‘The Goliath is Amazon’: after 100 years, Barnes & Noble wants to go back to its indie roots

In this installment of our Centennial Series on companies that are over 100 years old, we are talking to Barnes & Noble CEO James Daunt. The last few decades have thrown some hurdles in Barnes & Noble’s way, however. Far from being the monster that inspired the plot of the movie You’ve Got Mail, it’s had to face down a new Goliath called Amazon and the general decline of big-box retail stores. After years of closures and declining revenues, Barnes & Noble was bought out by activist investors in 2019, who installed Daunt as CEO, and he’s managed to turn things around by doing two main things. 

First, he has decentralized operations of the stores, letting each store act like a local bookshop and giving his booksellers more control over what titles they sell and display. He immediately ended a system that allowed publishers to pay for special placement in bookstores, which he said corrupted the entire system in service of short-term profits. Second, he’s using Barnes & Noble’s scale to build a purchasing and distribution pipeline that serves as the rest of the book industry’s competitor to Amazon. 

This is about as Decoder as it gets. Daunt managed to rescue Barnes & Noble by upending the org chart and undoing the old culture while simultaneously pivoting the business model.

We get into all of it — the culture wars, J.K. Rowling, book ban bills in states across the country, and how Barnes & Noble went from being the bully on the block to competing with Amazon. This is a really fun episode. James Daunt, CEO of Barnes & Noble. Here we go. 

The following transcript has been lightly edited for clarity.

James Daunt, you are the CEO of Barnes & Noble and of Waterstones in the UK. Welcome to Decoder.

Thank you.

I’m very excited to talk to you. Barnes & Noble is a legendary retailer in the United States. It has been around for over 100 years. Let me just start at the very beginning. You are somewhat a new CEO, you took over in 2019. Did it factor into your decision to take this job that this was a 100-year-old brand that you had to somehow chaperone into its next 100 years?

It was the last, or is the last, sort of large bookseller in the United States. Frankly, with so few independent bookstores, if you want bookstores in the country, then Barnes & Noble needs to survive. It would take a very, very, very long time for anybody to recreate it.

You were yourself the owner of a small bookstore chain before you took over as CEO of Waterstones.

Actually, still am — present tense.

So you compete with yourself?

I compete with myself.

How does that work?

I have my own small, independent bookstores in London and they coexist alongside Waterstones, which I also run. Evidently my first and true love is my own bookstores.

Do the staff of that bookshop ever come to you and say, “This big Goliath is killing us”?

No, it isn’t like that. I mean, the Goliath is Amazon. The reality for booksellers, independent booksellers that is, is that you need all of the infrastructure from publishers, all the distribution and the reps and focus on physical bookstores, to survive. That’s really only there because there’s this great huge chain — Waterstones in the UK, Barnes & Noble in the United States — without which it would probably fall away and just sort of end up being a few independents trying to scrabble around and survive alongside an industry, which would have publishers on one side and Amazon on the other. So no, as an independent, one now looks at these big chains as a friend, not an enemy.

So, you had started your own small chain and you became the CEO of Waterstones. That seems like it gave you control over at least the continued existence of the infrastructure that the independent bookshops needed. I will want to dive into that later, because I think that is a unique arrangement for most kinds of industries where there’s a dominant Big Tech player. 

Then you became the CEO of Barnes & Noble after Elliott Management, a famously activist private equity company, had bought Barnes & Noble. What was that conversation like? “I’m already the CEO of a big bookshop chain in the UK. An activist private equity company has bought another legendary chain of booksellers, the biggest in the country, and I’ll be the CEO of that as well”?

Well, I think it’s following the same broad logic, which is that to survive as an independent bookseller in the United Kingdom, one needs Waterstones to survive. With a certain amount of arrogance, I believed that I had an answer as to how to do that, which was to simply stop managing it as a chain and let each of the stores behave like an independent bookseller. 

Then we got to the point where obviously Barnes & Noble was also getting itself into significant trouble. We look across from the very, very small United Kingdom to the US, where the market is dramatically bigger but it’s exactly the same publishers — all headquartered in New York City, by the way — publishing the same books as we are selling and we see a structure of the trade that is potentially going to fall to a simple, single retail partner in Amazon, obviously an online partner only, with no effective physical bookstore presence. Wherever you get a structure of a trade of that sort, then it probably is going to cross the Atlantic and be imposed on the United Kingdom. That would’ve been extremely unwelcome, obviously.

Was that part of your pitch to Elliott? “Hey, I see this thing that’s about to happen. Let me take over Barnes & Noble and I will at least ameliorate the problem, or hold it at bay, as well as potentially succeed”?

Well, no, obviously my pitch to them was, “You’re going to make tons of money.”

Yeah, they’re private equity.

That’s the pitch that’s going to work. But I was able to say, “Well, look, we’ve done it perfectly successfully in the United Kingdom, and if we did the same thing in the United States, it’ll be a very good investment for you.” So that was the pitch. But the reality in terms of the motivation to do it is that I’m a bookseller. I love bookstores. I think bookstores have a real importance within communities and a value in their own right, and therefore keeping them alive and prospering is really important.

We’ve talked to a number of CEOs that came into the picture as part of a private equity deal. The arrangement of that, the chronology of that, is kind of variable. Sometimes the private equity companies go shopping and they find a CEO later. Sometimes they have a CEO and the CEO goes shopping for an industry where private equity can make change with their amount of money. How did it work for you?

