Post by bananasmom on Nov 2, 2013 6:26:31 GMT -5
The Toy Mogul Who Became A Billionaire Through His Fight To The Death With Barbie
This story appears in the November 18, 2013 issue of Forbes.
by Abram Brown, Forbes Staff
The trophy case in the tiny conference room outside Isaac Larian’s corner office spans an entire wall. It overflows with the dolls that have made him a fortune, from his first hit, the miniskirt-clad Bratz toys, to the latest, the Lalaloopsy dolls with their bumble-gum pink and neon-orange coils of hair. Scattered among Larian’s girls are framed dollar bills in various denominations, the spoils from employees, friends and business partners who bet that one product or another would flop–and lost. A recent example is a $100 bill from a sales executive who doubted Lalaloopsy would ever catch fire. His message of surrender scrawled in blank ink: “I was wrong.”
For Larian the voice of the vanquished is as sweet a sound as ka-ching. “I have a passion for making things kids want, and I have a passion for winning,” says the 59-year-old Iranian-American with closely cropped graying hair, droopy eyes and an unshakable Persian accent. The two passions form the core of perhaps the most intense and combative player in the toy business.
Don’t be fooled by the dapper eccentricity of the blue French cuff shirt, unfashionably wide polka-dot tie and new pair of black monk-strap shoes with the price tag still stuck on the right sole. Or by the little jaunt on a toy scooter to amuse a photographer. Larian is willing to make an enemy of anyone in his way–from hated rival Mattel to his own brother, Fred. “We’ve taken the risks that no one else would,” he says, “and created toys that aren’t like anything else in the marketplace.”
Larian’s MGA Entertainment of Van Nuys, Calif. took in an estimated $820 million in sales last year, making it the largest private toymaker in the U.S. And making Larian very rich: His 82% share of the company is worth an estimated $1.1 billion (using comparable figures from Mattel and Hasbro). That’s all the more impressive given that MGA nearly perished seven years ago, thanks to a costly legal battle with Mattel. The war between the 10- to 12-inch titans, Bratz vs. Barbie, is still very much alive. “The people at Mattel are crooks,” Larian says. “And, yes, you can quote me on that.” (Mattel declines to respond.)
“Isaac is just a bulldog,” says Gerrick Johnson, a BMO Capital Markets analyst who has observed Larian over many years. “He operates with a chip on his shoulder. It drives him .”
It probably comes from growing up as an outcast in prerevolutionary Tehran. One of five children, he was poor and Jewish, the son of a textile salesman who instilled in him the belief that death is the best time to sleep. Determined to live out the American Dream and enchanted by countless matinees (“My God, I loved Spartacus “), he bought a one-way ticket to Los Angeles in 1971, arriving with $750 in his pocket. He put himself through Cal State, Los Angeles on a waiter’s wages, earning a degree in civil engineering.
Building bridges wasn’t in his future. After the Ayatollah’s takeover dashed plans of returning home, Larian and his brother went into business as importer-exporters in 1979, selling schlocky brass figurines from South Korea. (They were also maneuvering their parents’ money out of Iran.) In the early 1980s they moved on to consumer electronics, repackaging Nintendo's GameBoy forerunner, the Game & Watch, pulling in $21 million in sales the first year. That fad passed after a couple of years but left Larian with an appetite for the toy business. When a struggling inventor in 1996 brought him a design for a talking doll already passed over by Mattel and others, Larian pounced. Singing Bouncy Baby was the surprise runaway hit of 1997.
He challenged his team to create a new fashion doll. “Everything they came up with just looked like a Barbie,” he recalls. In September 2000 he saw a sketch by Carter Bryant, a freelance designer, for a big-headed, plump-lipped doll. While Larian didn’t initially like it, his grade-school-aged daughter, Jasmin, did.
Bratz did something no other doll has done before or since: knocked Barbie flat on her back. In 2005 MGA was doing roughly $800 million in Bratz sales; by then revenue for Barbie had tumbled to $445 million. Bratz was everything Barbie wasn’t–sexy, dressed in the newest fashions and available in an array of ethnicities.
