Handler, Ruth

views updated May 17 2018

Handler, Ruth

(1916-)
Mattel, Inc.

Overview

Ruth Handler was the mastermind behind the creation, marketing, and sales of the Barbie doll, first sold in 1959. Thirty years later, more than 800 million dolls in the Barbie family had been sold by Mattel, the company founded by Ruth Handler and her husband Elliot. In 1996 Barbie dolls and Barbie paraphernalia generated $1.7 billion dollars in revenue for Mattel.

Personal Life

Ruth Mosko was born on November 4, 1916, in Denver, Colorado. She was the youngest of ten children of Polish immigrants and was a tomboy who shunned dolls. Ruth's Jewish father, Jacob Moskowicz, arrived in America via Ellis Island in 1907 where his name was shortened to Mosko. Because he was a blacksmith, he was shipped to Denver, center of the railroad industry, where blacksmiths were used for making and repairing tracks. Ruth's mother, Ida Mosko, was 40 and in ill health when Ruth was born. From the age of six months, Ruth was raised by her eldest sister Sarah and her husband Louis Greenwald.

When she was 16, Ruth met Elliot Handler at a B'nai B'rith dance. Elliot, who wanted to be an artist, was deemed a poor match by Ruth's family. They envisioned him as a starving artist, and were relieved a few years later when Ruth decided to move to Los Angeles, where she had landed a job as a secretary for Paramount Pictures while visiting a friend. Elliot followed Ruth to California, enrolled in art school, and found a job designing light fixtures. In 1938 they were married. Shortly before their daughter Barbara was born in 1941, Ruth quit her Paramount job. Their son Ken was born in 1944.

When Ken was six months old, Ruth decided she needed something to do besides take care of children. Within 25 years, the company she started, Mattel Creations, was a multimillion-dollar business. She was the first woman elected to the Toy Manufacturers Association board of directors and the first woman appointed to the Federal Reserve Board. President Richard Nixon appointed her to the National Business Council for Consumer Affairs and the Product Safety Committee.

While at the height of her success, in 1970 Ruth lost her left breast to cancer, then struggled with depression, a loss of self-confidence, and an inability to find a prosthetic breast that made her look "even." At the same time, Mattel was under investigation for illegal accounting practices. Just when it seemed that poker games in local cardrooms would be her sole preoccupation, Ruth Handler decided to manufacture and sell prosthetic breasts. In 1975, both Ruth and Elliot left Mattel. Elliot went back to art school. They spent their retirement alternating their time between their Century City penthouse condo and their Malibu beach house. Elliot painted; Ruth doted over her grandchildren and played bridge.

Career Details

Elliot Handler was fascinated with new materials, especially an acrylic plastic called Lucite or Plexiglas that had been used only in the defense industry. When he and Ruth rented their first unfurnished apartment, all they could afford to buy was a bed, a table, and two chairs, so Elliot set to work designing some furniture and accessories that could be made from plastic. Ruth thought the sketches he produced were so good she encouraged Elliot to consider making up some samples for her to use in sales calls. The apartment came with half a garage (to be shared with a neighboring apartment), and the couple decided to locate the equipment needed to produce the samples in the garage. They made coffee tables, end tables, and lamps for their apartment, then used the leftover material to make hand mirrors, candle holders, cigarette boxes, and bookends. When those who shared the garage complained to the landlord, the Handlers were promptly evicted.

Elliot quit his job and dropped out of school, they moved into another apartment, and they rented a small space that had been a Chinese laundry to house their workshop. Ruth, still working at Paramount, made sales calls with the samples during her lunch hour. "I found that I loved the challenge of selling," Ruth recalls in her autobiography. "Adrenaline surged through me whenever I walked into a store with samples and walked out with an order." The plastic business in the Chinese laundry attracted four partners and quickly rose to become a $2 million enterprise making giftware and costume jewelry. But by 1945 Elliot grew restless.

A year earlier, Ruth had entered a business partnership with Harold "Matt" Matson, a friend from Elliot's first job in Los Angeles. They persuaded Elliot to be their designer, even though he had a full-time commitment to his costume jewelry company. The three named their company Mattel ("Matt" for Matson and "el" for Elliot). Fortunately for Mattel, Elliot's desire to experiment with new products and continuously expand his business led to a dispute with his partners, so he sold his interest in the company and joined Mattel full time. Matson withdrew due to illness, while the Handlers continued to work together, building what was to become the number one toy manufacturer in the world.

