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This episode writes to my family to Athens, and it was truly an incredible trip. We ate amazing food, we saw a parthenon and we'd go around and all the incredible things you can see in one of the most amazing cities in the world. And one of the things that we did special was the home we booked on Airbnb. We had to take a parthenon from our bedrooms.
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Your home might be worth more than you think. Find out how much at Airbnb.ca slash host. Hey, it's out here. So Melissa and Doug Bernstein originally planned to make educational videos for kids, but when that plan didn't quite work out, they decided to shift to toys.
And the rest, as they say, is, well, we'll have to be able to find out. Melissa and Doug's story first aired in December 2016. Basically, what happened is when we called the stores, you know, hey, let's get into some more. Nope, it's not selling.
And we would always say, but you're not selling it. We're going to say, no, it's not selling. And this happened time and time again. And then after about two months, it was like, this stuff is taking up too much space.
I line out my store. Robin B.R. It's how I built this show in the Bader's Entrepreneurs of Dealists and the stories behind the movements. They built.
I'm Guy Ross. And as I show the story of how Melissa and Doug Bernstein built a multi million dollar toy company without ever selling a single screen, video game, or app. OK, so if you have a small child in your life, maybe a niece or nephew or a grandchild, maybe your own child, at some point, you will find yourself in a toy store. And you will be frantic looking for a new transformer or shopkins or Angry Birds video games and with a battery probably.
And while you're doing that, you might stumble on toys made by Melissa and Doug Bernstein. Sir toys that do not have to be plugged in or charged or upgraded with a latest software. They're just simple old fashioned toys. I think it's like wooden locks and t-sets and puzzles and e-sles.
And the company, which is actually called Melissa and Doug, was created when Melissa and Doug Bernstein were still dating back in 1988. And the way they met, they were actually introduced by their parents. Was it like leather for cycles or instant connection? I think for Melissa, it was one of the first things that I could have done.
Yes. You know, it was very interesting because we're both very strong people. So I would say it was interesting yet contentious. So what were you guys doing at the time of the time of the life?
You know, I've always been a wild creative, but never believed that could turn into a vocation. So of course, instead of pursuing creative things, I ended up as an investment banker of course in Stanley New York City. The most creative job at all. Exactly.
And by the way, do not like numbers either. What were you doing? I was right out of school. I was planning on going into education.
And I wanted to work at a university. And right when I was getting ready to do that, and head off into a career in higher education, I got a call from a person I worked summer for, Jim McNanis, one of the greatest mentors, greatest marketing people in the world. And Mr. McNanis said, nope, you're not doing that.
You're going to come work for me. And be my assistant, be my right hand. And so I went there right after school, worked for Mr. McNanis for a couple of years and had an incredible experience.
It wasn't something that I wouldn't want to do. I wasn't interested in investment banking experience. But no, but there was something inside me that tugged and wanted to do two things. One wanted to do something for children.
And frankly, you wanted to do something of my own creation also. So what did you do? Well, we booked ourselves into a little breakfast in Latinx and Massachusetts. I think it was called the Cliffwood.
And we walked ourselves in the room and did what everyone would do. A flocking a room in Latinx Massachusetts and brainstorm business ideas. We literally said, let's close this door and we are not leaving this place until we know what our path is. So what was the idea you came up with in the hotel room in Latinx Massachusetts?
I think we walked out there knowing we wanted to start by doing some interactive products for children, things that they could really interact with rather than be passive recipients of. So OK, so you get back to Westport and like what did you do within a week's? We did. We determined that this is what we were doing.
We literally took our savings accounts, put them in one joint account. Which was nothing but it was meager at best. And we decided we were going to use those funds to create our first product. So at this point, Melissa, are your parents regretting that they introduced you to Doug?
That's funny that you say that. And I would have to say my parents were scared to that. I bet. I remember when we were in a list of kitchen and we were talking about doing this.
I remember them being concerned, let's say, because she had the greatest thing going and she was leaving it to do. Well, we weren't too certain. Exactly what we did. But yeah, it was a good problem.
Yeah, you know, they were as I guess depression era. People, they were just very fearful and worried about security. Whereas we couldn't have been less worried. We felt like if you weren't living out your passion and wanted to go to work every day, running to work every day, then it didn't matter how much money you were making about the security.
