Interview: Tim Waterstone, businessman

It is not a rhetorical question. When we talk about his new novel, In For A Penny, In For A Pound, I ask what the pleasure of writing is for a businessman better known for building the Waterstone's chain of bookshops than actually filling its shelves with his work. "Do you write fiction?" he asks. Yes. "You answer first then." Hawk eyes pin me. He's 70 now, and deceptively affable with a warm, avuncular smile, but I wouldn't bring him slippers and a bag of Werther's Originals just yet. Ask him something he doesn't want to answer and the chop comes so quickly that you think, blimey, when did Uncle Tim turn into Pierrepoint?

His characters have been the subject of much speculation. How close did he come to real people? "I'm certainly not going to tell you who they are." I didn't ask who they were. (Agony aunt Anna Raeburn, newspaper tycoons the Barclay brothers and a certain Aussie media mogul are all in the frame so far.) Anyway, I don't know why he's going all maiden auntish and demanding the smelling salts at this late stage. Some of them are so barely disguised it's the equivalent of sticking a ferret under your nose and claiming you've got a moustache. His media mogul, for example, is a brash, Australian chancer called Rod Tadlock. Now who could that be? I'm surprised, wrote one Irish journalist scathingly, that he didn't just call him Poopert Burdock.

The guessing is good fun, unless you're the subject of the speculation, and Waterstone clearly has a well-developed sense of mischief. His novel is the tale of high finance and double-dealing set among a chain of bookshops called Waterwells (stretches us, that one, but keep thinking) and a media empire. The bankers are harder to identify: they're all morally corrupt which leaves the field wide open. "The situations may seem far-fetched but they are entirely plausible," he says.

In fact, the characters came about because of some business dealings he had. "In the middle of these meetings, I started to jot down the dialogue. There was someone they intended to knife, and they kept on saying, 'Love the guy! Love the guy!'" Waterstone explodes with laughter. "I couldn't believe it and I thought, I'm going to make a parody of this one day."

It's not just Waterstone's fictional deals that have excited interest recently. He left his bookshop chain for a second time in 1998 but has made several attempts to buy it back, the most serious being four years ago. In the last few weeks, there has been speculation he wants to try again. But, as with his characters, what's fact and what's fiction?

AT THE bottom of Waterstone's very nice road in Holland Park (the estate agent obligingly situated there reveals houses in this street go for a cool 3 million), is an Edwardian-style bookshop with wooden shelving and old-fashioned ambience. Part of a small London chain, it's one of the few not gobbled up by big giant Waterstone's. ("You can romanticise independents," says Waterstone, unrepentantly. "Many of them were terrible.") This one has a copy of Waterstone's novel in the window in all its garish splendour: brash red jacket, black writing, spinning gold coin. Very Jeffrey Archer. Or so the publishers hope.

It's 14 years since Waterstone produced a book (this is his third) and he is happy to play along with this "new Archer" marketing line but one suspects the Cambridge graduate's heart beats wistfully for something more. "You run up against the limits of your own ability in writing. Did you find that?" he asks intently. "Did you? You can't actually do better than this. You try but that's what you are. You sit down and write and it's you, and you run into a kind of wall of what you can and can't do."

Yet he has pushed beyond what other people thought he could do quite often in life. Born in Glasgow, he was the youngest of three, and cheerfully claims to have been considered the dunce. "By an absolute mile. My brother and sister are very clever and my mother was terribly proud of them. I think I was a bit of an accident, as we used to say in those days, and when I arrived my mother took one look at me and decided I was quite sweet but utterly brainless."

She was quite cross when he made it into Cambridge University because she thought standards must be slipping. Didn't he resent that? "No. I could see the humour of it," he laughs. "I think inside me was a feeling not of resentment, but that it didn't really matter. Sweet people but … I was probably pretty patronising about them."

His father worked for a Glasgow tea company, James Finlay, for 54 years. Amazing the way people did that in those days, says Waterstone, who joined a brewery when he left university but then switched to booksellers WH Smith. He married in his early twenties but the marriage broke down seven years later. Round that time, he also experienced a mental breakdown but he's loathe to connect the two events. There's no single, external cause. "It's something that happens inside you."

He has never suffered any relapse — or come close. Awful places, psychiatric hospitals. He doesn't want to go near them. "I remember going into this place and it was a long time ago … 42 years … and I just wanted to sleep. I remember sleeping and sleeping and then coming out and becoming sick of this communal room, this awful place, with plastic chairs. Very smoky … all that sort of horror. Within two or three days of this, I knew I had to get out." He told his psychiatrist. "He said to me, 'That's fine if you want to go — but you will be back.'"

