E71: No Experience Necessary with Ronnen Harary

If you have a dream and a vision, starting sooner rather than later will bring compounding rewards and benefits down the road. Being a young entrepreneur will give you ownership, equity, a stake in the upside, financial and otherwise, of everything you create. It will give you control— control over your own destiny, control over your time and your environment, control over how you work, when you work, and with whom. It will give you a blank canvas to express yourself and share your vision of the world. It will give you the opportunity to build a career that's in total alignment with your talents, your sense of purpose, and your values. Most importantly, more than anything, it will give you the ability to be independent and self-reliant, allowing you to live a life in which you remain true to yourself. Make no mistake, There are many, many risks involved in starting a new business or any other endeavor, but you only get one life, and the single greatest risk of all is to look back at the end of that life and realize you didn't live the one you wanted.

This podcast is brought to you by Ginsler Wealth. The information discussed today is meant to be general in nature and not tailored to specific investing circumstances. This means that you should talk to your regular Ginsler Wealth advisor, or your own advisor, before acting on any information we discuss today. Nothing in this podcast is intended to be a solicitation, and past performance does not guarantee future returns. This podcast episode is specifically aimed at those in their 20s, but I won't tell anyone if the older folks want to listen as well. Today on The Limited Podcast, we speak with Ronen Harari, co-founder and chairman of Spin Master, a multi-billion-dollar public company, and author of the new book No Experience Necessary. We discuss his background and a learning disability that turned out to be a gift, how 3 young partners built one of the world's leading toy and entertainment companies, and why I had a bowl of bananas waiting on my desk for when Ronen arrived. Let's go. Welcome everybody. Hello. Another episode of the Unlimited Podcast. Very excited to have the guest that we have, but before I introduce our guest. You probably would have already heard a little clip from his book, which is what started off the podcast. Uh, so you probably know already. Let me go back in time and tell you a little bit of a story. When I was in second year business school at the Ivy— well, actually I was at Western University prior to getting into Ivy. And in the second year of business school, you have to do a project in a class called Biz 257. You have to create some sort of product or service. Most people created a product. And do all the research and figure out how you're going to market it and cost it. And this is your penultimate project for your second year, which has a big impact about, of your ability to get into Ivy because your professor or teacher would give you a reference and whatnot. And so this is in 1996. And by 1996, the only thing everyone was talking about leading up to that project and what are we going to do is Could we possibly do something like these guys did from Western called the Earth Buddy, where they somehow figured out how to stuff a nylon sock and let the, you know, the grass grow out of its head? And it was already legendary in 1996. And, um, we did not do Earth Buddy or a derivation of that for our project. We did something called the PC Buddy, actually, uh, which didn't go very far. It was a It was like a whole container to put your computer, your screen, your— oh yeah, we went to Home Depot. We priced out the, uh, all the wood. Needless to say, we didn't launch it like you. I'm talking to my guest across the table here, like you did with EarthBuddy. Uh, if we did, I might not be sitting here. Uh, but anyways, so we're here with the, with the creator of EarthBuddy, uh, Ronen Harari. Pleasure to have you here. Thank you so much.

Thanks for taking the time.

No, thank you. One of the reasons why we're here is Renen has written a book called No Experience Necessary, and we're going to talk a lot about that here. For those who don't know Renen, let me give a quick intro as I always do. Uh, Renen Harari co-founded Spin Master, Spin Master Toys, at 23 with 2 friends, no toy industry experience, and an initial investment of $10,000. What began with a nylon stocking that I've alluded to. Nylon stocking, sawdust, and grass seed became the company behind Air Hogs, Bakugan— I hope I pronounced that right— Hatchimals, and Paw Patrol, a global children's entertainment business generating more than $2 billion in annual revenue, public company as well. And in this new book, No Experience Necessary, Renée argues that curiosity, passion, naïveté, and fearlessness Can be genuine competitive advantages. So we'll dive into your story and that your two stories, your story and the book and the book, the book story. So again, I really appreciate you being here. And I have read the book and it is fantastic. So I've already told René, uh, all three of my kids will be getting a copy of this and we'll see, uh, if this resonates with listeners.

Well, that's great. First of all, 257, I remember Being at Western and being in that class, I never went to Ivy, but I did Business 257 and I had a bagel business.

Was it?

Yeah, that was my idea. And I came to the class and I brought bagels and I presented it to everybody.

Amazing.

Um, I love this.

It was good. And so when I was doing research for this, I, I just couldn't remember if it, I mean, I read your book and didn't mention it at all, but I didn't know if EarthBuddy was a 257 project, but I realized it was not. Okay. We keep talking about EarthBuddy. Your book opens with that story for the most part. Can you just give our listeners a little bit of history, like even way back before EarthBuddy, like what was the path that got you to that? And basically having, as you say, no choice but to launch this EarthBuddy.

You know, I was really fortunate or I would say, yeah, I'd say, let's say fortunate. I got identified with a learning disability at 10 years old and school was super difficult for me. So I, I knew intuitively as a kid that I wanted to go into business for myself. Plus also my parents had a small business. My dad had a Persian carpet gallery here in Toronto. And so there was a lot of entrepreneurialism around the house. We had dinner together as a family every night at 6:30 and we only talked about business. My mother worked in the business too. So it was like very business oriented. But I would say between that and my learning disability, when I graduated from university, I knew that I wanted to do something. And my partnership with my one partner, Anton, was formed on the tennis court at Camp Northland.

Okay. Okay.