It’s always worked for me that I’ve been motivated, as I say, to run really good bookshops. To the extent one has a partner alongside you to write the initial checks and obviously prosper from writing those checks, that’s a necessary part of it. I actually originally had a Russian businessman who provided the backing for the acquisition of Waterstones, and then Elliott, which is the private equity owner of Waterstones and now Barnes & Noble. I think we have a common purpose, or at least we have a common goal, with different motivations.

Did you go to Elliott and say, “We should do Barnes & Noble,” or did they come to you?

They bought Waterstones. That was the first step. It was only once they bought Waterstones that the obvious fact of what seemed to be the impending fate of Barnes & Noble — and the very public one, because Barnes & Noble was put on the block, it was put up for sale, and we were a very obvious purchaser.

So when you took over in 2019, it was on the block and the company was in a tailspin. One hundred and fifty stores had closed since the peak in 2008, there was management turnover, its competitors in the United States were failing, Borders had failed. It seems like Barnes & Noble, and Borders before it, were trying to compete head-on with Amazon — to take in a bunch of centralized management functions, to increase efficiency, to use the stores as warehouses to distribute online, and to effectively do what Walmart is trying to do with Amazon today in some much larger and disparate way. 

As it relates to books, the strategy for Barnes & Noble seemed to be, “We’ll just be Amazon in a different way,” and that had failed. Why do you think that had failed so badly?

To put it another way, they were hiring in various executives one after another from other retailers, each of them bringing a very rational chain-retail philosophy, which is that you try to run a very consistent retail operation and that you use your scale and leverage for both operational efficiencies and purchasing efficiencies. That works pretty much across the board, whether you’re Best Buy, Staples, Zara, H&M, whatever it is. Each of those seeks to put an identical store pretty much in front of its customers in a very coherent, very precise planogrammed retail offer. That’s what they wanted to do with the bookstores.

The trouble when you have Amazon as a competitor is that you have to give people a reason to come into your bookstore. It has to be interesting and engaging. And for books, that isn’t a single defined proposition. You actually end up with a blended average of everything that satisfies no one. 

There was also a misunderstanding that it was simply about racking up the books, as many titles as possible, so that if you woke up in the morning and wanted a book, you drove to your bookstore, you walked in, you asked a bookseller, they took you to the book, you picked up the book, you bought it, and you went away. Well, Amazon does all of that process dramatically better.

What you had left and forgotten about is that people come to bookstores to enjoy themselves. They come to meet other people, they come for the social experience, and they come to browse and look at books. It’s a very richly textured, actually emotional engagement that customers have with bookstores, and independent booksellers do that brilliantly. They understand their customers, they curate for their customers. The big chains had simply stopped doing that — well, I don’t think they’d ever done it, in truth — and therefore the business was failing.

There was a time when the big chains were somewhat homogenous, and that was the threat to the book industry. Barnes & Noble at its peak was a national monster. It could drive the cultural discourse in this country by dint of just putting a book at the front of the store, whether or not the book was good. The independent booksellers hated Barnes & Noble for this reason. 

Like you said, the stores were getting bigger and bigger in a way that the last time I walked into one of the giant Barnes & Noble stores in the early 2000s, I was shocked. I was like, “I don’t even think I can make it through the entire store. This is a warehouse, this is Costco for books.” That was a very different moment when Barnes & Noble was the behemoth. Now you’re saying it’s a necessary condition of having bookshops. How have you made it so that people don’t think you’re the behemoth?

That was when there were dramatically more independent bookstores. In the pre-Amazon times, you would be sitting in your 3,000-square-foot indie bookstore, and then a 35,000-square-foot monster would open up down the road from you, and that just was an impossible thing to compete with. It had the café and it had all the music, movies, vinyl, CDs, and everything else. It was a much richer retail environment. That killed off the indies. But the less-good indies were also killed off by the same thing that was ultimately going to kill Borders and drive a downward spiral at Barnes & Noble, which was Amazon.

Now, these same huge stores are really the only store across great swaths of the United States. They are actually still magnificent. I mean, I was going to a store in Cleveland, Ohio, and you have to laugh as you approach this vast store. It has writers’ names engraved all around the store. On the front, it had Thoreau and Walden, which made sense to me; Orwell, which was an interesting choice; and Molière. There was a time when Barnes & Noble actually celebrated Molière as one of the great literary names that it wanted to put before its customers. So there was also an aspiration to it, which is quite remarkable. It’s that aspirational side that I think is so valuable.

And they’re very inclusive spaces. There’s nothing intimidating about them; their very size welcomes everybody into them. That part within a community, which allows kids falling out of school at 3:30PM or 4PM to just pour into a Barnes & Noble with no obligation to buy anything, to chat away, look at books, have fun, maybe buy a cup of coffee, and then be off, is that bit of the democratic side of Barnes & Noble, which is so powerful.

Well, for one, I want to be very clear that I think Molière plays in Middle America — I grew up in Middle America — because Molly Ringwald does a name check in the movie The Breakfast Club. I think that spiked sales for decades, since the ‘80s. I think that’s where that comes from. I don’t have data, but there’s just a part of me that says that is why that’s on the door there.

