It had a high debt load and had to borrow $42 million dollars.
And believe me, 12 and a half percent is a pretty steep interest rate.
In 2008 it also created Borders Personal Publishing for authors to publish through
its website. This is a really nice service.
It's another example of disruption. This one's disrupting publishers.
We'll talk about that later on. But it's really not a source of.
High profits, at least at first. Okay.
Unless you get some really great authors who are selling many, many copies of
their books that are self published. It's stock dropped finally again down to
53 cents a share in 2009. they tried extensive changes in the board
of directors and senior management, but I think it was all over at this point.
However, they kept on going. In 2010 they opened an e-books store for
books to be downloaded to an e-reader device using a Borders app so you could
download it to a desktop, an iPad, Blackberry or Android.
But notice, where is the e-reader from Borders?
You have the Kindle from Amazon, you have the Nook from Barnes and Noble and you
didn't have anything except a generic app or series of apps from Borders.
February 16th, 2011, Borders filed for bankruptcy, creditors rejected a takeover
bid. When you're in bankruptcy and you have a
plan to exit, the creditors have to agree to it.
A company wanted to buy them, but the creditors didn't think the deal was good
enough for them. I'm not sure that, that was a great
decision, because them Borders filed for an auction.
But it's kind of sad that there was no bidder.
No one wanted to buy Borders. July 22nd, they started closing stores.
39 of them were left at that point. 17,000 employees lost their jobs.
So, what do you think went wrong? Why don't you tell us in the quiz, and
we'll take just a moment for that. I think there was a total lack of
response from Borders management. It failed to appreciate the disruption
that online bookstores would have on physical stores.
And the question here is why? Amazon announced its plans to sell books
online well in advance of opening its first website.
Bezos, the head of Amazon, was not shy. He wanted the publicity.
He wanted the buzz about his business. Borders had resources.
They were a going concern. They had capital.
They could have developed a website. Even on an experimental basis.
Maybe put one type of book on that website.
Try it and see what happens. If you don't have the competence in house
to do this, hire a consulting firm and let them build your website for you.
Maybe a consulting firm other than Amazon.
there was time for Borders to set up a competing online store And to experiment.
Was management denying, as we've seen in other cases, that the internet would have
an impact on its business? Borders did try its own online store but
it couldn't execute. Now where have we seen this before?
Lot, and lots of places, so it had to outsource.
It was late to the e-reader game and never really developed an e-reader.
It was late to the self-publishing game. So, one could say that what we're looking
at is a response that was too little, too late.
Manangement failed to recognize every new disruptive technolgy that came along.
It never was a leader. So it ended up as, we have seen in other
examples, taking the third path of our disruptive technologies model.
Not morphing the business, not adopting the new business model.
But in fact failure and liquidation. Managers didn't understand the likely
impact of technology, they couldn't respond.
And when they tried to respond, their efforts were not successful.
And now there is no more Borders. There's still a strong demand for books,
but consumers want to purchase them in a different way.
Just as Kodak thought it could tell customers how to take pictures, Borders
may have felt that it could tell customers how to buy books and how to
read them. And that's just not going to work in
today's economy. Consumers may want to use a different
medium then what has been historically the case.
I did both, okay? I'd, I'm not dedicated to one or the
other. I read books that are physical, on paper
and, and print and I read books on a Kindle.
I think the Kindle is absolutely great when I'm travelling because I can take 20
books on a Kindle and not have to load up my luggage with books when I'm going on
vacation some place. If Borders had the vision to see how the
industry was changing, and the skills to respond, it might still be here.
But we could probably say that about a number of companies that have failed.
So, in the end, there is no more Borders. There are employees who no longer have
jobs. And a source of content for all of us who
like to read, has disappeared.