🧸 Beanie Babies: The Cutest Boom, Bubble & Bust | 35

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I don't want to date ourselves here, Jack, but impressively, or maybe not impressively, we've lived through a lot of bubbles, man.

Think back to our youth, Y2K, the dot-com bubble, pets.com, laundry.com, fishfood.com.

all right so there we survived that first bubble but then a few years later we got the 2008 housing bubble that was much more painful for us because looking for jobs after college was rough because of the subprime housing bubble the guy who read your resume was laid off the next day it was not a pretty situation if you were graduating right then not to mention the nft bubble and the meme coin bubble that we're currently in and jack remember when we were kids one of the biggest most notorious bubbles in economic history and we're not talking 17th century dutch tulips or that crypto token NFT your buddy Timmy keeps on pitching.

We're talking about one product that perfected the art of creating demand through perceived scarcity, at least for a while.

This was a cuddly bubble, one made of fabric, velvet, and black beaded eyeballs.

Supporting characters include Legs the Frog, Squiller the Pig, and Pinchers the Lobster.

Because today, We're diving headfirst into a bargain bin of cute critters to bring you the story of beanie babies.

A beanie baby is a small stuffed animal that fits in the palm of your hand.

You almost feel like the beanie baby is a little person.

Beanie babies, they are small, they are soft, and they are full of beans.

Plastic pellets, actually.

Fair point, Jack.

But they were also at the beating heart of the biggest toy craze ever.

In 1998, the height of beanie baby mania, beanie babies maker Ty Inc.

claimed to have made $700 million in profit.

If true, that would be more than Mattel and Hasbro's profits for that year combined.

And that's just in the primary market because Ty Inc.

was selling those beanie babies for just $5 each, but collectors were flipping them for hundreds or thousands of dollars on a brand new thing called the internet.

This mid-90s beanie bubble coincided with the rise of the World Wide Web.

Tracking down a rare Claude the Crab, it may be the reason your mom signed on to AOL for the very first time.

eBay, the first major e-commerce company, had its first major moment thanks to that online beanie trading frenzy.

And at the center of all of this was a mysterious eccentric salesman named Ty Warner, part soft toy Scarface, part plushy P.T.

Barnum.

And while the Beanie Baby craze saw thousands of people lose their minds and millions of dollars, Ty Warner came away from it with over $5 billion.

But the Beanie Baby boom, bubble, and eventual bust is a textbook economic tale worth snuggling up with.

Today, we'll tell you how the Buzz Lightyear effect can spark deep connections between consumers and products, and why you need to speak up about your best ideas, even if you're just the summer intern.

And how selling my first edition Bucky the Beaver Beanie Baby in 1998 for zero dollars-yeah, true story, was the worst financial decision of my life.

You could have had a yacht, man.

You could have had a yacht.

Yeties, we've been waiting to tell this story for 28 years.

Here's why beanie babies is the best idea yet.

From Wondery and T-Boy, I'm Nick Martel.

And I'm Jack Pravici Kramer.

And this is the best idea yet.

The untold origin stories of the products you're obsessed with and the bold risk takers who made them go viral.

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a white Rolls-Royce silver shadow glides up to a hotel entrance.

The door opens and out steps a man.

He's in his mid-30s, but he has a youthful, elf-like aura.

What stands out, though, is his fur coat, his top hat, and a cane that he starts twirling as soon as he springs onto the sidewalk, like he just stepped out of a 1920s gangster flick.

He's got a briefcase in his hand.

Maybe he's about to make some kind of shady backroom deal.

Except, when he flips open the case, it's not filled with cash or stolen jewels.

It's crammed with stuffed toys.

This is Ty Warner.

And he's not your typical toy salesman.

And I don't just mean because of his wardrobe.

In 1980, where our story begins, he's pulling in six figures when the median U.S.

household income was around $20,000.

Ty's making well over $1 million in today's money, all from selling stuffed animals to toy shops.

But Jack, it's not just the money that Ty loves.

This guy, he's about the attention.

And he's realized something pretty important.

Being the most flamboyant guy in his sales district makes him unforgettable.

And that makes him very, very good at selling stuff.

And honestly, that tracks with his past.

Yeah, because he's always wanted to be center stage, literally.

Before the Rolls-Royce and the fur coats, he was an aspiring actor.

