As told to Nadine Heintz

Caroline Hirsch was a marketing executive at Gimbels Department Store in New York City when a few friends asked her to start a nightclub with them. After some arm-twisting, she agreed, and in 1981 they opened a cabaret called Carolines. The cabaret became a comedy club, then the most influential comedy showcase in the country. Before Jerry Seinfeld became Seinfeld and Paul Reubens became Pee-Wee Herman, they graced the stage at Carolines. In 2003, 175,000 customers flocked to her chic art deco club on Broadway. Hirsch's uncanny ability to spot rising stars has earned her a reputation as something of a comedy oracle, and she's now extending her reach: On November 9, she'll launch the first annual New York Comedy Festival, featuring performances by the likes of Denis Leary, Drew Carey, and Roseanne Barr. Yes, Roseanne Barr.

I opened a cabaret with two friends in the early '80s. They were both guys, and they wanted to name the club after a woman, so we called it Carolines. But the cabaret acts weren't really doing it for me, so I suggested we start doing some comedy. I had a feeling that there was going to be some sort of explosion, between Jerry Seinfeld and Jay Leno. Leno was our first act. It brought in a whole different kind of clientele. People in their late 20s and early 30s came out. I could feel it was the start of something.

Early on, nobody knew what I was getting into. Seinfeld had a small following. He was doing some late-night spots on The Late Show With David Letterman and Johnny Carson. But nobody realized that he would go on to create what's probably the most memorable sitcom that will ever be on TV. I remember his first performance at my club. He joked about socks disappearing at the laundromat.

Way back in '84 or '85, Paul Reubens put on this crazy Pee-Wee's Party every week at the club. He'd bring in different celebrity guests, like a member of Menudo. He'd find breakdancers on the street and bring them onstage. He'd wear big shoes and dance on the table to "Tequila." We advertised the show in the newspaper, and I couldn't believe how many people came out to see him. Andy Warhol even showed up in his pajamas one night.

Coming to Times Square in 1992 was the best move I ever made. The area was changing. I felt it in the air. With real estate, you have to do that. I found a space in an almost abandoned building on Broadway. I went to the bank, took out a loan, and made a deal with two of the builders. By the time I signed the lease, they had gone bankrupt, and I was the sole tenant that year. I had to wait around until the building filled up and more people started coming to Times Square. About two or three years later, business really took off. I finally stopped worrying.

After 9/11 I closed the club for a few weeks. That was the most challenging time for the business. I was wondering how I could get a performer to go onstage to make people laugh. How could they go inside themselves to be funny? But then everyone came up to me on the street and said, "I just have to go to your club. I just need to laugh." That's what it's all about. We broke into it gently, probably two and a half weeks later. I swear my business has gotten stronger since then.

We try to get comedians on the late shows like Jay Leno, David Letterman, Conan O'Brien. We're constantly marketing ourselves to event planners. They've gone out of their way to bring bar mitzvahs and other parties here. We send e-mails to more than 20,000 customers a week. Then we promote in-house with a slideshow letting people know what shows are coming up.

Working with comedians is always challenging, and it becomes even more challenging as they get more famous. It gets harder to book them. They get much more complicated in their demands. It goes with the territory. But there's a payoff, too. We really watch acts grow. Dave Chappelle was on my stage a long time ago, when he was just a little opening act. I watch these people through the years and I know who's talented and who's probably going to bust through and make it.

We've got it down to a formula. We've elevated comedy to a certain level. People want a nice environment. They don't want dirt on the floor and gum under the chairs. My club got an award from the American Institute of Architects. Serving food also makes us stand out. People say, "Let's have dinner there. Let's have drinks. Let's spend the night there."

I've kept ticket prices around $26, where they've been for the past few years. I increase them when there's a big act, but for the most part, I didn't want to be part of that business of raising prices all the time. My margins are pretty good. We're always looking at that bottom line. We're always struggling to get food and liquor costs down. We make sure drinks are poured in the right proportion and that we're not throwing away food. We run a tight ship.

There was talk in the early '90s that there was so much comedy on TV that it diluted all the clubs. Not true. If anything, it's made us stronger. Even today, when I have young talent in the club who has been on TV, fans come out in droves. We recently had three of the standups from the reality show Last Comic Standing and they generated a tremendous amount of business. When a musician puts out an album, that album drives concert sales. It's the same thing with comedy -- people want to see the performer live.

The New York Comedy Festival is an extension of my business. I've found that, in business, you always have to go forward. You have to try things, whether or not they work. If you just sit back, somebody comes along and inches past you. I'm always trying to find the next trend. I watch what the younger generation is doing. Right now I'm looking at other spaces to open, in big areas where people want to have fun, like Vegas or Orlando.

I don't think I'm a funny person. I just interpret what's funny. It's all instinct -- there's no research. I enjoy what I do, and I'm a big fan of comedy. If you don't like it, there's something grossly wrong with you. See your shrink. If people tell you they don't like it, run. Run away fast!