Barbara Meade and Carla Cohen thought they had a graceful exit strategy.

The two founded the Politics & Prose bookstore in Washington, D.C., in 1984 and transformed it into an institution -- one of the best-known independent booksellers in the nation's capital.

As they reached their mid-60s, they wanted to make sure their business would thrive into the future. Since neither had children interested in taking over the store, four years ago they hired a younger entrepreneur, Danny Gainsburg, with the understanding he would eventually buy them out.

Rather than suddenly imposing a new boss on their staff of 50, which they say they thought of as a family, they decided to move more slowly. They wanted to let Mr. Gainsburg work his way up in the business, learning all aspects of it. They also decided not to tell the staff that he was preparing to take over the store. "It was a trial period, to see if he really wanted to do this," says Ms. Meade, 69 years old.

The subterfuge, however well-intentioned, wound up tearing the place apart, enraging people who worked there and creating wounds that are still healing.

"We made a lot of mistakes," says Ms. Meade. "We forgot how much anxiety any change brings in a small business. A big change brought so much anxiety that it toppled the whole thing down."

Their story highlights the difficulties of making management decisions without the support of the troops. Such problems were magnified in the hothouse environment of this store, where work was a labor of love for many well-educated staffers. It was a culture that created a fierce, proprietary feeling among many who worked there -- an asset that helped make Politics & Prose a success, but one that held the seeds of acrimony and feelings of betrayal.

Largely by depending on their staff, Ms. Meade and Ms. Cohen bucked the nationwide trend that saw hundreds of independent bookstores close during the 1990s. Although Barnes & Noble Inc. and Borders Group Inc. each operate large stores within two miles, the 10,000-square-foot Politics & Prose in Washington has thrived. The store generated more than $6 million in sales for the fiscal year ended June 30, 2004. Ms. Meade says it earns more than 6% after tax, but declines to be more specific.

To compete with the big chains, the staff needed to be smart, motivated and charged with responsibility. Staff recommendations led to the launch of such recent additions as graphic novels, which are tales told in comic-book form, and DVDs. The store's music buyer, says Ms. Meade, "operates completely in a separate bailiwick" and has nearly doubled sales in a year. Many employees have carved out their own fiefs -- mysteries, children's books, history -- and brook little interference from the owners. "They say: 'Don't interfere; butt out,' " says Ms. Meade. "And we do. You have to be hostile to authority to work here."

Four years ago, when the two founders decided it was time to sell the store, they didn't discuss the matter with their employees, mostly because they doubted any of them could afford to buy it. Instead, they opened negotiations with a longtime customer, Mr. Gainsburg, who was in the process of selling his custom T-shirt business after 20 years.

Mr. Gainsburg, 50, had worked in a bookstore while attending college. Now, he wanted to get back into that world. "I didn't think I was going to make a fortune, but this was something I wanted to do," he says.

Qualified Buyer

Ms. Meade and Ms. Cohen saw someone who had built a successful company. And since he was selling his business, he would have cash. As other bookstore owners have discovered, qualified buyers are hard to find, largely because independent bookstores often have low profit margins. Mr. Gainsburg also had an amiable personality, the two women say, a quality they valued because neither wanted to cut her ties to Politics & Prose.

"We knew that the new owner would want to put their stamp on the store, but Barbara and I thought we had enough in common with Danny that we could continue working here," says Ms. Cohen, who is also 69.

Mr. Gainsburg started at Politics & Prose part-time in the spring of 2001, with the understanding he would become a full partner if all three felt comfortable working together. The expectations were that fellow employees would get to know him and he would learn the business from the ground up. "I thought I was easing my way in and people would get used to me," he says.

He began spending long hours with the two owners behind closed doors. It was unusual for a new person to have such extended access to the bosses, and the staff began gossiping that Mr. Gainsburg might be more than he appeared. "People assumed I'd been hired as a spy or mole. Why else would I be back there, having long discussions?" he says.

Finally, the trio decided to go public about their arrangement. In the fall of 2002, Ms. Meade and Ms. Cohen assembled the store's senior staff at an empty bank building they were renting for storage several doors away. They announced Mr. Gainsburg would be joining the company as a full partner, with the likelihood he would eventually become the owner. An e-mail to the general staff quickly followed.

Many were stunned. "Only two people congratulated me," says Mr. Gainsburg. "It was depressing. ... People felt like the rug had been pulled out from under them."

Another initial impulse was that nobody wanted to deal with a new boss -- period. "Barbara and Carla built this place" is how Michael Link, general manager, describes the reaction. "They've made the store what it is. People aren't interchangeable."

It didn't help that, as time went by, Mr. Gainsburg increasingly came off as what Ms. Meade calls a "traditional businessman." He set goals and told people what he wanted, and expected to evaluate them on that basis.

"I saw a lot of areas that could be tightened up," Mr. Gainsburg says. "As a result, one of the things people thought about me was that this was a guy who really wanted to make money."

Employees worried that Mr. Gainsburg would reduce staff, trim hours, even fire people. Inside the store, the gossip was that he was looking to cut dead weight and eliminate redundancies, recalls Mark LaFramboise, a buyer and one of the two people who had congratulated Mr. Gainsburg.

