CHAPTER 2 
Risk comes from not knowing what you’re doing.
—WARREN BUFFET
My first day on the job at Ten Almaden, I moved into my new corner office with its wide wall of windows overlooking San Jose. I felt as if I had arrived. The room was luxurious, with warm fabric wallpaper and a cherrywood desk. I sat in my executive swivel chair, stretched back, and took it all in. Everything was new: a brand new Apple computer, a brand new phone system. My assistant cheerfully said, “Good morning, Mr. Kuskey,” and answered the intercom every time I buzzed.
Once I settled into my new digs, James Lambert knocked on my door. He had been assigned as my mentor, and promised to show me the company’s offices. James was a former youth pastor, very tall and thin, with long blond hair; a handsome guy who looked more like a surfer than a vice president of publishing. He had a smooth, soft-spoken, understated manner that made him very easy to be around. His specialty was the printing of the art, and he had a close relationship with Thomas Kinkade as a result. James spoke of Thom as an acolyte speaks of his master, with reverence and adoration, and I was eager to hear anything he had to tell me. I had yet to meet the elusive Painter of Light, who preferred to stay ensconced in his studio as opposed to being surrounded by the bustle of the office.
As James and I walked through the honeycomb of offices, he introduced me to everyone. I shook more hands than I can remember. Everyone was friendly, and seemed genuinely happy to be working there. We visited the marketing department, with its spreadsheets and projections on the walls, and easels covered in charts and statistics. We walked through the graphics department, with its drawing tables and young men and women hunched over stencils and color transparencies. We dipped into the executive office suites, where I shook hands with Ken Raasch, who welcomed me warmly to the company. We stopped in at Dan Byrne’s office and made plans for lunch. I went into Kevin’s office, grinning from ear to ear; I gave him a bear hug and thanked him again for making it possible.
At lunchtime, Dan, Kevin, sales vice president Paul Barboza, and I walked out of the marbled hallways and into the sunny streets of downtown San Jose. We grabbed some sandwiches and sat on a bench on the sidewalk, watching the bustle of the city around us. I was giddy with my good fortune.
In the days to come, I threw myself into work. I set about to decipher what could be done with the Thomas Kinkade brand and images. I perused the library of his art and familiarized myself with the sales history of his work. I drew up calendars of releases, past, present, and future, creating a map of all the images coming out of Kinkade’s body of work. I investigated how the company sold the art and what their formula was. It was like nothing I had ever encountered, revealing unbelievable diversification and stratification possibilities. I believed one image could be used for fifteen to twenty different products, maybe more. It was exciting for me to try to crack the code with regard to what Thomas Kinkade’s fans would want to see. After the first two weeks, I finally had a short list of products for licensing, which I set about to put into motion.
I also scoured every other artist and venture Media Arts was developing, and soon realized Kinkade’s work was the only art that was best positioned for licensing. Obviously, Kinkade was the powerful, driving revenue force behind the company. A fleeting thought crossed my mind about the work of the other artists being marketed for “diversification”: Susan Rios, David Winter, and even Nancy Faulkner, the artist I’d brought with me. Deep down, I wondered whether the public would care about their work the way they cared about Thom’s.
From the beginning, I felt strongly that this was a Thomas Kinkade company; that without him there wouldn’t be a company, and nothing to diversify. But since going public, they had hung up the MAGI sign. They had removed Thom’s original company name, Lightpost Publishing, and merged all business into a subdivision of Media Arts. Gone was the name that reflected the heart of the business. Media Arts proclaimed itself as a marketing and media business—not the business of Thomas Kinkade.
It had been Ken’s vision to go public and to diversify, and on paper it seemed to make sense. Ken and other executives at the company felt Thom couldn’t possibly expand beyond the business he was doing, and the need to show a quarterly profit on the Nasdaq loomed large. They believed the lifeblood of the company was the publishing of art—the limited and open edition reproduction of original paintings in various forms such as lithographs, giclées, posters, cards, and books—by a variety of artists, not just Thomas Kinkade. They had made it to Ten Almaden because of the publishing success; living the big time, the company making $30 million a year, they were feeling rich. They had to feed the monster by diversifying, and they believed this goal was impossible as a single-artist company. They thought publishing Kinkade’s art was a model that could be duplicated, and that artists like Susan Rios, with her frilly, colorful interiors and beach scenes, and Howard Behrens, with his cobblestone images of seaside villages along the Riviera and the California coast, would continue the model of success Thom had set a precedent for. Ken also wanted to sell film clips from Hollywood movies as CinemaClips collectibles, looking to expand the company’s offerings. In selling Thom’s images, the company had become such an effective sales machine that the executive team believed any artist or product could be pushed through its established distribution channels—as though they were selling toothpaste or mouthwash.
By the time I arrived, Susan Rios and Howard Behrens weren’t performing the way everyone had hoped. CinemaClips was a failure. And David Winter Cottages, a financially troubled asset when Media Arts acquired it, had essentially eaten up all of the company’s profits.