So this is a long history that I want to talk about. Barnes & Noble is 100 years old. It occupied a dominant place in American culture for a minute, and it occupied a place in the American economy alongside Walmart as the thing that would threaten local economies for a minute as well. Now you’re saying, this thing kind of is the local economy, but the changes you have made are to make it even more local, to make it smaller, and to make it more representative in service to the communities that these stores are located in. That’s a lot of change. As you came in as the new CEO of a failing business, what did you see and what were the first set of changes that you made?

Well, what I saw was this large central structure, which is necessary if you want to run the stores in a very disciplined manner, which was also incidentally hugely expensive. I also saw these great, amazing bookstores with good people running them. Booksellers are the same tribe of people wherever you meet them. They’re the same in the UK, they’re the same in Japan, they’re the same everywhere. You know when you’re with booksellers, they are all more introverted, more cerebral people. 

I knew that if we could simply strip away that central instruction and that central machine, we were first going to save an awful lot of money, because we wouldn’t need those people and we wouldn’t need the very expensive Manhattan offices in which they were residing. Second, I thought that if we did appeal directly to the booksellers, that some of them would start running much better bookstores. Most of them, it probably wouldn’t make too much difference to, and then some would get worse. 

We could then start on that exercise of going around the ones that are doing less well and partnering them up with the ones that are doing really good stuff. We would start a virtuous cycle in which we steadily improved the stores. 

I got on with it straight away. I joined in September 2019, and by the end of the year, we had halved our central workforce; exited our two very large, very expensive New York offices; and moved into a couple of empty floors above one of our stores in Manhattan. We managed, thank goodness, to do that just before COVID-19 came along, because otherwise our landlords would not have taken back those very, very expensive offices and we would have been in much worse shape when a brutal time erupted on us. 

Let me retell that story in a slightly more rude way. A private equity company buys a storied national retail chain. It installs a CEO from a different country who comes in and says, “I know what to do.” He fires half of the executive workforce, and starts shutting down offices and thinking about closing down stores or ranking stores based on their regional performance. That’s a private equity story. You’ve come in, you’re slashing costs, you’re going to try to increase revenues, and you’ve set up performance metrics to get rolled out store by store. 

That’s not you. I can tell that’s not what you were thinking from an abstract level, right? 

I mean, that’s the story here. How did you preserve the culture or keep people calm through that set of changes?

I think we explained exactly what we were doing and the rationale for it. We’re saying to the booksellers and the bookstore managers, “Look, you really have to take accountability and ownership of your stores. We are going to give you the tools to actually prove that you are good booksellers. We’re not going to tell you what books you’re going to have or what books to reorder. You have to make those decisions yourselves. You have to decide how you display them. You’re no longer going to have planograms telling you exactly where to put all of your books in the front. You have to decide. Scratch your heads, think about it, and put them as you judge best.”

Not unreasonably, a lot of the intelligent ones came back and said, “That’s really difficult.” The less intelligent ones said, “Great. Let’s get on with it.” Because it’s really difficult. From a head office perspective, there’s nothing personal when you have one of these sort of great huge ructions. It’s not saying, “No, you’re useless. Off you go. I think you’re a bad bookseller, bad buyer, bad merchant, or a bad whatever.”

We’re saying, “Look guys, we’re simply going to stop doing a very significant amount of what we used to do. For those of you who are in service to the stores — so the IT people, the tech side, and the rest — nothing changes in your world. In fact, we’re probably going to invest in more of you. But those of you who are presently dictating to the stores what kind of things they’re going to do, you no longer have a job. Nothing personal.” 

It was a good employment market then, so most of them went straight off to other jobs and didn’t feel that it was any personal judgment upon themselves. Therefore, for everybody who was left, it probably felt relatively positive, as far as these quite traumatic things can be.

I always joke that Decoder at its heart is a podcast about org charts. You’re describing a massive org chart change, right? What tools does a CEO have to solve problems? My theory is that the first one is the org chart. You come into this huge problem, and you upend and decentralize your org chart. How is the company structured now?

It is very decentralized. We do most of our heavy lifting from a merchant perspective out in the stores. We are continuing to necessarily invest in the things that support the stores, so we probably have more infrastructure centrally to do that — the store development teams, the construction guys who do all of the refurbishments and new store build-outs, and a lot of investment in IT and logistics. Otherwise, we’re very light touch. All of our book buying is done by essentially one person with two assistants, and that was a team probably of 40 or 50 before. That’s all we need to do centrally. The rest is all done out in the stores.

How many direct reports do you have now?

Ooh, I’m very un-house-trained as a corporate person. I had my own business for a very long time, and I still run this one in the same way that I do my own. I have a lot of people who I speak to a lot, but fairly informally. I think it’s all about conversation and constant engagement. Everybody’s overlapping. I don’t see our org chart as some sort of hierarchical structure. I think it’s something much more like a solar system.

Are you the sun?

No, I’m just one of these orbiting circles that sort of overlaps with others. You do need somebody in the middle. If I play any role, it is to constantly articulate that this is what we are doing to banish hierarchy, because I think hierarchy is the thing that constantly undermines us. With hierarchy, there comes a lot of ego and a lot of desire either to take the praise and benefit for whatever is being done and to offload the cause for anything that’s going wrong, rather than collectively dealing with things. I think that it’s changing that ethos. 

We’ve also changed from being a very masculine company to one that’s probably much more feminine now. I don’t know if that’s partly in reflection of that flattening of the organizational structure.

Wait, unpack that for me. What made the company masculine, and what do you think makes it feminine now?

