Transcript: Ryan Holiday on Opening a Bookstore During a Pandemic

(Bloomberg) -- Bookstores typically aren't seen as the most attractive businesses in the year 2021. Add in the pandemic, and that makes it even tougher. And if you're in Texas, dealing with scorching heatwaves in summer and life-threatening blackouts in winter, then it gets even harder. Our guest on this episode did all of that. We speak with the author Ryan Holiday,  the author of several books including The Daily Stoic and Ego Is the Enemy, as well as Conspiracy, a book about the takedown of Gawker.  Below is a lightly edited transcript.

Tracy Alloway:
Hello and welcome to another episode of the Odd Lots podcast. I'm Tracy Alloway.

Joe Weisenthal:
And I'm Joe Weisenthal.

Tracy:
So Joe, I feel like we're definitely still working through the economic reverberations of the coronavirus crisis. Right? We've had this massive recovery, but it still feels like there's further to go.

Joe:
Yeah. I mean, absolutely. I mean, it seems like in many respects, some of the sort of business disruption, supply chain issues, it's not obvious that they're getting better. You know, we talk a lot about shipping and logistics and at least by some measures, for example, that's actually still like, as worse as it's ever been today than at any point in the crisis.

Tracy:
Yeah, so we're still working through various forms of gridlock in the supply chains, as we've been talking about quite a lot on Odd Lots, but I feel like there's also these sort of deep scars on the business environment from the past year. It goes back to that question, I guess we've discussed it on the supply chain episodes, but what do businesses do about investment? Are they confident enough to start reopening to really put a bunch of money into expansion? Or is everyone going to be nervous for a long time that you could get a third wave or some sort of delta variant, something like that that could come in and I guess surprise everyone again.

Joe:
Exactly right. You know, I think a lot of businesses were clearly designed for a sort of like predictable pre-pandemic pattern, right? And some things are going back to normal and it's like, okay, people are going out to eat again. And it looks like people are starting to go to movie theaters again though I don't know if it's enough to justify AMC's stock price, but people are going back to movie theaters again and so forth. But obviously things are just different. And so certain types of businesses or just certain types of behaviors are going to be different and certain types of businesses are going to be affected positively and some negatively. 

Tracy:
Yeah, so on that note of things being different, one thing I wanted to do was talk to a specific business — like a single small business — to try to get a feel of what the past year was like and how they're now looking at the future. And I thought what could be really interesting is to look at a business that already has its challenges even without the pandemic. So today we're going to be talking to a very, very famous author and someone who recently started their own brick-and-mortar bookstore in Austin, Texas. And they actually opened that store during the pandemic. And Joe, I know you follow the Texas news very closely, but there were also all sorts of a weather-related events that would have made the past year even painful for a new business. 

Joe:
Yeah, absolutely. I mean, I think in the last few months Texas has had both a historic freeze and a historic heat all in a short period of time, stretching pretty, you know, that added to grid strain. I mean, we saw like the crazy freeze, I think it was back in March. So just one thing on top of another.

Tracy:
Yeah, exactly. So today we're going to be digging into all those various challenges from the perspective of an actual small business owner. And I am very pleased to be introducing our guest on this episode. It is the author Ryan Holiday and now the proprietor of The Painted Porch. So Ryan, thank you so much for coming on.

Ryan Holiday:
Yeah, thanks for having me. You're right. It's difficult to have a business during a pandemic. I think opening during the pandemic was so much harder because you were completely flying blind. Like you had no idea whether it would work under ordinary circumstances. And then it was like, are people ever going to be in the same room with each other ever again? That was like the level of like questioning your bedrock assumptions about reality that we had to think about a lot over the last 15 months.

Tracy:
So walk us through the timeline here then. When did you start thinking about opening a bookstore and why? And at what point did you actually start doing it and how did that clash with the pandemic?

Ryan:
It seems like an eternity ago, but I was in the fall of 2019. We lived near a small town called Bastrop, which is right outside Austin. I was sitting in a restaurant with my wife in this small main street and we looked out across the street and there was an empty building that had been closed forever. And my wife said, you know what would be great there? A bookstore. And I said, that sounds crazy. But for some reason we ended up getting excited about the idea. And so I think it officially became our space in January of 2020. And we hired like our first employee, started the process, in mid February of 2020. So, right, right before the wave crashed.

Joe:
So what was the vision? I mean, I'm actually, I used to live in Austin for awhile. I've been to Bastrop and I'm just sort of like imagining the sort of like idyllic little bookstore. And it sounds very cool and I hope to visit it one day, but besides sort of like looking at a spot and saying a bookstore would be here, what was sort of in your mind, the business opportunity for it?

