'Expensive miscalculations, appalling frights and many sleepless nights'

In the first of a series by entrepreneurs, Tim Waterstone explains how he founded the bookshop chain that bears his name with pounds 20,000 of equity in 1982, selling it a decade later for more than pounds 40m.

I'M uncomfortable in large corporations. I suppose that's why I started Waterstone's, and it's part of the reason we aimed at eventually selling it.

I was 41 at the time, running W H Smith's US operations. America was wonderful, but Smith, for all its strengths, was in some ways a caricature of what corporate culture can be like. I tell the story with shame really. I was unhappy working with them, and they were unhappy with me. Other people's decisions have never been easy for me to accept if they contradict my own judgement.

When things went wrong I was speedily removed - correctly from the Smith viewpoint, but the irony was that the dismissal did me a great service. I then turned to what I really wanted to do - start my own business. I went back to England and launched Waterstone's.

Having grown accustomed to New York, London bookselling seemed extremely weak. With few exceptions, the shops had inadequate stock and the trading hours suited the sellers not the customers. One of the qualities you have to have as an entrepreneur is such overwhelming confidence in what you're doing that you simply cannot envisage failure. I was sure I could sell books better than anyone else, and that the public would support us. The public did, emphatically so, but looking back I shudder at the arrogance of it all.

There was so little money in the company, apart from anything else. Smiths gave me pounds 50,000 when I left, but I had to put pounds 30,000 of that into the underpinning of my house, which chose that moment to show signs of imminent collapse. Soon my severance pay had been whittled down to pounds 6,000. Friends and family lent me another pounds 14,000, and with that I shopped my idea around to the banks. Eventually NatWest lent me pounds 75,000 under the Government's Loan Guarantee Scheme; 3i took a small stake, and we were on our way.

The first branch, in Old Brompton Road, South Kensington, opened on 1 September, 1982. The idea was straightforward and uncluttered. We carried three times as much stock as our competitors, traded the shops on Sundays - and as late at night as we could afford - and employed nobody but booksellers who really knew their books. The staff were enthusiastic. We had a waiting list with hundreds of job applicants on it.

Further branches followed. Christina Foyle, from her generous and eccentric heart, offered us a wonderful site beside her in Charing Cross Road at a very attractive rent. We opened in Edinburgh. In Newcastle. In Manchester. And, most profitably of all, in Hampstead and Dublin.

One of the most satisfying aspects of shopkeeping is that once you've got the model, and it works, it replicates itself reliably. You can put a branch down in Aberdeen, and know that it will perform similarly to the one you've just launched in Belfast. When you're raising money - which we were, every five minutes - to open yet another bookshop, that's a very important strength to be able to demonstrate to your backers.

We drove the company extremely hard. Every time we had any money to spare we opened another branch and, with a cash requirement of pounds 130 per square foot, we were continually stretched. The bank was generally supportive, though continually on the telephone. Despite some narrow shaves, whenever they required it we were able to find fresh equity - helped by our decision to pull in private Business Expansion Scheme investors.

For all that, there were appalling frights, expensive miscalculations and many sleepless nights. We made an unholy disaster of our first attempt at computerised stock control. We introduced our own charge card and had to close it down less than 18 months later in humiliating ignorance of who owed us what. And we lost unfortunate sums in a culturally satisfying but commercially disastrous publishing venture.

But the shops themselves went from strength to strength. We began to be regarded as one of the two or three most successful venture capital companies of the decade. We even forced a couple of Smith shops to close. It was like watching a child grow up.

When the time came for the shareholders to realise their investment, the rewards were very high. Our original investors paid 12p for their shares. Eleven years later, in 1993, W H Smith completed the purchase of Waterstone's at 528p. Amongst the shareholders were hundreds of the staff. Between us we had established one of the most respected names on the high street. It really was the most exhilarating adventure.

Alexis Sanchez has completed a £35m move to Arsenal, the club have confirmed
sportGunners complete £35m signing of Barcelona forward
Poor teachers should be fearful of not getting pay rises or losing their job if they fail to perform, Steve Fairclough, headteacher of Abbotsholme School, suggested
voicesChris Sloggett explains why it has become an impossible career path
world cup 2014
Ray Whelan was arrested earlier this week
Arts and Entertainment
In a minor key: Keira Knightley in the lightweight 'Begin Again'
Arts and Entertainment
Celebrated children’s author Allan Ahlberg, best known for Each Peach Pear Plum
peopleIndian actress known as the 'Grand Old Lady of Bollywood' was 102
Wayne’s estate faces a claim for alleged copyright breaches
newsJohn Wayne's heirs duke it out with university over use of the late film star's nickname
Life and Style
It beggars belief: the homeless and hungry are weary, tortured, ghosts of people – with bodies contorted by imperceptible pain
lifeRough sleepers exist in every city. Hear the stories of those whose luck has run out
Mick Jagger performing at Glastonbury
Life and Style
fashionJ Crew introduces triple zero size to meet the Asia market demand
ebookA unique anthology of reporting and analysis of a crucial period of history
Santi Cazorla, Mikel Arteta and Mathieu Flamini of Arsenal launch the new Puma Arsenal kits at the Puma Store on Carnaby Street
sportMassive deal worth £150m over the next five years
Arts and Entertainment
Welsh opera singer Katherine Jenkins
musicHolyrood MPs 'staggered' at lack of Scottish artists performing
Life and Style
beautyBelgian fan lands L'Oreal campaign after being spotted at World Cup
Arts and Entertainment
Currently there is nothing to prevent all-male or all-female couples from competing against mixed sex partners at any of the country’s ballroom dancing events
Potential ban on same-sex partners in ballroom dancing competitions amounts to 'illegal discrimination'
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Business Analyst Consultant (Financial Services)

