Not a direct path to popularity, but G.I. Joe the toy doesn’t give up. Hasbro was brilliant in finding ways for G.I. Joe to always be current.

Dave Young:

Welcome to The Empire Builders Podcast, teaching business owners the not so secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector, and storyteller. I’m Stephen’s sidekick and business partner, Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.

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Dave Young:

Welcome back to the Empire Builders Podcast. I’m Dave Young, and I’m with Stephen Semple. We talked about Barbie and Matchbox and Hot Wheels. I don’t know how we could go on without bringing up that other 1960s era doll toy. I’m going to call it a doll.

Stephen Semple:

Oh my God, how dare you.

Dave Young:

I know. The word action figure, I don’t think it existed when GI Joe was first released.

Stephen Semple:

No.

Dave Young:

I don’t know what they called it. Maybe they called it action figure. That became a term that you used because boys don’t play with dolls, right? But somebody looked at all the Barbie dolls being snapped up and said, “What are we going to get for these little boys to convince them that heading off to Vietnam is a good idea?”

Stephen Semple:

Well, even in the Barbie, when we were talking about Barbie, you even at that point talked about GI Joe.

Dave Young:

Oh, yeah, yeah. I had some GI Joes. I was not a fan. I just wasn’t. I had some but it wasn’t me. All right, so let’s hear the story of GI Joe.

Stephen Semple:

So GI Joe is a Hasbro product, and Hasbro was founded… Now, it was founded under a different name, but the company was founded on December 6th, 1923 by Herman, Hillel, and Herman Hassenfeld in Providence, Rhode Island. They originally started selling textile remnants, and then they started to make pencil cases in school supplies. Then they moved into modeling clay, and they made doctor and nurse kits as toys. By 1942, they were primarily a toy company. And in 1968, they shortened the name to Hasbro, which is basically short form for Hassenfeld brothers, Hasbro. Today they’re one of the biggest toy companies around with over 5 billion in sales.

Going back to the beginning, the move into the toy business was really driven by the son, Merrill. So in World War II, the company gets involved in plastics, and this gives Merrill an idea for a hit toy. It’s 1952, and he comes across this idea that was developed by George Lerner, and it’s these plastic pieces that you can use to form a face that you put on vegetables.

Dave Young:

Oh, okay.

Stephen Semple:

So Merrill takes this idea to his father, and they buy the rights for 7K, and they make the toy affordable. It’s made from plastic, has no head. The head is a vegetable, it’s priced at a dollar. And what do we think it’s called?

Dave Young:

Mr. Potato Head.

Stephen Semple:

Mr. Potato Head.

Dave Young:

I had one of those. Those were great.

Stephen Semple:

Yeah. So that was their first big toy.

Dave Young:

You know where my brain goes with all this, right?

Stephen Semple:

Yeah.

Dave Young:

When you started talking about they got into plastics, it just immediately took me to the scene from The Graduate. Remember that? Dustin Hoffman. He doesn’t know what to do with his life, and he’s standing around his parents. They have a cocktail party or something, and this guy takes him aside and says, “One word, one word, plastics.” He tells him to get into plastics. It’s the equivalent of a gold rush in the toy business, right? Learn about plastics.

Stephen Semple:

As we know, Mr. Potato Head was a huge hit, right?

Dave Young:

Yeah, I think a lot of people don’t remember that you didn’t get the plastic potato.

Stephen Semple:

No, you would just get the pieces.

Dave Young:

You had to get a potato from mom.

Stephen Semple:

Yeah, or a carrot or a beet or something like that. But it also is what made it affordable, because they could price this thing at a buck. But, like so many of these stories, it was met with resistance by the store because food as a toy is a bad idea. Because remember, the parents had come through food rationing in the war, the Depression, so they didn’t want food as a toy.

So what does Merrill decide to do? Market directly to children. And he sees this new media, TV, that kids are watching. And so he places an ad for the toy on television. And Hasbro, in fact, is the first company to advertise a toy on TV. And it totally works. Kids ask for it to be bought. So many advertisers also get stuck in this whole thing of, “Well, I have to advertise to the customer, and the customer is the parent.” No, you advertise to the kids and the kids will ask for it and the parent will buy it. But this is a game changer. They’re the first to do that. And they make $4 million in the first year. Huge. It’s making more than the original pencil business.

Dave Young:

Wow, that’s great.

Stephen Semple:

But Merrill’s looking, he still needs more. He wants another line. So there’s this movie that has come out, The Absent-Minded Professor. Remember in the movie there was this invention called Flubber. Remember Flubber in the movie?

Dave Young:

Jerry Lewis, yeah.

Stephen Semple:

Yeah. But the movie’s so popular a sequel comes out, The Son of Flubber.