Ryan:
So I have a couple advantages that your average sort of bookstore owner would not have, which is for the last 10 years, actually more than that, I've had an email list where every month I just recommend some of my favorite books. And this started with like 50 friends and it's now, you know, a couple hundred thousand people all over the world that get this one email that I do 12 times a year. So I've been recommending books for a really long time. And I know books that people like. So I've loved, I've loved supporting and recommending other authors even before I ever wrote any of my own books.

So I've kind of had a digital bookstore for a long time, except almost everyone that recommends stuff online sends those people to Amazon and you take affiliate revenue, right? And so I've sold hundreds of thousands of books, hundreds of thousands of dollars with the books over this time, but just, you know, taking, a minuscule commission. And so part of it was thinking like, okay, I've already done this before. What would it be like if I actually owned the books and sold the books and what if I sold my own books directly to consumers? What would that be like? Then the other wrinkle — and this was a great piece of advice I actually got from Allison Hill, who is the owner of Vroman’s and Book Soup in Los Angeles — And now she's the head of the ABA, the American Booksellers Association.

But she was saying that if you use this space, multipurpose use of the space in bookstores is basically the only way to survive. And so I actually needed — my wife was tired of all my books being in the house, me being in writer mode around the house sort of dipping in and out of reality — and so the idea was I needed some office space. I needed a place that I could do what I do, even recording this episode right now. So I needed space. I wanted to do the bookstore. It came together in this specific location in this town, you know, down the street from my house. 

Tracy:
So first of all, let me just give a plug to Ryan's reading recommendations email, ‘cause it is really good and probably responsible for like a good chunk of my personal reading every year. But just going back to this idea of a physical bookstore and a multi-use space. So I get that in your case, it's a little bit different. You're an author, you're looking for office space that you can use for your own projects. But to what extent are most bookstores nowadays multi-use space? Like I certainly know in New York, if you go into a bookstore, chances are it's probably going to have a coffee shop. Maybe like a little area where they're selling stationery and greeting cards and things like that. Everything seems to have diversified and expanded to try to offset the giant that is Amazon.

Ryan:
Yeah. That's a huge part of the business, wine bars or coffee shops, stationary, gifts, accessories, that's all a part of the business. But that to me still makes you very vulnerable to like in-person retail traffic. So I would say the real way that most indie bookstores are diversified is that they also sell online. Right? So having e-commerce and in-person, that's a big part of it, but still you're dependent on customers to sell books.

So what I really wanted was some way that, like we could have bad day, like nobody came in the store, which does occasionally happen, and I wouldn't have necessarily lost any money. Like it didn't cost me anything because I still needed the space to write. When I was thinking about sort of risk mitigation of this crazy, very expensive, let's call it a vanity project — that's the wrong way to put it — I think this rather self-indulgent business, like you're not opening a bookstore ‘cause you think it's going to make you very wealthy. I was doing it ‘cause I genuinely loved books, but I wanted a way that like, Hey, the mortgage or the rent or whatever it is, is covered, at least partly by things that are not dependent on people coming in and buying hardcovers or paperbacks today.

Joe:
So why don't you walk us through the timeline a little more? You mentioned that you had the idea in late 2019, obviously. No one knew what was coming a few months later. How quickly did you put it into motion? What did that entail? And what were the first steps to turn like raw space into a bookstore?

Ryan:
Yeah. In March of 2020, that's when we had just started the building of the demo, the building of the shelves, all that work started like right as the world was shutting down. I remember talking with some of the workers and going like, Hey guys, like this is going to get real. I don't know where this is going. And so, you know, then it did escalate really quickly. We took, I think we took our youngest out of daycare on like March 8th, March 9th, and sort of stayed at home, which is a few days before things really started in Texas.

But I remember a few days later, you know, ‘cause no one was in the space, I could safely drive there and not be around anyone. But I remember just walking through this space that had previously been set up to be a restaurant. That's what the space had been. It's been open for 140 years. But the last thing that was here was a Mexican restaurant. I remember I walked through the space, it's now completely empty. All the expensive kitchen stuff has been torn out. The bar has been removed. It's like worse than when we bought it. And I remember thinking like that line from Arrested Development, you know, I may have made a huge mistake. It was just like, oh my God, did I bet everything on like a thing that's not going to exist anymore?