And we grew up together and we were super competitive. And we actually said we were never going to work together because he was also business-oriented. We were super competitive and we said that and we did that till we needed to work together. Right. And after our first year of university, we were selling fertilizer door to door and it was a really tough gig. And then we noticed that the guys that were a year ahead of us, they were doing this poster, taking pictures of kids during Frosh Week and selling advertising around the perimeter and giving it out to students for free, had graduated and weren't doing it anymore. So I turned to Anton like, why don't we do it? And he's like, great. And that's what we did. And we grossed $12,000 our first year.

It's a huge amount of money.

Yeah.

1990. '91, '92.

I took $4,000. We had $4,000 deposits. I took 2. I went to Europe. Nice. Came back in the fall, took pictures of all the kids, got the posters out. By the time we ended up university, we had this campus faces business. We were doing it at 5 schools, graduated with no debt. And then just after we graduated, my mother was reading the Israeli newspaper and it had the story about these people that were making these grass heads. 6 of them were making them in Israel and they all disclosed all their sales numbers. Hmm. Yeah. And you added it up and added up to 300,000 pieces in a country of 10 million and no one was doing it here in Canada. So again, I went to Anton, I said to him, what do you think? Do you want to make this product? And he thought it was crazy. And secretly, I think he was, it wasn't secret. He was, he was interviewing at Nabisco.

Oh, okay.

But he didn't get the job at Nabisco. All 3 of us, we're all idiosyncratic, you know, so we were totally not employable. Yeah. Um, and, uh, yeah, so we started, we said, make 5,000 pieces for Mother's Day and we'll see how it goes.

And that was it. And off to the races. Yeah.

And so we basically, uh, I got my brother-in-law, we gave him 5% profit sharing and he came in and helped set up the factory for us. Gave my sister 5% profit sharing on EarthBuddy. She designed patching for us. We hired people from a homeless shelter, got the 5,000 pieces out, started selling them on the streets of Toronto. Uh, came back into the office after our first weekend. We still had 4,000 pieces in the warehouse. We're like, we better figure out how to sell these 4,000. And 2 weeks later, through a contact of my mom's from a closeout company, um, that sold closeout toys that doesn't sell new products, they called us and said, can we have 26,000 pieces?

Right.

And we're like, we'll get— sure, no problem. So Mood Factory scaled up and, um, and then the most—

and speaking of, by the way, sorry to interrupt you, but speaking of Biz 257 or whatever, when I was researching, I see there is a case on EarthBuddy. It's an operational case. And I think it has to— I couldn't read it or see it because, you know, you got to pay for it, but I think it has to do with how do you operationalize this and make thousands, hundreds of thousands, million, whatever. So how did you figure that out? You know, as you say, like, I'm again in the book, you just got started and you, you had to like learn as you went. How did you figure out how to do this? Well, I guess you had your brother-in-law's help as well.

I would say by the time, by the end of the year, we had sold a million, manufactured and sold a million EarthBodies in 9 months time. I would say a lot of it is attributed to the people that we were able to attract into the business. So it was my brother-in-law, who's an incredible engineer. Our third partner, Ben Garrity, came into the business as a result of needing more hands. Yeah. And so Ben was actually running the factory, which is quite ironic because Ben's not a manufacturing guy, but he's really smart. We got super lucky. We started hiring people from a homeless shelter. The majority of them didn't work out, but there was two individuals, okay, that stayed with our business for many, many years. And one of them was a gentleman by the name of Bob Wakeland. And Bob walked, he was working on the line and he walks into Ben's office and he says to Ben, I think you need a little bit of help with your manufacturing. And Ben was like, sure, no problem. And the next morning Ben walks in and he has all these Gantt charts, okay, up on the wall. And he basically level set all the line flow in the manufacturing to make us super efficient. So we got super lucky with this guy who was homeless, but was manufacturing savant. And we had my brother-in-law and we had Ben and was myself and Anton and some other good people. And we just, we just all came together to do something that was, you know, you know, fun and exciting. And then the most magical thing happened was we got this huge order from Kmart in the United States.

Yeah.

And, and it was the most magical thing. And I, I write about it in the book about how people are always rooting for young people. They want young people to win. And so what happened was I drove down to Detroit, Anton threw a contact, got us a meeting with the buyer. And I do this presentation and the guy tells me he's not the buyer for this product.

Right. Yeah.

And, uh, and then I didn't believe him at the time. So I repitched him again and he says, I'm not the buyer. And then I said to him, well, we'll give you the product on consigned sales. And he's like, you don't realize I'm not the buyer for this product. So I'm like, I just drove all the way from Toronto. Who's the buyer?

Right.

So he goes to his office. He comes back with a name and I shake his hand and I start walking around Kmart Corporation looking for this lady. And I'm super lucky. Her name was Adrienne Zach. She was sitting at her desk and I did a pitch and she's like, okay, go downstairs. I'll see you at 3:30 today. Go downstairs. The other guys are like, what happened? I said, I got another appointment. They're like, great. Let's go for lunch. I'm like, I'm not going anywhere.

This was my, one of my favorite parts of the book. Basically said, I'm not, yeah, I don't want to tell your story, but it's a good, it's a good pause to, I think, give listeners a little bit of insight into you and what it took to, to make this happen. So my point is just to pause you. So I say, listeners, listen up. Yeah.

You know, it was, I drove at 3:30 in the morning. Okay. I didn't even stay in a hotel the night before and I was. Obsessed with selling this product.

Yeah.

And I wasn't going to let anything distract me from like being in the zone. And I knew if I was going to go for lunch, I'd be out of the zone. So I wanted to stay in the zone.

Right.

Plus, also, I didn't know if they'd let me back in the door. Right, right.

