Spin Master/PAW Patrol: Ronnen Harary

Podcast Summary

• From novelty gifts to Paw Patrol: Haronen Harari's entrepreneurial journey: Intuition, pattern spotting, and solving a problem you care about can lead to business success. Overcoming challenges and staying true to your vision are crucial. Company culture plays a significant role in driving business success.

  Building a successful business involves overcoming challenges, adapting to changes, and staying true to your vision. Haronen Harari, the founder of a toy company that launched the children's franchise Paw Patrol, shared his story on the "How I Built This" podcast. Harari started out making novelty gifts from pantyhose and sawdust but faced numerous setbacks before finding product-market fit with Paw Patrol. He emphasized the importance of intuition, pattern spotting, and solving a problem you have that others also experience. The toy industry is particularly challenging due to the fickleness of children as customers. Despite these challenges, Harari persevered and built an enduring brand. Another key takeaway is the importance of company culture in driving business success. Insparity, a leading HR provider, offers guidance on building a culture aligned with business goals. The National Security Agency also emphasizes the importance of innovation and a supportive work environment. Lastly, for Wondery Plus subscribers, listening to "How I Built This" episodes early and ad-free is a great perk. And for those interested in advancing their careers, the NSA is hiring exceptional individuals for world-class intelligence and cybersecurity projects. Overall, the podcast episode offers valuable insights for entrepreneurs, business owners, and anyone interested in innovation and building something meaningful.

• Leveraging visual detail and entrepreneurial spirit to overcome academic challenges and build a toy empire: Successful entrepreneurs like Renéne Harari of Spin Master discovered the importance of understanding children's play patterns to create iconic toys and brands. Harari's dysgraphia, a learning disability, fueled his visual acumen and business savvy, leading him to build Spin Master from humble beginnings to a global toy powerhouse.

  Understanding the fundamental patterns of play in children is key to creating successful toys and brands. Renéne Harari and his co-founders at Spin Master discovered this insight in the late 1990s, and it led them to create iconic toys and brands like Bakugan, Airhogs, Flicks Tricks, and Paw Patrol. Harari, who grew up with dysgraphia, a learning disability that made writing challenging, learned to leverage his attention to visual detail and entrepreneurial spirit to overcome academic challenges and pursue business. Their early ventures included a poster business during college, and their persistence and intuition eventually led them to build Spin Master into a global toy powerhouse. Despite facing challenges in school, Harari's determination and unique perspective ultimately contributed to his success in business.

• Turning a frost week photo opportunity into a business: Being entrepreneurial, resourceful, and seizing opportunities can lead to significant success

  Identifying opportunities requires being open-minded and resourceful. The speaker's success story began with taking pictures of kids during frost week and turning it into a business by selling advertising around the collage. Later, they discovered the grasshead trend in Israel and saw an opportunity to bring it to Canada. They didn't let the seemingly crazy idea discourage them and started manufacturing the Earth Buddies with the help of their family and friends. The lack of licensing or patent for the product didn't stop them either. With determination and teamwork, they produced 5,000 pieces for Mother's Day and expanded their business to five universities in Ontario, grossing $100,000. The story illustrates that being entrepreneurial, resourceful, and seizing opportunities can lead to significant success.

• Believing in your product, being resourceful, and leveraging your network: Starting with a simple idea and a plumbing tube as a seed planter, Earth Buddies founders turned their business into a profitable success by determination, creativity, and networking. They sold on the streets, secured deals with major retailers, and even found a factory manager through a backpacking connection in Europe.

  Determination, creativity, and networking played crucial roles in the success story of Earth Buddies. The founders started with a simple idea, using a plumbing tube as a seed planter, and turned it into a profitable business. They initially sold their products on the streets and later secured deals with major retailers like Walmart and Kmart. Their third founder, Ben Virati, had no manufacturing experience but was able to run the factory with the help of experienced individuals, including a former factory manager who was homeless. The team's persistence paid off, as they eventually secured a meeting with a buyer from Kmart through a connection made while backpacking in Europe. The story illustrates the importance of believing in your product, being resourceful, and leveraging your network to achieve business success.

• Adaptability and price-competitiveness in business negotiations: Being flexible with pricing and able to scale up production can help businesses stand out in crowded markets and secure large orders.

  Being flexible and competitive in pricing can be a game-changer in business negotiations. In the story, the entrepreneur found himself in a crowded market with similar products. Instead of giving up, he lowered his price to make his offering more compelling. This decision led to a significant order from Kmart, worth nearly $80,000. This experience demonstrates the importance of being adaptable and price-competitive in order to stand out in a crowded market and secure business opportunities. Additionally, the entrepreneur's ability to scale up production as orders grew was crucial to the success of his company. By continuously improving their facilities and hiring more workers, they were able to meet the demand for their products. This story highlights the importance of being agile and responsive to market conditions in order to grow a successful business.