Tracy:
So in March of 2020, when you're surveying the space and it's a mess, are you, what are you thinking in terms of next steps? Do you just press on with the plan or did you maybe scale back some of the ambitions or have to delay some of the work and refurbish again?

Ryan:
Yeah. The first thing we did was basically cut the plan in half. So our space is technically two addresses, although they're joined in the interior through a door. The original idea was like bookstore on one side, coffee shop/meeting space/event space for the bookstore on the other side. The bookstore would be like 5,000 square feet. The second this happened, it was like, well, we're definitely not doing meetings anytime soon. Definitely not having events. Definitely not having people sit for coffee. Like, is that even going to be possible? So we cut it in half just then, which was both terrifying and somewhat of a relief because it made the scope of the project so much smaller. Like of all the things we were thinking about doing, that I'm the least qualified and have the least experience about, more of the hospitality side of things was the furthest outside my experience. So scaling it down to just like, there's this store that sells books and it may be that we're primarily online for the foreseeable future, that was the first radical shrinking that we had to go through.

Joe:
Okay. So pandemic hits, total chaos. When did things start to feel for you, like, okay, things are easing a little bit. The chaos of the first couple months, you know, you start to get your bearings a little bit, get more, you know, some sense of normalcy. When did things start to gel a little bit for you?

Ryan:
We did end up pressing ahead with the work. So it was, it was surreal to see like shelves go up and then the order of books came, but there was no sense for us that it was remotely safe or appropriate to open. So Texas, like in June, Late May/June basically decided — kind of like Florida — that the pandemic didn't exist, that we had no obligations to our fellow citizens and that it was sort of every man, woman and business for themselves. So, you know, that was supposedly a pro-business decision, but it was actually really kind of terrifying and overwhelming for, especially for a first time business. Like we don't have customers that we're serving, right? Cause we've never opened our doors, but it's just like, are we going to take what is literally a sealed-off bubble that is our lives and open it to hundreds of people and is that the right thing to do in a small town, in the middle of a pandemic? So it became this thing. Well, now we can proceed with opening, but sort of ethically, morally, and then also just as far as keeping our own family safe, we've got two young kids — can we, should we, and, and we just decided no. So we didn't even start thinking seriously that we might open ‘till like 2021. So we had to eat a year of expenses going out, but nothing coming in.

Tracy:
So just to be clear, Texas didn't provide guidance on whether businesses should stay open or closed or what sort of things they should do to try to protect their customers.

Ryan:
Yeah, almost none whatsoever. I mean, you know, at the beginning of the pandemic, there was like a mask mandate and some business closures and like some crazy lady, it turns out it was like sort of a — not a stunt, but it was sort of a political sort of operation — some lady in I think Dallas, kept her hair salon open in violation of the policy. And then she was like arrested or fined. And then the governor like pardoned her almost like immediately. So it basically made it, it basically reduced masks and public safety and all the Covid regulations to like meaningless theater, which made it so much harder to open. It made it essentially impossible for us to open a business for the safety of our own kids, but then also just like in good conscience, right? Like I'm not indicting or criticizing the other businesses. It's a totally different story if you have people who have worked for you, who are, you know, sort of dependent on their jobs, whether your restaurant or whatever is open. We didn't have that. Because the government had punted on the problem, it now made it our problem. And we had to decide like, can we look ourselves in the mirror and be part of the problem?

Joe:
Yeah. I remember hearing this from other business owners that like, okay, obviously there's some impulse, like you want to, people want to open up, you want to sell, you want to make money. On the other hand, you sort of like create this, I guess it's like game theory where it's like, if you let everyone open, then you're put in this position where you're sort of screwing yourself if you don't open, even if you don't feel like you could do it safely or something like that. It was a pretty weird time.

Ryan:
It was super weird. And, you know, now that we have the vaccines and we sort of have, I don't even want to say we're coming out of it, but now it's really difficult to go back and remember what it was like in June or July. Like, was it coming just around the corner? You know? And I think what I do remember of that time, in every step, like Texas sort of made the wrong decision and it got worse, right? So it'd be like, Hey, you know, we're at 10,000 cases a day. Well, you know, is that the peak? And then it's like then 20, then 30, then 40, you know, it kept going higher and higher and higher. And so every time we thought like, okay, we're going to turn a corner soon. It was this sort of self-inflicted, you know, like let's make it worse by pretending this thing doesn't exist.

Tracy:
Did you get any help or support from either the state or the federal government? You know, I'm thinking about the Paycheck Protection Program, for instance, I don't know if that applied to you because you're relatively new and maybe there were restrictions on how long employees had to have been working for you, but anything like that?

