Hi Everyone,
Whew, getting closer to on-time with these notes. And we've also managed to get our events planned months . . . do your hear me, months! . . . in advance, so check out all the cool stuff we've got coming up.
But, before you dive into that, I've two questions and a bit of business. Business first -- the write-up for the General Meeting on the 31st of March is up at the Sponsors' Blog <http://borderlands-sponsors.blogspot.com/2017/05/report-on-sponsors-general-meeting-of.html>. I warn you though, it's a long, dense bit of writing (I think I need to start talking less at these meetings). If you didn't make the meeting and you have any questions or comments, please do drop me a line and we'll chat.
And now, the questions.
First, during the meeting there was a suggestion that we should start a Sponsors' forum / message board sort of thing. There are two ways that we can go about that. It can be a typical forum sort of setup (check out SFF World for an example - http://www.sffworld.com/forum/) or we could use something called Slack <https://slack.com>. I've discussed the two options with several knowledgable folks and there are pros and cons to each option. If you're familiar with both of the possibilities and you've got an opinion, I'd appreciate it if you'd drop me a line.
Second, Jude, Scott and I were talking about future events (did I mention that we've got them planned months . . . Months! . . . MONTHS! in advance?) Um. Where was I? Oh, right, future events. Anyway, we thought it would be fun to do a group trip to the Great Dickens Christmas Fair <http://www.dickensfair.com> in December. Tickets are usually pretty expensive ($30 for adults) and so we planned on getting in touch about a group ticket rate. Then Jude pointed out that we might have a sponsor who was connected (in a slightly Mafia-sort-of-way) with the event. So, anyone out there with a useful hook-up for group tickets to Dickens Fair? If not, no worries, I'm sure we can make a deal though the usual channels. And, honestly, I don't mind at all helping to support them -- it's a really cool event.
Now, on to the event schedule which, as you may have heard, extends MONTHS! into the future.
All Best and Warmest Regards,
Alan
Inch worm write-up:
(1) Game nights. Inspired by the rousing success of the first one, we'll be doing a monthly game night at the Cafe on the second Monday of each month. The first monthly Game Night will be Monday, May 8th from 6 pm - 10 pm. Guests are welcome and no RSVPs are necessary.
(2) Our next Sponsor Social will be Saturday, May 13th from 7pm - 11pm. We'll have fencing (with swords, not wooden posts) demonstrations, a fabulous retail guest, free advance reading copies and much more! You may bring one guest, and RSVP's are appreciated.
(3) Our first Monthly Sponsor Cocktail night at Churchill was a huge success. We will definitely be out again this month at the same location and time to enjoy the company of fellow sponsors. Our May Sponsor Cocktail night will be Tuesday, May 23rd at Churchill (198 Church Street at Market) starting at 7:00 pm. Guests are welcome and no RSVPs are necessary.
(4) A first for Borderlands Sponsors; we’re going to the theatre. Our very own bookseller Scott is performing in an uproarious comedy called Sordid Lives. The play starts at 8pm on Thursday, June 8th. We have a block of discounted reserved seats, so please come by the store to purchase your ticket at the discounted rate of $25.00.
(5) We’re exploring the haunted side of San Francisco history. On Thursday, June 15th we’re taking a Ghost Walk tour of the Pacific Heights neighborhood. Please RSVP if you're interested (you're welcome to bring a guest). The tour will cost $15 per person.
(6) Join us for a guided tour of the San Francisco Center for the Book (375 Rhode Island St, San Francisco, CA 94103) on Sunday, July 2nd at 10:00 am. The cost for the tour is $10. Please RSVP if you're interested. You may bring one guest.
(7) The third Sponsor Social of 2017 will be on Saturday, August 19th, from 7 pm to 11 pm. More details to come.
(8) Sponsor Karaoke with Seanan McGuire at The Mint (1942 Market Street, San Francisco) on Thursday, September 7th at 7:00 pm! 21 and over, no cover charge (but there is a 2-drink minimum), guests welcome. Please RSVP so we know how many people to expect.
Monday, May 8, 2017
Report on the Sponsors' General Meeting of 2017
The 2017 Annual Borderlands Books Sponsors’ Meeting
Friday, March 31st, 7pm
30-35 Attendees
On Friday, March 31st at 7pm the third annual Sponsors’ General Meeting took place at Borderlands Café to discuss the progress of the sponsorship program, give updates on projects, and talk about the general state of the business.
Alan Beatts, the owner of Borderlands Books and Borderlands Café, started by thanking the attending sponsors for their continued support, stating that the sponsors are the single most important reason that Borderlands still exists. He reiterated the benefits for sponsors that are listed on the website, but also urged sponsors to remember that he and the rest of the staff are, within reason, at their service, and encouraged them to reach out with any sort of request.
From there, the meeting went back and forth between information from Alan and questions / responses from the audience.
BUSINESS UPDATES
March 31st is the deadline to have 300 sponsors. As of March 31st, 2017 there are 632, which in an increase of 21 over the number at deadline in 2016.
Business at the bookstore in the first quarter of 2017 has been slow compared to 2016. However, in 2016 we had two very large author events in the first quarter which were not repeated this year, so lower income at this point in the year isn't a surprise. Alan said that he wasn't very concerned about the reduced sales but that he would be keeping an eye on it over the next three months.
Jeremy Lassen is taking an extended break from the bookstore to focus on a new job for the next couple months, but Alan expects and looks forward to having him back soon. To pick up some of the slack, Maddy Hubbert, the senior barrista at the café who’s been a patron since she was quite young and an employee since the age of 15, is cross-trained as a bookseller and so will be working more shifts at the store.
