Building Next-Generation Bookstores: The Case

Co-authored by Paul Wright and Praveen Madan
June 7, 2021

Executive Summary

We propose a bold but realistic initiative to re-imagine and transform the role of community bookstores through a new national social enterprise (for which we have given the placeholder name “NewCo”). Our intent is to foster the healthy development of Next-Generation bookstores that will deepen literacy in their communities, enhance literary and civic culture, have strong financials, and offer a genuinely viable career to their leaders and staff with meaningful work paying meaningful wages. To enable this transformation, NewCo will help design and implement new models for Next-Generation bookstores in partnership with social entrepreneurs, existing bookstores, and communities interested in being part of this vision. NewCo will provide a suite of services for Next-Generation bookstores like training, consulting, financing, legal structure and business model assistance, business certification, and real estate assistance.

We acknowledge that this will not be an easy or quick undertaking! The new model will require participating bookstores to reimagine their mission, evolve their understanding of what business they are in, innovate new programs and services, and embrace new ways of organizing their work and engaging with their communities. Successful transformation will require new mindsets, new structures, new money, and new skills. We believe many of the necessary conditions are present for such an industry¹ transformation and most of the missing pieces can be implemented through the social enterprise we are proposing.

This is not the first time in the history of our country that substantial public investments have been needed and made in the literacy, arts, and media sectors, with significant and lasting societal benefits to be gained. We have studied four previous waves of public investments starting from the late 1800’s. These waves of investments spurred the development of nearly 1,689 public libraries, Chautauqua assemblies in rural America, 1,178 public radio stations and 356 public television stations, and most recently a transformation of the journalism sector (under way) under a mix of for-profit and nonprofit models.

America’s 1,800+ community bookstores are nearing an inflection point in their history. For years, they have been engaged in an existential struggle, marked by changing reading habits and online competition, the colossus of Amazon, and an unsustainable economic model that makes bookstores impractical as a career choice for most people. The Covid-19 pandemic has compounded these challenges. Most bookstores, it is clear, are severely undercapitalized and inadequately skilled to successfully reinvent themselves for a more sustainable future. Despite these existential challenges, bookstores have proven their resilience by continuing to function and serve their communities. Many bookstores have even managed to innovate and we are particularly encouraged by bookstores implementing new and innovative business models including co-operatives, non-profits, and hybrid legal structures. 

Our vision is deeply informed by Praveen Madan and his team’s work at Kepler’s, a successful work-in-progress model of a Next-Generation community bookstore. Kepler’s was founded in 1955 and quickly became one of the Bay Area’s leading cultural and intellectual hubs serving the communities of Menlo Park, Atherton, Palo Alto, and surrounding areas. By 2012 Kepler’s was ready to shut its doors, despite having been resuscitated by the community six years earlier. Since 2012, Praveen and his team have applied new ideas and principles, including the philosophy of stewardship², community financing, an innovative legal structure, and a sharp focus on staff inclusion and living wages. These have resulted in Kepler’s becoming a shining example of what’s possible when a community works together. Kepler’s is the only known bookstore to have raised staff compensation at all levels by about 75%, including a minimum starting wage of $16 per hour plus profit-sharing. Kepler’s has developed high-impact new programs, built new partnerships with companies like SAP and Facebook, and added high-margin new revenue streams. Due to its strong team, strong financials, and strong community engagement, Kepler’s has been able to continue innovating and serving its community through the pandemic without any layoffs.

The transformation of Kepler’s has received world-wide attention. For several years Praveen and his team have been getting requests from bookstores in other communities (and even other countries) asking for help in applying the experience and practices from Kepler’s to their own operations. Many bookstores have been inspired to set up new legal structures similar to Kepler’s. However, our initial plan, of doing open-source innovation at Kepler’s and letting others replicate and customize it, has turned out to be inadequate for the task. Our proposal for a new national social enterprise represents an attempt to address the need and the potential we see among our fellow bookstores and their communities. We invite you to read further, and share your feedback and suggestions for our vision and plan.