Yeah. So you got this like small amount of money in the savings account and what's the part you make? So what we decided to do first was we both had a little bit of experience with television and television programming. And we decided that we wanted to make a program for children that would be groundbreaking in that children wouldn't sit there and watch it.
They were actually participate with the program. And so we literally wrote, scripted, produced, directed, cast, wrote music, Melissa Sungates, we just wrote lyrics. We used to create a VHS video. Ultimately, three of them.
So you were, you were like, you participated. You were on camera. So we wrote a script for this. And we literally went around to stores and parks and we cast real children.
We didn't want this to be contrived or fake. We didn't go to casting agencies. We literally would sit in grocery stores and look for animated children and approach them, which probably couldn't do today. Not as successfully.
We literally had parking lots with watch for children that were interacting with their parents. And we had eight children that were in this video. And then we shot at some friends houses in West Fork, Natakit, some schools. Well, you were like, I mean, was it kid singing?
Was it dancing? Yes, I was singing and it was dancing. And it was encouraging children who were watching this to participate along. It was literally teaching them some of the songs, teaching them what we were dancing to.
And talking directly, one of the things that we knew about it is the boy who led the programs, talked directly to the kids at home and truly befriended them in a very honest and sincere way. Do you remember any of the songs? I like how they go. Go ahead and listen to them.
Ready? Special friends, special friends. We will be special friends. That was like the emotional one at the end.
But the others were very, you know, and... Should be do-do-do-do. All sorts of making sounds with your body, making sounds with your lips. So how much money did you guys just think into producing this thing?
Because at that time it was not cheap to make films. It was a lot. Probably, I think, also the first one we probably spent about 30 or 40 thousand dollars to produce. And so what do you want?
Well, it took all of our savings and then we finished this and we said, wow, this is awesome. And then we looked at each other and said, well, wait, what do we do with it? We had to put no thought at all into what do we do with this product. We now had to figure out, well, how are we going to pay for the next lunch?
And what are we going to do to get this product out there? So do make thousands of copies of it to start to sell it? So we did. And we got our first little lessons in business because, right, you want to make some copies and you find out, well, we won't make you four copies.
We have to make you 5,000 copies. And we said, what in the world are we going to do with 5,000 copies? We made lists of our relatives and we got us fully at 5,000. And so we literally bought a little combination and television VCR player, put it in the back of my father's station wagon and we started driving around knocking on doors of retailers.
And the funny thing was this was right around holiday time when we finished this product. And so all the little Montpauce shops throughout New England, this was their busiest time of year and we would walk in there and apologetically carrying our take player and our TV and put it on the counter and beg them, please, we just show this to you, please. And I think after enough begging they figured out the only way to get us out of their store was to take a few of these and present them to their customers. So we would leave very happy that they decided to take a few of these and try to sell them.
And by the way, this was another thing that was completely against what was happening in the industry because as a manufacturer, you never went directly into a store. You actually had middle people called manufacturers reps who represented your product into the smaller stores. But we realized that if we used one of those and they never do our one tiny little product just as they had hundreds and thousands of products. And if we wanted to get our product truly distributed, then we were going to have to do it ourselves.
So power sales. At the beginning, people were not buying these from the stores. So they were remaining in the stores and they were remaining on the shelves, which is not good for long term business proposition. So we learned, we got another few business lessons.
One was that we learned our packaging was interesting because you looked at it and you had no idea what this product was. I call them Mysteries and Box. When you have something that is in a box and you have no idea what it is and you're not promoting it on TV or advertising it, it's very hard to get it out. And the second thing we learned was that for something new like this, you need to help seed some knowledge and support about it.
So Melissa and I then started spending all of our weekends driving back around the same stores all throughout the Connecticut New York and Jersey Massachusetts. And we would have play days in their stores and we would sit down and carpeted air in the store and we would sing songs with children. We would hope and pray that there would be one child there or two children there and maybe they would tell a couple of friends. But it sounds like not to be like cruel or crude, but it kind of failure.
