Mark Rubbo (and partners) acquired Readings (founded in 1969) in 1976. What a trip it's been! Almost 50 years on and having stepped down from his day to day role as CEO in mid 2023 Mark shares a very personal take, with cover to cover reflections, on the Readings Story.
@MarkRubbo from @readingsbooks shares his personal take on buying and building this iconic business. We cover a lot of ground including;
QUOTES:
"Sometimes founders rightfully wrongly put everything they've got into it and other people get to benefit from it."
"I hope Readings has been a sort of community focused business."
Michael Kerr (00:01.23)
Hi, it's Michael Kerr here presenting Small Business Banter.
Michael Kerr (01:24.238)
Welcome into edition number 139 of the Small Business Banter podcast. I'm really chuffed to be sitting next to Mark Rubo today. Mark was the founder and still part owner of Readings Books. Welcome in Mark. Thanks Michael, it's great to be here to chat to you. I should add I'm not really the founder of Readings because the founder was Ross Reading. True. And...
following on from Small Business Band, I bought that business. Yes, they did. And yeah, no, that's true. And you actually did a music business called Professor Longhead. That's right. I did start that up. To take on the book industry. But yeah, so I mean, it's been on the landscape of Melbourne for so long, and there's so many accolades for what you've done and what the business has achieved. So yes.
Thank you Ross, or acknowledge Ross. And his wife Dot. And also Peter Reed, who's another one of their pounders. Right, it kind of had a similar name. All right, so what we're going to chat about Mark, it's great to have you in. Having run Readings now for such a long time, for it to be such a, particularly the Ligon Street store is,
is a part of the Lycon Street experience and has been for probably 40 years. But we're going to chat about your experience growing that business to where it is today. I think last year you exited on a day -to -day basis. Although I did see you pre -Christmas behind the till selling books, which means you'd die hard. But we'll cover some of those things. But just...
I'll get you to tell us a little bit about your career, but I want to, on your behalf, just to peel off a couple of things. You were described a couple of, four or five years back as a pivotal figure in Australian book selling and one of the world's great book sellers, which is quite something.
Michael Kerr (03:44.91)
Your achievements to the business, but also to the literary community and the book publishing industry is renowned. So I think currently Chair of Readings, the board, past President of the Australian Book Sellers Association, founding Chair of the Melbourne Writers Festival, you played a crucial role in Melbourne being designated a UNESCO City of Literature.
The Carlton Bookshop was named International Bookshop of the Year by London Book Fair in 2016. You've been involved with the Wheeler Centre and the Indigenous Literary Foundation and awarded the prestigious Lloyd O 'Neill Award for Distinguished Service to the publishing industry. So that's quite a list, all well -earned and done with a lot of humility, I think, from my...
time with you. So could you just tell us your highlights from that long list and talk about where Readings is, because I want to start with that business that's been around so long. Yeah, thanks Michael. Listening to that list is quite a bit surprised. Look, I came into business accidentally. It was never...
never my intention. So you didn't do a strategy course on how to buy a business and grow a business? I did not. I was a very bad student at Melbourne University. I started off doing medicine. My father was a professor in the faculty and after first year he's, one of his colleagues rang up and said, Sid, the results are coming out tomorrow but I thought I should forewarn you that your son has failed every subject.
So I then started doing an arts course majoring in politics and economics. I was interested, maybe thought I might go into journalism or something like that. I was interested in writing. And I got a part -time job. They had a very, very good bookshop at Melbourne University, which obviously sold textbooks to students, but it was a really good general bookshop. And I got a job there and they had a record bar up in the mezzanine. And that was...
Michael Kerr (06:11.342)
run by a gentleman who to me seemed very old, Mr McCarthy. Mr McCarthy didn't know much about contemporary music and I thought I did. And so I got really involved in that and I was, I think I was quite good at it. I sort of had a feel for what people might want and what the new trends were.
What time frame was this, Mark? My first big punt I remember buying was an album by an English band called Jethro Tull called Thick as a Brick. And I can't remember how many copies I ordered. Mr McCarthy was shocked. But we sold them all. And so then I thought, I'm quite good at this. And...
a shop became bacon and lager street and I thought...
There was no record shop in Ligon Street. Ligon Street was becoming this sort of cultural hub of Melbourne. There was La Mamba Theatre, the Pram Factory was going, there was an independent cinema. There were small cafes and boutiques opening up as a real sort of vibrant hub. And it was a great time, the music, you know, the new music, Whalers, Dylan was on top of his form, all these new bands.
So I thought I'd open a record shop and I borrowed some money from my mother and opened it and it proved to be quite successful. That was physically opposite where the current day... It is. My professional life, I've stayed fairly close to my roots. So yeah, I ran that by myself for a couple of years and then I...
Michael Kerr (08:04.302)
I started working with a guy called Greg Young who had a record shop in South Yarra called the Record Collector. We used to bring in records from overseas together to cut down costs. And one day I said to him, oh look, I'm getting a bit bored working on my own. He said, oh, I'll buy you out. And I thought he was a canny little.
business man and I thought if he thinks I'm worth buying out maybe I shouldn't and so I said no and he said well do you want to go into partnership and he found out there was an electrical goods shop up for sale in Hawthorne that had a little record bar and he said we could buy that and he also said I know this other guy who's selling records at La Trobe University and he might come into this business so that's so that's I did join forces with Greg and Steve Smith.
and we took over the shop in Hawthorne and that was successful. So I was still called Professor Longhairs and then we changed it, kept Greg's shop's name, the Record Collector. And then around about 1976, Ross Reading, who I'd become very friendly with, he owned the bookshop down the road, came to me and said, oh, my wife and I want to move to the country.