Two weeks after I came on board, Ken called me into his office for the first time. I had immersed myself in work so deeply that I had hardly noticed fourteen days had gone by. I announced myself to his assistant, Bernie, a salty older lady with a wry sense of humor who guarded Ken like she was minding Fort Knox.
Ken sat in his spacious corner office behind his massive desk, gesturing for me to take a seat. I took a chair across from him and smiled. Ken thanked me for coming. I said I was glad to have a chance to talk with him, since we really hadn’t had time since I joined the company. Ken leaned back in his chair. He looked uncomfortable. He asked me how long I had been at the company and I told him it was two weeks already. He nodded, as though buying time.
I told him I felt like I had just gotten there. And that I was excited to be here. He didn’t return my smile. I could feel that something was up. He leaned forward and looked me straight in the eye. He said he wanted to tell me something, but he didn’t want me to freak out.
That made me nervous, but I tried not to show it. I promised not to freak out and asked him what was the matter. He said something bad was going to happen that day. I felt my grip tightening on the armrests of my chair. Was I being fired after only two weeks?
Ken struggled to find the words. He said he was about to deliver the worst news the company had ever had. I nodded numbly. Where was this going?
Ken said Media Arts was going to lay off about a third of its workforce.
There was a tingle in my hands and I tried to swallow, feeling both relief and then dread. I wasn’t being fired, but maybe this was worse. I had just moved my entire family up from Santa Barbara to San Jose, and I had sold my company to Media Arts.
Ken looked miserable, but tried to put on a good face. He told me there was nothing to worry about and that it wouldn’t affect me. He promised me I wouldn’t be going anywhere. But he was going to have to let a hundred people go today. And he felt he should let me know before he did it.
I couldn’t hide my shock.
Ken looked toward the inner offices and said he was worried about the other people in the company. His voice began to break, and tears welled up in his eyes. He said he cared about every one of the people working in the company. And he was going to have to break one hundred hearts that day. And that broke his heart. It was awkward for me to sit across from this man I hardly knew and share in his deep emotions. At the same time, thoughts raced through my head. “What does this mean?” “Is the company going under?” “Have I just made the biggest mistake of my life?”
Ken added that there was one more thing.
I didn’t think I could take much more.
He said we would have to move out of Ten Almaden, and into our warehouse space on Charcot Avenue—not right away, but in a month or so.
I nodded and thought, “There goes my corner office.”
October 16, 1995, came to be known as Black Monday at MAGI.
I had heard of the Charcot Street location only in rumors, and the rumors were not good. Charcot was an industrial area in the wrong part of town. Kevin and James and I took a drive a few days later to have a look. We saw an industrial park with nondescript buildings, browning grass, and empty parking lots. It wasn’t the marble foyer of Ten Almaden or the brilliant sunlit downtown area. It was a blighted area near a railroad track, and word was that it wasn’t safe to walk the streets. Whereas our neighbors had been J.P. Morgan and Citibank, they were now CB Tool Supply and Critchfield Mechanical.
We parked at the back doors and went inside. It was a high-ceilinged cavernous warehouse, with no walls and no partitions. It looked a little shabby for a warehouse, and a lot shabby for offices.
We all stood looking around. Kevin tried to sound optimistic, saying they were going to roll on some paint and make it look better. I thought it would take a lot more than paint. Kevin was trying to be hopeful, saying they would build partitions and make offices. But I pointed out the offices would have no windows and no spectacular city view. James wryly added that at least there would be the noise from the train rolling by every fifteen minutes.
Despite its ugly-duckling appearance, the warehouse was bustling with activity. Charcot was the shipping and receiving center of the Media Arts operation, and trucks were rolling in and out without pause. Forklifts were driving through the cavernous space, hauling stacks and stacks of wrapped canvases and lithographs. Boxes were stacked up to the ceiling, and a smattering of workers kept things moving. There were no windows and no views to the outside. The cavernous space echoed and jangled with noise. I was horrified.
I said I would miss downtown and the marble foyer. Kevin agreed he would miss the nice restaurants. James said he would miss the easy access to banks and shopping.
As much as we were being reassured that everything was going to be all right, I felt I had made a terrible decision. I had been given a lot of company stock, partially as payment for MAGI having purchased my company. The stock had plummeted the moment Wall Street caught wind of the financial trouble at Media Arts; suddenly it was worthless. I couldn’t shake the sense of dread.
Anxious thoughts were racing though my mind. I had just uprooted my family from our beautiful ranch home in Santa Barbara, where our extended families lived, and relocated us to Los Gatos. My wife felt isolated, and because she had not been able to get to know the players, she wasn’t quite sure what to think about the born-again vibe at the company. She had expressed her reservations openly to me, saying she thought it felt phony. I reassured her. And reminded her of the solid salary and benefits I was now receiving. She took the check, but she never bought into the dream. How was I going to tell her this?