As a new partner, Mr. Gainsburg says, he wasn't contemplating anything drastic, but he did want to add some efficiencies. He tried to save on things like insurance. He thought the structure of the store could be streamlined and communication among departments improved.

But he significantly underestimated the staff's resistance to newcomers. Dara La Porte, now assistant manager of the children's department, says when she and several others joined the store after their own children's bookstore closed, the reception wasn't welcoming. "We hit a wall of resistance when we came over," she says. Only after many months were they accepted, she adds.

Employees of the bookstore exhibit a kind of swagger about their expertise. "A lot of people who work here are underemployed for their education levels," says Mr. LaFramboise, the buyer. "Everyone reads, and they are all good with customers." Regular shoppers confide to them: One woman's husband had just left her, another was getting divorced, and they needed books to help explain these events to their children. Workers pride themselves on these close relationships.

"It's very gratifying, and it shows that you have the respect of the community," Ms. La Porte says. "You don't want to be treated like you are selling underwear."

Some staffers resented taking criticism from Mr. Gainsburg, whom they regarded as a neophyte. Debra Morris, a nine-year veteran who today buys university press books for the store, says she initially welcomed him. But eventually she concluded he wouldn't be a good fit for the store.

"He would go into a department, stay for a while, find out what he thought was wrong, but never got to a level of skill where he understood what we were doing," says Ms. Morris. She says she told Ms. Meade and Ms. Cohen she didn't think Mr. Gainsburg was qualified to be an owner, but to little avail.

"Danny is a fairly likable person, but that's not the issue," she says. "He hadn't mastered the store. He didn't understand what was happening and how people were working together to get jobs done."

In a typical year, a half-dozen people leave Politics & Prose, the owners say, but rarely anyone from senior management. New workers start at an hourly wage of about $8, says Ms. Meade, while senior staff can earn as much as $45,000 annually.

High Point

Mr. Gainsburg says he thought he was doing well and believed his partners were happy with his performance. "They told me it was going swimmingly," he says. (Ms. Meade disagrees, saying she had told him to do better.) Sales and profits were up, and on July 6, Politics & Prose successfully hosted a book signing by former President Clinton. It was a humid day, and the line stretched well down the block. Although exhausting, the event went so well the store rewarded each of its employees with a $100 bonus. For Mr. Gainsburg, it was a high point.

Two days later, he made a fatal mistake: He kissed Heather McLeod, the store's publications editor, on her cheek on her birthday. Ms. McLeod says that before the incident, Mr. Gainsburg had made her feel uncomfortable and she had complained about his manner. She quit, ending her 18-month employment.

Everyone in the store knew what had happened, and the uproar was so unsettling that Ms. Meade, who was in Colorado on vacation, had to fly back a few days later. The incident "was the catalyst," Mr. Gainsburg says.

In a meeting with his two partners, he defended his behavior as harmless. He said he realized he shouldn't have done it, but there were no malicious intentions. "They said they believed me," Mr. Gainsburg says.

By then, however, the bad feelings aimed at Mr. Gainsburg were out in the open. Faced with what they considered a staff rebellion, Ms. Meade and Ms. Cohen hired an organizational psychologist to meet with the staff and listen to their concerns. Eventually it was suggested that Mr. Gainsburg take off the rest of the month as a cooling-off period. When the atmosphere inside the store didn't improve, the two women decided a change was needed.

Ms. Meade says she wanted Mr. Gainsburg to be given another chance, but wasn't able to persuade the store's employees. She notes that she and Ms. Cohen are limited in their ability to actually lead them. "They are accustomed to going in their own direction," she says.

It was the will of the store's employees, she says, that Mr. Gainsburg had to leave. "I couldn't turn people around one by one," she says. "We don't have a traditional management structure, and we don't have traditional employees."

Cleve Corner, the store's events coordinator, who has been at Politics & Prose for four years, says people who worked at the store were deeply upset that Ms. McLeod quit, and felt they were defending a colleague during discussions that followed. "There was a sense that somebody had been wronged," he says. "But it also relates to our autonomy. We love our jobs because we have the ability to work responsibly in our own fields. The management styles of the owners didn't click."

Eventually, all three partners agreed Mr. Gainsburg would leave. In turn, he was given back his initial investment plus a premium. Ms. Meade declines to say how much that was.

More than six months later, the three are still sorting out the break-up. Ms. Cohen says she intends to stay at Politics & Prose for at least another 10 years in some capacity, and adds that the business isn't for sale. "It was a chastening experience," she says.

Ms. Meade, by contrast, is ready to move on. "I don't want to die with my book bag on," she says. "There's every reason to feel good about the future. But getting out when you are winning would seem to make sense."

As for Mr. Gainsburg, he says he was initially devastated when he realized he would never go back to Politics & Prose. Rather than look for a new job, he decided to get into shape and has since completed a marathon. "We all started with good motives, but there was lots of naiveté on all sides," he says. "I thought I'd found my calling. But I'll land on my own two feet." He is now looking for another business opportunity.