I’ll Probably Delete This

Why does an oil company decide to sell books?

Introduction

Hello listeners.

Welcome to episode 9, the start of Ingram Books.

My name is Will Jauquet and this is I'll Probably Delete This, where I learn about book publishing and podcasting by telling stories from successful authors and other notable people from the history of the publishing industry, including telling stories about a family-owned oil company that became a backbone to the business of trade book publishing.

Most of our episodes focus on the story of an individual person, which is as it should
be. People's lives make better stories and it is the action of individuals that move history.

These next two episodes aren't going to focus on a single person, but instead will focus on two different but connected stories important to the creation of Ingram Books.

In some ways, Ingram Books, or what is now called Ingram Content Group, is second only to Amazon in its importance to the US book industry. Its early days also offers us a few good stories.

To set the stage, today Ingram Content Group takes in approximately $2 billion in revenue each year. That revenue puts the publishing or book side of the Ingram company in the same ballpark as companies like Papa John's or Krispy Kreme, Zillow, or Dropbox. In revenue within the book business, it's roughly equivalent to Big Five publisher Harper Collins and bigger than Scholastic or Macmillan or Simon & Schuster. Because of how important Ingram is, covering its start in the book business is worth our
time.

Our first story then, and what we will cover today, is why in the 1960s, based on a favor and a commitment to a friend, Bronson Ingram first bought a sleepy company that would later turn into Ingram Books.

Because these next two episodes, today's and the next one that will follow, will be a little more business heavy.

This seems like a good time, as any at least, to include a quip. And the quip is found in the book that I'll cite in the bibliography, and it goes like this. The problem with book publishing is that it's made up of English majors trying to do math.

Today's story isn't so much about English majors doing math, but maybe instead it's about oilmen trying to sell books.

As you know, in future episodes, we will cover more stories from other successful storytellers and authors, and from other people and companies important to book publishing. Join me now as we get into the beginnings of Ingram Books.

Family History

Like Laura Ingalls Wilder, the Ingram family business gets its start in the woods of Wisconsin. In 1857, ten years before Laura Ingalls' birth in the town of Pepin, the Ingram family patriarch settled 50 miles to the northeast. Specifically, Orrin Ingram moved to Eau Claire, Wisconsin, and began to set up a series of sawmills. By the time Laura is a teen on the South Dakota prairie, Orrin and his family own huge swaths of white pine forests.

But the boom in Wisconsin lumber would fade over the succeeding decades, and was clearly fading by the 1920s.

Next up in our quick march through family background is Orrin's grandson, we'll skip a generation, Hank Ingram.
And Hank Ingram in the 1930s, before World War II, switches the family business into oil refining, and then into oil transportation. He created a barge transportation company to benefit from the much lower costs of transporting
by water than by rail or by truck. Ingram also owned and operated two separate textile businesses, which the family ran into
the 1960s.

Hank sold off the oil business and started a few other businesses with his brother that eventually flopped. And then he returned to refining and to the oil barge business in the early 60s. This reentry in the oil business that he would incorporate as the Ingram Corporation.

His oldest son, Bronson Ingram, had been apprenticing in the oil business for the last number of
years. It's in the early 1960s that Bronson would move to center stage of our story. And that's because in 1963, Hank Ingram died suddenly of an aneurysm. He was 58. This left his son Bronson, now age 31, in charge of the family business.

I think that's enough of the family background for now.

Given its background of manufacturing, the sawmills, textiles, and then you've got oil and gas, it does seem strange that the Ingram of today is now such a big part of the infrastructure of the book business.

How did that happen?

Keep that question in mind, and maybe the strangeness of it, and we'll come back to all of this.

There are a few themes from the family history that we just walked through that I think it will be worth revisiting after we hear most of today's story.

Book Depository

In 1964, Bronson Ingram had the Ingram Corporation buy half of a small and sleepy company involved in the book business.
The small company was the Tennessee Book Depository.

If you're like me, probably the only time you've heard mention of a book depository is in discussions of the Kennedy assassination. You might remember that Lee Harvey Oswald became an employee of the Texas School Book Depository because of the sightline that it gave him of the presidential motorcade in downtown Dallas. I just wanted to mention that as a reference point if it came to mind, because it did for me.