So you sat there for what, 5, 6 hours?

It was like 5 hours. It was like from 10 to 3. Just sat there. I don't even know if I ate any food or anything. I just sat there. And, uh, and then I came up at 3:30 and I walk in. And the craziest thing was on the left side of her shelf, she had 7 competing products. So I knew I was in the right office with the right buyer. And as I walked in, I dropped my price.

Okay.

Before you even sat in the chair, I dropped my price. I was going to charge $2.65 US. It was costing us about $0.65 US to make it. And I dropped it a buck to $1.65. And I did the pitch and I sat there and I told her about Campus Faces and everything we did at university. And starting the factory and everything. And then she did the most magical thing and she gives me this big book. It was the vendor book. And she says, I'm going to give you an order today for 48,000 pieces. And if it goes well, I'm ordering half a million for Christmas.

Right.

And it's funny, you talk about scaling up. Then the hardest part was we, we did the math and we said, okay, we're getting an order in June for 48,000 pieces. And if she comes, if it does well, she's only going to give us the order in September. And if we get the order in September, How are we going to manufacture half a million pieces between September and December? So it's impossible. So we actually took a bet on ourselves. Wow. Yeah, we took a bet on ourselves and we started producing the half a million, you know, order in July and we were 200,000 pieces in before we got the first order. Right. Yeah.

Amazing.

There's a part I don't write about in the book. Yeah, the part I don't write about in the book is that I actually, there was a day we got so nervous that there was one day where I drove back to Detroit, okay, to physically get the purchase order. Right. And it came halfway between my drive when I was around London, Ontario.

It just got like called in or something.

It was over the fax.

Yeah. Or something like that.

Right.

It got faxed in. Yeah. Yeah. Could have been email.

Yeah. But we were 200,000 pieces in. And if that order never came, we'd be in a lot of trouble.

Right.

There was no way to do the math because we were actually producing at our peak, we were 17,500 EarthBuddies a day. In downtown Toronto, right where there's beautiful condos. Yeah.

Amazing. Okay, so we're going to dive into a lot more about, you know, Spin Master and products and whatnot.

Let's, let's—

I still want to talk a little bit about your background. You mentioned right off the bat you were diagnosed with a learning disability. What I love about sort of what I've read is you've called it a disability. You also call it a gift, which I think is an amazing way to, to describe it. Can you describe a little bit about what this is and how it actually led to being a gift. Yeah.

So it's called dysgraphia. And so it's the inability for me to get my thoughts out through my hands. And so every time I'm writing, my hand cramps up and my handwriting becomes super illegible. And then for me to, even for myself to read it, I need to rewrite the words and then I need to rewrite it so a teacher can read it and there's someone grade my exam. So every time you have to like go back and rewrite words, you lose your train of thought. So it's like, it's like rebooting all the time. And so it would take me like 2 hours to do an exam that takes someone an hour or 3 hours to do an exam that takes someone an hour. And then there's some other, you know, spatial awareness issues that I, that I have to deal with, but I was super lucky. I got identified. So I got accommodations in school and I was like the special ed kid. But what it, what it taught me was that anything is possible because I had to grind my way through essays and exams over and over and over and over and over again. And then it teaches you how to like, you know, use other cues to get your information. So I can read body language really well, right? I use my hearing and I'm like picking up on other cues and I'm just connecting dots in different ways. And so that other, using other senses and attributes in your mind and your body helped me later on in business, especially with how I connect with people. And because I don't have a writing gift and I'm not super organized, I really lean into my verbal skills and my interpersonal skills. And, you know, I love being out of the office and So fantastic coming to your office. Like I learned more about seeing you in your environment than anything else. Right.

Valuable. Yeah. Well, and you mentioned, uh, in your book, when I come into the office, I'm scheduling meetings from the moment I arrive to the moment I leave. I never take lunch breaks. I've only gone on 5 business lunches in my life. And I mean that literally, I can count them on one hand. I never go out to restaurants and I never sit at my desk and eat by myself. I've eaten every single lunch of my career in a meeting. It seems like that's a natural progression from what you've just described that suits your, I don't know, the way you interact, the way you work, the way you lead.

You know, I write a chapter on control in the book and the greatest thing about being an entrepreneur and having your own business is you get to control your own environment and do things the way that work for you.

Yeah.

Right. And I think that's super important. It's like how we define success is very personal in life and how we can actually work that suits our gifts, I think is super important. So that was— that's just— that's just what works for me.

Right?

Right. I like to just stay in a rhythm, stay in the flow, be in the zone. Yeah. And, and I go out of the zone if I go for too many nice lunches and maybe I'll probably have too many drinks.

You talked about control just now for a second. I think there's a little bit of a history through your childhood, whatever, that leads you to sort of focus in that area. You've said in the book and said, you know, don't put your life in the hands of other people. Can you talk a little bit about that? Where did the desire for control or the revelation that you needed control, which would be sort of in the form of your own business, what's the background there?

I think part of it was back to learning disability because I was, I felt very confined for many years in school. It didn't match. They were not able to teach me the way that I would have liked to be taught. And I wasn't able to express myself in the way that I'd like to express myself. Right. Which leads to many other things. So it was a combination between that and then also my family upbringing, my, the financial situation, my family was not so stable. So my dad had a business for 10 years and then it closed and then he got employed at a company, which I was really proud about. And then he lost that job and they opened up another business. And that was only for a couple of years. So there was a lot of instability. Um, and I didn't want to have that instability in my life. I think something was seminal was when my dad, he got hired and he was VP sales at Sunripe Juice. And I was like super proud. I was like, he was a VP. This is really cool. And I actually felt super secure once that happened, but then he lost his job 6 months later.. And I think that stuck with me.