I would say it depends on how you define the word failure there because it probably was a failure in terms of having a product that instantly sold and instantly was successful. Yet it was the biggest success we ever had in that what we learned from that and all the learnings came from that are precisely every single thing that our business is based on today. So Melissa's point, you know, the idea of having to record relationships with all these customers doing anything that they wanted. I mean they would call us in the middle of the night.
I have a problem with one of your tapes. The phone was on our bed. We would answer in the middle of the night. Everything that we do today we learned I would say in that first couple of years.
And frankly, maybe most importantly just the fact that not everything is going to work perfectly. So what you guys call Melissa and Doug, anybody know what you're coming? We actually weren't our first company name that we call ourselves was light camera interaction. And the reason the company's called Melissa and Doug it's funny because we from day one, every single product we made, we were signing our names.
And we were writing on the back of it. If you have any comments for us, please call us anytime Melissa and Doug. And so as we started getting more and more products out there people would call our company. And we would answer the phone or someone would answer the phone and say, well, let's camera action.
I'm sorry, I thought I was calling Melissa and Doug. And so one day we said, well, wait, let's answer the phone and say, oh, listen, Doug. And that's how we became Melissa and Doug. And by how long?
How long are we? We wanted two years in. We are three years into it at this point. So focusing on video for three years.
Basically it was a video year. We produced a video year for three years. We have three videos out there in relationships now with I'd say probably, I'm going to guess a couple thousand retailers. Yeah.
So how did you like move from videos to toys? Let's tell you, like start to think, we'll just start making other things. Well, honestly, like most things, it was another brainstorm. We were talking in the car about some of our favorite childhood toys and we're talking about Pat the Cat and Pat the Bunny.
Yeah, right. Of course. The folks that had the tactile pieces on them. We could touch on them and Pat the Bunny and catch all the things about.
Exactly. And we said, I don't know what made us say about what we said. Well, wouldn't that be great in a puzzle if we could do a tactile puzzle? And we brainstormed having a puzzle that had animals and that the height of each animal was a piece of flesh that had the texture that I don't want to look and came up with this idea for what we called a fuzzy puzzle.
And like how did you know how to design a puzzle and where do you make a factor and what produced and where did you begin? I would say for most of the things that have happened along the way we had no idea. And we learned as we went and we would almost the way you were asking the question now, we would ask ourselves the question then. So wait a second, if we need animals from the artist, how do we do that?
We went to the library. We looked at a lot of children's books and we looked for illustrators. We liked them. We would contact illustrators and we would see who might want to help illustrate this.
And each step of the way was a new face of learning, but at no point was there ever a magic answer or an easy answer. It was a lot of making mistakes and falling down and some horrible learning experiences along the way. How did you guys fund your company at this point? How were you able to pay for the manufacturer of puzzles and did you take loans if you go see your investors?
You know this is why we grew at a solid. We wanted to be self-funded and we lived incredibly frugally for at least three years we ate rum and noodles which were eight for a dollar and turkey hot dogs on a hot plate because it was about 50 cents a meal. And we lived with our parents for a few years until we could literally get one room in someone's home above their garage and help them with errands for decreasing rent. And we fueled every cent that we made back into an engine.
We literally did not take money out of that one. But once you created that like a fuzzy puzzle, we were able to sell it. Oh gosh, I wish we were that easy. Not quite like that.
So once we had the design for the puzzle, I mean everything again was trial and error. I can tell you one of the things that happened early on was the very first time we went to a very large toy show where you would exhibit to retailers and show your products. And the agent who we hired top us make our puzzles had a display set up just down the hall from us with our exact puzzles. Well he was selling his basically selling your puzzles as his own.
Yes he was. And this is someone that we had entrusted. And he told us the reason was because we wanted to grow slowly and grow with our independent neighborhood stores. And he wanted us to immediately take them and put them in the mass market.
And because we didn't want to do that, he figured he would just do that on his own with our products. So that was his good reason for doing hits. Wow. So I'm just curious like your reaction at that moment was, was it to go into what are you doing now?
What's going on? Did you confront him? No, we weren't confrontational about it. We were at a huge show thousands of customers.
And when they came to us and they started to tell us that this is what this person was doing. And they assumed that we were part of it or that we knew what's going on. When they found out the truth of what was going on, it was amazing how many customers came up to us. And literally in front of us ripped up orders that they had placed with this person who was our agent.