Early tree changes. Yep, grow, build a mud brick house and grow organic almonds, I think they were going to do. Do you want to buy the bookshop? And the rest is, as they say, history. So we raised the money from my family and Greg's family to buy the business. We didn't have anyone to advise us. They told us what the price was.
It was quite a lot in those days. This is 76, $50 ,000. Well, it would have been a significant investment in those dollars at that time. It seems to be the way, and we've done some work together, and in the book industry, it's not dissimilar to some other industries where a lot of the sales go on between,
Michael Kerr (10:25.774)
the existing owners and they knock on, you know, say like I'm ready to move on, you know, I'd like it to go to a good home and it seems to be a bit of a pattern. Yeah, I think... For the independent bookshops. Well, in hindsight, I mean, Ross showed great faith in trust and need to take on his business. I think, sadly, later on, the almond farm growing didn't work out and his marriage didn't work out.
I think he probably regretted his decision. It was too late by then. So that was in 1976 and it was just an incredibly exciting time. Because there hadn't really been an Australian publishing industry before. There had been some, but it was sort of a cottage industry and sort of the big...
Publishing was more in those sort of coffee table pictures of Ayers Rock and that kind of thing, but serious writing and serious books about ideas and how Australia could be a better place and more interesting, that hadn't been really done. And...
So, yes, the book that you got a sense that that bookshop was on that wave. We came in that cusp. There was around the corner from us, there was two young women, Hilary McPhee and Di Gribble, who'd started up their own independent publishing company called McPhee Gribble. Morrie Schwartz, who now, as many of your listeners might be aware, he owns the Saturday Paper and the Monthly Magazine.
He and some friends had started up a small publisher called Outback Press. And there's also at Penguin, which was a UK -owned, a guy had just started his publishing. His name was Brian Johns. And Brian was a journalist, had no publishing experience, so he was a great... Everyone thought this was outrageous that they bring an outsider. But Brian was...
Michael Kerr (12:37.71)
absolutely passionate about Australia and Australian writing. And he...
He was sort of like a catalyst. Penguin started to publish a whole lot of books, but he also supported his competitors. It was amazing. He became really good close to Hillary and I from McPhee Gribble. And when they were in trouble, he gave them a lifeline through Penguin. And so readings was sort of part of that. And Carlton was that cultural hub.
There still is, but there was a pub around the corner called Stewart's. And every Friday night, Brian Johns, every writer who was in town in Melbourne, Hilary McPhee, Dio Gribble, would all go to Stewart's for drinks on Friday nights. And it was just a very exciting time. I got to know all the writers, got to know the publishers.
And reading sort of seemed to be that sort of the public face of that new movement in Australian writing. Yeah, it was, it sounds extraordinary. And I sort of seized it. I just sort of loved it. Yeah. And also the book sold. Yeah. I do love retailing. I like it. Well, you had a track record with Professor Longhair selling, you know, picking... Yeah.
what's going to sell and then backing yourself. But also you still had to go and borrow or find 50 grand at the time. And I suppose you had a bit of a track record with your parents by that stage that, you know, and others to say, well, I'm now shifting to the book industry. And it sounds like the environment was rich and fertile. There's a good timing is often such an important factor. It was. And so we,
Michael Kerr (14:41.582)
When we bought the business, we changed the shops, all the names to readings and added books to the mix. And music became less and less important. And yeah, I just loved that industry. So you switched out of medicine to go into arts, an arts course. And so that wasn't such a leap then if you were really into exploring ideas and... No, it sort of fitted very...
I keep thinking about you know, you're backtracking out of medicine and your parents going, what are you doing Mark? My father was the most disappointed. Sadly he died before I started Professor Longhairs and I would have liked to have shown you that I wasn't a table. My mother was always terribly supportive you know. When I started Professor Longhairs I said, I think I needed $10 ,000 and I said, Mum can you lend me 10?
And I paid her back quite quickly. Yeah, it sounds like you had a knack and you knew the street and you knew a lot of the, you know, the players. It's a very different Ligon Street now. It is, it is. Culturally it is. There's still elements of it. I think one of the things that made Ligon Street so vibrant was its proximity to Melbourne University. There's not many...
places in Australia that have that kind of proximity to a very significant educational institution. Yeah, it's a block, well, it's two blocks. A block away, yeah. A short walk. And that sort of helped, I always thought it was probably one of the best places to sell books in Australia. Yeah. Just because you had that, and people were adventurous and they were excited.
Yeah, so readings today has gone way beyond the Carlton, Ligon Street store. So what's the snapshot of readings today in terms of where you're located? Well, I was always fairly ambitious for readings.
Michael Kerr (16:59.15)
It was probably not necessarily an ambition that my partners shared, I'm not sure. Because the way they were instructed is I looked after the books and then Steve looked after the music, Stephen Bred looked after the music. And it was sort of hard for them because the books became more and more important and the music became less and less important. So it was difficult, must have been difficult for them.
Yeah, I guess, yeah, the two different markets were growing at much different... Music was probably reasonably well. It was quite dynamic when we first started and then vinyl, woodhound CDs came in. Yeah. And then of course streaming came and it was killed. Yeah. It's finding its way back in different ways. In different ways, it's not... Certainly on a retail.
Not unless it's second hand. That's right, it's too expensive. So I was ambitious for readings and...
We started to experiment. We bought a shop in Melbourne. That was number two, yeah. We had Hawthorne, South Yarra and Carlton. In Carlton we had the record shop and still have the record shop and the bookshop. They were still separate. And then we decided to open a shop in Port Melbourne.
Michael Kerr (18:38.51)
And then I was in St Kilda one day and walked into a very nice bookshop called Cosmos where I knew the owner and I went in with my wife and Jack, the owner, called down from the mezzanine and said, Mark, I need to see you. And as you know, Michael, Jack wanted to see me about selling his business to me and you gave me some great advice and assistance in that process.