He grew up in Chicago, spent a year studying drama at Kalamazoo College, but he dropped out and moved to Hollywood to make it big in the movies.

Instead, though, Ty weighted tables, parked cars, even sold vacuum cleaners door to door.

And after five years of rejection, packed it in and headed back home to Chi-Town.

That's when he lands a sales job at Dakin, a company that sells stuffed toys.

You probably haven't heard of Dakin, but they were big from the 1960s to the early 80s.

Their standout product is a line called Dream Pets.

I'm looking at the picture now, Jack.

Dream Pets are like a velveteen-covered stuffed animal.

They're colorful, dare i say even a bit trippy like a cabbage patch kid who got stuck at woodstock for too long they look heavy they are because their stuffing is made of sawdust and wood chips literally and it's packed so tightly that these things are basically rock solid they're less of a bedtime snuggle more of a makeshift weapon against nighttime intruders but these zany looking brightly colored bears turtles octopi and tigers they suit Ty's sales pitch.

His over-the-top personality, honed in Hollywood, grabs his customers' attention every time.

Let me tell you my favorite story about when Ty was selling vacuums door to door.

As soon as the homeowner would open their door, Ty would throw a handful of dirt onto the floor in front of them, like inside their home on the hardwood floor, and then immediately vacuum it up with the vacuum that he was trying to sell.

The one vacuum sale was worth the 50% of the time the homeowner calls the police.

But Ty has another skill.

He has a unique talent that his toy shop clients love.

Ty has an almost supernatural ability to know which toys are going to be hits.

This, along with his tenacity, means that he can close more deals than anyone else at Dakin.

In fact, Ty makes more in a month selling to toy stores than he did in a year as an actor.

Some years, he's even earning more than Daken's CEO is.

I mean, Ty missed out on his chance to join the Hollywood Brad Pack, but now he's got a starring role at a top toy company, not too shabby.

Unfortunately, though, the fame goes to his head.

Ty's arrogance and main character energy doesn't go over well with his colleagues.

But as long as his sales numbers are strong, his bosses at Dakin don't care until Ty crosses a line.

Yeah,

in 1980, after more than a decade as Dakin's deal closer, one of Ty's customers tips off the company.

Turns out Ty isn't just selling Dakin toys, he's selling his own plush line on the side.

We don't know where Ty was sourcing these toys or even if he was hand stuffing them himself, but that didn't matter to Dakin when they found out.

Yeah, side hustling his own toys that compete with his employer.

And not even my little pony could forgive that.

So Ty's bosses, yeah, they fire him.

But does Ty regret it, apologize, and never, ever, ever Pinky Swear do it again?

Nope.

Ty doubles down and starts his own plush toy company.

But for the first time in his life, the market It's actually moving against Ty.

It's 1980.

Inflation spikes, unemployment soars, and Americans, they're more focused on buying milk and bread than teddy bears.

In just a few months, Ty goes from king of plush to having the stuffing knocked out of him.

This guy has built his entire life around selling fluffy bears and cuddly monkeys.

So struggling to sell these toys, it's bigger than a financial hit for him.

It's a full-on identity crisis.

Without those soft toys, Ty Warner is nothing.

So he does what any exhausted American who got a $1 million bonus last year would do.

He flies off to Italy's Amalfi coast for some RR.

Italia Andiamo.

The scent of lemon trees and sea salt drifts through the air as Ty Warner weaves his way through the winding clifftop alleys of Sorrento, Italy.

He came to this small, beautiful shoreline town to clear his head.

But despite the Mediterranean sunshine, Ty is still in a funk.

But then something catches his eye.

Among the hand-stitched leather purses and delicate lace shawls in the markets, he sees a stuffed cat.

He picks it up.

The fur is soft, almost weightless.

It's floppy, not stiff, settling naturally right in the palm of his hand.

He presses the paw and he feels tiny plastic pellets shifting about like small little beans.

Ty looks down into the cat's glossy, strangely expressive eyes and smiles.

He feels his mood lift and a new sense of purpose fills his entire body.

Remember, Ty's special power is spotting toy trends before they're toy trends.

To the casual shopper, this floppy Italian feline is cute, but nothing special.

But Ty sees them differently.

Remember those Dakin dream pets that he used to sell?

