Barnes and Noble CEO "Books Will Outlive Social Media" - James Daunt

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1:07James Daunt:R.J. freaking Decker as I live and breathe. He's a private eye. It's not a standard murder. It's someone bigger. And a public mess.

1:15Anthony Scaramucci:Trying to get sent back to prison today?

1:17James Daunt:You go to prison one time and suddenly it's all the jokes. R.J. Decker, series premiere, Tuesdays on ABC and stream on Hulu. It's a phenomenal piece of technology, James. Everything has changed. Our phones have changed, our computer. The way we look at the TV, the book is a 500-year-old piece of technology. You think in 500 years it'll be with us, James?

1:40Anthony Scaramucci:I think so, and I think it's astonishing simply how extraordinarily durable it is and effective it is. And as you say, newspapers, we don't read them anymore. It's on your iPad, it's on your phone. Music, the format changes all the time. Not with books. And I think when publishers also concentrate on the physical attributes of a book as well, they are lovely things and treasures forever.

2:03James Daunt:Welcome to Open Book. And joining me today is James Daunt. He's the chief executive officer at Barnes & Noble, which is an iconic American bookseller. He's also CEO of a stationary retailer, Paper Source, and of course, Waterstones. So the largest retail bookseller in the United Kingdom. And I have to tell you, the one on Piccadilly is probably my favorite, but I've been to several, James. And you are also the founder of the much-loved independent chain, Gaunt Books. So great to have you on. By the way, sir, this is our 200th episode. So you are coming on, James, right at our bicentennial, I guess you could call it.

2:46James Daunt:But you've had this unbelievable journey. So I want to start there. Take us back. what is your earliest relationship with books for me in the first grade i won the book contest for the there were probably 150 kids in my first grade class and i i read the most books in a three-month period of times i got me bugged up what about you probably about the same age um

3:10Anthony Scaramucci:but but also i'm a lot older than you and i come from a world in which there weren't actually many bookstores and certainly went in london and uh middle class people of which i was definitely one or born into a family of one and we went to the library we went down to the public library and we went once a week and we collected a little stack of books and steadily that stack got a bit taller and bigger and lugged them home and read them and took them back the following week and

3:36James Daunt:swapped them out i love it your uh your your life in books though it was at a turning point for books if you don't mind me saying so, because I feel like 2010 was a big moment. The iPad came in and it sort of decentralized media. It made it less interesting, frankly, to take a book like this, put it in your hand and read it. We were sort of fixated on social media and things like that. And so the bookstores were doing this, sir. Okay. And you saw something. And first of all, I want to thank you for revitalizing Barnes & Noble because I have one down the block from me here in Manhasset, which I'm in every single week.

4:22James Daunt:And I thought that that place was going to be touch and go a few years ago. Borders Bookstore, we both remember that, James, went out of business. And so you saw something in the book selling model, the hard book selling model at a brick and mortar shop. What was that? What did you see that you were able to cause this great revitalization in the UK and the United States?

4:47Anthony Scaramucci:Well, certainly my own experience of bookselling and I was, you know, I had my set up my own bookstore way back in 1990. So I had been doing it for a very long time. Amazon had come along and I didn't notice. I mean, I was obviously aware of them. I saw quite a lot of change in my customers' behavior, but most of that was wholly positive for me. I no longer had to order in the technical books and the manuals and I could change my stock to make it actually much more interesting because Amazon was fulfilling all of those orders. But my sales kept on going up. So that's why I said I didn't really notice it.

5:24Anthony Scaramucci:I only noticed it as a positive thing. But I also could see the chains who were overextended to a degree and then they started doing completely counter endless initiatives which were making their businesses ever less effective and their bookstores ever less enjoyable, largely because they were cutting costs. They lost trust in what they were meant to be doing, which was presenting really good and enjoyable bookstores. And that cycle of cost cutting and reduction in expertise and reduction in enjoyment of their stores was leading them to, you know, one after another to failure. And then ultimately, you know, the only person left in the United Kingdom was Waterstones and they were getting bankrupt.

6:15James Daunt:So, so James, I think what I'm hearing from you is they got scared. They started trying things that caused a decline in customer attention, frankly, and store traffic. And your idea was get back to your brass tacks, get back to your roots and do the things that got you to the dance in the first place. But that took guts, weirdly, didn't it? I mean, most people were going in a different direction. So what were you thinking at the time? Give us some of the strategy. you?