The Case

1. Our Proposal

We propose a bold but realistic initiative to re-imagine and transform the role of community bookstores through a new national social enterprise (for which we have given the placeholder name “NewCo”). Our intent is to foster the healthy development of Next-Generation bookstores that will deepen literacy in their communities, enhance literary and civic culture, have strong financials, and offer a genuinely viable career to their leaders and staff with meaningful work paying meaningful wages. To enable this transformation, NewCo will help design and implement new models for Next-Generation bookstores in partnership with social entrepreneurs, existing bookstores, and communities interested in being part of this vision. NewCo will providel a suite of services for Next-Generation bookstores like training, consulting, financing, legal structure and business model assistance, business certification, and real estate assistance.

2. The Problem & The Opportunity 

2.1 The Problem Statement

How can we strengthen and transform community bookstores in the US, to enable them to accomplish the following:

• Deepen their impact on literacy, lifelong learning, and civic engagement in their communities;
• Provide meaningful jobs for meaningful wages and a career path, including a path to ownership, for their employees; 
• Continue to operate as independent institutions with high-levels of structured community support and engagement; and
• Remain relevant as important sources of literary and civic culture in their communities.

2.2 Bookstores at a Crossroads

America’s community bookstores find themselves at a crossroads. They can continue on their present trajectory – often teetering on a financial knife-edge at best, while struggling to adapt to rapid changes in the world around them, and supported by talented staff eager to become career “bookstore professionals” but held back by poverty-level wages, a lack of training and limited career possibilities. Alternatively, bookstores can more confidently grow into their potential – strengthened in their ability to serve an array of stakeholders, equipped to thrive, remain relevant, and take their place as the civic and cultural institutions we hold them to really be. We believe that the latter path requires bold new thinking about how to create the right — sustainable — conditions for large scale impact.

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“… bookselling in America is built on what is basically an unsustainable business model … The popular belief is that there is a chance that a well-run bookstore could have the possibility of making a 1%-4% profit on its hard work and financial investment. This premise is built on paying low wages and benefits to staff … I have spent years trying to find the secret to surviving in this business … I’ve finally realized that it’s just not possible under these conditions…” – Alison Reid, Co-Owner of Diesel Bookstore, California

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At the same time, we also believe that the crisis facing community bookstores is intertwined with a much broader threat: a crisis of literacy as evidenced by declining civic literacy and engagement, the disappearance of local journalism, a polarized national conversation fueled by a disinformation crisis, and a growing distrust in public institutions. 

Most people will agree that America has a literacy and disinformation problem. Nearly 50% of American adults don’t read any books after graduating from high school. A large segment of Americans don’t believe that human activities are responsible for climate change. We can all see people around us becoming more entrenched in their polarizing siloes, a process to which the death and disappearance of local journalism and the de-socializing effects of social media are contributing. Civic engagement and public discourse are suffering from this decline in literacy as evident by our inability to rely on facts, critical thinking and science (as our national experience of the recent global pandemic has shown). The cumulative result of these drivers is our society’s failure to enjoy a shared reality, the lack of which represents “a big problem for democracy,” as the bestselling author Michael Lewis reminds us.

We are not claiming that addressing the challenges facing community bookstores will, alone, fix these enormous social problems. However, we do believe that the crucial services community bookstores provide to their stakeholders are integrally connected to these broader societal issues. Through their efforts to deepen literacy and to enhance both literary and civic culture, bookstores serve a vital purpose in our country (and have long done so). Yes, sellers of books they certainly are, but this is not all they do. By creating spaces that welcome and bring together readers interested in hearing more about the contents and ideas those books contain (as well as forums for the writers who create them), they perform a valuable public service that animates their communities. This is why we think it is no exaggeration to consider these bookstores as not just civic, but cultural, institutions. And also why we believe it matters that they have the tools to survive, grow and deepen their impact.

2.3 Why Community Bookstores Matter — A Closer Look

Community bookstores in America have long been more than places that sell books. Historically, they have also represented community spaces that nurture interest in the essential ideas those books contain and the voices that speak to them. And many have even provided forums for exploring those ideas. Consider, for example, that bookstores have served as natural incubators for ideas and movements like the abolition of slavery in the 19th century and the protest movements of the 20th. At the same time, as the growing strains in our civic culture continue to inform our national conversations, never has critical thinking mattered more than it does now. We firmly believe that strong bookstores, important anchors for strong communities, should be able to continue and build upon their work as essential spaces for readers and writers —  to explore the ideas that a society so dependent as ours on language and engagement needs to survive, and thrive.  

