- 7 hours ago
Spin Master, the company behind Paw Patrol and many other popular toy brands, was cofounded by Ronnen Harary less than a year after he graduated from college. He says his youth and lack of experience were the source of his success — not a barrier. He explains why in his new book, "No Experience Necessary." In a live Q&A with Business Insider's Sarah E. Needleman, Harary shares how he grew Spin Master into a toy powerhouse, and how other young entrepreneurs can follow his example.
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00:09no jobs too big no pups too small that's a lyric from the theme song for the hit kids show
00:14paw
00:15patrol and while we don't spend a lot of time talking about tv for preschoolers here at business
00:20insider we do love stories about the companies behind these mega brands hi everyone and welcome
00:25to the business insider newsroom i'm sarah needleman senior leadership and workplace correspondent
00:30and as you may have guessed my guest today helped build the community that brought the world paw
00:36patrol its portfolio also includes brands like hatchimals rubik's cube kinetic sand and melissa
00:41and doug he is ronan harari co-founder and chairman of spin master and author of a new book no
00:47experience
00:48necessary ronan so glad to have you here sarah thanks for having me on so nice to meet you
00:53um to everyone who is joining us on linkedin or youtube i have lots of questions for ronan
00:58but we want to hear from you too drop your questions about spin master or starting a business in the
01:03chat
01:03we'll try to get to as many of them as we can okay so for people who are not steeped
01:10in the toy industry
01:10just give us a little primer on what spin master is so spin master we consider ourselves a children's
01:15entertainment company started in 1994 with ten thousand dollars after we graduated university
01:20and um we have three parts for our business one is the toy business the other one is entertainment
01:25so producing shows like paw patrol and many others and the other one is digital games and we have about
01:3028 offices around the world we do just over two billion dollars a year in sales 3 000 employees
01:37going strong and we just love being in the kids business it's a lot of fun okay so 1994 that
01:44is quite a
01:45while ago and you're not you're not you're not dating me are you sarah i i was around then too
01:50but
01:50there was no social media venture capital wasn't everywhere retail looked very different um yet one
01:57of the takeaways from your book is that you could not start spin master today why is that no i
02:03i don't
02:03know if i if i said that we couldn't start spin master today i said i i couldn't start spin
02:08master today in
02:08my 50s i see that's what i was referring to i was referring to the fact that i started in
02:12my 20s when we were
02:13when i was 23 and my business partners were 23 and as a result of being in your 20s you
02:17have so much
02:17energy you have so much um drive determination and you know will to get things done and when you hit
02:24your middle age you know it it decreases okay it's more of an age thing well speaking of the age
02:30of in
02:30which you start a business that's a hot topic right now um and so when you built spin master you
02:35were in
02:36your 20s um we had a poll on linkedin and our audience we asked them what's the best age to
02:43launch a best venture and most of them said in their 30s what do you say to that i'd say
02:49that uh
02:50the average age of an entrepreneur in the united states is 38 so i would say that they're actually
02:56quite accurate in their assessment um what i write in the book is that there's i'm an advocate of just
03:02starting a little bit earlier and then letting all the energy and all the benefits of starting
03:06earlier compound um and there's a lot of benefits to starting in your 20s right give me an example
03:13for example everybody's rooting for you when you're 25 no one sees you as competition when you're 35
03:19potentially people see you as competition when we started our business at 25 years old um i remember
03:24we called up alan hasfeld founder of hasbro we asked him for advice he was so giving with his time
03:29he was
03:29so excited to have us in the industry he was like young guys it's going to be innovative going to
03:33bring more people to retail he gave us a lot of help from a business perspective i remember in our
03:38first year of business our payables were 90 days and our receivables were 20 and we had a cash flow
03:45of
03:4570 days okay and the only reason why we had that 70 day spread was because we were young there's
03:51no way
03:51we're getting that 70 day spread but what about the lack of experience i mean what what do you what
03:56advice do you have for young people who are interviewing for jobs and they're trying to
03:59convince hiring managers for example that they should hire them when they don't have a lot of
