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Child’s play: business advice from Spin Master’s co-CEO

December 8

Ronnen Harary, co-founder and co-CEO of Toronto toy company Spin Master, offers up his best advice for budding entrepreneurs.

If you’ve spent any time shopping for a kid over the past 27 years, you’re likely familiar with Spin Master’s products. The Toronto-based toy company, which has a catalogue that includes Paw Patrol, Hatchimals, Kinetic Sand and Ninja Bots among their catalogue, has been making must-have toys since 1994. But co-founder and co-CEO Ronnen Harary doesn’t just know toys—he’s a wealth of business knowledge, too.

Harary and his co-CEO and co-founder, Anton Rabie, founded Spin Master not long after they graduated from the University of Western Ontario. The company, then called Seiger Marketing, started with $10,000 in savings and the Earth Buddy, a weirdly adorable head made of pantyhose and sawdust that, when watered, sprouted grass “hair.” The quirky product took off; Wal-Mart Canada quickly ordered 26,000 units and within nine months, the company topped 1.5 million Earth Buddies sold.

The next year, they debuted Devil Sticks, a juggling game that was soon the must-have toy on elementary school playgrounds. This release was so successful, selling 600,00 units by the end of 1995, that they renamed the company to Spin Master in its honour. By then, they’d set up shop at King and Bathurst, and soon, they were working on the toy that would put their fledgling company on the map: Air Hogs Sky Shark. A compressed air-powered toy airplane, the Sky Shark was the result of a half-million dollar investment in R&D—and it paid off. The toy was wildly successful, becoming the third best-selling toy of the year and even being named the “Best of What’s New” by Popular Science. From there, Spin Master went on to release Bakugan, Paw Patrol, Hatchimals and a slew of other innovative toys, and to make strategic acquisition, including Gund, Meccano and Etch A Sketch.

Now a publicly traded company with $1.5 billion in revenue, 1,800 employees and 28 offices around the world, Spin Master doesn’t just make toys. It has also expanded into apps, games and entertainment. And Harary has helped steer the company to these ever-greater heights. Here’s what he had to say about encouraging innovation, the importance of balance and the surprising success of Paw Patrol.

How did you take Spin Master from an idea to the company it is today?

It’s been a long journey. At the beginning, it was literally one day at a time, then it was one month at a time, then it was six months at a time, one year at a time. Now we think three years out. But it was really step-by-step, and product by product. When we were developing the Sky Shark, which was our big breakout toy in 1998, all we were thinking about was developing the best product, marketing the best product, getting it manufactured and seeing how it would do. We were very focused on the product at hand. And then once that was out, we were like, ‘Oh, well, we can do some more stuff.’ And then we started doing different categories.

What’s one thing you did when you started the company that served you really well?

We never turned down an opportunity to go meet a buyer or to learn from a mentor. One of the greatest things about starting a business in your 20s is that people want to help you. Everybody’s rooting for you. They don’t see you as a competitor. I think we knew that intuitively, so whenever we had an opportunity to meet with someone in our industry, we took it. We got a lot of advice from the Irwin Toy family at the beginning, from the Alberts of Canada Games — wherever we could learn from people in the industry, we took advantage of that.

How do you know when you’ve hit on an idea that will resonate with kids?

I think the answer is you can’t know. But you can have certain intuitive feelings that can give you a higher probability for success. One is, you’re looking for a whitespace opportunity. So, you’re looking for an area that has not been done before or where there is not a lot of competition — you kind of want to be a contrarian. Kids can smell something that is derivative. It’s the strangest thing. Even if they’re not from that generation, they can just smell derivativeness. They’re always looking for newness. And you need to sense if there’s some sort of magic in there. I like to say that to be successful in this business, you need to stay as a seven-year-old.

Are there any Spin Master success stories that you didn’t see coming?

We never knew that Paw Patrol would turn into what it has become. Or look at something like Hatchimals. That took off; it really struck a chord with people and got into the zeitgeist in 2016. But we didn’t really anticipate how deep it would go and how global it would become. I think a lot of our big ones we were cautiously optimistic. Then when something big happens, it way exceeds your expectations.

How do you make your products standout against your competitors like Hasbro and Mattel?

Well, I think sometimes if you’re smaller, it’s a bit of an advantage because you can put the focus, time and attention on it — and retailers like that. They can see it in the quality of the product, the marketing, the innovation, and then they want to give you the shelf space, because they want freshness and newness and innovation. It’s also the passion — we would go down to Walmart or Target or Toys R Us and we really have a lot of passion behind our products. And then, you know, the way we did our packaging was super innovative, and retailers would see our commercials and they’d be like, ‘That’s a really great commercial.’ All those elements working together got us some decent shelf space over and above our competitors at the time.

When you’re looking to scale, how do you make sure your company is set up to meet the demand?

That was another ethos of our businesses: we never wanted to leave a customer unserved. From an operational perspective, that means making sure that your supply chain is set up correctly and working with really good factories that can react really quickly to increase their labour force or make extra tools very fast, that have the capacity to accordion out. Or, you need to work with multiple vendors at the same time.

Are there any other mistakes that you’ve made that you would counsel new entrepreneurs against?

I think it’s really important to work hard and put a lot of time and effort in. But at the same time, watch the balance. Building a business is all consuming — or you can make it all consuming. But you don’t want to be missing weddings or special occasions or putting important family and personal relationships second. If your ideas are good, and you’re talented, and you have a good team, you’ll find success. You have more time than you think. It’s a balance between building something amazing and enjoying the journey.

Any other advice for new entrepreneurs?

Don’t look at it so much as being competitive, look at it as if you’re growing in an industry. Industries have an opportunity to expand, so you’re making the universe bigger. That’s a really healthy way to look at it. You’re not just taking share from other people, you’re looking for the whitespace, so really concentrate on what’s not being done out there. And one of the things that we pride ourselves in our company, is that we never blame anybody. We’ve had so many products that haven't connected — tons of failure. And my business partner and I own it. No one else. At the end of the day, if you’re running your company, it rolls right to you all the time and you need to own it all the time. You can point out what the learnings are! But then you move past it very quickly. We’ll have products stuck on the shelf, and we’re just like, we need to close it out, mark it down and let’s get to the next new product. Don’t ruminate too much. A day, two days, but then move on.

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