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Interview: Arthur Blank
The Falcons owner talks to Steve Fennessy about rebuilding the team after Vick, problems facing Home Depot, and the challenge of giving away a fortune
This article originally appeared in our August 2008 issue.
Arthur Blank turned sixty-five last September, in the middle of the worst year of his professional life. Just weeks before, Michael Vick, the marquee Falcons quarterback around whom Blank had built the team, had pleaded guilty to running a dog-fighting ring out of his home in Virginia. The season would only get worse: In December, a day after assuring Blank he would remain as head coach, Bobby Petrino slithered out of Atlanta to take the top football job at the University of Arkansas. By that time, the season Blank felt would never end had only gotten longer. When the Falcons beat the Seahawks in the final game of the season, it was small consolation; the team’s 4-12 record was its worst in seven years.
Although he said he never considered selling the team, Blank must have asked himself at some point if it was all worth it. He is, after all, the 317th-richest person in America, according to Forbes, with a fortune of $1.5 billion, earned from twenty-plus years building The Home Depot into a retail leviathan. He has his own foundation, to which the vast majority of his fortune is directed. And he has six children, which include, with his second wife, Stephanie, an eleven-year-old son and six-year-old twins. Surely there are better things to do than endure the scrutiny that comes with being the owner of a professional football team whose fortunes were tied to a felon.
This year, though, Blank did what he hasn’t done since 1979, when he and Bernie Marcus opened the first Home Depot: He started building an organization from the ground up. He hired a promising young scout from the New England Patriots, Thomas Dimitroff, and named him Falcons general manager. He hired a new coach with a name—Mike Smith—as understated as his personality, And in this year’s draft Blank and company settled on Matt Ryan, a towering twenty-three-year-old from Boston College who will step into Vick’s position and lead the Falcons to what Blank hopes is a new era. It really is a new team, in virtually every sense of the word.
In late May, Blank sat down with Atlanta magazine’s Steve Fennessy for a wide-ranging interview that touched on Home Depot, his hopes for the Falcons, and how turning sixty-five has made him look at things differently.
This spring, for the first time since you left Home Depot in 2001, you were invited to address the annual store managers meeting here in Atlanta. The ovation the employees gave you before your talk brought you to tears. What was going through your mind at that point? It was great to be back in that environment. I spent twenty-three years there, so the company is like a seventh child to me. When you start a company, and you build it from nothing up to 250,000 people working with you, and then you leave and have almost no contact for six years—well, it was very painful for me, that separation, both personally and from a professional standpoint. One of the things I appreciated about Frank Blake was that when he became CEO, he reached out to me and Bernie. When he asked me to attend the store managers meeting, I didn’t know I was going to speak. But then he asked me to speak. I got to talk about a lot of things I felt were important—not so much living in the past and the good old days, but that these are the good today days. It was very emotional for me.
Last year was the first year that Home Depot’s revenue were less than the year before. What’s your advice for Frank Blake? My advice for Frank goes back to the very first breakfast we had. The opportunities in the marketplace are different than they were. This housing recession is the worst in a hundred years in America. The company was built on a certain set of values and a culture. I think those continue to be as relevant today as they were in 1979. They’re applied differently and the business environment is different, but those things are still the things that make it a great company. They kind of got washed out in the Bob Nardelli era. It’s like the foundation for a great cake. The icing may be wonderful, but if it’s a shitty cake, it’s not going to taste right. Frank is conscious of this. Let’s scrape away some of the icing and make sure the roots of the business are what they need to be. Even in the face of a bad economy, he’s done a lot of the right things. Hiring better people, investing not only in the quantity of people—putting more salespeople on the sales floor—but hiring experienced plumbers, electricians, and tradespeople that will make a huge difference to the business as the economy begins to turn.
Had Home Depot turned away from customer service? I think it had. I don’t think it was intentional. But the focus had gotten onto a lot of growth initiatives, a lot of things about how do you measure this and measure that, a lot of things that came out of a GE mentality. GE is a great company, but those are more appropriate for the kinds of businesses they’re running and not a retail environment. My feeling was they’d gotten away from a lot of the roots of the company in ways they should not have.
