sort of autonomy to exert their own asset, their own personalities.And that's allowed them to have friendly, nice spaces.And if they do that well, people come in and enjoy the stores.
Yeah i was so intrigued when i read about that the you empowering a local store manager let's back up a little bit boil the ocean before that so you know a good reboot is a lot of listeners know in my mind is you know you're hitting on three cylinders you're focusing on people focusing on the platform and the next generation what you're supposed to be building that they can buy
And you're focusing on passion in various ways, not just the people, but everything, the brand, the customers, and that mix.What are your cylinders?What did you have to hit on to turn?I mean, you walked into a daunting, pun intended, situation here.
So you were confident that you could do this turnaround.
I think it's that.It's restoring confidence to the store teams to say, just come on, turn your stores into nice places.You don't need to rely on New York head office.Corporate, right?
Corporate to tell you what to do, to give you a list of things to do, to give you planograms and all the rest.Just apply common sense.Apply your imagination and get to work making your stores nicer places.We were, ironically,
assisted in that at Barnes & Noble in the pandemic hitting us very soon after I joined.That forced us to close our stores.And we were able to use that time when we were closed to actually move them about a lot.
And again, store teams did so pretty intelligently.
And I think by the time we reopened our stores, we had better looking stores at the same time as having a customer base who had been obviously excluded from stores for some time and very eager to come back in.And then they found nicer
Stores and that propelled this sort of.Extraordinary growth in sales which i want to get back into growth confidence comes back and people feel that doing the right thing and do so with a bit more energy and a bit more.
and intelligence and you find yourself in a positive cycle of things going better, we're able to invest more money because we're making more money both in pay and in what we look like, and then start opening new stores.
Everything starts working properly and reinforces itself.Having said which, if you let people do that, you also get a few people who head the wrong way.But that's also easy to spot and then you can
Sometimes that can be good, too, that accidental innovation.You did what?Oh, wow.Let's try that in Omaha.So James, what happens when they don't come along with the reboot and they say no?
That happens, and frankly, is happening.It's kind of understandable because when you change cultures, you are There's a lot that's demanding of people, and there's tremendous uncertainties.
And when you've particularly come out of a corporate world where everybody knows what they're doing and what their place is, and it's hugely hierarchical, and you try and get rid of the hierarchy and make it much more fluid and much more responsive and all the rest, you can get people really struggling with it.
marching out the door, so leaving you, and good people can do that, or being highly obstructionist, and people do that, and we have to work through that.And at the store level, at the most extreme, they can unionize.
And that is effectively a store team saying, we want no part of this.We're going to get a union on our side, and we're going to fight you.And we're going to demand this, that, or the other, which introduces another person into the marriage.
And that is not good for the reboot.And we try and sensibly and intelligently and empathetically work our way through that.But my goodness, it gives you gray hairs, that's for sure.
So you hit on it.It's like the passion reinforces the, Hey, let's make the platform better.And let's make the stores cooler.And, but it all goes back to the people.And when you tell people that, so you're hiring a new manager first, you're.
latest store, I think it was in one of the Carolina cities, and they must think you're crazy.What, you don't have a planogram?You want me to do what?I mean, if you're hiring like a store manager.
We don't tend to hire much.We promote from within.That's been, again, that's sort of trying to really respect and understand that Bookselling is a vocational career.It's something that you learn.
And yes, of course, you can join the business with a passion for literature and reading and books and all those good things.But actually, there are a ton of skills that are necessary to hone and refine.
So we have tried to, or we are putting in place, a much more layered career structure based on a lot more training and development.And our store managers are almost all internal promotions rather than external house.
Yeah, that is a that is a core lesson there.Because I couldn't see you bringing in someone from target or CVS or Walgreens, they just would try to efficient you out of business.
The other thing you said is so you know, when they shut down the world, right or wrong, you're thinking about that. If you were a public company still at that point, you probably wouldn't have made it as my prediction.
You had some patient private equity people that I can't imagine how those board meetings went, but it is remarkable that you guys pulled through that and came out much stronger.
Yes, and they were prepared to back the bet that we would reopen one day, because it wasn't at all certain at the outset when we were initially closed.Of course, nobody knew how long it was going to go on for.
But also keep the lights on, so we were able to keep people employed during that rather than furlough everybody and lay them off. And and put them to work so that that was really the best and that cost obviously.
Quite a lot of effectively it was an investment in our stores prove to be remarkably a good one.
