Doing big business with big heart

When Al Kahn and his wife Patsy were touring museums in Greece this past summer in between Olympic events, he was amazed to find a wide array of tiny soldiers and chariots. He couldn't get over the fact that there had been action figures 5,000 years ago!
February 1, 2005

When Al Kahn and his wife Patsy were touring museums in Greece this past summer in between Olympic events, he was amazed to find a wide array of tiny soldiers and chariots. He couldn’t get over the fact that there had been action figures 5,000 years ago!

Those who’ve worked with Kahn are probably surprised he didn’t try to secure the licensing rights and create a marketing strategy for the ancient toys right then and there. But then who knows? He always seems to have a surprise move of some sort up his sleeve.

It’s a fun moment, but it’s also a serious example of what Kahn learned on his first day working in the toy department at Allied Stores 30 years ago: ‘The toy world is a microcosm of the adult world,’ he says. In other words, kids want miniature versions of everything.

That insight is just one of the secrets of Kahn’s success, which is so roundly acknowledged that the chairman and CEO of 4Kids Entertainment is the third inductee into KidScreen’s Hall of Fame.

You’d be hard-pressed to find anyone in this business who doesn’t know Kahn as the man who brought us Pokémon, Teenage Mutant Ninja Turtles, Yu-Gi-Oh! and Cabbage Patch Kids, the project that made him a marketing star and media darling in the mid-1980s. But what about the man – the one who was a bouncer, the one who loves to sing, or the one who started up a foundation for the children of law enforcement officers and firefighters who’ve died in the line of duty? The one who friends and business colleagues alike describe as one of most generous, loyal and caring people they know?

Kahn was born in Brooklyn in 1947, but he grew up in Massapequa, Long Island. His father was a buyer for a men’s clothing store, but he died when Al was a young boy. This was one experience that made Kahn more ambitious in terms of his career and in his desire to provide for his family. As a teenager, he wanted to go to college and play football (at 6’1′ and 300 pounds, our Hall of Famer could bench-press 450 pounds back then), but there just wasn’t enough money in the family coffers. Instead, he earned a bachelor’s degree in business administration from C.W. Post College in Long Island, and did a stint with the military reserves in 1969, stationed State-side.

He also worked as a bouncer at a club in Long Island, a natural part-time gig for someone of his stature. But one night, his size worked against him. ‘There was a guy who kept peeking into the women’s restroom,’ says Kahn. After repeated warnings, Kahn threw the peeping tom out of the bar. That’s when the perp pulled out a pistol. ‘I remember I stood sideways, thinking I might make a smaller target that way,’ he recalls, laughing.

When it was time to enter the real world, Kahn didn’t have a clear idea of what he wanted to do, but he had worked part-time at a local drug store and remembered liking this early experience in retailing. Building on that starting point, Kahn began to learn the ropes of the trade in a buyers training program run by Allied Stores in New York. He was transferred from one department to another until he found his calling in the toy aisles, and then spent the rest of his twenties jetting around Japan, Hong Kong and Korea scouting for new products.

In his next job as a buyer of toys and sporting goods for The May Co.’s catalogue division, suppliers would often ask Kahn for advice about products and packaging. At subsequent Toy Fairs, Kahn observed that some of these manufacturers had been successful by doing the very things he had suggested, and he began to understand that perhaps he had a knack for this business.

He joined toy company Coleco in 1977 as a sales manager, and it was here that his life took an irrevocable turn. He picked up The Wall Street Journal one day and stumbled across a story about an artist in Georgia who created one-of-a-kind dolls called Little People that came with adoption certificates. ‘He treated them as if they were alive, birthing them out of a cabbage patch every hour,’ says Kahn, who was by this time a VP at Coleco. ‘They were pieces of art that went for US$100, US$200, US$300 or whatever. And I wondered if we could mass-market them.’

Of course the answer was yes, and the Little People soon became the Cabbage Patch Kids, one of the most successful doll trends the business has ever seen. The dolls sold for US$30 to US$50, and just like the original collectibles, they were all unique – a considerable challenge in the early 1980s. Using a matrix of different facial expressions and hairstyles and colors that resulted in thousands of combinations, the toyco overcame the challenge. And if two dolls ever did come out the same, they were sold together as twins.

Kahn believed that the main appeal of the Cabbage Patch Kids was their one-of-a-kind guarantee and the fact they were treated, at least by his marketing team, as real. In fact, Kahn used to take his own red-headed Kid with him on business trips, buying the doll his own airline ticket and ordering him a separate meal at restaurants. ‘Everybody thought I was nuts, but it was a great icebreaker,’ he says.

