Somewhere in your parents' basement, there's a plastic Rubbermaid bin filled with worthless plush toys that once promised riches. The Beanie Baby frenzy of the 90s spread from suburban Chicago across the United States, creating a mass speculative bubble, with sales reaching $1 billion at their peak. Ty Warner, creator of the Beanie Baby, was an "obsessive" perfectionist, slaving over the minute details of each toy even after they had gone to market. This neurotic striving for the perfect design turned Ty into an accidental marketing genius: by replacing old designs with updated, slightly tweaked toys, Ty created a market of speculation that ultimately crushed the collectibles industry.
Zac Bissonnette, a writer previously known for his books Debt-Free U and How to Be Richer, Smarter, and Better-Looking Than Your Parents, spoke with VICE about his latest book, The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute. Inspired by a sad Rubbermaid container full of pristine and worthless Beanie Babies, Bissonnette began a deep investigation into the bizarre story of Ty Warner's empire.
VICE spoke with Bissonnette about American greed, consumer stupidity, and Ty Warner's extensive plastic surgery.
VICE: How did you end up writing a book about Beanie Babies?
Zac Bissonette: It was 2010 or 2011, and I was at an auction in Massachusetts. I went to auctions a lot—I was furnishing my condo—and in the back of the room at one sale were these huge Rubbermaid containers full of Beanie Babies, which I remember from the 90s. The interesting thing about them was not the Beanie Babies themselves but the manifest conviction of whoever had assembled this collection and thought that it would one day be of great value. They were all preserved with these plastic protectors over the heart tags, and there were all these spreadsheets about what each animal was worth, color-coded stuff. Very type A. And all this energy was poured into the cataloging of a collection of Beanie Babies, which were worthless. I think the whole thing sold for $100.
But for a few years in the late 1990s a huge swath of America thought that these animals were the ticket to long-term riches. The stats are really interesting. At one point, Beanie Babies were worth 10% of eBay sales. The guy who invented them, Ty Warner, was worth around $2 billion. And all that money was from Beanie Babies.
What happened? What caused these people to think Beanie Babies were so valuable?
Ty had been a very successful toy salesman. In 1994, he released the first Beanie Babies. And at first, nothing happened. Retailers thought they looked cheap. They worried that they were too inexpensive and would cannibalize sales. So at first it was very, very hard for [Beanie Babies] to get it going at all. But Ty Warner was just really convinced that this was the product that was gonna put him on the map. The guy who did his distribution in Canada remembers Ty summoning him into his office in Westmont, Illinois. Ty reaches into his desk and pulls out the prototype for Legs the Frog, and says, "From now on, every dime we have goes into this."
When I first heard that, I thought it was fake, like a line from a movie. But other people said the same thing. His girlfriend at the time recalled him showing Legs the Frog to her daughters and throwing it in the air, saying, "Can you believe how fun this is?" He'd bring prototypes to their family dinners and ask the daughters to name them. His girlfriend would say, "We're just trying to eat dinner," and Ty would say, "We can eat after the toys have names." So nothing really happened with them at first, but Ty was just... very perfectionistic. He'd spend several hours over every animal. He used to brush the hair on each toy before it shipped. And that obsession didn't change after a piece was released. He would take an animal after it had been released, and he'd change the design on it because he decided it didn't look right. Peanut the Elephant, in 1995, was this royal blue color. They shipped a few thousand, not that many. Then Ty decide that instead of this royal blue color it should be a baby blue color. So Ty started to change stuff, and no one really cared.
Then, all of a sudden, Beanie Babies started to develop a following among kids from suburban Chicago. The mothers started collecting them; a lot of this was tied into this soccer mom culture of the 1990s, much of which was centered around consumerism. The Beanie Babies were sort of the apotheosis of this. These women started to get really into it, started trying to assemble complete sets of Beanie Babies. As they went from store to store, calling around, they started to realize there are all these weird variations. Like they would find that he had changed the design on Teddy the Bear. So they started to pay higher prices for the variations. And the word of these higher prices got out. An economist once said that "there is nothing so dangerous to one's sense of self as to see a good friend get rich." And so it was that these stories of a relatively small group of people paying increasingly higher prices for the rarest Beanie Babies turned this into a phenomenon with no major marketing and no major stores.
This wasn't Ty's original idea?
