The Toys That Built America (2021) s01e02 Episode Script

Clash of the Toy Titans

1 The toy industry rakes in over $90 billion every year, and it's dominated by two American empires: Hasbro and Mattel.
The rivalry between Hasbro and Mattel has always been neck and neck.
But in the mid 20th century, they're not even in the toy business.
Mattel started out by making furniture.
Hassenfeld brothers made pencils, pencil boxes.
Until they dare to shift directions.
Ruth Handler didn't like to lose.
Every outfit custom made by world-class fashion designers.
Machine guns, bazookas, flame throwers.
His name is G.
They break all the rules.
No mother is going to buy her daughter a doll with breasts.
It's not a doll, it's an action figure.
You're out of your mind.
The Barbie doll's body was probably the first thing that moms saw and said, "Oh no.
She looks like a hooker.
" And some break the law.
They might as well have cut her heart out.
To become giants of a revolution.
We're talking about the biggest battle in Toyland: Hasbro versus Mattel.
The end of World War II brings a time of optimism.
With the hardships of wartime in the past, the US experiences a period of prosperity that sees the growth of industry, consumerism, and the family.
After the war, the economy was booming.
The marriages that had been put on hold, all of a sudden took place.
Everybody started having babies, and people wanted to give their children what they couldn't have.
That generation that grew up through the Depression went through World War II and had more disposable income.
And so the toy industry has started to really blossom and grow because of that.
And in Los Angeles, a young couple starts a business out of their garage, hoping to capitalize on the boom.
What are you staring at? The woman in charge is 28 year old Ruth Handler.
Ruth Handler was the 10th and last child of her parents who were Polish Jewish immigrants.
Her father was a gambler her whole life.
The family had exhausted their resources by the time she came around.
Be careful with that.
Ruth's mother gives her away as a baby to her eldest sister.
Whereas most people would be kind of stunted by that incredibly difficult childhood, Ruth was your archetypal striver.
She was strong, and she was resilient.
Elliot, come on.
She really was a pioneer.
Ruth starts the business with her husband, Elliot, and friend, Harold Matson.
The two men combine their names, Matt from Matson and El from Elliot, to call the company Mattel.
Given the convention of the time, even though Ruth and Elliot were married, Ruth's name was not part of the company.
Whether or not Ruth was happy with that name, the name stuck.
Mattel will one day become the largest toy company in the United States, worth $8 billion, selling in over 150 countries, creating one of the biggest toy and media franchises in history and an icon that revolutionizes the industry.
But right now, they're selling picture frames.
And when Matson quits, the Handlers are left to keep the business going alone.
Elliot and Ruth Handler had this really unique working relationship.
Ruth was the business side, while Elliot really was the creative side.
And it was Ruth absolutely running the company.
And of course, at that time, women were not running companies, much less a manufacturing company.
To keep the business going, Elliot begins using their leftover wood scraps to make dollhouse furniture, and sales of the dollhouses soon eclipse the picture frames.
Ruth now sees children as a new opportunity for Mattel.
Elliot, who loved musical instruments, had this idea that he could do a toy ukulele, and it didn't make any real sound that you would want to hear, but you could pretend with it.
And they called it the Uke-A-Doodle.
The Handlers bet that their first official toy will be a hit alternative to the toys of the day.
In the late forties, kids were playing with pretty much slightly updated versions of the toys their parents and grandparents had grown up with: toy vehicles, dolls, housekeeping, cap guns.
But they have no idea if there's a market for it.
3000 miles from Los Angeles, 30 three-year-old Merrill Hassenfeld is a low level executive at his family's pencil box company.
Hassenfeld Brothers was founded in 1923 by three brothers, Henry, Hillel, and Herman, and they were Polish immigrants that came to the US and formed a stationery company.
They made pencils, pencil boxes.
Merrill Hassenfeld was the son of Henry Hassenfeld.
After noticing the pencil boxes looked like tiny medical kits, Merrill gets a bold idea.
