It’s mid-morning in late spring, and Ben Dermer is splayed on the floor in the middle of Spin Master’s cafeteria in downtown Toronto. The 36-year-old vice-president of one of North America’s biggest toy companies is dressed in the official company uniform: flip-flops, cargo shorts, T-shirt and sunglasses, perched just so atop a crop of bed head.
A camera crew is on standby. There is also a United Nations assembly of dogs—a baby sheepdog, a schnauzer, and a Shih Tzu are all vying for leadership. Some are wearing bandanas or the latest in canine couture. All are perfectly groomed and ready for their close-up.
“It’s just like my last Playgirl shoot,” Dermer jokes. Just then, the star of the promotional video shoot waltzes on to the ad hoc set. The diminutive pup—black and white, with a patch above his left eye—is meant to look like a Dalmatian. In reality, he’s more of a mutt: a crossbreed fashioned out of plastic and animated by sensors, motors, thousands of strings of computer code—and the boyhood dreams of a pair of inventors who spent nearly two years perfecting their toy.
Dermer issues the command “Zoomer, go pee!” and Zoomer, the robotic dog, hikes his hind leg as if to take a leak.
“Good boy, Zoomer!” Dermer burbles, his voice filled with childlike wonder.
“Uh-maze-ing,” a co-worker coos from the sidelines.
Zoomer’s trick is even more amazing, given he was supposed to be a truck (which might explain why he has wheels for feet). But one look into his LED eyes, which turn into hearts when he’s happy or Xs when he’s playing dead, and it’s easy to see how kids could develop a serious case of puppy love.
It has taken three model overhauls, thousands of software tweaks, several trips to manufacturing facilities in China, and untold heated hours arguing over whether the perfect robo-pet should roll over, shake a paw or bark a song. But Dermer now believes this is the toy that every child will want when it’s released this month.
There’s much at stake. Since its founding 20 years ago, Spin Master has grown into the sixth-largest toy company in North America. Unlike the Hasbros and Mattels, it doesn’t have an evergreen toy brand—a Barbie or a Hot Wheels—to rely on. Instead, it succeeded by going from blockbuster to blockbuster. “They desperately need a hit,” explains Richard Gottlieb, a New York–based toy consultant and publisher of Global Toy News. “They’re a company that relies on hits, and they’ve been hitless for a while.”
Their last big winner, a mash-up of marbles and action figures called Bakugan Battle Brawlers, was a huge hit when it launched, but slowly saw its sales slump from a high of $250 million in 2008–09 to between $20 million and $30 million before it was pulled from store shelves last June. The company hopes to reintroduce it in a few years for a new generation of consumers. It’s a tried-and-true tactic, but one that hurt the company as the U.S. toy market overall was slowing down, dropping 4% last year, according to market researcher NPD Group. Spin Master claims to be still experiencing 15% year-to-year growth, but has now gone through two rounds of layoffs, and is rumored to have slashed its workforce by more than 20%. “The bigger you get, the harder it is to replace revenues when you don’t have brands that will show 10 years of steady growth,” explains Sean McGowan, an analyst at Needham & Co. in New York. “The best part is, you get to start over every year. The bad part is, you get to start over every year.” In a viciously competitive industry, Spin Master is betting millions on the hope that Zoomer will take his rightful place next to the hula hoop, Trivial Pursuit and Furby—and not be, for want of a better word, a dog.
In the toy world, developing and marketing the Next Big Thing is very serious—so this office environment certainly isn’t. The thinking is, that all work and no play makes Jack a dull toy. Thus the scene in Spin Master’s Toronto office: dozens of engineers, industrial designers and self-described “super crafty” kids now grown into 20- and 30-something adults emerge from their cubicles to play out their childhood fantasies. Adult inhibitions are the first casualty in the cause of developing the toys they wanted but never got under the tree—a threadless sewing machine, a doughnut maker and NASCAR racers. It is school without classes, only a daylong recess.
In late February, Dermer is seated in his office, which he shares with a lone team member. It’s located at the end of the building, a small, windowless room filled with top-secret ideas, and is strictly off-limits to all but a select few—his members-only tree house. His office shelves are lined with dozens of objects of inspiration. Mr Potato Head looks on next to an as-yet-unopened Game of Life autographed by its inventor. One wall is reserved for something he prizes like a kid would a treasure map: a framed drawing of Bakugan—the ball-like toys capable of transforming into monsters that once had hundreds of screaming kids and their parents lining up at a Mississauga WalMart for hours.
