The Economics of Everyday Things - Amazon Was Supposed to Kill the Bookstore. James Daunt Had Other Plans | Better in Person

Episode Date: September 17, 2026

He started with one small shop in London. He has since resuscitated both Barnes & Noble and Waterstones. In this episode of Stephen Dubner’s new TV talk show, James Daunt tells Stephen exactly how he does it. If you'd like to see the video version of Better in Person, you can watch it on YouTube or Apple Podcasts.  Hosted by Simplecast, an AdsWizz company. See pcm.adswizz.com for information about our collection and use of personal data for advertising.

This episode of Better in Person is presented by ChatGPT. Put ChatGPT to work on your most ambitious ideas and projects. Download the new ChatGPT desktop app today. Hey there, it's Stephen Dubner from Freakonomics Radio. If you like the economics of everyday things, you probably also know that we like to try new projects. And I'm here today to tell you about another new show. But this one is different.

It's a video show shot in my living room. and it's called Better in Person. If Freakonomics is about how things work, better in person is about how people work. You can watch the first season now on the Freakonomics YouTube channel or search for Better in Person on Apple Podcasts. To give you a feel for the new show,

we are publishing an audio-only version right here. I hope you like it, and I hope you will check out the video version on the Freakonomics YouTube channel or Apple Podcasts. And if you like that, please spread the word. That is the single best thing you can do to support the stuff we make. Here now is an episode of Better in Person that I think will especially appeal to listeners of the economics of everyday things. It's a conversation about bookselling with the unlikely CEO of Barnes & Noble, James Daunt.

As always, thanks for listening. I think 30 years ago, all the bookstore chains were ruling the world, and the idea that I would then be running them all is, Yes, fanciful. And indeed, I may wake up at some point and find it was all some sort of weird mushroom that I ate last night. Did you have a mushroom last night? I did not. Well, not that sort anyway. This is Better in Person with Stephen Dubner and James Daunt. James Daunt is not a household name, at least in most households, but he always has been in mine.

Years ago, he opened a small independent bookshop in London, Daunt Books, which many people consider their very favorite bookstore. From there, he somehow went on to revive two of the biggest bookstore chains in the world, Waterstones in the UK and Barnes & Noble in the US. You could argue that James Don't helped save the very idea of the bookstore, maybe the printed book itself. So how did that happen? I wanted him to start from the beginning, so I asked what his sales pitch was when he first opened Don't Books. This is going to be an amazing bookstore. We're going to be an amazing bookstore. We're going to absolutely nail it and we're going to go and take over every other bookstore in the Western world. No. It was not what we were saying. But the idea was to create a nice bookstore and

hopefully it would work. I love that it came out the way it did. I don't understand how you could have such confidence at opening a bookstore in 1990. It was deeply foolish and born of naivety and, you know, those who thought it would end in tears were nearly right. I left university with zero plan. When did you study? A history. Oxford? Cambridge. Cambridge, sorry.

That's a very UK, you know, do-l-l-l-l-da. But there were these things called banks, no idea what they did. But one of them was hiring, and you could come and live in New York, and that seemed really quite exciting. So I joined J.P. Morgan. And so what were those four years of work like? Did you enjoy it? Did you think about a career in banking?

I thought it was completely fantastic. It was engaging, it was compulsive, it was really interesting, but it turns out only interesting to other bankers. So my then girlfriend really didn't find it interesting at all. She thought it was boring beyond belief and said no. Wait a minute. I was under the impression that the girlfriend who said that is your current wife or is it a different question? Yeah, you know, I've only had one girlfriend on one wife. You only have one girlfriend even?

Yes. Yeah. Okay, so you... I'm really dull. So, no, I'm not passing any judgment at all. I think it's very, I think it's wonderful. But you quit the job you love that was exciting because your girlfriend, ultimately your wife,

thought it was a boring job. And she wasn't wrong. Uh-huh. Really having sort of left to try and think about what to do. I love reading, I love books, I love traveling, but that I couldn't quite see how to parlay that into a future. But a bookstore I could see, so I thought I'd give it a go. Was it a hit from the beginning? No, it took maybe five years to really get going.