In the cafe, Z'ev has moved to a salaried position as Manager and is doing an outstanding job. Thanks to the degree that he has taken over the day-to-day operations of the cafe, Alan has much more time to work on long-range projects for the company. Sales have been quite stable on the cafe side. The only real shakeup on the horizon is that a number of staff will be graduating from high school this year and several of them will be heading out of town for college. So, you can expect to see some new faces working there over the next few months.
Last year, due to a family illness, Alan found much of his time (about 20%) taken up dealing with matters associated with that. The result was that many projects at Borderlands were put on hold or delayed. But, heading into 2017, things in his personal life are much more stable and he looks forward to renewing efforts on multiple fronts.
FUTURE PLANS - Part 1, Long Term
To Alan's great relief, the total number of sponsors has increased compared to last year. Given that and barring major economic changes, it seems that the sponsorship program can be a long-term success and so that removes the nearest-term threat to the continued existence of the store. And so, just as last year, the next near term threat is the expiration of the current lease.
The bookstore’s lease expires in 2021, the cafe lease in 2025. At that time the rents will go up to market rate, which (in the current economic climate) would be impossible to sustain. Although it would be possible to raise the cost of sponsorships to the $300-$400 range to cover the shortfall produced by much higher rent, nobody seems to think that is a good or sustainable idea. Alan believes that the best solution continues to be buying a building with a balance of payments (i.e. income minus maintenance, taxes, and debt service) that is close to our current financial situation. On a fundamental level, finding that building is just a matter of math. Alan recently was working on a deal for a building located on Mission Street between 25th and 26th. He made an offer that would have satisfied the math, but it was below asking price and the seller declined.
Alan is continuing to actively pursue purchasing a building and that will be an ongoing (but unpredictable) process. If he is successful before 2021, then the store can relocate. It is certainly possible that we won't be able to find a building that meets our requirements and is affordable, but we hope the patience and flexibility will reward us eventually.
If the building purchase doesn't work out by 2021, the most likely course will be to combine the bookstore and cafe's operations within 870 Valencia, where the cafe is currently located. To do so would mean substantially decreasing the seating and menu in the cafe to allow space for the bookstore's inventory and, possibly, reducing the bookstore's inventory by a modest amount. Within those considerations however, the bookstore would be quite viable in the cafe space.
Taken together, we have more than 8 years to find a solution to the location of the store in an environment of much higher rents. If, by 2024 or so, we don't have a solution then it will be time to consider either moving out of San Francisco or shutting down.
QUESTIONS
What sort of buildings are being considered?
Alan gave examples of three broad types with one caveat – though he might be willing to consider it for a very attractive price, a nondescript mid-century structure is not something that he thinks would suit Borderlands. Regardless of the specific building, the store requires an absolute minimum of 1500 square feet of retail space. It would be a tight squeeze to fit in that area, but it could be managed (the current store is 2000 square feet with an additional 2000 square feet of basement storage).
The “Cadillac” version – a former church, an old firehouse, some wonderful old building with character. Possible drawbacks are both the potential cost as well as deferred maintenance and upkeep. For example, unreinforced masonry buildings are a dangerous pain in the butt.
The “Basic” version – repurposing an old industrial building (i.e. a repair garage, etc). Benefits are lots of space and low prices but drawbacks are possible hazmat abatement (not as bad as it sounds) and that there are current restrictions on changing the use of structures of that sort (i.e. PDR conversion restrictions).
The “Likely” version – the kind of building you frequently see in the Mission; commercial ground floor with two to four apartments above. The residential upstairs is attractive both by providing revenue, to support the bookstore and pay for building expenses, and because of the possibility of setting up some sort of “Author In Residence” program with below-market housing for local authors.
If a building were large enough, Alan mentioned offering reasonable or even below market rates to “kindred businesses” (i.e. the Bookbinders’ Museum, a letterpress company, and so on . . . even a general interest bookstore). If there were enough space Alan thinks that would be a great idea, but it all goes back to cost, expenses, and funding. Those ideas aside, Alan is hesitant to partner with another business to buy a building due to concerns of tying Borderlands' success and stability to the operations of another business.
Are there specific neighborhoods being targeted or excluded?
Though there are neighborhoods that are more and less desirable, but it all comes down to price. If a gorgeous building in Hunters Point becomes available for $200,000 then it would be well worth looking at but, generally, the areas that are "in the sweet spot" are; the Mission, the Castro, the Western Addition, Upper and Lower Haight, Potrero Hill, and Dog Patch. But, any area in SF in on the table, just the value relative to price would have to be better for the less desirable areas.
If the bookstore moves, what about the café?
Everyone on the staff loves the cafe, and the relationships it has produced, but the priority is the bookstore because of its uniqueness. Although Alan would be reluctant to close the café, there are literally dozens of awesome cafes in the Mission District alone. On the other hand, Borderlands is the only bookstore of its kind left West of the Mississippi. So, if it becomes necessary to close the cafe to keep the bookstore open, he'll do so with regret but without hesitation.
Are you employing a tactical or strategic approach to the building search?
To find possible properties to buy, Alan is working with two wonderful real estate brokers with more then 50 years of experience between them. They send him 1-3 listings a month, and sponsors have also sent in tips. Right now, Alan is letting them do the leg work while still keeping his eye open for possibilities.