At the New York Macy’s property launch in 1983, the dolls sold out an hour after the store opened. That Christmas, shortages of Cabbage Patch Kids caused riots, and Coleco shipped three million units, generating about US$60 million in revenues. In the next two years combined, the Kids brought in US$1 billion.

But the property brought Kahn more than just fame and fortune; it also led him to his wife Patsy in the fall of 1983. The way she tells it, the two met in the elevator of a Coleco building where they both had appointments. They exchanged cards, and Kahn called her up for a dinner date. She accepted at first, and then got cold feet later and cancelled.

But the following month, Patsy’s 11-year-old daughter desperately wanted a Cabbage Patch Kid for Christmas, and there weren’t any to be had in all of Manhattan. ‘I remembered I had met Al, and I rang him up,’ says Mrs. Kahn. ‘He was kind of curt, but he sent me the Cabbage Patch Kid. I went to dinner with him, and I fell in love with him that night. He ordered grilled fish and salad with no dressing. When I asked him how long he’d been dieting, he said, ’36 years.’ He’s so cute and funny.’

Kahn married Patsy a year and half later, getting an entire family in the deal. Besides proud Cabbage Patch Kid owner Tracey, there were twin boys Chris and Mike. And together, the couple had another girl, Cassidy, in 1988.

But while his personal life was flourishing, Kahn’s career was taking an unexpected turn. In 1986, he left Coleco. ‘OK, I was fired,’ he says, laughing, although it wasn’t very funny at the time. ‘I was shocked, to be honest. But it taught me a lesson that I took with me: If you don’t sign the checks, you don’t have any staying power.’

Kahn says he also learned another great lesson at Coleco about the power of TV. In his time there, Kahn licensed quite a few prime-time TV shows, including Dukes of Hazard, Knight Rider and The Smurfs. Realizing that kids seemed to want to own stuff related to the shows and characters they liked, he understood early on that media content drives product sales. (Of course, not everyone grasped this fundamental principle of licensing as well as Kahn back then.) He vividly recalls having to meet with Steven Spielberg to discuss licensing the movie Close Encounters of the Third Kind. ‘What was there to license? The volcano? That meeting did not endear me to him.’

When Kahn joined Leisure Concepts in 1988 as vice chairman, it was with the full intention of buying out the company, a goal that came to fruition in 1991. Soon afterwards, Kahn renamed the company 4Kids Entertainment in honor of his four kids. Hats off to Patsy for coming up with a name so simple and yet so versatile, as in 4Kids Productions, 4Kids Technology and Websites 4Kids, all of which are companies under the 4Kids Entertainment umbrella. (Only The Summit Media Group subsidiary doesn’t bear the famous 4).

Kahn’s first licensees at LCI were Nintendo (with which he had a good relationship from his Coleco days) and WWE. ‘I started to ratchet up 4Kids, developing licensing, syndication and media-buying strategies,’ says Kahn. But of course, he didn’t hit the really big time until 1998, with the launch of Pokémon.

So how does a middle-aged American man go to Japan, see Pokémon and become convinced that it would work in the U.S.? ‘I didn’t understand it really because of the language,’ remembers Kahn. ‘But what I saw was that everyone of all ages was playing with or buying Pokémon. And whether a kid speaks Japanese or French or German, the play pattern doesn’t really change.’

He was proven right by the U.S. consumer market’s reaction to the property, as he would be again and again with blockbusters including Teenage Mutant Ninja Turtles and Yu-Gi-Oh! 4Kids now represents 22 properties, boasts more than 220 employees, and posted US$102 million in net sales for the last fiscal year.

‘It’s a skill,’ says Mike Goldstein, chairman of Toys ‘R’ Us Children’s Fund and a longtime friend of Kahn’s. ‘Very few people have the ability to look at something and determine if a program or toy will appeal to children. I don’t think you can learn it; I think it’s part of your makeup. Maybe it’s because he still has a bit of kid in him.’

But it does take guts to put your money where your mouth is. Almost three years ago, Kahn set his Coleco epiphany in action when 4Kids bought four hours of weekend morning airspace from Fox to launch 4Kids.TV (previously called Fox Box). The programming block runs Saturdays and Sundays from 8 a.m. to noon, and features shows that 4Kids has either produced itself or licensed from Japan and localized for the North American market.

