CEO & Co-Owner of Tattered Cover Bookstore
"The big “aha,” for me with business, is everything repeats. This notion of a new frontier is total fiction."
Kwame Spearman boasts the resume of resumes for higher education having graduated from Columbia, Yale, and Harvard. His interest in creating change through politics led him to getting a law degree where he then realized that some of the most effective politicians had a strong understanding of business which took him to receiving his MBA at Harvard. Kwame later joined Bain & Company, ran real estate expansion for Knotel, and is now the CEO & Co-owner of Tattered Cover.
Having graduated from three Ivy League schools you could have gone into a lot of different fields. How did you land on consulting at Bain & Company as your first role out of school?
You know, I'm a big believer that you need training. You can be the smartest person, but you need a large, private institution that sucks you in and spits you out to teach you their way of thinking.
After five years of grad school, I basically had three choices. You either go be a corporate lawyer, try to be an investment banker, or you do management consulting. For me it was management consulting.
I learned so much in those years, and so quickly.
After learning theory for years during school, how do you learn to translate that into real world advice for the companies you were consulting with?
You actually still take the theory, but you start applying it to just raw data. The big “aha,” for me with business, is everything repeats. This notion of new frontier is total fiction. All that happens is there's a cycle, and then there's an addition of a new technology. There might be some changes in economic situations (during this case like a pandemic) but everything that we are experiencing in COVID--and coming out of COVID in particular--that's all happened before. What an institutional name is able to do is to graft all of those things and put you in a situation where company X is trying to expand into a new market. We called it the GXC at Bain. And you just get all these cases of what's happened, and you basically follow those notes. You’re doing all of these things that are incredibly methodical but are really enlightening when you're doing them fast and getting reps, and it teaches you how to think. The biggest “aha” for consulting is you're supposed to know how to ask the right questions. So if we're talking commercial real estate, and I don't know anything about it. I should be able to in a very short amount of time understand your industry by asking a few key questions that I know because every time I need to know an industry, those are the questions that I ask. And those are great skills to have.
Why did you eventually transition out of consulting?
Well, because you have to ask yourself, are you the consigliere, or do you want to own the answer? And it's no shame on either side of the equation. Do you want to be an adviser, or do you want to be the person doing? Advisers are like, “I've got the most power in the room with no downside. I'm doing this for a lot of different companies across a lot of different industries. I'm working in an incredibly protected environment.” Doer goes, “I own the answer and outcome.” Who knows who is right? It's a preference thing, but you're forced to make a decision internally with management consulting. Do you want to be an advisor, or do you want to be a doer? Because if you want to be a doer, you start looking at what you're advising for the clients. And you see that sometimes they don't listen. Other times they don't really care. Sometimes they do listen, and they didn't care. And you see the results, and that kills you to not be in their seat.
After Bain you moved on to be Head of Expansion at Knotel, one of the fastest growing real estate companies in the U.S. Eventually Knotel faced similar struggles to WeWork; Is hindsight 20/20 or did you recognize early on that the growth wasn’t sustainable?
Oh yes, within week eight.
You just start looking at the growth when we passed a million square feet in New York City. And you'd be in meetings and people were like “You know, we need to be five million square feet.” Why? Have we done any analysis? Now, post-COVID, I think there might be five million square feet available in New York City that could be flexible office space. Doesn't mean one company has to have it. I’d also ask, should we be signing this traditional lease when we should be convincing landlords to split revenues with this and take some of the risk? You’re asking those questions. And that's my nature. I'm a pretty direct, opinionated person. I don't think it necessarily handicapped my career because I'm still very close to all of the C-suite folks but there were definitely meetings that I probably wasn't invited into because people knew that I was going to challenge the orthodoxy at that point.
As a leader, that’s where culture comes in. How do you create a culture where everyone has input and is willing to ask the hard questions and not be fearful of going against what the CEO believes to be true?
I’m really big into leadership coaching and therapy in general. I look at leadership coaching, and it's a lot of stigma attached with this; it's allowed me to be awesome. You have to create a culture that is a magnet as much as it is a repellent. You have to create an environment in which you force people to challenge you at key junctures, and if they don't challenge you, you don’t reward them. So people who are just loyal foot soldiers and just sort of doing the path they think they should be doing may decide to leave when they’re not rewarded for simply showing up. At Knotel, we had a culture where if you challenged orthodoxy or really tried to push people, you were pushed to the side. So what does that do? It creates a repellant for people who want to feel ownership empowerment and feel like they control their own destiny, and it's a magnet for loyal foot soldiers. And so that's something I think about every day. What is the behavior that you're rewarding, and what is the behavior that you're basically saying I don't really care about this?