To begin with, I took a lease on in 1989 when everything was up, and I opened in 1990 when everything was down. There was the first Gulf War. It was a big recession. Actually, that helps me now as somebody running a company because I really remember what bad is like. But it didn't work for a long time, and we got through really with hard work and tenacity. One thing I notice is I get older.

I feel like what you could generally call experience, but particularly in business, is massively undervalued. I find in the market and in life. But as it turns out, there are some principles that you learn along the way if you pay attention. And I'm curious what principles you've learned that you feel are really valuable now?

Yeah, I've stayed in a very narrow world, so I hesitate to sort of think that my principles apply everywhere. But mine is the quality will out, and that one should never sacrifice the medium and long term for the short term. Everything has to be done for the long term. Hold to quality, dig in, work very, very hard, and ultimately you'll be okay.

That sounds so old-fashioned. It is very, very, very old-fashioned. I mean, I'm not going to lie, I love it. I've spent my life as a writer. I like to think that if you don't apply all that to your writing, then it can't be good. But I feel like the current economic culture goes against that, in part because so much leverage has been gained by the financial engineering industries, where it seems like they're not really producing or making anything and yet becoming fabulously rich. And so the principles that you just noted, an appreciation for well-made things, for well-created stores, it feels like nostalgia. Yeah, well, I certainly think that people gouging up short-term gains or short-term glory at the expense of the long-term is something that has bedeviled our industry, hugely, and one can see it going on elsewhere.

The people who ran Ordersons before me, the people who ran Barnes & Noble before me were not idiots, but they did destroy the business. And they did so, I think, by always pursuing the short term and getting fixated on the short term and then being locked into an ever spiral of downward short-term decisions to try and fix what required long-term decision-making. Were they driven by short-term results because of their ownership? Partly the ownership, partly, I think, a pursuit of glory. And if you are constantly trying to achieve the maximum in the present, you will do badly in the medium and long term. Let's go back to Daunt. You opened this bookshop.

You say it took about five years for it to become successful. For it to become not unsuccessful. How successful did it become then once it were you making good money? In time, yes. I mean, we open more stores, and it's a great bookstore. Sales have gone up every month, actually, since it opened. So it is a great, great bookstore. Very small, but great.

When I heard that you went then from being the inventor and proprietor of these wonderful independent bookshops to being the CEO of the big chain in Britain, Waterson's, I imagine that what had happened is that this big chain came to you, independent bookstore owner, and said, here's a very large check so that we can take over your shops and meld them with our failing shops and put you atop the whole thing until you fail. But that's not exactly what happened you retain ownership of the independent stores yeah how did um how did that work that sounds like a very unusual arrangement well the the purchase was extremely unusual in that um i did feel it was a tragedy for waterston's to disappear which it was obviously going to do at that point um

how long do you think it had uh an hour you know they they it was when the when the markets were opening, it was, they were announcing it was going into administration. I see. Administration essentially bankruptcy, yes? Chapter 11, but it's worse in the UK. It's worse in the UK. It's really, you don't mind here about bankruptcy. It's just like, oh, we're going bankrupt, fine. But in the UK, there's a huge stigma attached to it. And one of the reasons our economy is much less dynamic than the US is that there's a massive stigma and rigmar all around bankruptcy, and nobody comes out of it. I've heard this said by people before. which is that one of the secret drivers of our dynamic economy is you can go bankrupt and then just the next day open up the shop. So why is that not been copied more, do you think? Why hasn't been copied in the UK, for instance?

I think it's a cultural thing. And it's, you know, we do have limited liability and the rest. But there's a massive stigma attached to personal bankruptcy or business bankruptcy. You know, you can't have a bank account. You can't set up another. And people never rise from the ashes of bankruptcy, either as individual. or as corporates. Okay, so you at this point are a successful independent bookshop owner, and you think, well, Waterstones is a national chain of booksellers, and therefore it would make sense for me to buy them. That was your plan originally, was to raise some money to buy Waterstones and run it yourself? But I failed to raise any money to people to back me to buy it, and then was introduced to a Russian entrepreneur.

