Built for Speed
At the Atlantic Group, everything about the way the company operates is designed on one principle: speed. Is this the ultimate competitive advantage?
Face flushed and sandy hair askew, Roger Abramson bursts through the revolving doors into a Park Avenue office building, barks into a cell phone, extends a hand and flashes a smile to a visitor, and scans the lobby directory to locate his 9:30 appointment. His pace reflects his obsession with time. A minute spent on only one task is a minute squandered, and wasted time infuriates Abramson. He shouts at a taxi driver for taking the wrong route, slams down the receiver in disgust when a vendor puts him on hold, rips up an employee's work because she didn't follow his exact instructions. And to his family, fiancÉe, and friends, he issues a stern warning: "If you are not producing revenue, do not call me during the day." Abramson's mantra is speed, and heaven help you if you get in his way. So what's the rush?
Abramson doesn't have the luxury of slowing down. He doesn't have a unique product to sell, he didn't invent anything, and he hasn't unearthed a new market niche. He's an office-furniture distributor, which means that his company, the Atlantic Group Furniture Procurement and Project Management Inc., is in a commodity business in which margins are traditionally whittled away by both customers and manufacturers. All companies struggle to escape that cycle, seeking to distinguish themselves through tremendous customer service or by providing some additional value to their product. To be sure, Abramson does all that. But his true currency is speed. "From the time a dealer meets a customer until the time an order is placed usually takes a month," he says. "We can do it in a day." And it's not just about how fast he can deliver the goods; it's about how quickly he can track down new business, gather industry information, get customers to make decisions, guarantee results from his employees, and persuade manufacturers to go the extra mile. Spend a few days with Abramson and it will come as no surprise that he has built such a company; he is incapable of working any other way. What's impressive is how he and his partner and alter-ego, Mike Leiderman, have taken what seems to be pure compulsion and systematized it, deliberately creating a quality-driven company that's also hell-bent on hyperspeed--ostensibly incompatible goals that have yielded a total of $30 million in sales in just two and a half years, and profitability from the second month of operation. "We created a whole new business model," boasts the 30-year-old Abramson. "And if you don't like our system, you can go somewhere else."
That's what Abramson did. As a top salesman for a major Manhattan furniture dealer for seven years, he earned a mid-six-figure salary, yet was constantly frustrated. "The library never had any manufacturers' brochures in it. I used to have to run around to seven different showrooms and spend hours in traffic. My assistants were constantly on the phone with manufacturers to get samples we didn't have," he recalls. "And not once in seven years did I invite a customer to my office." Unable to sit for more than a few minutes at a time, he paces, throws up his hands. "Roger believed that he should be changing the rules and doing things in a very progressive fashion," says Chuck Hyman, his former boss, now senior vice-president of sales and marketing at Dancker, Sellew & Douglas, an Atlantic Group competitor. "It was difficult for us to constantly provide him with everything he needed at the speed he needed it."
Back then, Abramson learned an important lesson: you can't be really fast on your own steam. Sure, you need to vastly reduce cycle time, keep up with the latest technological advances, stay ahead of the competition. But unless your company is built in such a way that all that becomes second nature, you may as well be running in place. Abramson knew that he needed up-to-the-minute industry information, committed outsourcing partners, responsive manufacturers, and dedicated employees, and that he would have to make extraordinary demands on them all. To win their unwavering loyalty, he would have to make the payoff so clear and so attractive that they would never need to question the urgency of any request. And so Abramson, first and foremost a salesman, a master of the win-win deal, built his company as a symbiotic web of business relationships that, at its best, serves the most compelling interests of each participant. He sits at the center. And he is watching the clock.