After Knotel, what led you to your current role at Tattered Cover?
A friend from high school. He worked at the Tattered Cover when he was fifteen, and he read an article during COVID that the business was having financial issues. He got in touch with the owners and started a conversation about a possible investment. What became clear to him and became clear to everyone was that just an investment wasn't really going to cut it. Ownership needed to change hands. And so he pitched the idea to me. And it was the beginning of May, and I was just not sold. I said what everyone else said, which is, there's no reason to buy a bookstore--ever, especially not in the middle of a pandemic. That’s lunacy. And the owners had some very key missteps with BLM, and it basically became kind of a fire sale. And he came back to me and said, “Look, I think we could get an extremely good deal on this. Just give it a look.” And this was happening at a time in which we were seeing such social transformation. I kind of, being introspective to myself, did ask that existential question: What are you doing? And it's like the John Sculley--Steve Jobs conversation – “You could spend the rest of your life selling sugar-water, or are you going to try to change the world?”
And it was just like, wow! You know what? Let me actually dip my toe in this; let me do due diligence on it. And I went in with no real belief and you know the first stat that I found was crazy - There were more independent bookstores at the start of COVID than there were in 2010. That was fascinating. Independent bookstores are doing a fantastic job of tapping into localism. And they are doing a wonderful job of being the antithesis to these megacompanies. They are becoming places in which people feel comfortable to go and to congregate. And there's a business model behind it. So I had loose thesis – If you’re going into my store to buy a book and that's all you're buying from me, I'm screwed. But if I can get you in because of the lure of the experience and I have more ways to get money out of your pocket, there’s a business model here. And in fact, that's the only way retail is going to work moving forward.
Can you expand on moving Tattered Cover away from being just a bookstore?
Bookstores are dead; From a retail perspective. If I were a talking on CNBC, I'd say, “Look, from June 1 until January 1; you're going to see surges, potentially historic surges in foot traffic for retail businesses. But Q1 and Q2 of 2022, we're gonna be miserable because people have changed their buying habits.” Google just released a really cool survey that basically said in every demographic in the United States (age, race, religion, whatever) online shopping is now the majority.
So if you are a bookstore and you’re continuing to believe that people are going to come in and just buy books from you, good luck. Your margins will continue to decrease and you're not going to be able to invest in the type of R&D that every business, regardless of what you sell, needs to continue to prosper. So my strategy is I don't run a bookstore. The biggest fear that I have is in a year when you're talking to someone at CBRE and Tattered Cover comes up and they go, “yeah that's that bookstore, right?” That's my biggest fear because if they're saying that, I'm dying. I’m literally gone if they're saying that. They need to say, “Oh yeah, that's Denver's community institution, right? I mean they sell books, but I went there for wine, and I went there for this public speaking class, and I went there because I wanted to be in a place where other people were.” If they’re saying that, then we're just fine. Then we’re actually doing super well. And so that's the vision. It’s really transforming our stores’ culture to accommodate that.
So as the CEO, how have you been developing your vision for the Tattered Cover? Do you take some time away from the business to really think critically about the strategy?
It’s not about thinking to me; it's about listening. Really do due diligence before you try to do strategy. I talked to thirty booksellers--some who were successful, some who weren't--and asked them what they're doing, what's working, what's not working. And you look and this as the consulting training. You look for trends: what are these things that you start seeing all of the successful people or successful elements of their business, right? What is the Tattered Cover not doing that we could be doing?
And suddenly you don't have to think very much, you're just connecting the dots and where the thinking comes is picking your battles. Because the number one thing about strategy is, you can't do everything. So you're collecting all this information from just listening. Best thing you can do is just ask questions in which people are as organic and real as possible with their answers, and then it's connecting the dots and figuring out where you think you have competitive advantages.
It’s easy to have confirmation bias when asking questions. How do you try to listen to the answers without a preconceived notion of what the answer should be?
I try to have loosely held beliefs. The reason why Tattered Cover is an amazing opportunity for me is I'm not a bibliophile. I had no prior desire to sell books, so I'm not going into this going thinking I understand what the hell I’m doing. I'm not dumb, so I can probably figure it out, but I'm not going into something like, “We have to do this.” And I really think that's important. Now, conversely, if you know a lot about it, you probably don't actually need to interview people. Your entire career has been a giant interview. So maybe in that situation, you just go with your gut. And I think that's okay too. But when you're entering into something that you're not an expert on, I think you just have to have loosely held beliefs.
As the owner of a bookstore, what’s your favorite book?
Caste by Isabel Wilkerson
Lastly, what’s the best advice you’ve ever gotten?
You miss 100% of the shots you don't take.