Ryan:
Yeah. I remember I applied for all that stuff at the beginning, you know, having just spent all this money, all this time and then not knowing what it was going to do. And I remember we got, I think like all businesses got like a thousand, you got like a thousand dollars for every employee, like at the very beginning. So I think we got like a thousand dollars or something. And then, and then I got approved for like a loan in the low six figures, that the PPP loan on the first go around. And I remember just thinking, like, I don't actually need this and I don't feel good about taking it when other businesses are really struggling and do need it. So we ended up deciding not to take it. It was actually funny. Like several times they replied like, Hey, you know, you're approved accept your loan here.

And there was a large amount of money and it was tempting. I just felt like I felt like 1) it wasn't the right thing to do 2) I felt like because I have been successful, I mean, it still wasn't something I could afford, but I have been successful. I felt like the optics of it weren't right to accept it. And I also just didn't know where things were going. One thing I did end up doing that, I think a lot of business owners or people in Texas where property values have gone way up, what I did do was I refinanced my house at an extremely low interest rate that just sort of relieved the pressure of like floating a business for a year, if that makes sense. So I felt like I was benefiting from the government policy without having to take a direct amount of money from the government. And I felt better knowing that, you know, Hey, that that's going to someone who had actually needed. And then of course you find out like all sorts of huge corporations and businesses did take it that really didn't need it, but you know, what are you going to do?

Joe:
So, you know, Tracy and I were talking about in the beginning, obviously I think like in the last few months, Texas has had at least like two very extreme weather, seeing both extremes of the weather, that really stressed the power grid. There was the big freeze. And then of course there's all these issues that companies, small businesses are facing both with logistics, getting stuff and with hiring. So let's take some of these things. First of all, you know, what happened to you to you and, I guess your home, but also your business, during the freeze? I think that was in March, right?

Ryan:
Yeah. It was out of the fire and into the furnace for us. Like what happened was we ended up opening the business right after the surge crests at the, you know, at the beginning of the year, sort of partial open, only a few people at a time and mostly selling on e-commerce. And then this massive unexpected freeze happens that again, the Texas government was totally ill-prepared for. Had neglected maintenance and basic responsibility of competent governance. And the result is that the power grid collapses in the midst of, you know, a terrible freeze. It's a huge disaster because we don't end up, we don't all live in the same reality. We don't see it on par with like a Hurricane Katrina, but it really was a disaster on that scale. I mean, hundreds of people have died. A state with like 30 million people is completely without power in many parts for days at a time.

I remember going into my son's room and sleeping in his bed with him because we knew we would lose power during the night. And I'd heard of people freezing to death in their homes. That's a thing you're doing in the first world, it’s insane. Right? And long story short, what ended up happening is pipes at the building froze because we couldn't keep the heat on. Also snow accumulated on the roof and the weight of it cracked parts of the roof and water came rushing in and ruined a bunch of inventory. So again, to go back to this idea that like, oh, the Republican response or the Texas response is pro-business, we're not gonna let these lockdowns, you know, keep our businesses shut. Like pro-business is a philosophy which means supporting business and making business possible. The incredible incompetence and negligence right down to Ted Cruz fleeing the country for a resort in Mexico, that costs businesses like mine, tens of thousands of dollars — to say nothing of having to be closed and all that. And you know, let's not even get into that sort of perpetual denial of climate change, which puts us in the mess to begin with. Right? So it was extremely frustrating. And just again, I could afford it, but I can only imagine a business that was struggling to hang on, that being the blow that finishes you off.

Tracy:
Did you ever stop and think maybe it's not worth it?

Ryan:
I mean, the beauty of the sunk cost fallacy is that it blinds us and we keep going because of all of what we've already done.

Joe:
So supplies. So like, okay, you're like the snow cracks the roof of your building, the pipes freeze. So obviously that creates things you have to buy or things someone has to buy. Anyway, you mentioned inventory damage and so forth. We also know that coming into this, people are already talking about difficulty finding labor, I have to imagine it's not trivial finding construction labor, or repair labor in Texas in the middle of a boom on top of that. How did these things intersect to the extent that they did, where sort of like getting back on your feet, intersecting with some of these broad shortages and tensions that were building up even prior to this.