04:02experience i think at the end of the day people bet on people and they hire based on people and
04:08so
04:08people want to see your passion they want to see your genuineness they want to see your excitement
04:13are you really into the company have if you're interviewing how much homework have you done about
04:17the company how much do you know how much you know about the founders of the business what's the
04:20origin of the business what's the history of the business what's the competitive set what's why do they
04:24have a reason for for being that company and why are you passionate about joining right and how long
04:31are you going to plan to stay so all those sorts of things would bode well but people want to
04:36they
04:37want to feel you they don't want to feel the resume you know i've never done a powerpoint presentation in
04:41my life okay well some of our viewers or readers rather did chime in we have bernie from california
04:50said that he started his business when he was 42 he kept it for 21 years and sold it and
04:56he said it's
04:56best to work and learn from the industry you're in for a number of years before starting it and then
05:01we have aaron from wisconsin who said um there are a lot of comments about starting young uh but aaron
05:07wonders that that's partly why so many new businesses fail listen i would say first of all you can bet
05:12on
05:13yourself at any point in your life and uh i think that failures are actually gifts and failures will
05:20lead you to your ultimate successes at the end of the day um as long as you enjoy what you're
05:24failing
05:24at and um and you stick with it speaking of failing a lot of uh question i like to ask
05:30a lot of leaders
05:31are what are some mistakes you've made in the past and learned from because nobody's perfect what's
05:35something you've learned from over the years well i've learned from uh uh don't have too much hubris
05:44right hubris is really bad um you know we had this incredible product line called bakugan which we
05:52turned into a tv show which we partnered with sega toys in japan um and it took our company from
05:58450
05:59million dollars in sales to just over a billion in three years and then we went from a billion dollars
06:04sales back to 450 million dollars in the subsequent following two years and what i learned is that
06:11stick to your knitting attention to detail don't expect everything you do to turn to gold
06:18don't get ahead of your skis one of the most difficult things for us in our company's history
06:23was during that period we had to let go of 350 people we did four restructurings um and you know
06:30you never want to people you never want people to join your business and then have to leave
06:35so for me that was the biggest learning is like if you're going to grow as a business and growth
06:39is
06:39amazing grow at a steady pace right um don't just get ahead of your skis because things happen um and
06:48make sure that you have the diversity within your organization or within your company to maintain your
06:53growth you mentioned uh partnerships a minute ago and so i'm trying to get the origin of the the business
06:59so
07:00paw patrol story how did that begin and how did you move into it looks like licensing you know
07:05paw patrol actually happened in our 19th year business right so some people were like oh it's
07:09just like you know we just did paw patrol but that's not what happened um and we got actually into
07:15licensing as a result of necessity or producing tv shows as a result of necessity because what happened
07:20was 25 of the toy industry the products are from tv shows or movies and every time we would go
07:28to
07:29disney or a larger studio and try to get an a license they'd turn us down so then we said
07:35well
07:35we might as well start creating our own tv shows and then license the toys back to ourselves so it
07:39was
07:39almost out of necessity that we did it plus also we realized like that's a great way to expand the
07:44business and so we started with bakugan which was the first show we did and as i just said to
07:50you
07:50it was really successful and then we had three shows after that we had redikai complete
07:56stinker a dud yeah have some duds uh tenkai nights did not do well uh little charmers did
08:04not do well literally the products that were on the shelf okay so every time i would go to the
08:08shelf they would look beautiful and then i go back the next week it would look beautiful again i go
08:12back
08:12the next week beautiful i was like is there glue on the back of the product like is this like
08:16why is
08:17it stuck yeah you would not have them in your collection i'm like why are they stuck to the shelf
08:20like
08:21that um and then the fifth show we did was paw patrol and the fifth show of paw patrol being
08:27our fifth show was born in the lowest point in our company's history wow but it was doggone good
08:32and things worked out that's one way to describe it that's a you know how do you spot like what's