And said here, you can show this to him. Now that we understand what's going on, we will absolutely never in our lifetime order anything from that person. And I think that gave a little glimmer of hope to listen to myself. Well, on one hand, we had a little bit of an exposure to the darker side of the business world.
I would say simultaneously we had a really nice exposure to that there are a lot of people out there who will appreciate the loyalty that you have to them. And everything that we've done for them in the first couple of years and are now saying to us, we don't care even if you want to sell it to us for less money than you are. Anything. It doesn't matter.
We are loyal to you for everything that you've done. So I'm just thinking you guys are grateful to become a medicine and just move on with puzzles. Yes. We started to see our way.
You know, it's always about finding the path through the forest. And it was like this was the category that sort of was our path. We said, oh my gosh, I think we're on to something. When we come back in a moment, the story of how most of the group beyond puzzles I rise, they were saying to how I go this in front of the yard.
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Listen up first on the NPR One app or wherever you get your podcast. It's how I go this from NPR, I'm Guy Ross. So at this point it's the mid-1990s, and the toy company Melissa and Doug is literally just a Melissa and Doug. It is a two-person operation.
Melissa designs all the puzzles, Doug tries to get them into stores, but then the scientists start making other toys. Even though all they've made up until I point are puzzles. And we looked backward at what was wonderful and incredible from the past, and we saw wood and toys that category. And we said, okay, here's another category.
What are toys? Wow, really expensive, completely inaccessible to average people. The aesthetic is very unapproachable to kids, not very playful, and here's a category that we can go in and we can really read that. So at this point like kids are playing with plastic toys and battery operate toys, and you guys think you're going to be anti-battery to a company, we're not going to do that.
So we thought it was so interesting that every toy company was chasing, running forward, chasing the hottest fads and trends and hot licenses and hot workers. We were kids playing with the mid-1990s. It was like, you know, probably catachos and TV advertised toys and a lot of sort of hot toys, and that was kind of the market. And we saw in this experiment with puzzles that ended up working, we saw, oh my goodness, people actually still want things that are nostalgic and make them remember their past, but they don't want them dusty and they found them in some old attic.
They want them injected with pizzazz and brought to today. So what did you say? Well, our first line was about a dozen basics, but basics reinvented pounding and sorting and stacking and manipulating and doing them incredibly low price points and packaging them in a way that never been packaged with package. You were designing all of this and listen.
Yes. It's only that of plastic or wood. I mean, 50% of what we make is still wood. And then other materials we use a lot of metal, we use canvas, but mostly not plastic.
So at this point, are you guys, if you have an office, you have a place where you're working at it, or you can still just the two of yours now, do not have some employees. I'd say at this point, we probably had a couple of part time people that were helping us out. So we have a person who's coming up on his 20 years this year, because first job with us was a mix between helping us change our baby Brandon's diapers, helping us weed the driveway, and also when trucks would come and deliver products to our house, he would help us unload the truck and load the products in and help us pack up products and show them. So when you really like transitions from puzzles to employees, you're still just selling them mainly in small, small, small, certain, independent stores in New England.
Yes. Well, by this time, we had expanded beyond New England, but definitely the small independent stores. We were firmly convinced that that was the only way we could really get across out there. So I mean, it's not like this point, you guys were not a pretty safe path, and we could make anything safe.
We have actually never made a mistake. It's the craziest. Never really. We have had so many failures.
That's why we love that word, because failure is a word that you have to get comfortable with, and you can't fear the failure. So tell me about some things like, but what were some of them? So behind my desk, I have about, I gave it to them anymore, maybe 500 toys that were all my very favorite toys that failed in a big way. Some of them entire categories, because every day I want to remind myself when I come to work and come to my desk that the line between success and failure is as fine as a spider web, and you really never know.
What was some of the toys that didn't work? Oh my gosh, so many. But one of the lines that we were most excited about, and I think was a huge investment, was a line called puzzle world. And it was an entire world made out of puzzle pieces, not only for a zonley, they connected to a form of base, but you could build up vertically and build skyscrapers.
It was the most amazing line ever. But but also our most elaborate undertaking involved more tooling, more machining. It was by far our largest endeavor ever. A year of development, play tables, it was very extensive in a costly event, because unlike other products, the details were about $3,200 for sets that were sold in sets.