Yeah. Maybe. Hey, well, we can talk about it now. Talk about later. Does that fear, you know, 20+ years later, you're, you're somewhat successful right now. I would say that's a, that's a joke. Of course, you're unbelievably successful. Does that fear go away? Uh, you've sort of alluded in the book that maybe it never does.

That's how I write in the book about you can live with abundance and you can live with, with scarcity. And you know, if you grew up with a scarcity mindset, It doesn't matter how much money you have, you still have that mindset. But I think in business, having some fear is super important.

Okay. Oh yeah.

Like we don't take anything for granted, especially in the Toybit side of the business. Product can stay for a year, stay for 2 years, 3 years, and it cycles out. We're constantly having to refresh everything. And so I think having a slight or a healthy dose of fear that not everything is going to stay forever. And it hasn't. I mean, we've had points in our career where we hit $1 billion in sales and we lost $450 million in sales and had to restructure the company and put capital back in and let go of 350 people. So these things are real and they happen.

Yeah.

And I've lived through them and I have a lot of gray hair as a result of them. You know, we focus very much in our business on diversification and different categories. And, you know, we have 3 segments of business now. We have the toy part, we have the entertainment, we have digital games. So we're very conscious of the fact that business is tenuous. And if you're not staying on top of everything, then you may not deserve to stay in the game.

Hopefully my, uh, team over here is also listening to this podcast, 'cause that's exactly what we talk about at our sort of strategy sessions and a lot of meetings. I say just, you gotta wake up every morning, you gotta be running. You always gotta be running. You can't slow down. You gotta, keep evolving. Similar sentiments. So we talked about EarthBuddy, which was sort of the launchpad. We're not going to go through every single, you know, day of your life at SpinMaster here, but can you talk a little bit about Anton and Ben? SpinMaster didn't actually exist when EarthBuddy was moving. SpinMaster came from a whole other product launch. So how did it work with Anton and Ben? And how did Spin Master get created? And how did you guys know, again, it's a theme I'll keep asking you because I'm just curious, like, because you built this huge business, how did you know what to do? Or maybe you didn't know what to do. And you talk a little bit about that in the book for young folks to get moving.

So anyways, lots of questions there, but you know, we just kept on meeting ourselves where we are, where we were at. Right. And we didn't overcomplicate things. But funny, you were talking about before we were talking about scarcity and, and abundance and stuff like that. But when we started manufacturing the EarthBuddies, we were very cognizant of the fact that this was a trend. This is a pet rock type of item, and then it had a lifespan to it and that we better get on to something else. Okay. Before this thing ends its life. Right. And so that's how we actually found Devil Sticks, which got us into the toy category. And so what happened was I was noticing that kids were actually playing with these Devil Sticks in the schoolyards. And before, like 5 years before that, I was at Grateful Dead shows and I was playing with them. So I'm like, how do we make the leap from like Grateful Dead shows down to like 10-year-old kids? And maybe there's something here. And we had a factory, uh, manufacturing the EarthBuddy. So I was like, why don't we manufacture these devil sticks? Uh, seems like something's in ether, something's in the zeitgeist. Uh, and that's what we did. And we took them to Toy Fair in 1995. Through a rep, and they ended up getting us sales at Toys R Us and KB Toys, and they broke us into the two biggest toy accounts in the world. Suddenly we had our products in 2,000 doors across the United States, and that product went on to be hugely successful. We sold a million and a half pieces the following year. And then we were like, okay, well, look, what do we do here? Like, how do we build a business? And then Ben was very good friends with, uh, Jen Irwin, and he was actually living with Jen Irwin and the Irwin toys. Yeah. And they gave Ben this list of toy inventors. So in our business, there's 200 people that around the world that come up with ideas, but they don't commercialize them. So Ben literally took the Earth Buddies. He took the devil sticks and started traveling around the world, meeting with all these toy inventors, looking for ideas. And so you ask the question like, How did we do it? We were like, well, we're in the product. We said to ourselves, do we want to be in horticulture or do we want to be in toys? We were like, let's go into toys. And then we found, um, these two British inventors a few years later showed us this product called the Air Hogs, which is air pressure airplane. You pump it up, flies 45 seconds, and we licensed it from them. And, uh, you know, that really launched our toy career, no pun intended.

Yes.

But no, no pun intended. It was tapping into these toy inventors and then opening our eyes up to this toy industry, which is a $20 billion industry. And the irony is like, we were pretty late to the game, right? We were like the youngest guys to a very consolidated old industry, but it was working for us and the barriers to entry were not high and we were able to finance the business and it's low cap cost. And, uh, and we just stayed with it.

And, and nonetheless, I mean, not that you're glossing over it, but all this involves some risk. Uh, and you talk a lot about risk in your book. So how did you guys think about risk at that time? What's your definition of risk? You actually use a phrase, uh, called inverse risk as well.

So, so, correct.

Explain to us how someone at that stage and, or even, you know, as you've gone along for years here. How do you think about risk or how should people be thinking about risk?

