Alumni Success StoriesAlan Reed, B.S. '97
Marcia Israel Outstanding Student Award
What kind of business did the entrepreneur start?
Alan Reed established Card Cutz in 1995, a specialty greeting card company. It does not make just plain, ordinary greeting cards, rather, Card Cutz specializes in making three-dimensional greeting cards; each package comes with a blank card, an envelope, two-sided sticky foam, and punch-out pictures. With the package, the cards can be arranged in whatever way the customer wants. There are several different categories of cards including birthday, "thinking of you," "I love you," friendship, and congratulation cards.
The cards are targeted at a specific niche market within both the greeting card and the arts and crafts industries. The product is designed for people who want to go the extra step in providing their loved ones with a more meaningful card. Anyone can go to the store and quickly pick out a card that shows and says everything the person intends to say. However, for those people who want to show they care enough to take the time to make a card but lack the creativity, these greeting cards are perfect.
Surprisingly, there were no such products out in the market prior to the ones made by Card Cutz. There are other alternatives to the typical greeting cards like rubber stamp cards and computer generated cards. However, there is no true greeting card that is considered a high-end gift and novelty like these cards.
What is the background of the entrepreneur?
Alan was born in 1975 to an attorney for a father and a homemaker as a mother and grew up in the Los Angeles area. During his childhood, he was strongly influenced by the entrepreneurial spirit of his family. He and his brother used to buy clothing in downtown and sell it at the swap meets. Alan also sold cookies and had a lemonade stand, both of which were not successful, but taught him persistence at a young age. This all stemmed from the fact that several members of his family owned their own businesses, including his father. In addition to being influenced by his family, Alan attributes a great deal of what he is today from a revelation that occurred at age ten.
When Alan was ten years old, he was diagnosed with diabetes and, as such, Alan had to adjust to taking care of himself very quickly. With the daily-required doses of insulin, Alan had to be responsible at a very young age, which helped him mature and grow. From this, he learned the value of life and health and he also began to appreciate his family and friends even more. In a nutshell, this is what Alan believes is the key to business. Just as he values his family and friends, Alan realizes that valuing and trusting clients and customers is extremely important. In other words, he recognizes that it is important to put other people before himself.
As a result of his understanding the importance of his health and of being in good shape, Alan became very interested in sports. Prior to his diagnosis, he had been interested in sports, but became even more so after he learned of his condition and became as active as he could. Thus, he considers himself an athletic person and most people would agree as he participated in basketball and tennis in high school. In fact, it was in his high school, Birmingham in Van Nuys, that he also developed some of his leadership skills by being the captain of the basketball team and in charge of team-building skills.
During this time, Alan also began building his resume. He began painting street addresses on curbs and went on to work at Big 5 as a shoe salesperson. He also worked at a real estate office and at the Juvenile Diabetes Foundation where he assisted the organization in its fund-raising efforts. Alan also worked at a convalescent home as an administrator-in-training and did everything from changing bedpans to paying the bills. Alan has always worked well with the elderly and has been very close to his grandparents and, as a result, Alan hopes to someday build a retirement home of his own.
Following high school, Alan entered college at USC, his second choice to UCLA. Despite his initial wishes, Alan is extremely glad that UCLA rejected him. He has no regrets about going to USC and will always value everything he has learned from USC, particularly the excellent education and, even more importantly, the people he has met. Upon entering USC, Alan decided to be a business major and from there, he decided to emphasize in Entrepreneurship.
Alan had a wonderful experience in the Entrepreneur program and his efforts were also recognized by the faculty as he was selected as the most outstanding student in the Entrepreneur program, and, thus, received the Marcia Israel Award for most outstanding student. Alan did not have a favorite class, but does have a few favorite professors. He truly enjoyed hearing about Dr. Allen and Professor O’Malia’s real life experiences in starting their own businesses. He also particularly enjoyed Professor Gartner and his pure genius and brilliance that Alan will never forget. Overall, Alan truly values everyone he met in the program and the quality of the education he received.
Following graduation, Alan continued to work on his business. However, Alan also understood that as a startup company, he did not have a very steady cash flow. As such, he needed to find some employment that allowed him to earn money while also working on Card Cutz and any other projects that might come along. Thus, Alan is now working at Dean Witter Reynolds, Inc. where he is an account executive specializing in managed money. In addition to Card Cutz, Alan is also working on other entrepreneurial projects.
How did the entrepreneur get the idea for starting his business?
How did Alan get the idea for Card Cutz? While the ideas for some successful products come from a well thought out process by the inventor, Alan admits that the idea for Card Cutz actually came from the work of another person. It essentially started with a girl and a cruise ship during a summer vacation.
