From the March 2006 issue of Startups

What: Interactive entertainment company
Who: Fiona and Steve Markowitz, co-founders of Party Hats Entertainment
Where: San Diego
When: Started in 1993

At a birthday party 14 years ago, Fiona Markowitz, 40, rolled up paper bags into hats and let her children paint them for fun. Encouraged by party attendees who were wowed by her creativity, she and her husband Steve, 45, took a chance at making it a business. Now Party Hats Entertainment offers pre-made hats and many décor options, such as feathers, buttons, beads, silk flowers and more.

Fiona credits some of their success to The Special Event, a yearly international conference and expo for event specialists that she began attending seven years ago. "That's where I learned who the [event] industry people were, what their greatest needs were and what we'd be able to accomplish with [our business]," she recalls.

The Markowitzes honed their business skills while learning about the preparation and psychology that go into planning events. "We try to understand who's going to be there and what the needs are," says Fiona. Initially, there was resistance from event planners who thought the idea wouldn't appeal to adults, but the Markowitzes began sponsoring hat-decorating events at the conventions they attended. Says Steve, "Once those event planners saw the energy and realized that it's for [all] cultures, all ages and both genders, it sold 10 times over."

Party Hats has been hired around the country for events of all sizes and purposes. Requested themes are tied into the service. Customers can also throw a Party Hats event on their own with the company's Party in a Box product. The business, with projected 2006 sales over $1 million, isn't just about hats, however. The Markowitzes have made flip-flops, gloves and handbags, all of which can be pre-decorated on request. The latest product: Pimp Your Tux, which gives men the chance to decorate some tuxedo pieces.

"People say, 'This is the best thing ever,'" says Fiona. "Our best source of work is the people who spread that message to others."