In its first full year of operation, 1945, Mattel showed sales of $100,000, mostly in dollhouse furniture. Their second year in business was not as good, since a competitor was able to undercut their price with doll-house furniture made from molded plastic. Undaunted, the Handlers turned to other types of toys, including a miniature plastic ukulele and a toy piano. The ukulele rapidly lost market share due to a cheaper imitation from a competitor, and Mattel took a $60,000 loss on the piano because of excessive breakage during shipping.

Their early problems taught the Handlers some poignant lessons in cutthroat price competition and product quality testing. They realized that a successful business had to produce unique and original products of superior quality and strength that could not be easily copied by competitors. "We never had any trouble selling our toys," Ruth remembers in her autobiography. "The most difficult problem through the years was financing." A shortage of capital and the refusal of banks to gamble on the struggling young firm put a music box project on hold, but a $20,000 loan from Ruth's brother-in-law allowed Mattel to produce another winner.

In 1955 yearly sales reached $5 million and the Handlers decided to take a risk that would forever change the toy business: sponsorship of a 15-minute segment of Walt Disney's Mickey Mouse Club on the ABC television network. The 52-week $500,000 contract was equal to Mattel's net worth at the time. The payoff was immediate. The company's television commercials brought in mail sacks full of orders and made their brand name well known among their viewing audience. In another television link, Mattel introduced toy replicas of classic guns and holsters, exploiting the popularity of television Westerns.

In 1959 Mattel made toy industry history with the introduction of the Barbie doll, the best-selling toy of all time. Named after the Handlers' daughter, Barbie was 12 inches tall, with breasts and a curvaceous figure. Clothes and accessories had to be purchased separately. In subsequent years, additional dolls were added, including a boyfriend, the Ken doll, named after the Handlers' son. The next season, Mattel entered the competitive large doll market with another winner, the first talking doll. That year, Mattel made its first public stock offering. Sales continued to soar, from $26 million in 1963 to more than $100 million in 1965. In 1968 another spectacular hit was introduced: Hot Wheels miniature model cars.

Even though half of the product line was rendered obsolete in any given year, the company's profits continued to multiply. To deal with the need to keep new products in the marketplace, Mattel had as many as 300 people in its Research and Design department. The Handlers feared that they were not going to be able to continue at their exponential growth rate without exposing themselves to more risk. To solve this problem, Mattel turned into a worldwide enterprise through a host of acquisitions that included Dee and Cee Toy Co., Standard Plastics, Hong Kong Industrial Co., Precision Moulds, Rosebud Dolls, A & A Die Casting Company, Monogram Models, Ratti Vallensasca and Mebetoys, H & H Plastics Co., Metaframe Corp., Ringling Bros. and Barnum and Bailey, and others. In 1968 Mattel reincorporated in Delaware and began work on a $50 million Circus World theme park in Florida. In a joint venture with Bob Radnitz, Mattel produced its first movie, Sounder.

Chronology: Ruth Handler

1916: Born.

1932: Married Elliot Handler.

1944: Founded Mattel Creations with Harold Matson.

1955: Signed a $500,000 contract for sponsorship of Mickey Mouse Club.

1959: Introduced the Barbie doll.

1970: Diagnosed with breast cancer and a mastectomy was performed.

1973: Witnessed Mattel's first loss.

1975: Resigned as president of Mattel.

1978: Pled no contest to charges of false reporting to the SEC, fraud, and conspiracy.

But the good times soon soured. Ruth described the major mistake made by Mattel in her autobiography: "We should have stayed in the toy business, accepted a slower growth rate, and resisted the temptation to acquire so freely. Our organization was not really equipped to evaluate and control so many diverse companies, and our internal auditing capability was inadequate to ferret out the problems in advance." In 1970 Mattel's plant in Mexico was destroyed by fire, which necessitated the cancellation of one-third of that year's Christmas orders, and the following year a shipyard strike in the Far East cut off their toy supplies during their busiest season. To maintain the appearance of corporate growth, the financial records showed as income millions of dollars of orders that had been placed but not fulfilled. For two years (1971 and 1972) Mattel issued false and misleading financial reports. In 1973 the company reported a $32 million loss just three weeks after stockholders had been assured that the company was in sound financial condition. Mattel's stock plummeted and the Security and Exchange Commission (SEC) stepped in to investigate.