£60000 - £75000 per annum: Harrington Starr: Business Analyst Consultant (Fina...

Systems Administrator - Linux / Unix / Windows / TCP/IP / SAN

£60000 per annum: Harrington Starr: A leading provider in investment managemen...

AVS, JVS Openlink Endur Developer

£600 - £700 per day: Harrington Starr: AVS, JVS Openlink Endur Developer JVS, ...

Technical Support Analyst (C++, Windows, Linux, Perl, Graduate)

£30000 per annum: Harrington Starr: A global leader in trading platforms and e...

Day In a Page

A History of the First World War in 100 Moments: Peace without magnanimity - the summit in a railway siding that ended the fighting

A History of the First World War in 100 Moments

Peace without magnanimity - the summit in a railway siding that ended the fighting
Scottish independence: How the Commonwealth Games could swing the vote

Scottish independence: How the Commonwealth Games could swing the vote

In the final part of our series, Chris Green arrives in Glasgow - a host city struggling to keep the politics out of its celebration of sport
Out in the cold: A writer spends a night on the streets and hears the stories of the homeless

A writer spends a night on the streets

Rough sleepers - the homeless, the destitute and the drunk - exist in every city. Will Nicoll meets those whose luck has run out
Striking new stations, high-speed links and (whisper it) better services - the UK's railways are entering a new golden age

UK's railways are entering a new golden age

New stations are opening across the country and our railways appear to be entering an era not seen in Britain since the early 1950s
Conchita Wurst becomes a 'bride' on the Paris catwalk - and proves there is life after Eurovision

Conchita becomes a 'bride' on Paris catwalk

Alexander Fury salutes the Eurovision Song Contest winner's latest triumph
Pétanque World Championship in Marseilles hit by

Pétanque 'world cup' hit by death threats

This year's most acrimonious sporting event took place in France, not Brazil. How did pétanque get so passionate?
Whelks are healthy, versatile and sustainable - so why did we stop eating them in the UK?

Why did we stop eating whelks?

Whelks were the Victorian equivalent of the donor kebab and our stocks are abundant. So why do we now export them all to the Far East?
10 best women's sunglasses

In the shade: 10 best women's sunglasses

From luxury bespoke eyewear to fun festival sunnies, we round up the shades to be seen in this summer
Germany vs Argentina World Cup 2014: Lionel Messi? Javier Mascherano is key for Argentina...

World Cup final: Messi? Mascherano is key for Argentina...

No 10 is always centre of attention but Barça team-mate is just as crucial to finalists’ hopes
Siobhan-Marie O’Connor: Swimmer knows she needs Glasgow joy on road to Rio

Siobhan-Marie O’Connor: Swimmer needs Glasgow joy on road to Rio

18-year-old says this month’s Commonwealth Games are a key staging post in her career before time slips away
The true Gaza back-story that the Israelis aren’t telling this week

The true Gaza back-story that the Israelis aren’t telling this week

A future Palestine state will have no borders and be an enclave within Israel, surrounded on all sides by Israeli-held territory, says Robert Fisk
A History of the First World War in 100 Moments: The German people demand an end to the fighting

A History of the First World War in 100 Moments

The German people demand an end to the fighting
New play by Oscar Wilde's grandson reveals what the Irish wit said at his trials

New play reveals what Oscar Wilde said at trials

For a century, what Wilde actually said at his trials was a mystery. But the recent discovery of shorthand notes changed that. Now his grandson Merlin Holland has turned them into a play
Can scientists save the world's sea life from

Can scientists save our sea life?

By the end of the century, the only living things left in our oceans could be plankton and jellyfish. Alex Renton meets the scientists who are trying to turn the tide
Richard III, Trafalgar Studios, review: Martin Freeman gives highly intelligent performance

Richard III review

Martin Freeman’s psychotic monarch is big on mockery but wanting in malice