Your mother recently celebrated her ninety-third birthday. I wanted to ask about growing up in Queens and how that informed the person you are now and the philosophies you say you live by, such as “You’re your brother’s keeper” and “Give back.” My mother has had a very profound effect on my life. My father, too. He was an entrepreneur. He started his own business in his late thirties, died when he was forty-four. We didn’t have much in a material sense. We lived in a single-bedroom apartment till I went to college. I didn’t live in a house until I was thirty-two years old. My first house was $34,500. My values were rooted in my childhood, and my mom particularly—this notion of working hard, having integrity, giving back to the community. We didn’t have any money to speak of, but my mother would always be involved in the community.
Such as what? Any sort of community event. We lived in a big apartment building with 300 or 400 units. She served on the board in the apartment that set rules and regulations. She always was just in the middle of things and was not afraid to express herself. She didn’t do it with money; she was just involved and caring.
I read that you were in a gang when you were a kid. That’s right. Two of my best friends from my junior high school were killed when I was in high school. One was shot to death, one was stabbed to death. I had spent time with them, did things, ran around. My mother was telling my younger children the other night at dinner that I was a really good son. And I was a good son. But I got in trouble. I remember one day in junior high school I was going to get the crap beat out of me after school. They had closed the school yard and I was inside. My brother, who’s three years older than me, ran back and jumped the fence and got in front of me.
How did those things you learned influence the philosophy of your foundation? When the company had no money, we always were involved in the community. We always wanted to do whatever we could. We didn’t have money to write checks to philanthropies, but our store associates were always involved. A lot of that came out of [Bernie Marcus’s and my] religious orientation—being your brother’s keeper, being involved in the community. A core philosophy of the Jewish faith is: It’s fine to go on top of the mountain and study the issue, but you need to come off the mountain and deal with the problem. That’s always been an important part of my own personal philosophy. You need to be engaged on the ground and give back. We cared about the people who shopped in our stores and the people who couldn’t shop in our stores. As the company grew, we wrote over $125 million in checks [to various causes]. We were even prouder of Team Depot—associates spending tens of thousands of hours in the community, building playgrounds, hospitals. It wasn’t written up in performance reports or anything, but it was an important part of what we do as a company.
When you formed your own foundation, was there another one you looked to as a model? When [Wal-Mart founder] Sam Walton died, I was in New York. I had dinner with [Walton’s son] Rob. We were talking about philanthropies and families. Rob said, “We knew we were a real wealthy family. But my father never spent much time in terms of building a philanthropy. He was interested in building the business. And we had all this money.” So his children don’t really understand what it means to be a philanthropist and have a foundation. I thought about that in terms of my children and my wife. I really wanted them to be very much involved and not have the same experience, where their father would pass away and have all this money and the children would say, “What do we do with it? We don’t have the skills and discipline.” So in 1995, we started our own family foundation.
What surprised you most about giving away money? It’s very difficult to do it and to ensure you have the impact that you think you’re having. There are a lot of great organizations out there, but it’s a question of understanding the vision and being sure they’re doing what they say they’re doing. Follow-up is essential. You can fall in love with visionaries. A lot of grantees have visions in their heads, but their ability to carry them out in the marketplace is pretty limited.
Who’s setting the priorities for what the foundation targets? The family does. I’ve always said to my adult children and my wife and my brother and daughter-in-law that I don’t want to sit at the head of the table. So literally and figuratively, all of our meetings are around a round table. Although I chair the foundation, they all have an equal vote and an equal say. Often I say the least at these meetings. I’m really interested in the children expressing themselves. I don’t want to be sitting there on my deathbed thinking, “Oh, what’s going to happen now to this big estate? They’re not prepared for it, and they don’t care about the stuff we’ve been working on.” So a lot of the work we do—whether it’s Better Beginnings or Pathways to Success or greenspace issues—they’re things the family really cares about, as well as myself.