Ryan:
I mean, I'll give you something even more practical than that. Publishers have had trouble keeping books in stock. My own books have gone out of stock like three or four different times. Different titles have, you know, publishers tried to over the years, get closer and closer to sort of real-time inventory management — to keep as little in stock as possible. Amazon, the same thing. You want to have as little inventory sitting in warehouses, but you want to speed up your ability to get books to people who need them.

And so when the pandemic happens, that's bad because publishers are, you know, printers are struggling. It's hard to get supplies. Everyone's dealing with, you know, sort of new Covid safety protocols and that makes it harder to do what you normally do. But then also this bumps into a good thing, which is suddenly people are home and reading more and they're buying them, you know, mostly online, but they're reading more.

So book sales have gone up during the pandemic, but the ability to stay in stock has been a perpetual struggle. So like even right now, I sent out my reading list email yesterday, and I had to decide what books I could recommend based on what books I could actually get my hands on in high enough quantities to sell them to people. And these are, you know, publishers and booksellers primarily make their money off what we call the backlist. Yes, new titles, celebrity books, memoirs, et cetera, sell. But it's, you know, it's books that are five years old or 10 years older or a hundred years old that sell. But those are the most dependent on that sort of inventory management. So it's been a real struggle just getting books in people's hands because stuff that people want isn't in stock.

Tracy:
Hmm. What do you think is needed to rectify that situation? Is it just things sort of going back to normal? Maybe people — this sounds weird to say it, but people reading less as they go back to work and start going out to bars and restaurants — or is it publishers and printing presses responding to the new demand and actually ramping up production?

Ryan:
Well, I hope the solution is not people reading less as, as just a member of society. I think part of why we're in this mess is people not reading enough. Like one book we sold a ton of copies of is John M. Barry's ‘The Great Influenza,’ which was published in, I think, ‘04, ‘05, actually, George Bush reads it and puts in place a pandemic response team that as we know is later disbanded. And that gets us where we are. But books are timeless and good ideas are timeless. And it's by studying the past that we can prepare for the future, avoid unnecessary repetitions of the past. So I think we need to read more, but I do think publishers are having to figure out how do you minimize costs, but also not make yourself dependent on this sort of Byzantine supply line that really struggles.

So one of the things I've made, I made these sort of brass coins, these ‘challenge coins’ that are emblazoned with some of the ideas in my books. We could have made them cheaper in China over the years. And that would have helped us be profitable up until 2020. But the fact that we use this small, you know, mint that's based in Minneapolis, allowed us to never go out of stock during the pandemic. So some publishers print overseas, but most printing is done in the U.S. which I think is why, although there's been trouble, it hasn't been a complete disaster. Businesses are having to figure out, Hey, you get stuff cheaper in China or Bangladesh or wherever you make it, but that makes you vulnerable to very long supply lines. And the closer that stuff is to home, the faster it can be done. It's more expensive, but it's also more resilient.

Joe:
Let's talk about that a little bit more. The actual physical publishing, because every once in a while, like me and Tracy, we'll talk to someone about writing a book, like maybe an Odd Lots book or something like that. And they'll go, if you start it now, you know, it'll like come out in the year 2027 or something. It's like, that's all right. I'd rather just write a tweet and have it be up two seconds from now. But, you know, but in all seriousness, like it does seem as though my understanding of like actual physical capacity of production is an issue. And there's only like so much production. So how much publishing capacity is there just in a normal state and then like what really happened to it and how strained is that now? Walk us through the sort of like publishing supply chain level.

Ryan:
Yeah. I'm not an expert on it by any means, but I'll give you an example. This was happening before the pandemic, the success of the Obama books, particularly Michelle Obama's book were so pronounced and so enormous that like printers in the U.S. were running out of paper. Right. So is massive hit book, you know, can suddenly suck up all the printing supply and publishers have to make decisions. And this was, these were arguments I was having with my publisher of course, is like, you know, well, who gets, you know, if there's however many pages available, how are you allocating them? Right. And who gets those pages? And so that can be a real battle.

And that, you know, the customers don't understand is, is influencing what they can see and what they can order. But what you're really dreading is like, somebody decides they want to read a book and then they go on your website, or they go on Amazon or they go to a store, and it's not available and you can't tell them when they're going to be able to get it. And so that's the perpetual difficulty. What's been interesting about my books is, I think my oldest book is 10 years old, but all of my books remain in print and sell sort of consistently. It's what they call a perennial seller in publishing. That's a good problem to have, but it's, you know, I think I have 12 titles. So that's a lot of books to keep in print, right. And that can be a hard target and hard choices get made and suddenly, you know, your book is the one that they push the printing back, you know, six weeks, but at your sell through rate, that means they're going to run out two weeks from now and for a month, people that want to buy your book, can’t buy it. And you know, what happens if that's the week that, you know, you get interviewed on NPR and suddenly...

