Quite literally I was broke in 1966--and not because I'd lost any great
fortune. I'd never made one. But with my partner, Stephen
Friedman, I decided to become a millionaire.
I got a little interested and curious and even a little envious in terms
of not having all this money to spend on the many things that
these people enjoyed. On top of that, when I started going with
the girl who [became] my wife, she was making a great deal of
money as a model. I decided that if we were ever to get married,
I'd have to be prepared to support her.
My opportunity came when Steve Friedman said, "Gee I'd like to go
into the [sales] promotion business for myself, but I don't think
I could really do it alone. I need help."
I said, "Well, good. I just finished my graduate studies, and before
I formally start my professional career, let me play at it with
you. We'll take a shot, and maybe we'll make a lot of money."
Steve was always telling me about how millions were made in dynamic
promotions, so I went into the arena with that expectation. It was
going to be fun. I had nothing to lose except a little time and a
few dollars for the initial investment.
We didn't set up any lavish offices or make any major financial
commitments. We were simply going to go out and try it and see
what would happen. We did just that and, lo and behold, we weren't
just "playing at it" anymore. It was hard work. Nobody
was buying anything just because we happened to be there.
But I [became] egotistically involved in the challenge of becoming a
success in the promotion field. I kept saying to myself what I've
said to myself all my life: If somebody else can do it, why
I reminded myself of the many times when I'd had a rough time studying
psychology and human relations in graduate school. I had gone back
to school four years after getting my bachelor's degree in
business administration. I had no background in psychology. I was
competing with kids who were very bright and who had come straight
up without any four-year lapses. It was the same kind of
challenge: I wanted to get A's and B's, and I kept thinking: If
they can do it, why can't I? I'll study hard, I'll read, write,
live in the library, do whatever I have to do to succeed.
Even with such determination, the results didn't always hold up. There
were geniuses with A averages, and at that time I couldn't
maintain one. I found there was more to it than to ask myself,
"lf someone else is a Phi Beta Kappa, why can't I be?"
But it's a sure thing: attitude did a lot. I stayed in graduate
school, maintained a decent average and got a degree--because
"lf the multitude of people can do it, I can too."
I've found it's the same in business. I'm not saying that if Howard
Hughes can be worth a billion dollars, so can I. Or you. To pile
up that many dollars, I think you've got to make a total
commitment that is for the most part unrealistic. But 1 do believe
that substantial success--even outstanding success--is not
unrealistic but is within the normal scope of endeavor for any man
with above-average ability.
So all I was really saying to myself was "If thousands of people in
the United States succeed in business for themselves, why can't
I?" Specifically, if there are promotion companies and if
there are individuals who head them successfully, I can be one of
So Stephen Friedman and I decided to become million-dollar promoters
working with billion-dollar corporations. Our entire assets
consisted of just the two of us. We had no office, no secretary,
nothing. We worked out of our homes.
Not long after we began, I decided to try starting up our business in
California. We had no clients at all, not even any connections
where 1 could go and see a guy and say, "Look, how about
giving me a break? I'm starting out, you know my track record, and
I can do a job for you." We had nothing. But I went to
California and beat on doors there while Stephen stayed in New
Our decision to operate coast to coast before we even had any business
was half foolishness and half [common sense]. I was foolish enough
to believe it would happen fast because we were out there with
something to say and something to sell and we were competent.
Nobody knew how bright we were, nobody knew how talented we were, nobody
knew how creative we were. We just succeeded by one
thing--determination. We knocked on enough doors for a long-enough
period of time so that the law of averages, the law of
probability, worked. Not everybody, everywhere, could say no
continuously. Somebody had to say yes.
The sensible part was that when you have two different exposures you're
better off than [you are with] two guys doing the same thing. If
I'd stayed in New York, invariably, no matter how much we might
have tried to split up there would have been many times when we
[would have gone] . . . together somewhere, because it's more
comfortable to work as a team than alone. But when you're 3,000
miles apart, you don't duplicate effort. And when you need money,
you work hard even alone.
