Letter to the stakeholders of Better World Books

This letter went out internally today.
 
 

To the stakeholders of Better World Books:

To this point in its history, Better World Books has posted a cumulative loss. In short, more money has been spent than has been earned, sacrificing short-term profitability for long-term growth. We’re hardly the first company to do this: Amazon lost over $1 Billion before it turned the corner. We do not have a billion dollar cushion. We have neither a dot-com bubble nor wealthy founders to draw upon to fund continued losses. As a responsible B Corporation, we have succeeded in many ways: creating jobs, funding literacy, and saving books from landfills. Economically, the company has grown revenue year-over-year in a way that very few businesses have. But towards the goal of becoming a profitable enterprise, we have not yet succeeded. As a management team, we regret it deeply.

In a better economy, we may have grown our way to profitability or raised additional outside funding. As the world looks now, we see the very real possibility of a deepening worldwide recession and have to prepare for the worst. This means making sure that Better World Books supports itself and its future growth solely through the sale of books. As such, we’ve worked since November to implement a “profit improvement plan” that spanned every aspect of the business. 

Many aspects of this profit improvement plan have been achieved over the past three months with significant improvements in productivity, decreases in expenses, and growth in sales on BetterWorld.com. Unfortunately, this only gets us part of the way to our goal. While we expect considerable sales growth and future operational improvements, they are far from certain and we can’t bet the company on them. Most of the expenses that are discretionary have already been cut. Regretfully, we have to get the rest of the way to profitability by reducing payroll. 

There is no good or painless way to reduce payroll, but we tried to do it in a way that best fits with our company’s values. By instituting across-the-board salary cuts, at the suggestion of some employees, we saved 30-40 jobs. The salary cuts will be in place for at least six months. These cuts will be reviewed in August 2009 and our hope is that we can reinstate compensation to its previous levels if we are running profitably. 

Today’s announcements:

1. The salary of the founders and CEO will be cut by 20% for at least six months. VP’s will take a 15% pay cut for at least six months.
2. Other employees, both hourly and salaried, will take a 10% cut if they make over $30,000, or a 5% cut if they make $30,000 or less, for at least six months. 
3. We will cut 42 full time positions across Indiana, Georgia and California. In most cases, the reduction will be a capable person who was working in a role that the company can no longer afford. In some cases, it was a relocation of mission to consolidate or save the company money.  In no cases was it easy
4. We are consolidating the marketing team to Atlanta to reduce costs and increase effectiveness.

Along with these announcements, we have refined our strategy to reflect that we will have to do more with less. It comes down simply to some things we will do a lot more of, some we will stop doing, and some we will maintain while focusing on profitability. Your supervisor will share this list with you and can discuss how it may change your role. As always, we encourage you to contact members of the leadership team directly with any questions, big or small. 

Again, we empathize with you during these painful changes.  We thank you for your continued support during this transition and for being a part of Better World Books.

Sincerely, 

David Murphy
Kreece Fuchs

Paul Sansone
Andy Warzon
Dustin Holland
Xavier Helgesen

 

5 Comments

  1. I’m sorry to learn the news, guys… I’m going to stay hopeful that things will turn around. BWB is amazing and something great will happen.

  2. I wish we had more leaders like you running private and public companies. If we did we would have alot less corporate jets, golden parachutes and we could save front line jobs across the globe.

    It appears that your decision while difficult is balanced as you have multiple stakeholders that you are accountable to -(employees, customers, investors)

    What I find so refreshing is that the actions taken include the salary cuts for the executives and in fact you have taken the biggest cut- whereas others would have just slashed more jobs to protect their perks. In addition, you did not peanut butter spread the salary cuts but tiered it so that those with the smaller salaries had a smaller impact. Every day we hear about x company having XXXX job cuts – but few companies are impacting the executive perks. Saving 30 – 40 jobs is material and you have lived your values while at the same time acting responsively.

    Also it feels as if you have a plan that is not based on the moon and stars aligning – that would not be responsible – you have to have some measured caution otherwise you could be at this again in a few months if the recession does not pick up – I know this first hand and it is painful.

    I am sure some of the employees impacted might not agree with me but I can tell you this kind of balanced action where the leaders share disproportionately in the pain is unusual and you (BW employees) frankly are blessed to have leaders with integrity who truly balance their decision with what is best for the company, employee and customer and put themselves second.

  3. Thanks for the support Eileen. It’s much appreciated.

  4. I’m really sorry to hear about this. I’ve only recently found your site and love the range of second hand books you have. It’s been a godsend for feeding my book addiction! Adding in the fact that you’re doing great work in the community makes your site that extra bit special.

    I have to admit that the weakening dollar effects the quantities I would normally be able to buy (as an overseas customer) which is a shame because I’d love to be able to go nuts when shopping here.

    Hang in there. Word of mouth is a great business asset and I’ll spread the word about your site where I can.

  5. Effective today, Better World Books restored employee salaries. We very much appreciate everyone’s solidarity in weathering difficult times, and in continuing to work hard to improve the business. Thanks to the entire BWB team, and to our customers for your continued patronage.

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