All In: A local publisher takes a page from history to prepare for the future
For an industry that’s been on the verge of extinction for years, the book publishing business flat out refuses to die. In fact, some might say it’s flourishing.
Nielsen BookScan’s data showed 571 million printed books were sold last year, an increase of 17 million from 2014. And in November, Amazon opened a brick-and-mortar bookstore in Seattle, perhaps ushering in a new age of book sales.
None of that is a surprise to Gibbs M. Smith, founder and president of the publishing company Gibbs Smith. He and his wife, Catherine, have been publishing books for nearly 50 years, and although he’s witnessed the demise of many big publishing houses, he feels there will always be a demand for printed books.
Smith’s business model is based on the Alfred A. Knopf publishing company, which has been around for more than a century. Knopf gave Smith some advice when they met in New York many years ago. “He told me to publish things I really cared about. This is more than a business. You have to have heart and believe in the business,” Smith says. “One of my motives was to never have a boss, and that meant I had to start my own business from scratch.”
Although he’d planned on being a history professor, and even wrote a popular book about executed labor activist Joe Hill, Smith launched a publishing company in California in 1969. Four years later, he moved his business into a refurbished barn on his mother-in-law’s farm in Layton, and he’s been there ever since. He saw many of his colleagues in California go out of business, unable to adapt to the ever-changing publishing industry.
Smith says he had some distinct advantages that helped him stay afloat when other publishing houses were sinking.
First, he published and distributed books he believed offered a positive value. Second, he had low overhead costs, due to the location of his business. Third, he was able to attract talented writers in Utah who might not have been considered for publication in bigger markets. Last, he created a niche for Gibbs Smith, creating history textbooks for almost every state in the country.
With 60 employees and a second office in Kaysville, Smith considers publishing books to be a high calling—a calling that promotes new ideas, stirs thoughtful introspection and inspires readers all over the world.
The next chapter
Like any successful business owner, Smith wants to see his hard work pay off for many more years, even when he’s no longer at the helm.
When he was a young man living in Kaysville, Smith’s family was friends with Hod and Clover Sanders, founders of the Clover Club potato chip company. “I always had them as a role model for my business. I could see how it was possible to start a business on a shoestring and make it a success.”
But times changed and Smith watched Clover Club suffer as it was sold out of the family, and resold again, changing hands over and over, and ultimately losing its brand power. He didn’t want the same fate for Gibbs Smith.
Smith believes a publishing company is a cultural institution that must endure for more than one or two generations. He wondered how his business would survive in the future and what he could do now to create the groundwork so Gibbs Smith could thrive when he was no longer in charge. He began thinking about a legacy plan and researched different options.
One of Smith’s favorite publishers, W.W. Norton, wanted his employees to have a share in the company’s ownership to get them invested in the business’s future. After Norton’s death, a system evolved where stock was solely owned by working employees, with no shares available outside the company. With the employees responsible for the success of the business, they had a deep commitment to keep the publishing company relevant.
This concept was intriguing to Smith, and he looked into the possibility of creating an employee stock ownership plan (ESOP) at Gibbs Smith. His hope was that if the employees were given a stake in the business, his company wouldn’t fold or be acquired by a larger publishing house.
He learned an ESOP, where he and the employees each owned 50 percent of Gibbs Smith, would keep his company viable while giving employees security for the future.
“It’s a way to know the company won’t be sold out from underneath you and it becomes more valuable over the years,” he says.
Because it was never his goal to sell, Smith felt the ESOP arrangement was the best thing for everyone involved, describing it as “a blend between the best idea of socialism and the best idea of capitalism,” where people are working for each other. He’s learned his employees value having an investment in the company and are excited for the future.
Smith says that despite the rumors, young people are reading printed books, with independent book stores increasingly “alive and well.” He considers the creation of the ESOP to be a sequel to an already successful story and a prequel that will carry his company through its next 50 years.
“You know the company isn’t going anywhere,” Smith says. “Employees can see how hard work and success leads to their enrichment.”