Standing in the warehouse at that moment, we looked at each other, thinking the same thing: “Is this the death knell of the company?”
That night I went home and polished up my résumé.
Days later, I received a phone call from Thomas Kinkade himself. It was the first time we had spoken; we had never even met. I held the phone to my ear, standing in my soon-to-be vacated office.
“Thom. It’s great to talk to you,” I said.
Thom told me he had heard all about me, and that I had a lot of experience. He said he felt that I would be bringing a lot of new dimension to the company. There was a mellifluous quality to his voice, instantly calming and reassuring. I thanked him and told him I appreciated him saying that. He told me he just wanted me to know how happy he was to have me on board.
I was thinking, “Does he believe I’m going to quit?”
Then he said he would like me to come to his studio in Monte Sereno, to give us a chance to talk. He said he wanted to hear more about the licensing business.
I said, “Sure, Thom. I’d love that.”
Going to meet Thomas Kinkade was like going to meet Howard Hughes; he seemed that elusive. Despite all the company’s woes, I was honored and excited to be granted a private audience with the legend himself.
I left downtown San Jose in my Volvo driving on Highway 17 and headed directly toward the Santa Cruz Mountains and followed a circuitous route off the highway, ending up at a winding Ridgecrest Avenue in Monte Sereno. The street was the crown jewel in the surroundings of Los Gatos, where Thom lived on his four-acre compound. Nestled against the eastern base of the Santa Cruz Mountains, Monte Sereno, Los Gatos, and Saratoga, known as the golden triangle in Silicon Valley, are among the wealthiest neighborhoods in America. I wound through the majestic stands of oak and redwood trees and almost missed the gate. Buzzing the intercom, I announced myself and heard Thom’s voice.
“Drive up by the cottage and park.”
The heavy iron gates slowly opened, and I drove through with anticipation. Dappled light danced over the circular drive. I headed past the front entrance of the main house, a two-story creamy yellow stucco structure with white wainscoting, gabled roofs, and stately Palladian windows. I parked in the driveway and saw a path to my left leading to a charming restored 1930s cottage, which adjoined the main estate. This was Thom’s studio, Ivy Gate Cottage.
When I got out of my car, I was overcome by the scent of jasmine and roses as I walked the narrow cobbled path to the cottage. I knocked.
“Come in!”
I opened the door and hesitantly looked inside. There was a fire roaring in the stone fireplace, making the polished wood floor gleam. The smell of paint and linseed oil permeated the room, and paintings were stacked up against bookcases filled with art books. Striking original paintings by other artists hung prominently beneath studio lighting. The French doors admitted light into all sides of the cottage, allowing shafts of sunlight to fall over the worn but elegant leather sofa and chairs on the garden side of the large room. Antiques were scattered about the bookcases and shelves, and a stuffed fox stood by the fireplace.
Thom sat on a stool facing his easel. He had a large physical presence, over six feet tall, over two hundred pounds. His head was a little too large for his body, and his hands were small. He sported a thick chevron mustache, its ends growing down over the corners of his lips, a decade out of fashion. His hair was neat and combed like a little boy’s, and his cheeks glowed with a red hue. He wore blue denim jeans, boots, and a plaid shirt. All he needed was a straw hat and a reed of grass in his mouth, and the country-boy image would have been complete.
Surrounding him, on tables and stands, were hundreds of paint tubes and more paintbrushes than I could count. Palettes stood in various states of use, covered in fresh and drying oil paint with prisms of tints and hues spreading out their rainbows of color. He also had a cold can of beer perched next to him. I had heard Thom was fond of his drink now and then, but it was a warm day and I didn’t think much of it.
Thom kept his eyes on the canvas as I entered. “Welcome to my humble home, Eric,” he said.
“It’s a beautiful studio,” I said.
“This is where I live. I only visit the big house when the girls let me in,” he chuckled.
I laughed and stopped at a wall across the room in front of Thom, which was covered in what seemed to be a hundred photographs; references for his paintings. He had several photographs taped to the wall beside his easel, and occasionally glanced at them as he worked. Stacked behind him were numerous canvases in various states of completion. He had a large wooden box with a door, shelves, and a heating element, in which he kept paintings to dry. Thom was known for painting in many layers, and he needed to dry them in between adding new colors. One painting might have up to fifty layers of paint. These layers were said to give the paintings that Kinkadesque quality: their familiar texture and dimension, and of course their famous glow.
I sat across from him and watched him paint for a while. It was stunning to see how effortlessly he found and mixed his paints, plucking out just the right brush and using it to dab at the painting in what looked like a haphazard fashion. Yet as I watched, the painting came more and more to life. It was fascinating to see.
To his right was a painting propped up on a drying rack: a gorgeous image of a lighthouse set against a rocky shore with the spray of the water hitting the rocks and exploding on the shore. A white fence bordered the narrow perch where the lighthouse stood, and a light post illuminated the path. The lighthouse was lit bright golden from inside, offset against a turbulent sky and sea. Thom noticed me looking at it.