08:37going to be hit like how do you know especially in the age of tick tock and youtube and gaming
08:41it's like how do you know what's going to resonate with young folks who seem to have like you know
08:46very limited attention spans are very fickle how do you figure it out listen you you want to be as
08:52close as you can to the zeitgeist right and by knowing what's going on in the zeitgeist you can
08:57identify the white space opportunities and if you see the white space opportunities then those are
09:01good indicators of where where to lean in so when we did paw patrol we were looking at the preschool
09:06landscape in terms of the competitive tv shows that were out and we noticed there hadn't been a hit
09:10in let's say 10 years um and it was just it was a bit of a neglected space and so
09:18we felt that we
09:18had more we as a result that we had permission to go in and and try our luck at it
09:22excellent so um
09:24another question i wanted to ask you about like the other partnerships like let's take melissa and
09:28doug for example that's a really big brand um how do you like sniff out the opportunities of who to
09:34partner with and how do you set those deals so they're favorable for you well melissa and doug
09:39actually was actually an acquisition so it wasn't a partnership it was a company we bought three
09:43years ago and the reason why we like melissa and doug was because it's the most synonymous brand for
09:50quality wooden products and open-end play patterns for kids and we realized that you know with with
09:57all this shift towards digital and ipads and screens and and youtube and scrolling and all that type
10:04stuff that parents really want their kids off the devices and they want them physically interaction
10:09with toys and they want their imagination to be able to roam freely um and so we made a bet
10:14that that
10:17ethos and that way parents want to raise their kids is going to continue and is going to grow
10:21um in terms of partnerships we're always looking for people with the same values as us
10:26the same work ethic uh you know we partnered with nickelodeon when we when we sold paw patrol onto their
10:32broadcaster we have our third movie of paw patrol coming out in five days we partnered with paramount
10:39the people that we choose to animate our shows uh you know we're always looking for people that
10:45when they get involved with something or when we bring them an idea it means something to them
10:49so i'll give you an example when we did bakugan back in the day it was it was so for
10:55your listeners
10:55bakugan is basically this action figure that pops out out of this um plastic ball and so it came to
11:02us
11:02from this inventor 23 year old inventor and his whole idea was putting an action figure in a marble
11:06so we licensed it from him it was just ideas on on a piece of paper and then we developed
11:12a certain
11:13point we were like it's not great and so then i took a trip to japan and i pitched tomi
11:19i said would
11:20you partner with us on this they said not interested i went to bandai they said they're not interested
11:23and then i sat with mr kokobun who doesn't speak a stitch of english okay i was with the translator
11:29and he
11:30says he says i said what do you think about this and he said um give us three months and
11:35come back
11:35and we're going to partner with you i left i came back to japan three months later and they did
11:40the
11:40whole magical pop open transformation with the spring inside with the magnet putting a sheet of metal
11:46inside the card that's that's decorated and you roll it onto the card i roll it onto the card we
11:51battle
11:51it out and then i looked and i said to him i said how would you feel about doing 52
11:56episode animation
11:57and he said it's going to cost 12 million bucks do you have six so i said to him okay
12:01i need three
12:01months yeah rovers i went i went back and spoke to the team and stuff like that we raised the
12:08money
12:08came back and said we're in and it was it was just his love of the product at the end
12:17of the day
12:18he was just a toy genius and so those are the types of people we like to partner with is
12:24people
12:24that are just like passionate about the product and what the product is going to imbue with the
12:28children okay and the kids and what it's going to create and it's more about the creation than just
12:32like oh we're going to make some we can make some money from this anytime it's it's just about the
12:36money it fails it's got to be the passion the real thing the genuine love for the toy we have
12:41a
12:41question from our viewers sure amazing jeffrey from montreal uh hi jeffrey could you provide some
12:47suggestions on how to successfully transition from corporate to running your own business
12:53it's a great question i think that fundamentally the biggest thing one's got to do one has to just
