#178: Spin Master – Yep, The Toy Company

Going from public domain toys to Spin Master Originals was a must. How did Harari, Rabi and Verity do it? It wasn’t with the devil sticks.

Dave Young:

Welcome to the Empire Builders podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Simple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is, well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. Here’s one of those.

[Seaside Plumbing Ad]

Dave Young:

Welcome back to the Empire Builders podcast recording live this morning from the North Patio at the Wizard Academy classroom tower.

Stephen Semple:

I always get turned around. So this is north, is it?

Dave Young:

That’s north.

Stephen Semple:

Okay. All right. I always get turned around here.

Dave Young:

The causeway, the ditch thing that runs-

Stephen Semple:

Oh, right. Of course. That’s east-west, of course.

Dave Young:

No, that’s north-south.

Stephen Semple:

Oh, right.

Dave Young:

North-South.

Stephen Semple:

Right.

Dave Young:

If you stand in the middle of it and look up, you can see the North Star over the, and so we’re on the other side.

Stephen Semple:

Right. Of course we are. Okay.

Dave Young:

Yeah.

Stephen Semple:

I always get turned around.

Dave Young:

Yeah, that’s okay.

Stephen Semple:

Okay.

Dave Young:

It has taken me a while. Anyway, we’re recording a podcast.

Stephen Semple:

Yes. We talk.

Dave Young:

And we’re sitting outdoors. And just as I was hitting the record button, you said Spin Master.

Stephen Semple:

Spin Master.

Dave Young:

This is an exercise bike.

Stephen Semple:

Toy company.

Dave Young:

Toy company. What am I thinking, spin cycle? First of all, I don’t play with toys and I don’t ride exercise bikes, so I’m at a loss.

Stephen Semple:

They’re best known for Paw Patrol. And you wouldn’t know about that either ’cause you don’t have any little kids in your life.

Dave Young:

No, my little-

Stephen Semple:

Anybody who’s got little kids in their life know Paw Patrol.

Dave Young:

All right. Well, I am all ears.

Stephen Semple:

Give you an idea how big the Paw Patrol franchise is, 14 billion.

Dave Young:

Wait. 14 billion?

Stephen Semple:

Billion in sales when you add all their stuff up.

Dave Young:

Wow. Okay.

Stephen Semple:

Yeah.

Dave Young:

And these are toys?

Stephen Semple:

Yes.

Dave Young:

Okay.

Stephen Semple:

They are toys and they are a Canadian company, and my niece used to work for them.

Dave Young:

Really?

Stephen Semple:

Yes.

Dave Young:

Okay.

Stephen Semple:

This was actually a little extra fun to do.

Dave Young:

Some insider info.

Stephen Semple:

Yeah. Well, not really, but yeah, they’re a Canadian company in quite a little success store.

Dave Young:

Little, yeah.

Stephen Semple:

Then we’ll talk about later, they also went on to have bought some other brands such as Rubik’s Cube. They now own Rubik’s Cube.

Dave Young:

All right.

Stephen Semple:

Yeah. It was founded by Ronan Harari, Antoine Rabi and Ben Verity. They started the business in the late 1990s. And around that time, patterns of play does not change.

Dave Young:

Okay.

Stephen Semple:

Toys may change, way kids play with things, the way even adults play with things don’t change. And so the key is to find things that fit into those play patterns. That idea has basically led this company to be one of the greatest success stories in the toy space in the last 20 years. Yeah. And this whole idea, the key to find things that fit in those play patterns basically led to the creation of Paw Patrol, which is their biggest success is it was built very intentionally.

Dave Young:

[inaudible 00:04:01].

Stephen Semple:

It was very thoughtful, very intentional in terms of what they did. As you listen to this story, it all led to the knowledge that built Paw Patrol. In the late 1990s, toys really started to change, but the pattern of play did not. The key to their success on Paw patrol was recognizing these play patterns, which is what made them, quite frankly, the most successful toy brand in the last 20 years. And it was built very intentionally.

Dave Young:

Play patterns didn’t change. Kids are playing the same as we-

Stephen Semple:

Yes, as they always have. The toys have changed, but the patterns of play have not.

