I remember when the mega bookstores started popping up in the early 90’s. Back then before the Internet revolution, the mega concept seemed revolutionary: bookstores as a place to hang out and socialize. The concept was basically an adaptation of the Starbucks concept of “the Third Place”, promoted by Starbucks founder Howard Schulz as a social meeting place, neither work nor home, but a place for relaxation and socializing. The Third Place, whether as a coffee shop or bookstore, served as a sort of non-alcoholic pub or place for intellectuals, a quiet setting for the mild mannered and dreamers to whittle away their daytime hours. The Mega Bookstore was actually similar to a library, but with croissants and coffee, fashionable eye candy and an open-door setting for social interaction.
It was prophetic that it was at a Borders bookstore in the early 90’s that I met the first Internet hosting provider I ever knew, a chain-smoking woman dutifully promoting her wares from a small fold out table, answering basic questions like: “What is an Internet provider?”, and “Can I access my service if my move to another city?” It was all so unknown at that time that she might as well have been describing travel to Mars.
Borders Bookstore, a successful non-digital company, had industry dominance but never made a successful leap to Internet based services. Like so many other successful digital companies (Tower Records come to mind) they underestimated the size of the Internet wave. Borders was too slow to adapt, leaving the company crushed by the very wave that others were riding like silver surfers to new plateaus and vistas.
Borders’ most significant error was transferring its Internet operations to Amazon in 2001. While Barnes and Nobles, their chief competitor, could never match Amazon as the internet bookstore, they did better than Borders. Borders essentially abdicated the battle by handing over the keys of the castle to Amazon. There were certainly other errors of judgment made but this error was key to their demise.
This week Borders was forced to file for Chapter 11 bankruptcy business reorganization protection, which is not strictly a bankruptcy in that the business is not liquidated. Rather it is a business re-organization. So, in effect the company will have a trustee overseeing their affairs and their creditors will have to line up and take a haircut on their debts.
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