You’ve been a big financial supporter of the BeltLine. I’m a big believer in community and connecting the dots. I had a conversation once with Shirley Franklin. We were talking about Downtown, and this relates to the BeltLine. She had a real pretty pearl necklace on. I said if you took the necklace off and I cut the strand and you had all these beautiful beads just laid out all over the table, it wouldn’t look like a beautiful necklace. And what has to happen Downtown is that you have to connect the pearls. To have a great Downtown, you have to be able to walk, you have to commute easily, you have to be safe, you have to have a lot of greenspace. There’s a lot of people looking for that. With the BeltLine, you have an opportunity to connect these pearls of Atlanta in a way that brings together community in the most positive ways. So people don’t have to get in their cars and drive seventy miles an hour. They can do it by bike, they can do it by jogging or walking to get from community to community. It’s a unique opportunity.
Do you think the political will behind it is sufficient? I think it is. Frankly, it’s such a positive thing, no matter what part of the city you live in. Atlanta is a great city today. It’s a great city probably because we say it’s a great city. But from a world perspective, is it a great city like New York or London? Probably not. To some extent, Atlanta has been caught up in its growth, which has been unbelievable. When I moved here, there was a little less than a million people living in the region—780,000 or something like that. Now it’s five and a half million, projected to be fifteen million in the next fifteen years. How we deal with the quality of growth is going to be very important. It’s not only because of people we want to attract here, but it’s the quality of life for the people already living here. All of that fits into the BeltLine philosophy where we can reduce traffic and we can get people connected in all kinds of positive ways.
Do you see the foundation making further contributions? Absolutely. To us it’s a journey.
You’re sixty-five. That’s an age when people might start taking stock. I did a lot of that this year. Age sixty-five for me was interesting. I actually do it all the time anyway, but I did it with more rigor this year than I have in the past.
Because of the number? Yeah. It used to be when you were sixty-five you retired. It doesn’t mean that anymore. It certainly doesn’t apply to me. But we spent a lot of time as a family this year talking about the estate. I’ve redone my estate plan with my wife’s involvement and with my children’s involvement. A percentage of my estate will go to philanthropy, almost all of it.
How much? I can’t tell you how much, but almost all of it. Probably 95 percent will go to the foundation. Stephanie and the adult children and then the younger children will carry on the foundation after I’m gone. Coming to grips with that and developing plans to see that happen is something I’ve done this year. We spent a lot of time as a family talking about what that really meant. We had a consultant come in and help us facilitate the conversations, which was helpful.
What was the mood? It was sobering, but positive. You ask tough questions and you can’t give answers that are humorous. The answers we all gave were serious answers. I certainly want my family to be well provided for. My wife is well provided for. My children are all well provided for. On the other hand, they need their own mountains to climb and their own challenges and their own life. They need to do life’s work, and they’ll do that. But I really feel, at the end of the day, that we were really blessed at Home Depot. This is a way of recycling that estate back into the hands of society in a real positive way. We worked hard and we were good at what we were doing and the timing was good and maybe we had a little luck. We want to recycle that back in. There are tremendous needs today. The public sector—federal, state, city—all are able to do less today. It’s up to the foundations and people like myself that are the recipients of this wonderful society and opportunity to give back in a way that’s significant.
Let’s turn to the Falcons. How much did last year age you? It was a very difficult year. Professionally it was certainly the most difficult year of my whole life. And it was all played out in the eyes of the public, which is the nature of this business—the disappointment in the relationship with Michael and Coach Petrino and the lack of our ability to control that situation. Seeing our organization hurt, seeing our fans hurt, seeing our community hurt. And there were fans all over America that were hurt.