I think traditional retail businesses tend to be quite masculine, and very hierarchical structures are often dominated by men, particularly men of a certain age. Obviously, as a late-50-year-old male, this is not a greenhouse I can really start slinging rocks around in. When you flatten organizations and have a lot more young people working in a much more collaborative way, you tend to end up with a structure which is very equal in terms of the balance and ends up more cooperative for that. Which is to say, if you were predominantly masculine, that is to feminize it.

Has that reflected in the demographics of the workforce as well? Are you more feminine overall? Do you employ more women?

I think bookselling always has, but we’ve always had this very peculiar dichotomy of having a very masculine leadership at the same time as having, initially, a very equal workforce — and actually one that probably tilts towards the feminine.

So do you track that now? Is it more equal now?

It’s certainly more equal. We do track it. We track gender pay and obviously diversity as well, which is something that has also bedeviled bookselling and publishing generally. We have always typically been very white middle class. There’s something there around the attractiveness of bookselling as a career and how that’s very accepted in the traditionally more white middle-class educated parts of society. And more aspirational parts of society look at the industry, particularly the poor pay, as something that they don’t really want a part of. Again, it’s how we broaden ourselves out of an educated elite, which is where we’ve tended to concentrate.

This was the criticism of Barnes & Noble at its peak — that it was imposing a white middle-class cultural hegemony on the United States, because it would drop in, it would kill your local booksellers, and then whatever books it wanted would become the books. Is that something you’re actively trying to undo? Talking to you now, yes, the private equity company wants to make a lot of money — and I still want to talk about that part — but it seems like a big part of your vision here is to undo the centralized cultural relevance of Barnes & Noble.

I think the centralized part, yes, not the cultural relevance. I think we have a huge part to play in positively promoting education, reading, and engagement with cultural issues, but I think we should always reflect the communities where we are. When you decentralize that to the individual stores, you get something much healthier than when it was directed from New York City, that’s for sure.

This brings me into the classic Decoder question. We say Decoder is a show about this question — it’s really a show about org charts, but you can’t sell that quite as well. But this is the classic question: how do you make decisions? What’s your framework? You have made a lot of decisions in taking over Barnes & Noble, and you’ve made a lot of decisions about where the cultural authority of the company that sells books should be. How do you make those decisions?

You always make sure that it’s going to work in the medium and long term. Nothing is done for short-term expediency. You should, I think, always test it for, “Is this what we want for us in the medium and long term?” I always say, “Is it right for my booksellers?” Lots of decisions cannot be. I have a great advantage of having spent 25 odd years as a shop floor bookseller, so I do understand what it’s like to work in a bookstore. If you make it right for the booksellers, then that will almost certainly be right for the customers, because happy booksellers make for happy engagements with customers. 

Also, is it fair? Everything you do should be fair. As an executive, you are often making decisions about how you’re paying people, how you’re promoting people, how you’re changing people’s jobs, and the like. Are you happy to stick that on the notice board by the coffee machine for everybody to read and think, “Yeah, that’s fair enough”?

One big decision you made in taking over both Waterstones and now Barnes & Noble was to get rid of what were called the publisher co-op fees. The publishers actually had quite a stake in the success of the bookstores, but they took a bunch of control in return. Explain what that was specifically so the audience knows, and why you chose to undo it.

Well, we had things called co-op and promo fees, which were amounts of money paid for the placement of books. It would either be that you would take a certain number of books, in which case dollars were attached to that, and then in particular, that they would be placed in particular parts of the store. That was extremely attractive to publishers who take enormous risks with books. They pay these upfront amounts when they buy books, and they need to be sure they’re going to sell them if they want to mitigate that risk.

One of the key ways to mitigate the risk is to pay the chain bookstore to put it in the front of the store or even on the bestseller lists. We would charge an amount of money to be number one, two, three, four, or five — obviously in descending order — on the front table. The front of the front table is a different amount of money to the back of the front table and so on. A significant part of the store was sold to publishers for a very, very large amount of money.

The trouble with that is that it obviously means you have the same bookstores everywhere. By definition, you’re taking away the curation of the stores from the booksellers. It is being agreed in exchange for money in offices in New York City. We had to end that, and end it completely, as we did. We literally hadn’t taken a cent at either Waterstones or Barnes & Noble from the day I joined. That completely changes the nature of bookselling and allowed us to tell our bookstores, “You’re free now. You do whatever you like.”

For publishers, some of it was great, because they no longer had to pay and the good book still gets put everywhere up front. Prince Harry’s is the book of the moment. There isn’t a single Waterstones or Barnes & Noble you walk into that won’t have it front and center, and it didn’t cost them a dime. It’s also allowed us to bring forward the books that each individual store likes, so we have much more unpredictability around what becomes bestsellers.

What you’re describing is something that has a much more local feel to it, where the local bookstores get to look at their communities, look at who their customers are, and adjust the store to them. Then there’s a basic marketing level here, where you have to go tell the local community that this bookstore reflects their interest. You have to get them to show up and walk in the door. That’s all happening in parallel to things like the Prince Harry book, which are international, unifying phenomena. That’s happening in parallel to things like #BookTok, which is people on TikTok talking about books and flattening the discourse around the country.

Do you see that tension? Do you have a centralized buyer that’s saying, “All right, this is blowing up on TikTok, all of the stores are going to need to have this book,” and then making that decision? Or is that still happening at the local level?