That success sparked the plastic wars. Mattel, the world’s largest toymaker, fired the first salvo, suing MGA in 2004 . It alleged that designer Bryant had conceived of Bratz while on its payroll and accused MGA of bribing and secretly hiring Mattel employees for projects on the side. MGA hit back, claiming that Mattel spied on its salesmen by masquerading as toy buyers, rearranged Barbie and Bratz displays at Wal-Mart and other stores and paid off retailers to favor Barbie over Bratz. Seesawing cases have taken the dispute as high as the Ninth Circuit’s U.S. Court of Appeals. At one point MGA nearly went out of business, burdened by legal fees and a court injunction to stop selling Bratz. Only the November 2006 acquisition of Little Tikes, a maker of infant and toddler toys, saved it.
The court wound up ruling in MGA’s favor and last January awarded it $137 million for legal fees. But the judge left the door open for Larian to refile his suit against Mattel. Larian vows he won’t let the matter drop until Mattel comes crawling to him: “If those guys want me out of their hair, they’ll apologize.”
He has only slightly better odds with his brother. Fred sold his 45% stake for a mere $9 million in 2000, then sued Isaac, accusing him of hiding information about the breakout potential of Bratz. (But Isaac offers a transcript of the arbitration where Fred concedes his brother didn’t hide anything from him.) Fred dropped the case, he says, only after his parents begged him to do so. But the brothers haven’t spoken in two years. “Isaac once told me that he wants to see how many people show up for his funeral,” says Fred. “It goes hand-in-hand with his greed.”
Larian hasn’t written his own obituary yet, much less pondered his retirement or named a successor. He still makes all decisions–down to the fabrics and pumps on a particular doll. One former MGA executive claims he quit after just over a year because Larian wouldn’t give him the authority he needed. Employees can expect to hear from the boss any time of day or night. “He says he sleeps six hours, but I don’t see how that’s true,” says another onetime higher-up. Larian says he’s up between 4 a.m. and 5, sends e-mails, then travels to the office from his West L.A. home, putting in as much as 16 hours in Van Nuys. Design meetings proceed and conclude at his whim.
MGA breaks convention when it comes to licensing deals for those key tie-in products like backpacks and lunch boxes made by other firms. Whereas most licensees want to see a toy become a hit before signing a deal, Larian drives his team to secure those extensions before a new line hits the shelves to build word of mouth for the brand. For the 2010 rollout of Lalaloopsy, “I was out begging for licenses, begging,” says a former MGA executive. It all paid off. Lalaloopsy–a set of rag dolls with coal-black buttons as eyes, gangly limbs and names like Crumbs Sugar Cookie and Lalaloopsy-Oopsie Princess Anise–launched with 20 licensing partners, and it’s now a blockbuster, taking in $350 million or so in revenue last year. (By contrast, Bratz probably did $50 million in sales.)
On a recent Monday Larian doesn’t let me get much in his way. As usual he stalks the second-floor cubicles, swooping down on employees and peppering them with questions. They reply like diffident children, as timorous as the former employees I spoke with, who all insisted on anonymity. “I really like your hair like that,” he tells a designer, who has her artfully pinned-up do dyed deep purple. Later he stops in what resembles a toddler’s junkyard, scattered with the parts of a dozen Little Tikes plastic cars. A dull techno dance beat pulses from a cheap stereo. He asks if one car model has started production. It has.
With me in tow, he keeps conversations to little more than brief snippets, talking only in generalities and sometimes whispering, promising a later chat–once I’m gone. He instructs Lalaloopsy designers to throw red-checkered sheets over their workstations to hide half-finished creations. “Don’t worry, he won’t steal your ideas,” he announces to a group of designers as we walk by.
Larian isn’t much more forthcoming about his personal life. He declines to comment on becoming a billionaire–other than to say that he works not for the money but because he loves what he does, battling opponents and all. Away from the office he uses weekly Shabbat dinners to coax his three children to marry; he badly wants grandchildren. He steals some time to bike and play volleyball with friends on Saturdays.
Of his kids, daughter Jasmin is perhaps the most likely successor. She has a small office at MGA from which to run her own women’s accessories business. “The one thing I don’t like about it is that I can’t control her now,” Larian says. “She has her own money.”
Across the office park from her office, Larian invites me for a farewell kumbaya moment. He and I join hands with his latest doll, Niva from the Mooshka line, a little pink-haired baby girl in a purple floral sundress who sings “Ring Around the Rosie” in an eerie soprano, until one of us drops a hand. Is he sure Mooshka will be his latest blockbuster? “Would you like to bet on that?” he asks, extending the same offer he’s made to countless others. “How about a $100? And, yes, I will frame it.”