We just kept knocking on doors, and our prospects would say "Plaza
who? Howard who?" Steve stayed mostly in New York because of
the tremendous amount of business there. But I ran around the
whole West. I was traveling from Arizona to Texas to Oklahoma to
Kansas to Colorado to Utah. I just kept going through this whole
western circuit. Many times I'd fly to see somebody and go through
all kinds of discomfort, and the guy wouldn't even be there. The
secretary would give me her regrets about last-minute meetings
that [had come] up, and it was heartbreaking.
But I kept telling myself, "Well, who gives a damn? I'm still a
social worker, a psychotherapist. I can always go back to what I
originally was doing. I'm not going to die. I have no children. My
wife can still make a living."
However, that part about my wife making a living was a bit of a fallacy.
She found that modeling in California was quite limited compared
with New York. At the same time, the purchase of a home, a car and
all the things we wanted to have to live comfortably--all these
were now piling up into a tremendous drain on us financially. I
had to support the business endeavors too. Just the traveling
around and a few little presentations rendered by commercial
artists added up to quite some expense. We were forced to go back
to New York, where we slept on friends' couches and cots . . .
saving every penny so we could maintain our California hole.
This in-between period of about a year--when we had our million-dollar
ambition but very little success--was our time of agony. But I
clung to my belief in the law of probability.
Stephen Friedman and I had decided to sell million-dollar ideas that
would make money for the companies that would buy them. We kept
going on the principle that if we called on enough of the right
kinds of companies, one of them sooner or later would buy.
Now, what kind of company is going to pay a million dollars for an idea?
First, it has to be a company that is used to spending
million-dollar budgets for advertising and promotion. And second,
obviously it has to be a company that has sound reason to buy the
particular kind of idea we were offering.
For good business reasons companies prefer to get their ideas from within
or from their advertising agencies. Unless it's a specialized idea
requiring expertise in a field they don't know much about. That's
the kind of promotional area Stephen and I selected.
We started out in the game game. We thought up ideas for games of the
kind that supermarkets and gas stations use to attract customers
and keep them coming back. The customers come back, for example,
in hopes of getting lucky coupons that pay off in cash, or pieces
that complete a map for a grand prize.
This approach put the laws of chance to work for us in two ways at the
same time. Most people have a yearning to get something for
nothing. And they're fascinated by the element of luck--by games
of chance. So our product made sense.
The law of probability finally came through for us. We sold our first
game for $16,000. It was a game called Football Cash. We had sent
out brochures on a football game to all the supermarkets on the
East Coast. Down in Atlanta, Associated Grocers liked the idea of
Football Cash, and they bought the game from us.
That was a welcome success for us, of course, but it was only enough to
keep us from being so much in debt. My wife and I were still just
hanging on, going through our 'period of agony in New York away
from our California home. Then suddenly Steve closed our first
million-dollar contract--with the Mobil Oil Company.
We'd been trying to sell Mobil a game called Discover America. The
signals were "go" all the way up to the top management.
They liked the way our game was laid out, but they said,
"Well, we'd like to tie in with our safety advertising
campaign, We Want you to Live." So we had to come up with a
safety game, because we surely wanted to live also.
That evening in a Chinese restaurant, Steve, my wife and I were trying to
think of a name. I recalled that my mother always used to say,
"Safety pays." Every time I went out, my mother would
say the same thing. "Don't forget, drive carefully, safety
pays." So I asked Steve: "How about it? Safety Pays in
terms of money and Safety Pays in terms of the life you save may
be your own...."
Well, Mom's loving care made a great deal of money fast for Plaza
Group--and I don't know how much for the oil company, but it must
have been a lot. They liked our ideas.
Suddenly Plaza Group was a success. We went ahead and created another
game for the same client--Winning Line. Winning Line was a
completely different type of format in name and type of game. It
was born when the marketing department of the oil company called
us in and asked us, "Can you design a game that will help
sell our products for the dealer? Let's make the dealer a major
part of this game and try to make him some extra bucks beyond an
increase in gallonage."
So we came up with a game built around the whole line of
pro-ducts--tires, batteries, and car accessories, besides gasoline
and oil. We designed an accordion-pleated card on which the
customer had an opportunity to fill in five gas pumps with all the
different octanes, or four different batteries, or three different
tires. If he completed any line across, he won the amount of cash
that was imprinted next to the line. Winning Line was a winner for
all of us.