Alexander Mamut. Alexander Mahmout, who did put up the money. And he was highly agreeable because he just handed over the money and said, get on with it. And we got on with it. And we sort of got to work, just trying to understand what this very strange business was. So just walk me through those first few days. What was it like procedurally? Where were you living?

What were you doing? And how did you assume this? Well, I was working in my bookstore every day. And then I had to go to an office, which I hadn't been in an office, for 20. two years or something. I took a friend with me from Dawn Books. You're walking into the corporate headquarters of Watersons? Corporate headquarters. And what did these people think of you? Well, obviously, to my face, they're very polite. Clearly they're thinking somebody's just turned up. He's got six bookstores, little bookstores, and thinks he has any idea about how to run

this huge business of us. And did you have any idea how to run this huge business of us? And did you have any idea how to run that huge business? I knew how to run a bookstore, and I knew that there were 300 bookstores, that if I allowed the bookstores themselves to run themselves, so rather than have a home office, which was immediately apparent, was dedicated to telling each of those bookstores how precisely to run their business, that we needed to change that immediately, which is the euphemism for I far them all. So you fired them all?

Most. Most of them. And what did you do then? How did you find the right people? They were there. We just dropped down. And the people who were running it now were the people that we dropped down to then. So the people that were running it that were no good, they were...

Well, not no good. I mean, that's the interesting thing. They were actually very good, but they were trying to do the wrong thing. They're trying to run these stores. They're trying centrally to dictate precisely operationally in their visual merchandising in every small part. what exactly each store should do and that all stores should do the same thing. It was all centralized.

It was all coming. And what's the problem with that for bookstores? You end up with very boring bookstores because they're uniform. We've got bookstores all over in different communities and different size, different shapes, different booksellers within them. It makes the job of being a bookseller in that store very dispiriting, and it makes the stores themselves in their sheer uniformity very boring. And it's really expensive to run a business like that.

And it was pretty difficult initially. But we sorted it out, turned the business round, and then sort of fast forward to 2018. And we were looking with some trepidation of what was going on in the United States, where it was clear that BNN was heading downhill pretty fast, and we really, really didn't want BN to go under. Because why? Because the publishing industry is headquartered in New York City,

by far and away the largest market for English language books. And whatever the structure of the market is in the United States will be applied elsewhere. And if BNN had gone under, then publishers would have been effectively in a duopoly with Amazon. And that wouldn't have been very good for us in the long term. They're not going to maintain warehouses and distribution and all the things that we require as bookstore operators, be us independent or a chain. so we did need BNN to survive. In 2018, Alexander Mahmute sold Waterstones to the hedge fund Elliott Management. So when Barnes & Noble came up for sale the same year,

Elliot, which was already confident in the leadership of James Daunt, was a natural buyer. I asked Don't to meet me at the Barnes & Noble on Broadway and 82nd Street in Manhattan. This is my local store. I don't know if you know. And I love it. It's improved enormously. and continues to improve. Yeah, so that's what I...

I'd love you to just show us around a little bit. I follow James Daunt up the escalator to the second floor. So I can see science and I can see business. And then into world history. Booksellers need to know the chronology. They need to know every single non-fiction section is now not organized by alphabet, but organized by the sensible theme.

Each store will do it differently. As long as it makes sense. It's almost as good. as an Amazon algorithm. No, no, no, an Amazon algorithm can't even begin to do this. Absolutely can't even begin to it. But there was a time,

if you go back to the origin of Amazon, it felt like Bezos persuaded a lot of people that it didn't really matter for books, that a book I could buy here is exactly the same as there. So, if that's the case, and this involves a lot of real real estate, not warehouse real estate,

on the outskirts of, you know, Western New Jersey. How is this a viable business proposition? If this arrives in a little smiley envelope, it's not as good a book. It's the same book, but you won't enjoy it as much. And you get pleasure walking out of here. And then when you read that book, you've still got that lift. The kid who chooses their own book upstairs

is definitely emotionally more invested in reading that book. This episode of Better in Person is presented by ChatGPT. ChatGPT work moves beyond answers into getting real work done. It's a new experience in ChatGPT for bigger multi-step projects across web, mobile, and desktop. You can give ChatGPT work a goal and have it gather context, choose an approach, create the output, and continue iterating all while you stay in control. It can help turn messy inputs into useful outputs like briefs, spreadsheets, dashboards, presentations, prototypes, landing pages, and workflows. You can even ask ChatGPT work to take on entire workflows with a single request.