Everyone has always thought that it was. Forbes did a story in 1999 on his "mystique marketing." But when I brought this up with people who worked with Ty at the time, they would laugh. This wasn't a strategy, this was madness. This was an obsessive compulsive guy. His girlfriend at the time described it as "this never-ending striving for a perfect that doesn't exist."
Are there still Beanie Babies out in the world?
Yeah, the Beanie Boos! Ty is still the biggest plush toy brand in the world. You don't realize it until you start to look for it, and then you see Ty everywhere. They're sold in Duane Reade.
While researching The Great Beanie Baby Bubble, did you have the chance to meet Ty Warner?
I met him once at a toy fair. It was very, very strange. He showed up to look at his booth, this very strange-looking man. He's had a lot of plastic surgery. 70 years old with this very blonde hair. Very spiffy dresser. I walked over to him and I think he was kind of surprised. He doesn't really talk to people. He lives in this $150 million mansion in Montecito and no one really talks to him.
But I told him that I thought he had an incredible story, one of the great entrepreneurial stories—how from $5 plush toys he became one of the richest men in the history of the American toy industry, still one of the richest people in America, certainly in the top 300—and that I hoped he'd tell his story to me. He said, "Well, the Beanie Baby thing was a lot of good and a lot of bad. If I told you the story, I'd probably just tell you the good and it wouldn't be balanced." And I said, "Well, thank you, Mr. Warner. I could talk to other people too, to be balanced." And he said, "I just think it's better if you talk to other people." So that's what I did, and he didn't restrict my access. I spoke with his estranged sister, his ex-girlfriend, many of his former workers...
It sounds like this story is teetering on tragedy. Were there people whose lives were ruined by Beanie Babies?
I mean, certainly, people lost a lot of money on Beanie Babies. Ty sales were, at one time, more than $1 billion a year. Virtually all of that demand was speculative. It's not unreasonable to say that at least 70% of Beanie Babies sold were bought because people thought they'd go up in value.
Did they ever go up?
Yes, that's what drove it. It's a lot like the real estate bubble or the internet bubble. In 1998, if you had been one of the original collectors—because I know these collectors, I talked to them a ton—they all had collections that they bought for basically nothing and were worth at one point half a million dollars if they sold them. One collector sold hers to adopt her first child, another built a house. Some of them lost money on internet stocks.
The story of The Great Beanie Baby Bubble, the reason I called [the book] Mass Delusion and the Dark Side of Cute, is partially an allusion to the Charles Mackay's book Extraordinary Popular Delusions and the Madness of Crowds, the first book on speculative bubbles. But really the story to me is about how wrong people can be about what has value, and sort of the process by which that happens. And coming to terms with the fact that you were wrong about it. The Beanie Baby craze ended really badly for everyone. This was a high point in people's lives, but the Beanie Babies ended up worthless and Ty Warner ended up miserable and alone.
Is there anything now that mimics the Beanie Baby pattern of delusion?
The fallout from Beanie Babies was so spectacular that people in the collectibles industry believe that this ruined the industry. It hasn't recovered. Once bitten, twice shy: the fallout of the Beanie Baby craze really did teach people that consumer goods probably aren't going to go up in value. If it's in a store and everyone thinks it's going to make you rich, it probably won't. But certainly the real estate bubble isn't terribly different. People were fueled by these stories of how much their neighbors were making, and that jealousy and greed led them to irrational financial decisions.
Was jealousy and greed motivating the Beanie Baby craze?
Absolutely. [Former editor of Mary Beth's Beanie World magazine] Mary Beth Sobelewski sort of sighed at one point and told me, "The thing I remember so much about Beanie Babies in the beginning was how they just made people feel so happy, and so warm and fuzzy. Then it just became greed. And it got really dark."
Is there any silver lining to the story?
Well, these things do have long term benefits. For instance, you have an unprecedented number of very well-made, mint-condition plush animals that aren't worth anything. Every week in local papers there will be a story about someone donating a thousand Beanie Babies to a local children's hospital or a police office. And the kids who get these toys while they're going through traumatic situations, like cancer, they have no knowledge of the fact that, at one point, people put so much faith in the abilities of these lifeless things.
The Great Beanie Baby Bubble comes out March 3rd, 2015 from Portfolio Penguin.
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