Playtime Is Part of the Job, but Not at Profits’ Expense
At least once a week, Steven Lebensfeld hears the same question: Is your life like Tom Hanks in the movie “Big”?
No, he doesn’t get to sit around all the time with toys in hand. But even Lebensfeld, who is president of ToyMax International Inc., admits that playtime is part of the job.
And this game of life seems to be working. After only eight years in business, ToyMax already has some blockbuster hits to its name--like Laser Challenge and Creepy Crawlers--and Wall Street likes what it sees.
“Toys are fun, but you also must remember that toys are also about fashion and style. It’s all about being on the leading edge,” Lebensfeld said during a recent interview at ToyMax headquarters in this Long Island suburb.
“There are times that this job is fun, absolutely, just like the movie ‘Big,’ ” he said. “But there is also a very serious side to this business, especially when it comes to building market share and topping the competition.”
Lebensfeld grew up in the toy industry, spending much of his youth at his father’s toy business, which made blackboards, magnetic letters and other educational toys. He yearned to be part of the action and always loved making gadgets, like the radar system he built in junior high school.
While attending Queens College in New York, he took classes early in the day so afternoons could be spent at the toy factory. Before age 20, he developed his first creation: an indoor basketball hoop to hang on the back of the door.
“I came up with this toy, and my dad told me to get out there and sell it,” said Lebensfeld, whose father sold his toy business in 1995 and now, at age 84, still helps his son at ToyMax. “I soon learned that selling a toy was just as hard as creating it.”
After college, Lebensfeld founded his first company, Hot Items, and before he was 30, he started the Asia-based HG Toys Hong Kong, where he learned about licensing and the value of producing overseas.
His biggest success, however, came in 1987, when he co-founded Toy Biz with associates from HG Toys. Within a year of its start, Toy Biz held the exclusive license for action figures based on characters from Marvel comics and DC Comics, including Batman, Spiderman and Superman.
“We were instantly the largest action-figure company in the market. It was unbelievable,” said Lebensfeld, who came up with the idea for the comic book figures after seeing a void in the market. “Here we were, a little company doing about $4 million in sales a year when we get this incredible license. Today, those licenses bring in $300 million to $400 million in sales a year.
“What we did at Toy Biz will never be re-created,” he said. “There isn’t an opportunity anymore for a small company to acquire licenses like that.”
By 1990, the thriving Toy Biz was bought by an investor group that included Revlon mogul Ron Perelman. The value of the deal was not released.
But the sale of Toy Biz didn’t mean Lebensfeld finished his toy career. In fact, his next goal was to build a company that wove together his knowledge of the business.
“We realized that we had to be something else at ToyMax. We had to use technology and licensing, but not the way everyone else was using them,” said Lebensfeld, 45.
ToyMax doesn’t rely exclusively on major-movie licenses or have a best-selling doll. Instead, it has a diverse product mix that includes everything from action toys to interactive plush dolls to hand-held electronic games.
Sales for its fiscal year ended March 31 surged more than 81% to $99.3 million from a year ago, while its profits nearly tripled in the last year.
Although smaller than Hasbro and Mattel, which have sales well into the billions, “retailers look at us and say ‘I know that ToyMax is going to offer something different and innovative that everyone else doesn’t have,’ ” Lebensfeld said.
Its biggest hit to date is Laser Challenge, a game in which players shoot infrared light beams at one another. The line accounts for about 60% of total sales and has been a huge seller since it was introduced in February 1996.
Also popular are Creepy Crawlers, a 1960s favorite that allows children to make their own colorful, rubber bugs. This year, ToyMax will partner with Disney to make a Creepy Crawlers set to go along with the much-anticipated “A Bug’s Life” movie due out this fall.
“We really have built a business around retro toys,” said Lebensfeld, who still smirks whenever he has a toy in hand. “We realize that parents want to buy their kids what they played with, and it’s our job to give it to them, adding new technology.”
The Disney deal aside, ToyMax usually shies from entertainment licenses. Unlike many of his competitors, Lebensfeld believes that hinging an entire business on the success of one movie or television show is too risky today.
Instead, ToyMax is focusing on more corporate licenses. This year, children can make classic Chevrolets, such as Corvettes and Camaros, when playing with the Metal Molders die-cast car set.
“What we’ve done is develop a brand and then work pieces of licensing into the core brand,” Lebensfeld said. “That means the toy still lives even if the license is old.”
This year, ToyMax is also entering the electronics market with its new Nintendo Mini-Classics. The hand-held video games are based on favorites from years past, like Donkey Kong and Super Mario Brothers.
In addition, ToyMax is testing some educational toys and will soon come out with a line of toys directed at young girls.
With each of these new ventures, ToyMax is looking to expand its distribution beyond large toy retailers, like Toys R Us and Wal-Mart. ToyMax wants more of a presence in the specialty market and is beginning to concentrate more on getting its toys in small stores, stationery and airport shops and some mail-order firms. It’s also developing ideas for the Internet.
“We are in the major retailers and we enjoy a very, nice relationship,” Lebensfeld said. “But that community has become so important to us that if you miss one beat, it can throw your numbers off for the year.”
After a lifetime in toys, Lebensfeld sees himself just hitting stride. ToyMax is gaining a reputation as a solid manufacturer that’s found its niche within the industry. Wall Street has been kind to his company, thanks to its increasing sales and profits.
And he still loves toys. Maybe he’s more like Tom Hanks in “Big” than he thinks.
“To be successful in the toy industry, you need to know a little bit about everything,” Lebensfeld said. “What goes into a toy is the same thing that goes into a car. Every part has to work, every piece has its function. Then it needs to be marketed and advertised to the consumer.
“But with a toy, you feel something special when you have it in hand,” he said. “I’ve been in this business a long time, but I still love picking up a toy and playing with it. “