Reach Abram Brown at abrown@forbes.com
www.forbes.com/sites/abrambrown/2013/10/30/the-toy-mogul-who-became-a-billionaire-through-his-fight-to-the-death-with-barbie/
This story appears in the November 18, 2013 issue of Forbes.
by Abram Brown, Forbes Staff
The trophy case in the tiny conference room outside Isaac Larian’s corner office spans an entire wall. It overflows with the dolls that have made him a fortune, from his first hit, the miniskirt-clad Bratz toys, to the latest, the Lalaloopsy dolls with their bumble-gum pink and neon-orange coils of hair. Scattered among Larian’s girls are framed dollar bills in various denominations, the spoils from employees, friends and business partners who bet that one product or another would flop–and lost. A recent example is a $100 bill from a sales executive who doubted Lalaloopsy would ever catch fire. His message of surrender scrawled in blank ink: “I was wrong.”
For Larian the voice of the vanquished is as sweet a sound as ka-ching. “I have a passion for making things kids want, and I have a passion for winning,” says the 59-year-old Iranian-American with closely cropped graying hair, droopy eyes and an unshakable Persian accent. The two passions form the core of perhaps the most intense and combative player in the toy business.
Don’t be fooled by the dapper eccentricity of the blue French cuff shirt, unfashionably wide polka-dot tie and new pair of black monk-strap shoes with the price tag still stuck on the right sole. Or by the little jaunt on a toy scooter to amuse a photographer. Larian is willing to make an enemy of anyone in his way–from hated rival Mattel to his own brother, Fred. “We’ve taken the risks that no one else would,” he says, “and created toys that aren’t like anything else in the marketplace.”
Larian’s MGA Entertainment of Van Nuys, Calif. took in an estimated $820 million in sales last year, making it the largest private toymaker in the U.S. And making Larian very rich: His 82% share of the company is worth an estimated $1.1 billion (using comparable figures from Mattel and Hasbro). That’s all the more impressive given that MGA nearly perished seven years ago, thanks to a costly legal battle with Mattel. The war between the 10- to 12-inch titans, Bratz vs. Barbie, is still very much alive. “The people at Mattel are crooks,” Larian says. “And, yes, you can quote me on that.” (Mattel declines to respond.)
“Isaac is just a bulldog,” says Gerrick Johnson, a BMO Capital Markets analyst who has observed Larian over many years. “He operates with a chip on his shoulder. It drives him .”
It probably comes from growing up as an outcast in prerevolutionary Tehran. One of five children, he was poor and Jewish, the son of a textile salesman who instilled in him the belief that death is the best time to sleep. Determined to live out the American Dream and enchanted by countless matinees (“My God, I loved Spartacus “), he bought a one-way ticket to Los Angeles in 1971, arriving with $750 in his pocket. He put himself through Cal State, Los Angeles on a waiter’s wages, earning a degree in civil engineering.
Building bridges wasn’t in his future. After the Ayatollah’s takeover dashed plans of returning home, Larian and his brother went into business as importer-exporters in 1979, selling schlocky brass figurines from South Korea. (They were also maneuvering their parents’ money out of Iran.) In the early 1980s they moved on to consumer electronics, repackaging Nintendo's GameBoy forerunner, the Game & Watch, pulling in $21 million in sales the first year. That fad passed after a couple of years but left Larian with an appetite for the toy business. When a struggling inventor in 1996 brought him a design for a talking doll already passed over by Mattel and others, Larian pounced. Singing Bouncy Baby was the surprise runaway hit of 1997.
He challenged his team to create a new fashion doll. “Everything they came up with just looked like a Barbie,” he recalls. In September 2000 he saw a sketch by Carter Bryant, a freelance designer, for a big-headed, plump-lipped doll. While Larian didn’t initially like it, his grade-school-aged daughter, Jasmin, did.
Bratz did something no other doll has done before or since: knocked Barbie flat on her back. In 2005 MGA was doing roughly $800 million in Bratz sales; by then revenue for Barbie had tumbled to $445 million. Bratz was everything Barbie wasn’t–sexy, dressed in the newest fashions and available in an array of ethnicities.
That success sparked the plastic wars. Mattel, the world’s largest toymaker, fired the first salvo, suing MGA in 2004 . It alleged that designer Bryant had conceived of Bratz while on its payroll and accused MGA of bribing and secretly hiring Mattel employees for projects on the side. MGA hit back, claiming that Mattel spied on its salesmen by masquerading as toy buyers, rearranged Barbie and Bratz displays at Wal-Mart and other stores and paid off retailers to favor Barbie over Bratz. Seesawing cases have taken the dispute as high as the Ninth Circuit’s U.S. Court of Appeals. At one point MGA nearly went out of business, burdened by legal fees and a court injunction to stop selling Bratz. Only the November 2006 acquisition of Little Tikes, a maker of infant and toddler toys, saved it.