Dave Young:

Okay.

Stephen Semple:

And Merrill buys the rights to create a toy version of Flubber.

Dave Young:

A Flubber, all right.

Stephen Semple:

It totally bombs. There’s a real problem with the product. There’s reports of lots of rashes, people getting sick. Within months they have to pull it. They even have a hard time disposing of it, and there’s a rumor out there, you’re going to love those Dave-

Dave Young:

Made with lead paint.

Stephen Semple:

There’s a rumor out there that it’s buried under one of the parking lots at Hasbro.

Dave Young:

All the Flubber. That’s great. We’ve been looking for Jimmy Hoffa. We should have been looking for Flubber.

Stephen Semple:

We should be looking for Flubber. I know this will be on your mind now for a long time. So they literally lose 5 million bucks on the whole Flubber thing, so they need a way out and fast. It’s 1963 and they’re desperate for an idea, and Merrill comes across this idea created by Stan Weston, and it’s the first movable toy soldier.

Dave Young:

Okay, yeah.

Stephen Semple:

But it’s not going to be called a doll. Boys don’t play with dolls.

Dave Young:

No, boys don’t play with dolls. But did this follow the first movable Barbie doll, Ken doll? Is that about the time that they became movable parts?

Stephen Semple:

It was around the same idea but developed separately. This is where Merrill was brilliant. He recognized that there was going to be big resistance to this if it was called a doll, and he wouldn’t let it be called a doll. He created the term action figure.

Dave Young:

Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.

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Dave Young:

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Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.

Stephen Semple:

He created the term action figure.

Dave Young:

Okay, so it did. It came right hand in hand with GI Joe.

Stephen Semple:

It’s like so many things, when there’s this resistance, rename it, reframe it, change it, romanticize it, whatever it is you need to do. Don’t educate people on, “Well, no, it’s not a doll.” Just don’t call it that. Call it something different. So he coined the term action figure. Now, no one liked the idea but he forged ahead anyway, because again, what he liked with it was the life, the accessories, all the things that you could do with it.

Dave Young:

Oh yeah, yeah.

Stephen Semple:

Look, and he saw that in Barbie.

Dave Young:

You model a toy after military spending, right? All you have to do is make a weapon that the army doesn’t have, and they’ll buy that now, right? So you sell a kid a GI Joe, and now every accessory you make just contributes to the arms race.

Stephen Semple:

In the 1960s, members of the military were heroes. Your dad at that point or your uncle or whatnot served in Europe defeating Adolf Hitler.

Dave Young:

Absolutely, yeah.

Stephen Semple:

So there was also all of that. And they came up with the name GI Joe from a 1945 film called The Story of GI Joe. That’s how they created the name GI Joe. But what they want to do is make sure GI Joe was not mistaken for Ken, so he put a scar on his face.

Dave Young:

I remember the scar, yeah.

Stephen Semple:

Right? Which made him tough and all that other stuff. And he articulated in over 21 places, so it was really quite an innovative toy.

Dave Young:

Oh yeah. They had buttons on him. He had the kung fu grip.

Stephen Semple:

Well, those all came later, yeah. But even the first one, like the wrist, there was all sorts of articulation. So it really was an innovative toy. So it’s 1964, they’ve started to produce the toy. They’re ready for the launch debut at the world’s biggest toy store. And the night before, they suddenly discover they’ve got a problem, Hasbro’s got a problem. They’ve been talking to Stan Weston, but they never finalized Who owns the rights. Stan Weston still owns the rights to GI Joe.

Dave Young:

Okay.

Stephen Semple:

So Merrill and Stan need to sit down and negotiate it. So man, could you imagine being in that negotiation where all of a sudden you’ve developed all these toys, you’ve made all these toys, you’re going to be launching it tomorrow, and you suddenly discover, “Holy crap, I don’t have the rights. This other guy does.” So they sit down, Merrill offers Stan a hundred thousand dollars straight up for the rights, and Stan takes the money.

Dave Young:

Ah, poor Stan.

Stephen Semple:

The initial orders were slow. GI Joe did not sell well at first. So to jumpstart sales, here’s what Merrill does. Merrill gets his reps to go to every Woolworth’s and buy up all the inventory, just keep going back and buying, going back and buying. Woolworth’s thinks that they’ve got a hit.

Dave Young:

Oh my gosh.

Stephen Semple:

So what they do is they then do a follow-up large order. Hasbro tells the world that it’s a hit and that Woolworth’s is buying more, and the rest is history.

Dave Young:

Oh my gosh, that’s fantastic.

Stephen Semple:

They end up selling 16 million units in the first year.

Dave Young:

Create scarcity by manufacturing it.

Stephen Semple:

Ever gone to an auction?

Dave Young:

Oh sure, yeah.

