Threshold Resistance Read online

  THRESHOLD RESISTANCE

  The Extraordinary Career of a Luxury Retailing Pioneer

  A. Alfred Taubman

  CONTENTS

  Introduction

  1.

  From Pontiac to Ann Arbor

  2.

  Creating My Own Path

  3.

  The Golden West

  4.

  Evolution of the Arcade

  5.

  Creating 100 Percent Locations

  6.

  Buying the Ranch

  7.

  A Frosted Mug of Root Beer

  8.

  Minding the Store

  9.

  Fashion Statement

  10.

  Sold!

  11.

  Cookie Jars and Irises

  12.

  Selling Art and Root Beer

  13.

  Going Public

  14.

  The Best and Worst of Times

  15.

  Standing Alone

  Photographic Insert

  16.

  United States of America v. A. Alfred Taubman

  17.

  50444-054

  18.

  Coming Home

  Acknowledgments

  Epilogue

  Searchable Terms

  Notes

  About the Author

  Credits

  Copyright

  About the Publisher

  ACKNOWLEDGMENTS

  Developing a regional shopping center requires the talents of many people. I can now say the same is true of writing a book.

  I first want to thank Malcolm Gladwell, who I met in 2004, for giving me the inspiration to tackle this project and focus my story on the concept of threshold resistance. Christopher Tennyson, who has provided communications counsel to me and my companies for 23 years, helped me organize my thoughts and remember all the good and the bad. My longtime assistant, Melinda Marcuse, was a great fact-checker and sounding board. Helen Rowe patiently sorted through decades of photos, correspondence and news clippings. Each draft was constructively critiqued by my wife Judy and my attorney Jeffrey Miro (it takes a confident man to involve his wife and lawyer in the same project).

  The enthusiastic Harper Collins team, headed by Marion Maneker, was indispensable, as was the skillful editing of Dan Gross. And my friend Mort Janklow skillfully guided us through the fascinating process of getting a memoir published.

  Thanks also to Pauline Pitt and Tommy Kempner—the only two people nasty enough to publicly express their dislike for me during the most trying days of my life—for their unintended inspiration. Pauline was kind enough to describe me as a “pig” in the New York Post (actually, pigs are the most intelligent of all farm animals, with brains nearly the size of a human’s) and Tommy sought me out personally at a dinner party to tell me how delighted he was that I was headed to prison.

  In keeping with the spirit of the book, any profits I receive from its sale will be contributed to the University of Michigan ALS Clinic, where neurologist Dr. Eva Feldman and her medical research team are closing in on groundbreaking treatments.

  Finally, I must single out my dear friend and partner Max Fisher, who passed away in 2005 at the impressive age of 96. Not a day goes by that I don’t miss hearing from Max.

  INTRODUCTION

  “This better work, kid. It’s your ass if it doesn’t.”

  Strong words. Especially when you consider that they were directed at a twenty-four-year-old store planner by Milton J. Petrie, founder and chairman of the Petrie Stores Corporation. It was 1948, and I had just presented Petrie with an alternative plan for an apparel store he intended to build in Highland Park, Michigan, a close-in suburb of Detroit.

  Petrie was a big wheel in retailing. Starting with a single hosiery shop in Cleveland in 1932, he had essentially invented the women’s specialty store business in America and knew a good deal about how to design and build stores. By the time we met, he had hundreds around the country. What was wrong with the basic design his company had relied on so successfully? And what did a junior draftsman half his age at the Charles N. Agree architecture firm know that he didn’t?

  Here’s what. The classic 5,000 to 6,000-square-foot Petrie store employed what we called a “deep throat” entry space bracketed by display windows. The front door was set in ten to fifteen feet from the sidewalk, which allowed the customer to view the merchandise leisurely in the windows before actually pushing the door open. Often, there was a glass-covered display island in this space as well. In theory, a shopper, protected in this initial U-shaped display space from the weather and the activity of the street, would enter the shop having already begun to make her purchase decisions.

  That was the theory, anyway. But I didn’t buy it. I may not have owned any stores at the time, but I had been selling things—shoes, clothes, flowers—to people since I was a kid. I had studied design in college and had some experience in the field. And where Petrie saw a tried-and-tested recipe for retailing success, I saw an inefficient use of space; where Petrie’s experienced store designers saw opportunity, I saw unnecessary barriers. First, the deep window displays robbed precious interior sales space. Second, the idea of retailing is to get people inside the store. And the distance from the sidewalk to the front door only heightened the odds against the customer ever coming into the air-conditioned space where the salespeople had a chance to assist. Third, it was an aesthetic mess. The sheer amount of display space was difficult and expensive to maintain in an attractive and imaginative way. Dressing store windows is an art.

  Petrie Stores was a critical tenant for our client’s three-store retail development, and I certainly didn’t want to mess things up. (Our client was Ira Gumm of Alpena, Michigan, who happened to be Judy Garland’s uncle.) But I had to communicate my point of view.