Dave Young:

Really, we never really needed to depart from just sticks or…

Stephen Semple:

Well keep that in mind when we’re going through this. There’s an interesting stick story.

Dave Young:

Okay.

Stephen Semple:

One of the founders, Ronan Harari. He moved to Toronto when he was five from South Africa, and his dad ran a carpet business. And he was an average student, but he had a learning disability, dysgraphia. And dysgraphia is where the hands cannot keep up with how the brain is thinking.

Dave Young:

Okay.

Stephen Semple:

And basically, it’s almost like he describes, there’s this constant rebooting that’s going on in the brain. It’s wired slightly differently, but for him, visual detail is very hot in terms of his attention to those details. He went to the University of Western Ontario, and he knew from a young age he wanted to own his own business ’cause of that endless potential. He of course took business in college, and while in college, he started this little poster business where what they would do is take pictures of frosh wheat, print these collages and sell advertising. Went to five different universities, basically made a hundred thousand dollars doing it. Did really well.

Dave Young:

Yeah.

Stephen Semple:

Then he saw this item that his mother brought from Israel, and it was a knockoff of the Chia Pet. Remember the Chia Pets?

Dave Young:

Sure, yeah, yeah.

Stephen Semple:

Yeah. Except this one was more like a ball of sawdust that you immersed in water and the seeds would grow. And his mother had read that in Israel that this was a big craze in the country. He decided I got to make a version in Canada and call it Earth Buddies.

Dave Young:

Okay.

Stephen Semple:

He goes to Kmart, buy some seed, pantyhose, gets some sawdust. It’s 1994, and then make 5,000 of these for Mother’s Day. That was the plan.

Dave Young:

Okay.

Stephen Semple:

And his sister-in-law made-

Dave Young:

Wait, so pantyhose with sawdust and seeds.

Stephen Semple:

And seeds. Yes, yes.

Dave Young:

Okay.

Stephen Semple:

And he also, they made this contraption that would allow them to make it at scale. They found this small factory space that they could use the three of them, and they set up on the street and they sold it on the street. And they basically sold 800 of 5,000 that they made.

Dave Young:

Oh, man. Okay.

Stephen Semple:

But they then also through their mom found a gift distributor. The company sold toys, Samco Sales, and in a couple of weeks they had an order for 26,000 pieces at Walmart Canada.

Dave Young:

All right.

Stephen Semple:

They’re off to the races. And they had this fun idea where they would go to homeless shelters to find people to work in the warehouse, ’cause it was like this really simple job. Then they got this massive order from Kmart, and it’s really funny how they got this Kmart order. It’s a real story of luck and persistence. Antoine, when he was backpacking, a year before this in Europe, met this guy who was really connected. And Antoine called this guy when they had this product going on, especially when they sold it into Walmart. And he said, “Do you know anybody at Kmart?” At the time, Kmart was big.

Dave Young:

Yeah.

Stephen Semple:

I know Kmart’s a big [inaudible 00:07:29]. And he said, “Sure, I can introduce you to a guy.” He introduces the guy and they travel down to meet him. Turns out that the contacts not a buyer, just a guy who works at Kmart.

Dave Young:

Just a guy, just runs the blue light special light, that’s it.

Stephen Semple:

But instead of leaving, they wander around the building and they find the buyer. And then they say to the buyer, “Hey, could we meet with you?” The buyer says, “Sure, you can meet with me at 3:30.” And they’re like, okay. They still choose not to leave the building ’cause they may never get in again.

Dave Young:

Yeah. You got to just wander around a bit.

Stephen Semple:

Now, what they also noticed was she had eight other versions of Earth Buddies sitting on the desk at different names.

Dave Young:

Oh, the buyer did?

Stephen Semple:

Yes.

Dave Young:

Lots of other people selling the same thing. Yeah.

Stephen Semple:

Immediately Antoine was like, yeah, I’m going to need to drop the price to beat out the others ’cause he suddenly realizes she has lots of different options. They decide to start with an order of 48,000 pieces, and pretty soon they’re doing 500,000 pieces through Kmart. They had to move to a bigger faci