Choosing the right
SOURCE OF CAPITAL
If speed is Abramson's vehicle, control is the engine that powers it. From the beginning, he and Leiderman were determined to start a business that was beholden to no one. In their industry, that isn't easy to do. Typically, says George Kordaris, coeditor of officeINsight, an industry newsletter, the cost of entry into the office-furniture distribution business is so high that most entrepreneurs are forced to seek financing. "They need elaborate CAD systems, software, and a staff of at least four or five to service customers," he explains. Private investors typically demand a presence on a company's board, a full-blown business plan, and an exit strategy. That kind of accountability was abhorrent to Abramson and Leiderman. "If you have other people investing, they want to be involved in decision making, and I didn't want to constantly have to justify what I'm doing," says Abramson. "I didn't want to waste my time writing reports. This is the Roger and Mike show, and we're the only people who get to vote." So they bankrolled their start-up with $500,000 in savings, eschewing all other financing options and agreeing to remain true to their original philosophy: to make money, they would need to spend money. Their own.
Several months ago they did just that, moving to their third location in just two years. The company, begun with six employees in 1,700 square feet of midtown office space, had already moved once but had grown to 25 employees and was bursting at the seams. Abramson, using commercial real estate contacts he had cultivated during a brief career as a broker, hunted down 10,000 square feet of space at 46th Street and Sixth Avenue, where he and Leiderman spent close to $1 million to transform an entire floor into a thoroughly modern workplace, with gleaming maple floors, arched windows, exposed-brick walls, and meticulously designed workstations outfitted with the latest technology. Tucked toward the back, adjacent to Abramson and Leiderman's shared corner office, you'll find a pool table, a big-screen television connected to two satellite dishes, a fully stocked kitchen, and (for company-hosted parties) Sam Adams beer on tap. To investors, if there were any, it might all appear wildly extravagant--the self-indulgences of an underage, overconfident spendthrift. But Abramson knows that everything, right down to the fine French wine stacked next to the CD player, serves a purpose.
Choosing the right
SETTING FOR BUSINESS
In Manhattan, a significant part of an office-furniture dealer's day is spent in taxis, ferrying customers around from one manufacturer's showroom to another. "By the time they get to the ninth showroom, they've forgotten what they saw at the first," Abramson says. And then there's the wasted time, the traffic jams. "In New York, most dealers don't have showrooms because every major furniture manufacturer has a showroom here," says Chuck Hyman. But Abramson set up his space as a working showroom, similar to the way manufacturers display their products, but with an eye toward showcasing every line he represents.
Each piece of furniture, purchased at a deep discount, is arranged functionally, and customers rarely need to leave the Atlantic Group to make their decisions. Most of the workstations are from Haworth, one of the three largest office-furniture manufacturers in the world, and the company that accounts for approximately 65% of Abramson's sales. But in Abramson and Leiderman's corner office, another manufacturer, Geiger Brickel, reigns. "Haworth does not make the best high-end wood case goods, so they're not in here, and they're not happy," says Abramson. "I tell them, if you had the best product for the best overall value for the customer, you'd be here." He applies the same standard everywhere, displaying the best visitor's chair, the best high-tech conferencing material, even the best desktop accessories. It's a system that invites competition among manufacturers, but also one that ultimately serves his customers better and more quickly than schlepping them around to manufacturers' showrooms. It also saves time for Abramson and Leiderman. "Ninety percent of what clients want to see, we have on the floor," says Abramson. "So many of them come in here, point, and say, 'That's what I want.' A third of our customers walk in today and sign off on a budget tomorrow." Although it sounds like an obvious strategy, it's not common in the industry. "Roger is one of the few people who has it all there," says Hyman. "There's nothing close to what he's got."
Choosing the right
What entrepreneur doesn't salivate at the prospect of a few very large, very stable customers who can be counted on to generate a steady stream of revenue? "I looked at the five biggest dealers in town and they all catered to the Fortune 500," says Abramson. But that niche wasn't for him. As a salesman, he had focused on the middle market--small, growing companies that he knew would keep growing and come back to him as they expanded. "We both know that Merrill Lynch isn't going to double their business in two years, but a 40-person advertising agency can," he explains. Besides, Abramson has always relied heavily on his real estate contacts to direct him to potential customers--customers who count on their brokers to advise them on every aspect of a move. Those companies are generally small ones in which founders and CEOs are still involved in day-to-day decision making. "I like dealing with owners and decision makers," he says. "I wanted to work with companies that can do things fast."
