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HATTIE: (In the Studio) Hi, I'm Hattie Bryant. In 1989 Robert Redford wanted to generate dollars to fund projects for artists and for causes dear to him. He had an idea that he could sell the same items found in his Sundance retail shop via a catalog. And he was smart enough to know what he didn't know. Redfored recruited a man with just the right experience who was able to not only able to launch the business, he was able to build a strong foundation the company still enjoys today.

(Voiceover) Sundance is a place -- 6,000 acres of land and a lodge. Sundance is a film festival and Sundance is a catalog. Robert Redford bought this area in the Provo Canyon to protect it and then to provide a place for artists to develop their craft. The money to take the leap to came from his role in the file, "Butch Cassidy and The Sundance Kid." Then he writes, "I couldn't get a loan from the bank." He found investors and now what started in 1969 is a premiere place to visit. A venue for film makers and a catalog company.

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CHRISTINA (Operator): Sundance Catalog. This is Christina. How can I help you?

BRENT BECK: This is a product out of Jonah Bridge collection by John Reed, a famous Adirondack designer, and this is all hand-bent hickory, handmade.

HATTIE: (Voiceover) Brent Beck has been with the Sundance operation since 1970.

BRENT: It's preserving the history of the last century and really fits into what we're about. You know, going onto the product, it's outdoors, obviously. There's a brand-new kind of napkin holder that's got a wind tray on it. This is a weighted little tree that sits on top of the napkins, so if you're out picnicking or on your patio they don't blow away. A tray out of the same metal stuff.

HATTIE: (Voiceover) Robert Redford brought Harry Rosenthal, CEO of the catalog, into the organization because of his success in his own catalog business.

HARRY ROSENTHAL: If we're tight on space on this one, I would recommend killing the tray, even though I know it matches the napkin holder, just 'cause it's a really weak category. I mean, we've carried a lot of trays, and I think most of them are still out back somewhere. I don't know, but you've got to leave room for the story on this guy.

I grew up in the suburbs of New York, actually, a classic New York post-war suburb which is New Rochelle. If you've ever seen the old "Dick Van Dyke Show," it takes place in New Rochelle, New York, a very much classic suburbia. I went to college. I majored in Greek and Latin literature, perfect background for mail order. It's so perfect that I went to law school. There's not a lot else you can do with a Greek and Latin major. And I was a lawyer for several years in Los Angeles--securities law, tax law, real estate law--and always wanted to start a company and have a business, and I had some friends who felt the same way. So back about 10, 11, 12 years ago, we all quit our jobs, knocked on doors, raised money, and we started a mail-order catalog called Right Start catalog.

We really did think that we had the range of skills necessary that we could start up and succeed at a business that we knew nothing about. No, in fact, we did start up and succeed at a business we knew nothing about. However, I don't think that the range of skills was nearly as applicable as we thought it would be. I think it was more of the things that make any entrepreneur succeed, which is to say the ability to work very hard and to also react very quickly and be able to fly by the seat of your pants.

The first thing you learn, I think, when you start a new business in an area where you're inexperienced is that you really don't know anything. And the sooner you learn that, the faster you begin succeeding. It's when you think you know things that you don't know that you run into trouble.

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HATTIE: How did you get to Sundance?

HARRY: Sundance found me. Actually, I'd never hear of Sundance. And I was, as I said, thinking of getting back into practicing law. And because Robert Redford's lawyer in Los Angeles had, at one point, been in the same law firm as I had, even though we'd been in at different times, we had a lot of friends in common and we knew about each other.

He knew that Sundance was thinking of starting a mail order catalog. And, lo and behold, he found out that someone that he knew a great deal about had just done a successful catalog start-up, and so they contacted me, forwarded my name to some of Redford's people out here in Utah, and then they contacted me to ask about what it would take to start a mail-order catalog for Sundance. And they already had an idea in their mind of what the mail-order catalog might be like, what the business was like. And this idea was not firmly grounded in the reality of the catalog as a business.

I figured I was never going to hear from them again because, essentially, I had said to them, `This isn't going to work,' and sent them back to Utah. They came back again and wanted to have another meeting, and we discussed it again, and finally asked me if I would work as a consultant and write a business plan. And I wasn't doing anything at the time, and I said, `Well, yes, I can do this for you, but I don't want to take your money unless you understand what you're getting into and are prepared to go forward with it.'

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One of the things that you have to have and really is very valuable in starting up any business is someone who is going to get up in the morning and go to bed at night living and breathing that business. That's the main thing that they care about. It helps if that person has experience, but it's more important, in a lot of cases, that they have the drive and the dedication.