• Identifying trends and creating unique brands: Capitalizing on trends and creating unique brands can lead to success for toy companies, as demonstrated by Spin Master's journey from discovering juggling toys to designing and selling their own global products.

  The success of Spin Master, a toy company, can be attributed to identifying trends, creating a unique brand, and persevering through disagreements. The founders, who met through the sale of a product at Walmart Canada, discovered the trend of juggling toys at a toy fair in New York. They capitalized on this trend by creating a brand called Spin Master Devil Sticks, which became a hit among young children. Despite disagreements among the partners about strategy, product, and marketing, they always aimed for unanimous consent and apologized when necessary. After two hits, Earth Buddy and Devil Sticks, they decided to design and develop their own products and sell them globally, leading to significant growth.

• Discovering and developing overlooked inventions: Seamless Toys' success came from discovering inventions overlooked by larger companies and investing heavily in their development to create unique branded products.

  Seamless Toys' success with the AirHogs toy came from their ability to discover inventions that had been overlooked by larger toy companies and develop them into branded products. This was evident when they came across an airplane invention from British inventors John Dixon and Peter Manning, which had been rejected by other companies for years. Seamless bought the license for the product and spent significant resources on design, development, and manufacturing to turn it into a reliable and marketable toy. Despite investing all their profits into the project before having orders, they managed to sell it at the toy fair and began production. This strategy of discovering and developing overlooked inventions allowed Seamless Toys to differentiate themselves in the industry and ultimately contribute to their success.

• Taking calculated risks without extensive research or testing: Companies succeed by believing in their product, continuously innovating, and combining passion, teamwork, and innovation.

  Successful companies often take calculated risks without extensive market research or testing, relying instead on their passion and belief in their product. The team behind Spin Master, for instance, launched the Air Hog without any research or testing, based solely on their love for the product. This approach could have resulted in a disaster, but their belief in the product paid off and the Air Hog became a hit. However, successful companies don't rest on their laurels. They continuously innovate and work on their next big idea to stay ahead of the competition. Atlassian, for example, is using AI to transform teamwork and make impossibilities a reality. Similarly, Canva helps teams design compelling visual content to make an impact at work. And Schwab's thematic investing allows individuals to invest in emerging trends and ideas they believe in. In the end, it's the combination of passion, innovation, and teamwork that leads to success.

• From design to sales: The story of Air Hogs: Self-financed founders designed, developed, and marketed a successful flying toy, reaching $35M in sales in 1998, by focusing on innovation, effective marketing, and continuous product development.

  The success of Air Hogs, a mechanical flying toy launched in 1998, came from a combination of innovation, effective marketing, and a focus on continuous product development. The founders, entirely self-financed, designed, developed, and manufactured the product themselves, learning valuable engineering and business skills in the process. They marketed it extensively through TV commercials, point-of-sale displays, and international distribution. Once Air Hogs took off, sales reached $35 million by the end of 1998, with over a million units sold. However, the toy industry's fast-paced and competitive nature meant that the team had to continually innovate and diversify, leading to the creation of new flying toys and expansion into other product categories. Despite the seriousness and intensity of the business, the founders' dedication and focus on innovation and quality ultimately led to their success.

• Discovering hits without market research: Successful toys often result from intuition and personal enjoyment, even without market research or data analysis. Consensus among founders and inventors is important, but not always necessary.

  In the early days of Spin Master, the company's success with the Air Hogs product came unexpectedly without any market research or data analysis. Instead, the founders, Mark Segal and Ronnen Harary, relied on their intuition and personal enjoyment of the product. They visited inventors in person to assess potential inventions, and when they had universal consensus, the likelihood of success was higher. For instance, they discovered Flip Tricks miniature BMX bikes during a visit to an inventor's office in Chicago and instantly fell in love with it. They didn't conduct any market research or analyze statistics, but rather trusted their instincts and the excitement of the inventors. The toy industry is known for its intuitive and creative nature, requiring a deep understanding of play patterns and history. While some products, like Air Hogs and Flip Tricks, became hits, others, like Don't Free Freddy, failed. The founders learned that consensus is essential, but not always necessary, for making successful decisions. Overall, their approach was to always think and feel like a seven-year-old, keeping the focus on fun and creativity.

• Understanding play patterns and innovating within them: Successfully creating a toy for kids requires understanding historical play patterns and continuously seeking out new innovations to resonate with kids

  Creating a successful toy for kids is not an easy task that can be accomplished solely in a boardroom with market research. Instead, it requires understanding the play patterns that have existed throughout history and finding ways to innovate within those categories. This was exemplified by the failure of the KeyCharmCuties product in 2001, where the company faced tough competition from established brands like Mattel and Hasbro. However, instead of giving up, the company continued to look for inspiration in places like Japan, where innovative toy design is a cultural norm. By staying focused on the play patterns that resonate with kids and continuously seeking out new ideas, toy companies can create products that spark joy and excitement.