No and you have no franchise is there a holy on the road to the end of the properties themselves released we don't have a single piece of real estate but we do run all of them ourselves.
Right.So let's talk about people and trends and why are they coming into your stores?
I am an old-fashioned bookseller.I've been a bookseller for 35 years, close to 35 years.And nothing has really changed over that time, in my view, other than positively.That is, people read and enjoy books.
You enjoy books when you're the smallest and youngest of children, a baby.A baby likes a bath book.They can chew them, at least. And then through all ages, and the oldest of oldest citizens likes a book and bookstores.They're very social spaces.
And books themselves provide this sort of wonderful entertainment.They can be read, of course, electronically.And there is a market for that.But the physical book is something very special.
And the physical book is as decoration, as an object, which also marks phases of your life that I
it identifies you in many ways if you're a student and you go into your fellow students and you want to know what the light will look at the bookshelves and that's still true today and all my book selling career.
We've been driven by young adults more than anything else if you think of all these great phenomena that is swept the world of book selling and it happens again and again and again it tends to be young adults from harry potter through to now sarah j mass and rebecca and all that.
The current bestsellers they are young people can be occasionally teenagers goes up to the city of twenty something year olds and any. product that is sold to, predominantly to young adults, but also appeals to every other age group, has a future.
So I'm not quite sure where this sort of lack of confidence, as Amazon came up, originated from.Other than that, the big corporates, they invested hugely and were massively successful.But corporate ways of retailing and bookselling are incompatible.
And I think that took a while to understand.
Yeah, that's actually very encouraging.But don't judge me by my bookshelf, by the way.Once I read one, I get a lot of them for people that want to be on the show, of course.But I usually give them to someone.
Not always people that are younger than me, but I just think of like, hey, James would probably really like this book.And sometimes they ask me, why did you give me this book?I said, well.
You know, mine are mostly business books, but the, you know, the, um, the classics are, and how do you groom people?
Because there's so many genres and sections and, you know, in a store, do you have a one that's like a guru and I'd be great in your business section.I could help people.I know that much.
Stores develop over time.And inevitably, people have their own passions and interests.And a good store will develop people that cover the swath of interests that we have within the store.Typically, most people start young.
This time of year, the Christmas temp is the way that almost everybody starts being a bookseller.They're a student.They're even still.
And school and they get that weekend job or they get that christmas high and then they find they like it and we are a tribe i think booksellers. You can recognize the booksellers no matter where you go around the world.
Japanese booksellers are no different to US booksellers or any different to Irish booksellers.We are a particular sort, tend to be quite cerebral, introverted.We like our books.
And that tribe, particularly if you're focused on tenure and keeping people, will be of
Yes, all these young kids coming in who are starting off, some of them just moving on and we don't see them again, but a few staying who really are these very vocationally driven individuals and the best of our stores cover most of the bases.
Yeah, I mean, back to the audience.I mean, your words are encouraging, because I just see this landscape of lazy streamers and gamers and social media-ers.And I don't see readers at the top of the list.
I don't see people giving a lot of books out for Christmas.You're going to correct me on that, I'm sure.But maybe that's just my circle.I haven't got a book for Christmas in a few years, and I used to love that.
If you're in one of our stores at 4pm, it'll be pretty quiet or at 3.30, it'll be pretty quiet, not much going on, there's a few people toddling around here, a few people wandering around there, it's also sort of not much going on, but you'll notice that the booksellers begin to get quite active at around 3.30ish at this time of year and the reason is because the schools are about
end that day and at that point all the people come zipping into the store in november come this chatter of noise and activity and energy And almost all stores, that's the case.We are social spaces.
But during the day, the ebb and flow of different groups coming in.If you're in our city stores in the evenings, full of people.We're the best pickup joint that's ever been.
But it's a very different sort of pick up joint to a bar or any of the other places you might go.It's for quieter people.
Step above the library though, I bet.Oh my gosh.I forgot about dating sites when I listed off those people.There's all this.I love that. And the environment, so you operate your own cafes.
You don't sub that out, which is fascinating, because that's a whole different business.Sure is.
It sometimes causes me as I would have more hair.
Exactly.There's supposed to be a good margin in that, I've heard, but I don't know. Books could be better.Who knows?So many places to go there, but still with the people.
So good CEOs know how to reboot the culture, that people, platform, passion thing.It's the people and the passion, or the bookends, because if you just have a great product, who cares?
So, but that's easy to say if you're like 500 million, you're at three and a half billion dollars.You've got 18,000 going to 20,000 people.