They were cute, yeah, but basically sawdust crammed into velveteen.

They were stiff, they were rigid, more for display than for play.

Kind of like a taxidermied animal.

But these cats, they're soft and they're floppy.

They bend, slouch, and settle into your grip.

You can flop them over your shoulder, and it it feels like they're snuggling with you.

And this is Ty's key insight.

These Italian toys are only half filled with stuffing.

Typically, doing something halfway would seem the cheap thing to do.

But in this case, the half-filled toy is actually more satisfying, more engaging, and maybe, ironically, even more premium.

In that moment, Ty sees his future.

This could be his chance to outshine his old employer, the guys who fired him.

But Jack, this is the mid 80s.

And although the economy's picking up, it is actually a terrible time to launch a new soft toy business.

In this moment, plastic toys are booming.

That's where the money is.

There's huge cartoon tie-ins like the Care Bears, the Transformers, and He-Man.

And although Barbie launched way back in 1959, she's still riding high, rocking big hair, big shoulder pads, and big sales.

But if there is one thing Ty believes in more than these stuffed cats, it's himself.

So he puts all the money that he saved up into founding his new toy company, which, true to his ego, he names Ty Inc.

This is probably the first time you're realizing this, but the letters T Y on the heart-shaped tag of your beanie baby, that's just the first name of the founder.

His thought positioned Ty as a high-quality toy brand.

His attention to detail, that is what will set him apart from all the mass-produced toys out there.

Ty is so confident, he leaves Italy and flies straight to Asia to find a production partner.

He spends months making sure that every detail of his new line of cats is exactly how he wants them.

From the color of their ribbons to the precise distance between their eyes, this man is meticulous.

Well, these cats that Ty is making, they're not beanie babies yet.

They have a similar look, but they're bigger.

About the size of a real cat.

Also, unlike the beanie babies we know today, they only have plastic beans in their paws.

The rest of their bodies are filled with regular toy stuffing.

Cotton.

It's just less cotton than other toys use, making them floppier, which Ty likes.

Once Ty finally perfects the cat, he makes one more strategic move.

He decides to give the cat a name, a specific name.

Now, we'll come back to why that's important in a bit, but in the meantime, he names his prototype toy cat Cashmere after his favorite Led Zeppelin song.

Ty has emptied his piggy bank in perfecting and producing these cats, but there's more on the line here than money.

These cats are Ty's way of proving to himself and to the world that he is still the best toy salesman on the planet.

Yeah, but one final question, Jack.

Is anyone actually gonna buy it?

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There are few experiences more intensely specific in life than an industry trade show.

Car shows, swimwear shows, even hot sauce shows, where every possible permutation of a particular product is on display and everyone acts as if this is the most important event on the calendar.

Right now, we are at a toy trade show down in Atlanta, Georgia, where Ty Warner is laser-focused as he sets up his stall.

He meticulously plucks the eyebrows of his 10 long-haired plush cats, all identical except for their color.

A few moments later, the doors swing open and the crowd flows in.

Ty shifts instantly from silent perfectionist to magnetic showman.

His reserved intensity giving way to a full throttle sales performance.

And Jack, how are we looking over there?

In the first hour, Ty closes $30,000 in toy sales.

That is $500 of toy cats sold every minute.

And Ty, he sees dollar signs.

So he works that trade show circuit hard, trying to take his floppy toys from cute idea to big money.

Ty is back, baby.

From now on, Ty lives, he breathes, and he speaks soft toys.

Ty quickly expands his product range.

They're still not beanie babies as we know them yet, but there's something crucial they all have in common with beanie babies.

Each of these toys has its own name.

There's Wally Walrus, Freddy Frog, Clover Cow, Peepers the Chick, and uh...

Hooters the Owl.

Okay, I feel like that one's just on the nose.

But still, these are not just funny names.

These are a way to give each toy an identity.

The strategy here is to make something more for kids to bond with.

It seems counterintuitive to name each toy, but it's all part of Ty's three-step plan.

Big move number two is to limit the supply.

You might think Ty is eyeing expansion like Genghis Kong.

He wants to conquer every toy store that he can.

That's not the case though.

Ty actually refuses to do business with the big stores like Walmart and Toys R Us.

That shocked us because the big money, that's in aisle six over over at Target.