Here's an example. It can turn customer research into a campaign brief, use that brief to create marketing assets, and adapt those assets for different markets, carrying context through every step. Put ChatGPT to work on your most ambitious ideas and projects. Download the new ChatGPT desktop app today. I mean, there was a period during early Amazon peak when most people that I knew in publishing, I don't know so many people in bookselling, but most people in publishing were pretty sure that Amazon was going to put all other booksellers out of business. What was that period like for you as a bookseller? Yeah, I mean, I think that that was a lazy narrative, but it was one that people believed, and then there was a lazy narrative that Kindle slash Nook was going to supplant the physical book itself.

And, you know, we were all going to be having our Kindles and our Nooks, and, you know, that's the end of the game. Again, very lazy thinking. I knew that if the bookstore was a good bookstore, people would want to shop in it. Why would you not? I feel like I'm in some twilight zone. I feel like everything you're saying about this endeavor, which has been successful, by the way, goes against what American business schools at least teach. And a lot of, you know, any kind of leadership preaching would entail. So do you feel like you're a little bit of an outlier?

Or do you, are there more of you out there that I just don't know about? I suspect it's a little different. For example, we do no marketing. Join companies which have huge marketing budgets. And I set the marketing budget on day one at Orgston's, which I think then was 30-ish million at zero. And it's been zero ever since. What were they spending $30 million on? What TV ads, social media advertising, blah, blah, blah, all of that marketing and advertising.

What persuaded them that it was worth it? I've no idea. I think they're too frightened not to do it. Why were they too? I mean, I'm just asking where this conventional wisdom comes from. Because everybody does it. I don't think there's a single retailer that has a marketing budget of zero. We have a marketing budget of zero. We have a, you've met my PR department. They're ghosts, apparently.

Well, it's dead. It's an assistant who is also my assistant, but is also the executive team's assistant. We don't have a PR department. Seems to work fine. Mm-hmm. Booksellers today have a new form of marketing in Book Talk. Have you ever been scrolling on Book Talk and feel like everyone is talking in code? Don't worry. I got you. That's where TikTok users make book recommendations and react, often very emotionally, to what they're reading. This book was so good.

Book Talk has become a real cultural force. It can turn an obscure title into a bestseller, and it can resurface books that have been forgotten. How do you feel about book talk generally? It's fantastic. Yeah. Do you collaborate? Individual stores do. I think it's come across as being slightly patronizing it's not meant to be, but we say

until you just leave it to the guys with the blue hair. And they do a fantastic job. We don't put any controls on them. We have a single guardrail. Please use your common sense. And then periodically somebody strays the wrong side of that. What's an example of straying? You can promote.

something that shouldn't be promoted. And, you know, people are idiots, so these things happen. And we then need to not overreact and apologize if that's necessary and reset and move on. Would you care to say more about people are idiots? People are idiots, you know, we all know that. Or present company included, I see. Yeah, absolutely present company included. But from our perspective, vanishingly rarely, is it anything other than innocent stupidity. And that's why if you just let people get on with it, they have a lot of fun. And they really do have a lot of fun. And it's sort of kind of brilliant what they're able to achieve.

So do you think it means anything significant that an old-fashioned business like yours, hand-selling books on paper, says anything about our general cultural digital trends, which seem to be moving fast in the opposite direction? There's a real worth to the book. If your kids read, they will have better educational outcomes. Oh, hang on a second. Do you have proof for that, sir? It's, I mean, there are, hopefully, academic studies that seem to reinforce this.

