To appreciate the unique dichotomy of outlooks that is essential in any successful auction house today—one foot in the old world, one in the new—you need look no farther than the large windows flanking the front door of America’s oldest such business.
Samuel T. Freeman & Co.’s Center City Philadelphia headquarters is a narrow and unpretentious six-story concrete building on Chestnut Street. On one 2005 visit, behind the glass to the right of the door hung a half-dozen handsomely framed, stately prints that would be up for bid in several weeks. In the window to the door’s left was a sleek Pioneer flat-screen television showing images of items sold at previous Freeman’s auctions—an Andy Warhol self-portrait, a Keith Haring work and a George Nakashima music stand among them.
Auction houses trade in legacy. The product they move, to use a contemporary term, is typically shrouded in the seductive aura of the past—items purchased, collected or made decades or centuries ago, often handed down through generations, until finally a great-great-great-nephew decides to sell. But those institutions rooted too firmly in tradition run the risk of becoming history themselves. As Freeman’s found out the hard way, business cares little for tradition, especially when tradition starts draining the bottom line.
“We were just a processor of goods, doing what we had done for 50 to 70 years,” says chairman and sixth-generation steward Samuel M. “Beau” Freeman II, 69. “We needed some new ideas,” adds Freeman, who has been with the company for 47 years, the last 25 as its head. “We weren’t going anywhere.”
After some hard choices and a shakeup that unsettled many attached to an enterprise stretching back to the early 19th century, Freeman’s is enjoying prosperous times. Along the way it has learned some lessons: The good old days weren’t always good. Getting help isn’t a sign of weakness. Doing your homework is as important in business as in school. And sometimes, less really is more.
In the boardroom on Chestnut Street, five generations of Freemans peer down at the large wooden table in the center of the room. Their portraits line the perimeter, offering silent testament to 200 years of family leadership. From the frilled shirts of two centuries ago to the narrow neckties and pocket squares of the 1960s, a visitor can see wardrobe styles that changed with the times. The business itself, though, wasn’t as nimble.
Tristram Bamfylde Freeman founded the auction house in Philadelphia in 1805, and for more than 200 years it has been run by him and his descendants. Over the years the company’s fortunes waxed and waned. Satellite offices were opened, then closed, in New York and Boston. There were significant successes along the way, but by the late 1990s, Freeman’s was a tired enterprise mired in outdated operations and raising revenue in painfully small increments. The house was selling most lots for $20 to $40 each; some went for as low as a dollar. Worse, it was costing the company an average of $33 to sell each lot.
So when an outside authority—Paul Roberts, the president of Phillips North America, one of the industry’s biggest players&151;approached Beau Freeman with some thoughts on turning the business around, Freeman listened. Roberts came aboard as Freeman’s new president and launched a series of wide-ranging, bold initiatives that brought Freeman’s into the present day, occasionally with some kicking and screaming.
By far the most significant change, according to company officials, was to refocus the house’s sales strategy so as to emphasize margin over volume. In 1999, the year Roberts came to Freeman’s, the company pulled in $6 million on more than 60,000 lots sold. By 2004, revenue had increased to $15.5 million, on just 11,000 lots sold. In 2005, its 200th anniversary year, Freeman’s annual sales hit an all-time high of $21.25 million.
The auction industry is extraordinarily competitive, and with sellers to compensate and expenses to pay, houses are well advised to run their businesses more efficiently. At Freeman’s, that effort began with heeding the counsel of outsiders, a difficult but necessary step.
“The great challenge in running a family business is complacency,” says Samuel T. Freeman III, 45, Beau’s son, who had worked in the auction house as a teen and returned last summer as an associate in the trusts and estates department. “Once you reach a certain level, the tendency is to coast. Thanks to my father’s leadership, we’ve changed that, within the family and among our employees. There’s a quietly aggressive culture that wasn’t here when I was here as a teenager. You have to be able to look outside for guidance and information about options.’
Those options extended far beyond selling fewer, more expensive lots. Freeman’s had a reputation in Philadelphia, of course, but wasn’t much of a player beyond. Roberts helped to change that by getting the company to talk about it itself more often and more forcefully. Beau Freeman admits that was a difficult step to take.
“I was not a good proponent for marketing and all that stuff,” Beau says, practically spitting the last word. “But that was one of the big thrusts—Paul Roberts is really a marketer. We developed a good and effective marketing division. It takes a while to become effective and produce results, I’m finding, but I think we’re seeing it now.”
By communicating with trust and estate officers that Freeman’s was able to do more than simply provide an auction venue—it also conducts appraisals and assists with insurance and tax issues, for example—the company was able to attract more business. The house’s promotional literature was upgraded greatly; lackluster, mostly gray catalogs were replaced by full-color publications with more detailed descriptions and a contemporary look.