So yeah, steady increase. There was no great strategy. I think a lot of it was opportunistic. I think we sort of started to be more strategic in our thinking and looking. The other thing was online. That was, we set up a website in 1995.
a long time ago, sort of anticipated, but never quite successfully. The other thing I did was I used to go to America quite a lot to buy books, and I'd go there and see all these great sort of independent book shops, were suddenly going out of business because this shop called Borders would open up across the road from them. And...
I knew that Ligon Street, that was where we all our sales really came from. You were so high profile. Energy, yeah. And I knew we were in a small shop there. I said, if we don't have a bigger offering, someone's going to come in and we're going to be annihilated. And I kept on trying to find alternative premises. And...
Fortunately for us and unfortunately for a lot of people, the State Savings Bank of Victoria went under and their carcass was bought by the Commonwealth Bank and suddenly the Commonwealth Bank had two branches in Ligon Street and they decided to consolidate and move one of the branches and it meant that there's this very nice size 400 square meter shop.
Michael Kerr (21:02.51)
they were suddenly available and they decided to sell it. And I just knew we had to get that shop. And I didn't know how we'd finance it. In those days, you could, there was a loophole in the Superannuation Act that you could borrow in your super fund. Right. So what time, what year? This is 1997. And Steve,
and I had some super and Greg had super. So I said to Steve and Greg, we've got to do this. And Greg wasn't interested at all. So Steve was to his credit and we.
We had about $500 ,000 between us and we managed to get a bank loan and we got the building. And that was a lifesaver because as my forecast about someone coming in... It was smack on. It was smack on. Not too long later. Not too long. So we moved in 1998 and that was very exciting because suddenly, I mean, we'd always struggle with cash flow and...
You had a lot of money tied up in books. A lot of money tied up in books and probably didn't manage our inventory as well as we could. It was always a struggle to find the money to pay our creditors. We also had a silly structure. It was a trust. In those days, the trust, you had to distribute all the profit you made.
And if we did that, we'd put it back in again. Well, you couldn't put it back in. Yeah, you had to let it. And you had to pay tax on the profit that you distributed, which you didn't get. And so we turned it into a proprietary company, which is much better. You paid your tax on whatever. Yeah. And you could retain your profits. And so suddenly we had money, which was the first time we'd ever done that.
Michael Kerr (23:10.254)
But you also, was that like, you're thinking on buying the building, you know, retail business, how vital was it? Or how much of a consideration was it? We're at least, whatever comes at us, we own our digs and we can, we're here for as long as we need to be. Was that a? Yeah, I wanted to, I think I wanted the security. Because one of the things when we first took over readings is,
to say we weren't that good at managing our inventory. And we had a couple of years where I'd made some terrible mistakes and we'd had to borrow and get overdrafts and I never wanted to be in that vulnerable position again. So owning the building and have that security was quite, to me, quite important. I think for a lot of retail businesses, because landlords can...
they own their properties to make rent, but that underpinning security kind of affects the way you go about running, or can affect the way you run the business. Maybe not thinking as long term as you should, because you've got a five year lease or in a shopping center.
Well, it's given us the, I guess, the courage to... So we did obviously fitted it out when we moved in 1998 and then it was starting to get tired and then two or three years ago we decided to do another fit out, which I'm absolutely thrilled with. And that, you know, if we'd been renting, probably wouldn't have had the courage to do that. So...
Yeah, so as I say, so that was a fantastic move. And for a few years we had money to invest. So we were able to buy the Sinclair shop. We didn't have to borrow money. We were able to open up the shop in Port Melbourne. We didn't have to borrow money for that. So it was an exciting time.
Michael Kerr (25:21.102)
we could afford a van for the first time. A proper van. With your own name on it? With our own name on it. So that was exciting. We sort of computerised to try and better manage our inventory and things like that. So you had a couple of shareholders and did you have, was there a governance structure as in the directors or shareholders would meet and talk about strategy?
as well as, because you were CEO, right? Basically CEO. Sort of. We did have a CEO for a couple of years, which didn't work out terribly well. Yeah.
And that sort of finished, before that had just been me and three, sort of Steve, three guys sort of. Oh, so they were also, yeah, day to day involved. Yeah. Okay. Yeah. But you did a lot of stuff on the fly as you're running. Yeah, that's right. Yeah. And...
So, you know, in hindsight, it would have been better to have to drawn on some sort of professional advice or even to have done some professional development. I didn't do any, you know, I didn't have any training or anything like that.
Michael Kerr (26:43.278)
there it's just a quick interruption to the podcast and it's a message from Kirk Capital, a supporter of the podcast. If you're a business owner thinking about selling and you're unsure about what you should do, well the worst thing you can do is jump straight into an unprepared business sale. Cross your fingers and hope for the best.
If you want to take control, get a sense of what the business is really worth and a plan to make it more sellable, then head over onto the Kerr Capital website, check out the value and sellability diagnosis. If it piques your interest, contact me, Michael Kerr, or book one of the free 45 -minute diagnostic calls. Now let's head back to the podcast. Yeah, you're in a business that you... You're in the business because you're loved.
books and what the industry was able to achieve. But yeah, then it's so busy. One of the things I found is I got bored quite easily. And so that would result in, oh, let's try this. I think it's shiny object syndrome. Yeah, I was very much. And not being comfortable with, it's OK, don't mess with it. No.
And that was, you know, we were a very early adopter of IT to computerize. I became obsessed with that. And then the other thing, I also became involved in the industry because I liked it a lot and that was incredibly useful and sort of recommend anywhere in small businesses to get involved in the industry. Yeah.
because the benefits you reap are just the contacts you make. The shared learnings. Yeah, and also to find out that actually the problems that you have aren't unique to you, and you can learn things from people. Early on we had a sort of loose buying group of, we called ourselves the Independent Booksellers of Victoria.