No, it’s happening at the local level. We like looking at #BookTok and TikTok and saying, “Ooh, it’s amazing. Madeline Miller is becoming massive, and Song of Achilles is a huge success.” Obviously for a narrative, that’s what we need to do. But the actual way that #BookTok works is at a local level. It’s innumerable numbers of #BookTok communities that are swirling around promoting different books all the time in different parts of the country.

There’s roughly 600 stores, so 600 different communities, that are interacting with #BookTok in their own special way. Occasionally that will sort of come across and a few books will become massive sellers, but that’s the froth. What’s really going on underneath is lots and lots of kids just getting excited about books themselves. It’s moving very fast because we employ quite a lot of those kids ourselves. Those are the ones having the Saturday jobs or the after-school jobs in the stores, generally. We’re very alert to it. 

Because we just leave them to get on with it, I think it has driven a massive part of our success. We were very lucky to have the good fortune of having liberated the stores at precisely the moment when it was most powerful for them to be able to adapt quickly and seamlessly to whatever was going on in their local community. It’s worked brilliantly for us.

The background of this entire conversation has been Amazon and the necessary scale of a company like Barnes & Noble to compete with Amazon’s dominance. Amazon shows up to a publisher and says, “We’re going to order all of the books you can print.” Amazon is very pay-to-play and they operate one of the largest advertising marketplaces in the entire industry. “And we’ll make sure that you sell a lot of them.” They have the Kindle system; they can make sure that the books are promoted on the Kindles when the Kindles are turned off. They just have a huge amount of efficiency that publishers can go to and participate in.

When we’re describing a decentralized Barnes & Noble, it seems like you need to have the scale to have the publisher conversations and say, “We operate this many hundred stores, we move this many books, we have a construction team that goes around refurbishing the stores.” There’s all these things where the scale provides you with the operating leverage, the cost efficiency, all the things. Where’s the trade-off? Where do you say, “Okay, here’s a place where efficiency actually costs us in terms of quality experience”?

Well, I would slightly challenge that Amazon is a very effective bookseller. I think it’s a hugely efficient fulfiller of whatever you want to buy, but you have to know what you want to buy. They are extremely efficient about putting the brand-name authors and the brand-name new books in front of customers — and by brand-name, I mean from the really established authors — but they are not effective at discovery. 

They are really terrible at putting a book in front of you that you never thought you’d want to read, that you have no reason to read and no tether to at all. Whereas a bookstore is precisely the place that does that. You pick up the book that you never thought you would want to read, might read, or could even think about reading, by an author you’ve never even heard of until that moment. When a bookseller says, “Look at that,” “Read that when you next come in,” or “I love that,” or whatever it is, all those small, little recommendations are personal and able to attach themselves to books that otherwise have nothing going for them at all.

Amazon is terrible at discovery, and I think publishers are slowly realizing that if you want to move beyond the brand names of the past, you’re going to need to find a way to promote them. I would point to the bestseller charts when I joined Barnes & Noble, and every single book on that is something you’ve heard of. It’s James Patterson times three or four, it’s Mike Conley, it’s John Grisham, and on and on. There are people on that who died many, many decades ago and they’re under a trademark. There is very little new coming through. That’s what booksellers do.

Now, Barnes & Noble is becoming very powerful in that. The reason we do it is because, although we don’t do anything centrally, we are nonetheless a single company, and there’s a lot of chat between booksellers. There’s lots of calls of, “We’ve read this. We’ve been successful with this. Has anybody looked at this?” That creates a sudden momentum around books which I think otherwise would’ve been quite out of sight for, really, the industry as a whole. Then if Barnes & Noble does that, Amazon sells a ton of them at that point, because then Kindle gets going, as you say, Audible gets going. Then the big box guys, the Walmarts and the Costcos, start ordering the books. But these are of new authors.

Bonnie Garmus, who was our book of the year, voted for by booksellers, was an absolutely massive bestseller for Barnes & Noble this year, but our market share stayed much where it is — 30-ish percent of the market — because everybody else sold it as well. She’s an author that, I think, without the efforts of the Barnes & Noble booksellers, would not have had this astonishing success. It’s inconceivable that she would’ve done it.

There is a bit of tension there. It might be a healthy one, it might be a constructive one. You’re saying, “Okay, we employ all the kids on Saturday mornings and after school. They’re on #BookTok, which has become a sensational discovery method for book communities. We’re feeding it with our own employees, and we’re receiving the early part of the return of the discovery. There’s internal chatter inside of our company to accelerate the momentum of sales. Then the big-box retailers will capture the bulk of the market share.” That seems like a tension. It might be exactly where you want to sit, but that seems like a tension you could point at and say, “We should get more of that.”

Yeah, though, personally, I don’t see it that way. I think the more reading there is going on in the community, the better it is ultimately for us. By the way, much as I love bookstores and booksellers, we sit in the second rung beneath public libraries and public librarians. They’re the true heroes of our industry, and they don’t sell a single book. They’re sitting in there doling them out for free.

What we do is encourage this engagement with books. It does mean there are more books being sold in Walmart than there would otherwise be, but it also equally means there are more books on people’s bookshelves in homes and there are more homes where book ownership is an established norm. With that, ultimately, will come a more prosperous time for us as booksellers. 