That's the antithesis of Fortune 500 companies, where a purchasing agent might take months to place an order and where following bureaucratic procedures takes precedence over speed and value. "They have no vested interest in saving money, and they don't have sole decision-making power," Abramson says. "We don't want the grief." And, he explains, manufacturers are more likely to approach big companies on their own and bring in a dealer after the price, and hence margin, has already been determined. It's a control game he doesn't want to play. In fact, he recently turned down $7 million in business from a large insurance company that was unhappy with its current dealer. Abramson, initially excited by the prospect, looked over the existing contract and rejected the deal out of hand because the dealer was receiving such low margins. "You can't get the service you want at those margins," he told the company.
Instead, he prefers customers like John Muldoon, the chief financial officer and cofounder of IntraLinks Inc., a two-year-old, rapidly expanding document-management company that's taking on an additional 7,500 square feet of space. Muldoon tries out a few conference chairs, runs his hand across a highly polished reception desk, and listens to Abramson rattle off the pros and cons of various keyboard trays. "Some of the furniture manufacturers' keyboard trays are OK," he explains. "But here's one from a company that makes only computer accessories--this one articulates much farther out." Better for your wrists, he explains. Muldoon clearly appreciates the expertise. "My gut sense with Roger is that it's not just about pure numbers, it's how you figure things out," he says. "He helps you come up with workable solutions within your budget, and he does it fast." And because Muldoon values that, he is the perfect customer. Although price is important, what matters most to companies like IntraLinks is service, and Abramson doesn't disappoint. He and Leiderman are personally involved in nearly every sale, their staff is trained to follow up assiduously, and an Atlantic Group employee is present at every installation. The dollar volume per deal is smaller in the middle market, but that doesn't matter to Abramson. He boasts that, on average, he sees 30 new customers a month. "He's the king of the smaller project," says Chuck Hyman.
Choosing the right
WAY TO FIND CUSTOMERS
Although pursuing the middle market has become increasingly fashionable, the drawback of focusing on smaller companies is that they are almost always more difficult to find. Abramson and Leiderman take a slightly circuitous but fruitful route: they seek out the design firms that their future customers hire before they're even thinking about furniture. John Muldoon, for instance, arrived at the Atlantic Group with his designer, Mavi Corey, who steered him toward Abramson. "The design firms are very influential," explains Abramson. "With the middle market they're more involved in deciding what their clients will buy than they are with Fortune 500 companies." Like his real estate contacts, designers provide Abramson with early access to customers, allowing him to create a united triumvirate--customer, designer, dealer--to negotiate with manufacturers. Leiderman, a salesman for a major furniture manufacturer for 17 years, was known for his close relationships with designers. Abramson, too, has always networked aggressively in that community. Sometimes too aggressively.
"When I first met Roger, I disliked him instantly," recalls Bill Buscaglia, president of New York Design Collaborative, a Manhattan design company. "He came in and talked a mile a minute, and he scared me to death. My clients are all Wall Street types, and I thought there was no way I can bring a person like Roger in without being thrown out the door." Two years later, Buscaglia was horrified to learn that one customer had already selected Abramson's fledgling company as its furniture dealer. He dreaded the prospect of collaborating, but he was won over in a matter of days. "He did such a thorough job on such a complex project," recalls Buscaglia. "He's there on the firing line for the tough questions, and he's there personally if the chairman has a problem with his chair." Buscaglia estimates that the deals he now brings to Abramson are worth $8 million to $9 million a year.
