"Today, Explained" discusses how Barnes & Noble went from bankruptcy to success. Nilay Patel and Brendan Ballou share the bookseller's unlikely turnaround story. They explore Barnes & Noble's transformation through community engagement, changes in the company, and the impact of private equity.
Barnes & Noble's turnaround was achieved by empowering individual bookstore teams and reviving the local bookstore experience through cost-cutting and returning decision-making power to store managers.
Private equity's short-term focus, heavy debt burden, and extraction of fees can have detrimental effects on businesses and employees, highlighting the need for regulatory reforms and incentives to ensure positive contributions to the economy.
Deep dives
Revival of Barnes & Noble: From Big Box Bad Guy to Rebirth
Barnes & Noble, once portrayed as the big box bad guy gobbling up the competition, faced near extinction with the rise of the internet. However, the bookstore chain is making a remarkable comeback. Under the leadership of CEO James Don, Barnes & Noble has undergone a transformation. Don, an independent bookstore owner, aims to empower individual bookstore teams and revive the local bookstore experience. By cutting costs, eliminating central purchasing functions, and returning decision-making power to store managers, Barnes & Noble has been able to regain its identity and engage with the community. With a focus on better selection and services, the chain is attracting people to its stores as "third places" to hang out, discuss books, and make purchases.
The Inner Workings of Private Equity
Private equity is a business model where firms use a combination of their own money, investor funds, and borrowed capital to acquire companies. The goal is to make operational and financial changes with the aim of selling the businesses for a profit. However, private equity has been criticized for its short-term perspective, reliance on debt and extracting fees, and insulation from legal liability. These factors can lead to negative consequences, such as bankruptcy, job losses, and even harm to consumers in industries like healthcare. While there are successful private equity stories, there is a need to reevaluate regulations and incentives to ensure better outcomes.
The Impact and Controversy of Private Equity
Private equity has been associated with both success and controversy. While specific cases like the revival of Barnes & Noble demonstrate effective management, private equity as a whole has drawn criticism. The short-term focus, heavy debt burden, and extraction of fees can have detrimental effects on businesses and employees. Furthermore, private equity's insulation from legal liabilities raises concerns about accountability. To mitigate these challenges, regulations and incentives need to be reformed at the federal, state, and local levels, enabling private equity firms to contribute positively to the economy.
The bookseller has gone from big-box villain to company on the brink of bankruptcy to bright spot in the mostly dismal retail space. The Verge’s Nilay Patel and author Brendan Ballou explain the unlikely story of its apparent turnaround.
This episode was produced by Isabel Angell, edited by Matt Collette, fact-checked by Laura Bullard, engineered by Patrick Boyd, and hosted by Noel King.