And Sundance didn't have anybody like that, and I said, you know, `I know a lot of people in the industry. I can't do it for you because I can't move to Utah. However, I can help you find somebody. But if you're not prepared to do that, you ought to really seriously consider whether you should start out on this path because that's one of the things that's required.' And they said, `Well, let's write the business plan. Let's see.' So we did that. We wrote the business plan and we formed the company, got it capitalized, and then Sundance made a really good offer to me. So at this point, I had to make some decisions about whether, as a business opportunity and as a career opportunity for myself and my family, I wanted to pick up stakes from Manhattan Beach, California, where I was living a half a block from the ocean, where you can see and hear the waves pounding outside the window, and move to Utah, a place I had literally never been.

I had visions of vast deserts covered with salt and sea gulls.

That was really all I knew. I didn't even know there were mountains out here. And I'd never been to the place. But I thought, `Well, it's certainly worth looking at.' I came out here, got familiar with it, thought about the business, and there was a very big difference between Sundance and where I had come from with Right Start. With Right Start, it was three guys named Lenny, Stan and Harry. I mean, if you opened the front cover of our catalog, you'd see there's Lenny, Stan and Harry holding stuffed animals. And, you know, we wanted our faces and names to be there, but we weren't particularly well known.

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I knew that when you opened the front cover of Sundance, you were going to see Robert Redford.

This was his big advantage. And so you knew that you were going to have a lot of name recognition, not just because Robert Redford is a famous person but because Robert Redford stands for a lot of things -- support of the environment, support of the arts -- that are meaningful to people in America. So there was more to this than just the image of, `Here's a famous movie actor who's going to sell you things.' This is the image of a man who really stands for certain things in the minds of people that are going to really allow them to want to became a part of what you're trying to do--not just buy from you but become a part of what you're trying to do, and things that you're trying to change in America.

HATTIE: People need to understand that success doesn't come overnight.

HARRY: Most catalog companies that I'm familiar with take four to five years to begin turning a profit. We did it much faster than that. We were very fortunate, and we had really good people working here, tremendous merchants, principally Brent Beck. He's our vice president of merchandising. Brent really was a remarkable piece of luck for us as a company because he was already there. He had no experience in mail-order cataloging at all. He had been running, very successfully, the store up at Sundance and he knew a lot about retail, had a lot of experience there. But he has turned out to be one of the top catalog merchants in the industry.

BRENT: And then a pitcher and then two of our candles that we do so well with the same company that we're running right now.

Mr. SCOTT BECK: When the store--the merchandise that it would get was so reflective of the area.

HATTIE: (Voiceover) Brent's son, Scott Beck, grew up at Sundance and is now sales manager for the lodge.

SCOTT: ...and so we had a very good following of people coming with up and skiing with us, staying here during the holidays, and they would leave and someone would comment on the shirt they had or the bag they had or the belt they were wearing or the shoes that they had on, and they said, `Well, I got them at Sundance.' `Well, how can I get one?' `Well, here's Shana Pierson's name. Call her...'

HATTIE: `You gotta fly to Salt Lake. You gotta drive an hour. You gotta, gotta, gotta.'

SCOTT: `...or call them...'

HATTIE: Yeah.

SCOTT: `...explain it to them, and they'll ship it to you.' And so we were, in a sense, in the mail-order business before the catalog business was really popular.

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BRENT: And then years later, Bob came to us and he said, `I want to create a vehicle by which to fund the artistic and environmental disciplines that I believe in, but I don't want to do it out of my pocket. How can I create something that I can make enough money on to do that?'

HATTIE: So what do you think makes things so unique about...

SCOTT: Well, let me show you.

HATTIE: OK.

SCOTT: Come over here. I'll show you some stuff that...

HATTIE: OK.

SCOTT: A lot of times, it's the little things that make a big difference. There's an artisan that takes glass and scents it.

HATTIE: Oh, my gosh. These are pieces of glass?

SCOTT: Yeah, it's just glass and it's...

HATTIE: But how does the scent get in there?

SCOTT: Well, glass is porous, and when the glass is fired in a molten state, they can add different things to it and scents.

HATTIE: This is wonderful.

SCOTT: And so that's the kind of stuff that people would imagine is Sundance, little things like local artisans that, you know, take an old scrap piece of iron...

HATTIE: And create...

SCOTT: ...and make something...

HATTIE: A sculpture.

SCOTT: ...that is very unique.

HATTIE: And then clothing, I mean, the clothing that you would think...

HATTIE: Yeah, like...

SCOTT: ...you would cuddle up in.

HATTIE: I bought this in New York City. Let's see how this does. This is better. This is better for Sundance. It's a little large, but it does feel cozy.

SCOTT: It feels Sundancy, and everything's about texture. So the wood, the fixtures...

HATTIE: Everything's about texture.

SCOTT: That's, I think, what makes it so...

HATTIE: Ooh, tactile.

SCOTT: Yeah. Yeah.

HATTIE: OK.