Stephen Semple:

Here’s the thing that always amazes me. An auctioneer goes, “Do I have a bid for a thousand dollars,” and there’s no one. “Do I have a bid for 700? Do I have a bid at 500? Do I have a bid at 250?” And suddenly somebody bids at 250. No one was willing to pay a thousand dollars, and then suddenly the thing bid at 250 and then it sells for 1,500 bucks. And you go, “Wait a minute, are you freaking… What?” We see this all the time.

Dave Young:

My whole point is, anybody that thinks this world of toys and marketing and advertising appeals to the rational mind and that the rational mind is actually a thing, you’re wrong. It’s proven over and over again. A thing should have a value but that’s rational thought. It doesn’t.

Stephen Semple:

Right.

Dave Young:

It doesn’t, yeah.

Stephen Semple:

Well, and as I said, my favorite example, and I always love watching auctions for that reason. So they sell 16 million units in the first year, but then a problem happens. Along comes the 1960s and the Vietnam War, especially in 1968, which is the deadliest year, and GI Joe sales fall so fast during that, they have to halt production. Here’s where Merrill again, he’s brilliant at reframing. So remember, he reframed it from a doll to an action figure. So now what does he do? GI Joe is no longer a soldier. He becomes an explorer. So they rebrand GI Joe as an explorer. It’s not as big a hit but it’s still selling.

Dave Young:

Keeps it alive, sure.

Stephen Semple:

Keeps it alive. Along comes the 1970s, and because of a whole pile of things going on with the oil industry and the cost of plastics, the sales of the 12-inch figure fall, because it’s really expensive. So they make an eight-inch figure, and that doesn’t work out so well. Then Star Wars comes along with their action figures that are three and three-quarter inch, and they’re completely out of sync with Star Wars. Because as we know, what do kids do? It’s not like all my GI Joe things I play with, and I don’t… No, you cross play with stuff, right?

Dave Young:

Absolutely, yeah, yeah.

Stephen Semple:

So they’re out of sync with the market and that creates problems. Now, Merrill passes away and his son Stephen takes over, and he decides to bring back GI Joe, because guess what? He sees an opportunity. Because there’s this conflict going on with Russia, with the Soviet Russia, with communist Russia, and American patriotism is on a rise. He reintroduces GI Joe, the great American hero, fighting this made-up enemy, right?

Dave Young:

Yeah, which there’s also an action figure for.

Stephen Semple:

Right. And it’s a runaway success. So when you look at GI Joe, what’s really incredible is all the reframing that they did. It’s not a doll, action figure. Not a soldier, an explorer. Now fighting this unseen enemy. When I looked at it, they went through actually so many reinventions and iterations, I just thought it was a real incredible, really incredible story. Again, what I really like is they were willing to make these little pivots in repackaging and reframing, and really it’s just about reframe, reframe, reframe.

Dave Young:

The fact that they were able to reframe is a tribute to, they didn’t completely get blinded by the blinders that they put on themselves when they named it GI Joe.

Stephen Semple:

Yes.

Dave Young:

That’s a big risk in a lot of product things, is when you… A good example would be a plumber or some company that’s a local company that wants to grow and be bigger, but they’ve named themselves the Sixth Street Plumbers.

Stephen Semple:

Right.

Dave Young:

Right? It’s like, okay, well now you want to go to another town. Are you going to try to find a storefront on Sixth Street?

Stephen Semple:

Right.

Dave Young:

So be bigger than that. Get something that’s a little flexible to be bigger than that.

Stephen Semple:

But in fairness, in the time when GI Joe was launched, I think it would’ve been very hard to picture a day where the military was not going to be deeply respected and aspirational.

Dave Young:

Point well taken. Yeah, yeah, absolutely.

Stephen Semple:

In fairness, I think that was a hard one to see coming.

Dave Young:

And they’re riding that wave, right? That’s okay.

Stephen Semple:

And they’re riding that wave. When sales really fell and they had to halt production, they didn’t go, “Well, we’re done with GI Joe.” They did step back and go, “Well, what can we do? This is the problem. What can we do differently? Well, let’s reframe it this way.” While it didn’t hit the same sales, it still had a success.

Dave Young:

Yeah. Back when there were still things to explore.

Stephen Semple:

Well, exactly, right. Great point. Great point.

Dave Young:

Are we going to do more episodes where we play with dolls?

Stephen Semple:

Well, maybe.

Dave Young:

Oh, I’m sorry, action figures.

Stephen Semple:

No, action figures.

Dave Young:

Action figures. Oh, thank you Stephen. I’ve enjoyed learning about all these toys. It’s a fun topic. Thanks for bringing it to us.

Stephen Semple:

All right, thanks, David.

Dave Young:

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