The big box chains have the largest customer base by far, so that's where you want to be.

But Ty does the opposite.

He only sells to small mom and pop toy shops.

Ty thinks it's worth it because selling to smaller toy stores gives Ty more control.

Ty can build one-on-one relationships with each of these owners who then will give him valuable feedback.

And most importantly, he can dictate exactly how the store should display and sell his toys.

Ty thinks customer perception is two-thirds of why people love his toys.

So he wants to be able to micromanage every detail.

And Walmart, they're not going to let them do that.

Now, Jack, there is one more detail in particular that Ty becomes obsessed with.

Ty starts enforcing strict limits on how many of each of his toys a store can buy.

Because in Ty's years as a salesman, he noticed that people are more likely to buy something if they feel it might run out.

A shop owner might be planning to buy, let's say, eight toys from Ty, but then Ty tells them, We have a customer limit of 12 per order.

You can't order more than that.

If he tells you that, Nick, you might be like, Oh, damn, I guess I should get 12.

Give us the maximum.

We'll take 12.

So Ty ramps up the pressure even more.

He starts rotating his toy lineup.

He cycles toys in and out of availability, which creates an even greater sense of urgency.

Because if a shopkeeper doesn't grab what they can now, there's no telling if or when that toy will ever be back.

What Ty's doing here is the true genius of his business empire.

He is creating the perception of scarcity.

All right, let's talk numbers here, Jack.

Is this strategy paying off for Ty in his bottom line?

Big time.

By 1992, sales topped $6 million, and Ty's personal income is over $1 million.

So financially, Ty is doing pretty fantastic right now.

But guess what?

He's just not satisfied with how the business is doing.

Basically, thinking a million dollars is nice, but I want a billion.

These toys, they just haven't taken off into the phenomenon the way Ty envisioned yet.

Ty wants a smaller, more affordable toy, a way to break into more retailers.

His strategy, the $5 toy.

Wholesale them for $2.50 with stores selling them at $5 a piece.

And this is Ty's big move number three.

Price them at a consistent, nice, around

number.

Five bucks a piece.

That makes them the perfect pocket money impulse buy kind of toy.

And that is when he introduces this brand new design, starting with a small green frog who he calls legs.

And it's not just the size that sets this frog apart, because with legs, it's what's on the inside that counts.

Legs has no stuffing inside, only those plastic pellets that feel like beans.

If Kermit the frog and a hacky sack made a baby, legs the frog would be it.

Sorry, Miss Piggy.

And Jack, we know how Ty works.

He doesn't stop there.

He sits down and he designs eight more of these toys.

We're talking Brownie the Bear, Spot the the Dog, Chocolate the Moose, Patty the Platypus, Pinterest the Lobster, Squealer the Pig, Splash the Whale, Flash the Dolphin.

That is quite a starting lineup right there.

And in November 1993, Ty officially introduces Beanie Babies.

But I gotta ask, how does the world react?

The world

says.

So initial sales of beanie babies, they're actually sluggish.

Ty tries adding new characters like Allie the Alligator, Inky the Octopus, Humphrey the Camel, but no matter what he does, it's just not working.

Then one day, there's a knock on his office door and in walks Lena Trevetti.

Lena is in her early 20s, a sociology grad who paid her way through college working as a telemarketer for Ty Inc.

And she's about to bring two ideas to the table that are going to help take Beanie Babies from a struggling novelty toy to a cultural phenomenon.

Beanie babies all come with a heart-shaped card tag.

On the front, it says Ty Inc.

and has the logo.

And on the inside, the beanie baby's name appears along with space for people to fill in a to and a from.

Lena's first big idea?

Why don't we use those tags to give each beanie baby a little extra charisma, a hint of backstory to inspire kids' imaginations?

Here's her suggestion.

Add a poem and a birth date to each and every beanie.

And then she hits him with one she just whipped up for Stripes the Tiger.

Jack, could you give us a little rendition of the very first ever Beanie Baby poem?

Stripes was never fierce nor strong.

So with tigers, he didn't get along.

Jungle life was hard to get by, so he came to his friends at Ty.

Born on 6-11, 1995.

Not exactly Walt Whitman, but we can work with it, man.

With that origin poem, Ty's supernatural sense for a viral idea tingles.