12:59make a decision that they want to go into business for themselves that's the number one thing and it's
13:04and it's the hardest decision you can make because i think when you sit on the fence the universe
13:08doesn't come towards you but once you make that decision there's lots of opportunities that will open
13:12up um because you're putting your energy in that you're invested you're invested in that direction
13:18and so it's it's a difficult one but just make the decision that that is truly what you want to
13:27do and then give it a try you mentioned the zeitgeist earlier and that seems to be right now these
13:34squishies neato's um but you guys actually have the original with the kinetic sand in my mind as
13:40far as like the sensory um what do you make of the zeitgeist moment now and how what's your way
13:45into
13:45that uh it's a great question i think people just want to have that tactile feel with stuff they want
13:51to be off the screens they want to get that that feedback from something physical and i think that's
13:56why neato is doing so well plus also i think that things can actually spread really quickly over social
14:04media now it's like it's like goes like fire um and uh you know i think our team was probably
14:12a little bit slow to it you know we have the kinetic sand which is actually a very large business
14:18um but the neato really caught like something in terms of the fact that you know i'd say this much
14:24kinetic sand is more of an activity you know you have to be more in place and in situ to
14:28play with it
14:28but the neato you can take with you you can move around so they have the portability factor that
14:33gives them an edge got it um okay so let's see what else um we talked about duds oh here's
14:41one thing
14:42i wanted to ask you about when you found out when you were young that you had a learning disability
14:47called i'm going to pronounce it wrong dysgraphia dysgraphia okay um and you made a point of talking
14:52about that openly so tell me a little bit about what that is and why do you talk about it
14:57openly what
14:57it meant for you in your career thank you for asking me um so i was identified at 10 years
15:02old
15:03with dysgraphia and a few other commingled you know learning challenges um but dysgraphia is the
15:09inability for you to get your hot your thoughts out through your hands so if you read my handwriting
15:14you'd be like oh renan you can be a doctor you get a writing prescription um so what happens is
15:20i start
15:20writing and then my hand cramps up and then my writing becomes illegible and then for me to read it
15:25later i got to go back and rewrite it slowly but then i lose my my train of thought right
15:31um so the reason why i talk about it is that i am super lucky that i got identified because
15:38as a
15:38result of getting identified i got accommodations so for example an exam that would take someone an
15:43hour to do i got two hours to write the exam without the accommodations there's no way i would have
15:48made
15:48through high school and i probably would have dropped out and when you drop out your options become
15:54quite limited um and then you could end up on the wrong side of the tracks you can end up
15:58in jail
16:00right that's how serious it is and i'm very passionate because as a result of the accommodations
16:04i got out of i graduated high school with a 69 i'm the king of the seas okay
16:11i was on wait list at western my mom was like go drive and go go drive to london's two
16:17hours away from
16:17toronto and go sit there at admissions until they let you in and that's exactly what i did
16:22i pleaded my case and they let me in and university was the greatest thing that happened to me because
16:27i got to learn and it's such a gift and an honor to be able to learn and learn stuff
16:32that you're
16:33interested in and i solidified my business relationship with my business partner anton
16:38we had a small business called campus faces then is that where you met on campus we met at summer
16:43camp
16:43um and he met my third business partner at business school university so everything coalesced there
16:51uh and if i didn't make it to university the business would have started and the last thing i just
16:55want
16:55to say on this point is that the reason why i like talking about is because not everybody gets assessed
17:04and assessments if you pay for them are six thousand dollars so they're a lot of money so
17:08not everybody can afford assessments so i'm a very big advocate of people getting assessed the public
17:15school system paying for assessments because people with learning disabilities have a disability on one
17:20side but they have a gift on the other side and their gifts are so creative and society would be
17:25a lot
17:25better off okay if they're contributing their gifts as a result of staying in school and being identified
17:30excellent we have another question come in i love questions um we have a barclay from idaho