But what is a book depository?

A book depository business is a pretty odd thing, though not chartered as such. A book depository business operates almost like a public benefit corporation. Most often, they were created by state statute. They exist in the U.S. as a way for local school boards to save on the cost of textbooks.

When states got involved in providing funding for school textbooks in the 1920s and 1930s, they set up these depositories as a way to do that more efficiently and cost-effectively. A book depository takes book orders from school systems, consolidates those orders, and uses its size to negotiate lower prices with publishers. From there, the depository will warehouse the books and distribute them to the various schools consistent with the needs of the academic calendar. Generally, this will mean that they're going to do the bulk of their shipping in, say, late July or August or maybe early September, depending on when the school year starts. This book depository system is better for the schools, particularly in more rural, less populated states, because under the system, the schools are guaranteed to have those books available to them and to have a location in-state that the books can be shipped from. They also tend to have guaranteed replacements available, and importantly, they get the books at a better price.

The system is also better for book publishers, because instead of having more than a hundred different orders from a hundred different locations in the state, the publishers receive one request, and they get to issue one invoice and ship to a single location. Even if they get a lower price for their textbooks, this trade-off is worth it to them. It's also probably worth noting that in the time that most of these were created, in the 20s and the 30s, the U.S. road system was not very good, so it would have been very difficult for publishers to ship books to each individual school location. Having a book depository really saves them the hassle and the expense and the time.

Tennessee, like a number of southern and western states, chartered a book depository company, which was privately run but contracted with the state government to provide these particular services. Tennessee created a book depository in 1935, pretty consistent with the trend of states creating these.

Enter Jack Stambaugh

You might be saying to yourself, okay, fine, we have these book depository things here. Why was the one in Tennessee interesting to Ingram or to Bronson in particular?

And the short answer to that is that it wasn't, or at least it wasn't initially.

To answer why Ingram purchased it, we have to go back a few years from 1964. Prior to his death, Hank Ingram was on the Vanderbilt University Board of Governors. Hank had moved the family and the business headquarters down to Nashville, Tennessee, and had put down roots in the community.

While on the university's board, he befriended a man by the name of Jack Stambaugh. Stambaugh was a vice chancellor for business affairs at the school. Prior to Vanderbilt, Stambaugh had been in various senior staff positions in the Eisenhower
presidential administration. There he focused on economics and international trade.

Stambaugh had gotten his start in business first with Sears Roebuck in the 1920s, and prior to or just prior to World War II, he opened a number of different farm supply companies in Wisconsin.

Stambaugh was good friends with Hank. After Hank's death, Bronson replaced his father on the Vanderbilt board and also developed a relationship with Stambaugh. Stambaugh was in his late 60s and close in age to Bronson's father, and Stambaugh was
preparing to retire from his role at Vanderbilt.

As Stambaugh was getting ready to retire, Bronson offered him an office at Ingram's headquarters, and the idea was that he could work out of that office while he looked for what else to do, what he was going to do next.

Stambaugh thought that was great. He took Bronson up on the offer and moved into the office, and while there he mostly
sat reading the paper. After a little while, it started to bother Bronson, or at least enough for him to comment, that Stambaugh seemed to mostly be spending his time reading the Wall Street Journal whenever he went by the office.

Bronson therefore decided to make him an offer. If Stambaugh could identify a good business, Bronson said that Ingram would jointly purchase it with him and provide additional funding for growth of the business.

Again, this is a pretty generous offer.

Buying the Tennessee Book Depository

Stambaugh accepts it and began his business search.

It didn't take long before he identified the Tennessee Book Depository and brought it to Bronson for consideration. Stambaugh liked it, Bronson also liked it, and he gave Stambaugh the go-ahead to approach the current owner, Forrest Reed, about whether he was willing to sell. And after those conversations he found out he was.

The story of the sales negotiation is kind of fun, so I'll recount it here, even if it might be a little bit apocryphal.
Bronson met with Reed, they met in an office, sat down, and the two men, on separate pieces of paper, wrote down the price that they thought made sense for the business. First with Reed, and then with Bronson, they wrote out on the piece of paper their price, put the piece of paper face down on the table in front of them, then the two of them flipped over their pieces of paper together, and each one read $240,000, and that's the price they settled on.