Well, the inverse risk, I love the name. I actually wanted to title the book The Inverse Risk, but the publisher didn't want to go to time, but didn't want to go with the name. They thought it was too nerdy. Okay. I think that it's riskier not to bet on yourself. I think it's riskier to not go with what you're curious about in life, what you're passionate within life. I think it's riskier to sometimes listen to other people and not to listen to yourself because at the end of the day, what's going to give you the most energy in your life and what's going to push you through and to, to run a business and to start a business, you need so much fortitude to get through everything. If you're not curious about it, if you're not passionate, then you're not going to make it through. But if you are, your chances of actually getting success are greatly increased as a result of that. So it's kind of counterintuitive. The other thing is that the— with the inverse risk is that we can all game out the downside. We all know what's going to happen, the bad side of what's going to happen, but you don't know what's going to happen once you start. It's beyond all our imaginations. And I think that the, the biggest thing is just making that decision. So for us, we made the decision, okay, we're going to actually go into business for ourselves. And I'm a huge believer in that if you sit on— if you make that decision, the universe is going to meet you halfway, right? If you sit on the fence, it's going to be very hard for those— if you wait for the opportunities to come, it's going to be very, very hard for things to happen. So if you commit to something, things are going to happen. And what those things are going to happen are beyond all your expectations. You can't put on a piece of paper. You can't write the story that 3 guys are going to go to Western, okay, and make a grass head, and then 19 years later are going to make Paw Patrol, right? You— I can't write it. I can't write it. No one else can write it, right? So the question is like, do you want to miss out on the screenplay of your life? And that's the risky part, is like missing out on what potentially could be if you take that path. And the other thing is that is that, uh, at the end of the day, it's like, it's riskier to not be true to yourself. And that's essentially the thesis that I'm trying to put out there in the world. And only you know what it is at the end of the day. And even your parents don't know, right? Because they haven't lived your experience. They haven't lived what you were like when you were 10, 15, 20. And as you've been observing the world, right? But a lot of us feel the pressure in many aspects of our life to, to conform and to take a different path. It's not true to us. Great.

Makes sense. Okay. So lots of successes. Uh, obviously you talked about, I mean, EarthBuddy, um, uh, Air Hogs, uh, the Spin Master, the Devil Sticks, and it just goes on and on. So there's lots of successes. What about failures along the way?

Oh, there's many.

So, so what's, what's a good sort of failure story, because just like you said, sort of you're learning disability is a gift. I mean, I think in the book it says Anton always says failure is a gift. So what's a failure? And I mean, as you say, maybe there were many. And what was the gift that came from such failure or failures?

Well, after Air Hogs, um, did really well, we started licensing more products from the vendors, and we had a string of failures. First was Don't Free Freddy, okay, which is a stuffed animal that, uh, you press this button and he roared. Um, we had, uh, Tickle Secrets Baby. So this little baby doll and you tickle in different places. That was a bomb. We had, uh, Key Charm Cuties, which was small dolls, which had this special plastic material that you can dress up the dolls with. That didn't do well. It was like 3 failures in a row. And we spent 2 years on each one of them. Okay.

Wow.

And, but the greatest thing about those failures was it really solidified how we work together because no one blamed anybody for the failures. There was zero blame. We marked down the products, cleared out the inventory, got onto the next products. And it taught us actually how to get into new categories, work with new manufacturers. And then the key thing that it taught us was it taught us how to do commercials. I'll never forget the time when we did the Don't Creep Freddy commercial and I saw the look on the kid's face and he was totally deadpan. And it was before we shipped one product.

This is like an actor kid type of thing, right? No, it wasn't.

It was, we were doing a little focus group on the—

Oh, focus group.

Oh, okay. We were doing a focus group on the, on the commercial. And, and he was like deadpan face. I was like, I knew this thing was going to stiff before we shipped one piece.

Right.

But we got better at our craft as a result of it. And we knew which categories to get into and what categories not to go into, et cetera, et cetera. So it's, uh, it was, it's, it's an amazing learning. So all, all the failures, um, you know, growth hides in multitude of sins, you know that you learn that in business school and when you're not growing, you know, everything comes out and you reassess and you're actually more grateful for the successes that come afterwards. I think that's one of the biggest things with the failures, as long as you're not betting the farm. Right. Right. And that's one of our key things in our business is like not to bet the farm. So that was one of our string of failures we had. You know, I touched on at the beginning when Bakugan went down. I mean, that was probably the biggest failure, which is like getting ahead of our skis and hiring too many people and believing that everything, everything we touch is going to turn to gold. And that wasn't true. Right. String of TV failures. Before PAW Patrol, we had 3 TV shows in a row that failed. You couldn't give the product away. There's one product called Redikai. It was like a hybrid between— it was not a hybrid, but it was a trading card game. Okay. And I would tell you when I went to retail, beautiful shelves were like packed out, beautiful displays and everything. I go a week later, all the products still there. I go a week later, I'm like, all the products still there. Go a week later, all products. I was like, is the product glued to the shelf? Like, what's wrong here? Okay. It was such a bomb. I think it's probably our most epic bomb in our company's history. And we spent $5 million doing a TV show and you couldn't give the product away.

It's, and so, I mean, you can't predict the success of every, you know, toy that you create, or, but is there something you could be, that you've learned that you would do now so that if that opportunity came again, you would wouldn't get into the situation where all that sits on the shelves?

The toy part of the business is a very, it's a very artistry type of business. It's half artist and it's half science.

Okay.

Right. So the things that we do now to give ourselves the highest degree of success is we really believe in having a very robust funnel on the top. Okay. And we look at 2,000 to 3,000 ideas a year. And we're very judicious with what we actually allocate capital at.

Just as an aside, again, I apologize for interrupting you again, but I read your book and I've been following your stock for, you know, 10 years and listening to what you sound like to me is what I hear from, you know, the private equity firms that we interview and meet with. We look at X thousands of companies, we filter, we diversify. Some are going to be big successes. Fastest summary we've got. Do you guys think about it like that? As you're almost like a port— you wouldn't call yourself a portfolio management firm, but is this, this business a portfolio management firm where you have, you know, you're going to have 12 things and a few of them are going to be huge failures and a few of them are going to be multi baggers, as they say?