FUTURE PLANS - Part 2, A Non-Profit
Last year there were many, many people interested in the idea of setting up a nonprofit. The short answer is that a nonprofit is definitely part of the long-term plan but the shape and structure of it is still in flux. Alan has some leads on very good lawyers to speak to, but the main problem is that a nonprofit cannot exist solely to support a for-profit business. A way around this is to structure things so that the bookstore is only a small part of the non-profit's operations (much the way that religious organizations run gift shops) but the main point can’t be retail. The solution would be to do many things (the “fellow traveler” idea) related to bookselling and our genres (i.e. a publishing house, writing classes, etc.) of which bookselling is only a small part. The catch is, who would run it? Nobody currently on staff has both the time or experience to do the job. A sponsor in D.C. suggested that there are professionals who make a career out of doing exactly that – coming in and just administering nonprofits regardless of the mission. That is an interesting possibility that requires more research and input from attorneys.
Another option would be setting up a non-profit to focus on events that qualify as "educational" in nature. That could include all of our author events, for which the non-profit could pay rental fees to Borderlands. And, there are other ways that a non-profit could make modest contributions to Borderlands' operations and bottom line. But, doing that means understanding exactly how the relationship between Borderlands and the non-profit could be structured without breaking any of the rules. Again, more research and talking with attorneys.
Alan will be keeping everyone informed as the process moves along. Regardless of the results of further research, if all goes well a non-profit is without a doubt in the future since Alan's longest term plan is still to transfer the entire business to a non-profit, once he can no longer run the place (either due to decrepitude or due to the eventual and inescapable consequence of age).
QUESTIONS / COMMENTS
Why not just do like L. Ron Hubbard and start a religion?
Alan related a story about visiting a bookshop in Vancouver last year. The shop is in an old bank building and it's just extraordinary. One of the booksellers there characterized the business thus, “This used to be a bank, but now it’s a temple and . . . I am a warrior monk of bookselling!” A bit nutty but still an admirable sentiment. So, a religion centered around books isn’t out of the question, but Alan has some hesitations because it seems a little disrespectful of "real" religions. He is, however, open to discussing it with folks.
One sponsor suggested that Jude would be a great choice for high priestess. Jude firmly demurred.
MINIMUM WAGE EFFECTS ON BOOKSTORES
There then was a long discussion about the effect of minimum wages on bookstores nationwide. Much of the discussion has been covered elsewhere in sponsor notes and in our blog. Rather than restating the whole discussion, the new information is condensed below.
1) An idea that had been floated was that publishers could stop putting "cover" prices on books. That would allow bookstores in high minimum-wage areas to adjust their prices upwards with less perception that they were overcharging customers. Alan talked with several knowledgable people at the World Fantasy Convention last year about this. In addition to the problem that a "cover" price is integral to most contracts between publishers and authors, there is the added problem that contracts between publishers and retailers like Walmart and CostCo also include cover prices as a critical element. The general opinion of the people that he spoke to was that, although the idea of eliminating cover price is an interesting one, it is impractical on a fundamental level.
2) At the same event, Alan spoke with an aide to a conservative member of Congress who is quite involved in the question of minimum wage. This aide's feeling was that there was essentially no chance whatsoever of an increased federal minimum wage unless, at minimum, the Presidency and at least one house of Congress were controlled by the Democrats. And, most likely, both houses would have to be Democrat controlled.
3) A sponsor observed that another great local indie business, Comix Experience, which has been suffering the same wage pressures as Borderlands, seems to focus heavily on things like t-shirts and other "sidelines". They wondered if that was something that could work for Borderlands. Alan responded that Borderlands experience with selling non-book items has not been very positive. There are some that work (like blank books), but for every success there have been five failures and so it's not something he focuses on much but he's open to suggestions for things that would work well.
4) Another sponsor asked why not put a higher sticker price over the printed price on books. Alan’s initial reaction was that doing that is a little creepy and deceptive. And, on a more practical level, it won’t fool anyone since the price appears on multiple locations on books. Plus, Amazon is a ubiquitous source for pricing information.
5) The audience wondered if Borderlands could charge more for signed books. Although charging extra for signed books is common when dealing with older books, especially if the author is deceased, Alan explained that doing so for recent books is not usual practice. The assumed agreement between authors (and their publishers) and bookstores is that authors come to sign books to assist in the marketing of those books. The costs are borne by the publisher on the theory that it is to the benefit of all parties. When a store charges a premium for those books, the store is taking advantage of the author and publisher (albeit in a small way).
It was then suggested that it could be on a case-by-case basis with the consent of the authors. Alan said that he'd be happy to talk with some authors who are personal friends to see what they thought of that idea. Of course, the assumption would be that un-signed copies would be in stock at cover price if there was a premium charge for the signed copies.
6) Finally someone asked how well Borderlands mail-order / ecommerce system worked. With a grin, Alan said, "By the standards of 2007, it’s awesome . . . by any modern standards it leaves a lot to be desired." Although there is a clear set of improvements planned, doing so would mean bolting on more stuff to a web presence that is already outdated. The alternative, a complete redesign and migration of Borderlands' website, is a much more complicated process that he's been working on but hasn't had as much time to give as he would wish. Hopefully that will be something addressed this year.
GUIDANCE FROM THE ATTENDEES
As is usual at this point, a wide-ranging discussion took place between Alan and the attendees. This meeting is a valuable opportunity for Alan to get feedback, suggestions and ideas about the current status of the company, as well as guidance moving forward. The tone of the discussion was conversational and what follows is an extract of the questions and discussion.