How are you, first of all, how did you restructure it and say, okay, forget about the old public company culture.That's dead.Here's where we're going.And how are you keeping that alive at such a big, you know, revenue number?
The one is not easy and it's not easy for anybody i don't get particularly easy trying to set a setting put in place the structures which allow it to happen and it's certainly not easy at the store level working within it.
Because you know fundamentally what we're trying to do is create careers in and move from what was a traditional retail structure in which you have.
A very small number of people run your store that's typically what you have in a retail business manager my assistant manager and then you have a bunch of people who are tend to be in the united states because of the way benefits work cost works part time.
And that's what it is, and they come and go.Sometimes you get some continuity there, but they're still working 20 hours, 24 hours, whatever it is.You don't want to trigger that benefit line.
But you don't build knowledge and tenure particularly effectively, certainly not to the degree that you need to to run a really good bookstore.So we're having to move to something where we
Create much more stable careers we hold on to a good people is much more performance management also in it which is that's.
Copy you from the stick around performance management that is setting expectations and that's all of that is quite tough it's destabilizing it's confusing if you're asking also stores to really think through what they're doing in that.
In that with that displays and how they.
Price books even in everything that's also requires some anxiety and it's intellectually challenging which not everybody's gonna be comfortable with, it's much much easier actually for the corporate to say do it like this so you are creating i think i'm much more stimulating environment one that appeals to a lot but equally is.
Significantly challenging so you are asking much more and then in our case we also got to.
You should be rewarding people much better for that giving the career promotions and the pay that comes with that in an industry which is being traditionally horribly underpaid.
Yeah we are a minimum wage retail employer same as all the rest of the retail businesses so how are you actually going to make the dollars and drive the business up and then reinvest that in people and.
That's you know there's a certain amount of chicken and egg going on and a lot of trust on the part of the book selling population that you are going to deliver and. I don't pretend for one second that that's easy.It becomes easy.
Waterstones, which really went properly, properly bankrupt in 2011, all sorts of trouble makes.That took a good decade to really get it right.Once you've got it right, it becomes pretty easy.But it takes a decade.
We're only sort of halfway through that decade at Barnes & Noble. i think i'll store teams are varying stages of effectiveness.
You need good leadership at the store level of course you need to build your teams and that you have to do patiently and get get in the structures in the training and all the rest it's it's it's like.
When you look at growth and innovation. You know, I'm all about accelerating that, how you get, you know, double the size of your company, whatever your analytics hopes and dreams are.
But how do you think about partnerships, you know, doing things with other either to stimulate demand and get people into the stores or actually in the stores or online, of course, if you have a big online business too, but you know, what's your, what's your partnership lens looking like?
I don't know, my personal philosophy is actually not to just become bigger for any other reason.I kind of knew that.That's why I corrected myself. You know, I figure it's not always better.You're right.It's definitely not though.
You also a lot of things work much better if you are growing.
And in my case, when I'm really focused on is one that we have a vocational desire to put bookstores in communities and therefore opening them is inherently worthwhile and a positive contribution and and satisfying just
For that occasional side but also you're giving career opportunities and if you.If you work for a shrinking business that's a nightmare from a career perspective if you're even in a static business you just have to wait to get that.
Manage a job you have to wait for somebody to retire there's not gonna be many opportunities if you're opening lots of stores as great as a young person you can move up quickly it's lots of.
have opportunities that's that's the other part of why we grow as far as working with other people.Again i'm a bookseller and nothing else we have made an acquisition of stationary and paper source which is a stationary business because.
Actually we have that within our stores and we were doing it so extraordinarily badly we needed needed help accelerated sorting out a bit of the store that needed sorting out but otherwise we grow and have a partnership only if they make.
our business better, make us a better bookseller.
And then occasionally when other booksellers get into trouble, which is part and parcel of what is a perilous trade with very thin margins, then both in the United Kingdom and here more recently, we pick up a few people who get themselves into trouble and give them a good home.
I love the way you talk about community at the center of your what I'll just call it an expansion strategy because you've opened a lot of stores and you're always talking about the community.
And, um, I don't see that from Amazon, Walmart, some of the big dogs.So that's a benefit.Um, and, and it seems to really be part of your core, uh, passion there.
And, um, is there any community partnership things I'm thinking about libraries right now? I'm probably going in the wrong direction, but I just don't know.
It just seems natural that you're such a community supporter, you want to do things that are good for the communities.