Michael Kerr (28:52.878)
And it was about five or six shops and we'd buy books together to get extra better terms. And that was good. But I mean, the benefit of that was that, you know, you shared knowledge and got to know people. And yeah, I was always learning and trying to find new things. I went to a bookseller's conference in Brisbane in the early 80s.
Brisbane at that time was a very conservative backwater, it was run by this very right -wing premier called Joe Belki Peterson. It was a corrupt, failed, failed state. But I went to Brisbane and I went speaking to a guy there who ran the local university press and he was telling me, oh, we have these readings at the university bookshop and 100 and 200 people come.
I thought, God, if they can do that in Brisbane, imagine what would happen in Melbourne. So I brought that idea back. That was a spark. Came out of somewhere unexpected almost. Yeah. So I came back and said, oh, I'm going to do that. And there was a theatre around the corner in Fitzroy from where we are. And I knew the owners vaguely. And I said, oh, can I use your theatre to...
And that's where that started. And that sort of that, because that was the start of sort of community engagement and author events, so it was really cementing. Yeah, and from what I could gather, you and your shareholders may be driven a lot by you. That was about also an industry view of
of your business. You could see how, you know, you knew you were in the business because it was important to have, give Australian writers a voice and share innovative ideas. And so that you can sell books, but then you can, and this is what I marvel at. I don't want to miss talking about when Borders came into town, but, and smack opposite where you are in Carlton, but where your business is such a,
Michael Kerr (31:22.222)
part of that industry community as well as the local community and having those events. Yes, it's going to make more people aware of readings, the bookstore, bookshop, but it's also, it engages people and it gives life to the shop because it's after hours or in that case it was around the corner. But there's a lot of activity.
notice boards, it's, you know, it's a, it is a real, you know, sort of a meeting place. Yeah, I mean, that's what I, I loved all our shops is that, and I like book shops a lot because they are, they're safe places for people to meet and to gather. And I love going into, I certainly love going into or working at my Ligon Street shop because so many people come in, they're old friends and it's chat, a lot of chatting, which.
in between stacking shelves. Did you get ticked off by anyone at pre -Christmas last year because you were chatting too much? It was hectic. It was. I mean, that's a great... Christmas in retail is a lot of fun. Yeah, yeah. A great deal of fun. It's another, you know, as I said at the beginning, another... watching, you know, catching up again with you briefly while you were...
you know, as an example of someone who's totally, you know, into their business and... Yeah. I mean, probably that's one of my weaknesses as well, is that I have to do everything. And I wasn't a terribly good delegator. And...
No, it's too big. I can't, well, it became so big that I had to trust people. Yeah, yeah, yeah. And I'm sure I frustrated a lot of my staff. So if we go, if we roll forward to, like, you remain the chair, but you, what did you step down as the CEO or? Yes, yeah. In middle of last year, middle of 2023?
Michael Kerr (33:36.078)
middle of last year, but I've been transitioning probably for about two or three years. So, and did that involve building up a team below you as a succession plan, so that you could go with less impact on the business if you'd built some management capability? Well, I'd started to bring in more or give people more responsibility. That was quite a while ago.
Greg left the business in probably...
I can't remember, maybe 2005, 2006, and I became the CEO. Then I sort of started to, I had someone, I did get some advice from people and one of them was, you know, you need to build up. Yeah, a team. A team. And you have to need professional marketing people and professional.
So I've been doing that and I was conscious, what am I going to do? I'm 75, going on 76 now. This is 10 years ago, what am I?
going to do and my son had been working in the business, sort of, you know, holiday jobs and things like that. And then he came back and he started to, said, I actually wanted to work full time. And he'd been working. We opened a little annex in the State Library, which...
Michael Kerr (35:14.542)
He ran, which was a horrible little thing. He hated it. It's now a really nice little shop that's doing really well. And then we opened a shop in Doncaster and he said, I'll go and manage that. So he opened. So he learned from. Yeah, so he worked in the business. I still wasn't sure what his plans. We sort of had a.
A close relationship, but we didn't talk about that. He used to get cross with me. How so? Like, what are you going to... Yeah, if I said, what are you going to do? And he'd say, what are you going to do? And I did have this chap who sort of gave us sort of a bit of corporate governance advice and financial advice. And I was talking to him and I said, I just don't know what Joe wants. And he said, oh, I'll go and have a talk to him. So he went and had a talk to Joe, my son.
Joe really loves the business and he thinks really strategically about it. So it's a sort of revelation to me. The advantage of having someone in the middle. Yeah, that helps. Converting the conversation or the communication. Yeah, without the baggage. Yeah. So, and did that then give you...
a Philip in terms of maybe there is a someone who is the successor. Did you get that and did you, had you already had in mind what an ideal successor would look like?
No, I knew I sort of wanted the flavor of the business to continue. But I also wanted it to thrive. And I knew that I was getting to the stage where I would say, oh, we did this in 1985. It was a really good idea. Let's do it again. Yeah. Maybe one time. You got a couple of signals at. One time in 20 was still a good idea, but.
Michael Kerr (37:22.03)
So I knew that we needed fresh. Yeah. Which is, that's challenging to take in and process. Yeah.
It is. So that was when Gerald had that conversation with Joe, it was probably three or four years ago. So after that, we consciously, I gave him more and more responsibility. And so probably in the last two years, he's been running it operationally. Yeah, okay. And I've sort of been faffing around more.
I mean, we had COVID then, that was obviously terrible for us and everyone. But do you have a formal role in the business? No, not at this stage. It's a work in progress. Is that something you... like how... one of the... you know, how you adapt from and deal with taking over readings back then. Yeah.
growing it, getting involved, doing all of what you did, achieving what you achieved, and then saying, it's time for someone else. It's a massive transition at a personal level, I can only imagine. Is that... Yeah, look, I still feel a bit uncomfortable. And I guess I went back and worked behind the counter at Christmas, and I did enjoy that. And it's probably, I would like to do a bit of that.