  I had presented an alternative design that featured more shallow, see-through display windows and a welcoming front door on the sidewalk, closer to the property line. This would create significantly more sales space and turn the store itself—with its merchandise, human activity, and light in full view—into the display. Most important of all, in my design, far less stood between the customer and the goods, the customer and the salespeople, the customer and a sale!

  “In short, Mr. Petrie,” I explained (we were not yet on a first-name basis), “we can eliminate much of the threshold resistance.”

  “Threshold resistance,” he repeated slowly. “What do you mean by that?”

  “The physical and psychological barriers that stand between your shoppers and your merchandise,” I explained. “It’s the force that keeps your customer from opening your door and coming in over the threshold. I think we can reduce all that with this new design.”

  What followed seemed like the longest period of silence in my life. Had I insulted this retailing icon? Had I jeopardized a leasing deal for one of my employer’s most important clients? Come to think of it, who the hell did I think I was? All I could think about as Petrie stared at the blueprints laid out in front of him was how I was going to tell my fiancée that I had been fired.

  But that’s when those glorious words came out of his mouth: “This better work, kid. It’s your ass if it doesn’t.”

  YOU could say things worked out well. I kept my job at Agree, and Petrie Stores’ Highland Park location became one of the strongest-performing stores in the chain, influencing future planning and design throughout the company. From that initial meeting, Milton Petrie and I developed a close friendship, which continued to the day he died, in 1994, at the age of ninety-two. In the intervening years, Milton was my neighbor in New York City and Palm Beach, one of the largest tenants in my shopping centers, and
my partner in such business ventures as the Irvine Ranch and Sotheby’s.

  Our important encounter in 1948 also helped give me the confidence, after a short stint with the O. W. Burke construction company, to start my own real estate development business two years later. That enterprise, the Taubman Company, also worked out well. Over more than half a century, we have pioneered the development of shopping centers, transformed the nature and experience of luxury retailing, and created tens of thousands of jobs. Today, Taubman Centers owns and/or manages twenty-three large centers in the United States. If you’ve ever shopped at the Mall at Short Hills in New Jersey, or the Beverly Center in Los Angeles, or the Mall at Wellington Green in West Palm Beach, or the Cherry Creek Shopping Center in Denver, you’ve spent some time with us.

  Developing unique retail environments certainly made me wealthy—wealthier than I could have ever imagined. Equally important, it opened up a similarly unimaginable range of opportunities for me: to travel and see the world; to pursue my passion of collecting fine art; to meet and work with many of our time’s leading entrepreneurs, businesspeople, artists, and civic leaders; to own a champion professional sports team; to get involved in businesses ranging from A&W Restaurants to Sotheby’s; to contribute to the well-being of institutions and communities that made my career possible; and to create entities—buildings, companies, educational organizations—that will last far beyond my lifetime.

  Now, the world surely doesn’t need another book written by an older man telling how he became a self-made billionaire. In this country, and in this system under which we are blessed to live, it’s relatively easy to make money.

  So what’s the point of this volume? Partly, it’s that when you get to be my age, there’s only so much golfing, fishing, and shooting you can do. Partly, it’s to set the record straight and tell my side of the story after many years during which others—and frequently others who didn’t know me or who intended to harm me—loudly trumpeted their versions of my life and career.

  But mostly it’s because I want to share what I’ve learned from my experiences. It’s a safe bet most readers will never build a shopping mall or buy an auction house—or spend part of their retirement in a federal prison. Nonetheless, I’ve concluded that my experiences—my ups and downs, my gains and losses, my victories and defeats—allow me to offer some valuable perspective.

  And looking back, it’s clear to me that threshold resistance has been the key. In all my endeavors, in every chapter of my life, every relationship I’ve formed, every business opportunity I’ve pursued, every challenge I’ve encountered, every achievement I’ve enjoyed, threshold resistance has played a formative role.

  It’s always there, in business and in life. And it’s not just about store design. Every day, we encounter psychological, physical, cultural, social, and economic barriers. In order to accomplish anything, people have to find a way to get beyond the limitations they believe that personal background, conventional wisdom, common practice, or experience has placed on their imaginations. Threshold resistance might stop a customer from entering a hosiery store. But it might also stop a young woman from applying to medical school, or stop an engineer with a great idea from leaving the comforts of a job to start his own company, or stop a politician from seeking votes among a vital growing constituency. For everybody, being able to assess and overcome threshold resistance is nothing less than an essential life skill.

  If there’s one thing I’ve learned over the years, it’s that to succeed, you have to look beyond immediate barriers and see opportunities. Successful entrepreneurs and builders possess a sort of serial vision that allows them to look past things as they are to see how they could be better, not just different—and hence more valuable. It means looking at a wheat field in a rural area and seeing a massive shopping center that will serve a large local residential population. It means looking at a huge ranch in Southern California and seeing one of the nation’s most prosperous and valuable real estate markets. It means looking at a snooty, off-putting fine-art auction house and seeing an open, inclusive retail business. And it means looking at seemingly intractable problems—the persistence of low achievement in public education, the economic struggles of Detroit—and seeing the possibility for change.

