Interview with LEGO CEO Niels B. Christiansen

We saw the train in Nuremberg at the Toy Fair and also at the New York Toy Fair where I've been for the first time. And it's so much fun to see. And I have to buy the set too for my daughter, of course, for my daughters. So we'd like to know a little bit about you. You live in Billund right now, another city. And do you have kids? I think 2 kids. Am I right?

Yes, I have 2 kids, a son at 22 studying engineering in Copenhagen and a daughter that finished high school last year at 19 that's still at home.

So still some bricks around or dark ages?

No, lots of bricks around. I was actually just looking for skis the other day, and I stumbled over like 3 big boxes of Harry Potter LEGO. That was very big when my son was in the middle of his LEGO age. That's when Harry Potter hit big time. So I think we have almost any set of Harry Potter from from back then. So it'd be exciting to see now with Harry Potter coming back what can happen there.

We've seen the Hogwarts Castle in New York, which is awesome. So we talk about licenses right now. Do you think those are very important for LEGO in the future as well? Or do you think when we just celebrate the 60th anniversary of the LEGO brick, which is more important, the classic LEGO bricks as we see right here, Or the licensed stuff? I

think it's hard to say what's more important. But the heart and core of everything, I think, is the classical brick and the unbelievable things you can do with it. It's only the imagination setting the borderlines. But I think bringing then the classical brick into IPs, into classic own IPs, basically, into all kinds of digital solutions, I think that's the beauty of it when we can do that. So I would say even going forward, the IPs, like Star Wars, is still going to be very important. And over time, we've just seen they fluctuate a bit more after what's fancy right now, where the core LEGO theme, the City and the Friends and the Creator, I mean, they're more stable and they keep growing. And I think that's just a fact of life. But we want to be relevant and we want to bring the LEGO play into any opportunity that there is. And IPs is also a way to do that. So that's going to continue.

So we just saw your reportings this morning. And this was a difficult year, 2017. Are there any changes, any ideas for the future? What would you like to change here in the company as the new boss?

Yeah. No, it's true that it was a challenging year. All in all, I just think I want to mention at least that although the revenues declined, actually, the consumer sales, so how many consumers went into shops or stores or on e-commerce and bought LEGO, that number actually still is as high as it was the year before. And in essence, I think that's probably the most important thing. So the love for LEGO and the excitement around the brick is there. I think that that's important. Now then, things fluctuate a little bit depending on what's fancy in the market, what's there. Our long-term ambition is, of course, to grow the company again and reach many more children. That's actually the essence of what we would like to do. That's what the LEGO family like. They want to bring these bricks to many more children around the globe and having even more people and children being excited. And to do that? We need to be very creative. We need to be innovative. And I think when we talk about '18 as a stabilization year, it's a year where we start to invest even more in those things and bringing more decision closer to the markets where they have different— in Germany, like Technik, like in Denmark. In other countries, they like something else better. And we need to be very quick in playing up against that. But we also need, of course, to make sure that we get even more good digital physical integrated solutions. And there are some good ones. Boost is a good one. So a lot of good things happen. Now we're experimenting with augmented reality around our bricks and all those kind of things. I think that needs more power.

So when we talk about LEGO, we talk about kids, but we also talk about those guys like us, the adult fans of LEGO. And the funny thing is that you've mentioned those adult fans of LEGO, I think, twice this morning, this annual press conference. So I think you cannot give us any number, but how important are those adult fans for your company?

Really important. I think it's almost the essence of the brand. The excitement and the passion that you see in adult builders is next to nothing. And it's basically like kids are excited, but it follows you all through up. And just in this house we're standing right now, in the LEGO House, the home of the brick, when you see the creations also made by adult builders, it's unbelievable. So I take a lot of pride in that, but also get very excited when I get to meet people that really devote their free time to that and build and create things that are amazing. So it's very important to the company.

