And so began Masada's journey to becoming one of America's top comedy impresarios. Supporting himself through a series of odd jobs at comedy shops on the Sunset Strip, Masada was befriended by a group of local comics. It was here that he learned the rhythm of a good joke and honed his instincts for spotting talent.
Though he enjoyed comedy once he found it, making it a career path was all but accidental. "If I'd have become a dishwasher then," he says, "I would have gone on to be the best dishwasher."
PAYING THE TALENT. Today, Masada's flagship Laugh Factory on Sunset Boulevard in Hollywood is not only successful -- with packed houses for the past 25 years -- but also one of the most influential proving grounds for comedic talent in the nation. Entertainment producers and managers routinely prowl his club looking for the next Jim Carrey, Jamie Foxx, or Chris Rock -- all of whom got their start on Masada's stage.
In building his kingdom of comedy, Masada has groomed and showcased some of the biggest names in the industry. In the process, he has helped change the economics of the business by paying all comics for their work, helping to promote diversity within their ranks, and finding new revenue channels through crossover promotion.
"Jamie has really grown his club in a really hard business," says comedian Bob Saget, former star of the sitcom Full House, who has known Masada for 25 years. "Not only does he have a good gauge for talent, but he's a guy who's always helping people." Saget says the fact that even the biggest-name comics return on their own -- Chris Rock performed just a few days after hosting the Oscars -- is a testament to the club's proprietor.
"When I perform at the Laugh Factory, it feels like a home for me," he adds. "He always treats me really well, and it is one of the best spaces for doing stand-up. It's like a tiny music hall."
SPLITTING RECEIPTS. With that success has come inevitable expansion. Just last year, Masada opened his newest venue, a $4.5 million multilevel complex in New York's Times Square, and a third club, in Long Beach, Calif., is on its way in June. Like many successful entrepreneurs who have become industry standard-bearers, he faces a challenge: building upon his self-made reputation without diluting a brand that is now considered among the best.
In 1979, when he was barely 20, Masada used a $10,000 loan from a producer friend to open his now-flagship club. Almost from the start, Masada distinguished himself on a number of fronts. For one, there was the pay. At the time, most up-and-coming performers worked simply for the exposure. But Masada always split the door receipts, even when there wasn't much to split.
Following his opening night, Masada says he gave headliner Richard Pryor his cut: $2.50. "He then pulled out a $100 bill from his pocket and gave it to me," Masada recalls. "He said, 'Your heart is bigger than your wallet.'"
Masada also opened his stage to overlooked voices. During the early 1980s, the dominant clubs in Los Angeles were the Comedy Store and the Improv. And most of the marquee names were white males. Masada nurtured talent among African-American ("We had a Black Pack," he says), Latino, and female comics, as a way to differentiate his club from the other venues as well as to expand both the talent pool and audience.
From day one, his business philosophy remained simple. "I wanted to make people laugh," he says. "I believe if you enjoy what you're doing, the money will follow."
PRESERVING QUALITY. Masada does little advertising, instead relying on word-of-mouth and a spectrum of crossover partnerships, including the Laugh Factory Minute, a daily radio spot that airs routines from the club's shows to 240 markets and 19 million people through Premier Radio Networks. And recently he joined with Nick at Night, using his New York club as backdrop for the network's Funniest Mom Contest.
While Masada says his West Coast club has been profitable for years, with the new Times Square venue, he has had to raise awareness for an audience not nearly as familiar with the Laugh Factory name. Masada's foray into the Big Apple came in large part as a result of an invitation from former Mayor Rudolph Giuliani, who was encouraging new businesses in the wake of the 9/11 terrorist attacks. "I thought, 'Yes, New York needs some laughs,'" Masada says.
Despite the recent expansion, Masada isn't interested in a rapid rollout of Laugh Factories, which he believes could weaken his brand. "I get so many offers," he says. "Jamie Foxx and Chris Tucker have asked me to partner. But I am very particular. I want to make sure to go to places where I will be successful. I don't want franchises like McDonald's."
NURTURING NEOPHYTES. In addition to operating his clubs, Masada manages a roster of comics. Past clients have included Rodney Dangerfield and the Wayans brothers. He also serves as a TV consultant and has produced comedy specials like Fox's Comic Strip Live. These moves help create a pipeline between comics and opportunities, and further enhance the Laugh Factory's standing as a talent hothouse.
A business based on laughs means you have to keep them coming. Although a number of big names spent their fledgling years on his stages, Masada continues to nurture newcomers. Every Tuesday he holds an open-mike night, drawing comic hopefuls from around the world. And afterward, Masada offers individual feedback and advice.
In the business for nearly 30 years, Masada has developed an instinctual grasp of what is funny -- and, more important, what the audience will find funny. If a routine is smart and makes him laugh, he's willing to take a chance. "Sometimes you're going to lose," he says. "It's the audience who decides if they're stars. I give them a spot. I can't take credit for their talent."
BRAND'S ATTRACTION. After his own hardscrabble start, Masada maintains a soft spot for those in need -- and uses comedy to help. Every year, he provides Thanksgiving and holiday dinners for struggling actors and comics. And since 1984, he has run the Laugh Factory Comedy Camp, giving disadvantaged children in Los Angeles the opportunity to spend 16 Saturdays working on their own routines with mentors like Ellen DeGeneres. This summer, he'll launch the camp in New York.
Masada has watched the industry evolve over the years, but perhaps the biggest change has been his what his club's audience expects. "When I started, they would come for the big name on stage," he says. "Now it doesn't matter. They come because they know they're going to see a good show." Perman is a reporter for BusinessWeek Online in New York