"Working with Warren"-Denis Abrams, President, Benjamin Moore
Wednesday, May 02, 2007
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SUSIE GHARIB: Speaking of buying companies, billionaire investor Warren Buffett has a special gift when it comes to buying and managing companies. His huge Berkshire Hathaway conglomerate is a collection of 73 successful businesses he has acquired over the past four decades. One recent acquisition is Benjamin Moore, the paint company. It had been independent for more than a hundred years until 2000, when Buffett bought it for a billion dollars. When I met with Benjamin Moore's president, Denis Abrams, who becomes CEO in July, we talked about what it's like to work for this business legend. As we continue our series "Working with Warren," I began by asking Abrams why Benjamin Moore wanted to be owned by Buffett.
DENIS ABRAMS, PRESIDENT, BENJAMIN MOORE: It's what Warren offered and Berkshire offers is really the ability to act like a privately held company. Warren brings to the table a lot about his people. Everything he says is about the people. He talks about his all-star team. He talks about the people being basically the key asset of all of his organizations. So it really was a natural fit to go with him.
GHARIB: Mr. Abrams, how did the negotiations go with Warren Buffett? Is he a tough negotiator?
ABRAMS: Our CEO at the time and president at the time went over to Omaha, spoke to Warren and literally within an hour, he had made an offer, told him that his offer stood firm. It didn't matter what happened to the market. They should take as much time as they needed working with their board and he wouldn't change his offer and that was it.
GHARIB: So it was a one day negotiation?
ABRAMS: Truthfully an hour or two.
GHARIB: So how has it been different these last seven years with Buffett as the boss?
ABRAMS: Very little to what the history and tradition of our company has also been. Because as Warren always says, basically Berkshire Hathaway does not dictate to the operating companies how they should operate. He really wants them to operate in what's best for them.
GHARIB: Buffett is known for giving his CEOs total freedom to run the business, but does he ever just stop by here at headquarters and check up on the business?
ABRAMS: Actually no. He never just stops by here at headquarters. He has visited us once soon after he bought the company at our request. It would be a benefit to our people, not because he wanted to see anything. The results are the results. He's happy with everything that all of us do and never has he stopped in or visited us.
GHARIB: Certainly he has some expectations of you hitting targets for sales or profits?
ABRAMS: Absolutely not. We don't have to try to get results as most Wall Street quota companies try to do. The results are what they are. And generally whatever results we have, there's always wonderful praise from Warren.
GHARIB: Do you ever call him up and ask for advice?
ABRAMS: He's always open to phone calls, very easy to get hold of, very easy speak to, always willing to give advice if we want it, but would never volunteer in any way to tell us how to run the business or dictate in any manner.
GHARIB: What if you screw up? How does Buffett handle that?
ABRAMS: I don't anyone has screwed up. I'm not aware of any company that has really fallen into difficulties under his ownership.
GHARIB: At most American companies, CEO closely monitor the businesses. Why is it do you think that Warren Buffett's hands off approach is so successful?
ABRAMS: It's successful because I think he's a very good judge of people. It's successful because I think he does empower his people. He trusts them and they in turn respect that trust and that judgment. So I think he certainly does have a winning formula with it.
GHARIB: There are more than 50 Berkshire Hathaway subsidiaries. Do you think that Warren Buffett has enough time for all of you?
ABRAMS: The amazing thing is he has as much time as we want. Call him at the show or visit with him or anything like that, it seems as if he has all day, all the time in the world to talk to everyone, to give you as much time as you feel you need.
GHARIB: How often do you interact with the CEOs of the other Berkshire Hathaway subsidiaries?
ABRAMS: Not All that often. Warren does not expect any synergy between the operating companies. He says if it makes sense for the individual businesses to work together, makes business sense for both of them, do it. If it doesn't, don't try and force the issue.
GHARIB: These 50 or so subsidiaries are all in so many different kinds of businesses. Is there any common denominator that links all of you?
ABRAMS: Brands, very strong brands, solid brands, good brands. As Warren always puts it, businesses that he can understand tend to be in some ways more simple types of businesses rather than the high tech style or anything along those lines. And again, the people. When you look at the group of managers that he has and you talk to them, you see, wow, this is an incredible set of people.
GHARIB: In what way?
ABRAMS: The values, the non-pretentiousness of them, the basic understanding of basic, simple business principles.
GHARIB: What is the most important management lesson that you've learned from Buffett?
ABRAMS: There's nothing complicated or complex about business. It's really the very simple fundamental values and principles and something either makes sense and it always will make sense or it doesn't make sense. It always amazes me when you hear Warren or talk to him how he simplifies things and there's nothing complicated about anything.
GHARIB: Tomorrow night, we continue our series "Working with Warren" with my conversation with another Berkshire Hathaway manager, Bruce Whitman, CEO of Flight Safety International. And I'll be at Berkshire Hathaway's annual meeting this weekend in Omaha. So watch for my report on NIGHTLY BUSINESS REPORT on Monday.