The court wound up ruling in MGA’s favor and last January awarded it $137 million for legal fees. But the judge left the door open for Larian to refile his suit against Mattel. Larian vows he won’t let the matter drop until Mattel comes crawling to him: “If those guys want me out of their hair, they’ll apologize.”
He has only slightly better odds with his brother. Fred sold his 45% stake for a mere $9 million in 2000, then sued Isaac, accusing him of hiding information about the breakout potential of Bratz. (But Isaac offers a transcript of the arbitration where Fred concedes his brother didn’t hide anything from him.) Fred dropped the case, he says, only after his parents begged him to do so. But the brothers haven’t spoken in two years. “Isaac once told me that he wants to see how many people show up for his funeral,” says Fred. “It goes hand-in-hand with his greed.”
Larian hasn’t written his own obituary yet, much less pondered his retirement or named a successor. He still makes all decisions–down to the fabrics and pumps on a particular doll. One former MGA executive claims he quit after just over a year because Larian wouldn’t give him the authority he needed. Employees can expect to hear from the boss any time of day or night. “He says he sleeps six hours, but I don’t see how that’s true,” says another onetime higher-up. Larian says he’s up between 4 a.m. and 5, sends e-mails, then travels to the office from his West L.A. home, putting in as much as 16 hours in Van Nuys. Design meetings proceed and conclude at his whim.
MGA breaks convention when it comes to licensing deals for those key tie-in products like backpacks and lunch boxes made by other firms. Whereas most licensees want to see a toy become a hit before signing a deal, Larian drives his team to secure those extensions before a new line hits the shelves to build word of mouth for the brand. For the 2010 rollout of Lalaloopsy, “I was out begging for licenses, begging,” says a former MGA executive. It all paid off. Lalaloopsy–a set of rag dolls with coal-black buttons as eyes, gangly limbs and names like Crumbs Sugar Cookie and Lalaloopsy-Oopsie Princess Anise–launched with 20 licensing partners, and it’s now a blockbuster, taking in $350 million or so in revenue last year. (By contrast, Bratz probably did $50 million in sales.)
On a recent Monday Larian doesn’t let me get much in his way. As usual he stalks the second-floor cubicles, swooping down on employees and peppering them with questions. They reply like diffident children, as timorous as the former employees I spoke with, who all insisted on anonymity. “I really like your hair like that,” he tells a designer, who has her artfully pinned-up do dyed deep purple. Later he stops in what resembles a toddler’s junkyard, scattered with the parts of a dozen Little Tikes plastic cars. A dull techno dance beat pulses from a cheap stereo. He asks if one car model has started production. It has.
With me in tow, he keeps conversations to little more than brief snippets, talking only in generalities and sometimes whispering, promising a later chat–once I’m gone. He instructs Lalaloopsy designers to throw red-checkered sheets over their workstations to hide half-finished creations. “Don’t worry, he won’t steal your ideas,” he announces to a group of designers as we walk by.
Larian isn’t much more forthcoming about his personal life. He declines to comment on becoming a billionaire–other than to say that he works not for the money but because he loves what he does, battling opponents and all. Away from the office he uses weekly Shabbat dinners to coax his three children to marry; he badly wants grandchildren. He steals some time to bike and play volleyball with friends on Saturdays.
Of his kids, daughter Jasmin is perhaps the most likely successor. She has a small office at MGA from which to run her own women’s accessories business. “The one thing I don’t like about it is that I can’t control her now,” Larian says. “She has her own money.”
Across the office park from her office, Larian invites me for a farewell kumbaya moment. He and I join hands with his latest doll, Niva from the Mooshka line, a little pink-haired baby girl in a purple floral sundress who sings “Ring Around the Rosie” in an eerie soprano, until one of us drops a hand. Is he sure Mooshka will be his latest blockbuster? “Would you like to bet on that?” he asks, extending the same offer he’s made to countless others. “How about a $100? And, yes, I will frame it.”
Reach Abram Brown at abrown@forbes.com
www.forbes.com/sites/abrambrown/2013/10/30/the-toy-mogul-who-became-a-billionaire-through-his-fight-to-the-death-with-barbie/
