Review: Zac Bissonnette’s The Great Beanie Baby Bubble: Mass Delusions and the Dark Side of Cute
This review first ran in the April 13 edition of The Hamilton Spectator.
By Zac Bissonnette
Portfolio / Penguin
I spent a small fortune to learn a valuable life lesson.
I was one of those kids who bought comic books and hockey cards. I faithfully rode my bike or the bus to comic book stores and card shops every Saturday. I forked over every dollar I earned cutting lawns, shoveling driveways, delivering newspapers and catalogues, babysitting, washing dishes and bussing tables.
As the comics and cards piled up, I fooled myself into believing this was less an out-of-control habit and more of a smart long-term investment. Mint condition X-Men comics and Eric Lindros rookie cards were my college fund. The proof was in the price guides put out by collectors who made their livelihood off selling to kids like me.
In the end, my investment yielded a return of about a half cent on the dollar. I traded my cards and comics at used bookstore for just enough cash to buy two textbooks and a one-month bus pass. But I also left with a newfound appreciation that something’s only worth what someone else is willing to pay for it.
That was a lesson lost on everyone who got caught in Beanie Baby mania in the late 1990s. Otherwise sane grown-ups spent hundreds, and even thousands, of dollars on toy animals shipped by the millions from Chinese factories and sold in stores for $5.
Beanie Babies were the brainchild of entrepreneur Ty Warner, dubbed the Steve Jobs of plush. In 1998, Warner’s company rang up sales of more than $1.4 billion. Warner’s pretax income was a whopping $700 million. One saleswoman earned more than $800,000 in commission selling to toy and gift shops in Chicago’s northern suburbs, which was ground zero for the Beanie Baby craze.
“The story of Ty Warner and his Beanie Babies shows the dynamics that drive people into and out of speculative manias, but it’s also about every other manner of human dysfunction, turmoil and trauma,” says author Zac Bissonnette, who interviewed former employees who’d likely never nominate Warner for boss of the year honours. “The Beanie Babies brought (Warner) as the Norwegian playwright Henrik Ibsen wrote of money, ‘the husk of many things but not the kernel…food, but not appetite; medicine, but not health; acquaintance, but not friends; servants, but not loyalty; days of joy, but not peace or happiness’.”
Beanie Baby mania peaked at the same time as the Internet stock bubble. Warner’s toy company was one of the first to launch a website in 1996 where collectors bought, sold and swapped Beanie Babies. eBay soon followed and Beanie Babies accounted for 10 per cent of initial sales. In May 1997, the auction site sold $500,000 worth of Beanie Babies at an average price of $30.
“The prices they were fetching on eBay helped drive sales volume by a huge multiplier,” says Bissonnette. “Once people could buy them for $5 and flip them for two to five times that much, the speed of the fad’s spread multiplied because humans have an insatiable need to brag. The idea of making money reselling stuffed animals was so bizarre – so fantastic – that everyone who did it told everything they knew about it. Even with relatively tiny volume, stories about profits on Beanies spread word virally of an otherwise unremarkable product.”
Warner also did a masterful job of driving up demand. He’d drop hints and then retire Beanie Babies to send collectors into a frenzy. As the secondary market overheated online, adults bought whatever new Beanie Babies hit store shelves. Warner only shipped small orders to independent toy and gift shops to fuel the chase for collectors. There were never bins of Beanie Babies for sale at Walmart or Costco. Media coverage of preteens and soccer moms striking it rich made Beanie Babies look like a can’t miss opportunity to strike it rich.
The end came suddenly at the start of 1999. Warner over-saturated the market with too many different kinds of Beanie Babies and turned off collectors. There were more sellers than buyers and kids had moved on to Pokemon. By November 2000, Beanie Babies were showing up in discount dollar stores. No one seemed to care when Warner announced he was retiring Beanie Babies and then reversed course.
Warner claimed losses of more than $39 million in 2004. In the Fall of 2013, Warner plead guilty to tax evasion and was sentenced to two year’s probation and 500 hours of community service.
Before we lose our minds in the next inevitable speculative bubble, we’d do well to read Bissonnette’s book and remember that something’s only worth what someone else is willing to pay for it. Warner’s life story would also make for a great life-is-stranger-than-fiction mini-series on HBO or Showtime.