What a terrible thing to say. Awful, agrees Waterstone. But he didn't accept the psychiatrist's assessment of his future. Just as he had when his academic ability was underestimated, he held on to inner belief. "It didn't upset me particularly but I remember thinking, you prick. That's just not what you should say. But it was probably good because I also thought, I'm not going back."

Not even when his second marriage, which lasted 15 years, broke down, or when he was sacked from WH Smith. In fact, being sacked was "a fantastic relief". "I was highly paid but I was in the wrong job and profoundly unhappy. I'm sure they picked up on that. I was an impossible colleague and only wanted to listen to my own opinions. They were right to fire me. I thought, Yippee! Thank God I can do what I want to do."

Wasn't he wary, having just been sacked from a book chain, of starting his own? "Not in the least. I had so little money, I wasn't risking a great family fortune. I was risking exactly 6,000."

It's an entrepreneur's attitude to risk everything you have but Waterstone doesn't like that term. Whatever you do in life, whether it's business or writing or listening to music, you are just expressing your personality. Why try and label it? "What is business?" he asks. What is an entrepreneur? Wheeling and dealing didn't interest him. It was the idea of a chain of bookshops called Waterstone's that lit his flame. "It was simply a dream that was burning me up. I really wanted to do it."

That dream was about two things. "At the heart of Waterstone's was a great cultural aspiration to buy great bookshops for Britain. That makes me sound very saintly but it was also a really hard-run commercial operation. We weren't looking for Arts Council funding. We were in it to make money and we did. It was both together and that's the right way. I'm not a great admirer of people who are frightened of the two together. It was extremely profitable but it had a cultural point to it and that's what the staff all loved."

There is no doubt that Waterstone's changed the cultural landscape in Britain in the 1980s, delivering a quality bookshop to almost every town. But Waterstone sold the chain to his old employer, Smith's, in 1993 for 47 million. In the years that followed, the chain moved from an artistic guiding light to a fallen star. It became embroiled in frequent controversy with accusations of dumbing down, limited choice, lack of independence and an over-reliance on celebrity memoir. Waterstone didn't like what he saw and, in 1998, joined forces with HMV to buy it back, forming the HMV media group. The relationship foundered and Waterstone eventually resigned.

"I was instrumental in putting Waterstone's into HMV. I put the funding together. But what really pissed me off is that the people who were in there running Waterstone's were there to destroy it. They weren't there to build it. I was chairman of the company but chairmen have limited power; chief executives have power. I got into battle after battle after battle so I resigned. All through those years my relationship with the people running Waterstone's was regressive and counterproductive. Meanwhile, profits were going down. Not only were they destroying the culture, they were completely wiping out the balance sheet."

So what does he feel when he walks into a Waterstone's shop? "I hated it," he admits, up until the start of this year. "At that time, I just couldn't bear to see what I was looking at, which was books being taken out and mugs being put in. I couldn't believe it. A complete living nightmare!" Last year, Waterstone's came in for more criticism after introducing a new distribution centre called The Hub which had serious teething problems and badly dented sales.

But everything changed in January, says Waterstone, when a new team was brought in. "I have nothing but admiration for Simon Fox, the chief executive now," says Waterstone. "I like him a lot." He's also a fan of managing director Dominic Myers and product director Tim Watson. "They understand what the thing is. We're only seven or eight months in but it feels really good to me again."

What about the recent proposals that Waterstone's run pubs and restaurants as part of the stores? "I'm an agnostic. The Piccadilly store is the biggest bookshop in the world and has 54,000 square feet, which is one hell of a lot of floor space. In that sort of instance it might be a good thing. But some of the stores are far too small and you need every square inch of space for books. Coffee shops in every store? No, no, no. People don't need coffee shops. They're all over the place."

Books, we're constantly being told, have no future. Waterstone disagrees. Certainly, the abolition of the Net Book Agreement, which ensured books had to sell at cover price and could not be discounted in supermarkets, has made trading challenging. Waterstone was strongly in favour of the agreement and doubts he could have got his shops off the ground without it.

"WH Smith had by far the biggest market share. We could open a store right beside them and they couldn't cut prices against us. They had to compete on stock and staff and everything else. And I knew they couldn't. We were very good booksellers and people not being able to cut prices against us meant we were able to triumph because we were better at it than everybody else.

