In the multibillion-dollar greeting card business, Smart Alex has carved a niche by boldly going where no big company has gone before. Founder Jay Blumenfeld opens up about his irreverent, unorthodox rise to success.
Jay Blumenfeld started the bold and bawdy greeting cards company Smart Alex in 1980, building it without venture capital, business training -- or a sense of hearing. Today, the deaf, gay, and out-about-it-all CEO personally designs bestselling card lines for specialty retailers, including sex shops, across North America. Blumenfield recently linked up with Inc.com via instant messenger to share the story of Smart Alex, advice on succeeding with a niche brand, and why uniqueness counts in the business world.
How did you start Smart Alex?
It was by accident. I didn't intend to do it at all. What I wanted to do was to promote my photography, and get a photography book published after I got out of college. This was 1980. Many book-publishing art directors told me that I should put my creative energy into making greeting cards. I thought it would be something I did for a year or two to promote myself as a photographer. But I fell in love with the alternative greeting cards industry, and decided to continue with the business.
What does Smart Alex do today? How is it distinct within the greeting cards industry?
We are a greeting card company that makes edgy cards. We aren't afraid to use butt-kickin' humor. And we sell through unusual channels. Most card companies are all alike and don't focus on a particular target audience as much as we do. We have a very specific market.
One of our most successful lines is the bachelorette series. I know I'm giving away our biggest secret, right? Oh no! But not many companies can do something like that.
We have great relationships with stores that aren't catered to by companies with bigger lines. Quotable is bigger. Hallmark and American Greetings are far bigger. They do humor. But it's just not as fearless as what we do at Smart Alex.
Can you make a comparison to another company?
If Hallmark and American greetings are like NBC and CBS, and Quotable is like CNN, I guess we're like an MTV or VH1.
After 27 years in the business, what are some important lessons you have learned?
I have always been on my own. I am deaf, which might surprise people. But I haven't looked for government or other assistance specifically for deaf CEOs. I don't even know if these programs exist. What I do know is it's easy to get things done when you do them on your own. That's one reason why we print locally, and have worked with some of the same sales representatives since 1985. Sure, it's outsourcing. But we have a great relationship with both our printers and our reps.
It is important to believe in your work, so much so that you can get it done without feeling you need any special help be it from government or selling to investors or outsourcing to China if you can't stop in to see what's being done.
That's an important lesson. Believe in what you do, and get it done yourself. That, and always pay your bills within 30 days.
So your company is completely self-financed?
When I need to borrow money for a new big project, I go to the bank and get a loan. I've borrowed and paid off $200,000 within five years. In the last six years, I haven't taken out loans for Smart Alex. I guess I'm an old fashioned guy in that regard. If I have to, I'd prefer to work with the bank directly. Though I'd rather not take out loans at all. Recently, profits have comprised 45 percent of income on most of our card lines. Our company made about $600,000 in revenue in 2007. That was up from $550,000 the year before. That's pretty good for a small company from the North Side of Chicago. People, and their sense of humor, can change so fast. The marketplace for greeting cards can be very fickle.
In light of the greeting card market's mercurial nature, why is business good now?
With Smart Alex, I have always used the philosophy "where people go, we go the other way." To an extent, we have to go with the flow of what's popular at the moment, knowing what's hot now will not be hot in two or three years. But what we do is we really get an understanding of our customers, meaning both the stores and the people who buy cards in them. We work with thousands of stores in the U.S. and have a distributor in Canada. We pay close attention to what we learn from stores when they place orders. And we pay close attention to our reps, who are out there communicating with the stores all the time.
How did such close communication with your reps and customers benefit you most?
Let me ask you this. Did you know that adult stores customers are now mostly women? It's a changing market! It's no longer for dirty old men.
Thanks to our reps -- who like us because we come out with new designs every seven weeks, and the fact that we pay our commissions precisely on time -- we were able to identify that trend in the marketplace, that sex shops were becoming mainstream, and design for and sell to them.
We make a line of bachelorette cards, as I mentioned. We have a line of divorce cards [congratulating divorcees on their freedom and independence]. We have cards that no family-oriented company could ever make.
Even if Hallmark and American Greetings and all the others are now starting to use words like "slut," or something in their cards, they still don't want to be making things like a "flick" card, which we do. This is a greeting card to cover a light switch, and the hole is cut out -- you know, so the men look like, switch on… they're "on." These are selling like hotcakes. The characters are funny -- doctors, Santas, snowmen, cowboys, dancers. If those ever stop selling, we just find out what's funny now, and design something new.
What was the darkest day for Smart Alex?
I had to learn that if you are well-known for one thing, that's what people want from your company. It is like a brainwashing that happens out there. People want what we originally sell them.
Back in the early '90s, we started a second company called Silver Dog. It was an avant-garde, high-design, greeting cards company. My partner, Mark Taylor, joined Smart Alex after working as a graphic designer for Montgomery Ward for years. He is the senior art director for Smart Alex today. We just had our 19th anniversary. He is my "ear." Maybe it was a way to show off some of the designs he and I are capable of… something different. Two years later, all the clean cards companies were doing the same things.
We had to go back to the places where they can't go. Nothing poetic or flowery. And we had to do the things they can't do, which is humor, edge, but with nice, highly graphic designs. Also, when we tried making gift tags, coasters, and other things, they just weren't as profitable. It's like this: would you buy spaghetti from McDonald's? Probably not! That's where you want a hamburger.
Do you still design and write your own cards?
Yes. I do some of them. Mark does some of them. Since I am deaf and he is hearing, it's like we cover two different worlds. It is a wonderful relationship personally and creatively. Also, we find a lot of freelance designers and the like online. The Internet is a big help to find them.
Writing a card is harder than designing one for me. Deaf humor is funnier to me, and more visual. My deaf friends will have to ask me about things we print like puns or slang and other written humor. So I prefer to design. I love Photoshop. It is one of the world's greatest inventions. Designing a card is fun to me, and relaxing thanks to Photoshop.
Speaking of software, what technology has most impacted your business since it began in the '80s?
I think about the time when we didn't have fax machines, pagers, e-mail, relay services, videophones, etc. It was very difficult for me to run the business being deaf in the hearing world then. I overcame all the obstacles.
When I needed to engage the services of sales reps nationwide, picking up the phone and giving them a call was simply not an option. So I constantly traveled.
Customer service was another big challenge. Every order and communication had to be done via mail. This put me at a four-day disadvantage compared to my competitors, which bothered me a great deal. It was my routine for three years.
I honestly can't tell you how I managed to keep it up. But I'm glad I did. I think maybe e-mail and instant messaging have been the most important technology for me, because they resolve all of that. And for the deaf community too.
Did you ever publish that book of photography you set out to do?
Even though I went to a photography school for college at RIT in Rochester, I haven't been involved in photography in quite some time. I'm a CEO and a graphic designer. But I am no longer a photographer.