Whether it be through a ‘TV screen, computer screen, video game or movie …we don’t care where they see it, as long as we get the content in front of kids,’ says Kahn. He’s so convinced that content will fuel sales that 4Kids is making entire episodes of its kids shows available on its website free of charge. ‘We believe that the beneficial payout of kids programming is the licensing,’ says Kahn. ‘We want kids to want to live that program off-screen by buying products associated with it.’

Next up, 4Kids is looking at adding more girls adventure shows that also draw in boys. One new series debuting in September is Magical Doremi. About a little girl who struggles to become a witch, it’s one of the biggest girls shows to ever come out of Japan. ‘The proof will be in the pudding,’ Kahn hedges. ‘We’re always questioning what we’re doing because we’re not always right.’

His aggressive business style might lead some observers to believe that Kahn sees kids merely as potential revenue sources. (Regarding Ava, his two-year-old granddaughter, he jokes, ‘She’s a customer now, so that’s good.’) But all kidding aside, nothing could be further from the truth.

After the 9/11 terrorist attacks in New York City, Kahn and his wife (who already sit on several charity boards together) thought about what they could do to help. Kahn knows first-hand the pain of losing a parent at a young age. These kids didn’t necessarily need money; they needed support.

So two months later, on Thanksgiving Day, he personally rented out ESPN Zone on 42nd Street (he won’t tell you this himself) and played host to 1,000 children who had lost parents that fall, especially kids of police officers and firefighters. They all enjoyed a big breakfast and got a goodie bag filled with toys donated by 4Kids’ property owner partners before watching the Macy’s Thanksgiving Day parade.

It worked out so well that in 2002, Kahn founded the National Law Enforcement and Firefighters Children’s Foundation, which now boasts corporate sponsorship from companies including Samsung Electronics and Louis Vuitton, as well as scholarships, counseling services and a 1,700-kid turnout at what has become an annual Thanksgiving Day event. The invitation is now open to all kids whose parents have been killed in the line of duty, not just on 9/11. In the last four years, the Foundation has spent over US$1 million on kids.

To help victims of the tsunami disaster in Asia, 4Kids and its partner Mirage Studios (owner of Teenage Mutant Ninja Turtles) are now donating all the licensing royalties they earn on the Turtles from the affected countries back to those nations. When asked about how long this effort will last, Kahn simply replies, ‘We’ll do it as long as it needs to be done. Some shareholders may not be thrilled, but sometimes you just have to do the right thing. It’s a small world, and we can see how fragile it is.’

Maybe that’s why he and Patsy try to keep life as real as possible at home. Every morning, Kahn makes Cassidy – a junior Olympic diver – a hot breakfast and then goes to the gym. On weekends, he indulges his weakness for vintage cars by tooling around Bedford, New York (where the Kahns have a weekend home) in his restored Rolls convertible or T-Bird. That’s also when he kicks back and watches sports, although the good-humored Kahns have issues there – he roots for the Mets; Patsy cheers for the Yankees.

Kahn also loves to sing – so much so that he started taking lessons from a Broadway voice coach a couple of years ago. (He’s been known to belt out a show tune or two at the company Christmas party, and the word is he’s pretty good.) ‘If I wasn’t in this business, I always wanted to be a Broadway singer,’ admits Kahn, although ‘I don’t know if I’d make any money at it!’

And despite Kahn’s natural affinity for the very latest in kids products, games and collectible trading cards, he also loves things with historical resonance. Patsy tells a great story about her husband’s interest in ancient relics. For Mother’s Day last year, he surprised her with a 3,000-year-old Roman necklace – a ‘soft, soft gold’ link chain with a medallion of Medusa, no bigger than a silver dollar. Later that summer on their museum tours in Greece, the Kahns saw a necklace just like Patsy’s on display. It made them wonder who had worn Patsy’s necklace. Cleopatra maybe? ‘Al was very jazzed’ at the thought, says Mrs. Kahn.

It’s a bit difficult to sum up Al Kahn’s life. He’s been described as a brilliant executive, a marketing genius, a philanthropist, a devoted husband and father, and a general lover of life. He’s loyal in a corporate world that doesn’t always appreciate that particular trait. But his partners do. Alan Dorfman, president and CEO of Basic Fun, says his company has held one license or another from 4Kids for 13 consecutive years.

‘He has been supportive in giving us the first shot at new properties, has protected our category even in light of bigger offers, and has publicly expressed support for our company. His achievements in licensing have helped set some of the most significant trends in the past 20 years,’ says Dorfman. ‘Once you break though the no-nonsense, all-business exterior, what you have is a big man with a big heart.’

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