“That’s going to be called A Light in the Storm. It’s an allegory of Jesus’s proclamation ‘I am the light of the world.’ John 8:12.”
“It’s fantastic,” I said. The painting would become one of his most famous images.
“How do you make the image glow like that?” I asked him.
“Layers and layers. It can take me up to three hundred hours to paint a painting.”
I calculated in my head. “Isn’t that over two months?”
He nodded, and began to tell me about his process of painting. He said that after getting all the layers of the painting down, he got to a point late in the process when he put in the light in a painting. He pointed to the canvas he was working on at that moment. It showed a sunrise over water. He told me how he found the center of the source of the light. It was the sun on the horizon in this painting. Then he explained he would now add the strongest, lightest color to that light source. His brush dabbed a bright white spot into the middle of the already painted sun and clouds. It looked like an accident, and I was concerned that he had just ruined the painting. But his brush kept gently dabbing at the white spot. He demonstrated how he would not feather out the paint, and keep it strong, but subtle enough so it wouldn’t dominate the image.
As he spoke, his brush made a light, scruffy dabbing sound as the sun began to glow more sharply. He told me that as he brought the sun into clarity, he liked to let the radiating light come out from it, like God’s radiance; his glory just breaking through.
His paintbrush slowly spread the bright white spot into light feathery lines emanating from the sun. The sun and the clouds around it began to glow. I was amazed at the transformation.
“You see? It’s not paint anymore. It’s light. The white in the paint will keep that light burning bright. That’s what I try to do. I leave the light on.” He chuckled.
It looked amazing. The paint had literally transformed from an oily, formless substance to light emanating from the painting. He told me that people thought he used luminescent paint, but he didn’t. I asked if he had studied this technique, and he explained that he did use a painting technique that brought out the light in a painting. He surrounded the light source with lots of intense dark values and then dropped the nearly white light source into the middle to make it stand out. The dark underpainting was done in warm values, while cool tones were used on top, the contrast giving them a glowing appearance. He had learned the technique from studying the likes of William Turner, who himself was originally called the Painter of Light. But he said it was his work on the animated movie Fire and Ice that had finally taught him to master the manipulation of color and hues into glowing tones. It was movie magic in art.
“The light is the last thing I paint,” he said.
He showed me how he touched any of the points of light in an image with four or five very bright white- and yellow-hued paints, to give them the appearance of glowing. He explained how, in a low-light setting, these spots of paint were always the last points of light to remain luminescent. That’s why he always brightened the light at the top of a candle, or the light emanating from a lighthouse or the sun, or the light gleaming off the headlight of an old car.
“The light becomes an allegorical contact point for me. I imagine that whoever would buy this painting one day, might be someone who felt like the light has been overcome by the shadow of dark clouds in their life. I hope to let a new day begin to dawn for that person, through this painting. I want to touch people with my painting. That’s why I paint.”
Then he asked me if I remembered the paintings that hung in my parents’ house when I was growing up. I said I remembered them well. He then told me most people remembered the paintings hanging on the walls in their childhood homes. He asked if I remembered liking the paintings and I said, “Yes and no.” Some of them were odd to me. I didn’t understand them. In fact I thought they were a little disturbing. I remembered that I didn’t understand why the sky was black in one, or where the water flowed to in another. He asked if they made me feel weird or good. And I told him the ones I didn’t understand made me feel weird.
“Do you want your kids to look at paintings that make them feel happy or weird?”
I told him that of course I wanted them to feel happy.
“That’s what I want the world to feel from my art. I want everyone to feel happy.”
He smiled and turned his attention back to his canvas.
“Tell me about this licensing thing,” he said.
I had brought a briefcase full of samples, showing Thom’s paintings mocked up on various greeting cards and stationary and gift items. He looked through them thoughtfully.
“How does it work?”
I told him we would sell a license of an image to licensees like Hallmark, for instance, and they would then put his image on products they sold in their stores. Like greeting cards or stationery. The greeting cards would then get his name out there. I called them introductory products. You put your image on a greeting card, and it familiarizes the public with your work and leads to an actual art purchase.
He sifted through every image. “I like them all. Where do we start?” he asked.
I told Thom that in the world of licensing, there was no better product than the greeting card. It showed the art, and also elegantly told a little story. He turned one of the cards I’d had printed up in his hand. It showed one of his paintings with a cottage in the snow and deer nearby.
“It does tell a story, doesn’t it?” he mused.
I explained that on the back we would have the copyright and his name clearly printed. Also, that we would put the company address on the back with the phone number, so people would know where to find us. So that prospective manufacturers could call us in case they wanted to use the art on their products.
Thom pulled four paintings from his stack and set them up, side by side. They were wintry scenes depicting snow-covered cottages, with warmly lit windows casting a glowing light that illuminated the forest and animals, while smoke rose from the chimneys.