We should never resent what the other guy is doing. I, by the way, have utmost respect for Amazon. I think they do a completely brilliant job and they are particularly good at democratizing books. If you want a book and you don’t have access to a bookstore, Amazon will get it to you. They’ve driven down the price of books, they’ve made it really competitive, and they’ve forced bookstores out of their complacency to become really good places that justify their existence. So I think all of that is very positive.

There’s a split there with Amazon, right? Amazon is this centralized, extremely efficient distribution funnel. As you said, they’re not good at anything other than demand- or intent-based purchasing. If you know what you want, Amazon will get it to you, oftentimes by the next day. Then there’s what you’re talking about — the retail endpoint, the experience of being in a bookstore, the people chatting, the workers telling you what to read, the recommendations, and the curated table that is not pay-for-play. If you were to start Barnes & Noble over again, would you need the retail endpoints? Or would you build an efficient distribution chain that allows not only your retail endpoints to exist, but also the independent bookshops that plug into it?

You need physical bookshops to have proper discovery. Physical bookshops are the things that I love and they are my vocational commitment. So if I understood the question right, are they necessary?

Well, are they necessary for Barnes & Noble? Now, it seems like the infrastructure of the company is at scale, but really, the stores are acting much more like independent bookshops.

Yes. It is possible that there could’ve been a world in which there would’ve been far more independent booksellers and properly run, properly invested independents that could’ve given something close to the coverage that Barnes & Noble now gives. But the reality is that one of the things you need is scale. 

I know this as an independent bookseller: it is very, very difficult to expand as an independent. The capital that’s required to open up a bookstore, the huge levels of investment in stock as well as the premises, and the inherent lack of profitability in our industry has always been the same in every single country in the world. The vast bulk of the profits of the business are captured by the manufacturer, the publisher, and the author, and the retailer is operating on these very thin margins.

It’s very difficult for independents to do anything more than be what the vast majority of independents are, which is a single store. The number of independents with more than one store is extremely small, and the number of independents who are growing is minuscule. This is why you need the big guy in there, otherwise, you’re just not going to have enough bookstores. 

Now, why is it that the retailer holds the stick in almost every other sector, but it’s the manufacturer which holds the stick in the world of books? It’s an interesting one. I think it’s down to the peculiar nature of books, where the creativity and the author actually have all of the power. Whereas, if you’re selling shoes or running a stationary-selling company, you need the retailer. You can go and say, “Well, if I’m not going to sell your eraser, I’m going to sell somebody else’s,” or their pencil sharpener or whatever it is. In books, it lies with the author, and publishers ultimately control the author.

Do you spend time talking to TikTok, Tumblr, wherever else the kids are discovering books, and saying, “What are you seeing? Can we get ahead? We should share data”?

No, that would be completely counter to my ethos, which is to encourage the stores to be doing that and encouraging the stores to be brave and just get on with things. Of course we’ll make mistakes, in which case we’ll apologize if they’re egregious. It’s not just TikTok, it’s the kids who do that side of it, but we do all the other social media platforms. That covers the spectrum of society. 

That is the extraordinary thing about a bookstore. It’s almost unique — and I would actually claim is unique amongst retailers — that we appeal to every single age. Kids love us. A baby in a stroller loves being in a bookstore, all the way to the oldest citizen. Everybody has a place and a different way of engaging with a bookstore. That translates into the various social media platforms as well, but we have to do it authentically and we have to do it locally. That means you don’t actually try and do any of that centrally. We do a very nice podcast centrally with the big authors, but that’s it.

You mentioned libraries and librarians, you mentioned getting in trouble, and you mentioned social media. This is a very odd time in America as it relates to the First Amendment. There’s a lot of politicians out there who are yelling about free speech and then turning around and banning books in their states. There are contentious school board meetings about what should be in the school libraries and school districts are banning books at a rate that I personally had thought was all but extinct. It feels very repressive again in that way. 

You’ve now decentralized the control to a bunch of kids in your local bookstores. Are they facing the same pressures to remove books? Are they making mistakes that blow back onto you, the CEO of the company? Is that something that you want them to do?

I think it does blow back. Generally, most booksellers are sensible people and passionately believe in freedoms of speech and all of the positive things around that. We stand fair and square alongside librarians. We would always try and champion the widest diversity of opinions.

That is not to say we should ban the other side. We are a place that should carry everything, but we do seek to exclude from our stores things that are beyond an acceptable level. If it’s racist, antisemitic, pedophilic, or absolutely egregious in all of these different ways, then those books have no part in our bookstore and we don’t have them. It is a delicate balance sometimes as to where that line should be drawn. 

I suppose at the end of the day, ultimately, this is something that I and my colleagues are held to account for. We try not to make mistakes. Occasionally, we do, but I think bookstores generally are places which promote diversity of thought and proper and good values.

Do you feel the pressure from the culture war?

My email inbox feels the pressure of the culture wars, for sure, and they range across political diversity, gender identity, and all of the other issues. I think our job is to navigate those as sensibly and professionally as we possibly can. But yes, it is absolutely part of our world.

You feel it as a CEO. You obviously have a strong idealistic belief in what a bookstore should do, but you’ve decentralized control of the inventory to the shop managers. Say a shop manager in Florida says, “You know what? We are just not doing Marx and Engels in the store. Das Kapital is not going to get sold in the store. We’re not going to support communism.” Do you support that? Is that a decision that you leave up to them?