SCOTT: Well, I hoped you guys sense that there's something special about this mountain and this area, and that you can't have that and not share it. I think it's the same thing with what other people do when they climb a mountain or do something. It's important to share that experience.

HATTIE: What is Sundance? What does it mean to people?

HARRY: Well, Sundance stands for a blend of environmental responsibility, creativity and support of the arts and responsible business. And the Sundance concept is for all of these entities to support themselves, to support the arts, to support the environment. It's a big part of our core mission.

BRENT: Bob is so supportive of arts, the environment and craftsmanship. That's what he lives for. That's the things that he's passionate about, and so that's the vision of this catalog, is the brand name Sundance supports art, environment or craftsmanship.

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HATTIE: Could any small-business owner find a famous spokesperson and use that name, that branding to build their business?

HARRY: The use of a spokesperson is a really complex topic. If it's perceived as nothing more than an advertising gimmick, it can actually bounce back and harm you after the early going. If there's considered to be some depth and some reality to the image, as there is with Robert Redford, and you live up to that, then it can be very, very helpful. But in all cases, I think the advice I would give to people is that a spokesperson or a famous name or a famous brand gets people to try your product or service once.

It's really all it gets you.

If you deliver a good quality product or service at a good price and people are satisfied with the experience they have, then they will come back. And I don't know about all other businesses, but I can tell you that in the catalog business, all of the profitability really is based upon repeat purchases by customers. If they don't have a good experience, you won't have a successful business.

Buyer #1: You know, really we have quite a dedication to customer service, and we're small enough that there's not a huge issue that would come up that we couldn't get resolved.

HATTIE: Oh, you don't have layers of bureaucracy.

Woman #1: Correct. Yeah.

HARRY: So while we may have launched the business on Robert Redford's well-known public persona, we really built the business on the quality of the product that we deliver to people.

THE LIGHTBULB

HATTIE: You can build a business faster with a brand than without one. And the success of the catalog started with the hit picture "Butch Cassidy and the Sundance Kid." That film gave Robert Redford the money to purchase the land and lodge in Provo Canyon.

Most of us who start a business from scratch don't have brand recognition. Harry certainly did not have brand awareness when he started his children's products catalog.

When he started the Sundance catalog, the lodge existed and soon the film festival also bore the name Sundance. The result has been that the festival helps the catalog and the catalog helps the lodge and the lodge helps the festival.

With 12 million catalogs being mailed per year, the catalog is building brand awareness for all of Mr. Redford's enterprises. Big businesses spend millions in advertising to build their brands because they know you can build a business faster with a brand than without one.

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HATTIE: (Voiceover) The brand, plus Harry's experience, have pushed the enterprise to $42 million in sales. Sundance mails one million catalogs a month, takes orders in its modern call center and is now installing state-of-the-art technology to prepare for even more growth.

Sales Professional #2: Yeah, the marble heart necklace.

Sales Professional #3: There's another one that you could get Thursday by the end of the day and that's for $2 more.

RICK: We have just outgrown the current system that we're on. When I first came here, we were on Response. That's a DOS-based application that had done well to a point, but it just couldn't handle the number of orders that we were putting through it efficiently. And so in order to become more efficient and to meet the demand that we were expecting, we needed to go to a system that was more robust and more stable than the current system was. We've moved to a package called Mozart from CommercialWare, and the platform is an AS/400, which is considerably more stable. The architecture is different and the stability of the databases are much, much better.

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Sales Professional #2: So if I've shipped out one, it's going to tell me I've shipped out one and the ship-to date.

HATTIE: How do you decide what you want to bring to the meeting?

BRENT: I'm driven by picking a sample by how I can see it either at Sundance or in a home or how I would use it. You'll see most of the things that are here are a lifestyle we live. I mean, different than most of the catalog companies out there, you're been to the place Sundance. It's real. I mean, we get up in the morning and we put on jeans and we go and we use these implements you see in the catalog, and the person Redford is real.

There is a real person, there is a real place. It isn't a fantasy land.

This is the West and the things you see here can be used in this environment. They are part of our heritage, they're part of the things that drive us to work, and things that turn us on, and things that we love. And that is one of the most exciting things about our business, is this is real life. This is not fantasy land.

HARRY: We're a general merchandise catalog, which these days is called lifestyle catalog, and lifestyle really is a better description because of the way we present it. But the downside of being a lifestyle catalog, where you have furniture and jewelry next to each other, for example, is it's very hard to target. You can't target jewelry buyers, you can't target furniture buyers, and there are people who are very interested in buying the rugs, the lamps but who wouldn't really buy jewelry from you and vice versa.

They all have to get the catalog. So you're mailing to a lot of people who won't be interested in a great deal of your product, and you know that up front. So as you grow big and as your universe of names gets bigger and bigger with the lifestyle catalog, it gets a little thin out on the fringes. It becomes harder and harder to get good response. And while we are nowhere near that growth ending, we are at the point where we can now efficiently split off parts of the database targeting customers who are interested in jewelry--that was our first one--interested in apparel.