While many people continue to think of bookstores as obsolete as horse-drawn carriages, the data show that, nearly 25 years after the dawn of the internet, bookstores have proven to be a resilient species. The national trade association for independent bookstores has over 1,800 members, with the average member bookstore generating $1.4 million per year from new book sales. Combined, these bookstores generate annual revenues of nearly $2 Billion and employ over 11,000 people (not to mention the number of people who live within these stores’ geographical reach). As a backhanded testimonial to bookstores, it’s worth noting that, after spending twenty years trying every possible move to take market share away from bookstores, even Amazon has decided to follow the join-’em-if-you-can’t-beat-’em strategy by opening physical bookstores. At last count Amazon operates 17 of these bricks-and-mortar retail bookstores in major cities across the US.

In fact, these numbers significantly understate all that community bookstores represent – much of what they contribute to our society, in fact, is priceless, as evidenced by their many supportive stakeholders. Community bookstores provide an avenue to lifetime learning, encouraging readers of all ages, both first-time and die-hard, to engage in the unique browsing possibilities that bookstores offer, and exposing them to curatorial and cultural experiences that complement the fundamental act of reading. Writers, too, understand that bookstores present important venues where they can build their audience and find voices for their stories, not to mention concrete opportunities for them to literally put books into readers’ hands. Book publishers, meanwhile, appreciate community bookstores for offering unique opportunities to make their books visible in the marketplace, especially true for books by new and emerging authors – these bookstores account for as much as 50% of a new literary fiction book’s early sales, in part thanks to the personal, bespoke attention booksellers provide. And we count communities, too, as notable stakeholders in community bookstores, for their importance as places that model thought leadership and good citizenship.

2.4 What Bookstores Want

Our research with bookstores owners and managers indicates they share the following needs (in roughly descending order of importance): 

1. Improving access to less expensive financial capital along with business plan review and support. “Capital needed to build and sustain bookstores can’t be earned from just selling books.” While this is an issue for most bookstores, it has particularly serious implications in book deserts i.e. communities that lack good bookstores due to their socio-economic demographics. We’ve also seen that LGBTQ people, non-native English speakers, and BIPOC people have a harder time raising capital to start bookstores.
2. Business modeling support – identifying the best business and development strategies, processes to determine and navigate changes, and identifying sources of value.
3. Legal services to help create new legal structures and certifications.
4. Training and skills-development for running a non-profit and for fundraising.
5. Advocacy on behalf of the bookselling community that emphasizes the value of books and bookstores.
6. Help in exploring and managing deeper relationships with publishers.
7. Better buying opportunities from publishers (“we rely too much on Ingram”).
8. Help with strategies to increase readership — “too dependent on outdated, non-inclusive strategies”.

3. The Next-Generation Bookstore

3.1 Our Vision

In a very real sense, many community bookstores already function with some of the earmarks of civic institutions, providing important convening spaces for customers (readers), all sharing some fundamental assumptions about the formative power of knowledge, ideas, literacy and community connection – and how these contribute to the practice of good citizenship.  

With that in mind, we would like to propose that Next-Generation bookstores could be prime venues for facilitating community services that intersect with bookselling, books and what both unleash in the human spirit. We’d like to encourage you to imagine, for example, ways in which community bookstores could embrace a social mission of helping people become better readers, better writers, more engaged with others in their communities through literature and literary programs. They could also become platforms to support lifelong learning. In fact, Next-Generation bookstores could explicitly have a business model that’s about serving their communities as important social, cultural and intellectual hubs.

Many bookstores have already taken exciting and innovative steps towards this vision. Kepler’s 2020, for example, offers a plan that has already demonstrated and tested specific ideas and principles of transformational value. Following this roadmap – and continuing even further – we envision Next-Generation bookstores that:

1. Are financed and governed by their community, not by a private owner.
2. Have a purpose for existence that is based on a mission dedicated to deepening literacy, enhancing literary and civic culture, and providing meaningful jobs paying meaningful wages.
3. Maintain a high caliber staff. A Next-Generation bookstore pays decent, sustainable living wages, offers training and development opportunities for career advancement, and involves its staff in all aspects of operating and improving the organization. Because working in a Next-Generation bookstore represents a legitimate and practical career option, the bookstore regards its staff as its biggest asset and competitive advantage, and translates that belief into its business model. It also creates systems and conditions to enable staff to work on improving the whole system together and to benefit from it together.
4. Have leaders and staff that diligently practice good stewardship, i.e., operate their organizations with sustainability in mind while delivering value to the community, and look after the interests of all stakeholders, rather than prioritizing personal gain.
5. Strive to develop strong stakeholder relationships, new value-adding services in keeping with their community mission, and immersive experiences; and experiment with monetizing these with the aim of generating robust and diverse revenue streams.
6. Monetize all services and experiences for those who can afford them, and make them available on a subsidized or pro bono basis for those who can’t afford to pay. 
7. Generate a substantial part of their annual revenue from diverse sources other than book sales, including: memberships, programs, services, donations and grants.
8. Prioritize structured community engagement in order to be in sync with the community’s needs while avoiding the trap of inward thinking.
9. Practice openness and transparency with information and decisions, and work diligently to eliminate secrecy and decisions made behind closed doors.
10. Offer an inclusive organization that employs a diverse staff and serves ALL members of its community regardless of their social or economic status or political views.

3.2 Building on History

This is not the first time in the history of our country that someone has seen the need for a substantial investment in the literacy, arts and media sectors to introduce or enhance significant societal benefits, of which community bookstores are, we believe, also a crucial component and, in a sense, natural heirs. Consider these four previous waves of innovative investments:

Wave 1: Between 1883 and 1929,  Andrew Carnegie supported the building of 2,509 libraries, including 1,689 in the United States alone. Motivating Carnegie was an unwavering faith in the power of books, as a path to self-improvement and civic engagement, and in the importance of curiosity (for fueling which he insisted on open stacks for browsing).  

Wave 2: Almost exactly overlapping the period included in the first wave, the Chautauqua movement unfolded across largely-rural America as a form of lifelong adult education through public lectures, cultural gatherings such as concerts, and other events (including non-denominational religious programs). At their peak, Chautauquas offered a way for Americans to access and learn about ideas, new and old, and to enhance their capacity for understanding the world. 

Wave 3: Starting in 1967, the US Congress (with input, coincidentally, from the Carnegie Corporation of New York) authorized the creation of the Corporation for Public Broadcasting (CPB), to oversee public funding for public television and radio. This has led to 1,178 public radio stations and another 356 public television stations, under the CPB umbrella, providing essential access to public media for 99% of Americans, through a blend of Federal dollars and donations from viewers and listeners.

Wave 4: Since the 1990s – Hundreds of millions of dollars are being invested each year in the ongoing reinvention of nonprofit and for-profit news organizations due to the collapse of the advertising revenues that news organizations once relied upon before the internet. New nonprofit organizations that are filling the void include ProPublica, the Center for Investigative Reporting, the Center for Public Integrity, Mother Jones, the Texas Tribune, Journalism that Matters, and many others.

Preceding each of these waves, a problem, a need, a gap was recognized. And in each case, the need was seen as tied to an essential ingredient for a strong and functioning civic culture – curious minds open to learning about the world.   

We propose to continue this tradition of social and business innovation by inspiring a wave of donors and social impact investors who recognize the valuable contributions of America’s community bookstores. We want to appeal to donors and investors who see these bookstores as essential civic and cultural hubs; who accept the importance of creating the means to support and transform hundreds of existing community bookstores, as well as making it possible for new Next-Generation community bookstores to join their ranks across the US; and who see the value of ensuring that, by means of these supportive services, their innovative work can continue.

3.3 So, What’s So Next Generation About Next-Generation Bookstores?

Perhaps the real answer to that question is that community bookstores are not just bookstores. Perhaps we even need a Next-Generation name for “bookstore” itself. Let us be more explicit:

A good bookstore’s value to its community is far greater than being a passive reseller of best-selling books. Or even a passive reseller of books of any sort. Far more than this important and essential activity, good bookstores also play a vital role in the discovery and curation of new ideas, developing new readers and writers, and serving as intellectual and cultural centers for their communities. Besides harkening back to the age when communities competed for their own Carnegie Library, it’s encouraging to remember other innovative movements promoting literacy, education and the discussion of ideas that flowered in the earlier period of the country. Consider the Chautauqua Movement, for example, when American communities opened themselves up to a variety of social and cultural events attuned to a deeper appreciation of the outside world. (Indeed, the Chautauqua Institution still flourishes in Chautauqua, NY, dedicated to presenting a wide range of cultural “experiences” founded on the proposition “that everyone has a right to be all that he can be — to know all that he can know.” (chq.org) 

But as we have already noted, bookstores are in danger. The digital revolution was already weakening community bookstores – the current pandemic is only going to increase the damage. There is a real and urgent call for a new model. 