During a summer vacation on a cruise ship, Alan began a "shipboard" romance with an Italian girl from Long Island. Unlike other "shipboard" romances, this one did not end when the ship docked and despite the long distance between Alan and the girl, the two continued to keep in touch with one another via electronic mail, phone calls, and through personal cards. She began sending Alan personalized greeting cards that she had made herself. For several months this continued until one day the entrepreneurial light bulb in Alan’s head began gleaming.
Alan soon realized the potential in the cards she sent him. He had never received a homemade card before, and thought the cards were very special, so special that he would never forget them. This is when Alan realized that if the cards meant so much to him, they would probably mean a lot to other people as well. However, unlike Alan’s girlfriend, Alan felt he did not have the artistic ability or creativeness to make a card of his own. Thus, he then recognized that a need was missing in the greeting cards market and, along with that need, there was a great opportunity for someone like himself. Thus, Card Cutz would soon become a reality.
What did the entrepreneur do to start this business?
Alan first found out what his friends and family thought about the cards in September of 1995. He then needed to learn about the greeting card and printing business and knew that if he wanted to be successful, he needed to be able to sell large volumes of his product because it would be a volume-based product. Alan also asked everyone he knew, such as his professors, family, and friends, for their input regarding the 3-d greeting card idea. Subsequently, in January of 1996, Alan hired an artist to make prototype cards.
Alan also needed to keep his costs down, and, thus, needed to find someone who would print his cards at a relatively low price. In July 1996, after several phone calls, he found a man named Ron Schwartz, who was retired but had previously been in the printing business for nearly thirty years. To say that Ron had some experience would be an understatement as he was at one time the chief printing estimator for the largest printing company in California. Alan made an offer to the man to print all of the cards in exchange for 10% ownership in the company.
After returning to school that fall, Alan actively promoted his company and every time the professors brought in guest lecturers, Alan would tell them about his company, ask them for advice, and exchange business cards. Alan’s classmates could testify to the fact that Alan was constantly talking about his product. That fall, in October of 1996, Alan received the design patent for the product.
Alan then hired a packaging company, found through a referral, and bought the supplies for and made the displays on which the cards would be placed. He then took the artist’s work, scanned it into his computer and put the scans into negatives, which were then converted to film. This process took Alan through the end of 1996 after which the film went to press and Ron Schwartz printed the die cut cards. Thus, in January of 1997, Alan had the cards printed from the prototype cards that were made by the artist. Once printed, Alan had to collate the envelopes, die-cut sheets, foam tape, and insert card so that they could be packaged by the packaging company which occurred in February of 1997.
In March of 1997, Alan visited over forty privately owned stationary and arts and crafts stores in the Los Angeles area asking all of them if he could sell his product in their stores on consignment. In the stores that accepted his offer, Alan conducted tests and surveys from May through August of 1997, thereby spending almost the entire summer following graduation at the stores asking customers their opinion of the product. He even stopped customers who did not notice or purchase his product why they were not interested. During this test market, Alan never revealed that he was the owner and creator of the product because he truly wanted people’s honest opinions. At the same time, throughout the summer, Alan went to various cards and arts and crafts trade shows promoting his product.
In September, Alan began meeting with relatively large companies that had many different business lines in the arts and crafts industry to garner their level of interest in purchasing his product. Busy with his current position as an account executive, Alan did not do a great deal more with this venture until recently (March 1998) when he decided to seek individuals or companies that might be interested in licensing the cards so that he does not have to do another production run himself, but rather, could receive royalties from the licensing.
When did the entrepreneur do these activities?
Alan’s girlfriend sent the personalized greeting cards to him in the summer of 1995 and he began showing the cards to his friends and family that September. In January of 1996, Alan hired a professional computer artist to make fifteen different cards and in July of 1996, Alan met Ron Schwartz, the printing guru. The following October, Alan received the design patent. In the months between the receipt of the patent and the end of the year, Alan processed the artist’s work so that it could be ready for printing.
In January of 1997, the cards were printed. During January and February, Alan and Ron Schwartz prepared all the produced cards for packaging and in March of 1997, Alan began contacting the various stores in the Los Angeles area. From May 1997 to August 1997, Alan conducted the test market in the stores and visited various trade shows. By September, Alan began looking for larger companies interested in purchasing the cards. However, in the recent past, Alan has been busy with his current position as an account executive and did not do as much until quite recently (March 1998) when Alan decided to find companies to whom he could license the cards.
What major problems did the entrepreneur encounter during the startup of this business?