But kind of we also know it to be true. And the parent who brings its child into a bookstore and selects books and goes away is going to have a happier child. It's a great way to stay there. Okay. Now you're starting to make me think that you're not just suburb. very lovely bookseller, but that you have an agenda to actually improve society somehow. I think bookstores do do that, and we think of ourselves as being vocational, and I do. We are vocational. It's really hard work. You've got to come in, you've got to have your brain

switched on it, you've got to be highly intellectual, you've got to be prepared to work your socks off. You've got to be very social. You've got to engage with people. All of those attributes will allow you to do almost any other job. But you choose to be in a bookstore, and you choose to be in a bookstore because you're getting something else from it. And that is considerably a vocational commitment to what that bookstore is doing within its community. Barnes & Noble is on track to open dozens of new stores this year. There are now more than 700 across the U.S.

We will never be a massively profitable business, but we should be and have been now for some time a very consistently profitable business. An editor, a senior editor who'd also been with Amazon, she's been around the book industry, and she said that the biggest chance, changed for BNN from her perspective, is that BNN can make a hit again. The bestseller lists were almost wholly static.

They were the same names. Patterson, Philippa Gregory, and on it goes. These are not saying they're bad writers or anything, but it hadn't changed for a decade. Michael Connolly. Yeah. And why is that a problem? It's boring.

It's really boring. We can still sell and do. sell those books, so that we're not snobbish, but you need new people to come through. And in creating these, this is sort of excitement around new voices. And we also uncover some really great, great writers. And the people who were doing it with the book clubs, so Oprah was doing it, Reese was doing it. So there are other people doing it. But it, abrogating that sort of responsibility for creating new authors and new books to a TV host.

Yeah. I mean, come on. You said something about how the bookstore can or should be a sort of a third place, like a public space, like a library, but different plainly. Just talk for a minute about that philosophically. What do you mean by that? I think we are very embedded within our communities. Obviously, communities vary.

But it is a space, a retail space that everybody enjoys young through to very old. And a lot of the people who use bookstores have no real intention or expect. are buying books within them, but they do very much enjoy being in them. It's true of all the kids who pile in here after school. They're just coming in to flirt. The boys go in one corner. The girls go in another corner, and they do their thing, and they chatter and jabber away. But it's very safe, and it's very nurturing, and it's very civilising.

The old people who come in the carers, a lot of carers in here. Different times of the day you get your different populations coming through. And then amongst that all, particularly if it's a happy store, those people have been respected and looked after. And then the people who are actually buying books, which is the rest of the community, enjoy the energy that comes from that. Right now, AI is taking a lot of the oxygen out of every room. But I feel like any time there's a disruptor, whether it's a firm that does things differently or a new technology, the assumption is often that it will replace the old thing entirely and the old thing will die. And what's so interesting to me about your story of turning around Waterston's and Barnes & Noble is that the Amazon will beat out everybody story did not happen.

But also the old-fashioned, you know, ink on paper was going to go away. We heard about the paperless office argument many, many, many years ago, and I think that proved to be wrong for a while because people started printing and printing. But now you do see among some cohorts, some people I feel live their life, without any paper. I think that's right. And I think the bit that I've always felt that preserves the book as a truly covetable and collectible item is reading them is a pleasure, collecting them is a pleasure, and they're hugely decorative. So the book is more than the book. And we know that if you read a physical book, you remember it much more easily than if you read a...

Same as if you handwrite something versus type it. And reading, after all, most reading is for pleasure. But it's also no surprise to me that reading that where there is no expectation of retention has gone digital. So the digital market is huge. But it's concentrated in sort of generic romance, for example. Massive volumes there because people read one, two, a week. Isn't that a little bit snobbish, you're thinking that they're not reading to retain? Well, they're not.

It's just in the moment entertainment. Yeah, it's in the moment entertainment. And that has gone on. I'm not judging it. I'm just saying that's what it is. And that has gone that way. Whereas, you know, literary book, particularly nonfiction, has remained rooted in the physical book.