17:36at says uh i'm launching a game a card game for for ages 14 and up we're currently funding it
17:42through
17:42kickstarter but i don't yet have a large audience what evidence or milestones would convince you that
17:47this could go from a niche educational product into a scalable retail game and which distribution channel
17:52would you pursue first well sounds interesting i would start locally right i think everything starts
17:59with the consumer at the end of the day so putting aside the distribution the question is does the
18:04consumer have a good reaction to your product is there a need for it um and are they are they
18:13using
18:14are they playing with it for a long period of time right or are they getting bored after a few
18:18minutes
18:19so i would assess that with your locally amongst your consumers um and then
18:25if it's educational it's it is you know we don't do that many that much educational products um
18:36i would do i would do stuff in in your local
18:41toy stores and maybe do some live events um and be able to see see what's happening with the consumer
18:49uh i do see some uh in the mall near me a toy republic there lots of people playing card
18:54games
18:55so there is like live opportunities uh and yeah it seems like a lot of fun um we are business
19:00insider
19:01let me ask you a very businessy question tariffs um and trade policy those things have a real impact
19:07on a toy company um how does it impact your business and how do you talk about it because some
19:13leaders don't want to talk about this publicly some do how do you uh draw that line well i think
19:18tariffs are very disruptive they're very disruptive to our business last year uh retail basically
19:24from like april till june screeched to a halt the retailers were had to change all their ordering
19:29patterns they didn't know how much to order how much to hold um christmas was really wonky last year
19:35prices got increased as a result because tariffs are a form of attacks at the end of the day and
19:45it
19:45causes inflation um so it's very disruptive for businesses and i think it's disruptive for consumers
19:53i know it's only august and santa claus has not even you know put on his boots yet but how
19:59is this
20:00shaping up for like i assume you plan well in advance for christmas so how are you how are things
20:05going to be this year as far as like the tariff impact i think everything's settled down i mean now
20:10it's been over a year and so everybody's had an opportunity to to really digest um uh the tariffs
20:16that are being put in place and so i think it'll be a much smoother year than it was last
20:20year okay
20:20that's good yeah um we have another question from james from the uk uh have you got any practical
20:26examples of how you manage risks in a fast-moving startup um i'd have to know a little bit more
20:33specifics on like the type of startup um yeah i think i think the question is a little bit about
20:43um how you stomach um you know taking a risk and how do you like decide whether or not like
20:48something
20:48that could be very detrimental to your business or plunking down a lot of money how do you
20:53talk it through your head to convince yourself to go forward or not
20:58well i think i think the first thing is is to ask yourself why are you doing it right um
21:04check your
21:05own internal knowing right like what's your motivation for going into the space um is it
21:11something that you've been thinking about for a long period of time um is there any data points in the
21:16market that subs that support the need for what you're doing um you know i'm a big believer in half
21:22gut
21:22half half science half art half science so you need to have that i see the white space right and
21:29i feel it but then let me back it up with some stuff that's going on in the marketplace um
21:34to justify
21:35going forward and so i would say like this is like keep at it um and but don't get too
21:42married to
21:42your product right and if you need to pivot you got to pivot and make sure that you're pivoting fast
21:47and i'll share certain things like you know in the early days when we were marketing um our products
21:51we had a string of a string of bad products we had don't free freddy key charm cuties and tickle
21:57secret babies three products in a row we spent a year and a half on each product all three of
22:02them
22:02failed wow but when you're in retail you know the most important thing is to mark down the product
22:08clear it out make sure you're not carrying too much inventory and and then move on to the next product
22:13and one of the things that we did in our business is we never blamed anybody because everybody really
22:17knows the score and why things didn't turn out well and we were just continuing to move forward so i
22:23think it's incredible that that this person started their business they're in momentum um and you know
22:30just don't get married and pivot if you need to but if you are seeing traction then stay focused and