Merrill, young guy out of college, says, "Hey, I see a bigger opportunity for us to invest in new machinery, new technology.
Let's get into the toy business.
" Merrill also gives the company a sleek new name, abbreviating Hassenfeld brothers to Hasbro.
But to convince his father of the potential of toys, he needs a hit idea.
It's like a little potato face man.
I call it Make a Face.
George Lerner was an artist from Long Island, and he came up with the idea of taking different shapes and piercing vegetables with them and making a funny face kit.
Merrill takes it to his father.
So you put the pieces in.
Families have enough to be able to afford a $1 toy, so let's take advantage.
Merrill Hassenfeld will go on to create some of the most revolutionary toys of all time and build an empire worth more than $5 billion, In 1952, Merrill Hassenfeld is betting big on a toy to lead the family's business into a wildly new direction.
Merrill had the vision and that strength of character to persevere and prove to his family that, hey, this is the right direction we should go in.
With his father's blessing, Hassenfeld buys George Lerner's Make a Face for $7,000.
Within months, the toy is in production.
To make the kit affordable, the two dozen facial accessories are made of an innovative material.
Toys prior to World War II were made of cloth, they were made of wood, and they were made of metal.
After World War II, plastic took over.
It was cheap.
It was available.
Also keeping expenses down, it doesn't come with a head.
You provided the head in the form of produce, a vegetable.
With low production costs, Hassenfeld can price the kit at just $1, but when Merrill presents it to stores, he's met with resistance.
It had to get past the people that thought wasting food was something you shouldn't do.
Using food as a toy is a tough sell to Americans who recently lived through food shortages during the Depression and rationing during World War II.
So Hassenfeld finds a revolutionary way to bypass the adults and market directly to children.
On April 30th, 1952, Hasbro did something that no toy company had ever done before and that is advertising a toy on television.
What's new, Hasbro? Mr.
and Mrs.
Potato Head with their own cars and trailers, that's what's new.
It wouldn't be the best ad, and it wasn't the most sophisticated, but it did make Mr.
Potato Head a success.
It was really genius marketing at the time.
Kids saw it, and they were telling their parents to run out and go get it for them.
Hasbro's groundbreaking approach transforms the industry.
It's an absolute game changer.
It made a seismic shift in the fact that toy companies could now reach their target market, which was kids.
Within its first year on the market, Mr.
Potato Head earns the company $4 million, $39 million today.
Potato Head was unlike anything else on the market.
Hassenfeld is promoted to president of Hasbro, which is now earning more than the original pencil business, but he knows he needs more than a one hit wonder to stay on top.
Meanwhile, Ruth and Elliot Handler have gambled Mattel's future on a toy ukulele.
It sort of set them as initially a maker of musical toys.
In a year, they make $30,000, more than a quarter of a million today.
A modest hit, but sales quickly decline.
Ruth knows she needs another idea if she wants to keep up with Hasbro.
Mattel and Hasbro had an interesting rivalry from the beginning, really.
Like any corporation that competes with another corporation, the one you're competing with makes you better.
To launch their next toy.
Ruth takes a page directly from her competitors playbook.
So it's a variety show hosted by kids? What's the name of the show? "The Mickey Mouse Club.
" And to sponsor this show? $500,000.
You got any cheaper shows? No, we want "The Mickey Mouse Club.
" They're going to advertise every 15 minutes, but you have to buy a year's worth of advertising, and that's going to cost $500,000.
She was betting the entire net worth of her company on advertising on television in a way that had never been done on a show that no one had seen.
The product Mattel risks the company on is a toy rifle called the Burp Gun.
That Thunder Burp looks like real, sounds like real.
You can tell it's Mattel.
It's swell.
It's the first time a toy ad appears on TV outside of the Christmas season.
And when "The Mickey Mouse Club" becomes a huge hit, sales of the Burp Gun explode.
They have more orders than they can fill.
You can thank Ruth Handler for the fact that children will now whine and complain and beg their parents for toys that they see advertise on television.
But just like the Uke-A-Doodle, sales soon plummet.