Similar to other industries, like journalism, that have been impacted by the digital revolution, bookstores are in dire need of new mindsets, new skills, new ideas, new business models and new funding mechanisms — in short, fundamentally new thinking. With these, we hope to stimulate the resources to rebuild our nation’s bookstores (a step toward rebuilding our communities) —  especially in view of the gaping holes in our society that the pandemic has exposed.

4. Our Proposal 

4.1 A New Social Enterprise

While many bookstores have been doing individual heroics including implementing elements of our vision of Next-Generation Bookstores, we believe that an external intervention is needed to help them be more successful and have a bigger impact. Catalyzing and accelerating such a transformation will, as we have noted, require new thinking and new resources. To lay the foundation for Next-Generation bookstores, we propose a new social enterprise (NewCo) that would focus on building, nurturing and supporting Next-Generation bookstores in communities across the US.

To accomplish this, NewCo will partner with philanthropists, foundations, corporations and communities, through implementation of a new model with services such as training, consulting, financing, legal structure assistance, business certification,and real estate assistance. NewCo’s work would be inspired by the example of Kepler’s transformational work and best practices from many other bookstores. We also want to make room for cutting-edge innovative ideas from other organizations that have been able to scale and create large impacts like Room to Read, 826 National, and Teach for America.

More specifically, NewCo will provide services to three kinds of entities inspired to build Next-Generation Bookstores:

1. Communities and social entrepreneurs that identify a need for Next-Generation Bookstores in their own backyard. 
2. Existing bookstores interested in transforming themselves into Next-Generation Bookstores for greater impact and sustainability and improvement in the compensation for their staff.
3. Existing literary non-profits that want to embrace bookselling to diversify their revenue streams and strengthen their models.

4.2 How Will NewCo Accomplish This?

NewCo’s new model will include services in the following areas to catalyze an industry-wide movement to build Next-Generation Bookstores. 

1. Capital: It will enable easier and cheaper access to capital, through loans, equity investments, donations and grants. 
2. Skills: It will provide training and consulting services to nurture new skills and mindsets, including community engagement, board development, new technologies, stewardship, fundraising, relationship- and partnership-building, developing innovative new services and experiences, and institution-building. 
3. Legal Structures and Business Certifications: NewCo will also develop expertise in new legal structures and certifications – for example we are intrigued with a new nonprofit franchising model, called social franchising. While relatively new in the US, social franchising has made significant inroads in the nonprofit sector in Europe, Asia and elsewhere in the world. Similarly to its more familiar commercial counterpart, social franchising offers an innovative way to apply business principles and the advantages of scale to non-profit enterprises with the assistance and guidance of an independent, central organization – the social franchisor. 
4. Real Estate Assistance: There is an opportunity for social impact investors to invest in commercial real estate and hold it for long-term gains in value. Some of the real-estate (considered as an asset class) could be rented to Next-Generation bookstores for below market rent while the rest earns market rents for commercial businesses that see value in being located in community hubs surrounding great bookstores. Examples of this already exist in many communities in the US including investments made by Google’s founders in downtown Los Altos, CA that have been benefiting Linden Tree Books. NewCo can facilitate this as a win-win for investors and next-generation bookstores.

4.3 How? The Plan

We are planning to raise a first round of funding to do the following planning work:

1. Form Advisory Team: Form an advisory team with representation from all major stakeholders – publishing, community, donors, customers, and authors.
2. Conduct Market Research: Solicit Requests for Proposals (RFPs) from bookstores, to determine the number and characteristics of communities that would be a good fit for Next-Generation Bookstores. 
3. Design New Model: Design the new model in collaboration with major stakeholders and legal advisors. Incorporate best practices from other similar literary organizations that have successfully created large-scale impact including 826 National/ 826 Valencia and Room to Read.

4. Develop Business Plan and Budget: Develop a business plan and budget for the next 2-3 years for NewCo to implement the new model in a few test communities to extract key learnings on what works and what doesn’t. 
5. Create Staffing Plan: Plan out the organization and staffing needed for NewCo.
6. Secure Funding for Implementation: Secure next round of funding to implement the plan for a few test communities.