"Would the industry like the agreement back? None of them would say yes publicly but there wouldn't be a single person in publishing or bookselling who wouldn't say yes please. It was a safer, easier industry and I think the consumer was better served too."

Despite the challenges, there has actually been massive growth in the book industry. In 1996, it was worth 1.8 billion. By 2007, it was worth 3.6 billion. Only in the last two years has there been a slight dip in sales but almost every retail industry has been affected by recession. Growing literacy and higher rates of education have helped sales. But Amazon, the supposed bte noir of traditional retailers, has actually done everyone a favour, argues Waterstone. "Amazon has grown the market for everyone. It has 16 per cent and Waterstone's has 16 per cent. And the range of books in Britain is enormous. We publish 140,000 titles a year. America publishes about 50,000 a year for a market that's five times our size. Talk to people in New York and they think Britain is wonderful."

Not even the advance of e-books dents Waterstone's optimism. Encyclopedias and reference publishing will almost all be online in the very near future, he accepts. "But do I think fiction is going to be dominated by online reading? No, I don't. The e-share of the fiction market is not even minuscule, it's beyond minuscule. I think the book, the printed word on paper between two boards, is the most fabulous consumer product. It's cheap, it's lovely, everyone adores it. It's collectible, storable, transportable. It's a beautiful product."

So if he loves books, and they're still profitable, does he long to walk into Waterstone's as owner again? The talk about that has been mischievous, he insists. "If Simon Fox wants to sell Waterstone's, which he doesn't at the moment — perhaps he will in the future — then yeah, I'd be very interested to buy it. But if he doesn't want to sell it, then fine because it's in the reach of people who really understand it and who are pushing the culture back into Waterstone's again. They are doing a fantastically good job."

However much he insists he's happy with the current leadership, refusing to rule out future ownership suggests there's an unsevered connection. What is the bond that still exists? Does he simply want to run a bookshop again? Not at all. "I have no interest in bookshops. I don't want to buy Foyle's or Smith's." It's simpler. "I am interested in preserving the reputation and culture and quality of Waterstone's itself. I am very proud of what Waterstone's achieved. It still carries my name. It's what I started …"

IT'S A WARM, sticky day and the doors from the kitchen are open, leading to a private little enclosed garden, with a wooden bench nestling in the sloping contours and a classical statue behind it. It's a beautiful house but Waterstone did not come from a particularly well-to-do family. "We weren't rich, we were lower middle class." He has been a long-term member of the Labour Party. "I was ecstatic when Labour got into power in 1997." He laughs. "And I got increasingly less ecstatic as the years wore on."

He marched against the Iraq war and believes Blair is detested in Britain for his disastrous actions. "The best thing he could do is face up to that and go and teach in Harvard or whatever it is he wants to do." But Waterstone is still a Labour supporter. "I feel comfortable in the centre-left. You define yourself against what you can't stomach, as well as what you can, and I define myself against the upper classes still. I think the Labour Party at its best has done wonderful things and the government of Clement Attlee is probably the highest spot of parliamentary democracy in this country."

For over 20 years, he has been married to Rosie Alison, who is 25 years his junior. "This one's lasted forever," he says. "We adore each other and are very well matched." A television and film producer, Alison's first novel, The Very Thought Of You, was shortlisted for this year's Orange prize and went on to sell 100,000 copies. He has eight children from his three marriages, ranging in ages from 16 to 46. "Broken marriages are difficult. I think I have been good with some of the kids and not with others but I've certainly loved the act of bringing people up. You get miles more sensible as you get older, less pushy. You develop that wisdom. You should look at these people and say what a privilege it is to bring them up and you don't really own them at all. The only aspiration you have for your kids is for them to be happy. It's all we really want for ourselves too, all we should want."

Waterstone gives the impression of having achieved that later in his life. He has no particular business interests, but "that's not to say I wouldn't make another acquisition if the right thing came along". He's not actively looking? He hesitates, not quite able to rule anything out. I suspect those hawk eyes are always looking for something interesting in the long grass. But he doesn't need it because he has his writing — more novels are planned — and he has Rosie. "I don't fear gradually fading down at all. Blair said, bless him — and I mean that cynically - 'retire and expire'. Drivel. Absolute drivel." There is always, Waterstone says, "the life of the mind". n

In For A Penny, In For A Pound, published by Corvus, 16.99

This article was first published in Scotland On Sunday, 19 September, 2010