Party in the Front, Business in the Back

When Gary Morrison’s mother and her best friend got into the foil-stamped napkin business in 1979, the two women were just looking for a side project that would make them some extra money. Decades later, Gary is running AR-EN Party Printers, a company that custom prints cocktail napkins, coasters, matchboxes and more. He’s the first person to acknowledge that no one really needs what he’s selling, yet he’s figured out how to make a sustainable business out of disposable personalized favors.

Transcript

WAILIN WONG: Groucho Marx is famously quoted as saying, “I don’t want to belong to any club that would have me as a member.” Gary Morrison has his own version of that line.

GARY MORRISON: I don’t want to be invited to any party that would have me as a guest.

WAILIN: Despite his best efforts, Gary turns up at a lot of parties. Or more accurately, his products do. Since 1995, Gary has run AR-EN Party Printers, a company that makes personalized items for festive occasions. The business custom prints napkins, matchboxes, gift tags and more, and it specializes in foil stamping, which is applying colored foil to paper or another surface.

GARY: So this machine we just use for printing fancy bags for out of town guests for weddings and stuff like that. We use a thicker plate for this. Andre here is doing coasters, so here he’s finished a job. “Happy 40th Sully.” This is a ribbon machine. It just does ribbon. It prints on the ribbon, so here’s an order, here’s a bunch of ribbon we gotta get done. “Martha and Roy.” This is a great machine.

WAILIN: The products that AR-EN Party Printers makes are essentially disposable frivolities. The welcome bags get left behind at the hotel after they’ve been emptied of snacks. The monogrammed cocktail napkins get crumpled up and thrown away at the end of the evening. But there’s nothing disposable or frivolous about the way Gary Morrison has managed the company through interpersonal conflict, declining sales, the advent of the Internet era and more. And it turns out that persuading people to spend money on fancy napkins is very serious business.

GARY: Most people in the social printing business, they want to be in the invitation business. ’Cause that’s where the real money is. With a wedding, you need an invitation. Do you need napkins, place cards, gift tags, coasters, thank you — you don’t really need any of that stuff. So I’m in the business of selling people things they really don’t need, but I’m in the happiness business because it’s for one of their great events.

WAILIN: Welcome to The Distance, a podcast about long-running businesses. I’m Wailin Wong. On today’s show, how AR-EN Party Printers built something sustainable out of stuff that people really don’t need. The Distance is a production of Basecamp. Basecamp is the saner way to run your business. It’s an app for communicating with people and organizing projects and work. If you’re feeling overwhelmed by email, chat and meetings, give Basecamp a try. Sign up for a 30-day free trial at basecamp.com/distance.

GARY: These are all windmills. We make these attachments so it becomes a foil stamper, so Jimmy here is running napkins and the reason why it’s called a windmill is ’cause the arm spins around. So when one arm is grabbing the napkin to stamp it, the other arm’s grabbing the napkin that just got stamped and put it down over here. No one has made a machine to stamp napkins that’s better than these machines that they haven’t made in 40 years.

WAILIN: AR-EN Party Printers operates out of a 20,000-square foot facility in Skokie, Illinois, a northern suburb of Chicago. There’s a manufacturing space, a recently expanded storage area and a bright office where the designers and customer service representatives work. There’s even a yoga room. The company has come a long way since the 1950s, when it was started by a husband and wife out of a basement on Chicago’s northwest side. They named the business RN after the first letters in their names, Roberta and Nathan. In the 1970s, one of their customers was Gary’s mother, Annette, who was the stationery chairwoman at her synagogue and handled orders for bar and bat mitzvahs.

GARY: Someone would come to my—the stationery chairman of the synagogue and said we need napkins, she would place the order with Roberta and Nathan and I think they had two other employees. Nathan dies. Roberta calls my mom and says, “Buy the business. I’ll sell you the business for $15,000.” And my parents did not have $15,000, but they thought they could scrounge up 7,500 bucks and my mom went to her best friend Elaine and said, “Let’s go into business together. Can you cough up 7,500 bucks?” So the two women bought the business for $15,000 and that was probably sometime in 1979.

WAILIN: Annette and Elaine added their first initials to RN and the business became AR-EN Party Printers, spelled A R E N. The way Gary tells the story, the two women weren’t looking to build a huge business. Their children were grown and they just wanted something to do on the side.

GARY: All they wanted to do was work 20 hours a week. They were doing place cards, place cards were big, they had a line of thank you notes that were really lame. It was very bar mitzvah, bat mitzvah-y and probably 90% of what they did were napkins and they did some matches but they didn’t really do coasters or gift tags or stationery. You know, the breadth of of colors and options was, you know, much less.