“What was your happiest day of the year, Eric? What day held the most anticipation? The most pent-up excitement as a little kid?”
“It was definitely Christmas.”
“Exactly. I want to do Christmas cards. I want to be the Painter of Christmas.”
He looked off into the distance, seeing it all in his mind. He asked if we could print Christmas calendars. I told him we could. He asked if we could print Advent calendars. I said, “Absolutely.” Thom’s mind raced and he paced the room. I could see the visions dancing in his mind. He was brilliant; for every one of my ideas, he had ten. He said he wanted to do ornaments, and collections of miniature villages, and collectible replicas of cottages that would light up. He thought we could do stockings, tree skirts, coasters, wrapping paper, and Christmas lights.
“We can do all of those things, Thom.”
He stopped and looked back at me and smiled.
“We will, Eric. We will.”
A month after Black Monday and the announcement of the layoffs, a hundred employees slowly made their tearful exit from the company. The Charcot warehouse had been under constant renovation as Media Arts built partitions and offices, and remodeled the space to house the hundred or more refugee employees who remained. Wall Street reacted positively to the belt-tightening and the stock started to edge back up. Although I dreaded leaving my posh downtown San Jose office, I was relieved things seemed to be moving forward and I didn’t have to return to Santa Barbara anytime soon.
It was my visit with Thom that had bolstered me the most. He understood the potential of licensing so well that I immediately went to work to put the plans into action and scheduled meetings with important licensees. Thom and I planned to travel to Kansas City together within the month, to meet with my most important client, the Hallmark Company.
Days after I met Thom at his studio, I filled in Ken on my licensing plans. Bernie had decided she liked me by now, and let me inside without an argument; I considered myself lucky. No one got past Bernie. If she didn’t like you, it seemed like memos got lost and meetings were cancelled.
Ken was sitting behind his large desk, dressed in a finely tailored suit as usual. Motioning me to take a seat, he continued his conversation with someone from Wall Street. I took a moment to take in the surroundings. His office was sumptuously decorated with an antique gold couch as the centerpiece. I was afraid to sit on it for fear it might break. Pictures covered his walls: Ken with his employees, Ken and Thom, Ken and his family, and Ken with dignitaries in local government.
Ken finally got off the phone, turned to me, and asked how my meeting with Thom went.
I told him I had enjoyed it very much, and that Thom was on board with my ideas, and had many of his own. I just had to put them into action. And I wanted to bring Ken up to speed on what we decided. He asked me to go ahead and tell him everything. Ten minutes turned into two hours, as I sat and told him all my plans. I explained how a licensing agreement worked. And I explained the simple economics of licensing agreements; how they earned money and how they could be built into a multimillion-dollar royalty income stream. How licensing would introduce new customers to Thomas Kinkade, who would someday buy his art. How it would supercharge the marketing by putting Thomas Kinkade out there on a calendar on a wall, and a mug on a desk, or a bookmark in a book, and allow people everywhere to stumble across the art. I could see the lightbulb go off in Ken’s eyes, as he realized the magnitude of the income potential. “And we can do this globally. It’s universal. We can go everywhere,” I said.
He was excited, and that was flattering and encouraging to me. He had listened and fully understood, on a business level, everything I was trying to do. We bonded from that moment on, and became fast friends and allies. He understood my vision and he supported it. And I supported his in turn. At least I tried as much as I could. Diversification still looked good to everyone on paper; I thought maybe the company’s layoffs were simply bad luck. Having Ken behind me was going to be very helpful in my plans to expand the company’s licensing program quickly.
I had arrived at the company too recently to know that Black Monday wasn’t just bad luck. It was caused by management choices; specifically choices Ken, with the full support of the board, had made. In order to grow its rapidly expanding operations and to fuel the diversification schemes, Media Arts had arranged for a bridge capital loan with Levine Leichtman Capital Partners, an investment management firm. Since the diversification schemes were now failing and David Winter Cottages had wiped out the company’s cash reserves, Media Arts couldn’t meet the terms of the loan, and Levine Leichtman was threatening to foreclose. This was the impetus for Black Monday. Something Ken would eventually get blamed for. But I didn’t know that yet.
I left his office that day with the feeling I had just been handed a chance to hitch my star onto his wagon. Little did I know he was also hitching his star onto mine.
Charcot Avenue was fully renovated by the time I moved into my new office, and I was impressed by how much they had achieved only a month after Black Friday. The warehouse had been converted into organized offices with sections and partitions and cubicles. It was nothing fancy, but being there in the center of the operations was interesting to me. I got to observe the inside workings; how everything was done. I saw the forklifts moving back and forth, revealing just how healthy the art business was. And I also saw it was Thomas Kinkade’s work, as opposed to that of the other artists, that was shipping out all day long.