It was not cheap. It was not. And we had all our prototypes which took us over a year to create and we brought it to Toy Fair and had our play table out. And the reaction was actually incredible.
Amazing. It was probably the best ever. We had, I believe we had a thousand assignments and we literally got a third day of Toy Fair. We sold out.
But we made it clear to our retailers that this was going to be a big undertaking for them. Because this was not an item that was TV advertised. It was expensive. It was hard to understand.
It was a mystery in a box. And it was going to take a lot of education on their part, educating their customers about the merits of this. But we told them, if they do this, it will be in a new way. They will have years and years of the selling and generations buying more sets and we'll create more.
Because each set connected to the other set. It was all interconnected and connected to the popular railway sets at the time. The Thomas and the Rio. So it connected into any existing set you had as well.
And they agreed and we sent it out. And do you want to? Oh sure. The message tells all the exciting rail parts.
Yes, my part is, yeah, I failed. It all came back to us. When there I wasn't moving the warehouse, we're saving it all back. That was my role in this.
What happened? Basically what happened is when we called the stores two weeks later, you know, hey, let's get into some more. Nope. It's not selling.
And we would always say, but you're not selling it. I mean, they'd say, nope, it's not selling. And this happened time and time again. And then after about two months, it was like, this stuff is taking up too much space.
I wanted out of my store. But it just didn't never took off. Well, the stores never got behind. I mean, I think it had the potential to take off.
But it's hard. You know, it's hard to run a story and you have thousands of products and you have lots of competing interests. And here we are thinking, well, you'll just focus on our product and sell it. It reminded us that there's a higher burden on us because we take our products really personally.
We think that every day is going to take all the time to explain everything about it the way that we, the inventors would. And that's always the case. It can't be done. So we realize it's our job.
It's our job to design it in a way that speaks to their customers. And that's really what we started to do after that. Do you know when a, like, how do you know when a toy is going to work? It's amazing.
You know, really quickly. I mean, we don't have, you know, we're not a hit driven company. We joke that we have a lot of singles and doubles. We don't really want home runs because we don't want it here today.
And tomorrow we're never going to company. We want our toys to be around forever. Melissa, you know what she's working on a product. Even with our own test laboratory with our six-kilter at home is always using our products with our own children.
I would say the initialization. I mean, you're obviously feeling a good gut that you have an idea that's going to work. And then throughout the process, we do a huge amount of, we call it mom testing. And mom is an honest with care.
You ever get anyone who's playing teacher. And we get a good sense as we're going through the process. But the truth is that's the joy that you never know for sure at all. And there's surprises every single day.
Yeah. I mean, that's it because you start this company in 1988. You know, 10 years really before the internet starts to pick off. I mean, there was no reason why wooden products and analog toys were going to succeed.
And so unlikely. In fact, every reason why they wouldn't succeed. And I think that's been a part of, you know, to the exact way of business model. I think that's been a part of it all along is to not go with the time, not go the direction, not look at things inside.
That's what everyone is doing. That's what we should do because our feeling has always been if we copy every good model out there, that's what I mean. We're going to be mediocre by definition because we are simply following and copying what everyone else is doing. So what was your point?
I don't know, like investors or somebody said, you guys, you've got to do something with batteries. So you've got to do something that, you know, electronics or something. And you're thinking, maybe they're right. They say to us every single day.
And that's, you know, that is one of the things I think that has kept us successful. Because we've stayed true to mission, you know, ever since we started with our very first puzzle. You guys basically did this on your own for pretty much until a few years ago. You were a successful company.
But yes, just a few years ago, you decided to see outside investors. We kept significant ownership and we brought in some investors who now will sit on our board and participate very actively with us also and helpfully. Because the truth is for the first 20 years, we really did this without mentorship. You know, it was a little, it was finding our own way in a very dark room.
What did the other investment allow you to do as a company? Well, I think two things. One is they have rolodexes that are much larger than ours and introduce us to folks that can help with things. And then financially, also frankly, freedom to grow and expand more exponentially if we want to expand our footprint internationally.
And so open up those doors too. I'm curious. How did you guys? I mean, obviously, you've got, I mean, I should obviously, it seems like you have a great relationship.