And as a major retailer of vinyl, which we are and DVDs and amazingly also now CDs, which are on the up, there is a market for the physical object. but obviously the market that remains is but a fraction of the overall music market. You're selling all those at Barnes & Noble's Final Records. What share of your business is that? It's a relatively small one, but it's something where we've invested a lot of time,

again, in the curation of it and in the assortment of it, and in consequence of doing that, we've had ourselves going up pretty dramatically. So whether it's with Waterston's or Barnes & Noble, you did a lot of things that worked. You gave the individual shop managers more authority. You changed the culture of the book selling. You changed the culture of how customers come in. There must have been some things, though, that you tried and failed, I assume, that you're not flawless.

Yes, one example is we had very large pine tables with a riser on in all our stores, which is a wonderful piece of furniture and quite expensive. And I said they were terrible. The table I was looking at was terrible because it was low, single copies, curling up, covers, terrible selection. And in 650 stores, all the pine tables and their risers were dumped in their trash and garbage and were gone within a... Wow. And now we're spending an enormous amount of buying them and putting them back in. So there's that kind of sort of thing happens very easily.

Well, luckily, I said one of my key principles is never to look in the rearview mirror. And you also said you like looking at things and seeing what's not working and getting rid of it. There's a very, very good reason for that is because we make endless mistakes. And I do think one should try and do things. And, yes, it's sort of more like a zigzag upwards, not a linear progression. These businesses also just change very, very slowly. And you can only move at the pace that the business is prepared to go. And we do move very slowly.

And if you do try and go too fast, it ends in tears. Okay, cliche question, but the dinner party where you can pick the guests, anyone from antiquity till now, who do you want at that dinner party? Hmm. Are you looking at me with hatred that I asked you this question? No, I mean, I was sort of thinking, because some of the most interesting people, to Gaulle and Churchill, I mean, it would be amusing to observe them. I don't think either would be friends.

And the trouble is the best dinner party is the one we're friends. So I'm not a, you know, assemble the great and the famous type person. What about writers whose books you've loved that you would like to just chat with over an evening? Can you name a few of them? I think there are writers who are just fabulous company. and interesting people, and some of them I know, Kant-Tobin, for example, I mean, you couldn't want for a nicer person

or better company. Others, just sticking with the Irish, Sally Rooney, I rather admire for her sort of pugnaciousness, but I don't know her. It'd be fun to meet her. How do you feel about the split between commercial and literary? I know that you're more of a literary reader. There was a phrase I heard once,

mass with class. That's the idea. That's what you want to achieve. I'm just curious how you, think in that realm? Well, we are in the game of curation. Publishers are, you know, if you throw enough darts at the wall, some of them will stick. At the end of the day, good publishing with good editors will out, and it's all of the assembly of elements which makes a good book with a huge dose of luck added onto it. Does it get the good review? Does it get visibility? Does it catch the zyazirical?

like Geist, does it, all of those things. But publishers are getting better at it, and certainly in my very long time in which I've been selling books. Yeah, you know, it's funny. I wrote books for a long time, and then I started doing other things, not just because I liked the other things,

but because I didn't like being in the book world that much. The American publishing industry is not a lot of fun, I'll be honest with you. And book selling, it just, it didn't feel like a great place to be anymore. But I might need to write another book now. Just to get something back in a new Barnes Noble. Thank you so much.

Pleasure. Really appreciate that. James Donn. Thanks for checking out this audio episode of our new TV talk show Better in Person. And remember, you can also watch it, along with all the other episodes in the first season of Better in Person. Just go to the Freakonomics YouTube channel or look for Better in Person on Apple Podcast. guests. And let me know what you think. Our email is radio at freeconomics.com. We will be back soon

with more economics of everyday things. Until then, take care of yourself. And if you can, someone else, too. You've seen the Seinfeld episode where George brings a book into the bathroom with him. You familiar with that one? And then it's tagged. He can't return it because they knew somehow that had been the bathroom. You ever run into that in real life? Are you familiar with that one? there. Thanks again to ChatGPT for sponsoring today's episode of Better in-P-P-P-T. Chat-GPT can help teams move from goals to real outcomes. Put Chat-GPT to work on your most ambitious ideas and projects. Download the new Chat-GPT desktop app today.