Still, Wall Street wanted more. Even with the steady painting and lithograph business, and the revenue from the Bradford Exchange, the stock market demanded not only a turnaround from the red, but constant profits and a steadily increasing income. The pressure never let up. The other diversification artists weren’t performing, and the licenses I was working on would take a while to get up and running. But things had to turn around fast—and the answer seemed to come falling out of heaven.
Dan Byrne, the executive vice president of Media Arts Group, had seen a demonstration at a printing shop of a new process called the canvas transfer system, in which a photograph could be transferred onto a canvas, creating the look and feel of a real painting. It was the latest innovation in printing technology, and Dan had gone to have a look. He watched a demonstration of this cutting-edge technique; the process entailed lifting the ink off a printed lithograph and affixing it to a blank canvas, creating a work of art, bumps and all, nearly indistinguishable from the original. Only one artist at the time was using the technique with success, a landscape painter named Marty Bell who ironically specialized in painting Cotswold cottages. He was replicating his images with the canvas transfer system and offering them for sale.
Dan brought the brochures and videos back to the company and made the executive team all have a look. Thom was present for the meeting, and he was the first to immediately understand the implication. Thom asked whether we could make a product that looked and felt like an original work of art, but wasn’t an original. Dan confirmed this was true. Thom then asked how many we could make. Dan said we could make as many as we wanted. They knew what it meant in that moment.
They had stumbled onto the Holy Grail.
I believed in diversification; at least I wanted to. On paper it looked right enough, but in reality, Thom’s consumers were so ravenous and faithful, it was like making money by accident. People bought anything he put out. Ken, along with most of the executive management team, sincerely thought that dynamic was duplicable. But they were wrong. Thomas Kinkade’s sales were anything but normal. In retrospect, it seems that the logic was influenced by Thom’s immediate, amazing marketplace value and success. They must have thought Thom’s success was a normal art business phenomenon, or at least something that happened periodically. But Thomas Kinkade only happened once in a lifetime, if that.
While most of us were chatting with our colleagues in the Charcot Avenue cafeteria, there was a secret conversation brewing. Rick Barnett, who only came in for occasional meetings from his outpost in Monterey, where he kept a separate office, was having discussions with Thom, his wife Nanette, and members of the board. They were worried about the necessity of the move to Charcot Avenue. Wall Street had lost confidence since Black Monday, and they knew the company had just had a near-death experience. They began to see that the company’s strategy of diversification was flawed. And, as is often the case, the CEO becomes the fall guy, even if the board approves all decisions made.
This came true for Ken. To appease Wall Street’s concerns, Ken eventually stepped down as CEO of Media Arts. The company went through a period of uncertainty regarding who the next CEO should be, but ultimately installed Bud Peterson, chief financial officer. Bud had never planned on becoming CEO, but coming from the CFO position, he knew the numbers and everyone, including Ken, felt this would be best for the company. It would satisfy Wall Street and Ken could retain his position as chairman of the board. Bud was a true force at the company through many years of growth and related turbulence. He was always level headed and steady with his decision making. Even so, Bud only lasted a year in this position before new CEO candidates were eventually being considered again.
Thom had been all for diversification. He was exhausted, creating up to fifteen masterpiece paintings a year, and appreciated the idea that some of the load could be taken off his shoulders. Diversification had promised him more time on his motorcycle, more vacations, more time to enjoy his life and newfound wealth. Each masterpiece painting took months to complete, and he would work on several at a time, as well as the many plein air paintings, landscapes he painted in one afternoon. The last thing he wanted to do was sit behind his easel and paint nonstop night and day, as he was doing then. But diversification didn’t reap Thom those benefits.
Only in retrospect did everyone at the company realize how foolish they had been to think other artists would sell in these quantities. All profits clearly came from one source. The money coming into the company was coming from the sales of Thom’s art, while the money leaking out had nothing to do with Thom. David Winter Cottages had been a huge toilet flush, with some $20 million down the drain. With that deal alone, the company went to zero profits.
Now Ken was talking me up to everyone who would listen. Licensing and my related strategy became part of his plan. I respected Ken as a man with a good heart and a kind disposition, and I appreciated him as a great supporter who championed everything I did. Time showed the licensing to be a much more profitable business, and the canvas transfer system even more so. These two moneymakers became the way in which the company climbed back out of its hole.
The first day Thom stood before one of his canvas transfers, Dan Byrne told me how he had marveled at how perfectly it resembled the original painting displayed on an easel next to it. The two pieces were indistinguishable from one another; one was a perfect replica of the other. It went against everything the modern art world holds sacred: the notion of scarcity; the concept of the original; the value of uniqueness. But Thom didn’t care about all that. The possibility of recreating an original work of art—the ability to make it look identical to the original, and to reproduce that original ten, one hundred, or one hundred thousand times—was exhilarating.
He walked up to the reproduction and ran his hand reverently over the canvas transfer, feeling the bumps and bulges of paint, just like they could be felt on the original.