WAILIN: AR-EN was a wholesale business, meaning its customers were stationery stores and event planners. Annette and Elaine found customers by going to the National Stationery Show, an annual trade show in New York. Gary estimates that the company peaked around $400,000 in sales under his mother and Elaine. But by the early 90s, sales had fallen to $320,000. And running a business together began to drive a wedge between Annette and Elaine.

GARY: We socialized all the time. Sunday barbecues, going on vacations together, the two couples playing bridge and within a year, the two women never socialized again. So it ruined their relationship and they had a contentious relationship. The two husbands stayed best of friends, but the two women did not, and then there was a huge falling out in 1992.

WAILIN: Elaine left AR-EN, along with the company’s attorney and accountant, who were her daughters. The rupture left Annette scrambling to keep the business going. At that time, Gary was working in radio ad sales.

GARY: I said to my mom, “You know, you need a partner, you’re a cigarette smoker, you lie on the couch, you watch the Cubs, you’re not that healthy,” and my mom said, “I’m gonna go to go to New York for the stationery show. If I pick up 40 new customers, I’ll hire you.” She came back, said “I picked up 40 new customers.” She thought I would hate the job and I knew nothing—I knew nothing about this business. I quit my job and I came onboard and um for the first six months, it was “Don’t touch anything. I’ll do everything.” When I came onboard, my mom would do the inventory on little three by five Rolodex cards and she’d write everything down and we had one computer with a 3.5-inch floppy disk that she bought an accounting program because she lost her accountant and um it was pretty rinky dink. (Laughs) It was pretty rinky dink. So after six months, I said to my mom, “All right Mom, company’s going out of business.”

WAILIN: In Gary’s view, one of the company’s biggest mistakes was that it charged clients extra for designs. The other major problem was its outdated physical catalog.

GARY: I said, “We have to redo the catalog. Yours opens the wrong way, you’ve got matches on bar mitzvah pages, nothing makes sense.” I think it’s gonna cost about $50,000 to do it, we have to hire somebody, and I said, “I’ve got $25,000 to my name. I’ll kick in 25, you kick in 25 and we’ll give it a shot.” And we did that at the end of ‘93 and we rolled it out in ’94 and we went to New York and it was a game changer and the company’s never looked back.

WAILIN: Gary also had an eye on expanding AR-EN’s line of products beyond just napkins and place cards. But he knew this would require his stationery store customers to open another book. If you ever shopped for custom invitations in the pre-Internet age, you might remember flipping through huge binders of samples, mulling over thickness, texture, colors and fonts. The napkins and coasters and gift tags would be a whole separate book.

GARY: So most companies would uh sell invitations and then everything that we sell was just a sidebar, you know, one, two percent of sales. Whereas we took the position that we would expand that market and because we were asking somebody to now open up another book, instead of selling out of the back of the invitation book, which would be a lot easier, you want to sell them out of our book, we gave them better pricing, we gave them better discounts. It’s taken me 23 years to become the most expensive person who’s not only the most expensive person, but doesn’t give the best discount.

WAILIN: In the U.S., spending on weddings is the highest it’s ever been. The average cost of a wedding was over $32,000 in 2015, according to a survey by wedding website The Knot. And couples are spending more money on personal touches like signature cocktails and, yes, customized favors and accessories. This is, after all, the era of witty event hashtags and choosing the perfect Instagram filter for the shot of a napkin that says “Eat, drink and be married.” Some of these trends even befuddle Gary.

GARY: There is a thing called stir sticks, do I have one around here?

WAILIN: A stir stick is a little wooden paddle, about six inches long, that can be stamped on each side. Gary shows me one that has a pink heart on one side and a couple’s names on the other. About a decade ago, Martha Stewart Weddings asked AR-EN Party Printers to stamp some stir sticks that would appear in the magazine.

GARY: So my wife comes in and gives it to me and I’m like, “This is the stupidest thing I’ve ever seen.” Now there is a joke around here, that when I think something is stupid, it’s a winner and they run with it, and when I say this looks like a great idea, they go okay, that means it’s a bad idea and we’ll never do it. So I had to go source these out, these are from trees in China, I’ve sold millions of these, and I think this is the dumbest thing. You can stir drinks, you can put it inside of a donut, you know, I don’t sell as many as I sell napkins, but we have sold millions of these over the years and I’m always like, stir sticks at a wedding? I don’t want to be invited to a wedding that has stir sticks.