"Designers are a demanding bunch, so the fact that we get back to them really fast and accurately is really important to them," says Abramson. It's part of the payoff he looks for in all his business relationships. He relies on designers to bring him business, and they rely on his ability to work quickly with budgets and proposals--critically important since designers are generally paid by the square foot, not by the hour. Just as important, the Atlantic Group supplies designers with resources they can't afford to build up on their own. The company, for instance, houses an extensive library of manufacturers' brochures and displays more than 16,000 fabric samples on pegboards. "Most dealers might have a piece here or there," says Mavi Corey, "but I've never seen the entire system on display." Corey relies on Abramson to keep her current on which fabrics are new and which ones are out of circulation. "Roger also knows which fabrics are right for each product, so my clients don't waste time falling in love with a fabric that won't work." Designers love Abramson's conference room, where nearly 2,000 furniture photographs with magnetic backing are stuck to magnetboard lining the walls. Customers can see at a glance what Abramson has to offer and can mix and match the photos without leafing through piles of catalogues. "We've fast-tracked and short-circuited the whole process," says Abramson. "It saves the designers nonbillable time."
Choosing the right
When Abramson and Leiderman first started out, they knew they needed to build their business around one of the four major furniture manufacturers: Haworth, Knoll, Herman Miller, and Steelcase. Those manufacturers control approximately 75% of the New York City market, and few dealers can attain scale without representing one. "We knew that Haworth's market share in New York wasn't as high as it should have been," recalls Abramson. "They had great products and great engineering, but they didn't have the connections. So I called them up and said, 'We have access to designers you can't even get on the phone." Al Lanning, vice-president of global sales at Haworth, recalls that "we had other strong dealers in the market, but we thought that the Atlantic Group would be a great fit. Roger does a very good job with multiple customer groups--everyone from architectural and design firms to real estate firms." Although those companies are not Haworth customers per se, Lanning views them as such because "we need to gain their confidence." It's a view that Abramson shares, and the synergy has yielded predictable results: "They're one of Haworth's fastest-growing dealers," says Lanning.
But although Haworth is the mainstay of his business, Abramson takes care to seek out other manufacturers to round out his product offerings so that customers can come to him for one-stop shopping. "I go to all the trade shows," he says. "I'm a walking library. I'm always looking to improve upon the widget." He once found a high-quality upholstered wooden chair made by a small Kentucky manufacturer--the type of product that might sell for $400 to $600. "This one is $240. We carry it now, and nobody else knows about them," he crows. "We're the ones showing people the new products."
Another time-saver: Abramson refuses to bid against other furniture dealers, a policy that most dealers claim to follow but that few can afford. The Atlantic Group hasn't gone head-to-head with another dealer for over a year. "If I'm bidding 10 jobs and winning one, I'm wasting time, I need more staff, and I have to raise my prices to pay for all the bids I lose," Abramson says. "That puts me in the commodity business, and that's not where I want to be. It wouldn't be good for our existing clients." Instead, he tells customers up front what his margin is (6% to 9% of list, depending on the level of service they require) and then negotiates the deals with manufacturers, thus controlling the business he brings to them rather than acting as their order taker. "Most of the dealers protect the manufacturer," says designer Bill Buscaglia. "Roger respects the manufacturer, but he gets the best numbers for his clients. That's the difference."
Listen to Abramson talk for a few hours about how his business works, or watch as he scolds a manufacturer's rep who has made the mistake of not delivering samples on time, and you begin to wonder why his suppliers put up with him. "He's very demanding of us as a vendor," says Rod Larsen, vice-president of sales at Geiger Brickel, a manufacturer based in Atlanta. "He once called and said, 'I need specifications for 50 offices and I need them tomorrow.' That would normally take a week, but if he says he needs them, we know he needs them, and we're willing to go out of our way to perform for him." Why? Because Abramson brings new customers to manufacturers and, in concert with the designers with whom he aligns himself, helps drive the customer's decision-making process. "He can turn over and perform quickly on a dime," says Larsen. "We're confident that if we put other things aside for him, we're not wasting time."
