It’s been about 20 years since the U.S. suddenly fell in love with the adorable 5-inch Beanie Baby dolls created by Ty Warner. In a new book called The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute, author Zac Bissonnette details how that passionate devotion rose up suddenly across the U.S. and then came to an end. Along the way, Bissonnette shows how Beanies helped foster the rise of ecommerce and all sorts of other unintended consequences, including — believe it or not — murder.
The Beanie Babies story at times reads like a Shakespearean tragedy as much as business school case study. It also is chock full of irony, such as the fact that an extremely unlikeable man such as Warner could be responsible for creating something so lovable. In an interview, Bissonnette likened Warner’s obsession with creating the “perfect” Beanie to the maniacal focus late Apple CEO Steve Jobs put on designing products such as the iPhone that became a ubiquitous part of the modern world.
Like Jobs, Warner wasn’t afraid to take risks. He ignored the naysayers after Beanie Babies flopped during their initial debut, and pressed forward with a product he believed in more than anyone else. Warner’s obsession even became an asset. When he would suddenly change product designs, collectors and wannabe entrepreneurs would snap up the $5 plushes and resell them on eBay at mark-ups topping 1,000 percent. In 1999, Jeffrey White, a career criminal from West Virginia, shot and killed a coworker at a lumberyard after an argument over Beanie Babies.
Prices for Beanies eventually crashed and collections, which some people insured for thousands of dollars, became worthless. Warner’s hubris eventually got the best of him, too. Earlier this year, he pleaded guilty to tax evasion.
The Fiscal Times spoke with Bissonnette about the colorful rise and dramatic fall of Beanie Babies and the lessons that people can learn from them.
The Fiscal Times (TFT): Your account of Ty Warner's life is both fascinating and sad. How did someone so unlikeable create something so lovable?
Zac Bissonnette (ZB): Ty Warner — really in a way that is not comparable to anyone I’ve read about other than maybe Steve Jobs — channeled every part of his being into making the animals perfect. The flip side of that was that, certainly from the experiences people told me about, once he was done taking care of the plush animals, he didn’t really have a ton of that care to offer the people in his life.
TFT: Beanie Babies flopped after their initial debut. Warner, though, was undaunted. What did he see that others didn't?
ZB: At first, the retailers thought they were cheap-looking and stupid. But as Ty himself once said: “If you know in your heart it is a good idea, don’t give up or compromise it. Before I started the Beanie Baby line, the industry rule was that a $5 collectible item could not work. Enough said?” It took two years for it to happen, but when it did happen, Ty became, in less than three years, the richest man in the history of the American toy industry.
TFT: Did Warner fail to appreciate that bubbles always come to an end?
ZB: No, not at all. One of the things that got him into a little bit of trouble with retailers was that, when Beanie Babies were the hottest thing and retailers were clamoring to order as many as they possibly could, Ty’s sales reps started demanding orders for the company’s much less popular lines as a condition of receiving large shipments of Beanie Babies. Ty had seen a lot of companies become too dependent on one product — he was really well-versed in the rise and fall of Coleco, which went bankrupt after the end of the Cabbage Patch craze — and he was really trying to use the demand for Beanie Babies to transition himself into being the leader in traditional stuffed animals.
The emphasis on diversification didn’t really work; Beanie Babies were well over 90 percent of the company’s sales at the height of the craze, but the company has rebounded quite well with other lines, like Beanie Boos, over the past few years.
TFT: Beanie Babies are still around, but the site now offers beanies of well-known characters such as Olaf from Frozen. When did the company change its business model and why did they do it?
ZB: After the collapse of Beanie mania in 1999, Ty Inc. returned to earth and was once again governed by the same problems that governed the rest of the industry — the problems that had made Ty’s success so incredibly unlikely in the first place.
Ty dipped into that [licensing] business for the first time with Garfield-branded plush in 2004, and then expanded into brands like Hello Kitty, Disney, major league sports teams and My Little Pony. That licensing business, combined with popular original lines like Beanie Boos, have not only kept the company alive but made it, more than 15 years after the mania ended, the most successful plush company in the world. Still: Ty’s sales are only about 5 percent of what they once were, which is a testament to just how big the Beanie craze was.
TFT: How is Ty Warner holding up in light of his tax evasion conviction?
ZB: I can’t speak to its impact on him emotionally, but I can say that he’s doing amazing stuff with his community service obligations that were handed down as part of his sentence. I’ve spoken with the principal at The Leo School in Chicago, where Ty has been mentoring underprivileged kids who have an interest in business. As mysterious as he is — and as difficult as most of the people who’ve worked with him remember him being — he really has done amazing work.
TFT: I am sure there are plenty of people who still have vast Beanie Baby collections in their homes. What is your advice for them?
ZB: An antique dealer I know told me that once in a while someone will tell her that they have a large collection of Beanie Babies they’re looking to sell. They’ll say stuff like, “I have a Beanie Baby collection insured for $5,000!” And when they say that, she says: “My advice to you is to drive your car into a bad neighborhood and leave it there for a few days with the doors unlocked.”
All kidding aside though, they’re wonderful toys and, if you’re like most people who have them, yours are in mint condition because you once thought they would make you rich. The good news: Those animals will make a wonderful gift for a local hospital or police station, where they will provide comfort to people too young to remember that there was a time when Beanie Babies drove people to madness.
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