Still, maybe. I'm doing a bit of buying. Yeah, okay. Quite like doing a bit of some deals. Yeah. And I'd like to sort of, we'll fix up, make sure that we've got the right governance and management structure. Yeah. So that Joe feels supported. One of my regrets, I had a terrible work -life balance. And...
Michael Kerr (39:31.982)
I know something of Joe as my son, you know, his father was never around. Yeah, you were totally consumed? Totally consumed. It was, I'd go to work at seven, come home at seven, then go and work in my office. Yeah, yeah. And every weekend. Well, it was a seven day.
a week business, wasn't it? And it probably would have... Obviously I had people working there and we had the other shops. Yeah, but you were totally absorbed. Yeah, and that's not a good way to be. So if you were looking back, I mean, you said you also invested in technology and you invested in a website, but you did...
struggle with letting go or handing off, is that one thing you might think about doing differently if you were to go back?
Because it's also like to build this institution, readings leaves such a mark on our cultural wellbeing in the city because of readings. And there are other businesses we were chatting before we got in about these businesses that are there and have been there for a long time. But yeah, it's so...
Sometimes founders rightfully wrongly put everything they've got into it and other people get to benefit from it. And the founder may well feel like that's their purpose and their mission, but it doesn't leave a lot of time for anything else when you're so focused. No, it doesn't. And I've...
Michael Kerr (41:37.23)
A lot of people I know in my industry have got similar issues. I've got a very, very close friend who has a bookshop in Sydney, David Gawnt from Glee Books. And he's had the same sort of drive. He's a very similar business to Readings. He wants his business to make a difference to the community. So he does the kinds of engagements that... Yeah.
Sadly for him, he doesn't have a son who's interested. Or a daughter? Or anyone. So he's sort of a bit of a crossroads. Yeah. And therefore, the necessity and perhaps the...
only choices to keep going, isn't it? Yeah, it's a bit sad. I mean, one of the problems with the book industry is it's had so much bad press through Amazon and e -books that everyone outside the industry is often surprised that we're still going. Yeah. I think I was listening to one of your earlier podcasts and I think you made the comment, Michael, that...
if you're earning above a certain level of profit, you should expect to get two or three knocks a year on your door. And I was thinking, well, readings does that. I haven't had anyone knock on my door. Maybe your time is near, but it'd have to be. So that's a, if you had to, for whatever reason,
there was an opportunity to, you know, this is just playing things out about selling the business. Is there things that you would have to demand of a buyer that would be vitally important to, this is just speculating. But it's often, you know, when a business is so essential in the founders lives and has occupied a large part of their existence and it's important culturally.
Michael Kerr (43:53.358)
and the owners recognise that. I deal with owners of businesses in small regional towns and they're modest businesses but they're vitally important and they do care about the business continues and they do care about who actually buys it. We've had time, we don't want your money because the owner thinks they wouldn't do what should be done. Yeah, look, I mean that's a hard...
I don't know what... It's without notice as they say on the... Yes. I don't know what... Well obviously at the moment Joe is very engaged and loves it and has got plans for it. At some stage he's going to come to an end too. I mean how do you guarantee things from the grave? It's a really difficult question. I would love readings to...
Well, I hope readings has been a sort of community focused business. I mean, I started this foundation in 2009 where, you know, we were starting to make quite reasonable profits and I thought, oh, I don't need that money. We need to keep that money.
back to reinvest. But personally, I'm okay. So we decided that we'd...
gives 10 % of our profits back to staff and also 10 % of our profits to, we started up this charitable foundation. What's that called? It's called the Readings Foundation. And I love it. I think the staff really love it. We've given away about $2 million since we started it up. Excellent.
Michael Kerr (46:04.942)
We've got almost a million dollars in the bank, so it can keep on going. Yeah, yeah, self -sustaining, huh? I hope that's the plan. I would like, you know, if we did sell the business, that someone might continue those kinds of values. But it's also hard with a big business, too, to... You know, how do you keep those small business passions alive?
Well, yeah, there's many, many examples of big businesses buying medium or small businesses and there's a fairly heavy focus on one plus one equals three, but completely misses culture or just other more nuanced things about the way they both operate and whether they're actually potentially aligned or not. Well, I've seen...
Certainly in the publishing industry where there's quite a lot of amalgamations and buyouts and things like that, you see they're very traumatic for all the people involved and does change the culture of the businesses. Yeah. Look, it is a major event in any way. If you're a business owner and for one reason or another you choose to sell or you
you get approached or you have to sell. And if you've cared about your business, it's a really difficult transition process. Business buyers can often be a big part of the problem as well. Business owners aren't prepared, haven't thought about it. And then you throw in some advisors around that who are
advising owners and buy or sellers and buyers and it's just so complex and emotional and you know it's it is a trauma that's why I think a lot of owners fail to do anything about it because it can look pretty daunting and pretty overwhelming. When I first started the record shop and then bought readings since the early late 70s my sister was
Michael Kerr (48:30.734)
working and living in Ann Arbor, Michigan. And I used to go on a buying trip and I'd go make a side trip to see. And in Ann Arbor, Michigan was this wonderful independent bookshop called Borders. Owned by the Borders brothers. And I just thought, oh, that is, I would love to have a bookshop. You know, it was probably about the same size Readings is now. We were in a tiny shop and. Yeah.
It was just terrific. And then the Borders brothers got ambitious. They opened a few shops. Then they ran out of money and they got into bed with Kmart, who opened more and more shops. And then the internet hit. And they don't exist anymore. So it's... Well, they opened up in Carlton in 2008. They smack bang opposite you. Yep.
which is a big statement in and of itself. And then, so how did you feel and what took place the next year or two? I was very apprehensive because as I said before, I'd been to America quite a lot and seen a lot of really great bookshops closed when the borders opened up across the road from them.