You're great to this partners, but also a great couple of great parents. You've got kids as well. You've got six kids, all right? Yep.
You were just trying to figure out how many kids. She was going to say with her first husband. No, I was going to say, you considered Doug a child. Six children and then Doug.
But like honestly, was it all like blissful and joyful and laughing or would a moment's attention to each of you? You mean this morning or in general? It's a combination. The good news is that we absolutely do have things that we disagree on, which is good and which is healthy.
But I would have to say that I think we have our respect and our admiration that keeps it working perfectly, you know, both from a business and a personal perspective. The business we never would have been able to make it without each other. I mean, this is absolutely a partnership and a partnership is necessary to go through everything we've gone through. I mean, this seems blissful and easy.
The 28 years has not been easy and we have faced every challenge imaginable and it goes on and on every day. Melissa and Doug Bernstein run by company Melissa and Doug company because run from just the two of them to almost 8,000 employees with revenue of more than $350 million a year. And they still make lots and lots of puzzles. I never thought of puzzle.
We take a letter out and it says it's a few years to have a letter. And for some reason one of our two letters weren't in the right slots. I don't know about it. I fall into the kids room with them and I just heard, Jay.
Jay. Jay. What is the word that comes from? How does it show?
It's like a shadow moving over the center. I thought this is all about the one we're playing. Do you want to replace me with the letter? I was like, Melissa and Doug, you, I need to sleep tonight.
I'm sorry. And please do stick around because in just a moment we're going to hear about the things you're building. But first, the quick thanks to one of our sponsors QuickBooks. When you work for yourself, every receipt lost its cash loss at the end of the year.
Snap and sort your business expenses with QuickBooks for maximum tax deductions. As far as the tools for the world's hardest workers, QuickBooks, I can you. Hey, thanks so much for sticking around because it's time now for how you go back. And we're not going to take a story.
We ran about a year ago. This one is from Joshua Ezzard, who grew up in Ithaca, New York. We were immigrants from St. Lucian, Caribbean.
And my dad being an old school Caribbean guy. Everyone knows about the old school parents. They cut their children's hair. Yes, they did.
But his dad's version of the haircut was not exactly Joshua's idea of the haircut. And I wanted to edge up my hair and have a cooler hairstyle. So I realized that I needed to find a way to give myself the styles that all the cool kids had. Joshua didn't have the money to pay a barber and when he tried getting himself a cut with his dad's clippers.
Well, I ended up with Bob Spotsen. Let's just say that I spent a lot of time in middle school with hats on my head. Joshua's 13 at the time and the kind of kid who loved to draw and design. And I realized that if I can cut some pieces of plastic and cardboard and mesh them together for certain designs and stencils, I may be able to use that as a guide to help me cut my hair.
So Joshua invented basically a head stencil. He pressed it against his head and then he shaved around it. And the first haircut was perfect. Like the crisp curves on my sideburns were just amazing to the point that people were like, man, you went to the barber?
What was your barber? Me, I'm the barber, he would say. And Joshua kept using his stencil through middle school and then high school and in his mid-20s, he decided to patent his invention. And within a few months, the cut buddy was born.
So I actually took the product and I shot a video of me cutting my own hair with the cut buddy. He put it on YouTube and he got some sales, but also maybe this is because Joshua doesn't have the best hair for this or something. So people started to troll him. Oh my goodness, he has a receiving hairline.
His product sucks, but what they didn't realize was that the main issue was obviously me as the model. So Joshua cast out for guys with the perfect hair to demo his product on YouTube. And those videos actually started to work. They started selling like a few dozen cut buddies a day.
And then when a popular DIY site posted one of the videos, he went viral. I'll never forget it. I'm putting on my clothes and my phone just starts going, and then they didn't think they did the best best best best best best best best. Like vibrations and notifications.
All this happened in March of 2016 and Joshua started to get hundreds of orders for the cut buddy. And since then, he sold about 90,000 of them. He also got a chance to go on Shark Tank. And while the shark's even a $300,000 investment.
And with that money, he started to get the cut buddy into some major chain stores like Target. Oh and another piece of the news. His wife recently had a baby. The baby's name is Phoenix.
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