“It came to me as a drawing,” Dermer explains, his thick eyebrows arching like Slinkys, lending him an air of mischievousness—the kind of guy who is incapable of playing deadpan while stalking his next whoopee cushion victim. “You never know where a great idea is going to come from. But I just had a feeling it was something magical right from the start.”
He pauses for a moment, breathes deeply, before proudly proclaiming: “You know, I’ve been wrong almost as often as I’ve been right.” In any other business, a 50% failure rate would have security escorting you to the door. But in a fickle industry where an estimated 80% of all new products never turned a profit, Dermer is right to see the glass as half full.
The York University film graduate got his start at Spin Master fresh out of school, demonstrating toys in stores. When the head of inventor relations left for a competing company, Dermer got the position. It’s his job to meet with toy inventors who hope to sell their ideas to the company; he has demonstrated an uncanny ability to tap into one of the world’s great mysteries: what makes an eight-year-old’s brain tick.
In more than a decade, Dermer has crisscrossed the globe, evaluating more than 40,000 toys, meeting with everyone from strange tinkerers toiling in their basements, to rocket scientists, mompreneurs and, of course, professional inventors.
Stories of missed opportunities haunt even the major players. The Cabbage Patch Kids concept was rejected by five major toy companies in the early 1980s, including Mattel and Hasbro, which apparently took to heart the wisdom of unimpressed mothers in focus groups. “My daughter has no idea what adoption is,” said one, according to the book The Real Toy Story, “and boy, is this doll ugly.”
Spin Master has grown by taking chances on innovative products snubbed by the industry giants. For example, both Mattel and Hasbro passed on a tiny soda bottle toy attached to plastic wings. It was 1996, and Dermer and his team believed the air-compression-propelled airplane had potential if the only the technology could be perfected. Two years, and nearly a half-a-million dollars later, the company was in possession of one of the world’s most coveted toys—Air Hogs.
Dermer maintains there’s no one formula to ensure success. The considerations are many, the possibilities of a misstep limitless. Among the most important questions: How much will it cost? How easy is it to manufacture? Is there a category competitor? Does it fit with company strategy? Is it what the retailer wants? Can the idea be reduced to a bullet point? Can it be communicated easily in a 30-second TV spot?
Ultimately, though, one question overshadows all others: Is the toy capable of casting a spell over an entire generation of kids?
At a meeting in mid-March, Dermer sat in his office with his back to a small group of staff, his head swallowed by drapery. Products that are under development are top secret and only declassified if and when the toys hit the market. Dermer literally keeps trial models and prototypes behind a curtain in his office, like a magician storing the rabbit destined for the hat. His sidekicks, a product designer and brand guru, have been allowed into his office to offer up their opinions on early prototypes.
“I thought we could look at a few stragglers,” Dermer avers, rustling for a moment before emerging with a few toys that aren’t fully formed but illustrate the desired “play patterns”—or how the target age group will interact with the toys.
First up, a mask with special features.
“It looks like Mick Jagger!” someone shouts.
“But creepier,” another interjects.
Talk quickly turns to a Spin Master mask with a similar play pattern that didn’t manage to break through.
A bendable toy that has been souped-up and is back for a second look.
A hush falls over the room. The tone is considered, even serious.
“That has potential.”
“Not there yet, but I’d like to see some more work.”
And finally, Dermer presents a box that shakes and shimmies. “An incremental bit of business for the girl’s team?” he asks.
“Maybe if it had fleas.”
“Maybe if it were super-cuddly.”
“Maybe if it were tiny.”
Maybe, and maybe not.
It was at a similar meeting, 18 months earlier in Chicago, the toy invention mecca of North America, when another boxlike creature was presented to Dermer, dreamt up by two toy guys from Lake Geneva, Wis.—Barbie’s hometown and the birthplace of Dungeons & Dragons.
Peter Greenley and Nick Grisolia of G2Inventions believed they were in possession of something special, a 14-inch vehicle that could transform itself in an instant into a talking, interactive, even bigger, super-monster truck.
Mattel was smitten. The toy was developed to fit into a line of talking trucks, and it gave Greenley and Grisolia the green light with the intention of eventually inking a deal. The two tinkered with their blueprint over the next few months. But in a tepid economy, and with few signs consumers were willing to spend on anything but lower-ticket items, Mattel started to make new demands. Costs had to come down, they said. In other words, one of the two motors that animated the truck had to be removed.
Greenley was crestfallen. “It just wasn’t fun at that point. The magic would be gone. I didn’t want to make the toy they wanted.”