• Embracing unique ideas from Japan: Spinmaster's success in the toy industry stems from sourcing unique Japanese ideas and forming strategic partnerships, leading to the creation and global success of Bakugan.

  Spinmaster's success in the toy industry can be attributed to their willingness to embrace unique ideas and partnerships, particularly those originating from Japan. A pivotal decision in 2005 involved moving their director of global licensing to Japan to source new ideas. This led to the creation of Bakugan, a toy that combined marbles and transformers, which became a billion-dollar franchise. The strategic launch of a cartoon to accompany the toy acted as a powerful advertisement, enhancing the toy's magic and capturing the hearts and minds of children worldwide. Spinmaster's transition into a 360 media company around 2008 was a natural progression, with Bakugan serving as the genesis for this new direction.

• Relying too heavily on one product can lead to business risks: Diversify product line and avoid relying too much on any one product or revenue stream to minimize business risks

  Relying too heavily on one product or revenue stream can be risky for a business. As discussed in the interview, Spin Master experienced significant sales decline after the success of Bakugan, which accounted for over 45% of their income. The company's subsequent product launches, such as Redikai, did not connect with consumers, and the recession did not impact toy sales as significantly as expected. This left Spin Master in a slump, losing millions of dollars. The retirement of Bakugan in 2013 resulted in a sudden decrease in sales from hundreds of millions to zero. To avoid such risks, businesses should aim for a diverse product line and not rely too heavily on any one product or revenue stream. Additionally, understanding the natural life cycle of products and planning accordingly can help mitigate potential downturns.

• Surviving financial loss through tough decisions and refocusing efforts: During financial struggles, companies must make tough decisions, invest in new product lines, and remain committed to innovation and growth.

  During a period of significant financial loss, our company had to make tough decisions to survive. We had to be more selective with product offerings and undergo multiple rounds of restructuring, resulting in a large reduction in workforce. This was a stressful time, but it also forced us to refocus and invest in research and development for a new product line targeted at preschoolers, which eventually became Paw Patrol. It's challenging to achieve success in the same genre multiple times, so we shifted our focus to a new category. Despite the difficulties, we remained committed to innovation and growth.

• The success of Paw Patrol: Transformation, storytelling, and relatable characters: Paw Patrol's success comes from its unique blend of magical transformation, storytelling, and relatable characters that resonated with preschoolers, leading to a toy franchise and enduring popularity.

  The success of the children's animated series "Paw Patrol" can be attributed to its unique blend of transformation, storytelling, and relatable characters that resonated with a preschool audience. The creators identified a gap in the market for this play pattern in this demographic and sent out a brief to various creatives. Keith Chapman's proposal, titled "Robbie and the Rescue Pups," stood out with its concept of magical transformation backpacks and dog houses that turned into vehicles. This combination of story and transformation captured the imagination of children and led to the creation of a toy franchise that has become one of the biggest since Mighty Morphin Power Rangers. The enduring success of Paw Patrol is due in part to its ability to keep the characters relevant and timely through new content and innovations.

• From a simple toy idea to a multi-billion dollar franchise: Spin Master grew by continuously innovating, diversifying, and adapting to market trends, and setting up for long-term success through a public offering and leadership transition.

  Spin Master, a toy company started with a simple idea, grew into a multi-billion dollar franchise by continuously innovating, diversifying, and adapting to market trends. The founders, Ron and Anton, went public in 2015 not just to raise funds but to set the company up for long-term success and ensure its survival beyond them. They learned from past experiences, such as the reliance on one product (Bakugan) leading to significant revenue loss when sales declined. To mitigate this risk, they diversified their portfolio by acquiring companies specializing in pool toys, puzzles, games, and digital products. The entertainment industry, with its ever-evolving trends, demands constant movement and innovation. Ron and Anton's decision to step down from their leadership roles was not just about retirement but part of a transition plan to enable the business to continue thriving beyond its founders.

• The Role of Hard Work and Luck in Business Success: Success in business requires dedication, the right people, and a bit of luck in partnerships and discoveries. Setbacks and failures are normal, but learning from them keeps you moving forward.

  Success in business involves a combination of hard work and luck. Rene Harari, co-founder of Spin Master, attributes their company's success to their dedication and the people they've worked with, but also acknowledges the role of luck in their partnerships and discoveries. The early 2000s saw the rise of controversial reality TV shows, like "The Swan," which offered contestants a transformation and a competition, but ultimately became a viewing nightmare. Harari's story and the failures of shows like "The Swan" demonstrate that both hard work and luck play a role in achieving success, and that setbacks and failures are a natural part of the journey. It's important to learn from these experiences and keep moving forward.