Book Review: The Great Beanie Baby Bubble

book cover imageBissonnette, Zac. The Great Beanie Baby Bubble: Mass Delusion and the Dark Side of Cute. Portfolio/Penguin, 2015.

At the end of the 20th century, two speculative bubbles reached their climaxes and then quickly collapsed. The best known was the dot-com bubble, which involved publicly held internet companies on the NASDAQ. The other bubble involved a privately held toy company that sold $5 and $10 stuffed animals. A new book, The Great Beanie Baby Bubble, tells the story of Ty Warner and his company, but it is also an entertaining look into the formation and dynamics of speculative manias.

Author Zac Bissonnette relates the tale of the creative and driven Ty Warner, who was a top grossing salesman for Dakin before he started a competing company Ty Inc. Warner’s personal charisma and obsessive attention to detail compensated for his start-up company’s disadvantages such as limited product line, lack of scale, small sales force and low price points. He changed his product mix often and focused on independently owned toy and gift shops, which remained loyal to him.

In 1995, a popular Beanie Baby was discontinued due to supplier problems. Retailers complained until they learned that Warner “retired” the product, which created scarcity. Retired Beanie Babies became collectible and each $5 piece took on a higher value in the secondary market.

Beginning with the first collectors in the Chicago suburbs, interest in assembling collections of retired Beanie Babies spread incrementally by word of mouth. Warner retired pieces that were already hard to find, creating a frenzy of buying. The Internet was new, and vague comments and innuendo about future retirements on caused prices to spike. Soon a new auction site named Ebay created a market that operated 24/7.

The craze ended suddenly in 1999 as Ebay brought transparency to the supply side of the market. Adults who had used a child’s toy as an investment lost everything. Ty Warner reported a net worth of $1.7 billion. In 2013 Warner was charged with tax evasion and fined $53 million. Jimmie Fallon joked, ” The Beanie Babies creator owes $53 million for tax evasion. If he sells them all, he’ll just owe… $53 million.”

Also available as an audiobook on OverDrive and as an eBook on OverDrive.

© Meg Trauner & Ford Library – Fuqua School of Business.
All rights reserved.

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