Value Added: The Souvenir Business

Here's Tom Heath's latest column on greater Washington's entrepreneur set:


Capitol Souvenir Co. in College Park, Md. , really isn't a souvenir company. It's a tourism business. Capsco-Inc.'s sales rise and fall on the ability of people to travel. What Washingtonian is going to walk across the mall and buy a coffee mug with Ronald Reagan's, well, mug on it? Not many.

What local will shell out for a keychain with the Washington Monument twirling on the end? Maybe someone from Odessa, Texas, or even Odessa, Russia. But not your jaded, inside-the-Beltway lifer.

So when tourism disappears, like it did after 9/11 and in New Orleans after Hurricane Katrina, Capsco-Inc. needs to move quickly.

"Whenever the government has a code red, when they close museums, put missiles on the Pentagon and everyone is scared to travel, when something like that happens, we have to move fast to keep up with changing demand," said Michael Goozh, 33,
president of Capsco, Inc. and the fourth generation of his family to run the 87-year-old Washington company. "When the Statue of Liberty and the monuments were closed for eight months, we switched from tourism to patriotism. We switched to American Flag merchandise, mugs with 'We Will Remember.' "

Right now, with high gas prices slowing driving, families are traveling less and buying fewer souvenirs. Business is down in some places, though it is just fine in the Washington and New York corridor, according to Martin Goozh, president of operations.

Don't feel too sorry for the Goozh's. They are nimble and do just fine.

There are big margins in those plastic key chains and little magnets. Capsco grosses around $3 million annually selling custom designed souvenirs around the U.S., from New Orleans to the Kennedy Space Center, from the Statue of Liberty to the South of the Border amusement park on Interstate 95, and from the Empire State Building to the Newseum on Pennsylvania Avenue.


Capitol Souvenirs Co. Inc., in College Park, Md., has been in the Goozh family for 87 years and four generations. Michael Gooz (green shirt) is president. Martin Goozh (white shirt) is president of operations and Jay Goozh (black shirt) is president emeritus. Joe Goozh, father of Jay and Martin, is in the picture their holding. Photo credit: Owen Wexler.

I estimate Capsco profits are somewhere around 30 percent, although the Goozh's would not say. That puts profits at somewhere around $1 million. Most of it is rolled back into Capsco, though Michael Goozh, his uncle Martin, and his dad Jay, take salaries. They won't say how much.

The business is highly competitive. Come out with a new deck of President Bush Cards somebody else is ripping off the idea within weeks.

So Capsco is always fishing for new accounts to sell their wares. Michael Goozh and his sales manager troll the Internet and attend trade shows looking for new tourist attractions. "We go online and find out who has a new location. Like Crime and Punishment or the Newseum. We brought the Newseum newspaper reprints of important dates in history."

Goozh has one rule of thumb: "Whatever our wives say they love, we don't buy. Any item we fall in love with sits on our shelf. The items we think are terrible, those usually sell."

Capsco is a middle man. It buys millions of souvenirs -- generally in lots of 1,440 -- from manufacturers in China and the U.S. and re-sells them to retailers around the country at a healthy markup. Capsco keeps its edge over competitors by having built relationships with its suppliers over several decades. It also knows the ins and outs of shipping, customers, inspections and all the other things that can go wrong with shipping a deck of cards 10,000 miles.

There are three main divisions: one that sells to retailers throughout Washington, from the Smithsonian to National Airport. A second divison sells to other wholesalers up and down the East Coast. Third, and most lucrative, is a division that sells to major tourist attractions throughout the U.S., from amusement parks to zoos, and at places like the Kennedy Space Center and on Bourbon Street in New Orleans.

In D.C., the busy season starts with the blooming of April's cherry blossoms and lasts until the end of October. It gets really slow in December and January. But not this January. A new administration spells big bucks. And an Barack Obama victory would be a big boost for the traditionally slow winter tourist season.

"We love inaugurations. It's like our Olympics. There is a huge spike in volume. Obama is getting sold out eight-to-one to McCain. And Hilary was outselling everybody."

I love the stories of these old, family run companies that find a business niche and mine it for decades. Think Nat Sherman, the famous tobacconist in New York, which has been around since the 1930s. Family members still walk the floors, drawing on a cigar and making sales.

Capsco was founded in 1922 by Jacob Goozh after he immigrated to the United States from eastern Europe. Goozh ran Empire Photo Studio at 917 Pennsylvania Avenue. When he wanted to make an extra buck, ran up to Baltimore Harbor and started taking photos of World War I doughboys coming off the boat. He would frame them and sell them to the soldiers. Goozh changed the original name to The Capitol Souvenir Co., in 1931.