I would say in the earlier years, definitely yes. I'd say in the first 10 to 20 years of our company's career, It was very much like that. Now it's after we had our big decline after Bakugan, we, our focus was we want to get very diversified, stable, recurring revenue. And so we started buying companies that were not sexy at all. So we bought a company called Swimways, which is in the outdoor category, bought a company called Cardinal Games, which is one of the largest manufacturer of puzzles and games in the world. You wouldn't know about it, but it's like super, you know, recurring revenue. We made our big acquisition with Melissa and Doug a couple of years, a few years ago, which is open-ended wooden toys plays.

Yeah.

You don't get the huge spikes, but it's very steady. And so that's really what our business has become today. And that's the type of portfolio that you want. You want franchises, you want brands, you want stuff like Rubik's Cube, stuff with high brand awareness. You can innovate around it. So we're looking for that type of concentration of brands and franchises, but it was like that at the beginning stages where you, the winners definitely covered all the losers where you had to bat 600 in our business. Right.

You mentioned when you're talking about failures, you know, things didn't go well. No one blamed each other. I use that maybe as a springboard to talk about partnership. Like you and Anton have been together for decades. Ben came into the fold and sounds like you guys have for decades worked unbelievably well together. What's the secret for folks listening to finding a great partner, however you want to describe it? Because you guys seem unbelievably effective as a partnership and as a team.

I'm definitely an advocate of finding partners young. You get to see people in their truest form, you know, no, no no math, no nothing. You know, Anton went to university with Ben and he was, you know, basically loved him for his notes.

Yeah.

And I think it's, it's like all things in life. If I think we got lucky, um, because we didn't overthink things too, too much. And we actually had a, we had the opportunity to get to know each other. And try things out. So Anton and I built our campus spaces business over 3 years together at university. So we knew we kind of worked well together and Anton had this relationship with Ben from university and he knew that he worked well together and we just got along as people, right? And we mind melded. I'm a big believer in like whoever your business partner is, make sure that you can get into the zone and you can talk about all the issues with that person. And, and, and not only talk it out, but get to amazing conclusions as a result, as a result of those discussions. And so I was able to do that with Anton early on. I think Anton was able to do it with Ben in business school. And when the three of us came together, it was kind of magic. A lot of debate, a lot of fighting, but the thing that got us through is low ego because we were all able to recognize when the best answer surfaced. That came out of the discussion and we would run with it and we would never attribute, you know, that was Ben's idea. That was Anton's idea, never attributing ownership to it. And then I'd say the other thing is the ability to say sorry, the ability to apologize when you overstepped. And God knows we were always overstepping. You know, we had a thing like, you know, for 15 years, it was like everybody's micromanaging each other because everybody was nervous that we'd make a mistake. But when you micromanage, you overstep. Right. But everybody had the ability to apologize and then you get the apology and you feel better and you can move forward. Right. So it was all around ego, mind melding, and then the desire to win and the desire to not only win, but put out the best products and reach the most amount of customers and make a difference. And that was just aligned with all of us and had nothing to do with, with the hours that we worked or how we worked. It was more about like, you just, you felt no one was dialing it in. Right. And I think that that is the, that is the glue that underlines everything that no one's dialing it in.

Amazing. Okay. I'm not going to repeat the whole story other than to say it becomes a huge success. Uh, you're doing it for many, many years. You, and it sounds like from my read, Anton also has a little bit of this control sort of focus as well. And then a number of years ago, it seems like both of you stepped back. Uh, there's a new CEO now. In your book, you talk about wanting Spinmaster to become a living, breathing organism that could potentially live on for generations. I don't know if you, when EarthBuddy was out there, were saying something like that. So how do you evolve to that point? And what, what is it like to take your full hands off the reins or? Full range, you know what I'm saying?

I would say this as much as we were a student of other companies as we were building the business. We were always looking at the Hasbro's, Mattel's of the world. We were looking at the Sega Toys of the world, Disney's, Sony, Nintendo, Bandai, Takara Tomy. We were looking at all these companies and really trying to ascertain like, How do they do it? How do they stay around for so long? And I'm a huge fan of the Japanese companies, constantly studying how they do it. And they, their whole thing is they love to keep multiple generations of individuals in the business. It's no Freedom 55 in Japan, right? They want people to work as long as they potentially can work, 75, 80, right? Because it's the transfer of the knowledge. And so it's a combination of transfer of knowledge from older people and younger people coming in and people in midlife and all of it working together. And I think that the highest testament of success is if you have something that is just not dependent on the original founders at the end of the day, because then you're able to create a culture that has a repetition to it and it just has a way of continuing and building and growing. And so that, that is like That's the point that we're at now is like, how do you do it? And I would say, and it's not about, it's interesting because for many, many years, it's always been about the products or the TV shows. And now the company itself has become the product. This is the ultimate development project is the culture of the company and the product that then don't want to call the company a product, but the, but the company itself and its longevity.

In this phase or stage of your sort of role, I guess, for you guys.

Yeah.

That's what's happening. Yeah. I want to, if we can digress for a second, you mentioned Japan. Uh, we're recording this. Uh, there's no video, but there's a big bowl of bananas on my, uh, on my desk here. And I think maybe my favorite story of the book is your, maybe your first trip to Japan or the meet. Can you just describe what?

Well, first of all, Brian, it's incredible. You have 4 very ripe bananas on your desk. And I didn't make the connection when I came in here, right? What was going on?