It is right in line with giving each toy a human-like identity, the type of relatable personality that stands out in a commoditized market of mass-produced toys.

It feels less like a toy and more like a pet.

So Ty says to Lena, okay, you wrote a good poem.

I'm convinced.

Now I need you to write a poem for every beanie baby.

Here's the catch: we have a new shipment of beanie babies coming in later this week, so you have to write a poem for each one of them by then.

Well, what does Lena do?

She cracks open a case of Red Bull, dips a feathery quill into some ink, and cranks out, get this, 86 poems in three days.

This was an inflection point.

They catapult beanie babies into a whole new dimension of sales.

By the way, later when the bubble really takes off, those tags become an essential part of the product's value.

In fact, if you have a mint condition legs the frog, but the tag is bent, well, you've already lost 50% of the resale value right there, which at the peak of the bubble means thousands of lost dollars.

As for Lena's next idea, she pioneers an entirely new dimension to sell beanies: a website.

Now, we should point out Ty has no idea what Lena's talking about.

Lena actually has to lug a desktop computer and one of those giant beige monitors up into Ty's office just to show him this new thing called the internet.

Remember, it's 1995.

At this time, only 1.4% of Americans are online.

Most people have no idea what the at sign on their keyboards are even for.

But Lena, once again, confidently stands up in Ty's office in front of his commanding desk and convinces him to let her build a website for beanie babies.

And this turns out to be one of the first ever business to consumer websites ever built.

Lena is an early, early, early adopter.

One benefit of being so early is that they're easily able to snag www.tie.com.

That Ty URL goes on every beanie baby tag from this day forward.

And as sales take off, so do visits to the Ty.com website.

Now, Jack, at this point, I feel like we got to put Lena up in the realms of like Steve Jobs and Bill Gates because the website isn't just a website.

She even decides to make it interactive.

It features a blog that is run by Lena, although no one calls it a blog back then because the term blog hasn't even been invented yet.

And Lena's also inventing something else at the time.

She's inventing content marketing.

Because instead of just listing Ty's products, Lena creates narrative content through the voices of the Beanie Babies themselves.

And that drives engagement, which drives more visitors, more interest, and even more sales.

In fact, at its peak, the Beanie Babies website is pulling in over a billion visits a year.

A billion.

But Jack, hold on to your Bucky the Beaver, because while the internet stoked interest in Beanie Babies, there is one more ingredient that is going to take Beanie Babies stratospheric, and that ingredient is four little letters: F-O-M-O.

FOMO.

So beanie baby sales are picking up thanks to these new tags and the website.

Ty is still limiting the number of toys that a shop can purchase, which also helps drive demand.

But Ty is about to double down on this scarcity strategy.

One day, Ty gets a call from one of his suppliers in China.

It's bad news that will become really good news, actually.

Stick with us here.

This supplier makes a floppy little sheep named Lovey the Lamb.

But the supplier tells Ty they can't source the materials for Lovey anymore.

Basically, they tell Ty, Lovey is done.

It's death by supply chain.

When Ty starts telling his customers that Lovey's been discontinued, well, those retail stores, they actually get angry.

Lovey is one of their best sellers of all.

They feel like Ty is just cutting them off for no good reason.

So, Ty digs back into those Hollywood acting roots of his and he starts telling them something different.

Ty doesn't tell his customers that Lovey is discontinued.

No, no, no, no, no, no.

Lovey is in fact retired.

That one word, total game changer.

Discontinued means, oh well, they stopped making it.

But retired makes it sound like the toy has been elevated.

So when people hear that a toy is being retired, they start snatching up every last one of these retired toys that they can find.

Ty connects the dots and he hatches a plan.

What if I start sending certain beanie babies into early retirement?

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Follow Lawless Planet on the Wondery app or wherever you get your podcasts.

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You hear that?

That's the sound of beanie mania sweeping America.

We just heard how Ty realized he could stoke demand for beanie babies by retiring them.

To make people think if they don't buy one right now, they may miss out on the chance forever.

He spreads the word with his customers, the toy shop owners, who in turn then tell their customers, yeah, that one's retiring in like two weeks.

And then they tell each other, creating a whole tsunami of FOMO.

Ty ratchets up the pressure even more by limiting stores to just 36 of each Beanie Baby character per month.