The question left is, why the depository business? What was it that was attractive both to Stambaugh and to Bronson?

One of the things that was attractive was that the business was steady and predictable. It earned a steady profit, there was a markup on transactions generally of 8%, the school systems were also very good credit risks, meaning that they weren't likely to fail to pay on their book orders. The depository business was a small, contained business that was very low risk and might
offer some future expansion opportunities.

Stambaugh ran the business for a few years and led it to slow and predictable growth, kind of just what they expected and what they wanted.

So it's profitable, it's growing, but nothing dramatic. This continued for a handful of years until his wife got sick, and his wife's health required him to step away from the business and caused them to move to the West Coast. Eventually, I think he settles in California in Rancho Santa Fe, California.

Because Stambaugh is stepping away, Ingram then buys him out of his half of the business and renamed the Tennessee Book Depository into the Ingram Book Company. Before Stambaugh stepped away, Bronson recruited Harry Hoffman into the business.
With Stambaugh's departure, Bronson then promoted Hoffman to take over leading the book business.

At the time, even after the growth, it was still quite small. In 1970, Ingram Books had 18 or so employees, a big warehouse, but it was profitable and in 1970, or at least by the end of the year, it was pulling in a million dollars in revenue. Bronson and Hoffman created a growth plan and Hoffman was meant to carry it out as newly in charge of Ingram Books. And essentially, that plan was for Hoffman to look for profitable opportunities that the company could meet with its existing resources.

Return to Themes

Now is the time for us to return to that marker we put down at the start of today's episode. We just covered why the business was attractive to Bronson and why he purchased it. Even though books seems very different from any of the prior businesses that the family was involved in, there are a couple of themes that make the book business much more consistent with the family's history, and I want to touch on those now.

One theme was that none of the prior businesses were a straight line.

Warren Ingram had left Leeds, England, traveled first to Ontario, and then down to Wisconsin before opening sawmills. His son sold off the lumber assets and held the money until Hank Ingram bought into the oil industry. Hank and his brother also tried a number of other businesses, including textiles, and then also there was one point they did a business related to creating the wax coating for milk cartons that failed, and probably a number of other businesses that failed. But ultimately he came back to the oil business to what he knew. So none of those are sort of straight lines and obvious long-term commitment to oil and gas or even to transportation.

The second theme, which I've highlighted a little bit already, is there was a good deal of experimentation and some failures and setbacks. The family businesses included lumber mills. You've got the barges, you've got some oil refining. They did yarn making, they had a separate factory for fabric making, and then I also mentioned sort of the coatings for milk cartons.

Each of these was different. In each generation there's been experimentation into new businesses and new approaches, and that experimentation has been important to the current makeup of the company and end up being particularly important to the growth of the book business and the book warehousing business, and we'll touch on that a little bit next week.

The third theme, or the third point, is that while books seem very different from oil and transportation, Ingram wasn't focused as much in those businesses on drilling for oil, and in publishing wasn't focused on selecting the books or in publishing the books. Instead, for oil they owned barges to move the oil, and in books they owned warehouses to ship the books. They were largely in the logistics business.

The book depository business was entirely consistent with that type of focus. Unlike software businesses, it was a capital intensive business where logistics is key, where software businesses are very capital light. Capital light businesses have been kind of the vogue in much of the business world over the last sort of 20 years.

That experimentation that we've mentioned is going to be important to the success of Ingram in the book business, and really central to its surviving today and being profitable.

Bibliography

Our bibliography for today's episode, and really the source material for the story that we covered, is a book called The Family Business. Its subtitle is How Ingram Transformed the World of Books.

The book is by Keel Hunt and was published in 2021 by West Margin Press.

At the time, West Margin was owned by Ingram. Ingram, about a year later, I think, sold it off, sold off the publishing house.

The book is definitely meant to be laudatory of Ingram family members, but it tells the story of and gives you information about Ingram and its developments that you won't be able to find other places. The writer conducted many dozens of interviews in order to do the book and to tell the story of Ingram's involvement in books.

Closing

Join us next time for another episode of I'll Probably Delete This, where we explore more stories of authors, storytellers, great books, and publishing, including another story about Ingram.

Thanks, everybody.