  Spend a few hours with me, and I’ll tell you how I encountered and overcame threshold resistance. I can’t promise that my story will help you make more money or be more successful in your career. This isn’t that kind of book. But I can guarantee you will learn a great deal. I know I have.

  ONE

  From Pontiac to Ann Arbor

  I was born in 1924, five years before the start of the Great Depression, in Pontiac, Michigan, to German Jewish immigrants Fannie and Philip Taubman. Talk about threshold resistance. My parents surely encountered their fair share.

  The story of how my parents came to America is a little hazy, as many immigrant stories are. From what I recall, my paternal grandfather was in the hardwood business in Bialystok, a city in what is today northeastern Poland that was known at the time for its textile industry and hardworking Russian, Polish, Jewish, and German population. In the first decade of the twentieth century, the story goes, he sent my father to the United States to find supplies of wood. My father came via boat up the Mississippi River and landed in Davenport, Iowa, where he was to meet an agent who would take him to Wisconsin and Minnesota. But my father, who spoke not a word of English, arrived on a Sunday, and the agent didn’t show up, so he was promptly put in jail. The agent eventually showed up, got him out of jail, and helped him get a job as a gear grinder in a factory. After about a year, his parents were concerned that he might marry a non-Jewish woman, and so they sent over his second cousin—my mother—to keep him from straying.

  They married, settled down in Davenport, and started a family. My oldest sister, Goldye, was born in 1913 followed by two boys, Sam and Lester, in 1915 and 1920. My father worked for the Wilson Foundry Company, and after World War I he was transferred to Wilson’s Pontiac plant on Saginaw Street. My father had a good job with Wilson. The company thought highly enough of him to transfer him to its growing Michigan operation. But my father never felt satisfied or safe. He never fit in with the top executives, who certainly were not Jewish immigrants and were not about to invite him to join their country clubs. My father had dreams, ambition, and a desire to provide the best for his family. Call it entrepreneurial intuition: he knew there were at least as many barriers to his success at Wilson as there were opportunities.

  Blessed with true entrepreneurial guts and spirit, my dad left the relative safety of the corporate world to start small fruit farms in nearby towns like Rochester and Orion. Later, he built modest commercial real estate projects and custom homes, including the comfortable four-bedroom Tudor-style home at 300 Ottawa Drive in which I was born. He also built the first synagogue in Pontiac. Both the house and the synagogue still stand.

  The region was booming in the 1920s, as companies like Pontiac Motor, Oakland Motor, and Ford built plants that created thousands of well-paying jobs. A guy from New York named Shutzie had talked my father into building houses on some land just north of Pontiac, so he and my father borrowed money from the bank and put up a bunch of homes. Then the crash came, bringing widespread unemployment. In those days, the name of the original home builder remained on a mortgage even after the house was sold. If the home owner stopped making the mortgage payments, the bank looked to the builder for the funds. (Later, legislation was passed to include exculpatory clauses in mortgages to limit the builder’s responsibility to the bank once the house was sold.) So when people who were unable to pay their mortgages walked away from their homes, the bank looked to my father for repayment. Shutzie left town and went to Los Angeles.

  My father was stuck with these vacant houses, which he couldn’t sell or rent out. But he refused to abandon his financial obligations. For a period, he tended his orchards in northern Oakland County and moved us into a modest cottage on Sylvan L
ake. Though it took him many years, my father made good on every precrash debt he owed, even though dozens of clients had left him holding the bag. It was a big lesson to us all. I remember those years as a very difficult period. I recall visiting a friend of mine—his father was an architect—and seeing him burning furniture in the fireplace for heat because their gas had been cut off.

  School was not easy for me, either. To the best of their ability, my siblings helped pave the way for me. Back then, dyslexia, which I have struggled with all my life, was diagnosed as slowness or stupidity. As a kid I also stuttered. Add the fact that I was always big and a bit awkward for my age, and you get the idea that I was not a model student.

  There were two things we always had in abundant supply at home during those challenging years: our love and our faith. In Pontiac we were part of a small but tightly knit Jewish community of about sixty families. My parents would send my sister to the West Side of Detroit once a week to get kosher meat. Most years at school, I was the only Jewish kid in my class. My parents spoke German at home. And with my name—I was called Adolph Alfred after my two grandfathers, who were both named Avram—I definitely had the sense of being an outsider. I was a big kid, though, which helped keep me out of a lot of fights. And thanks to some gifted, dedicated teachers in the Pontiac public schools, I never lost my sense of curiosity and desire to learn. Where others saw challenges, my teachers saw potential. I think that’s why I so respect the teaching profession and have made education a major focus of my philanthropy.