Transcript of Praveen Madan’s talk at BK’s annual shareholders meeting on July 27, 2017
To answer the question of why I accepted the board chair role at BK, I need to tell you a story.
About five years ago, we got an opportunity to assume stewardship of Kepler’s Books, which is a retail bookstore and cultural institution in Silicon Valley. Kepler’s had failed as a business very publicly six years prior to this (in 2005) and had been saved and brought back to life by some of the best and brightest minds in Silicon Valley who had poured in a lot money and had tried many new strategic initiatives to make the business stronger and sustainable. During these six years, Kepler’s brand had grown, many wonderful new programs were developed, and tremendous community goodwill was generated. But toward the end of 2011, the business was about to fail again! When we got involved, Kepler’s financials were in fairly bad shape. Sales had been falling 10 to 15 percent per year. There was a severe cash crunch. Inventory was very thin. The store had been losing money. Debts had been piling up. The store was forty-five days away from starting a liquidation sale, it had stopped paying rent, the landlord was getting ready to start eviction, and many publishers had stopped shipping books to it. Most community members knew Kepler’s death was imminent.
It so happened I was looking for a new challenge. I was looking for an opportunity to build the bookstore of the future. I knew the traditional bookselling model was not sustainable and something new was needed. I didn’t have a clear vision. I didn’t have a real plan. I didn’t have a team. I didn’t have resources. But I had some ideas! One of the core ideas was to implement the BK Way into a dying business and use it as a cure, a magic potion to change the trajectory of the business. I had fallen in love with the BK Way—the model of radical democracy, self-organizing teams, eliminating the class system, practicing leadership as stewardship for the benefit of the community, approaching management as a science, involving staff and stakeholders in all aspects of the business, providing full transparency. I was convinced that if I followed the right path—the BK Way path—the vision, the plan, the people, the resources would follow, that all of it would work out. It was an act of faith! I had never done anything like it before.
So, we got to work. I invited Steve Piersanti to help and he did. He helped a lot! We conducted a future search. One of BK’s authors, Sandra Janoff, came out and facilitated it on a pro-bono basis, and she has stayed involved by continuing to help us. David Marshall participated in it. Over several months, we involved many, many people from the community and all of Kepler’s staff in rethinking its future. With significant involvement from the community, we developed a new vision, a new business plan, raised new capital, and built a new team and new culture.
For the last five years, I have kept benefiting from BK, its books, and its rich community of authors. We keep tapping into the BK community—observing, asking, learning, and going back and applying these lessons and best practices at Kepler’s. I regularly ask BK folks for documents—they send them to me. I ask them for their best practices—they send them to me. BK has been like an open and accessible training program, a school, an incubator of great organizational ideas and practices.
Five years later, the results speak for themselves:
- The sixty-two-year-old bookstore has reinvented itself and now operates three distinct but closely related book businesses—each with its own business model and team—and all three businesses are thriving! These include Kepler’s bookstore, Kepler’s Literary Foundation, and GiftLit.
- Kepler’s bookstore is organized as a social-purpose corporation with a mission of making books accessible to all members of our community. Kepler’s Literary Foundation is set up as a nonprofit and has become the premier producer of literary and cultural programs in Silicon Valley, including programs at many public schools. GiftLit is a web-based book gifting service that is helping us get thousands of new customers all over the country and has become the fastest growing part of Kepler’s.
- Kepler’s recently became the first bookstore, to the best of our knowledge, to begin paying a starting wage of $15 per hour to our staff—which was an important milestone for us to continue strengthening our team. Last year, Kepler’s also paid an additional profit share of $1.44 per hour to all employees, so an entry-level staff member effectively earned $16.44 per hour. In 2012, the starting wage for entry-level booksellers at Kepler’s used to be $9 per hour. We have been able to increase it 82 percent over five years. The minimum wage in California is $10.50 per hour, and the federal standard is even lower. So we are quite a bit ahead of what the government considers a minimum starting wage.
- Kepler’s sales have increased every year for the last five years.
- Kepler’s has been profitable for five years in a row.
- Four years ago we instituted a profit-sharing program and started distributing most of the store profits back to employees. In these four years, we have redistributed over $150,000 as profit sharing to staff members.
- Kepler’s progress in building this new business model was recently profiled in Stanford Social Innovation Review.
I could spend the next hour talking about Kepler’s—but that’s not the point.
I don’t think we could have achieved these results without the BK Way. Following the BK Way opened up new possibilities and a bright new future for Kepler’s. This is why when Steve recommended and the board asked me to become chair of the board at BK, I said yes.
I owe BK! I believe in the BK Way. I believe in it more than I believe in just about anything else. I believe in BK’s books, BK’s worldview, and BK’s mission of creating a world that works for all. My association with BK has transformed me—my values, my leadership style, my view of my role in organizations and society. I want to give back by helping BK scale its work and make it available to everyone who needs it in any corner of the world.
So, congratulations on twenty-five great years, and I hope by working together we can ensure BK is going to be around for a very long time—because the world needs you.