The Handlers haven't found their long lasting iconic toy yet.
The toy business is a fashion business.
It's a business that is dynamic.
It changes constantly.
One day, something could be in, and three months later, it's completely out, and no one's buying a thing.
Ruth desperately needs a toy with staying power.
And in the winter of 1956, she finds unexpected inspiration during a family trip to Switzerland.
Ruth and her daughter, Barbara, we're walking by a window.
Ruth saw her daughter's interest in the doll, and something clicked.
The Bild Lilli doll came scantily clad, and certainly she was more of a bachelor party gag gift than a gift for little girls.
She realized that she could build a doll like this that would be a play thing for girls rather than kind of a joke for men.
But especially for a company that made millions on a toy machine gun, Ruth's vision is a huge departure.
Ruth, no mother is going to buy her daughter a doll with breasts.
Toy maker, Ruth Handler, is desperate for a long lasting hit for her fledgling company, Mattel, and she has a bizarre idea based on a bachelor party gag gift brought back from Europe.
What do you think? Cute.
Ruth's entire research and design department were men, and the men said, "Ruth, you don't know what you're talking about.
Go back to running the company.
Mothers will never buy their daughters a doll with breasts.
" And she wouldn't accept that.
Ruth tasks engineer, Jack Ryan, to help reinvent the doll's design with unprecedented attention to detail.
Ruth goes to the top design school in Los Angeles, and she wants the most realistic, tiny clothes that are going to have tiny little snaps and beautiful little zippers.
Ruth even hires famed child psychologist, Ernest Dichter, to conduct focus group tests.
At the time, most of the dolls on the market were baby dolls.
So what Ruth saw was a gap, and what she wanted to create was a doll that could represent women at a more mature stage in their life.
The Barbie doll's body was the first thing that moms saw and said, "Oh no, she literally looks like a hooker.
" Is this a gift for my daughter or for my husband? Ruth Handler didn't like to lose, just as she didn't like to back off or be told she couldn't do something, and that's what it takes for an entrepreneur to build a company like Mattel.
Meanwhile, Hasbro president, Merrill Hassenfeld, hasn't had a major hit since Mr.
Potato Head.
Hasbro was losing money, and Merrill was looking for a toy to lift it out of its doldrums.
There was a hit movie with "The Absent-Minded Professor.
" The character created this substance called Flubber, which is flying rubber.
Two years later, they were planning a sequel called the "Son of Flubber.
" So Merrill Hassenfeld thought, I'm going to tie in with this sequel.
Hassenfeld licenses the rights to Flubber and creates a toy version.
Flubber was a new space age material that stretches, pulls, you can roll it into a ball and bounce it.
But within months of hitting the market, the Flubber bubble bursts.
There were reports of kids getting rashes and having sore throats.
That started resulting in claims against the company, liability issues.
No one is seriously hurt, but it's a major setback for Hassenfeld.
They had no choice but to pull it and to get rid of it.
And according to legend, there is another problem.
The myth around Flubber is that Hasbro tried all these methods to get rid of this stuff.
So they were going to dump it at sea, but Flubber floats.
They were going to burn it, and they said, "oh, we can't do that.
" Finally, the one legend I do believe, is that all the material was brought back to Hasbro, and they buried Flubber under the parking lot.
Hasbro loses nearly $5 million on Flubber, 44 million in today's money.
The fiasco that was Flubber really left Hasbro with a black eye.
Merrill had to come up with a way out and fast.
But Hasbro isn't the only one with a potential multimillion dollar loss.
Let's put a few of the boxes around the outside here on the bottom facing out.
Toy Fair every year is the trade show that places new products for the holiday season with retailers, and it is the make or break commercial endeavor for most toy companies.
After three years of development, Ruth Handler is finally ready to launch Mattel's unprecedented new doll, now named Barbie.
Ruth names the doll Barbie after her daughter, Barbara.
They went through a number of iterations and finally decided that Barbie was the one that seemed to fit the best.