Direction for 2017
The first question that Alan posed was where he should focus his attention for the next year. The two possibilities were; A focus on improving the operations of the store and cafe, both by making systematic improvements (like the website redesign) and general maintenance / updating (e.g. touching up paint, repairing furniture, and so forth). Or, focusing on some of the larger issues facing bookselling, specifically price inflexibility, limited support for bookstores from publishers and local government, and an ebook market in which independent booksellers cannot effectively participate. The second option would be harder and, though benefiting Borderlands directly, be more of a broad-based improvement for booksellers.
The audience feedback was;
1) Of the two options, what will make Alan happy?
"Basically? Meh. It doesn't make much difference to me. If either option is awful I just won’t do it." answered Alan. He went on to add that working within the confines of Borderlands is more comfortable, mostly because he knows exactly what he's doing much of the time, whereas meeting with The Suits in NYC is not his forte. To him, the main question is, where is the benefit? The “larger world” ideas are long term and he has no idea if or when there would be a payoff. If Alan focuses solely on internal concerns and increasing revenue, the short term benefit would be tremendous, but for the long term the payoff for solving things like the ebook problem is huge.
2) Any ebook plans would need to be compatible with Kindles for it to work. Alan agreed that trying to punish Amazon by excluding them is quixotic at best. Format wars are foolish -- everything should work with everything and penalizing customers for the electronics they use is stupid.
3) What are your thoughts on DRM?
Alan replied, "As someone smarter than me said, DRM is dumber than tits on a snake. The first publisher in our business to make money on ebooks was Baen and they still are totally DRM free. Baen's attitude is that it’s hard enough to get readers to hear about their authors so, if someone steals the book, that’s still a win. Tom Doherty, the founder of Tor Books, has been an advocate at Macmillan to eliminate DRM and succeeded in 2012."
There was no clear and strong feeling on the part of those attending whether Alan should focus his attention on the business or on some of the larger issues. The general conclusion was that he should just pick whatever seemed like either the best idea or the most pleasant prospect.
Politics: At What Point Should Borderlands Get Involved?
Alan mentioned in a recent piece in the store newsletter <http://borderlands-books.blogspot.com/2017/02/sponsorship-success-and-other-news.html#more>, he’s done his best to keep Borderlands out of politics, except for situations that directly impact our industry. As per that note, he’s planning to stick by that, unless something crossed the line from politics-as-usual and into the realm of fundamental civil rights. Given the sponsors’ commitment to Borderlands, he brought the subject up at the meeting to check in and get their opinions.
He began by explaining that his personal standard for civil rights has been what he calls the "Kindergarten Rule" because it's a standard of fairness that every child understands in kindergarten: everyone should be treated equally, regardless of who they are, and opportunity should be shared. His starting question was, "Is that a useful and reasonable standard to apply to Borderlands' political involvement?"
General comments were as follows;
1) The sponsors trust Alan and his judgement on how to operate the business, and that trust has been demonstrably rewarded over the past two years so, at a certain point, he should just do what he thinks is best. Alan replied, "Thank you and I will but -- I still very much value your thoughts and opinions."
2) The "Kindergarten Rule" seemed like a good basis to operate from, though it probably won't work in more complicated situations.
3) What would even be the use of getting Borderlands politically involved? Alan responded that, due to his background, he can articulate general legal principles relatively well and talk about the significance of law enforcement actions. He also enjoys a pretty good reputation, both in San Francisco as a whole and within our field. Those two qualities combined with a good-sized audience (700 sponsors, 3000 newsletter subscribers, and 11,000 followers on Twitter) means that he could have some influence on public opinion. In addition, it would also be possible for Borderlands to both host and produce fund-raising events for, as an example, the ACLU.
4) One sponsor observed that one of Borderlands' goals has always been to be a welcoming place for everyone. Based on their own experience at their job with a manager who was politically conservative, the Bay Area's left-leaning qualities can make things uncomfortable for people who are more conservative. That would be an argument against political positions for the business. Alan agreed whole-heartedly.
5) Finally, another sponsor pointed out that it's easy to take no position on the issues when the business never has. But, once the business does start taking positions, the absence of a position on any issue sends a message and can even be the same as actively taking a position. In essence, once we start, it can be very hard to stop.
Miscellaneous Comments and Questions
The following comments and questions came up at various points during the meeting and have been collected here in no particular order.
1) What about getting a liquor license for beer and wine in the cafe?
Alan replied that it might be worth it, but it would also means nobody under 18 could work at the cafe anymore. That would both deprive Borderlands of a valuable pool of staff as well as stopping something that gives all of us great pleasure; giving younger people their first job and showing them what a good, fair work environment is like.
2) Could there be more social gatherings, outside of the quarterly parties?
In mid-2015 there was a regular Tuesday night drinking session that eventually petered out due to lack of attendance, and more frequent Sponsor Socials could lead to lower turnout. Some suggestions from the audience include a monthly silent reading party or a monthly meetup at a local bar. Alan was in favor of the idea but pointed out that people need to actually show up. Audience feedback for this ideas was very positive.
(Note: in response to this we've started a monthly meetup for drinks. The first one was last month and was quite a success, so we'll be continuing it.)
3) What about a book club for sponsors as was suggested last year?
That was started last year and sort of worked but there were some communication issues around the book club that could be resolved to improve the attendance. This could also dovetail nicely with the silent reading parties suggested in #2 above. Definitely something to consider.
4) What about a regular board game night?
Alan and the audience were supportive of that idea as well.
(Note: we've started doing that this month. The first meeting will be on May 8th and we'll see how it goes.)
5) Would it be possible to set up an automatic renewal system for sponsorships?