The company has grown over the years and moved in 2000 to College Park, where it leases some space and has a showroom. They were on 14th Street NW for many years prior to that. As usual with these family companies, there is no debt. The owners take some of the action but don't milk the company. Capsco employs 14. It has two trucks and some vans. Michael's wife helps with the office work. They love the business and are growing it so it will be healthy for the next generation.

"We call this the business that let's us invest into other avenues," said Michael. Real estate, stocks, mutual funds. The Goozhs are diversified.

Michael said they have had offers to sell, but the family is holding on.

"We want to make it to 100 years," Michael said.

By Dan Beyers  |  August 26, 2008; 6:07 PM ET  | Category:  Value Added
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Comments

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I bet the margins are larger then that -LOL! It is good to read about a successful family run business that has been handed down through the generations. Unfortunately, the traditional long standing family run business is almost non-existant today as a result of sell-outs, family squabbling and or to less than business savy and or greedy off-spring entrusted to keep the company growing only to watch it collapse around them.

Posted by: Anonymous | August 27, 2008 9:06 AM

What a great story - I even looked them up on EBAY and there are plates from 1957 with Capsco on the back for sale.

Posted by: Anonymous | August 27, 2008 2:42 PM

That's a great story, Tom. The part about "if we love it it won't sell" really resonates. I'm a photographer and my least favorite pieces are always my most popular! I wonder if other business owners have the same experience? Here's to another 87 years for Capsco!

Posted by: SB | August 28, 2008 1:42 PM

Amazing how many ways there are to make real money in this country. Only in America. Good for them.

Posted by: capitalist | August 28, 2008 1:45 PM

Coming from a family that was in a niche business and being in something of a niche business today, it is always fun to read about some business that you never knew even existed but is very successful. Good Story!

Posted by: David | August 28, 2008 1:49 PM

Great story! This is an excellent column – it is so interesting to learn about different businesses and the people that make them successful. I am glad you had the chance to share the Capsco story – what a great read about a family who has continued to build and expand the business to maintain momentum as the market continually changes. Once again, you did a great job conveying the company’s uniqueness and capturing the owners’ personalities. I loved the quote about inaugurations being like their Olympics! When you think about it, this company has been a part of quite a few inaugurations by now! I wish the Goozh family continued success and look forward to next week’s column!

Posted by: MC | August 28, 2008 2:20 PM

Great story Tommy. Way to go finding unusual businesses that any entrepreneur can learn from. These guys are an example of hustle, knowing their market, and sticking with a business.

Posted by: Luka Brasi | August 28, 2008 5:22 PM

Tom - Great story of a local family business - the kind that usually goes untold and yet is highly valuable in illustrating the rich array of businesses that make up this great metropolitan area. Thanks for sharing!

Posted by: mezz | August 28, 2008 6:00 PM

I love reading these kinds of stories about people who came to this country with a vision, instilled good work ethic and values into the family, and years later are going stronger than ever with loyalty as a priority. Way to go Goozh family for being a success across the board! Thanks for the great story, Tom.

Posted by: Anonymous | August 28, 2008 6:49 PM

As a local business owner who has worked with Capsco for over 25 years, I was so happy to read this article. Capsco has always provided me with excellent items and service. I wish Capsco the best of luck in the future.

Posted by: Anonymous | August 28, 2008 8:40 PM

It is a pleasure to read about a company still operating as a family business and being successful. I would hope to read about Capsco again with another generation at the helm.

Posted by: beezus4 | August 28, 2008 9:29 PM

I've always thought a family-run business would be extremely challenging. What an inspiration the Goozh family is. 100 years is nothing to sneeze at!

Posted by: Anonymous | August 28, 2008 10:03 PM

Another interesting column.

I don't buy souvenirs, but I applaud the goozh's ingenuity in changing with tourist trends. It requires constant thinking and planning.

Posted by: robert | August 28, 2008 10:53 PM

Very interesting how in some businesses you have to embrace products that you specifically do not like. I'll have to remember the "wife rule."

Posted by: Matt S. | August 29, 2008 9:57 AM

Whenever I read a story about or see a display of tschotsky, I marvel at how the souvenirs can be sold for what they are sold for and still allow the vendor to make a good living. When you think of costs of material, costs of labor, the costs of molds and manufacturing, utility costs, packaging, shipping, storage, kiosk rental, marketing and some margin at each step of the process, the only conclusion you can reach is that they must sell a heck of lot of mugs. Another interesting profile.

Posted by: Cooper | August 31, 2008 9:19 AM

I have done business with Capsco for at least 15 years- and have nothing but many years of great service and commitment for customer satisfaction. I have not had the pleasure to deal with Jay but have dealt with Michael and Martin and it has been a pleasure. Congratulations on your success and hope it continues.

Posted by: Linda | September 2, 2008 6:15 PM

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