Choosing the right
You might wonder who on earth would want to work for Abramson--a guy well known for ripping up papers, shouting orders, slamming down the phone, and barging into offices without knocking. "He moves at 110 miles per hour," says senior project manager Nancy Heiss. "And he can definitely blow up." But behind the bad-boy behavior is a CEO who knows a thing or two about how to attract and retain employees. It's tempting to assume that he's read all those employee surveys conducted by workplace consultants and taken the responses to heart: workers today want the ability to learn new skills, an environment that gives them autonomy and responsibility, recognition for work well done, and fair pay. But the truth is that Abramson has created the kind of company that he would want to work in if he were an employee. It's why he can drive them as hard as he does; no one has ever quit.
"A lot of companies in our industry expect people to bust their butts and then don't pay them for it," Abramson says. "But we don't expect a free ride. Here it's pay for performance." Which is to say that everyone--everyone--is compensated extremely well, since not performing is not an option. His 10 most senior employees are part of a profit-sharing plan that typically distributes $15,000 to $35,000 per participant; the rest receive bonuses of up to 20% of their base salary. Health insurance is 100% paid for, the company offers a 401(k) plan with a 50% match and no cap, and Abramson reckons he spends $50,000 a year on training. If you stay past 8 p.m., dinner is on the company and you're more than welcome to flip on Seinfeld reruns or shoot some pool. And last year, Abramson and Leiderman took everyone to the Dominican Republic (employees voted on the destination) for an all-expenses-paid five-day sales trip during which work was heavily interspersed with golf, skeet shooting, and diving. "As crazy as he is," says Jeff Coletto, chief operating officer, "he lets you know you're appreciated."
There is no magic to how Abramson and Leiderman find their employees. Six came with the two partners from their former employers, some were recruited from competitors and design firms (not the ones the Atlantic Group works with), and still others came from manufacturers that were looking to place employees who wanted to relocate. Because the company--and Abramson--has such an unconventional reputation, candidates often self-select. Interviews start at 9 p.m. ("I'm not going to see someone at 3 while I'm running the business"), and just in case Abramson is on his best behavior while speaking to a candidate, Nancy Heiss generally talks to the prospective employee as well. "Have you heard about Roger?" she asks him or her. "Well, 95% of what you've heard is true."
"We want them to be self-starters," says Leiderman. "We expect more than they've ever been asked to do in their lives, but we give them the chance to make a lot of money and to be on their own." Heiss confirms that. "The responsibility is all yours," she says. "You're free to do whatever you want as long as your job gets done." Although there's an informal system of mentoring younger, less experienced employees, the company's organizational structure is flat: nearly all the company's employees are project managers--detail-oriented people with 5 to 10 years of industry experience whose job it is to take responsibility after Abramson, Leiderman, or vice-president of sales Jon Offerman (the only three salespeople in the company) have made the sale. Such employees are typically compensated modestly, but at the Atlantic Group, says Bill Buscaglia, "they make a fortune." And it's not just bonuses and profit sharing that line their pockets. After Abramson, Leiderman, or Offerman makes an initial sale, the customer is turned over to a project manager, who then handles the day-to-day responsibilities of the job. However, when the customer comes back for additional orders, the project managers get commissions (between 1/ 2% and 2% of the sale). So while most dealers pay commissions only to the salespeople who bring in business, Abramson rewards those who keep existing customers happy and stay in touch with them for the long haul. Abramson estimates that 25% of his revenues now come from repeat business generated by project managers.
The employees who aren't on staff are as revealing as those who are. "We have knowledge and the ability to sell furniture," says Abramson. "Everything else we outsource." An information-technology consultant visits the company every Monday to troubleshoot, outside companies administer all employee benefits, industry headhunters handle recruiting, and subcontractors deliver and install all furniture. Abramson chooses his providers the same way he chooses his customers: he looks for small, growing companies where he can deal directly with owners and top managers. "When we started out, we used a big IT [information technology] company and found we were getting overcharged and getting junior people on our account," he recalls. "So now I purchase the way I sell."