Ruth lands a meeting with one of the largest retailers in the world at the time, Lou Kelso, the head buyer from Sears.
We've just added another $125,000 dollars to our $1 million advertising budget.
Take one as a sample if you like.
You're out of your mind.
The buyer's thought this wouldn't work.
Girls are supposed to play with baby dolls.
Ruth has poured everything into making this doll.
This was the only toy she had invested in, and she is devastated.
Elliot says it was the only time he ever saw her cry.
Without a buyer for Barbie at the 1959 Toy Fair, the Handlers must find another way to sell their supply or lose millions.
The toy buyers are the one saying to her, "No one is going to buy a doll with breasts for their little girls," and Ruth pushed.
She pursued, and she believed in it.
And Ruth decided to bet on the little girls convincing their parents that this was okay.
She doubles down on Mattel's million dollar advertising budget in order to sell Barbie directly to the children.
Beautiful Barbie I'll make believe that I am you In the commercial, the little girl in the song says, "I'll make believe that I'm just like you.
" So the doll is actually made human in this commercial in a way that girls totally relate.
The buyers thought this wouldn't work, little girls voted otherwise, and Barbie just exploded.
Over 300,000 are sold in the first year, more than any other toy in history.
Barbie was, by most counts, the most successful toy ever.
Ruth and Elliot then innovate a new way to keep sales going: alternate versions of the doll with distinct accessories.
The genius of Barbie is that Barbie was really not a one-time purchase.
So if Barbie is a cheerleader, she needs pompoms.
If Barbie has a dream house, you need all the stuff that goes in the dream house.
Barbie itself was very cheap, and then the clothes and accessories are what you really needed to enhance the play pattern.
Beyond just money, Ruth really wanted to change the trajectory of toys.
In 1961, the Mattel CEO ups the ante again.
He is Barbie's boyfriend.
There was such a customer demand that Barbie have a man in her life that Mattel did come out with Ken, also very good looking.
The first Ken doll costs $3.
50, nearly $30 today, and wears just a swimsuit.
Both Ken and Barbie were named after Ruth and Elliot's own children.
The demand for Barbie and Ken reaches a frenzy, but a new movement is on the horizon, and it threatens to topple the dream house.
By 1963, Merrill Hassenfeld is struggling to keep Hasbro afloat, desperate for a big idea.
The Flubber experience certainly put Hasbro back on its heels.
Mattel was really successful with Barbie, and Hasbro wanted to compete, so they needed to come up with something.
This is Stan Weston, who is behind some of the design work.
Stan Weston is an independent licensing agent with a new toy idea that could rival Barbie, but for a different audience.
This is the world's first movable fighting man.
Boys have always played with toy soldiers.
In the 20th century, for like 50 cents, you could buy bags of little green army men.
Everything from guns to boots to dog tags will be perfect scale replicas of the real thing.
So this doll- Let's not call it a doll.
Right, it's not.
It's a play man.
The hurdle was getting over the fact that "a boy will never play with a doll.
" It's an action figure.
Every person inside Hasbro that heard about this idea thought it would be the end of Hasbro.
But Hassenfeld forges ahead and even takes a page out of the Barbie playbook.
Just think of the play potential: thousands of accessories, each sold separately of course, machine guns, bazookas.
It is a multi-layered sales principle.
You're making an investment in your consumer, who's going to keep on buying.
All right, it's like a Barbie doll.
It's not a doll.
It's not a doll.
So what's his name? Hasbro was struggling with the name.
They had given the soldier the name Rocky.
His name is G.
Joe was part of the name of a 1945 film, the "Story of G.
Joe," and to make them look rugged so that you'd never mistake them for Ken, they put a scar on the upper right cheek of G.
And so he was going to be a tough guy.
Good-looking, but a tough guy.
And there's another innovative difference from Barbie.
What made G.
Joe distinctive was that he was articulated in over 21 places.
The neck and the shoulders, the elbows, even the wrists would move around.
In 1964, Hassenfeld goes into production on his moveable action figure.
