And Now I Own (1/9 of 1/2 of) a Bookstore

I could never save enough from my wages to buy Porter Square Books. Thanks to abysmal failure that is Republican economic policy that demolished the American middle class, I'm not sure even the nine employees involved in the recent purchase combined could have put together enough capital to secure a small business loan on just what we could save from our pay. There would have been options of course when it came time for David and Dina to retire. There's crowdsourcing (which I imagine would have been successful). And some of us might have partners and other family members who would be willing to help and maybe there would be some applicable government loans available for small businesses, but, on our salaries and wages alone it would never have been possible.

This is, in part, because bookstores, especially new bookstores, are relatively expensive to buy, even more especially in relation to their profit margin. Books are expensive, you don't really finance the purchase of an entire store the way bookstores finance purchases of books from publishers, and the profit margins of even successful bookstores mean that business loans of any significant size will take a long time to pay off. (I remember the day when the founders of PSB finally had the liens taken off of their personal homes and they would have gotten credit from publishers for their initial inventory.) But, really, as above, the Republican economic model has guaranteed most Americans have much less buying power than they used to, more of that is spent on housing, healthcare and education than it used to, and the economy is subject to recessions in ways it wasn't before we put one of those classic Hollywood conservatives in the White House. Honestly, I don't know if there is any industry in America where the wages are high enough for an employee to save up to buy the business they've spent their lives working for.

From about 1998 (or maybe even 1996) to about 2011 or 2012, independent bookstores were struggling for survival. There were a couple of times, especially around the recessions of 2001 and 2008, when it looked like independent bookstores were going to vanish completely. The wage stagnation above hurt book sales and put downward pressure on the price of books (meaning that books aren't really priced high enough to support all the people working to produce and sell them), a problem only exacerbated by the recessions. The deep discounting at first Borders and Barnes and Noble and later Amazon hurt independent bookstores even more. That Amazon was able finance predatory pricing through stock sales, tax avoidance, atrocious labor practices, straight-up losing money for a decade, and pressure on vendors while improving and developing their sales infrastructure, including Prime and their ebooks monopoly, only put independent bookstores at a greater disadvantage. But, many of us figured that shit out.

So for many stores, the long term problem they face is no longer survival but succession. Given the desire to keep independent bookstores open in general and guarantee that one's own community has an independent bookstore, and the basic economic reality above, how do bookstore owners make sure their stores pass on to committed, talented, and capable new owners? How do they make sure they don't end up just hoping for an angel investor to come in from the tech or finance worlds?

Even though David and Dina aren't retiring any time soon, they wanted a plan for succession. They didn't want to find themselves just hoping the right person could come along to make sure Porter Square Books stayed open and vibrant in Porter Square. They wanted to make sure that the committed, talented, and capable people who were already contributing to the store's success would be able to buy the store when they retired. Their solution is actually pretty simple and replicable. (more on that later.) Essentially, they loaned nine management-level booksellers the money to buy 50% of the store (at the value Dina and David originally purchased it for) and we will pay back that loan on a ten-year schedule from the profits we are now entitled to as partial owners. In some ways it's kind of like a car loan from the dealership. You get to drive the car home, even though you still owe most of its cost to the dealer itself. This deal is structured to have as little impact on our taxes as possible and, if the bookstore does well over those years, should leave us with a little extra cash after the loan payment. The financial needs of a bookstore (or any retail) in an economy in which the majority of sales happen in one quarter and the general fragility and fluctuation of yearly profits, make it essentially impossible to commit the level of cash in salaries and wages necessary for an employee to save up to purchase a store, but by redistributing the profit when it's there at the end, David and Dina can pass that money on without risking the cash-flow and stability of the store itself. And by creating what is essentially a low-interest small business loan with favorable terms they made the purchase affordable, given projected profits.

I should note, this isn't just altruism on David and Dina's part. Sure, they take home a dramatically lower percentage of the yearly profits and forfeit some of the money an outright sale would generate, but, they also save themselves the cost of retraining management-level employees and protect a substantial amount of the bookstore's institutional knowledge. They saw in their years since buying the store, a staff with a...uh...unique set of skills that contributed to the store's profitability and they found a way to protect that set of skills that keeps the store financially secure in both the short and long term. Furthermore, a big part of how independent bookstores succeed is through the relationships booksellers develop with readers over time. Any time a long term bookseller leaves, for whatever reason, and is replaced, it takes some time for the store to make up the sales lost because that particular bookseller isn't there any more to talk to particular readers. By giving us a financial reason to stay, David and Dina have saved themselves the cost of staff turnover and protected institutional knowledge and by connecting those finances to store profitability they have given us an extra reason to work for the success of the store. It's hard to know anything like this for sure, but there is a chance that, even with their generosity, they might make out ahead in the end. I know, it's a shocking, perhaps even revolutionary economic idea that if you invest in the people who generate the profit for your business in a way that also communicates how you value them, they will continue to generate profit for you instead of leaving in three years for the first available promotion at another business. Why, you could almost create and sustain an entire middle class on that principle.