And you know, there's famously that film, You've Got Mail. So I was very apprehensive. But as I say, I'd anticipated probably what would happen. So we were so fortunate we had the larger shop. It was a lot smaller than the space borders took, but it was still enough to... And you'd invested in...
you're getting your stock right, you're conservatively managed, so you probably, I'm guessing you probably had cash reserves or you had your team geared up. We'd started to be more professional about our marketing, so we had that kind of stuff. I got some quite good press. And I mean, one of the things, Borders was an American company, it'd come in,
Michael Kerr (50:47.598)
first to the Jam Factory in South Yarra, and then I think Carlton was the second. But they were run by Americans and the buying was done by Americans. So they really didn't have any... Yeah, local. Local knowledge. Yeah, and it was private equity backed. Yeah. I think. It did later become... Oh, it did later, okay. But yeah. So they didn't have...
that sort of passion that we had and they didn't have the connection with the writing community. And so... They had a cafe out the back which they... Wasn't very good. There was Gloria Jean's in the end or something. So that was... I mean we took a bit of a hit initially and then we started to grow again, not huge but...
It was just, people took it on, our customers took it on as their battle. So why that? Why did they do that? What do you think? Somehow we'd connected with them that they felt readings was there. So they weren't just Instagram followers, I'm being a bit cynical, but those are people who...
maybe were local or maybe I think you have a lot of people that it's a bit of a ritual to come to the store from wherever and have a coffee down the Tiamos or wherever. Yeah, and go to the cinema. Yep. And then it became... Yeah, so they fought for it. It was important to them. It was part of that.
their safe place, this place where they felt comfortable. That, you know, they could go into readings, they could say to their friends, I'll meet you in readings. They knew that if they might know a staff member or see a mate. And so they became our greatest. I remember a friend, a customer who worked in advertising came into me one day with a crumpled bit of paper and he unfurled it and said, livre sans frontieres, books without borders.
Michael Kerr (52:59.214)
I said, wow! And I immediately got a banner made up and put it up the front of the shop. And people loved it. And... Oh, that was so good. And we had this... It was the time of Harry Potter when those books were huge and they controlled the release date incredibly. Everything was embargoed and you can only sell it at a certain time.
And Borders would discount it really heavily and we had this event and we had something like a thousand kids and the local high school jazz band and a barbecue and someone had lent me their Morris Minor for us to deliver the books in and Borders had a guy with a Falcon on him and no one in the shop. Victory! Yeah.
And then I think, you know, I don't like saying this, but Carlton did become, if you wanted to get a book, Carlton was the place to go. You go, hopefully go first to readings. Yeah. And if they didn't have it, you go across the road to borders. So. Yeah. So it wasn't, yeah, that's that golden mile of cars analogy, which I bring out a bit too often, but.
You go to buy a car, so you go down onto Brighton Road or wherever it was. There were 17 dealerships, but there was a car there that was going to suit you. And then when they closed, obviously we got a huge Philip, big spike, but then it started to drop away again. People didn't...
It had brought people to the area. Right, yeah, that's interesting. Where are things at now? What's the plans for the business? Well, I think sort of strategic growth. I don't want to open up against another shop. So a lot of the places are taken. Yeah.
Michael Kerr (55:14.542)
We did open a shop in the city just after COVID. And there are the other bookshops in the city, but there used to be 15 bookshops in the city. And when we opened a shop in Emporium, there was only three bookshops. So I thought, you know, Metropolis Society of Melbourne should have more than three bookshops. And we...
that's been successful and we're opening a shop in Chadston. Okay, and so these are sort of Victoria. Yeah. Is it, would it encompass going to other states? Or is it? Well, it's a question of how can you, yeah, how can we maintain that sort of community feel? Yeah. And add something of value back to.
Yeah, I always think Glee Books is doing, Glee Books do a great job in, because they know their local market. I don't know the business particularly well, but you know, I'm sure that the same goes for Hobart, there'd be, and other places, there'll be some, you know.
bookshop, possibly a music shop, and there are things that have been around and they survive because they know their market. And one of the challenges facing our industry is that a lot of shops have closed. The most obvious ones, we were in borders closed. There was...
They all closed, but by the time they were in their last years, they'd been bought by a venture capital company that owned Angus and Robinson bookshops. So when borders closed, all the Angus and Robinson bookshops closed. So the industry lost a lot of retailers and they've never really been replaced. And some of the sales have been replaced by online.
Michael Kerr (57:19.95)
So I do think that I say to my team, I think we have an obligation to look at opening more shops because the authors in the industry needs more shops. It's really difficult for authors, becoming more and more difficult for Australian authors at the moment because a lot of the sales that used to go through borders now going through online, through Amazon and Booktopia.
And the way people shop online is different. I'm a strong believer that, and I see it all the time, that people come into a bookshop. Often they come in, as I say, because it's a nice space to wait, to meet people, and they discover something.
Yeah. They discover something because the bookseller, they chat to a bookseller who says, oh, I've just read this, it's fantastic. Or the way, you know, I'm very conscious of where you display things. So we try and the books we believe in, we try to make really prominent. And so I was like, oh, I hadn't heard of that book, I'll pick it up. Yeah.
And you don't get, that's not, people go online pretty much, they've heard about a book, they go online to buy it for the cheapest price they can, and that's it. So that ability for a new author to be discovered is not there, and that sort of really worries me. I've got a very dear friend who's got an independent publisher and company, and you know, he used to, you know, I used to...
I used to sell 3 ,000, I could place 3 ,000 copies into shops.