Joe: 
… Or Odd Lots.

Tracy:
Or Odd Lots, yeah!

Ryan:
I'm only saying that because we're not actually talking about my books here, but I just mean like, you know, maybe that's the week that some celebrity mentions your book on Instagram and all that demand disappears in the wind because they can't purchase it when they want it.

Tracy:
A lot of this reminds me of, in some of our shipping episodes, we've been talking about how you actually get spaced on a container ship. And it usually goes to the big customers, like a Walmart or an Ikea. If, you know, if you're the shipping company and you have to make a choice about who gets limited space on your ship, you're going to give it to people that, you know, are going to come back again and again, and be worthwhile customers. So I guess I'm curious when it comes to authors, how are publishers making that judgment call? Is it just based on who they think can sell the most books?

Ryan:
Yeah, I think it's primarily based on demand and need and velocity. The good news is most books from the big publishers are printed in the U.S. but actually during the pandemic, I had bought back the rights and was working on a leather-bound edition of one of my books, ‘The Daily Stoic,’ and the only place we could get it printed was in Belarus. So it got printed in Belarus in I think late May, but we weren't able to sell it ‘till August. That's how long it took to get from Belarus to the United States.

I remember how — it was a crash course in global logistics to watch, you know, a book leave on a boat from Belarus, make it to New Orleans, travel up the Mississippi in a container ship until it got to our warehouse in Chicago — and watching that happen, watching it unfold. And then exactly what you said. I mean, as you pick your shipping rates, it's like, you know, here's what it costs to be in the container, but here's what it costs to be the first unloaded from the container. Right.

Joe:
Ooh, I didn't realize that was a thing that, that was like part of the price?

Ryan:
Yeah, and you know, here's what it costs to put it on a plane, you know, maybe that's $3 or $4 a copy, which is, you know, obviously destroys the margin. So there's all these things that you — doing my own books, having self published a few sort of premium editions of my titles — it did give me some empathy for the struggles that my publisher was going through. Although, you know, I remember having one conversation that was sort of like, look, the reason I sold my book to you was, so this would be your problem. And I would get, I would get the benefit of being protected by the big guy, you know, the multi-billion dollar corporation. But I think one of the things I learned about the pandemic was like, it really put everybody in the same boat. It didn't matter how big you were.

Joe:
How did you end up? So you had this vision for like a really premium leather-bound version of the book. How does that process work? Like finding the one printing press in Belarus that can like deliver the version you need?

Ryan:
Yeah, it was pretty funny. My agent had been a long time publisher before he was an agent and he recommended me to someone that they'd used before. It was like a Bible printer in the United States. They're actually based in Dallas, but they print at a factory that they own in Belarus. So, you know, we went through a bunch of different people. They gave us samples, but one of the reasons my publisher didn't want to do the premium edition and why they sold the rights to me is that it felt like to them to be more trouble than it's worth. It actually ended up being a great idea and readers have really loved it. Because The Daily Stoic is a book you read a page a day, every year, and you start over at, you know, after you make it through all 365 days. So it kind of needs to be a sturdier book than your average hard cover. So it was a cool project, but yeah, you just realize like, oh man, now I'm having to, you know, different qualities of leather. What do I want and how do I get in a box? And you know, how do I ship it, some to the warehouse in the U.K. and some to the warehouse in Chicago and what am I willing to pay? And yeah, how fast do I want it loaded off the container ship? And you know, what is the capacity of the port, you know, during the pandemic and then God forbid people whose stuff was going through the, the Suez Canal and there's a boat stuck sideways. Like all of a sudden these things that you read about in the news become like your problem when you're the publisher or when you own the bookstore.

Tracy:
One thing we haven't spoken very much about is, I guess employment and whether or not it was difficult to find enough people or the right people over the past year. I imagine some people, you know, much like you were perhaps reluctant to open in the midst of the worst of the pandemic, employees were probably reluctant to come into work. And then of course this year as the economy reopens, we've heard all this talk about a labor shortage. And I'm just curious if this is something that you've experienced yourself?