22:36and uh good things will happen venture capital or bootstrap what are your thoughts
22:41it depends on it depends on the type of business at the end of the day um i'm a big
22:47believer in
22:48keeping as much equity as you possibly can for as long as you can all right so depends on the
22:54elements of your business but if you can if you can get by with less so that you can have
23:01more equity
23:01that's what i would do right the other thing about private equity is that we never took on a private
23:07equity person we were a private company for 21 years and there was only three shareholders in the
23:11business and they were people who were what we called phantom equity holders so we gave out
23:17percentages of equity but they were phantom and they were only redeemable based on a sale or the
23:21company went public and 21 years later we went public and so people that had phantom shares they got to
23:27cash out which was really wonderful for them because they made incredible contributions to our business
23:31um but what i would say is that we made a conscious decision that we would rather have many
23:39shareholders than have one large voice in our business and that's the one thing that i i would
23:46caution um you know entrepreneurs is that when you're going to bring in someone from private equity
23:53it's like getting married choose very carefully okay because easy to get in hard to get out hard to get
23:59out and um and and understand your reasons why right money is one element but if you're going to get
24:05a private equity person i would look for way more than than the money what else are they going to
24:09bring
24:10to the table um but i we prefer to have less voices in our business and i think that's a
24:15big part to
24:16ascertain do you want more voices or do you want less voices makes sense yeah um one thing that hasn't
24:22come up in this conversation which is almost strange to me because every conversation i have lately
24:26centers around artificial intelligence what kind of impact does ai have on the toy business
24:34you know toy business got off to a bit of a false start because some people tried to do some
24:39products
24:39last year with ai and physical products and and they didn't do they weren't great right i think that ai
24:47is a creative tool that you can use to bring toys to life or to bring animation to life or
24:53tell stories
24:53in a different way um and so that's how we view it it's just it's a it's another tool in
24:58the toolbox
24:59um and uh you'll probably see some stuff from us in the future okay that should be interesting um you
25:05are now chairman uh what how do you decide when to step down and you've been with like this company
25:11your
25:11entire life it's got to be like part of your identity i'm not that you're you're still involved
25:15obviously um but what at what point do you say yourself okay it's time to step down from
25:19being ceo and give somebody else the reins um how do you make that decision and and now that you've
25:24made it how do you feel about it you know at 27 years i was just like okay this has
25:33been a long run
25:34uh i need to get off the treadmill i took sabbatical for a year and a half which is one
25:39of the greatest
25:40things that i've ever done um went to africa drove from uh cape town all the way to nairobi i
25:46was
25:46trying to make it to cairo but i didn't make it um i broke five ribs in the trip oh
25:51boy that sounds
25:52painful yeah it was painful uh so it was just it's just an internal knowing thing was just it was
25:58just
25:58time uh time for me to take a rest i would say i was a workaholic for many many years
26:02uh you know
26:03workaholics are like the it's like the number one accepted uh addiction out there um and i didn't
26:09realize that i was fully addicted till like six months in i was in africa i was like wow okay
26:13now
26:14i understand but i think it's in my subconscious i knew that i had to uh get off the treadmill
26:19and i
26:19think the last thing i share with you is you know the greatest thing about not being the ceo is
26:24that
26:24you give your company an opportunity to see if it can live beyond the founders and that is an
26:30incredible journey that we're on right now and and some of my proud most proudest moments are the
26:34products that we brought to market that i had nothing to do with right when i see when i see
26:39our company bring out incredible products and i'm not in the line reviews anymore and i'm not making
26:43the decisions i'm like wow that is that is the highest form of success all right well now you have
26:51plenty of time to work on rubik's cube and your tech deck and all these wonderful toys that you can
26:56play with without having to worry um i guess we'll leave it here um thanks again for coming in and
27:01and thanks to everyone for watching we'll see you next time on business insider
27:47we'll see you next time on business
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