Cardex Moving to Larger Space, Looking at Going Public
“Why can’t you have pre-paid everything?”
Those words spurred Alan Safahi to start his incentive company, Cardex, with just one employee back in 1995.
Cardex now is busting at the seams with 50 employees at its 4,000-square-foot office in Newport Beach, and it will be moving into a 22,000-square-foot office in the Irvine Spectrum at the end of March.
“We couldn’t hire any more because we have no room,” said Safahi, the company’s president and CEO. He said he is also looking for more capital to expand his business, and hopes to go public in 2001.
Cardex develops and distributes incentive programs based on pre-paid cards that can be used to buy services or merchandise.
Safahi heard those words, “pre-paid everything,” from one of his corporate customers when he was running CalCom, a seven-person operation selling cell phones, service and pre-paid calling cards. He also was selling the pre-paid calling cards in bulk to companies for use with internal promotions.
He started developing partnerships with retailers, airlines, hotels, restaurants and department stores and selling gift certificates from those stores in the credit-card form.
“I had a whole new business on my hands,” Safahi said.
He sold CalCom and started to work full-time on Cardex.
Cardex now sells pre-paid cards for everything offered by vendors ranging from Big 5 Sporting Goods and Victoria’s Secret to Olive Garden and American Airlines. In all, Cardex has partnerships with more than 100 retail stores, restaurants, travel companies and others.
Cardex also has developed a partnership with MasterCard to distribute debit cards in the incentive programs. With the debit cards, the rewarded employees can take the cards and use them anywhere that MasterCard is accepted.
“You cover the bases with debit cards,” Safahi said.
Cardex packages the gift cards in incentive programs and sells them to companies. It also develops custom programs for companies to promote everything from sales to safety to ride-sharing.
“We’re modifying people’s behavior through rewards and reinforcement,” Safahi said. And the company practices what it preaches, because Safahi offers incentive programs for his own employees.
Most of the 225-plus traditional incentive companies are on the East Coast or in the Midwest, where manufacturing is a large sector. They typically use the points-and-catalog system or gift certificates for single stores.
Cardex has also developed an Internet site where small and mid-size companies can get the cards for their incentive programs. Safahi said such companies traditionally have not participated in incentive programs because of cost and complexity.
“Companies with less than a $100,000 (incentive) budget will find it more cost-effective to go to our web site,” he said.
Safahi also said he has companies with incentive budgets of $3 million to $5 million, but most fall in the range between $100,000 and $3 million.
The company is pulling in more than $10 million in revenue per year and Safahi is planning to take Cardex public in the middle of next year.
“The market is fragmented. We have an opportunity to grow rapidly,” Safahi said.
With the capital raised in the IPO, Safahi plans to open up more offices across the nation. n