Alan's initial reaction was that automatically renewing sponsorships would reduce the engagement between Borderlands and the sponsors. His argument is that, if sponsoring Borderlands is something that just happens, rather than it being something that people actually decide to do, it makes them less involved in the process. Since the sponsors' involvement has been so critical to the success of the program, he's hesitant to make renewal automatic.
In response, a sponsor observed that all human motivation is essentially selfish. People are time-poor, not disengaged; they want to do something altruistic but don’t have time. Auto-renewal for those people would be a kindness, especially for folks who live out of town. Alan agreed that is a good point and concluded that he would like to go one more year without automatic renewal so that we can really see how the program is working without changing a significant variable. But, after next year, he's thinking that it might be something to try out. Auto-renewnal would definitely be "opt-in", not "opt-out".
6) What about reminding people who don’t renew?
Alan felt uncomfortable with that idea. He admits that it's stubborn of him but he doesn't want to be in the position of specifically asking people for their support. It's one thing to let people know that it's time to renew but it seems different to pester them about doing so. As it stands, the third sponsor note each year makes it clear that, if someone has not renewed, that will be the last time they are reminded.
7) A sponsor suggested that we could ask people if they would like to be reminded to renew (and, for that matter, be reminded about upcoming events). Alan thought that seemed like an excellent idea.
(Note: That "pester me" option was started in the last sponsor note and, at this time, over 40 sponsors have signed up to be reminded.)
8) Returning to the aspect of doing more social events, a sponsor asked if it would be possible to set up a forum, message board or perhaps a Slack channel where sponsors could engage with each other. After pointing out that there would need a cadre of dedicated and responsive moderators, Alan thought that was a good idea and said he would work on it.
IN CLOSING
Alan talked a bit about Borderlands' upcoming 20th anniversary in November and asked the attendees how they thought the celebration should be structured. It was determined that making the sponsor social on November 18th part of the anniversary celebration would be great while also throwing another party or event for the public would be a very nice thing to accomplish. After that, Alan thanked the sponsors for their time and support and the meeting ended at 9:30 pm, though many attendees stayed and talked afterwards.
Friday, March 31st, 7pm
30-35 Attendees
On Friday, March 31st at 7pm the third annual Sponsors’ General Meeting took place at Borderlands Café to discuss the progress of the sponsorship program, give updates on projects, and talk about the general state of the business.
Alan Beatts, the owner of Borderlands Books and Borderlands Café, started by thanking the attending sponsors for their continued support, stating that the sponsors are the single most important reason that Borderlands still exists. He reiterated the benefits for sponsors that are listed on the website, but also urged sponsors to remember that he and the rest of the staff are, within reason, at their service, and encouraged them to reach out with any sort of request.
From there, the meeting went back and forth between information from Alan and questions / responses from the audience.
BUSINESS UPDATES
March 31st is the deadline to have 300 sponsors. As of March 31st, 2017 there are 632, which in an increase of 21 over the number at deadline in 2016.
Business at the bookstore in the first quarter of 2017 has been slow compared to 2016. However, in 2016 we had two very large author events in the first quarter which were not repeated this year, so lower income at this point in the year isn't a surprise. Alan said that he wasn't very concerned about the reduced sales but that he would be keeping an eye on it over the next three months.
Jeremy Lassen is taking an extended break from the bookstore to focus on a new job for the next couple months, but Alan expects and looks forward to having him back soon. To pick up some of the slack, Maddy Hubbert, the senior barrista at the café who’s been a patron since she was quite young and an employee since the age of 15, is cross-trained as a bookseller and so will be working more shifts at the store.
In the cafe, Z'ev has moved to a salaried position as Manager and is doing an outstanding job. Thanks to the degree that he has taken over the day-to-day operations of the cafe, Alan has much more time to work on long-range projects for the company. Sales have been quite stable on the cafe side. The only real shakeup on the horizon is that a number of staff will be graduating from high school this year and several of them will be heading out of town for college. So, you can expect to see some new faces working there over the next few months.
Last year, due to a family illness, Alan found much of his time (about 20%) taken up dealing with matters associated with that. The result was that many projects at Borderlands were put on hold or delayed. But, heading into 2017, things in his personal life are much more stable and he looks forward to renewing efforts on multiple fronts.
FUTURE PLANS - Part 1, Long Term
To Alan's great relief, the total number of sponsors has increased compared to last year. Given that and barring major economic changes, it seems that the sponsorship program can be a long-term success and so that removes the nearest-term threat to the continued existence of the store. And so, just as last year, the next near term threat is the expiration of the current lease.
The bookstore’s lease expires in 2021, the cafe lease in 2025. At that time the rents will go up to market rate, which (in the current economic climate) would be impossible to sustain. Although it would be possible to raise the cost of sponsorships to the $300-$400 range to cover the shortfall produced by much higher rent, nobody seems to think that is a good or sustainable idea. Alan believes that the best solution continues to be buying a building with a balance of payments (i.e. income minus maintenance, taxes, and debt service) that is close to our current financial situation. On a fundamental level, finding that building is just a matter of math. Alan recently was working on a deal for a building located on Mission Street between 25th and 26th. He made an offer that would have satisfied the math, but it was below asking price and the seller declined.
Alan is continuing to actively pursue purchasing a building and that will be an ongoing (but unpredictable) process. If he is successful before 2021, then the store can relocate. It is certainly possible that we won't be able to find a building that meets our requirements and is affordable, but we hope the patience and flexibility will reward us eventually.