Have you already visited any exhibition, a place where you see a lot of buildings, like in Copenhagen a few weeks ago?

I couldn't be there in Copenhagen now and only. I've been very busy traveling around getting to know the company. So I've done too little of that so far. But I did like it. In the UK, there was actually a competition on television where people were building. And I had the 2 finalists come to this house, actually. So they put their buildings down there. And I spent 2 hours in the afternoon walking around with them, understanding what they did, and hearing them explain what they did. And these were huge creations, like 3 times— whoops. No problem. 3 times 3 meters. We'll build it again. Yes, yes. 3 times 3 meters. And so amazing what they were able to do. And so very exciting. And I look forward to doing more of that, actually.

We see a lot of colorful bricks here, but we also talk about the green brick now, as you mentioned this morning. They're going to be a future. Please tell us about it. There has been some discussion in the comments under my articles because, because all this new oil and stuff. What exactly is going on and where is the resource of that?

Yeah, no, we have the ambition that by 2030 we would actually like all the bricks to be based on sustainable materials, basically. And then now we're taking the first step now in 2018. And we've taken the trees and the leaves and the green stuff, and we can actually now make them with 100% sustainable materials, so made out of sugarcane. And what we were actually doing is working with WWF, also with some different alliances on making sure that whatever goes into our bricks is actually sustainable and really does fulfill all that and doesn't take food away from anybody and stuff. So it's sustainability in the in the right fashion. And I think that's— so we're moving forward with that as quickly as we can. Now, knowing LEGO, it's like our quality standards and the— I mean, the fact that the check we have in factories that the bricks don't break, that they don't get sharp, that you cannot eat them, that they actually— the clutch power is what it needs to be for the next 25 years. All that also needs to be true with sustainable bricks. And that's why it's not just a matter of taking some sustainable material and putting it into a molding machine. It is quite advanced when we do it. But I'm actually proud that we can be the ones pushing this. And obviously, LEGO should also be on the forefront here. So it's a good step, but it's only a first step.

This sounds great. I'm looking forward to the new bricks, which will be the same.

Yeah.

Right?

You won't notice the difference. Okay.

This is a good promise. I would like to talk about And then we have the LEGO Ideas platform, which is very important for LEGO. So there are guys out there, girls, who have ideas and put it on the network, and LEGO has the decision to make if this is going to be a real set. What do you think of LEGO Ideas?

No, no, I think it's great. In essence, like, you can say on the one side, yes, it's actually— it's a free machine to come up with great ideas. But I think it's also— it's actually a really good mechanism, because I think the guys that are designing out there, building creations, I mean, they're thinking of actually having your own LEGO box made and sold. Gosh, that would be something. I'm still hoping to get mine one day. So I understand exactly how that— so it's a really two-way street on this one. And I think that's something that works really well. And again, not many brands can actually have people do that, design products for them. I think we have a unique opportunity there that we should use, and we are using. And we're quite grateful of that happening.

And there is one thing about— LEGO Star Wars, which is very important for LEGO. And we've heard different versions of it somehow. In Nuremberg, we were told LEGO Star Wars wasn't that good. Now it's LEGO Star Wars is very important to us. The truth is in the middle. What is going on with LEGO Star

Wars? LEGO Star Wars is very important for us. It's also clear that the Star Wars franchise has actually been doing not so good as a total franchise. We've actually been doing better than average. So we've been taking share within that. So the truth is, yes, as you say, in the middle. It's actually in line with our expectations. But overall, you see a lot of not-so-positive writing about the franchise. I would also say that's a strong franchise. It's been around for a long time, and there's powerful organizations behind it. So probably in the long term, it's a good franchise also. But even right now, among the Millennium Falcon and the BB-8, I think we've had some really successful SKUs in that area also. So we are actually okay.

Have you built any of those Star Wars sets on your own, like the Millennium Falcon or BB-8?

I've actually started the Millennium Falcon, but I'm not done yet. Okay, we'll talk next year. Yes, we will, we will, and I'll have to show it to you.