It is something we leave up to them, but that doesn’t mean that we can’t have discussions over it, and we do have discussions constantly. I think that should be a healthy and respectful debate. If somebody was to say, “I’m not going to sell J.K. Rowling anymore because I disapprove of her views,” we would have a sensible and grown-up debate as to whether that’s a reasonable thing to do. I think we have so far navigated those in an intelligent and grown-up way.

I picked Marx and Engels because it’s the silliest one. A good bookstore should have all of those authors on the shelf, it’s what they do. You walked right into J.K. Rowling. This is the one that I think is the hottest button. It is even more treacherous to navigate in the UK. What is your stance there? Is it, “We’re just going to let the bookstore owners do what they want,” or is it, “This is horrible for our business if we don’t sell Harry Potter”?

It’s not horrible for our business. I think that authors will have their own personal opinions and that should not cause us to boycott their books in any way. It is important that we offer the books from the right of the political spectrum, from the left of the political spectrum, but equally on both sides of the gender debates, ethnic debates, Black Lives Matter…

But Harry Potter is not on either side of that debate, right? The author now is very much… 

Well, the author is entitled to her own opinion, and she has an opinion which she articulates. I do not believe that we should ever be boycotting individuals’ books within our stores because of our own personal perceptions of their opinions, be they on the right or the left or whichever side of whichever debate it is that’s going on. It is extremely important that booksellers hold themselves true to that. 

There is more pressure on a national bookseller, and one with the size of stores that we have, than a single indie bookseller. Obviously, if you just have one store and you are sitting wherever you are, you can do whatever you like. But equally, even in that case, you will be held to account by your customers. I think there is a generally accepted view that booksellers shouldn’t be campaigning and denying the voice to one side or other of any debate that’s going on. 

As you say, this is really difficult terrain for us. When you are decentralized, that requires an awful lot of conversation, because you will get a particular store or individuals within a store with very passionate views. Our job then centrally is to discuss those and talk it through. As with most things, diplomacy, talking, thought, and some level of kindness and understanding on both sides will generally get to a decent outcome.

Just to make this much more specific, you constructed a system in which lots of young people get to manage the stores across the country. One of your 800 stores says, “You know what? We’ve talked about it. We are just not comfortable with whatever J.K. Rowling said on Twitter this week, so we’re pulling the Harry Potter books.” That’s a decision they would have to tell you about, and then you would have some conversation. Is there a world in which the Harry Potter books get pulled from the shelves? Or is it, “We’re going to kindly bring you back to reality”?

We haven’t got to a point where something that extreme has felt reasonable by anybody working for us. We’re extremely fortunate that booksellers are not extreme people. I mean, we are very thoughtful. Otherwise, why on earth would you be in bookselling? 

Do I think that all of these conversations and debates are easy? No. They are not at all easy, and as I say, not in this particular case, but in others, you can find yourself with quite a difficult judgment as to which side of the line you fall. Again, I think that has to be done through debate rather than anything that’s dictated centrally. The only things that we do dictate centrally is to remove the really egregious, and that I have no difficulty in doing at all. If there’s something utterly unacceptable, then it shouldn’t be in our stores.

The line of what is acceptable comes back to my point about America and the First Amendment at this moment. The government’s speech regulations are on the rise in this country for some unfathomable reason. Mostly it’s, “We’re going to change lines of what’s acceptable.” If I had to point that fervor at something and say, “This is where it’s reached the hottest pitch,” it’s YA literature, right? It’s targeted towards a younger audience, and obviously that younger audience is going through a number of changes in their lives. There’s often frank depictions of sexuality in these books, and parents find them and they lose their minds. 

That’s possibly a place for schools and school boards to be involved. That’s possibly a place for libraries to be involved. That is where bookstores and #BookTok and social media is at its highest. Is that a thing that you think about? “Okay, we need to make sure that we’re constructively part of this debate and we have some ideals here,” or are there lines for YA for you?

We have to be constructive and part of the debate, but I believe that we should generally stock as broad a range of books as we can. I haven’t myself come across anything within that sphere which has caused me to say, “No, this is unacceptable.” Something like Holocaust denial, we would not have that in our stores. But if the local community is objecting to a particular book, I’ll be saying, “Well, there’s nothing obliging you to either read or buy this book.” As long as we’re curating it sensibly, not presenting it to be one thing or another, and acting responsibly within our stores, I think we can stand by what is being published. 

Remember, there is a gatekeeper before us, which is the publisher. Although one doesn’t see that debate, the reality is that we sell books that are being published by major and reputable publishers. If there is a book that is self-published, I would be regarding that with dramatically more scrutiny than I would something that comes from Scholastic, for example. Generally, we would hold that those need to be stocked and made available across the country, but they just need to be curated sensitively and not represented to be something that they aren’t.

You’re doing wonderfully here. You’ve opened the door to my next completely illogical tangent for this conversation. You talk about self-publishing. There’s a lot of self-publishing on Amazon. There’s a lot of self-publishing in the world, especially in digital. The internet is basically a self-publishing machine with a handful of gatekeepers and curators that we think of as platforms. 

Right now, in my world in journalism, all we can talk about is ChatGPT and how generative AI models are going to write books. You can go on TikTok and young people will tell you that there’s 100 ways to make money using ChatGPT, one of which is to generate small novels and put them on Amazon against popular search terms and just collect pennies because you’ve made so many books. I don’t know if this is actually happening, if people are making real money, but it’s a thing people are talking about. Are you worried about that? Are you worried about generative AI, and I don’t know, the next author who’s burnt out just letting ChatGPT do the work?