Alan quickly learned that distribution is an extremely important aspect of a successful product; his lack of a keen understanding of this process was the first major problem that he encountered in his business. He came to realize that understanding every detail about the distribution of products before being able to think about producing the cards was essential. A second gap in his knowledge base related to the greeting card industry as a whole; in the beginning, Alan lacked a full understanding of this industry. Another major problem that Alan found difficult and crucial to success was effectively communicating with the manufacturers and distributors. More specifically, Alan found it hard to deal with people who were older than him and learned the extreme importance of good negotiating skills.
Another difficulty that Alan faced was in human resources as he needed to hire a production person, a packaging company, and an artist. As a twenty- year old college student, Alan did not have a tremendous amount of funds to spend on the best suppliers or the most qualified employees. So, Alan needed to find a way to hire people either at a relatively low price or for an interest in the company. Finding an artist was particularly difficult because many artists were not interested in equity ownership, rather they wanted a decent salary. As such, Alan had to find a way to hire artists who were not as concerned with money.
Another major problem Alan faced was the recognition of the importance of packaging for his product. In his test market, Alan learned that the packaging did not clearly identify for what the product was to be used. Greeting card companies and others indicated that the pop-up cards were an excellent idea; however, individuals did not bother to examine the product to figure out what it did. Thus, if the customers were unable to quickly tell what the product was, it would never sell and proper packaging becomes a critical element of potential sell-throughability.
How were those problems solved?
Alan solved his knowledge gap problems through an abundance of both primary and secondary research. He read business books and articles about the relevant topic so that he could become better informed. In contacting individuals to speak with, Alan not only absorbed as much information from that particular individual as possible, but he also asked for referrals of other people with whom he could contact.
It was also through these contacts and referrals that Alan was able to find reasonably priced people to produce and package his product. Artists were still more difficult to find and Alan recognized that he simply could not afford top-notch artists. Thus, he utilized USC as a resource and placed ads around USC looking for artists. As a result, he was able to hire an artist who was not as concerned with the money, but more with the opportunity to gain experience.
Alan overcame his difficulty in working with elders through his maturity and professionalism. Before every meeting, Alan was completely prepared and organized and gave off the aura that he was serious and truly meant what he was saying. Alan also maintained his confidence and always "dressed for success." In addition to carrying himself well, Alan associated himself with professionals that gave him instant credibility. He had made contacts with an individual who was related to the president of American Greeting Cards Company, and also with an individual who sold his business to Hallmark. As a result of these affiliations, Alan was able to rid himself of the handicap of being too young in the business world.
Alan has ideas about changing the packaging to solve the identity problem; however, at this point he has decided against doing another production run at this time and is focusing his efforts on seeking a potential buyer for the company.
Who did the entrepreneur use for help and guidance during the startup of this business?
As with many other entrepreneurs, Alan had a great deal of guidance and support. His family has been extremely supportive and understanding of the trials and tribulations that a new venture must undergo; thus, they welcomed their recently graduated son back into their home where he is currently living. They also initially influenced and encouraged Alan to go forward with his venture. Alan’s father has constantly given him advice and his mother even helped design the sayings for each of the cards.
Aside from his family, Alan made sure that before any decision was made, he consulted not two or three people, but five people before he made a decision. For example, he constantly talked with the professors in the Entrepreneur program and took every step slowly making sure he did not miss anything. He feels it is very important for him to get advice from as many people as possible.
What advice would the entrepreneur give to someone thinking about starting a business?
"I would rather have a little bit of a big thing, than 100% of failure." Alan Reed mentioned this as his philosophy on starting a business. His goal for any new business he starts is to sell it at the hint of success. Alan does not want to spend the rest of his life with Card Cutz because he constantly craves something new and different. For potential entrepreneurs, he stresses the importance of not being so tied down to one product that a person will not let anyone else take control. In fact, Alan has already begun working on various other new products that are completely different from Card Cutz.
Along with this, Alan stresses that entrepreneurs need to be very open to criticism. Changes and updates to products are essential to initial as well as sustained success, thus, it is important to be open to criticism. Additionally, if an entrepreneur ignores one piece of advice, it could result in a halo effect and he/she might ignore even the soundest advice which could result in disaster.
Alan also emphasized the importance of a great deal of research and knowing as much as possible about one’s area so that he/she is able to become an expert in that area. Alan also believes that it is not only important to be an expert about the relevant industry, but also to be an expert in distribution. After working on Card Cutz for nearly two years, he has come to realize the importance of distribution for nearly every product-based business, regardless of the industry.
Why was this entrepreneur successful at getting into business?