Ryan:
Yeah. We hired someone really great at the beginning of the pandemic to be the manager. And then I think that was, you know, as soon as we did that and then we couldn't open, it became sort of unconscionable to us that we would like, if we wouldn't show up at the bookstore every day, to send someone else to do it for us, you know? So we just decided to sort of first have this person set up everything and oversee the rollout of the bookstore, knowing we weren't going to open, and then sort of repurpose them for other projects until they felt comfortable and we felt comfortable. And then, you know, obviously the decision for, for all of us to get vaccinated made some of this stuff less stressful, but you know, Texas, again shoots itself in the foot decides to sort of aggressively politicize the vaccine, you know, to lift the mask mandate early.

Again, the pro-business state passes this sort of nonsense legislation about, you know, not being able to discriminate in the form of vaccine passports. And it's like, okay, great. Now you have to deal in a universe where you're asking someone — an hourly employee — to demand some complete stranger who’s much bigger than them to put on a mask. And you know, this is a state where people can openly carry handguns. That is a totally unfair burden to throw on businesses, but it's the reality of where we are. So we said, what can we do about that? My wife and I have volunteered in the vaccine clinic in town. We've tried to go, like, we want to live and work in a town where people are vaccinated and safe. We can't affect government policy, but we can sort of try to be part of the solution.

Joe:
So what about sort of, I mean, we talked about the power outages and the power stress and the … buying things like buying shelves or like buying furniture or buying lighting, I imagine this was totally new to you. And again, we keep hearing about like shortages and delays with all that stuff. What was that process like?

Ryan:
Yeah. You, you definitely hear that from contractors and stuff. They're like, Hey, you know, I had to go to six different Home Depot’s, you know, to get this thing and I'm sort of going like, but I don't want you to have to go to any Home Depot's like, can we buy this stuff online? Cause again, I've been very conscious of not wanting to ask people to do things I wasn't comfortable dealing with myself, but we're in the middle of this, you know, we talked about the freeze, well now it's this crazy heat storm. And lo and behold, the AC, you know, it goes out in the building and we're going to have to spend, you know, a large amount of money on these two ACS, but like we're in a long line from the company. So like they have to wait to get it. And then we have to get slotted in with all the other businesses and people that need air conditioners, most of which, you know, probably weren't super well-maintained during the pandemic and then to go through this freeze. So that's what, like right now today, we were trying to figure out how to get this AC situation fixed and, you know, sweating our asses off in the meantime.

Tracy:
I guess that's a good segue into what things are like right now. Have things improved? Are customers coming in? Does the business feel established to you?

Ryan:
Yeah, it’s been just long enough that it's sort of part of a new normal, but business has been better than we expected. People have for the most part been wonderful. So many people have come in. I love bookstores. You know, I always wanted there to be a bookstore here. I'm so happy you're here. And it's been cool to see other businesses pop up, you know, in some of the empty storefronts since we opened. So we're feeling good about where it's going, but then like a lot of business owners you sort of also out of the corner of your eye, you're tracking this delta variant, and you're wondering, you know, could this all go back in the other direction again and how can we be prepared for that too?

Joe:
The other thing we haven't like really talked about is independent bookselling in the time of Amazon. Obviously it's been pretty, you know, the sort of like chain physical bookstore they got sort of obliterated, but there does seem to be this space for more independent bookstores. Are things like, sort of at an equilibrium where sort of like true book lovers are supporting independent books maybe more than they did in the past. And there’s sort of like this balance or is there still like persistent Amazon anxiety in your community, in your world?

Ryan:
I'm a little unique among authors in that, like, I don't get any of this Amazon hate. Like, I love Amazon. Amazon has been amazing for me and not just because they've sold a lot of my books, but they've surfaced my books to so many people that would have never heard about them. And they quite frankly, you know, a lot of indie bookstores have never got behind them the way that Amazon has. So, you know, when I go on Amazon, I know my books are in front of people. When I walk into a random indie bookstore in, you know, Cleveland or something, it's not a guarantee they're going to carry my books. So the vast majority of my sales come on Amazon. Not only am I not going to bite the hand that feeds me, I'm grateful for what Amazon has done.

But I would say that our strategy is, look, if you know, if you're looking for a very specific book, like you want to read the newest whatever, you're probably just going to buy it on Amazon because that title is in your mind and you want it right now. You're going to buy it there. The need we're trying to fill is, exactly the need we felt when we were sitting at that breakfast restaurant, you know, 18 months ago, which is we're having brunch, what are we going to do after? I love browsing bookstores.