Well, I suppose that sort of takes us back to what the purpose of a bookstore is. A bookstore is somewhere that curates. I mean, even the largest of the Barnes & Nobles has a fraction of the books that are published from reputable publishers, let alone from all of the nonsense of self-publishing. Not all self-publishing is nonsense, by the way, but a dramatic amount of it is. These AI, bot-driven books will be that. 

If you want to indulge in and waste your time reading those books, then by all means hop onto Amazon and the world is your oyster. That’s not what we do. We curate, and our job is to ideally marry the customer with a really good next book. If we can make that a book that they wouldn’t otherwise have thought of, so much the better.

Do you have a hard rule against AI-generated books? If the next Prince Harry book uses ChatGPT instead of a ghostwriter, would you stock that book?

No, I mean, not as a principal any more than if there’s an audiobook that’s being read by a bot made to sound like George Clooney. I mean, that’s sort of whatever it is. 

We would nonetheless want to judge books. You have celebrity books, you have humor books, you have this book and that book, but the core of what we sell is narrative fiction and narrative nonfiction, to which we ascribe a value judgment. It’s either well-written or it’s not. It’s well-published or it’s not. It’s well-edited or it’s not. As a physical product, it’s being beautifully designed and typeset, the cover art, and all the rest. We judge all of those things and put only the best in front of our customers. That is the job of a bookseller.

You bring up the fact that it’s a physical object. You still run the Nook, which is an e-reader, an e-book store, you do have a bit of an audiobook business. Those are much more central and much more internet-driven and platform-driven. Are they growing? Are they a focus for you, or is it just that customers expect that extension from a bookseller, so you have them?

I think customers expect them and so we have them. I think we do them perfectly well. It’s just a different form of reading. Again, reading’s good. Ultimately, if you read on your Nook or your Kindle, you’re probably going to end up buying more books. There may be very good reasons why you want to read on those devices. You’ve run out of space in your bookstore, you need the font, you need the backlighting, whatever it is. There are reasons. 

We are in the business of encouraging reading and engagement with books and the thoughts that are attached to them. That’s why we have audio and that’s why we have Nook. They’re an adjunct and a support to what is the core of our proposition, which is the physical bookstore.

You can’t decentralize something like the Nook, right? You need to have a central product team and a hardware design team and all of that. Does that operate independently of what’s happening in the bookstores? Do you manage that directly? How does that work?

Yeah, that’s run entirely independently. In fact, since I’ve joined, we’ve invested in new devices and have a couple more that are coming down the track. All I’ve said is, “If we do anything, let’s do it really well.” Therefore, we’ve just launched the audio subscription business, and as I said, invested in a whole new family of Nooks. If you are big enough to be able to make those investments, then just do it really well. And if it encourages sort of a broader engagement with Barnes & Noble and with reading, then that’s a very positive thing.

We’re talking a lot about a company that is a 100-year-old company. I think we’ve talked a lot about the new expectation from employees to be involved in the management of the company and to have a voice in the company. It seems like you are structured well to do that, in the way you run the shops and have the employees on social media. Is that a specific kind of change that you think is lasting? 

I’m just thinking about it in the context of 100 years ago and your comment of a much more top-down management. If you’d gone back 100 years ago and told the CEO of Barnes & Noble how it would work now, they might not believe you. Do you think that this is a persistent change?

I think it’s hopefully a very persistent change. I certainly think it gives one strengths that would otherwise not exist. What you really have to do is lock in a culture which holds these values central to it and everything that pivots around those values. I think that is what booksellers want. If you ensure that your central direction doesn’t become corrupted in any way and holds to the same values, then yes, you have something extremely powerful and enduring. 

I also think that bookstores are almost uniquely strong within the retail spectrum because they appeal to such a broad diversity of communities, as I said, every single age group. They are social spaces and therefore they’re effectively inured and protected from all of the fashion trends which so afflict other people. For a well-run bookstore, the future is extremely bright. 

In 100 years time, people are going to be reading books. We’ve seen off Kindle, we’ll see off audio, and we’ll see off all the other things. Not because those things are bad, but because actually all they do is encourage more engagement with real books and therefore the sale of more real books. What we need to make sure of is that nothing corrupts our world, that there isn’t a monopolistic lurch towards Amazon or some other thing where somebody dominates the world of books and doesn’t respect the physical book.

You said that your pitch to Elliott was, “You’ll make a lot of money.”Elliott is a private equity company. They are going to want to exit soon. What is the end game for Elliott Management in Barnes & Noble?

Well, I’m sure they will sell it for the absolute maximum they can. We were a public company and would hope that we would return to becoming a public company again. We have a really solid and robust business that’s growing. 

One of the real excitements here is actually just how few bookstores there are in the United States and how many communities used to have bookstores and now no longer do. Booksellers effectively folded in the face of Amazon and thought the game was up. They thought Amazon was just throwing them online, and then they thought Nook was the end of it. It simply wasn’t true. There was a collapse of morale. Now that we got our confidence back, we can grow again, and that’s extremely exciting.

Well, James, that’s an amazing place to end it. Thank you so much for being on Decoder.

Pleasure. Thank you very much.