“There were old ways of doing things; they were rather set in their ways,” says Alasdair Nichol, senior vice president for paintings, who joined Freeman’s in 1999, as the company’s transformation was beginning. “There wasn’t a great awareness of marketing. There wasn’t a huge proactive side of the business. I was going out and getting the business. You can’t survive in the auction business in the 21st century just waiting for material to turn up.#148;
Nichol’s hiring, a joint decision by Beau Freeman and Roberts, is emblematic of another important change—a shift in personnel. The house cut employees, from 33 in 1999 to about 25 today, and replaced some previous staff with outsiders, many with specialty expertise. These were seismic changes for a nearly 200-year-old business run by a single family the entire time.
“When [Roberts and other external hires] came in, we did clean house a bit, and there was some resentment,” Beau says. “We’ve either said goodbye to them or said, ‘Look, this is what we’re doing. We think you can help us. Are you going to go along with it?’”
According to Beau, while some left, others stayed, and only one of the long-standing employees who remained had any real difficulty with the new ways. (Freeman’s declined to make this employee available for comment, saying through a public-relations representative, “Beau prefers to keep conversations between himself and others private.”)
Thirty-year-old Jonathan Freeman, another son of Beau’s, has been with the company for five years. He started on the loading dock and now works in the appraisals department. Perhaps befitting the outlook of the young, who tend to find change easier to handle, he recalls no personal angst during the time his father was turning things upside down.
“As the changes came about, there was a lot of excitement,” Jonathan recalls. “Many of the staff looked forward to it, and others didn’t want to get involved. Several [staffers] we parted ways with. I considered it almost a new business venture, a brand-new business starting out.”
Sam Freeman had worked for the house for three summers as a teenager but pursued other opportunities after college. Five years ago he joined the company’s board. Last year, after working in project management and sales for a software company for eight years, Sam was approached by his father to join the business as an employee. Over the course of his evolution as a seventh-generation Freeman, he’s seen the good times and the bad. Both he and his brother acknowledge the unique challenges of sharing a name with six generations of family leadership. Sam says, “It’s a tremendous burden, emotionally and spiritually.” Jonathan calls it “a blessing and a curse.” Each of the two generations currently involved in the business say they try to keep out of the other’s way, and to respect the other’s opinions when there are differences.
That kind of flexibility and a determination to take a clear-eyed look at where things were and where they were headed, according to Nichol, are major factors in this 200-year-old business’s ability to scrape off the rust and reinvent itself. Asked what made the transition successful, Nichol answers, “A willingness on the part of Beau and the family to engage. They weren’t reluctant. They embraced it.
“You have to do a lot of homework first,” he continues. “You have to have a good business plan and know exactly where you’re going.”
Sam Freeman agrees. “You can’t do it just by throwing money at it,” he says. “You have to have a plan and a reasonable expectation of what the outcome will be. To do that, you need outside help.” In Freeman’s case, Sam says, Paul Roberts “opened the doors and the opportunity for discussion.”
Beau Freeman is a modest man—as evidenced by his disdain for marketing—and so he doesn’t speak much of the personal load he carried in importing external expertise and advocating change. “The people that worked here had only ever known one way of doing things. That had to be overturned,” notes Nichol.
As obvious as this observation was to an outsider, it was not an easy thing for Beau to face. Jonathan says. “The anxiety was borne mostly by Dad,0 Jonathan acknowledges. “It was a huge and bold change.”
And, ultimately a successful one. What was once a small, local operation is now a major regional force with a progressively wider reach. As Sam puts it, “The biggest surprise for me is that people return the calls I make.”
Arecent Freeman’s auction nicely illustrates the blend of traditional and modern that has breathed new life into the business. On the block is the collection of Ralph Raby, a descendant of Chicago retail shoe magnates George and Joseph Bullock, who in the late 1800s were acknowledged as the largest retailers of footwear in the U.S.
Freeman’s rectangular auction hall has high ceilings and rows of wooden folding chairs that might be as old as the building itself. On the chairs are seated a dozen and a half casually dressed buyers. Around the edges of the room are many of the lots up for bid—English and Continental furniture, decorative arts, paintings, rugs and bronzes. There is, of course, an auctioneer at the front of the room describing the lots and taking bids. When a sale is final, he looks around the room, says, “Fair warning,” and then drops a small gavel onto a block with a resounding crack.
But there is also a screen up front on which appears, via a laptop computer and a projector, images of the lots being sold by the auctioneer. On the right-hand side is a long table, where several employees staff a bank of phones and relay bids to the front of the room. A staffer seated in front of a laptop does the same with bids she is receiving in real-time thanks to an agreement with eBay—evidence of yet another improvement, an exploration in technology.
By making changes, by listening to outsiders, the descendants of Tristram Freeman have made the family business stronger than it’s ever been. Sitting in the boardroom, Sam Freeman describes himself as “tremendously gratified” to be part of a growing operation with which he is linked so closely. “There’s a certain amount of pride I take in that,” he says in his understated style.
Next to Sam, his father shoots a look and replies with a twinkle in his eye, “You’d better, in this room.”
You can almost sense the faces in the portraits above nodding silently in agreement.
Thomas W. Durso (twdurso@hotmail.com) is a freelance writer based in Glenside, Pa.