It's a psychological fact. Once you've achieved a success--once you've
proved you can be a winner--doors open that you couldn't get
through before. Other petroleum companies were now interested in
We sold Skelly Oil a game called Keyotane Cash, tying in with their big
advertising theme on Keyotane, a high-performance gasoline.
We developed a probability game in which every card was a potential
winner. We called it Something Extra and sold it to Getty Oil,
because that was their theme: Getty Oil gives you that something
We sold another probability game to Citgo which fit into their
advertising theme: Be a Winner.
At this point the law of probability was paying off for Plaza Group. We
weren't a small company any more. We were hiring professional
people for our staff. We spared nothing to get the cream of the
crop in creativity and in technical know-how. We had a production
manager and a creative director, an art director with artists
working for her, and we had sales people and account executives,
plus a full accounting department. We went on and on and got the
best possible people.
clients kept calling us in, and we branched into different kinds
of promotion. One new client was Olin Mathieson, the giant
chemical corporation. Olin said to me, "Look, we'd like to
sell chemicals to private swimming pool owners. We've got
competitors who make chemicals to clean pools, too. How can you
help us sell more?"
We started by analyzing the problem psychologically. Who gets involved
with cleaning his pool? Not the affluent homeowner. If I can
afford an expensive pool, I can afford to have a guy come around
and clean my pool for me professionally. So who are the private
pool owners who personally buy their chemicals? They are fellows
like the factory worker, the truck driver, the bartender, the cab
driver--the guys who make less money but want to give their kids
some pleasure too in the summertime.
The kind of pool they have is the plastic type. The father himself puts
the plastic pool in his backyard. He doesn't call in a $30-a-month
professional pool cleaner. He puts the chemical into the pool
What type of guy is he psychologically? He's a guy who's simple. Simple
in terms of the life he was born into or has brought himself into.
He works for $200 or $300 a week, and he lives in a community
setting where a lot of people are packed closely. It is
entertainment centers within the family structure. Every once in a
while he's motivated to show off a little bit for the sake of his
ego. (Why not? All of us do in one way or another.)
He can't satisfy his ego with the biggest Rolls Royce in the
neighborhood. So he looks for a gimmick. "Look what I picked
up--a swimming pool!" With it, we know, he'd like to have
something for nothing that's gimmicky. So we designed a poolside
flag kit. It’s an aluminum pole with little pennants in
bright colors, Dayglo colors, and they say
COCKTAIL TIME, LUNCH SWIMMING, CARD TIME. Dad
shoves the pole into the ground beside the plastic pool and
says, “Hey, see how classy we are, Tony! We got the thing that
says No Swimming when there’s no swimming, or it says Lunch when
we’re gonna eat.”
He gets that free, or maybe for a buck--and we sell a lot of chlorine for
My associates and I in this expanding Plaza Group felt no compulsion to
confine ourselves to any particular kind of business. When we saw
something hot, and we believed we could make a contribution, we
moved fast into that market.
In 1968 we discovered a manufacturer of women's wigs who was an old
friend. He was selling them at the rate of about $30,000 a month.
Not bad, but we could see that the wig business was booming, and
we felt that with our promotion techniques applied to his
excellent styling and craftsmanship, we ought to be able to be
very big in the wig business.
That's how the Jerome Alexander line of fashion products began. We talked
with our old friend (but not so old wigmaker) and interested him
in joining Plaza Group. Then we applied promotion psychology in
upgrading and merchandising the man himself as well as his
creations. In a relatively short time, we built a $300,000-a-year
business to a $10.5 million business.
Meanwhile we were getting into a direct-mail business: selling goods to
holders of credit cards.
Plaza Group, the company Stephen Friedman and I started only a few years
ago, is now selling merchandise to credit card holders at the rate
of some $20 million a year. It's one of the biggest parts of our
business. And it illustrates a truth: One win wins you others.
You remember that Steve and I started in the promotion business by
designing and selling games to get customers to keep coming back
to the gas stations that featured the games. This put us
"in" with big petroleum corporations, because they
credit our promotion for bringing them millions of dollars in
additional sales of gasoline and other products.