Hasbro really needed G.
Joe to be a success.
Joe would make or break the company.
But the night before G.
Joe's debut at the 1964 Toy Fair, Hassenfeld realizes there is a big problem.
Stan Weston, the man who came up with the idea for G.
Joe, still owns him.
Just before G.
Joe debuts at the all-important 1964 Toy Fair, Merrill Hassenfeld discovers Hasbro doesn't own the rights.
He has no choice but to make an 11th hour deal with creator, Stan Weston, or else G.
Joe and the millions invested will be lost.
I can offer you a 1% royalty of any profits we might make.
Five percent.
If I don't see an upside, Hassenfeld Toys is finished, and Joe is dead.
You'll have 5% of nothing.
How about three? Merrill said, "Look, you're free to take this anywhere else want, but here's my offer.
" I can offer a hundred thousand dollars straight up.
Think about it.
A hundred thousand dollars in your pocket, or you can just risk it all on a doll for boys.
To a struggling or even successful inventor like Stan Weston was at the time, it made sense to take the money and run, but it was a bad idea.
The Toy Fair gets G.
Joe on the shelves, but initial orders don't even cover the costs of production.
So Hassenfeld comes up with a bold scheme to jumpstart sales.
He tells his New York sales rep, "I want you to go to every Woolworth's in Manhattan and buy up all the inventory of G.
" His salesforce clean the shelves.
Woolworth's thinks they've got a hit on their hands, places a reorder.
Hasbro broadcasts that to the rest of the retail world.
The rest is history.
Joe G.
Joe Fighting man from head to toe With help from a patriotic jingle and aggressive TV advertising, G.
Joe becomes a sensation.
First year sales top 16 million units.
Joe elevates Hasbro to the number two toy company in America, and they're gunning for number one.
Meanwhile, Mattel's Barbie adds bendable legs and swivel hips to keep up.
Hasbro and Mattel were learning from each other.
I think Hasbro taught Mattel a lot about how to make their Barbie figure more posable.
But as culture changes through the sixties and the Women's Movement sweeps America, Barbie comes under fire again.
Barbie was generally despised by the feminists of the 1960s.
Betty Friedan's book, "The Feminine Mystique," had come out.
Gloria Steinem and you know, women were making great changes in this country, and here's this doll that seems to embody every sexist image and idea that is out there in the culture.
Ruth Handler answers critics with another groundbreaking move: launching a new range of Barbies styled as career women.
Over the next couple of years, Barbie has hundreds of careers.
She even becomes an astronaut and actually lands on the moon years before the actual moon landing takes place.
You kind of grow up, and you think you're going to get married, have children, be a mom, clean the house, cook dinner.
And Barbie is letting girls know, a lot more to life than that.
She changed the way little girls think.
Ruth hits on a new formula: a toy that can change with the times.
She even updates Barbie's eyes from a coy glance to a confident stare and responds to the Civil Rights Movement with an African-American doll, Christie, in 1968.
Ruth Handler is a tremendous innovator and continued to innovate throughout her entire life.
She recognized needs and created products to satisfy those needs.
Sales hit a staggering $180 million in 1966, 1.
5 billion in today's dollars.
And Barbie's turnaround comes just at Hasbro's G.
I Joe also faces changing times.
When G.
Joe comes out, it harkens back to this notion of the American soldier fighting against the forces of evil in far-flung places.
That changes over the course of the 1960s.
And as the war in Vietnam becomes more of a quagmire, people begin to associate the toys themselves with the unpopularity of that war.
In 1968, the Vietnam War sees its deadliest year.
The Tet Offensive occurs in 1968.
In response to that, parents start to react negatively to G.
Sales of G.
Joe plummet so fast that after just four years, Hasbro halts production.
So what Hasbro does is they quickly rebrand G.
So what, he quit the army? We'll call him the Adventurer.
Good luck, Adventurer Joe.
Joe was no longer a soldier.
Instead of making him go into combat missions, G.
Joe became an explorer.