4.4 Who Is Leading NewCo?

Praveen Madan is already a nationally-recognized leader in reinventing bookselling and building literary communities. As CEO of Kepler’s since 2012, Praveen has been leading a community-sponsored initiative to transform Kepler’s into a Next-Generation Community Bookstore. Praveen has also served on the Board of Directors at Berrett-Koehler Publishers and Heyday Books, and was co-owner of Booksmith in San Francisco and co-founder of Berkeley Arts & Letters. Praveen’s work in publishing and bookselling has been featured in Publishers Weekly, The Wall Street Journal, Stanford Social Innovation Review, Washington Post, USA Today, and many other leading publications.

Praveen draws on three decades of management experience as a corporate executive, social entrepreneur and strategy consultant to leading global companies, as well as on a life-long passion for good books. Praveen holds a B.Tech. in Electrical Engineering from IIT, New Delhi, India, and an MBA from the University of Texas at Austin, TX in the US.

Praveen has loved books and bookstores since his days growing up in India. From the time he  stumbled into bookselling in 2007, he has held onto the belief that, while bookstores provide a critical service, their business model needs to be reinvented for sustainability. 

“In ten years of working closely with Praveen, I have found him to have a one-in-a-million combination of leadership ability, entrepreneurialism, innovation talent, analytical skills, and bookselling industry knowledge. He knows how to lead, so everyone is involved, people do their best work, and great results are achieved in challenging environments.” – Steve Piersanti, founder and longtime CEO and president of Berrett-Koehler Publishers

“You have a very special gift and improve whatever you touch! Thanks once again for all you did for Heyday and for your continuing examples of highly effective, positive leadership.” – Nettie Hoge, ex-Board Chair, Heyday Books

“Praveen is one of the most innovative booksellers in the country, and more than anyone I know, has been able to look at the business of selling books with a fresh set of eyes.” – Len Vlahos, ex-COO of American Booksellers Association and ex-CEO and Co-owner of Tattered Cover Bookstores in Colorado

5. The Pitch 

5.1 Why Now?

This is not the first time America’s community bookstores have been faced with an existential crisis. In the run-up to the 2007-2008 financial crisis, more than 1,000 bookstore owners admitted defeat and closed their doors. As the Great Recession and the Age of Amazon piled on, bookstores felt added competitive pressure that has resulted in shrinking margins and diminished resources.

Although the intervening years have witnessed a modest wave of new bookstore openings, the coronavirus pandemic has introduced a host of added challenges, including the unanticipated costs of adhering to safety protocols, and the temporary Covid-related closure altogether of bookstore spaces to the public. Yet even as these challenges have bitten deep, they have also encouraged the emergence of two key ingredients: that innovative edge for which bookstores have acquired a well-deserved reputation for testing and honing; and a defined and supportive constituency – devoted book-lovers also known as their customers. The time to harness this energy is now.

5.2 Value Proposition for Social Impact Investors and Donors

We anticipate this work will take many years and potential investments of hundreds of millions of dollars. We envision most of the money will be raised from communities by motivated social entrepreneurs wanting to open new next-generation bookstores, existing bookstore owners wanting to transform their businesses, and community champions who are excited about sustainable bookstores in their backyards. However, we envision needing a small number of founding investors/ donors in the form of philanthropists and foundations excited about our vision and willing to partner with us to set up NewCo and fund its operating budget.

We believe that NewCo will offer value for a range of stakeholders: 

Employees: Bookstores rely on trained and professional staff. By strengthening their bottom line and enabling livable wages, it will become possible to transform bookstore jobs into genuine and credible careers. This offers the potential for elevating bookstores as community businesses.

Owners/ Entrepreneurs: Whatever ownership model bookstores adopt, it’s essential that they be able to offer credible return on investment, as a reward both for ownership and also for owners’ willingness to maintain and develop them as viable community assets and hubs.

Communities: More than ever, communities need stable cultural and civic venues, particularly as they seek out strategies to recover from the pandemic. Communities also benefit from bookstores that serve as hubs of information and news, plus the opportunities they introduce to promote literacy as a respected and visibly-supported civic practice, both alone and in partnership with local schools and community groups.

Readers: Readers want a range of options for not only buying books, but for accessing books in person, in support of local businesses, and see bookstores as important outlets for community and civic engagement.