In turn, this close relationship with such companies opened our eyes to
the enormous volume of business that can be transacted via the
credit card route. So, again, we found ourselves deciding to
prosper from a promotion-oriented type of business that we
[hadn't] invented. It was another case of acting on an attitude of
positive belief: If somebody else can do it and be successful, why
Let me try to spell out just how I applied this simple approach to get
started in multimillion-dollar merchandising via credit cards. I
reasoned this way: it's not magical. You don't have to be a
genius. You don't have to discover relativity or invent atomic
power. It's just simple merchandising. It's just following the
principle of satisfying people's wants.
Selling merchandise by direct mail through the credit card route is one
of the best examples of successful promotional psychology I can
show you. Let's take a term out of the psychology textbook and
apply it to marketing: frustration level reduction. People
want pleasure, ease, comfort. They don't want problems,
irritations, frustrations. They don't want to be made
Suppose you tell somebody, "Look, you can have this fabulous
clock-radio for only a fraction of its retail value--but what
you've got to do is send in your money first, and when your check
clears, I'll send you back a notice to come and pick up your
clock-radio at a specific place at a specific time." That's
full of frustrations. You're making it difficult for the customer
as well as vaguely distasteful to him. First of all you're
making him feel uncomfortable about the fact that you don't trust
him. Second, he--or especially she--may feel incompetent and a bit
insecure because she doesn't understand your instructions. Even if
he or she overcomes those two unpleasantness, your potential
customer still has a normal inertia. He has a physical problem
just to get to your store.
But by selling him with direct mail and letting him pay through the
credit card system, we eliminate all those frustrations. We tell
him, "Just say yes if you want this item, and we'll send it
directly to your home postage-paid." There's usually an
opportunity to try it for 30 days, and then he only pays on a
monthly basis without interest as part of his credit card bill, on
which he's charging gasoline anyway.
Specifically, how did Plaza Group get into the credit card merchandise
business? First, we saw the need for a first-class, up-to-date,
computerized operation that could service oil companies and banks.
Second; we sought out and hired the best people in the country to
run this new division for us.
We set it up to work this way: An oil company or a bank that has credit
cards in the hands of customers gives Plaza Direct Marketing its
list of names. PDM tests merchandise such as electric can openers,
pots and pans, blenders, watches, binoculars--items that appeal to
the oil company or bank marketing people as things that will be
attractive to a majority of the population.
Then we mail out an illustrated brochure to a test populace of credit
card holders, offering the item not only at a price that is less
than the normal retail price but also on a payment basis that lets
the proposed purchaser pay in monthly installments with absolutely
no interest charge.
If the offer is successful--if a high enough percentage of the people
order the item--we then mail the brochure to the entire rest of
the list, which usually runs to millions of people. As soon as an
order comes from a customer, our computer immediately mails out
the label to our shipping facility and simultaneously bills either
the oil company or bank.
An oil company goes into this business with us mainly because a satisfied
mail-order customer will use his oil company credit card more
often, and he'll drive into that company's gas stations more
often. Why? Because if you have a bill coming in every month for,
say, a cassette tape recorder, you decide you might as well use
the same credit card to purchase your gasoline. Most of us don't
like to have a lot of bills coming in at the end of every month.
One more bill would mean one more accounting chore. Besides, it
costs most people 10 cents apiece to write a check.
That's the principle behind credit card merchandising -- simplifying
things, making them easier. Obviously what's easier is more
appealing to people. And what's more appealing--pleasanter--sells
better. That's the simple psychological reason behind the big
success of credit card merchandising.
At the moment of this writing, Plaza is already one of the biggest in
this field, though our credit card merchandising division has yet
to celebrate its fourth anniversary.
Within only a couple of years after Stephen Friedman and I founded Plaza
Group in 1966, we realized our company had the potential of a
profitable giant enterprise, and we wanted to develop in the
fastest way from where we were to where we wanted to be two or
three years down the road. We decided to issue stock and become a
Plaza Group is always in a hurry, but we don't like to do anything
halfway or second-rate. So instead of settling for becoming an
over-the-counter stock, we were determined to get into the major
We decided to get ourselves listed on the American Stock Exchange.