6:48Anthony Scaramucci:Well, Waterston's, which was the Barnes & Noble equivalents in the United Kingdom, was in big trouble. They were literally going bankrupt. They were about to be closed. And that suddenly seemed a real shame. They had these great big stores everywhere in the nation. And, you know, obviously if they went, I as an independent bookseller was going to have an easier time of it. I could open up a few more stores, but I certainly wasn't going to open up 300 stores. And lots and lots of places that had had nice, good bookshops would lose them. And that seemed regrettable, particularly as I thought it was totally unnecessary that they were doing the things that they had done to make their shops so unattractive and unappealing.

7:28Anthony Scaramucci:And we just needed to reverse that and set out to do it and very quickly found that our customers were enjoying us again and coming back into our stores.

7:36James Daunt:Okay, so I'm an avid customer, so I'm going to say some things to you and I want you to react to it. I feel like you changed the lighting in the stores. You changed the presentation. You opened a store in Bridgehampton for Barnes & Noble in a very fashionable shopping area out there. And when I walk into that Barnes & Noble, it draws you in. The older stores almost had fluorescent lighting in them. You also changed the wood on the bookshelves even.

8:10Anthony Scaramucci:Our job is to make physically appealing places. So they need to have nice, you know, they need to be clean and they have clean floors. And of course, it's much, much better if you like them properly and you generally make them attractive. Again, extremely important is then if you present everything that you're selling attractively, that's important. But most of all, it's that we have happy teams of booksellers in the stores engaging with their customers and applying proper and curated intelligence to how they're presenting their stores. And it's that last bit that I think we've really cracked.

8:45Anthony Scaramucci:It's helpful that we've made a lot of them look a lot nicer, but we've also not changed in many stores. And we're doing very, very well in those because the booksellers are doing a better job.

8:54James Daunt:It's an interesting thing in our time, if you don't mind me saying so, because our time is about algorithms. Our time is about instant gratification of touching something in a one click, if you will. But I feel people go to your stores. We'll talk about the Dawn bookstores in a second, where somebody gave me a gift certificate to your store. uh i was in london giving a speech and the woman said i hear you like books here's a gift certificate i went to one of your stores and you know we just loved it i mean it's just magnificent presentation in your store but but it's against the uh the grain is that is it the pen is the pendulum swinging back james i guess that's my real question is that uh even with my kids you know they're off social media now i feel like their personalities are coming back.

9:45James Daunt:Deirdre and I were like, that's it. Give me the iPad. I feel like I've gotten them from the zombie zone. And I'm just wondering if Waterstones and Daunt books and Barnes and Noble is a return to reality.

10:00Anthony Scaramucci:Yeah, I take a much more positive view. And I think that, yes, of course, people fall into their iPad and fall into their social media and fall into the rest. But we've always been doing some version of that. When I was a kid, I was accused of having square eyes because I watch TV for half an hour a day. We've always had these anxieties about our kids, but actually the reality is that people read with different levels of enthusiasm at different ages, and they come and it goes. But generally speaking, people are reading all the time and reading more. Whether they read in a bookstore depends entirely on the friendliness and availability of that bookstore.

10:37Anthony Scaramucci:And we've found dramatic increases in reading in the United States, even at the same time as everybody says it's all going to part. It isn't.

10:47James Daunt:Well, let me tell you something. I was super worried about it. I was telling you, how am I going to find? My thing is, I don't like the algorithm. I want to go into Waterstones, Daunt, Hatchers, and I want to walk the store because there's going to be a book in the store that I wouldn't have anticipated. And by the way, my algorithm wouldn't have anticipated that I necessarily want to buy, you know? And so you've captured that. How'd you do that?

11:16Anthony Scaramucci:Well, the big insight that we had was to leave it to the store teams. And most retailers don't do that for obvious reasons. They want conformity. And if you walk into Zara, you want to find the same clothes. If you walk to H &M, you want this. And if you walk in, it's all around. It'd be very upsetting to walk into CVS and find they didn't sell toothpaste or shampoo. But with us, books are very, very different and we can leave it to the individual store teams. And in so doing, make the job of being a bookseller dramatically more exciting and invigorating than it had been when they were given strict instructions as to what was on this table and the best-selling book was going to be this, even though nobody wanted to buy it.

11:58Anthony Scaramucci:So we've trusted the intelligence and enthusiasm of our booksellers and most of our stores have got better. Not all of them, some of them have got worse, but we're patient about that. And then we address the people who've got worse, not centrally from New York and somebody turning up and shouting at them, but saying, the nearest store that gets it right, go and help them, sort them out. And having a patience to encourage that sort of diffusion of skills. And the stores become better and our sales go up. Doesn't surprise me. And bookstores are lovely things. Bookstores are places that of every age people like to come into small babies like being in a bookstore the oldest citizen does everybody in between and we don't we're safe spaces we're places where all the kids can tumble into after school it's a get out of jail card we give them because when they go home and they want to come into our stores because they want to lock around with them that they're friends but when they go home they say i was in the bookstore parents are not going to be crossed you know i watched your

12:57James Daunt:interview on squawk box a few weeks yeah it was about a month or so ago and andrew sorkin who's a friend of mine who has done this program for 1929, his bestselling book, which your stores have frankly sold a lot of. I didn't realize this, you've crossed the 700 store threshold. And did you think that was going to happen? When you signed on for Barnes & Noble to take this over, did you think you'd be where you are right now a couple of years later?