What personal toll did it take on you? There were a fair number of sleepless nights. The season seemed to go on forever for us. It seemed like a hundred years’ worth of football. But it finally did end. The organization is now in a very good place. We have a new general manager we’re excited about, a coaching staff we’re excited about, we had an outstanding draft. The energy level of our players is unbelievable. People have moved on. I’ve certainly moved on. Last year we tried to do the right thing for Michael Vick, the right thing for our organization, the right thing for the National Football League, and the right thing for our fans. I think we handled it as well as it could have been handled. But it was very difficult.
How did you explain all this to your youngest children? Well, at the time my youngest children were five and a half, so not a lot of explaining was necessary. For my middle son, Joshua, who’s now eleven, it was difficult. Joshua was close to Michael. And like every other ten-year-old in Atlanta, he admired Michael Vick the athlete and player. I had to explain to him. He was confused about it. I had to explain what Michael did wrong, what an indictment means, what it means to go to jail, to have a jury trial. I did the same thing that many other fathers and mothers did in trying to explain this to their children.
How did he react? He was certainly disappointed. But he accepted the explanation when I told him Michael was sorry for what he did. And I believe he’s sorry. It’s a severe price. But it’s the price society has deemed he should pay. He’ll have a second chance, I believe. His life will be okay. He’ll still be a young man when he gets out of prison and have the chance to get on with his personal and professional life.
You haven’t ruled out his returning to the Falcons. Does that still hold true? We have legal rights with Michael, we have financial rights with Michael, we have contractual issues with Michael. Our relationship with him is a very complicated one. From a personal standpoint, I certainly wish him well. I’ve told him this before, that anything I can do to help him, I’m prepared to do that. I’d love to see him back in the National Football League, not only as a player but as a role model, to go back into the community as an example of somebody who made some bad choices, who couldn’t cut the umbilical cord when he needed to cut it with folks who had a negative influence on him. I think that could be very positive. I’m hopeful that will happen. Whether it happens here in Atlanta or not remains to be seen. We drafted a young quarterback [Matt Ryan, from Boston College]; we view him as our franchise quarterback of the future. We have complete confidence and faith in him, and we’ve moved on as an organization. We owe it to the fans to do that, we owe it to ourselves to do that, and we owe it to the players to do that.
When the controversy broke last year, the debate seemed to split largely along racial lines in Atlanta. Do you agree with that perception? No question there was some of that. Michael within the African American community was considered to be a hero—playing the quarterback position, a great talent, a great athlete, who was involved in the community. That certainly was an issue. But what Michael did and what his punishment was had nothing to do with the color of his skin. It just had to do with what he did. At the end of the day, in my opinion, he was treated very fairly by the judicial process and by the National Football League. There was nobody out, quote, to get Michael. Everybody—certainly everybody in this building—gave him the benefit of the doubt for months on end. And was supportive for months on end of Michael based on what we were told and what he was telling us. I think today Atlanta has moved past it from a racial perspective. Those people that haven’t—frankly; shame on them. It’s not a racial issue.
How challenging is it being an NFL owner in Atlanta, a city full of transplants who have allegiances to other teams? It’s not. When I bought the team, folks said, “Well, Atlanta’s going to be a tough market,” because of the things you described. There are not many cities in the United States like New York or Chicago—great old cities that have been there two hundred years. Atlanta’s very much like Dallas or Houston or Charlotte—great emerging cities. People are great sports fans here if you give them a quality product and they have a great game day experience and they have players and an organization that are proud of the community. That’s been true. We sold out all of our games from 2002 through the majority of last year. We didn’t sell out all our games last year. People have responded beautifully and they’ll respond again.
How are they responding now with the new campaign? I think they’re stepping up. We’re not sold out yet. We’ve got a ways to go. But we’ve got a lot of time between now and the first of September.
You mentioned that the draft is not a new chapter, but a new book for the team. Well, it’s new leadership. With Thomas, Coach Smith, and all the coaches. Couple that with free agency and eleven draft picks, led by Matt Ryan, and on top of the draft last year, it’s going to be a young team. We’re going to be competitive, and we’ll probably win more games than most people think.