Another limitation to the supply to drive up the prices.

Meanwhile, Lena Trivetti realizes that the Beanie Baby blog is the perfect place to drop cryptic clues about which Beanie baby is next up for retirement.

And that pushes the frenzy even higher.

Uncertain about which beanie baby might be retired next and potentially skyrocket in value if it does, people become obsessed with collecting them all.

Stores carrying beanies start getting hundreds of calls daily from desperate buyers.

Lines start to form outside before the stores even open just to catch the latest deliveries.

Suddenly, a trip to the toy store goes from a bonding experience with your toddler to squid game with soccer moms.

Because here's the thing, this frenzy isn't being driven by kids so much as their parents, grandparents, aunts, and uncles.

Adults initially bought beanie babies for the kids in their lives, but pretty soon they're buying rare beanie babies as a financial investment.

It's speculation, baby.

Suddenly, Mystic the Unicorn is what's in your 401k.

Forget Wolf of Wall Street.

These are the predators of plush.

Some adults are even putting their savings, and get this, their kids' college funds into buying beanie babies believing that they'll get huge returns.

Besties, the beanie baby bubble has officially arrived.

Collectors start paying hundreds, even thousands of dollars for individual beanie babies.

If you had one brownie the bear, you could sell it for up to $2,500 at the height of the bubble.

Peanut, the royal blue elephant, was going up to 5,000 bucks in the secondary market.

That is a 1,000 X return.

And these these investors, they're putting some serious skin in the game.

They now have a financial incentive to keep the market for beanies hot.

Specialized magazines and websites spring up with prices, pictures, news, and rumors of what Beanie Baby is going to get retired next.

And as that collector's market takes off, or the secondary market in economics speak, so do Ty sales of Beanie Babies, the primary market.

And get this, at the height of the craze, Ty is shipping 15,000 orders of these toys every single day.

This is is huge, especially when you consider he's put strict limits on how much each store can buy.

And remember, they're only small mom and pop stores that he even allows to buy.

He's a hard no on big box stores.

He's passing on licensing deals to get into Saturday morning cartoons.

Ty even turns down the master of movie magic himself, Steven Spielberg, for a Beanie Babies film.

But there's one partnership that Ty actually says yes to, McDonald's.

Why McDonald's?

Ty thinks putting beanie babies in happy meals could help introduce them to less affluent households.

So in 1997, Thai Inc.

partners with McDonald's to make 100 million teeny beanie babies for a special happy meal promotion.

It's meant to last five weeks, but all 100 million toys they produce are gone in just two.

And it's because some customers are ordering tens, sometimes hundreds of these happy meals and then asking the server, just keep the food.

All I wanted was the beanie baby.

Turns out, the real happy meal isn't the food.

It's Iggy Viaguana who's waiting inside the box.

So, Jack, we just saw peak beanie obsession.

People are biting arms, tearing limbs.

I heard one dude got pinned at a Toys R Us just to get one of these things in the store.

But I gotta ask, Jack, what kind of numbers is Thai actually doing thanks to all these counterintuitive strategies?

In one year, from 1995 to 1996, sales for Thai Inc.

go from $25 million to around $250 million.

That is 10x growth in one year.

The following year, sales hit $400 million.

And the year after that, 1998, they're at $1.3 billion.

Around this time, two-thirds of Americans polled say they own a beanie baby.

Full disclosure, I had 28 of them.

And all of this buying and selling of beanie babies comes at just the right time for a new auction website called eBay.

Yeah, that eBay.

The shopping site actually launches in 1995 and it rides the wave of beanie mania.

At its height in May 1997, eBay is auctioning $500 million worth of beanie babies.

eBay is doing more in used beanie baby sales than Ty Inc.

is selling of new beanie babies.

By the time eBay goes public in 1998, beanie babies account for 10% of its total sales.

Beanie Babies didn't create e-commerce, but man, did they help fuel its rise.

As for Ty, all this craziness has proven that his instincts were right.

And you'd think all this success and validation might help mellow him out a little bit.

But if anything, it gets him even more controlling, even more secretive, maybe even more cruel.

Remember how Lena Trivetti helped Beanie Babies explode with the tag poems in the website?

Well, at this point, Ty is still only paying her 12 bucks an hour.

That's absurd.