If the building purchase doesn't work out by 2021, the most likely course will be to combine the bookstore and cafe's operations within 870 Valencia, where the cafe is currently located. To do so would mean substantially decreasing the seating and menu in the cafe to allow space for the bookstore's inventory and, possibly, reducing the bookstore's inventory by a modest amount. Within those considerations however, the bookstore would be quite viable in the cafe space.
Taken together, we have more than 8 years to find a solution to the location of the store in an environment of much higher rents. If, by 2024 or so, we don't have a solution then it will be time to consider either moving out of San Francisco or shutting down.
QUESTIONS
What sort of buildings are being considered?
Alan gave examples of three broad types with one caveat – though he might be willing to consider it for a very attractive price, a nondescript mid-century structure is not something that he thinks would suit Borderlands. Regardless of the specific building, the store requires an absolute minimum of 1500 square feet of retail space. It would be a tight squeeze to fit in that area, but it could be managed (the current store is 2000 square feet with an additional 2000 square feet of basement storage).
The “Cadillac” version – a former church, an old firehouse, some wonderful old building with character. Possible drawbacks are both the potential cost as well as deferred maintenance and upkeep. For example, unreinforced masonry buildings are a dangerous pain in the butt.
The “Basic” version – repurposing an old industrial building (i.e. a repair garage, etc). Benefits are lots of space and low prices but drawbacks are possible hazmat abatement (not as bad as it sounds) and that there are current restrictions on changing the use of structures of that sort (i.e. PDR conversion restrictions).
The “Likely” version – the kind of building you frequently see in the Mission; commercial ground floor with two to four apartments above. The residential upstairs is attractive both by providing revenue, to support the bookstore and pay for building expenses, and because of the possibility of setting up some sort of “Author In Residence” program with below-market housing for local authors.
If a building were large enough, Alan mentioned offering reasonable or even below market rates to “kindred businesses” (i.e. the Bookbinders’ Museum, a letterpress company, and so on . . . even a general interest bookstore). If there were enough space Alan thinks that would be a great idea, but it all goes back to cost, expenses, and funding. Those ideas aside, Alan is hesitant to partner with another business to buy a building due to concerns of tying Borderlands' success and stability to the operations of another business.
Are there specific neighborhoods being targeted or excluded?
Though there are neighborhoods that are more and less desirable, but it all comes down to price. If a gorgeous building in Hunters Point becomes available for $200,000 then it would be well worth looking at but, generally, the areas that are "in the sweet spot" are; the Mission, the Castro, the Western Addition, Upper and Lower Haight, Potrero Hill, and Dog Patch. But, any area in SF in on the table, just the value relative to price would have to be better for the less desirable areas.
If the bookstore moves, what about the café?
Everyone on the staff loves the cafe, and the relationships it has produced, but the priority is the bookstore because of its uniqueness. Although Alan would be reluctant to close the café, there are literally dozens of awesome cafes in the Mission District alone. On the other hand, Borderlands is the only bookstore of its kind left West of the Mississippi. So, if it becomes necessary to close the cafe to keep the bookstore open, he'll do so with regret but without hesitation.
Are you employing a tactical or strategic approach to the building search?
To find possible properties to buy, Alan is working with two wonderful real estate brokers with more then 50 years of experience between them. They send him 1-3 listings a month, and sponsors have also sent in tips. Right now, Alan is letting them do the leg work while still keeping his eye open for possibilities.
FUTURE PLANS - Part 2, A Non-Profit
Last year there were many, many people interested in the idea of setting up a nonprofit. The short answer is that a nonprofit is definitely part of the long-term plan but the shape and structure of it is still in flux. Alan has some leads on very good lawyers to speak to, but the main problem is that a nonprofit cannot exist solely to support a for-profit business. A way around this is to structure things so that the bookstore is only a small part of the non-profit's operations (much the way that religious organizations run gift shops) but the main point can’t be retail. The solution would be to do many things (the “fellow traveler” idea) related to bookselling and our genres (i.e. a publishing house, writing classes, etc.) of which bookselling is only a small part. The catch is, who would run it? Nobody currently on staff has both the time or experience to do the job. A sponsor in D.C. suggested that there are professionals who make a career out of doing exactly that – coming in and just administering nonprofits regardless of the mission. That is an interesting possibility that requires more research and input from attorneys.
Another option would be setting up a non-profit to focus on events that qualify as "educational" in nature. That could include all of our author events, for which the non-profit could pay rental fees to Borderlands. And, there are other ways that a non-profit could make modest contributions to Borderlands' operations and bottom line. But, doing that means understanding exactly how the relationship between Borderlands and the non-profit could be structured without breaking any of the rules. Again, more research and talking with attorneys.
Alan will be keeping everyone informed as the process moves along. Regardless of the results of further research, if all goes well a non-profit is without a doubt in the future since Alan's longest term plan is still to transfer the entire business to a non-profit, once he can no longer run the place (either due to decrepitude or due to the eventual and inescapable consequence of age).
QUESTIONS / COMMENTS
Why not just do like L. Ron Hubbard and start a religion?
Alan related a story about visiting a bookshop in Vancouver last year. The shop is in an old bank building and it's just extraordinary. One of the booksellers there characterized the business thus, “This used to be a bank, but now it’s a temple and . . . I am a warrior monk of bookselling!” A bit nutty but still an admirable sentiment. So, a religion centered around books isn’t out of the question, but Alan has some hesitations because it seems a little disrespectful of "real" religions. He is, however, open to discussing it with folks.
One sponsor suggested that Jude would be a great choice for high priestess. Jude firmly demurred.