“It feels so real,” he breathed.
Thom must have felt the very power of the creation of life in his hands. With the help of a machine, he had recreated himself, recreated the spark of genius in his own work, and duplicated it without leaving a trace of the process. The effect was mesmerizing, irresistible, and powerful.
Thom walked over to his easel, grabbed a palette, and dabbed some colors on it: yellow, gold, white, orange, and dollops of luminescent paint. With his paintbrush he dotted a few dollops of color here and there, touching up the points of light on the copy so that they positively glowed. Thom turned.
“We’ll hire some artists to retouch every painting and make it original.”
Rick chimed in that we could call them highlighters.
Thom nodded and smiled back at him. “Master highlighters.”
Soon I was watching those master highlighters at work in the Charcot facility. First, teams of people prepared the canvas transfers along a production line. They took prints made from photographs of Thom’s paintings and laid them in trays and brushed glue on them. When the glue dried, they lifted the glue, which held the ink from the print, and affixed the glue film onto a blank stretched canvas, and coated it again. Huge blowers were set up in dust-free rooms, similar to the rooms in which medical supplies are made. It was essential that the environment be impeccably clean, so that no canvas transfer was ruined by a speck of dust. The workers wore clean white suits with gloves, hairnets, and goggles, and huge ceiling vacuums filtered the air. The transfers were hung on racks to dry. As soon as they were ready, they were sent down the hallway to the master highlighters, mostly women personally trained by the Painter of Light himself, who highlighted the paintings by hand.
Then the reproductions were wrapped in brown paper, taped up, packed in cardboard edges, and slid into boxes. They were loaded into the warehouse ready for shipping, stacked twenty feet high. Reproductions of paintings in all colors and sizes were piled high at the loading docks, no different than if they were crates of iceberg lettuce. Eighteen-wheelers pulled up at the loading docks, were loaded to capacity, and drove out into the distance. This went on every single day at Charcot Avenue. While Rick, Thom, Ken, and the board of directors and executive team were still arguing over diversification, the canvas transfer scheme was a selling machine that hummed on autopilot, a vibrant life of sales that brought the steady money in.
I watched the process evolve with a mixture of feelings. I was in awe of the machinery and the sheer volume of sales. The process was flawless and the products were stunning and truly indistinguishable from the originals. I also knew enough about the art business to wonder about the edition sizes. Charcot was pumping out editions in so many shapes and sizes that I couldn’t count the volume. I was puzzled about how this was possible, but I was also pleasantly surprised. This new technology had opened up a door that allowed people to buy Thom’s art in a way that had never existed before. We were pioneers. And I was making a nice paycheck in the process.
At first, the reproductions of original paintings were sold in editions limited to, say, 2,500 prints, for an average of $1,200 apiece. In time, with multiple editions released per image, the total edition number became 10,000, and then 30,000. MAGI had already established a loyal base with its collectibles, and now it couldn’t sell the reproductions fast enough, as the delivery vehicles hauled off the artwork by the truckloads. Within a few months, the company opened a large flagship Thomas Kinkade Gallery in the Valley Fair Mall in Santa Clara, to showcase the new canvas transfer products. Business went through the roof.
It was a year of big changes. From my family’s move to Los Gatos to the near-death experience of Black Monday, to the biggest recovery I could have ever imagined a company making from the brink of losing everything, all because of the introduction of the canvas transfer system. Thom and Nanette had their third daughter, Winsor Christian Kinkade, that year. We spent occasional barbecue afternoons at their house with the kids in tow, and a feeling of happiness and family time pervaded, watching our kids play in the garden. We shared lots of laughter and companionship then, even if I had to listen to my wife’s skeptical analysis on the way home at the end of the day.
There was something about Thom she just didn’t trust. And I could never persuade her otherwise. Perhaps there were too many contradictions, and too many conflicts in the whole mission-based mandate of the company. “Sounds like a bunch of voodoo to me,” she always said. We were Catholics, and as such I was not part of the large born-again clan at Media Arts. That actually made me somewhat of an outsider. And for my wife, it all felt a little too contrived.
In September of 1995, I traveled to Kansas City, Missouri, with Thom, Nanette, and Dan Byrne, to introduce Thom to my Hallmark contacts at their corporate headquarters. Terry Sheppard, Thom’s videographer, also came along. His job was to document all Thom’s events and edit them into a video library for the record books. We were signing a deal for the first license I brought to the company. Hallmark rolled out the red carpet for us at their corporate headquarters. We went from the Hyatt Hotel, traversing the famous Skywalk, which years earlier had tragically collapsed, over to Hallmark, where we were met by the executive team. We toured their massive facility, met artists and graphic designers, sales and license VPs, and company dignitaries. Everyone treated Thom like royalty.
After the signing of papers, we had an extended meeting in which we discussed the plans for the products we had in mind. When the meeting concluded, Thom was whisked away downtown to the Country Club Plaza, where a Thomas Kinkade Gallery was located.