And when she walks into Ty's office one day and she asks Ty for a raise, guess what he says?

He says no.

And for that reason, Lena walks.

But through all this craziness of beanie babies selling on eBay for thousands of dollars, Ty resists the urge every entrepreneur would have.

He doesn't raise prices.

Keeping beanies affordable at $5 a piece keeps the frenzy thriving and keeps demand at a fever pitch, at least for a while.

The ka-ching of all those $5 sales and 50% profit margins is enough to get Ty on 1999's Forbes rich list with a $4 billion fortune.

He started as a millionaire and he finally became that billionaire.

But as Beanie's bubble starts to deflate, as all bubbles eventually do, our guy Ty overplays his hand.

So Ty basically makes three wild, unexpected moves that just burst the bubble like a pinprick.

That scarcity he's been carefully cultivating for years, he blows it by releasing 24 new beanies all at once.

And then, in a desperate attempt to reinflate the bubble, Ty doubles down on his scarcity strategy.

He posts a message to the company's website saying that at 11.59 p.m.

on December 31st, 1999, all beanie babies will be retired.

For years, nothing's been hotter than those cuddly little animals with cute little names.

But abruptly this week, Ty Incorporated announced over the internet that it's over.

The company says every last one will be retired.

As everyone's worried about their computers crashing on Y2K, Ty is mongering fear of another extinction level event.

And it does not go down well with the beanie acts.

Oh, but then it gets worse, Jack, because then Ty backpedals.

The beanies aren't going the way of the dinosaurs after all.

Instead, he lets the fans decide in an online poll asking if they should keep going.

And the fans, of course, vote yes.

Beanie babies will live on.

But then at that point, the brand whiplash just kills the mania.

The bubble pops right after Christmas, and by the early 2000s, sales are down over 90% from their peak.

Turns out you can only manufacture scarcity for so long before people catch on.

In irrational asset bubbles, they rely on two key forces.

First, there's the psychological aspect, the FOMO, that gut feeling that if you don't buy now, you're going to miss out forever.

The second key ingredient to irrational bubbles, arbitrage.

As more people get online, the market gets flooded with information, price guides, auction listings, listings, and data on what beanies are actually selling for.

Suddenly, buyers got smarter.

They see that most people aren't willing to pay those sky-high prices after all.

And once that realization spreads, then the demand from collectors, it just dies down.

And when that happens, so do the prices.

And for anyone left sitting on a storage unit full of beanie babies, let's just say they weren't retiring early.

And as for Lena Trevetti, Despite being frozen out of the money and recognition that she deserved, she moves on to become a successful marketer and software engineer, and she eventually sells an AI writing tool for over a million dollars.

Love seeing Lena's hard work and creativity pay off.

But Ty, he's still worth billions.

And Ty Inc?

Yeah, they keep on making beanie babies.

I just saw one at Walgreens the other day.

But Ty himself, he's become even more of a recluse.

He's a complex guy who's made a lot of questionable choices along the way.

In fact, he's basically turned the city of Santa Barbara, California into the beanie baby capital of the world.

Yeah, it really is.

If you visit the town, you'll see beanie babies everywhere you turn.

And Ty's weird ways continue.

Yes, they do, Jack.

He narrowly avoided prison over a $100 million tax evasion case involving a Swiss bank account.

And Jack, did you see that Ty even created a beanie baby that came in a three-piece suit?

Naturally, he named it Ty after himself.

So Jack, now that you've heard the story of beanie babies and deeply regretted not not purchasing a dozen of them, what is your takeaway?

My takeaway is the Buzz Lightyear effect.

The reason you love the movie Toy Story is because the toys have human characteristics.

Buzz, Woody, and the gang, they have personalities, feelings, and more importantly, backstories.

We connect with them like they're real.

Because Buzz isn't just a Space Ranger.

He's trying to reconnect with Starkman to protect the galaxy from the evil Emperor Zerk.

Ty Warner, thanks in no small part to Lena Trivetti, did the exact same thing with beanie babies.

He gave them names, birthdays, origin story, poems, these little touches, they made these toys feel like more than just stuffed animals.

They had identities.

They had lives of their own.

They felt almost human.

Bucky the beaver?

Yeah, he was my buddy.

Ty turned the toys into companions and that emotional connection helped spark the obsession.

because consumers love to buy figurative mirrors, products they can see themselves in.