It's not as explosive as the brand once was, but they're still generating lots of sales revenue, lots of profits.
By the early 1970s, Hasbro pulls back from the brink of disaster Ruth Handler has spent her career battling controversy, but by the late seventies, there's one brewing inside Mattel that threatens to upend everything she's worked for.
Mattel was now under fire from the Securities and Exchange Commission for falsifying some of it's accounting, making things look rosier than they really were.
It all went back to Ruth Handler.
Ruth is indicted for securities fraud because they were lying about what their stock was worth.
She felt very betrayed, and she laid the blame on senior management for the fraud.
In 1978, Ruth Handler is put on trial.
If convicted, she faces up to 41 years in prison.
The trial got quite a bit of attention, and she decides to plead nolo contendere, which means no contest.
Luckily for her, she had a judge who gave her community service and a fine.
Even so, there is no going back to Mattel.
Ruth and Elliot Handler are forced out of the company they founded.
They might as well have cut her heart out as tell her that she could no longer be a part of Mattel in any way, lose her baby.
At the same time, Merrill Hassenfeld's signature toy faces its own mortal threat.
Sales of the 12 inch G.
Joe, the gold standard of action figures, plummet.
Joe has to retool, rethink about where it's going.
And so G.
Joe downsizes from the 12 inch figure to an eight inch action figure, and they call him Super Joe.
But just as soon as Hasbro sinks a fortune into Super Joe, a new and unexpected competitor arrives, action figures from a galaxy far, far away.
So enter a new, exciting boys action property, "Star Wars," and they do what will become the new standard in action figure scale, three and three quarter inch figures.
There was a major seismic shift in the toy world when the smaller "Star Wars" action figures came out.
It was all in space, and G.
Joe just didn't fit that narrative.
Super Joe lasts for about two years, and then by 1978, was off the marketplace.
A year later, Merrill Hassenfeld dies suddenly from a heart attack.
When Merrill passes away, you got a sense that the company had lost its visionary, but that vision was replaced by his son, Steven.
38-year-old Stephen Hassenfeld is given the daunting task of turning the business around.
One of his first goals is to try to re-introduce G.
The time to bring G.
Joe back is now.
Let's do this.
The ideological conflict between the United States and Soviet Union is essential to G.
Joe's reimagination in the 1980s.
Inspired by the surge in American patriotism and the popularity of the four-inch "Star Wars" figures, Hasbro reintroduces G.
Joe but in the smaller size.
The relaunch is a runaway success.
Toys, animated series, video games, and even G.
Joe movies power Hasbro into a multi-billion dollar global franchise that thrives to this day.
Joe catapulted Hasbro to levels that we've never achieved before.
Today, Hasbro boasts sales of nearly $5.
5 billion.
Mattel isn't far behind, with just under 5 billion in revenue.
The rivalry between Hasbro and Mattel has always been neck and neck.
I think that continues to this day.
Sales of Ruth's revolutionary doll are stronger than ever, with revenue of more than $1 billion in 2019 alone.
I wish the world knew more about Ruth Handler.
There's a lot to be learned from how she succeeded, how she persevered through obstacles that would have stopped almost any other human being.
She is an American story.
Both companies launch more big hits after Barbie and G.
Mattel creates Masters of the Universe and invents Hot Wheels, rolling along is one of the highest selling toys ever, grossing almost $1 billion globally.
Hasbro adds more hits, including the wildly successful Transformers and Super Soakers.
Today, around the world, someone buys a toy from Hasbro or Mattel nearly every second.
Merrill Hassenfeld and Ruth and Elliot Handler were groundbreaking entrepreneurs.
They have impacted generations of kids.
Ruth Handler created an entire category of play for kids, and G.
Joe did the same thing for boys that Barbie did for girls.
These toys are a really integral part of developing the way that a kid thinks and creates and learns.
The fact that Mattel and Hasbro are these unique enormously successful survivors speaks to really a century of innovation in toys because there's hardly a toy you can think of that still being produced that doesn't fall under either one of those two umbrellas.

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