Not every bookstore will be able to ensure succession this way. The current owners would have to be clear enough from debt that they could afford to redistribute a percentage of the profits. There has to be enough appropriate employees to bear whatever new tax burden might be created. The store also needs to be profitable enough so those profits can cover the loan. Of course, there are also lots of different ways to apply the idea of “low-interest loan paid off through a share of the profits.” You could sell a quarter instead of a half of the store. You could change the time frame of the loan. You could create optional escrow accounts for all employees almost like a store based social security. You could do a similar loan-profit-repayment but for the full value of the store when you retire.

But, looking at the bigger world for a moment, imagine if, instead of building a fucking personal space program and continuing to avoid taxes, Jeff Bezos established a similar profit sharing model for Amazon workers at the management level. Sure, he founded Amazon and lead it to it's present behemouthness, but eventually he is going to retire as well. Why not transition it to a partial worker-owned business? (Well, we know the answer to that: it's stock value would tank because, even though more people would make more money, it's quarterly profit margin would end up shrinking, but more on that later.) Imagine if the Waltons did that. Imagine if the Koch brothers did that. Imagine if Bill Gates did that. Imagine if we had a business model that understood and respected all the contributions made by all employees at all levels and not one that saw non-ownership, non-executive staff as just expensive overhead. Imagine if our business decisions were guided, at least in part, by relationships with the community as a whole. Imagine if quarterly profits were, I don't know, just one part of how we assess a business's success. Imagine if the primary question of business (both large and small) was “How do we continue to have a positive impact on our community while making a profit?” instead of “How can we make as much money as possible as quickly as possible and stash it in the Cayman Islands so future generations never ever ever get a chance to enjoy the social progress lead by large scale federal investment in infrastructure, research and development, and a financial safety net that gave us the opportunity to make all of this money today, and wouldn't be cool if I got to Mars before that Musk guy did so I could somehow trademark or patent or claim ownership over the idea of colonization and teraforming before any legal precedents are set, making me even more like the 'mayor' of one of those late 1800s company towns, yeah, Bezosville Mars with Oxygen Prime?” Sorry, got a little lost there.

The point is, the biggest challenges of our economy, from wage stagnation, to the rising cost of living, to climate change, to the damage done to minds and bodies by decades of 40-60 hour work weeks, are only challenges because certain powerful aspects of our economy have prioritized short-term personal profit over everything. (More on this soon.) Once you open up the goals to include say, long-term health of the business, or maintaining your quality of service to your community, or whatever it is, a lot more options for how to run the business, and how to solve problems like retaining talent and succession open up.

Stepping even further from there book world, there is this weird idea that gets repeated a lot. In some ways, it's the basis for our entire economy and now (thank you Republicans) large swaths of our government and society. It's one of those ideas that can be casually expressed in conversation and just as casually accepted. It often goes something like this, “Hey, man, people are just really selfish and there's nothing you can do about that.” Of course, there is some truth to that. I have been selfish in my life, as have you, and pretty much everyone else. But if you take a step back and look at how people interact with each other, it's pretty clear that, for the most part, selfishness isn't what drives the vast majority of us the majority of the time. From independent bookstores, to Little Leagues, to parades, to acts of generosity after every single tragedy, to the fact that almost no one shoplifts, it's clear that people, even though we can all be selfish at times, are driven by community. David and Dina's succession plan is just another example of this fundamental fact of human life. The vast majority of us, the vast majority of time, want to have good relationships with the people around us (even the strangers) and are perfectly willing to take home less personal profit to do so. I bring this up because the idea that “everyone is greedy and selfish” is a very convenient idea if you, in fact, are greedy and selfish and don't want anyone to get in your way. Too often, we let a lot of bad shit happen in our economy and our world because we have been convinced, despite the evidence we experience every single day, that humans are inherently greedy. Listen to who says this and when. Don't accept it.

So, now I own a part of a bookstore. In terms of my day-to-day life and work, this doesn't have a huge impact. I was already selling as many books as I could not just because it made sure the payroll was met, but because I think selling books is important to my community. I'll still push readers towards challenging works, works in translation, works from under-represented identities and communities and I'll still help you find the perfect airplane read (which is The Long Ships, though in a conversation with another bookseller, Signs Preceding the End of the World is actually a pretty solid airplane read, you just have to read it again a week later for the full impact.) or wordless picture book, or YA novel with a lot of feelings (like The Gentleman's Guide to Vice and Virtue and Dairy Queen) or, you know, “just a good read,” (uhh, can you tell me any more, no, OK, umm, Shadow of the Wind, I guess). But now I get to do that with, essentially, a pension fund, (one that is probably a lot more stable than anything in the stock market) the opportunity to eventually help shape the bookstore around a new vision (if it needs reshaping), and a model for making sure PSB endures when it's my turn to retire.