Michael Kerr (59:00.91)
of a new author. Now I struggle to get a thousand placed.
and half of them are sent back to me. So it's very tough. Yeah, curiosity is on the way, perhaps. It's too easy online. You get you're subject to an algorithm that's the fewer clicks all the way to a... But some people like that experience. I think out of that... Well, I think everyone, people do use it. I mean, we did a survey a fair while ago of customers.
I guess what shocked me was that our customers weren't faithful. To use a contemporary term, they were polyamorous. They would shop around. And I don't think it was any malicious. It was like, you know, oh, I've heard about this book, I'll go online and get it.
But I love readings. When I go to Ligon Street to the Nova or something like that or to the Lido and Hawthorne, I'll go into readings. It's not that same rusted on. Yeah, yeah, interesting. I'm sure you find that. Yeah, like it's really hard. I do it myself, you know. Oh, you know, still like, I do.
you know, Dealey Love, you know, rituals, you know. But it gets harder and things change. But one of the things out of that is that there are a lot of smaller independent bookshops around the place and they do occupy, you know, the lawn books down there and, you know, lots of other, you know, out of Melbourne. And it's really, you really hope that, you know,
Michael Kerr (01:00:55.694)
there is a succession or a transfer of ownership with all of these because it's pretty easy to see a lot more of those spaces being taken over by development of the building. So maybe that's, yeah, I'm conscious, yeah, with readings, you don't want to go in and face off directly because there's probably not enough in the market for you. But,
picking up those or seeing those transition to someone that they think is a good home might be a part of the answer. Well, it's interesting. I don't know if you read that there's this shop called Hill of Content Bookshop, which has been around since the 20s in the same location. And the property owners are selling the building. The lease is finished, so it's Hill of Content to the tenants. They don't have any security.
And it's unlike, no, I don't know how like, but a buyer is going to try and get the most yield they can. And it may not, a bookshop may not be able to afford to pay that. Yeah, it's a reality, but you'd like to think there's another way to migrate that brand and that community down the road or around the corner. It is interesting that.
Michael Kerr (01:02:25.582)
those sort of local, you were talking before about those local businesses that are sort of not necessarily bookshops or anything, but they can anchor a community and be something that's terribly vital and people don't realise it once it's lost. There's something that's gone out of the community. Yeah, and it's another nail in the coffin. One less reason to go to, in a regional town particularly, one less reason to go there because now I need to go somewhere big because,
I can't get whatever I can't get and then the traders that are left suffer. We've seen it. We said before we took over the Cosmos Bookshop in St Kilda, which was an incredibly vibrant business. St Kilda at the time was incredibly vibrant retail strip, very much arts oriented, a lot of music and writers around there. And it had become a very successful retail strip and rents had gone up exponentially.
and all the old businesses, the owners were retiring or couldn't afford the new rents, so they were closing down. And suddenly what had made St Kilda an interesting, vibrant retail strip was gone. And so now half the shops are vacant. Every business is struggling. It's...
It's amazing. And the people from St. Kilda lament, you know. The St. Kilda of... We've lost Ackland Street, you know. There's no reason to go there anymore. And there's just tacky vape shops and nail shops and... Yeah. Yeah. ...and horrible bars. I always thought it'd be interesting. Leo's Spaghetti Bar up on Fitzroy Street. I kind of had this... It's been there since the 50s. Yeah. And...
I think it's that one. And they've got Leos built into the brickwork. I wondered if they own their own real estate. Yeah, you see businesses around that have established 50, 60, 70 years ago. And I think, as you did, buying a real estate can, for some businesses, it gives you the opportunity to lock it in for a long time. Businesses got to...
Michael Kerr (01:04:45.262)
pay its way. Yes, yeah. But it's um... It's interesting, I've been sort of in my retirement, I've become interested in the...
of policy and what, you know, we're talking about, you know, you've got these sort of cultural businesses that should, should they, should governments or the community give them support to make them, and it's a very interesting question. I've been reading up in France, for example, they are passionate about bookshops, so the government gives them huge amount of support. They have a fixed price, so you can't discount.
so every book has got to be sold at the same price for a certain period. They've just brought in this rule that online retailers have to charge a proper postage rate. Yeah. It's before Amazon was selling a book because they couldn't discount it, so they say, oh, we'll ship it to you for no freight. Yeah.
And then they brought in a law saying, no, you've got to charge freight. And so then Amazon said, we'll charge you one cent. And now just recently they've brought in a rule they have to charge three euros. And Germany also has great support. And so they have a very vibrant. And I mean, the free market ears would say, well, you know.
Competition's good. Doesn't matter where people buy their book from, as long as they can get it at the cheapest price. And I sort of wonder, I wonder if... It's like, you know, my dad was an accountant and I used to laugh with him about, you know, accountants know the cost of everything and the value of nothing. But that's very unfair. But...
Michael Kerr (01:06:47.214)
that idea that there's a broader framework for evaluating the value of something. It's not just the numbers. It's about impact. This is why social enterprise is burgeoning and there's going to be a lot of things that fall over there. They're addressing problems and creating impact and yes, they have to be financially viable, but...
Is it X or Y? And that's, if the owner wants Y and that's the high, that's fine. But you know, we've got, somehow we've got to foster the, some incentives or just at least create a bit of hope that you can do things beyond just for the max amount of money at the time. I mean, you don't want to prop up badly run businesses, but people who've got, are contributing something.
Yeah, but that's where maybe it is at a higher level where you say we want a vibrant regional Australia. So we need to have certain level, I think about this all the time, what is the viable commercial infrastructure of a town of 5 ,000 people? You need diesel fuel, you need milk and bread, and you need a pub, and you need, maybe it's a bookshop or a cafe or a barber.