A crowd had gathered for a gallery event, to see Thom speak. Thom took the microphone so naturally, and began speaking to the audience so confidently, that I was thrilled to be able to watch him, and to see the crowd respond with so much adoration. It felt like something important was happening, that I was witnessing something significant. Thom was effortless and masterful in his speaking. He was a natural-born orator. He spoke about his faith, but he didn’t preach. He was funny, and told several jokes. He went on to talk about his love for Nanette and their love story, and the audience fell in love with him. I was deeply impacted by hearing him speak, and enjoyed being part of the mosaic. I mingled with the crowd afterward, feeling proud to be one of the business people who supported him. I was helping Thom “make it all happen.” It made me feel important, too. It was intoxicating.
After the event in the Country Club Plaza, the Hallmark executives treated us to dinner at the Plaza III, known for having the best steak in Kansas City. The Hallmark people were quite conservative, and Thom and Nanette complemented their values perfectly. They appeared to be the poster couple for what Hallmark stood for. I was struck by Nanette’s poise and savvy; she had a quiet strength that never boasted, and she knew just how to present herself and support Thom in his role as the legendary Christian artist. She was the perfect wife supporting her husband, and she did it out of conviction and belief. She drew attention away from Thom’s drinking, which I had heard could be excessive at times; toned down his jokes if they got too boisterous; and spoke of him glowingly as a husband and father. Things couldn’t have gone better.
After the dinner, we shook hands with the Hallmark folks and said our good nights. As they left the restaurant, Thom nudged me and Dan and Terry toward the back of the building, where there were two limos waiting. He told Nanette we were heading out on the town. Confused, I heard him tell her he would see her later, back at the hotel. She got into her own limo and looked out at me. I remember the look on her face—in fact, I’ve never forgotten it. It left an indelible impression. I saw a mixture of sadness and concern, but no anger. She spoke to me directly.
“Be careful.”
Then we drove off in our own limo, heading out into the night. It didn’t seem like this was the first time this had happened to Nanette. And Thom looked as if he felt he could finally be himself, after hours of being the Painter of Light for Hallmark.
As he thrust a beer toward me, I asked, “Where are we going, Thom?”
“We’re going to have some fun.”
He called to the limo driver and asked him what the best bar in town was.
We ended up at Harpo’s in the college town area of Kansas City. The place was jam-packed with twenty-somethings quaffing beer and colorful cocktails. The music was pumping, and Thom looked like he was in his element. We sat at a table, Dan and I drinking a beer; Terry was drinking along and running his camera, while Thom had another scotch and looked around, yelling over the noise.
“Isn’t this fun?”
I nodded without trying to speak. Thom laughed, knocked back his scotch and ordered another, happy to watch the crowd and nod his head to the music. I looked at Terry and his camera, and wondered how many of these nights he had captured already. In that moment I saw something in Thom for the first time: his other side, his duality. It came as a surprise to me. I had only seen him a few times since I joined Media Arts, and he was always the model of what I imagined him to be: the Painter of Light. But on this night I realized there wasn’t just one Thom; there were two. Thom was the Painter of Light who had a mission to give people joy and peace with his art, but when the alcohol came out, the rip-roaring Thom emerged. He clearly believed he was put on earth to have a good time; to laugh with friends, to drink, to dance, to enjoy himself.
I was happy to see it. I didn’t know Thom was such a fun guy. Thinking of him as an almost missionary figure had clearly been a misconception. Thom was a regular guy; the guy you wanted to watch Monday Night Football with. He was a baseball, rodeo, Bud Light, straight-shot-of-whiskey kind of guy. He was uproariously funny, and he didn’t have a mean bone in his body. That night I saw that Thom was a life force. He had a light inside that lit up everyone around him. I didn’t see the harm, and I didn’t see any contradiction. I knew his belief in God was deep. He also clearly thought believing in God didn’t mean you couldn’t have fun. It made him more human to me; more approachable. I was relieved to see that side of him. Our long-standing friendship was kindled that night over booze with Thom the fun guy, who was the life of the party.
“We’re going to do some great business with Hallmark, aren’t we?”
I nodded again and grinned. It was great to see Thom so pleased with what I had brought to the company. Thom smiled back.
“And we’re gonna have fun doing it!”
Then suddenly he got up and jumped on the bar. He started dancing, shaking his two-hundred-plus-pound frame, yelling at the top of his lungs.
“Drinks on me for everyone in the house!”
A huge cheer went up in the whole bar, a hundred or more kids clapping and laughing. Thom handed the bartender his platinum American Express card.
When he came back to the table, he sat down and grinned at my shocked expression.
“Thom, that’s gonna cost you two thousand dollars,” I said.
He nudged me playfully with his arm, laughing.
“Don’t worry. We’ll earn it back with all the business you just made us with Hallmark!”
He was right. Within two years, Hallmark was generating royalties in the seven figures.