13:27Anthony Scaramucci:I was hopeful. The reason I want to open up bookstores is partly that vocational desire to put stores back into communities. Mainly, it's to give my booksellers career opportunities. And if you've got a declining store base, then there isn't much prospect of getting advancement. When you've got an expanding one, particularly a rapidly expanding one, that's great. You're a young bookseller, you can see your career opportunities. that's why it's very important that it makes the business go well um pleases my owners but but i'm

13:57James Daunt:doing it for different reasons i think i think you've done something too where you know when i see the label barnes and noble exclusive or waterstones exclusive you've uh you know there's a gravitron to that i feel like people are like yeah i could buy it from amazon but i want to keep this community store open or you know even the independents i think are are taking some elements of that. Tell us about how that relationship then now is with the publisher. So where's the balance of power now in the book selling community?

14:30Anthony Scaramucci:I think publishers are now highly appreciative of what we do. In the old days, they used to pay for placement. So they would give us lots amounts of dollars and we would pile up their books in a way that they instructed. And that was very helpful to them, obviously, for the predictability. We don't take a dime now, but we do sell far more books, and slightly unpredictably, and we don't send any books back or have any failures or less failures. So once they've figured that out, for publishers, good publishing gets rewarded much better, and ultimately that is better for them. The transition was a bit tricky.

15:13Anthony Scaramucci:there was a transition when everyone thought, oh Lord, maybe this won't work and we've thrown out the good and we haven't got anything back in return. But now they really do have it in return. So we work well with them. And of course, central to our mission is to develop careers of authors and do well by authors. And ultimately that benefits publishers, but we're really focused on the author more than we are on the publisher.

15:41James Daunt:You know, I've heard you say this as I've obviously listened to several of your interviews that there may be too many books being published right at this moment. Do you believe that? And tell us why.

15:52Anthony Scaramucci:Far, far too many books and it's getting ever, ever worse. And this is speaking as a bookseller who crafts a physical space. So I only have so much space and there's more and more and lots of self-publishing. Nothing wrong with, writing a book and wanting to see it out in the world. But for myself, I have to curate all the time. And the bit that I regret is that people get upset with me for not carrying their book. Well, I just can't. I don't have the space for it. And that's really what I mean. The fact that they sell on Kindle or they sell on Nook or online is fine by me. I want people reading.

16:32Anthony Scaramucci:But I myself have to curate. And the reality is that I can't take the vast majority of books that are published. Right. Interesting.

16:39James Daunt:And you also said something I thought was also interesting, which would change the industry, is that some books should just go straight to the trade paperback. What sorts of books would you recommend to a publisher? If you were running a publishing house, what sort of books would go straight to trade paperback?

16:54Anthony Scaramucci:Well, I think around the hard cover and the hardcover market, there is a certain gravitas to it. There's also obviously fame or or celebrity attached to it as well. But for a long time, it was felt that you had to put something in hardcover. And if there wasn't a market there, it would be much better to put it in softcover. Typically in the fiction genres, that's particularly applicable. It makes our life easier also to concentrate on the hardcovers that we want to sell. When there's too much, it becomes too crowded. It's difficult for us. And we always have to curate and we always have to select.

17:32Anthony Scaramucci:But again, I don't mind if they publish them. I'm just telling them, I'm not going to take it in my stores because you're crowding out the books that I do want to sell.

17:40James Daunt:Makes sense. I started this podcast because I'm a book lover. This was a labor of love for me. I've interviewed people like Daniel Silva and Brad Thor and Ken Follett and Chris Miller. And it gives me the opportunity because I actually read the book. So I show up having read the book and it gives me an opportunity. I feel like authors to me have a special place in our culture because if they've spent six months or a year researching, working on something, character development. you know when you and i were kids you i used to say you know for ten dollars and ten hours you can get ten years of somebody's life experience in a book you know what what could be more enjoyment it's probably 25 pounds an hour 30 dollars but it's still for me uh uh price per square inch is such a great buy and it's such a great intellectual advantage for people um but is it different on the other side of the Atlantic?

18:39James Daunt:How would you compare the UK bookselling to the US bookselling? Is it different culturally or did you figure out that Waterstones and Barnes & Noble are similar enough?