All these things that are, and they're all quite modest businesses, but don't overlook the value beyond how they interlink with each other, but also can be, if you don't aspire to be a billionaire or whatever, they can be viable businesses and earn a good living and be part of a community. One of the things that a publisher friend who operates in England, Amazon,
have taken up pretty much half the business. A lot of small book shops have gone out of business. But Amazon, the book industry works off a recommended retail price and you get a discount off it. But he was telling me Amazon demand 65 to 70 percent discount. So publishers...
Michael Kerr (01:09:05.87)
Obviously, to accommodate that, they put the price of books up. So, Maison can then say, we're selling at a half price. And there's a study saying in Germany where you're not allowed to do that, but actually the average price of books is actually less than they are in the UK.
they have all this discount. It's like the supermarkets. There's so much manipulation. Well, it's market power. If you go back to when readings, or when you went into readings, and the vibrancy of that particular area at the time in the 70s,
with all what was going on. It's like a really fertile new industry and it sounds like a bit like from what you're saying it's being a bit crushed again and that's not good. Oh it's interesting the government's announced last year a new Creative Australia policy.
and the Minister was talking about writing and how important having Australian stories published and available and supporting writers and publishers, and they didn't say anything about bookshops. Which I, as I said before, I think the very important part of holding that cultural community up. Absolutely, yeah. I've covered a lot of ground. I did want to just...
get to bring this home. I wanted to know what you're doing next, but also your advice for those in the industry, smaller bookshop publishers, what they should do to get themselves better prepared for an exit because everyone at some point has to exit or get a succession plan in place. I think getting a succession, thinking about it is very important. And obviously for
Michael Kerr (01:11:13.358)
many people, they've put their heart and soul and an amazing amount of sweat into building up their business and they deserve to get some reward for it. So I guess it's thinking about it and getting advice on how to get that business ready to. Invest some time and money and energy to think about your options. It's attractive to someone else.
And everyone gets stale. I mean, I got stale. I just was running out of ideas and enthusiasm. And there's probably some young, excited person out there who will love your business and take it to another level. And sometimes that's difficult because you're thinking, they're better than I am. But not necessarily. I mean, I...
I bought the business from Ross and I think I've made it a much better business. Would Ross have made it a much better business? Maybe. But if I was in Ross's shoes or so, I gave Mark and his partners the basis to build something wonderful. And I truly believe that and I'm terribly grateful for Ross that he gave me that sort of solid ground.
And he was before the surge in Australian publishing, but he gave me that solid ground that I could then seize that opportunity and take it and run. Take it and run. Yeah, I think that's a great way to think about it, that there is another generation and we need another generation of business owners who need coaching and mentoring and advice, but they've got energy and...
in a knowledge and experience in different ways. So that's a, maybe there's, you know, mentoring for you is a pathway. What's your week to week look like with - To be frank, well, that's -
Michael Kerr (01:13:26.094)
I'm sort of, it's got no pattern. It's sort of, I'm struggling a bit to tell you the truth. You started a podcast? Yeah, that was with another bookseller. So I'm doing that. Yeah. And... But it's harder than you thought.
Michael Kerr (01:13:46.126)
Not to start a podcast. I mean, to, you know. No, well, it's about book selling. I suppose it's finding interesting people to think about. But I mean, you know, it's, you know, you've been so fully occupied for so many years and then they go turn the tap. Yeah, I think that's part of it. I've sort of been helping. There's a really nice Indigenous arts organisation, not far from where we're talking today. And they...
They want to, they've been mainly working in the area of visual arts, but they want to engage with the publishing industry. So I've sort of been giving them a bit of help. There's also this wonderful prize called the Hope Prize, which we used to be involved in. And it's a prize for writing about stories on that hope, courage and resilience sort of in a difficult world to give people inspiration and hope.
and that we're working with Beyond Blue, which is an amazing organisation. So I'm helping with that. I'm judging a literary prize at the moment. But you've got room for some other opportunities if people... Yeah, I'd like to do other things. What's the name of the podcast just before we... It's called The Booksellers' Podcast.
It's not as professional as yours, but I like to do that. That's interesting. I'm trying to get the Minister of Arts, Tony Burke, on to tell us why he's not mentioning bookshops in his scheme, but he hasn't responded to any of my emails. Maybe you need to call him. I don't know how. Get on the plane. Yeah, look at his. It's...
that after getting out of a business, it's a challenging time for most owners I've ever seen in that situation. So, yeah, you've got a lot of experience and value to add. So I hope some of those things really flourish, the podcast. And I also, I mean, I don't want to be looking over the team's shoulder all the time. Yeah.
Michael Kerr (01:16:08.334)
because it's not fair to them and also probably because I'll just come up and say, well, 1985, we did it this way. Did they pay for that shift in just before Christmas? No, they didn't. Yeah, I don't want to just be a wager for them to get their wages budget down. All right. Mark, that was a wonderful chat. Thank you so much for taking time out. I'm sure there's lots of interesting things going to come at you with all of...
all that experience you've had. If someone did want to reach out, what's the best way? Are you happy? Happy for them to email me. We can put that in the show notes if someone's really... It's pretty easy. It's mark .ruboreedings .com .au. Yeah, so there you go. And you can search Mark up and he's visible. All right, Mark. Thanks, Mark. Much appreciate the time. It's been a pleasure.
Wish your podcast all the best. Yeah. Thank you.
Michael Kerr (01:17:19.15)
Well I hope you enjoyed that episode of Small Business Banter and I hope it was helpful in you getting the most out of your small business ownership. To subscribe or listen back or to check out any of the resources or information we talked about today, head over to the website smallbusinessbanter .com .au or if you want, search up Small Business Banter on your favourite podcast player. Don't forget to subscribe and if it was really helpful, I'd love it if you told another business owner about the podcast.
If you thought it...
and how about you leave me a five star rating? If you think I can help personally, please reach out to me, Michael Kerr via the website. There's a new episode out every couple of weeks. We'll catch up then.