So the premise of our bookstore is not that we carry every book, but that we carry books that we know you will like that we have gotten behind that we want you to check out. And, you know, that was something that surprised me when I was researching about the indie bookstore business. The average indie bookstore carries about 10,000 titles, which is an insane amount of books. We carry about 600 titles. We have multiple copies of those books, but my premise is I want to have a small amount of books that 99% of them, I've not only personally read, but like I can tell you about, and I can tell you why they're amazing and you absolutely have to read them. And I want to be able to display them in the store in a way that they stand out. So we carry a smaller number of books that we know people will love. That's the premise of this store. So we're not competing with Amazon. We're not competing with Barnes and Noble, It's right back to this email list I've done this whole time, which is like, here's some books that I'm personally vouching for that I think you'll love.

Tracy:
So I, I realized that we haven't actually plugged many of your books on the podcast. So I'm just going to say that two of my favorites of yours are ‘Conspiracy,’ which probably for our listeners is a little bit media navel gazey, but that's why I am very interested in it. And ‘Ego Is the Enemy’ was also amazing and helped me a lot when I moved into a managerial role at Bloomberg. So thank you for that. And I have to ask, are you working on anything at the moment?

Ryan:
Yeah. I mean, that was the other part of the pandemic, which is as, as expensive and costly and crazy as all this has been, it was also wonderful to have a quiet, safe space just to myself that I could write. And to know that, Hey, if I show up every day and write this book, do my job, we're not going to starve to death. It'll cover all this. Right. And so that was the ultimate sort of variable use of the space, that I could use the upstairs to write. And so I worked on a kid's book during the pandemic. I wrote a kid's book about Marcus Aurelius, that came out in March. And then I'm just now finishing and it's going to the printers, I'm writing a book about courage that will come out in the fall and hopefully will be the first event that we have in the store, depending on sort of where the pandemic goes.

Joe:
My wife is reading the Gawker book by the way,

Tracy:
‘Conspiracy.’ Yeah, it's great. And the new one on courage, it's called “Courage Is Calling.’ Is that right? I'm looking on Amazon right now.

Ryan:
Yeah. Okay. See, there you go. Yes. ‘Courage is Calling.’ The subtitle is ‘Fortune Favors the Brave,’ and it's the first in a four book series and the first one comes out in I believe September.

Tracy:
Okay. We'll definitely look out for it. Ryan, thank you so much for coming on Odd Lots and talking to us about the challenges of starting not just a new business, but you know, an actual brick-and-mortar bookstore during a massive pandemic. Appreciate it.

Ryan:
It feels good to vent a little bit, and to share the journey. So I appreciate the opportunity.

Joe:
Thanks so much, Ryan. That was great. Thanks.

Tracy:
So Joe, you can probably tell I enjoyed that conversation, but I think it really helped to crystallize a lot of the different ideas that we've been talking about. I know we've spoken individually on a number of these supply chain issues now, and a number of these sort of like high-level economic themes. But I feel like this one store in a small town close to Austin probably crystallizes a lot of what's going on.

Joe:
Yeah, totally. Right. And I feel like, you know, it's interesting, it would not have occurred to me that like, even though it makes sense, that like publishing got curtailed at the same time there was a spike in demand for physical books. I just feel like that is such a repeated theme that we saw over and over again this last year, the simultaneous spike in demand and the diminishment of supply all hitting at once. I just hadn't thought about it at all with physical books. And then everything he said about shipping was like super interesting. Like, I didn't even realize that, you know, track your own ship and getting to decide like when it gets unloaded, just all super interesting stuff.

Tracy:
Yeah. And also publishers prioritizing prints from certain authors, I guess intuitively it makes sense, but it's also something I hadn't thought about before. But the other thing I'm thinking is getting back to that question of whether or not these pressures are transitory, you know, this idea of does the publishing or, you know, the physical book shortage resolve itself because publishers ramp up capacity in one way or another, or because demand starts to normalize (and unfortunately people start reading less), or maybe it's a permanent shift in behavior? And having spent a year at home, people decide that they actually really like reading books. And it becomes the new normal, I guess it's too early to tell.

Joe:
It's too early. But again, it's interesting. ‘Cause like how many times have we seen, like an industry was trying to get super lean or just in time inventory or, again, books, like I get that impulse, like, of course, you want to not have inventory, but also like books are super unpredictable in terms of what's going to have a huge run. So once again, you see the sort of cost of like trying to get too lean, too fancy with your inventory.

Tracy:
Yeah, absolutely. Okay. Shall we leave it there?

Joe:
Yeah, let’s leave it there.

You can follow Ryan Holiday on Twitter at @RyanHoliday.

©2021 Bloomberg L.P.