Growing Forward

After more than 13 years, Spin Master Ltd. is finally “getting into a stride,” says Anton Rabie, president and co-CEO. It's an unlikely admission considering the Toronto-based toymaker seems to have been running full stride for much, if not most, of its life—at least from the outside looking in.

Since 1994, when three college friends (Rabie, Ronnen Harary and Ben Varadi) launched the company with a Pet Rock-style novelty toy, Spin Master's been on a skyrocketing trajectory that's seen it score with products like the Air Hogs brand of air-powered airplanes; a revived, revamped Shrinky Dinks maker; and Catch-A-Bubble “stackable” bubbles, the first of several Toy of the Year Award wins since 2002, including its most recent nod for Moon Sand. All along, the common thread running through its product lines was that predicting what they'd bring to market next was almost always impossible. And for that reason, watching them grow has always been entertaining.

Despite all the growth, though, Rabie will tell you that the company eventually hit a wall.

Regardless of Spin Master's reputation for innovative product and savvy marketing, playing in the toy business' big leagues involves more than the ability to develop great toys and market them to the hilt. Last fall, it brought aboard its first group of seasoned, outside executives and opened an office in Los Angeles to attract talent from beyond its own backyard.

Playthings sat down with Rabie recently to discuss how the effort was progressing.

Playthings: Where is Spin Master today?

Rabie: This company is functioning in a very pure form. We're very focused on the products and on the people, as well as the profits, but we're not distracted by Wall Street. We're in a sweet spot. There are several reasons why: For the first time in 13 and a half years, we're able to attract truly world-class people. We could attract good people before, but now we can pinpoint the best in the world in certain areas of design or in market research, and actually get them. Our image and our results and our reputation have got us to this moment. The other major thing that's happening is that, at the same time, we're letting go like crazy. Every day I interact with a staff member that's shocked we're not involved in this area of the business or that, how we're empowering others, how we're letting go. The company is evolving at a rapid rate and all that kind of text book stuff—metrics and ownership and accountability—is being dropped into the organization right now at a rapid fire, and it's being caught by great people. Look at our L.A. office; we've hired 25 people in five months.

Playthings: What do those new people bring to the company?

Rabie: They're experts in their fields. What we're doing is taking each business—action figures, for example, or Tech Deck [mini extreme sports replicas]—and hiring experts in each area and giving them all the resources and the tools and the systems to be successful, and they're flourishing. It's not just in L.A., it's in Hong Kong, it's in Toronto. It's throughout the organization. The other amazing thing is that when great people come into the company, it's contagious—everyone lifts their game. I'd say that the greatest thing happening at Spin Master is the transformation of our people. It's real. And it's mind boggling. So, we're attracting great people, we're managing people well—morale is going up in the organization—and there's a proliferation of ideas.

Playthings: How have those people changed the company? You said you're more hands-off now…

Rabie: We're tracking everything now. Everything's measured. For example, I just walked out of a serious meeting on defectives; never before had we had such a detailed meeting on every level… What among the defectives is manufacturing? What can be changed in design? What are real defectives and what percentage of them are returns from retailers? We're into numbers and data like never before—part of that's due to new systems, part of it's due to the new people we're hiring being used to that.

What you have to remember is that we grew overnight. We just shot upwards from 100 million to hundreds of millions of dollars in only two or three years, so some really basic stuff was never put into place…As of five months ago, no organized employee training existed...there was no career path guidance. People who were running businesses for certain brands weren't even given their brand's financial results in an alive fashion. All this stuff that some people take for granted in corporate America where it exists, we didn't have. We just had this raw talent and raw energy as an organization to find product and market it like crazy—now we've added this other expertise.

The partners are getting more comfortable as well. Ronnen and I are in new roles. Ronnen had overseen all the operations and development but starting last August, I took over all the day-to-day of the business, so he's freed up to focus on new opportunities, new revenue, new content, on acquisitions…things that will drive future revenue, while I take care of existing revenue. We haven't had a structure like that in our previous 13 and a half years.

Playthings: What has the result of those changes been for the company?

Rabie: Spin Master has been known on the outside as very innovative and incredibly aggressive on marketing. But internally, operationally, executionally, we've only been average. We've taken this company known for its marketing flair and ability to select product, to come to market aggressively, to be in touch with the consumer, and now add a degree of maturity and sophistication and planning to be able to operate as if we're a Proctor & Gamble or a Nestlé.

Playthings: What effect outside the company will the changes inside the company have?

Rabie: If you ask certain retailers about what we've been, I think they'll basically say to you, 'They're heavily innovative, they're unbelievable at marketing, but they don't ship us reliably, or their item maintenance or certain logistic things are not as tight.' What will happen in a year or two is that whether it's vendors in the Orient or retailers or licensors, they'll know us as the company that also has world class execution. Two years ago there was a licensor who said they wouldn't give us a master license because they looked at the partners here and they said, 'Who's going to execute it?' They were like: 'Show me your brand manager. Who's your designer—I want to see them. I don't just want to see you all the time.' So, we're able now to go into meetings and say, Here's our brand manager and here's our marketer; these are the people who'll be executing.' Basically we're transforming the culture of the business—maintaining the entrepreneurialism but transforming the culture to be more disciplined.

We're not there yet, but we're moving the needle every day. That's the part that we're so proud of: We saw the need for change and we did it while preserving the entrepreneurial spirit, the hunger for new product and innovation, while at the same time adding world-class execution. That is something I think I will look back on as a milestone in my life.