Go out and get additional rented names, other list sources of people who are going to be interested in those same merchant categories and now mail targeted offerings that will allow us to continue to grow and increase our growth faster than we could just mailing the lifestyle book. And that's what the segmentation strategy is really designed to achieve for us.

HATTIE: Why do you think, Harry, so many customers like doing business with Sundance?

HARRY: I think customers like Sundance because we carry things for them that are unique, they can't find them elsewhere. We always try to deliver something of such a high quality that when it shows up at their door, it's always at least a little better than they even thought it was going to be. We try to give them extremely good service and we also try to involve them in the other things that we are doing, the others goals that we have: the protection of the environment, the promotion of the arts; so that they understand that they're doing more than just buying something that they like. They feel like they're part of all the things that we and Robert Redford are trying to achieve.

People know we reinforce throughout the catalog in various places in the copy where we perhaps run a little article about the most recent Sundance Film Festival or we run a little piece about an artist who created something or about a company that's found a way to help the environment by recycling old wood that would otherwise be wasted, and we reinforce the message over and over and over again that we care about these things, that they're an important part of our mission.

Maybe we should just come out with a mission statement kind of carved in stone and print that on every catalog. But what we have tried to do instead is to build those values into the brand and make that so strong that just the bold statement of it isn't necessary because we always reinforce what it is that we do that reflects that mission.

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HARRY: The first thing to think about when you're starting up a business is, who else is doing it and what can I learn from them? If you're thinking of starting up anything from a corner drugstore to a software company, somebody else has tried it at least in some way.

Maybe not exactly the idea that you have, but in some way. So the first piece of advice I would give somebody is, OK, think about all the things that are similar. Think about all the people out there that are doing the things that are similar to what you're doing and find out all you can about them. Find out how they make their money, what works and what doesn't work. If you're thinking of starting a weekly newspaper, there are other weekly newspapers out. How do they do? Where do they make their money? Step number one, learn about the business--learn about the target market, learn about the competition, learn about the business. Step number two, get a really rigorous business plan together.

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HARRY: Most businesses start out undercapitalized. I've done it – really – coming from a position where I should have known better. I was a corporate finance lawyer. My other partner, Lenny, was a CFO of a $200 million company (yet) we were grossly undercapitalized. And it's because optimism rules amongst entrepreneurs.... you know, the general rule – we used to call it Art's Rule after Art Minella who was one of the lead partners of the law firm ... it's going to take longer and it's going to cost more.

So be really rigorous in your business plan. Figure out how much capital you're really going to need, then add to it because it's going to take more just because it's going to take longer. And usually the early years of a company involve losses.

The third thing I would say is that you have to understand that while this may be the most wonderful experience of your life, you might be in for five years of the most abject misery before you get there. It's really tough to start a business. And I think anyone who's started a business would say the same thing. It was a heck of a lot easier starting Sundance with the capital we had behind us and with Robert Redford supporting us than it was when three guys named Lenny, Stan and Harry started Right Start.

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HARRY: We had nothing going for us. But it's still hard. And if you're starting cold and you don't have an endorsement of a famous individual, you don't have all the advantages, you have limited capital, and maybe, if it runs out, nowhere to go for additional capital, it really pays to understand that you could be in for a few really rough years before you finally turn the corner and that that's OK because that's what most companies go through, and not to get discouraged. And if you...

HATTIE: So it's OK to feel like you're a failure?

HARRY: Yes. If you don't, you're probably blind to what's going on. You know, there are going to be things you're going to do wrong. When you're new at something, you make mistakes. And the first two to five years of a new company can be really, really tough.

And the thing you should recognize as an entrepreneur is that that is OK, that it's OK to be really struggling, to be spending all your time managing cash flows, to be thinking about, you know, `How did I ever get into this? When am I going to come out? When is it finally going to turn the corner?' because most new businesses go through that.

Some of the most successful businesses in the world went through a rocky start-up period and that it's OK to go through that period, and don't be discouraged, don't feel like a failure.

It's better to be really in tune with what's going on and understand you have problems to overcome than be living in a fool's paradise and wake up one day with a train wreck.

In The Studio

HATTIE: Since we taped this story, Harry Rosenthal left for another start up and Brent Breck retired. The good news is that these men built this company to last. Even without them, Sundance Catalog has nearly doubled in revenues and is now mailing 24 milion catalogues a year. This drives shoppers to the web and Rick Turrick, the IT driector you just met, says the Internet ordering is growing up to 300% per year. Today Sundance might be considered the godfather of its catagory. Many competitors have emerged but those competitors have actually grown Sundances' business by increasing the awareness of their niche.

Redford's advice is: know what you don't know. Hire the right people then step back and let them do their magic. I'll see you next time.