That's what it is. So can you, can you tell this story of your, I don't know if it was your first meeting in Japan or?

Sure. So I started going to Japan in like the early 2000s and this particular, it was probably my 4th or 5th trip to Japan. Um, and we had an opportunity to get the rights for a product called Aquadoodle, which is a big play mat. It comes with a pen you fill up with water. You draw on the mat, the image appears, and then it disappears. Perfect for kids like 2 to 5 years old and for parents who don't want any mess in their house. So we got this meeting with Pilot Corporation through this gentleman by the name of Dave Fuhrer. He organizes a dinner. We all go for dinner. We have this beautiful potluck. Um, fantastic night. And then the next morning we go to their office and Pilot Corporation is a 100-year-old pen company. Okay. And everybody wears the same suit. Okay. And they wear a little pilot, okay. Little badge. Right. And we go to the meeting and there's this huge long table. And in Japan, one company sits on one side, the other company sits on the other side. And so we get going with the meeting, starts at like 8:30. It's about 9:30 in the morning. And I get my blood sugar, like just drops between the jet lag and the blood sugar. So I turned to my colleague Matt, I'm like, Matt, I'm like so hungry. He's like, oh, well, you brought some bananas from the hotel. I'm like, oh, great. So I lean down and I pick up this banana, okay, and I start peeling it. And then suddenly I hear Dave Fury's like, put the banana away. And I'm thinking to myself, put the banana away? Like, it's peeled. Like, how do I put a banana away? And then my business partner Ben, who's got no filter, he's like, What the fuck are you doing? And I'm like, I'm like, I'm hungry. I didn't say that, but I was just thinking to myself. So I got Dave, like, put the banana away. My Ben's swearing at me and I get the banana peeled and I'm like, and I'm hungry. So I was just like, I just ate the banana. So I ate the banana and then some of this guy ran around the table with a garbage can. He's like shaking the garbage can. I put the peel inside. He ran out. The meeting continued. Okay. As if like nothing had happened. And then the most miraculous thing happened.

We got the business because it was a huge faux pas to eat this banana in the meeting.

It sounds like in Japan, you are not supposed to eat in any meetings. Okay. Unless, unless they put some food on the table.

Right.

Okay. You are not supposed to be eating. No one eats in a meeting in Japan. No one eats on the street in Japan. Right. Okay. So no one eats in a meeting. Okay. And you certainly do not eat a banana in a meeting, but Abe-san, who's the exact same age as my dad, born on the exact same day. Okay. He, he just loved me. Honestly, he loved me. And so he got so much mileage out of the story. So my next trip back, when I came back to Japan, everybody was calling me Banana Boy. Everybody's calling me Banana Boy. And he loved the story. He loved the story. And he just, the irony is that he came to our office 2 years later and he saw how messy our office was on 450 front straight. And he told me, he said, if I would've come to your office and saw your office first, I wouldn't have given you the business.

Right.

But the banana didn't bother him.

So the banana didn't. Okay, good. Well, you can eat as many as you like and so go for it. You've gone from, you know, the financial, let's call it instability of your earlier days to now very stable. And you've launched a foundation. You talk a little bit about sort of now that you've achieved this success and wealth, et cetera, what's, What's some of your goals here around foundation or otherwise?

Yeah, I opened up the foundation maybe 7 or 8 years ago after we went public and we focused on the homeless issues that this country is facing and other countries around the world. We have scholarships for kids with learning disabilities. We rejuvenate green spaces. It's predominantly in Israel. And through Spin Master, one of the things I'm most passionate about is the toy movement, which is the ability to bring toys to kids in refugee camps around the world and for displaced children around the world. So we've done about 22 missions. I've personally been to Iraq giving out toys. Yeah. I've been up in Kurdistan in Erbil. I've been to Jordan giving toys to the Syrian refugees. I've been to the Ukraine. I personally did a trip there when that war started. And other people at Spin Master have done numerous, numerous toy missions. We've given out millions of toys to kids around the world. So you get excited about—

amazing.

I don't get excited to give it to them, but because make a difference, but to make a difference where you possibly can.

Yeah. Amazing. So speaking about making a difference, so at a high level, Why did you write this book? This is like a simple layup question, but you know, why did you write this book? And then I'll ask you one or two more questions.

I had this idea about 10 years ago, why the '20s is such a magical decade. And, uh, only when Hank stepped down from being co-CEO of the company did I have the time to actualize it. I gave myself the space to put it, uh, onto the paper. But I really believe that the '20s is such a magical decade. And there's so many things that accrue to you that don't necessarily accrue to you later in life. And so I was so blessed to start my business, Spinmaster, at 23, but really start being in business at 20. And I just wanted to share those insights with everybody. And I was also very fortunate that my mom was really very supportive when we started the business. She gave us contacts, relationships, use the house. We grew all their first 50 Earth Buddies, okay, in the kitchen. We took over the whole house. There's still sawdust in the back of my mother's car today. Uh, there was never, it's not possible. Don't do it. The only thing I had a conversation with my mother about, okay, back in the day was whether or not we should actually order the Earth Buddies from the Israeli manufacturers. Okay. Or manufacture them ourselves. And I didn't want to be in someone else's hands. So we said, well, we'll figure it out ourselves. But she was super supportive. So I also—

maybe it's time to get her a new car. There's still sawdust in her car.

I got her a Porsche. She's okay. She's making sure. Yeah, she's got a nice yellow Porsche. Yeah, good.

I love it.