Writers: Writers too, appreciate bookstores for providing direct access to readers and a forum for promoting their craft.

Book Publishers: Book publishers are very concerned about their growing dependence on Amazon and very motivated to support alternative sales and marketing channels for their books and authors. 

Bookstores can demonstrate that viable alternatives exist for confronting, complementing and leveraging the strengths of the digital marketplace, in the face of rising concern at how the digital revolution threatens to upend more traditional business models. This, however, requires credible access to capital, consulting advice and training.

5.3 One Enormous Opportunity

While community bookstores face challenging times, we see several omens in the landscape that bode well for their future. Consider these five:

1. Customer acceptance of community bookstores as a necessary social service has been growing for many years and has just spiked to new highs during the current pandemic. In the last year alone, tens of thousands of people have contributed to dozens of GoFundMe campaigns for bookstores, and many times more customers have turned to shopping online from their community bookstores (almost always paying higher prices than Amazon).
2. Customers are increasingly willing to pay for experiences, memberships and services, and to make donations in support of them.
3. Customers want to be engaged, enriched and inspired, and are looking for authentic relationships with trusted institutions, as well as with other readers and writers.
4. There is an abundance of smart, passionate, literary people who desire meaningful work for meaningful pay. 
5. In today’s political climate, we see a widespread awareness that a crisis of literacy is worsening across the country, twinned with the growing sense that Americans dangerously lack a shared reality.  (Remember: “Nearly 50% of American adults don’t read any books after high school.” Update to Kepler’s Community, December 2019.)

Taken together, the crisis facing community bookstores and the crisis in the public square paint a sobering picture for which it would be easy to offer only a bleak prognosis. However, the five signs of hope we’ve just cited invite creative thinking at many levels. Community bookstores have an opportunity to transform themselves in order to serve a greater need than “just” reselling books, to enable themselves to advance to what we call the Next-Generation level. 

5.4 What’s Unique About This Opportunity?

1. Existing “program revenues” and existing employees: To reprise – some 1,800 existing bookstores generate close to $2 billion in annual sales by selling books and employ close to 11,000 people. 
2. Existing support from hundreds of thousands of “beneficiaries” and communities: Bookstore fans and followers have already accepted them as a social cause and support this cause by paying higher prices compared to what they could get from Amazon. In addition to higher prices for books, customers have been supporting bookstores via event tickets, membership fees, outright donations, and equity investments.
3. Strong support from stakeholders including employees, readers, writers, book publishers and communities – as mentioned in the previous section.
4. High impact investment: This work will have a transformative impact on communities. In addition, investors will have an opportunity to earn a modest financial return on their investment while doing good at the same time.
5. Multiplier Effect: Every dollar invested in NewCo will have a multiplier effect because NewCo will employ the philosophy of “Give a person a fish you feed them for a day. Teach a person to fish and you feed them for a lifetime.”

5.5 What This Is — and What This Is Not

Our goal is to catalyze an industry-wide movement to build Next-Generation bookstores by providing capital, training and consulting, guidance on new legal structures and certifications, and possibly real estate.

We don’t intend to build a new chain of bookstores, start a new trade association, or a marketing program for publishers to sell their books through community bookstores.

We think next-generation bookstores will strengthen the literary ecosystems in communities by complimenting and amplifying the work already being done by libraries, literary arts organizations, literacy organizations, and schools. This is consistent with Kepler’s experience in collaborating with such organizations on the San Francisco peninsula.

5.6 Do We Have ‘Proof of Concept’? Yes! The Kepler’s Story Points the Way.

In 2012, new leadership at Kepler’s Bookstore launched a systemic transformation under the Kepler’s 2020 program. With broad support from its community, the team has been able to accomplish the following:

• Amazon-proofing the business model: Kepler’s has diversified its revenues by growing new higher-margin revenues from membership fees, donations, event tickets, support from foundations and major donors, and corporate programs for companies like SAP, Facebook, and Box.
• Raising wages and building a strong team: Kepler’s has successfully raised the average compensation for its staff by 75% since 2012. Kepler’s profit-sharing program distributes most of its profits to its staff based on a unique democratic method. Better compensation, social mission orientation, and an inclusive culture have helped Kepler’s build a strong and stable team.
• Deepening community engagement and impact: Kepler’s operates with transparency and in the words of a recent survey respondent “a deep, ethical engagement with the community.” Community input is regularly solicited. A volunteer board of community champions governs Kepler’s non-profit foundation and supports fundraising. Kepler’s has programs to work with diverse schools, authors, senior citizens, and local nonprofits.