So, he didn’t. Instead, he and his partner went back to the drawing board, designing a more sophisticated version of their initial truck. Instead of removing a motor, they added two more and reduced its size, giving it even more power to move in new and novel ways.
Weeks later, they unveiled their creation to Mattel’s competitors at an industry gathering in Chicago.
Dermer took one look at the box and shook his head. He wasn’t interested in a truck.
“It’s not a truck anymore,” Greenley told him. “It’s a creature. It’s an animal.”
A light bulb went off. What if it were a dog?
Things moved quickly.
Within a matter of weeks, a small plastic box on wheels with a head that appeared to be constructed out of a vintage fax machine was performing puppy tricks for the Spin Master team.
The room was abuzz.
Could it be a big hit? Another Bakugan? Another Air Hogs?
“I don’t think there has been as much excitement about a toy since Air Hogs,” Ronnen Harary, Spin Master founder, chairman and co-CEO recalls. “But you never know what is going to take off. All you can do is try to mitigate the losers.”
No one had ever seen $1,000 worth of robot made into a $100 pet. Zoomer’s programming and product development allowed him to interact with people in new and novel ways. It was like he was a real dog.
The team got down to business.
Job 1: they crunched figures from past category launches for clues. Poo-Chi, a robotic dog launched in the 1990s, had been a smash hit. It followed hot on the heels of the original category-busting robo-pet, Furby. Brought back again last year, the revamped Furby was, once again, a wild success.
The company also rallied a group of testers—both adults and kids—and brought them in to play with Zoomer, watching how they interacted with the toy and how long they spent playing. The test group was besotted.
Meanwhile, Spin Master’s marketing team was already parading Zoomer in front of the big three toy retailers, Walmart, Target and Toys ‘R’ Us, in a Los Angeles showroom. The early prototype still had glitches, and couldn’t yet perform in all the ways the robot eventually would. When all was said and done, Zoomer would be able to roll over, breakdance, sing songs and interact with kids who could teach their puppy new tricks.
“The response was universal: ‘Oh my god, does it really do that?’” recalls James Martin, Spin Master’s vice-president of marketing. “They wanted in. Big.”
By the end of road show, Spin Master had convincingly satisfied the most important consideration of all: Zoomer was thrilling enough for a television spot.
Discussions continued over months, with retailers becoming intimately involved in how the toys would be marketed. Like Furby, Zoomer would be pitched to girls and boys, with an expected sales split of 65%–35% respectively. However, Zoomer would be aimed at a slightly younger boys group—starting as young as 4—and targeted at girls 5 to 8. And since Zoomer would be marketed to both genders, for the launch it would be positioned in neither the boys’ section nor the girls’ but in the “end caps” at the ends of the aisles.
Meanwhile, the G2 inventors continued to work out kinks and dream up new and even better features. Consumer testing showed that a black-and-white dog would have the widest commercial appeal, partially because it was the colour of a real dog, so Zoomer became a Dalmatian. Soon enough, as he made his debut at toy fairs around the world, sales orders began to pile up.
Logos, packaging, commercials were all being planned. One big marketing question: how to position Zoomer during the big TV push. Eventually, the team decided to drive their marketing message by focusing on the fact that the dog can be trained.
By midsummer, a month in advance of product arriving on retailer shelves, Spin Master planned to build buzz by reaching out to tech writers and mommy bloggers, and on social media—Pinterest, Facebook as well as through a dedicated website. The last piece: a promotional video of Zoomer in action.
It’s now mid-May, and the camera crew has set up in a makeshift set, the company cafeteria. Greenley and Grisolia, the inventor team, are in town from Wisconsin to talk about the Next Big Thing—no one is allowed to spill the beans, but it’s a robo-dinosaur. They sit on the sidelines, checking their cellphones, seemingly bored by the brouhaha unfolding beside them.
Meanwhile, Dermer is in front of the camera, trying to coax a (real) sheepdog puppy into playing with Zoomer, to work up the same excitement he so clearly feels for his pet project, his baby this past year. But the sheepdog is having none of it, oblivious to Zoomer’s breakdancing moves busting out right in front of him.
Will kids have the same reaction? Until Zoomer hits the market, it’s not clear whether he’s going to be best in show, or just another mutt.
Analyst Sean McGowan is a believer: “They have a remarkably good eyeball for good product. They’ve demonstrated their resiliency in the past. I think they’ll do it again.”
CEO Harary is more both more opaque and, arguably, more realistic: “Sometimes you just need a little pixie dust.”