MINIMUM WAGE EFFECTS ON BOOKSTORES
There then was a long discussion about the effect of minimum wages on bookstores nationwide. Much of the discussion has been covered elsewhere in sponsor notes and in our blog. Rather than restating the whole discussion, the new information is condensed below.
1) An idea that had been floated was that publishers could stop putting "cover" prices on books. That would allow bookstores in high minimum-wage areas to adjust their prices upwards with less perception that they were overcharging customers. Alan talked with several knowledgable people at the World Fantasy Convention last year about this. In addition to the problem that a "cover" price is integral to most contracts between publishers and authors, there is the added problem that contracts between publishers and retailers like Walmart and CostCo also include cover prices as a critical element. The general opinion of the people that he spoke to was that, although the idea of eliminating cover price is an interesting one, it is impractical on a fundamental level.
2) At the same event, Alan spoke with an aide to a conservative member of Congress who is quite involved in the question of minimum wage. This aide's feeling was that there was essentially no chance whatsoever of an increased federal minimum wage unless, at minimum, the Presidency and at least one house of Congress were controlled by the Democrats. And, most likely, both houses would have to be Democrat controlled.
3) A sponsor observed that another great local indie business, Comix Experience, which has been suffering the same wage pressures as Borderlands, seems to focus heavily on things like t-shirts and other "sidelines". They wondered if that was something that could work for Borderlands. Alan responded that Borderlands experience with selling non-book items has not been very positive. There are some that work (like blank books), but for every success there have been five failures and so it's not something he focuses on much but he's open to suggestions for things that would work well.
4) Another sponsor asked why not put a higher sticker price over the printed price on books. Alan’s initial reaction was that doing that is a little creepy and deceptive. And, on a more practical level, it won’t fool anyone since the price appears on multiple locations on books. Plus, Amazon is a ubiquitous source for pricing information.
5) The audience wondered if Borderlands could charge more for signed books. Although charging extra for signed books is common when dealing with older books, especially if the author is deceased, Alan explained that doing so for recent books is not usual practice. The assumed agreement between authors (and their publishers) and bookstores is that authors come to sign books to assist in the marketing of those books. The costs are borne by the publisher on the theory that it is to the benefit of all parties. When a store charges a premium for those books, the store is taking advantage of the author and publisher (albeit in a small way).
It was then suggested that it could be on a case-by-case basis with the consent of the authors. Alan said that he'd be happy to talk with some authors who are personal friends to see what they thought of that idea. Of course, the assumption would be that un-signed copies would be in stock at cover price if there was a premium charge for the signed copies.
6) Finally someone asked how well Borderlands mail-order / ecommerce system worked. With a grin, Alan said, "By the standards of 2007, it’s awesome . . . by any modern standards it leaves a lot to be desired." Although there is a clear set of improvements planned, doing so would mean bolting on more stuff to a web presence that is already outdated. The alternative, a complete redesign and migration of Borderlands' website, is a much more complicated process that he's been working on but hasn't had as much time to give as he would wish. Hopefully that will be something addressed this year.
GUIDANCE FROM THE ATTENDEES
As is usual at this point, a wide-ranging discussion took place between Alan and the attendees. This meeting is a valuable opportunity for Alan to get feedback, suggestions and ideas about the current status of the company, as well as guidance moving forward. The tone of the discussion was conversational and what follows is an extract of the questions and discussion.
Direction for 2017
The first question that Alan posed was where he should focus his attention for the next year. The two possibilities were; A focus on improving the operations of the store and cafe, both by making systematic improvements (like the website redesign) and general maintenance / updating (e.g. touching up paint, repairing furniture, and so forth). Or, focusing on some of the larger issues facing bookselling, specifically price inflexibility, limited support for bookstores from publishers and local government, and an ebook market in which independent booksellers cannot effectively participate. The second option would be harder and, though benefiting Borderlands directly, be more of a broad-based improvement for booksellers.
The audience feedback was;
1) Of the two options, what will make Alan happy?
"Basically? Meh. It doesn't make much difference to me. If either option is awful I just won’t do it." answered Alan. He went on to add that working within the confines of Borderlands is more comfortable, mostly because he knows exactly what he's doing much of the time, whereas meeting with The Suits in NYC is not his forte. To him, the main question is, where is the benefit? The “larger world” ideas are long term and he has no idea if or when there would be a payoff. If Alan focuses solely on internal concerns and increasing revenue, the short term benefit would be tremendous, but for the long term the payoff for solving things like the ebook problem is huge.
2) Any ebook plans would need to be compatible with Kindles for it to work. Alan agreed that trying to punish Amazon by excluding them is quixotic at best. Format wars are foolish -- everything should work with everything and penalizing customers for the electronics they use is stupid.
3) What are your thoughts on DRM?
Alan replied, "As someone smarter than me said, DRM is dumber than tits on a snake. The first publisher in our business to make money on ebooks was Baen and they still are totally DRM free. Baen's attitude is that it’s hard enough to get readers to hear about their authors so, if someone steals the book, that’s still a win. Tom Doherty, the founder of Tor Books, has been an advocate at Macmillan to eliminate DRM and succeeded in 2012."
There was no clear and strong feeling on the part of those attending whether Alan should focus his attention on the business or on some of the larger issues. The general conclusion was that he should just pick whatever seemed like either the best idea or the most pleasant prospect.
Politics: At What Point Should Borderlands Get Involved?