And that's the Buzz Lightyear effect.

What about you, Nick?

What's your takeaway?

An idea not shared is a missed promotion.

Lena Trevetti, she wasn't some high-powered executive, but she saw something others didn't.

And she pitched her idea of adding poems to Beanie Baby tags, making each one feel unique and collectible.

She even introduced Ty to the power of the internet, helping launch beanie babies into a global phenomenon.

Now, in this particular case, she didn't get the promotion she deserved from her boss, but her story does show that just because you're not in charge, your insights and your ideas do matter.

Yeah, the way we see it, the best companies and the smartest bosses are the ones who listen to fresh ideas from anyone at any level.

Although, if you think your boss is the kind of person to take your idea without rewarding you, maybe you should look somewhere else to work.

Okay, before we go, it's time for my absolute favorite part of the show.

The best facts yet.

Yeah, it is.

These are the hero stats, the facts, and the surprises we discovered in our research, but we just couldn't fit into the story.

I mean, Jack, there were so many great, crazy, and bizarre Ty Warner stories we just couldn't squeeze into today's pod.

But one of my favorite stories is the legal disclaimer that Ty put in his early toy catalogs.

Here it is.

Warning.

If anyone dare copy our creative designs and patents without written permission, ownership of your eternal soul passes to us, and we have the right to negotiate the sale of said soul.

Furthermore, our attorneys will see to it that life on Earth, as you know it, is not worth living.

That may cross a line.

That may cross a little legal boundary there, Jack.

Here's another one.

In 1997, Ty Inc.

came under legal pressure from the estate of Grateful Dead singer and guitarist Jerry Garcia over a Thai-dyed beanie baby named Garcia.

Now, when Ty renamed their bear Peace, the value of the original Garcia bears, oh, it shot up.

But now, sadly, the price has shot down and you can find them on eBay for just around 10 bucks.

I guess the eyes of the world are no longer on beanie babies.

If you know, you know.

Oh, and by the way, Jack, Bucky the Beaver.

You want to know what happened to my little guy?

I've been dying all episode to find out.

Okay, so I was at a sleepover and I traded him for a cupcake.

You traded Bucky the Beaver for a cupcake.

Now, in my defense, Jack, the terms of the deal were never clear, in my honest, humble, non-legal opinion.

But I believe there is a young man on the Upper West Side who still owes me the fair market value of 263 bucks for that beanie baby.

And that is why Beanie Babies is the best idea yet.

Coming up on the next episode of the best idea yet, start revving your V12 engine and waxing your racing red body work because we're going to put the pedal to the metal and race headlong into the story of Ferrari.

If you've got a product you're obsessed with, but wish you knew its backstory, drop us a comment right here and we'll look into it for you.

Oh, and don't forget to rate and review the podcast.

That's how we grow the show.

Follow the best idea yet on the Wondery app, Amazon Music, or wherever you get your podcasts.

You can listen to every episode of The Best Idea Yet early and ad-free right now by joining Wondery Plus in the Wondery app or on Apple Podcasts.

Before you go, tell us about yourself by filling out a short survey at wondery.com slash survey.

The best idea yet is a production of Wondery, hosted by me, Nick Martel, and me, Jack Kurvici-Kramer.

Our senior producers are Matt Beagle and Chris Gauthier.

Peter Arcuni is our additional senior producer.

Our senior managing producer is Nick Ryan and Taylor Sniffin is our managing producer.

Our producer and researcher is H.

Conley.

This episode was written and produced by Adam Skeuse.

We use many sources in our research, including The Great Beanie Baby Bubble, Mass Delusion and the Dark Side of Cute by Zach Bissinet.

And Behind the Beanie Babies, The Secret Life of Ty Warner in Chicago Magazine by Brian Smith.

Sound design and mixing by Kelly Kromeric.

Fact-checking by Erica Janick.

Music supervision by Scott Velazquez and Jolena Garcia for Freeson Sync.

Our theme song is Got That Feeling Again by Blackalack.

Executive producers for Nick and Jack Studios are me, Nick Martel, and me, Jack Ravici-Kramer.

Executive producers for Wondery are Dave Easton, Jenny Lauer-Beckman, Erin O'Flaherty, and Marshall Louie.