WAILIN: But Gary’s customers have spoken, and they love stir sticks. And customer satisfaction is everything in Gary’s business. A single typo, a wrong color or a stack of napkins that are creased incorrectly can derail someone’s special occasion.

GARY, 52:26–52:31: I’ve ruined parties. We once did a party for Gianni Versace and they wanted uh black foil on these air-laid guest towels in the bathroom so we foil stamped ’em and you have to vigorously wash your hands and you get, the foil will come off, so people are washing their hands, wiping their face and getting foil all over their face at a Versace party. Needless to say, I had to refund the cost to my New York planner. Now we’ve figured out how to get the foil to stay on and you know, it was very embarrassing. We’re in the business of minimizing mistakes, that’s what we do all day long, try to minimize mistakes. People buy us and when they buy from AR-EN, they’re buying me and they’re buying my customer service department. You know, you don’t want anything to go wrong and there’s no time for anything to go wrong, so people trust us.

WAILIN: For most of AR-EN Party Printers’ existence, the company was a wholesale business. That changed in 2003, when Gary noticed that a West Coast stationery dealer had photographed the entire AR-EN catalog and put it on a website. That dealer was becoming one of his biggest customers.

GARY: I’m like, what’s all this about? These orders are coming off the Internet. The Internet? That’s like chat rooms and porn and who buys on the Internet? Okay, people are starting to buy online and not buying at brick and mortar, so if I don’t get some kind of footprint on the Internet, it’s gonna sound a death knell for my operation. Back then, you know, you go onto some website and you click on napkins and then there was a dropdown of all the napkin colors. You couldn’t see anything, you’d just—I want black, I want blue, I want green. And then there was a dropdown of the imprint colors and a dropdown of the type styles, and then two lines for you to type in what you wanted to say and you submitted it and crossed your fingers and hope that you got what you liked. So I’m like, why can’t we, when you pick a blue napkin, the blue napkin shows up? And when they start typing, that would type right on the blue napkin and then they pick their foil, I’m like, nobody does that. Some of the t-shirt companies are doing that, but no one’s doing it.

WAILIN: Gary wanted the AR-EN Party Printers website to do what we now take for granted: instant previews of a customized product. The project eventually grew into a separate website called foryourparty.com, where customers can order napkins and stir sticks and even invitations directly, without going through a stationery dealer. AR-EN also has two stores on Etsy.

GARY: We were the first people to climb Mount Everest. Everybody else has copied us, I mean, we compete against Harvard and Stanford MBAs, you know, Shutterfly, that’s a huge fricking company. We’ve rewritten the site four times in 12 years because you cannot live on your laurels on the Internet or you will be crushed.

WAILIN: Some things, on the other hand, have stayed constant in Gary’s life during his 23 years in the business.

GARY: We always have napkins, and in fact it’s an embarrassment when we run out of napkins at our house. They’re onesies, so if I have a stack, each one says something different. We actually tried to sell them. We were gonna call them Other People’s Parties Napkins. They never sold on the Internet.

WAILIN: Gary’s now thinking about retirement and whether he wants to sell the business. Exiting the company will mark the end of a journey that started with his mother and her best friend buying out her synagogue’s napkin supplier. He bought the business from his mother in 1995 and she died in 1998. She and her friend never repaired their relationship. But their husbands still get together for lunch. It turns out there are happy endings in the happiness business. And Gary wants a good ending for his tenure at AR-EN Party Printers.

GARY: You know, it’s gonna be my last sale so after that, I’m on the beach, you know, I’m getting up when the sun’s high in the sky, I’m gonna work on my back swing, I’m gonna move to California, I’m gonna get a tan. I’m gonna learn how to play video games, I’m gonna do all the things I don’t have time to do. You know, selling a business is not easy. You can really screw it up. So I’m learning, I’m basically over the next 12 months, I’m bringing on more people, I’m gonna give up virtually all my responsibility and my job is going to be to figure out how to maximize the value of this company and take care of my key employees.

WAILIN: The Distance is produced by Shaun Hildner and me, Wailin Wong. Our illustrations are by Nate Otto. Thanks to Jack Segal for his help with this episode. I wanted to give you an update on a business that we featured on the show back in May, the Willowbrook Ballroom in Willow Springs, Illinois. The building burned down in a fire on Friday. The ballroom was safely evacuated, so there were no injuries, but the historic building is gone. Please keep the owners of the Willowbrook in your thoughts, and if you’d like to go back and listen to our episode on the ballroom, you can find it at thedistance.com or on your podcast app. The Distance is a production of Basecamp, the app for helping small business owners stay in control of projects and reduce email clutter. Try Basecamp free for 30 days at basecamp.com/thedistance.