Alan mentioned in a recent piece in the store newsletter <http://borderlands-books.blogspot.com/2017/02/sponsorship-success-and-other-news.html#more>, he’s done his best to keep Borderlands out of politics, except for situations that directly impact our industry. As per that note, he’s planning to stick by that, unless something crossed the line from politics-as-usual and into the realm of fundamental civil rights. Given the sponsors’ commitment to Borderlands, he brought the subject up at the meeting to check in and get their opinions.
He began by explaining that his personal standard for civil rights has been what he calls the "Kindergarten Rule" because it's a standard of fairness that every child understands in kindergarten: everyone should be treated equally, regardless of who they are, and opportunity should be shared. His starting question was, "Is that a useful and reasonable standard to apply to Borderlands' political involvement?"
General comments were as follows;
1) The sponsors trust Alan and his judgement on how to operate the business, and that trust has been demonstrably rewarded over the past two years so, at a certain point, he should just do what he thinks is best. Alan replied, "Thank you and I will but -- I still very much value your thoughts and opinions."
2) The "Kindergarten Rule" seemed like a good basis to operate from, though it probably won't work in more complicated situations.
3) What would even be the use of getting Borderlands politically involved? Alan responded that, due to his background, he can articulate general legal principles relatively well and talk about the significance of law enforcement actions. He also enjoys a pretty good reputation, both in San Francisco as a whole and within our field. Those two qualities combined with a good-sized audience (700 sponsors, 3000 newsletter subscribers, and 11,000 followers on Twitter) means that he could have some influence on public opinion. In addition, it would also be possible for Borderlands to both host and produce fund-raising events for, as an example, the ACLU.
4) One sponsor observed that one of Borderlands' goals has always been to be a welcoming place for everyone. Based on their own experience at their job with a manager who was politically conservative, the Bay Area's left-leaning qualities can make things uncomfortable for people who are more conservative. That would be an argument against political positions for the business. Alan agreed whole-heartedly.
5) Finally, another sponsor pointed out that it's easy to take no position on the issues when the business never has. But, once the business does start taking positions, the absence of a position on any issue sends a message and can even be the same as actively taking a position. In essence, once we start, it can be very hard to stop.
Miscellaneous Comments and Questions
The following comments and questions came up at various points during the meeting and have been collected here in no particular order.
1) What about getting a liquor license for beer and wine in the cafe?
Alan replied that it might be worth it, but it would also means nobody under 18 could work at the cafe anymore. That would both deprive Borderlands of a valuable pool of staff as well as stopping something that gives all of us great pleasure; giving younger people their first job and showing them what a good, fair work environment is like.
2) Could there be more social gatherings, outside of the quarterly parties?
In mid-2015 there was a regular Tuesday night drinking session that eventually petered out due to lack of attendance, and more frequent Sponsor Socials could lead to lower turnout. Some suggestions from the audience include a monthly silent reading party or a monthly meetup at a local bar. Alan was in favor of the idea but pointed out that people need to actually show up. Audience feedback for this ideas was very positive.
(Note: in response to this we've started a monthly meetup for drinks. The first one was last month and was quite a success, so we'll be continuing it.)
3) What about a book club for sponsors as was suggested last year?
That was started last year and sort of worked but there were some communication issues around the book club that could be resolved to improve the attendance. This could also dovetail nicely with the silent reading parties suggested in #2 above. Definitely something to consider.
4) What about a regular board game night?
Alan and the audience were supportive of that idea as well.
(Note: we've started doing that this month. The first meeting will be on May 8th and we'll see how it goes.)
5) Would it be possible to set up an automatic renewal system for sponsorships?
Alan's initial reaction was that automatically renewing sponsorships would reduce the engagement between Borderlands and the sponsors. His argument is that, if sponsoring Borderlands is something that just happens, rather than it being something that people actually decide to do, it makes them less involved in the process. Since the sponsors' involvement has been so critical to the success of the program, he's hesitant to make renewal automatic.
In response, a sponsor observed that all human motivation is essentially selfish. People are time-poor, not disengaged; they want to do something altruistic but don’t have time. Auto-renewal for those people would be a kindness, especially for folks who live out of town. Alan agreed that is a good point and concluded that he would like to go one more year without automatic renewal so that we can really see how the program is working without changing a significant variable. But, after next year, he's thinking that it might be something to try out. Auto-renewnal would definitely be "opt-in", not "opt-out".
6) What about reminding people who don’t renew?
Alan felt uncomfortable with that idea. He admits that it's stubborn of him but he doesn't want to be in the position of specifically asking people for their support. It's one thing to let people know that it's time to renew but it seems different to pester them about doing so. As it stands, the third sponsor note each year makes it clear that, if someone has not renewed, that will be the last time they are reminded.
7) A sponsor suggested that we could ask people if they would like to be reminded to renew (and, for that matter, be reminded about upcoming events). Alan thought that seemed like an excellent idea.
(Note: That "pester me" option was started in the last sponsor note and, at this time, over 40 sponsors have signed up to be reminded.)
8) Returning to the aspect of doing more social events, a sponsor asked if it would be possible to set up a forum, message board or perhaps a Slack channel where sponsors could engage with each other. After pointing out that there would need a cadre of dedicated and responsive moderators, Alan thought that was a good idea and said he would work on it.
IN CLOSING
Alan talked a bit about Borderlands' upcoming 20th anniversary in November and asked the attendees how they thought the celebration should be structured. It was determined that making the sponsor social on November 18th part of the anniversary celebration would be great while also throwing another party or event for the public would be a very nice thing to accomplish. After that, Alan thanked the sponsors for their time and support and the meeting ended at 9:30 pm, though many attendees stayed and talked afterwards.
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