But the last thing I'll say on this is that maybe deep down, it's like subconsciously it was, it was a give back for me to, to others. And I really want the book to be like a supportive parent. For people that don't necessarily have supportive parents. Right. Yeah.

So we've covered it a little bit, but maybe in, I don't know, a few minutes or less, what do people have in their 20s that they lose or don't have as they get older? And so why, why is it the magical decade?

Well, I think you have a few things. One is, again, everybody's rooting for you when you're in your 20s. No one sees you as competition. When you're in middle age, everybody wants to give back and helping younger people be successful as a form of giving back. There's a whole belief that I have, a reframe on the power of not knowing. Sometimes when you know too much, you overthink things and you get stuck and doubt is the anti-luck. You know, you're sitting across the table from a guy that's turned down a $100 million film, okay, from Universal Studios. I don't write about it in the book, right? And I was 40 years old. A whole long thing. We don't have to get into it, but that'll be the secret.

You know how Taylor Swift always sends out all these different versions after she like does an album? That'll be your sort of the special edition book.

Yeah. So we did incredible things that we thought that no one else thought was possible. Like Hasbro, Mattel turned down the Air Hogs. Um, right, right. We thought it was possible.

We didn't even talk about that here, but we're out of time.

Yeah. The power, the power of not knowing. I also believe when you're young, you're so close to the zeitgeist. And if you're close to the zeitgeist, you're able to spot the opportunities and the whitespace opportunities and you see the world differently. You don't have the experience, but you see, you sense something's, there's an opportunity to do something slightly different than the way it was done before. And that is a huge, huge advantage, right? If you can see a whitespace and you can get the tailwinds with that, That's golden. And so you are practically the zeitgeist when you are in your 20s, right?

Yeah.

Massive advantage for you. The amount of energy you have. I mean, you have unlimited amount of energy. You know, we're both now middle-aged, right?

Yeah. I'm trying. We're trying. We're tired at the end of the day.

But you have your wisdom. You do things a little bit differently, right?

I mean— You said it, not me.

Yeah. I'm a huge believer in If you want to be successful in business, you need to be out of the office all the time. At Spin Master, we said to ourselves, we will look at any product, any opportunity, anytime. We're open to ideas from wherever they come from. Anytime to get in front of a buyer, anytime to see a toy idea, anytime to, you know, fly to Asia and meet factories, et cetera, et cetera. So you have that when you, when you're young, right? You can keep on going, going, going, going. And so, it's almost like if you start young, it's like compounding interest. You can compound your potential success, not only from a monetary perspective, but from a body of knowledge. You start at 23, 25, the body of knowledge that you're going to accumulate, I will make the case that you will accumulate the body of knowledge 5x than in a job because every day is an MBA in a day, basically. And Indiana, yeah, I love that line. Indiana, that's a good lineup for a book.

You can use it on your tour here.

Yeah. So there's lots of things. And also like, I think your ability to take the risks, which is the biggest one, is you have time. I think when we're in our 20s, we're very much in a rush. It's a rush decade. But life is longer than you think. It's way longer than you think. And you can take more shots on goal earlier on. You can always go out, go back into the workplace. And I will just preface that business is not for everybody. But the nice thing is if you start young, if you find that's not for you, then pivot and take another path.

Right.

But then at least you got it off your, off your list. But if it is for you, how wonderful would that be? And you compound all your experience and you create yourself. And you don't rent your time. You own your time.

Equity versus equity.

Do you want to own equity or do you want to build someone else's? Or build someone else's.

Amazing. So maybe this is a repetitive question. If it is, you'll tell me, but is there one final key lesson? If there's one thing that someone would take away, if not what you just said, maybe that you would impart to a young person at this moment?

Or any person, frankly, but I would say on any person, you know, I wrote this book focusing on your 20s, but the more I've been out talking about the book is that you can bet on yourself at any point in your life. Right. I'm just making the case to bet on yourself earlier rather than later.

Got it. I love it. Last question for you, which I ask all my guests, and we're sitting here after, you know, in some ways looking back on your career and your success. Our theme here is Unlimited. The podcast is called Unlimited. We have a tagline called Your Wealth Unlimited because we basically help you with anything, uh, wealth-wise, we're not limited by what, you know, some people say we can look at or not look at. We can look at anything, we can help in any way. So given that the world is unlimited and you could have done and be doing anything in your life, if you didn't found Spin Master, Earth Buddy, do all this, is there something else you might have been doing or something else you would do?

Well, if my grades were better, I'd probably be a doctor.

But would that meet your passion?

Yeah.

Yeah. Oh, really?

Yeah. Yeah. Yeah. Listen, being, you know, being a doctor is such a, yeah, helping people out on a, on a very intimate one-on-one personal basis, the feedback that you get from that, I think it's tremendous. Um, so it would be that or something in public service. Okay. Great.

All right, sir. Well, look. Thank you so much.

I just want to say to the listeners out there, and Brian can edit this out or not, but I'm really grateful that you took the time to read the book and all the preparation that you put into this and all the questions you asked. I've been on, anyways, I'll stop there and just say that I really appreciate the fact that you read the book.

Thank you. Well, I appreciate you making the time to be here writing the book. We started with a little section from your book. I'll read the last part of it one more time. This is Ronen's quote. You only get one life, And the single greatest risk of all is to look back at the end of that life and realize you didn't live the one that you wanted. Super powerful. Thank you so much. I really appreciate it.

The Unlimited Podcast is hosted and produced by Brian Ginsler and is edited and mixed by myself, David McMillan. This podcast is not to be taken as investment advice. If you like what you heard, don't forget to rate the podcast and follow us on social media @GinslerWealth. Thanks for listening and see you next time.