The Role of Search
The object of Alan’s search was not to find a product to fit a purpose, as many believe being a successful entrepreneur entails. Yet, Alan’s search was also not to find a purpose for a product. Unlike some entrepreneurs, Alan had a product that met a purpose. Unfortunately for Card Cutz and Alan, the problem was not that he needed a product or a purpose, but some way of making the public realize that the product existed for which they had a purpose. Card Cutz is a product trying to fill the niche market of a greeting card that can express the user’s feelings and creativity at the same time. Linking the product and the purpose is very important. While there is some initial foundation to bring the two together, Alan realizes there is still a lot to do before the two are truly tied together. He also realizes the role that chance may play in solving this problem, much like the way it helped him have the initial idea for Card Cutz.
Unlike many entrepreneurs, Alan did not have to go through a very long search to come up with the idea for Card Cutz. Although he did not spend a lot of time prior to the idea improving the product, he has spent a great deal of time since beginning to make it a truly successful one, at least in his mind. Despite the fact that the idea came about fairly quickly, the making of Card Cutz into a successful product has indeed been a long haul.
Unfortunately, Card Cutz has not been the overnight success for which Alan, and many other young entrepreneurs dream. It is eminently clear that the work following the idea is longer and more difficult than the work prior to the idea. As such, everything has not come together at once, rather it has been a step-by-step process that, taken as a whole, has been quite an extensive search.
Alan seemed to face one problem after another which he indicates has all been part of the process and every time he solved a problem, he gained valuable experience that could help him with the next problem. Thus, extensive searching for solutions throughout the process has helped Alan not only with Card Cutz, but will also help him with his future projects.
As was mentioned, Card Cutz did not come about after an incredibly long thought process. Rather, Alan took an idea that had been around ever since children started making their own greeting cards in elementary school. While he may have recognized the potential for this product in the back of his mind at an earlier age, it was not rekindled until a girl he met on a cruise ship began sending him homemade greeting cards. If Alan was not on that cruise ship and had not met that girl, Card Cutz may not have existed. To some, this would be considered chance.
While many search styles are more systematic and less a result of chance, Card Cutz did evolve from sheer chance. While Alan was and still is actively pursuing great ideas, chance did play a significant role in the founding of Card Cutz. However, it was not as if Alan was just walking along one day and suddenly the idea for Card Cutz hit him on the head. Through the important concepts and lessons he learned in school and from the people who have given him guidance, Alan was trained early on to recognize good ideas.
Alan was also taught at an early age that if he could find someone to solve a problem better and quicker, he should follow that path. He taped any and all resources to think of ways to improve his product. For example, networking and allying himself with valuable resources has helped to make the process of creating a successful product more efficient and effective.
Psychology of the Search
In addition to the role that the actual search plays in reaching that successful point, the abilities, attitudes and behavior of the entrepreneur also play a critical role. The more obvious cognitive characteristics include intelligence, ingenuity and articulateness, all of which Alan possess.
Alan also has visual imagery. One of the most important things he does is cconstantly visualize what changes should be made to the product. For example, when Alan had to solve the packaging problem he had to picture what he wanted it to look like so it would be more appealing and more apparent to customers.
While Alan did not start out as an expert in the greeting card industry, he researched and learned as much as he could before he started Card Cutz. Even when he started the business, he was constantly learning more and more, and continues to do so today. Thus, he has done all he can to become more informed about both the greeting card industry as well as about distribution in general. However, despite all of his work at becoming better informed, Alan would be the first to admit that he is not the best expert in the greeting card industry. He does not contain a certain sense of the industry, but he knows enough to keep his business going and to stay a step ahead of the competition.
Alan also possesses a quality that every entrepreneur needs to have in order to be successful. He is persistent. He did not let any of the early difficulties get him down or stop him from pursuing his goals. Until Alan reaches his goal of someone buying the company from him or someone leasing the idea from him, he will keep trying until the next problem emerges at which time he will do all he can to solve that problem and continue going forward.
Social Context of the Search
Alan has also worked very well with the social aspects of the inventive or entrepreneurial search. Alan is not the type of person who strikes one as an inventor who will spend hours in isolation trying to solve a problem. He realizes the importance of others, the benefits of good social relations and the need to be a good communicator.
Alan has also allied himself with a wonderful support group of individuals who can help him both with various aspects of his business and with any new potential ventures. He has taken advantage of various resources and other people’s expertise to help jump-start him to the stage he is at today. Alan not only had to draw from various resources to aid in the production and the distribution aspects of the company, but he also had to find people who were experts in the law and patent system. Going to a school with such an incredible network base already put Alan ahead of many others and, as a result, Alan has continued to grow his network.
As a way of giving back for what he has received from others, Alan is currently helping two other inventors who asked for Alan’s knowledge of distribution and of generally starting a new business. He realizes that it is not just about taking from others but also giving back to the business community that has helped him. By building up his network, Alan is ensuring that he will be able to find the right person to help him should he need it in the future.
- Scott Lem