Question: Why are toy businesses such bad businesses? Inventory?
I've run a toy business for over 10 years, profitable for over 7. They're not bad businesses if you're in the right one. Is Lego a bad business? Mattel and Hasbro are going through tough times as they transition from brick-and-mortar to e-commerce, but their core is strong.pic.twitter.com/pT4buc1heS
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Is it true that Lego didn't patent the plastic.. i.e. it's a secret recipe? I've used some knock-off Lego with my kids and it's crap.. doesn't join and separate the same way. Could a big chuck of the Lego value be in the cornered resource of the plastic chemistry?
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They patented it. The patents are expired. Any quality issues you see now are just a function of manufacturing and trade secrets. There's nothing special about what Lego does today manufacturing wise though.
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If you own own evergreen IP, it's a wonderful business. It looks bad because: - inventory is tough - seasonality is tough - competition from Asia is brutal - there are strict regs, which Chinese don't follow - market demand is flippant - tech is eating demand for toys
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