It was a mad idea, of course. Our financial advisers told us we weren't
ready. We hadn't been a corporate entity long enough. We didn't
have a sufficiently impressive financial statement. Moreover, they
said, we'd have to be more than just a "promotion
company." There's no such thing as a promotion agency listed
on the Big Board or AMEX. We'd have to broaden our base by
achieving a record of wins in other business areas complementing
our initial specialty.
So we expanded our bailiwick of sales promotion into the broad arena of
marketing, and we established "Concept Marketing" as a
label for our range of services. It means we provide services in
every phase of the marketing endeavor, from product concept to
point-of-purchase promotion, and that all elements of the distribution,
advertising, promotion, and selling chain are coordinated and
unified in theme.
We already had a strong track record in our promotions for supermarkets
and petroleum companies. When we entered the wig business and the
business of selling products via credit card lists, we knew they
were hot opportunities, we did the right things, and we were
instant winners. We started out on a profitable basis right away,
and we were able to make a sound projection of even greater
success in these fields than in those we started with.
One big feature about Plaza Group that made us respectable to the
finance-oriented mentors: we [had] no failures. When we fired our
starting gun in the promotional games field, games were hot as a
pistol. People loved them. Naturally some were more highly
successful than others, but there were no bombs.
When we started supplying merchandise as premiums for supermarkets and
gas stations, we supplied towels, flatware, books, china--things
that people have shown they're delighted to get, throughout the
past twenty years. We simply did a good job of supplying good
items at a good price. How could we bomb? So, okay, we had
graduated from a shoestring to a string of successes.
The wig business took off fast. It was one of the most exciting, booming
industries there were, and we felt lucky that we simply were
booming with it. But deep inside we knew there was justice at
work. We were booming because we saw the obvious, logical things
to do--and we did them. The wig industry later ran into trouble,
and we are now out of it.
As for the credit card merchandising business, the same principles
prevail. When you send out good merchandise by mail and the
customer can pay it off monthly on a credit card with no interest
charges, you're making a practically irresistible offer.
Consequently our results are either astronomical successes or not
quite so fabulous successes--but no bombs.
We impressed these facts on the AMEX people. They began to see that a
million-dollar promoter is not a guy who comes up with elephants
and paints them with polka dots. He's not a guy who'd get a circus
to run loose in the street and then sell a popcorn called
Poppycock. We helped AMEX to realize that a million-dollar
promoter is a sensible businessman who goes to major corporations
--the top 500 companies who are used to spending a million dollars
on a promotion--and he does a sound selling job on ideas that fit
their corporate image and build traffic in sales on a large scale.
Meanwhile our financial man had contacted some Wall Street people and
found us a corporate shell on the American Stock Exchange (a usual
procedure on AMEX). The name of this shell company Was Electronic
Missile Facilities. They were in the construction field,
building facilities for the government on an awarded contract
basis. At the time we started negotiating with them, they didn't
have any contracts and were virtually out of business. They were
on the verge of being delisted.
After careful examination of our company, the president of EMF was
convinced that Plaza's aggressive young management could bring
benefits to his stockholders in a merger.
The next step was to convince the AMEX Board of Governors of the same
thing. We presented our background. We pointed to our small but
prestigious list of clients. We told of our plans for the future,
our dreams and aspirations. We emphasized our rapid growth as a
policy and as a fact. We said we'd make AMEX proud of us.
The AMEX people checked us out thoroughly both as a company and as
individuals, and our charter was assured. They let us merge into
EMF, change the name to Plaza Group and take over the company,
retiring EMF and its officers completely.
We had won our listing. Our ticker symbol was PZG. And being
promotion-minded, we had this stock market code embossed on our
The AMEX Board of Governors enjoyed the satisfaction of seeing EMF stock
zoom from a low of 2 to a high of 29 under the Plaza Group regime.
Even in the extremely bad market between April 1969 and March
1970, we held up very nicely around the 16-19 level.
Plaza Group, born in 1966, had reached the big leagues by 1969. That's