Kepler’s has won a number of awards and honors for its work on creating a new sustainable model for bookstores. This work has been featured in Stanford Social Innovation Review and many other leading publications. Many bookstores have found inspiration in Kepler’s story and begun their own transformations.

Kepler’s community members have invested over $2 Million in the Kepler’s 2020 transformation over the last eight years. This is above and beyond revenue generated from sales of books and related products, event tickets, and program fees from corporations like SAP.

Additional proof of concepts can be found among numerous bookstores that have begun implementing new and innovative business models including co-operatives, non-profits, and hybrid legal structures.

5.7 What Do Bookstores Think of This Vision and Plan? 

Summary of feedback from owners and top managers of eight leading bookstores, including City Lights Books in San Francisco, Seminary Co-op in Chicago, and Fountain Bookstore in Richmond, VA:

• “This (plan) is incredibly important.”
• “Revolutionary thinking is needed because the industry is broken: ‘need to build new models.’”
• “(NewCo) will fill a vacuum. There is no existing resource like the one proposed.”
• “Glad you are recognizing/addressing the importance of access to capital.”
• “Provides a template for improving compensation for staff. Booksellers are living on pennies and the idea of having professional booksellers with decent wages is very appealing.”
• “Like the emphasis on bookstore employees having jobs with dignity and careers like teachers and librarians.”

6. Conclusion: A Manifesto for the Next Generation of Bookstores

Community bookstores in America have long been more than places that sell books. They also represent community spaces that nurture interest in the essential ideas those books contain — from abolition of slavery in the 19th century to the protest movements of the 20th – and the voices that speak to them. At the same time, the growing strains in our civic culture continue to exacerbate our national conversations. Never has critical thinking about the world mattered more than it does now. We firmly believe that strong bookstores, important anchors for strong communities, should continue to offer essential spaces for readers and writers to explore the ideas that a society dependent on language and engagement needs to survive, and thrive.

Neither NewCo nor its vision of Next-Generation bookstores lies at the end of the road – they stand at the beginning. Re-imagining the bookstore industry will require more than a village; it will call on communities themselves and a universe of stakeholders. Next-Generation bookstores will be more than bookstores simply selling books. In the very best sense of the word, they – just as do their bookstore forebears of today – will represent the kind of civic institution we can be proud of supporting, for how we believe they will contribute to strengthening the fabric of their communities, and of our society, too. This moment that holds such danger for our bookstores and for social literacy also holds danger for the glue that holds us together. Our bookstores stand at the beginning of this road – we need them to flourish all along the way, too.  

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1. The nation’s community bookstores are often described as an industry, but we see them more particularly  as members of a true community, with far more collaboration than competition among them.
2. Stewardship: Choosing Service Over Self-Interest, by Peter Block
3. Average annual salaries at approximately 300 bookstores that participated in the 2019 Abacus Survey: Store Manager $38K, Buyer $34K, Event Manager $27K, Bookseller $17K.
4. Source: Shelf Awareness
5. Reading at Risk: A Survey of Literary Reading in America, by the National Endowment for the Arts
6. U.S. Public Views on Climate and Energy, by Pew Research Center
7. “Michael Lewis Makes Boring Stuff Interesting,” Richard Turner, Wall Street Journal, May 17, 2019
8. While the revenue numbers might appear impressive, the average bookstore generated a net profit before taxes of 1.3%. This combined with the poverty-level wages points to an unhealthy and unsustainable economic model.
9. Kepler’s 2020 was the name of the eight year long transformation program undertaken by Kepler’s starting in 2012. For more details, please see: http://www.keplers2020.com/media.html
10. A stakeholder is anyone with a stake in the success of the organization. A bookstore’s stakeholders include its staff, management, community of readers and writers, publishers, investors, donors, local schools, libraries, corporations, and other community partners.
11. “Social franchising is the application of commercial franchising concepts to achieve socially beneficial ends, rather than profit.” For more, please see:  https://en.wikipedia.org/wiki/Social_franchising
12. Anne Wojcicki discusses Los Altos investments
13. https://newrepublic.com/article/157315/end-indie-bookstore