Actually, we visited the LEGO Life event in New York City, which was the first event of this kind, a whole area with LEGO and big figures and building experience for kids, actually like the LEGO House. So is this something we could see more in the future? Or was this a once-in-a-lifetime experience?

I wouldn't say it's a once-in-a-lifetime. It's not yet structured, so it just happens. But I think the idea of actually— we're very keen on getting the experience out and also building the brand by— I mean, it's best done by getting bricks in the hands of people and actually seeing what can be done. And between the LEGOLANDs, the LEGO House, the LEGO Experience Centers we have around, actually, the LEGO stores, if you go to Leicester Square in London, you get a pretty good building experience around LEGO as well. So I think we want all these different ways of doing that. And as you said, the adult building thing we had in Copenhagen a couple of weeks ago, LEGO Life, as you saw, I mean, all those elements actually build around that. And they typically address different people or different needs. But I think they're all important.

There was one topic. And again, there was a lot of discussion. There have been, I think, 2,400 people who have to leave.

1,400, yes.

Yes, 1,400. Is LEGO back on track now? So was this really necessary? Or what would you say to this topic?

So we came out of a long period of, we call it, supernatural growth. It was— I mean, not many companies had this long period. And the brand just strengthened immensely over this period. And then at the end of that period where we have more of a consolidation period, suddenly, we weren't growing that much. We had a need to actually simplify the organization and bring it in line with our business size. Okay. Also bringing inventories in the channel down so we could kind of start '18 with the right-sized organization and with the right level of inventory in the channel. And that's what we're doing. That's why I'm also talking about '18 as a stabilization year where we build the platform for starting to grow again coming after that. And that takes investing more, some of the creative and innovative solutions, investing more in bringing digital experiences into our play offering. And as you know, you don't do that in 1 year or in 1 month. So it takes a while, but now we start doing that. And that's the beauty of being family-owned, that you can do the right things for the long term. And if we do the right things for the longer term and we get to more children around the globe or more adults around the globe, then the company will also grow, and then success will come from that.

Actually, I was told before our interview that this is the first fan media interview you do. Is it right?

It is correct.

Samgebaut, the first one. It's great. So what is it like to talk with the guy who runs a website? It's all about the brick. Is it different than those journalists you spoke to the whole day?

Yeah, it's different. It's much better, actually, because no, but I think we can get to talk about what really ticks and the passion and what Lego is really about. And Lego is much more than just a number. And I think also even numbers have to be looked on over the long term. And I don't think any of us can complain about the brand LEGO has, the experience we bring out, even the profitability we have around that, that allows us to do that in the future. So talking about the experience and the bricks and where it can run, I hope you can feel that. That motivates me a lot as well.

Me as well. And a few last things I would like to know. If we talk about your dreams, I mean, when you became CEO, I would think, okay, Now I'm sitting here, I'm the boss, and I have so many new ideas. What is your biggest dream you have?

Now, I think my dream is actually very much aligned with this, that I would really like— I mean, I would like us to get out and reach more children. I think being around, seeing children— sometimes when I sit down with a group of children and then we play a bit, and then they say, so are you really the CEO of LEGO? That's what I want to be. Can you please make sure that we get a new element And in essence, that is a dream, being in a position that you can actually move a brand like this forward and make sure that LEGO gets more spread out.

And my last question would be, what is your favorite LEGO set of all time?

Of all time?

The one and only favorite LEGO set.

If I have to say one, I like the Porsche.

Great. This is a great one. Niels, thank you so much for your time. It was a pleasure meeting you. Even you are taller than I am.

By a small margin then.

And I have— and maybe somebody would like to join you. This is our minifigure.

Excellent. Thank you very much.

Stay here in Billund. Thank you again for your time and hope to see you around next time. Niels, the new CEO of LEGO Group. Thank you so much.

Thank you.

Bye.