And because selling is what he's best at, Abramson maintains a tenacious hold on that role. "Mike and I are on the street for life," he insists. One senses that it could not possibly be otherwise, but keeping Abramson and Leiderman in the sales vanguard also serves to keep things moving fast. Since those salesmen, who pay themselves straight salaries plus year-end bonuses, are also decision makers, negotiation times are slashed; commissions that might be distributed to a sales staff go instead into profit sharing and the bonus pool, keeping project managers motivated to work through the night, if necessary. But can such a structure be maintained as the company grows? "The company might grow to $50 million to $150 million," predicts Abramson. "But I'll stop it the second I see that anything is being sacrificed on the service end. I don't want to be the biggest. I want to be the best."
Choosing the right
Abramson flips open his ever-present appointment calendar. Monday night, he's taking a customer to a Broadway show; Tuesday he's invited an architect up at 6 to shoot pool, then it's dinner at 9 with another customer; on Wednesday, he'll go to a United Jewish Appeal charity event with a real estate broker; Thursday there's another dinner with customers; on Friday, he's having a "networking" barbecue for 30 people on the roof of his Upper West Side apartment building. It's a typical schedule for Abramson, who is out nearly every night of the week with customers, real estate agents, architects, or designers. "I call everyone in my network at least once a week and I see them at least once a month," he says, waving a list of 100 contacts. He also hosts a monthly party where 150 people are invited to network with one another at the company. The pool table, the top-of-the-line sound system, and the well-stocked bar make the place look more like a wealthy bachelor's studio apartment than an office. "He's opened up doors for me to meet people I've ended up doing business with," says Dan Johnson, director of office services at Arista Records and an Atlantic Group customer. "Other companies come into your place, they sell you furniture, and then you don't see them. Roger's bringing people together." Networking is not only how Abramson keeps himself in everyone's subconscious, but also how he helps other companies do business as quickly and efficiently as he does. "We play matchmaker in all areas," he says. "We've found business for at least 20 of our clients."
As he does so often, Abramson stops a conversation midthought to take a call on one of the four telephones on his desk. It's a broker, calling to tell him that she passed his name on to a customer--a high-end investment bank moving to a 10,000-square-foot office. Can he meet her for breakfast at the Harvard Club next week? Abramson pencils her in. It's the kind of meeting he loves. She'll pump him for information she needs to be more valuable to her customers, like how much it should cost them to furnish their new offices and what kinds of discounts they can expect. And Abramson will get updated on the commercial real estate market. "Nobody has developed more relationships and has greater depth in the real estate community than Roger," says Chuck Hyman. "We're all jealous of what he's done."
Those relationships serve him--and his customers--well. Consider the conversation Abramson has with the CFO of a growing Internet company as he charges down Park Avenue with her and two other executives from her business. He and Leiderman are taking them on a tour of several offices that the Atlantic Group has furnished, but the talk is not about desks and chairs. She wants to know where her competitors are moving, what they're paying per square foot, how tight the market is. Abramson knows all the answers. He steers her south of Times Square, "the new mecca for media and entertainment companies." He tells her where one competitor has moved and what it paid. He stresses the need for quick decision making--he's seen too many of his customers lose space. By the end of the afternoon, they've probably discussed real estate as much as they've discussed furniture.
Abramson has hired a car to drive the three executives back downtown, but it doesn't arrive on time. He whips out his cell phone, pacing the sidewalk as Leiderman tries to distract the prospective customers with polite conversation. But it's hard not to overhear Abramson's loud, angry conversation with the car service. "He's president of the company and he's that concerned about our car?" says one of the executives, raising an eyebrow. But it isn't just the car. It's a broken commitment, a service not delivered, and Abramson won't tolerate that on any level. He just can't afford to wait. Can anyone?
Donna Fenn is a contributing editor at Inc.
DONNA FENN | Inc.com Contributing Editor
Donna Fenn is the author of Upstarts! How GenY Entrepreneurs Are Rocking the World of Business and 8 Ways You Can Profit From Their Success, an exploration of the ways Gen Y is changing the entrepreneurial landscape.