I mean, I certainly would always say sort of within that sort of the
the world of books, there is a hierarchy of importance and libraries are the pinnacle of that and libraries are just fantastic institutions and sadly, probably sort of under-invested in and rather beset upon.
They need a reboot themselves, exactly.
Yeah, and it's tricky.It's even worse in the United Kingdom than it is in the United States.All different things there, they're just being starved of
resource and money, so closing, and that's a catastrophe and such extraordinary short-sighted on the part of local government in the United Kingdom.
Here, book banning and the other pressures that afflict the libraries as well as always a shortage of money.So no, libraries matter hugely, but we're not a library, though we do something important within the community.
And I do think that when you're in a store, particularly when you're working in a store, you understand the role that you play.And it is hugely important that we are accessible to everybody.
There's no need to spend any money when you come into our stores.Particularly young kids come into our stores just to spend time and be around books and to be in a safe space.
At the same time, precisely because we are that, we are quite commercially successful because everybody wants to come into our stores.
Yeah exactly.You look back on your career, you have run some of the smallest bookstores in the world, you had a startup, to now the biggest.What's been your most challenging thing you've had to overcome?
Initially setting up, I think, any business is difficult, certainly.I was quite young.
2425 years old you have to get through that that's that's just endurance and stubbornness and a bit of luck to get established i certainly had a very very tough time early on.
Stamina and lock i think the two things that one needs and in my case always working with. actually extremely nice and supportive teams and hopefully I'm always being in turn supportive of that.
But it's how you build your teams and the people around you because you're not, I don't do much of the work obviously amongst 18,000 people I'm a cog in the wheel but the key is who are you building up around you and how do you get the most out of people.
I think of you more as the axle, but go ahead.That's actually a good leadership view, a cog versus the axle, but pick your metaphor.And then any personal challenges that have kind of reshaped you along the way?
To be honest, some people are very lucky and fortunate in life, and I'm certainly one of those.
I was born into a nice, comfortable, middle-class professional background, given my stellar education, which I've continued to benefit from because it opens up all of the intellectual hinterlands.
If you then set up your own business and you're an entrepreneur, that definitely has its challenges.You're waking up at three in the morning, you've got all of the difficulties and worries that are attached to
And then I've sort of taken a few steps, obviously, along the way.
First of all, instead of coming into Waterstones, which was in big trouble, and then Amazon launched Paperwhite, the big success of Kindle, which sort of immediately ripped away a lot of our sales, which caused a lot of difficulty.
Most recently, COVID causing difficulty on both sides of the Atlantic. So you have a huge responsibility as somebody running a company with lots of people in it to those people.And how do you remain true to that?
At the same time, if you are running a place, you have to make all sorts of difficult accommodations, particularly if you don't actually have a tremendous resource at one's hand.How do you pay people?
invest in a career ladder that is put money into promotions or should you raise the base entry level.Those kind of sort of quite moral questions are necessary to confront and communicate against.
And you know at the same time as knowing that personally I'm in a very comfortable and privileged position.
And where do you see this enterprise in five years?
I hope, well, I am confident, in fact, that it will continue to grow.And we will actually become a better and better bookseller.
And as we become a better bookseller, we will become a more successful business, which will allow us to reinvest in all the various parts of it that we need to, which, in turn, will make us more successful.
And I think we've now got ourselves into a nice groove of that sort of reinforcement of excellence driving further excellence.Not that the world can't change on us.We are still part of the retail economy and things can change there.
Ownership structures can change.We are owned by a private equity firm who presumably will sell us.You want to find yourself in That's why I said five years.Yeah, you need to get that.
But I think for me, above all, it's creating a culture within the business, which is one that everybody working within it feels deeply invested in.We are a vocational business.
And once you can get to that point of a culture, it does become, as we know from the UK, where we have this Waterstones business, which is working very nicely.You get yourself to a point where everybody feels actually relaxed and happy and confident.
Yeah.Any advice for people that want to work for you?What are you looking for?
You need to enjoy doing what we do, and it's a singular thing, book selling.So go and work in a bookstore and find out.People come up from below.
Everybody who works in our home office is recruited internally now, unless you're coming in for something very specialist in IT or something.
And again, it's one of these words which is sort of, in some ways, rather trite and simple, but everybody has to be nice.
I like it.We'll leave it there.Thanks, James.It's a great session.I appreciate it.Thank you very much.You've been listening to James Dunn, who's the CEO of Barnes & Noble.This is Dean Tobias with The Reboot Chronicles.
I want to thank you for joining us, and we'll see you soon.
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