Ruth, in charge of the company's administrative and financial affairs, was indicted by a grand jury in 1978. She entered a no contest plea to the charges (false reporting to the SEC, fraud, and conspiracy) and was ordered to pay $57,000 in fines. Her 41-year sentence was suspended for a probation of five years, during which she was required to perform 500 hours per year of community service. Elliot, a product designer with no say in the day-to-day running of the company, was exonerated. The federal court ordered Mattel to restructure, while the firm's bankers and creditors pressured the Handlers to resign. Shareholders then entered a series of class-action lawsuits. To settle, the Handlers turned over 2.5 million shares of their own stock, described by Ruth as "half of everything we'd worked for in the previous thirty years." In 1980 the Handlers cashed in most of their remaining Mattel stock (worth $18.5 million), ending their involvement in the company they had founded. The company was able to reestablish itself and within a few years was again the world's largest toy enterprise. Sales in 1997 were $4.8 billion, assets were $3.8 billion, and profits were $285 million.

Social and Economic Impact

When World War II ended, the toy market was bare and the baby boom, which would produce more than 77 million Mattel customers during the next 20 years, made the toy industry ripe for development. Before 1955 toy manufacturers relied primarily on retailers to show and sell their products, and advertising occurred only during the holiday season. Mattel was the first toy company to spend money on advertising year-round. The featured products all exceeded sales projections and the nature of selling toys changed radically. When Mattel's product line and brand name became known to its young viewers and their parents, an ongoing demand for the toys forced retailers and wholesalers to carry them year-round. To handle the rapidly increasing demand for their products, Mattel hired its own "retail detail" people to visit stores, set up product displays, and monitor the rate of sales of the various products. Utilizing this feedback from the marketplace, Ruth Handler was able to constantly adjust production numbers based on retail sales, making her one of the first experts at sales forecasting and inventory control.

Sources of Information

Contact at: Mattel, Inc.
333 Continental Blvd.
El Segundo, CA 90245-5012
Business Phone: (310)252-2000

Bibliography

Handler, Ruth, with Jacqueline Shannon. Dream Doll: The Ruth Handler Story. Stamford, CT: Longmeadow Press, 1994.

Ingham, John N., and Lynne B. Feldman. Contemporary American Business Leaders: A Biographical Dictionary. New York: Greenwood Press, 1990.

Kepos, Paula, ed. International Directory of Company Histories. Detroit: St. James Press, 1993.

Lord, M.G. Forever Barbie: The Unauthorized Biography of a Real Doll. New York: William Morrow, 1994.

Business Leader Profiles for Students

Handler, Ruth

views updated May 23 2018

Ruth Handler

American businessperson Ruth Handler (1916–2002) changed the face of the toy industry with her introduction of the Barbie doll in 1959. Co–founder of the Mattel toy company, Handler was also noted for her marketing innovations. She later went on to a successful second career in the prosthetic breast business. At the time of Handler's death, there had been over a billion Barbies sold in 150 countries.

Child of Immigrants

Handler was born on November 4, 1916, in Denver, Colorado. She was the youngest of ten children born to Jacob and Ida Mosko, Polish immigrants who had traveled to the United States on a steamship. Her father was a blacksmith who had fled Poland to avoid serving in the Russian army and her mother was in frail health, leaving much of her youngest's rearing to the child's older siblings. Interestingly, the young Handler did not like playing with dolls. She did, however, learn the benefits of a job well done as her parents fortunes improved and she earned tips working in their drugstore.

At 16, Handler met her future husband, Isadore Elliot Handler, at a B'nai B'rith dance in Denver. Three years later, she moved to Los Angeles, and he soon joined her there to attend the Art Center School of Design. The couple briefly returned to Denver to be married at the former Park Lane Hotel in 1938, but Southern California was home to them for the rest of their lives together.

Business Began

Handler first took a job as a secretary at Paramount Studios, while her husband studied and began designing household products such as bookends and candle holders. Before long, the couple's first company, Elzac (named for Elliot and a financial partner named Zachary), came into being. Elzac's line was expanded to include giftware and costume jewelry, and the company gradually became a $2 million business, but the Handlers were not satisfied.

In 1942, the Handlers joined forces with another designer, Harold "Matt" Matson, to manufacture picture frames. That business, started in the couple's garage, branched out to include doll house furniture made out of scraps from the picture frame enterprise. Using yet another merger of the name Elliot and a partner's name, the company was called Mattel. It turned a profit in 1945 and the Handlers found themselves in the toy business.

One of Mattel's first successful products was a toy ukulele called the Uke–A–Doodle. Its release in 1947 was also a learning experience for the Handlers, as they discovered ways to attain patent protection and thwart imitators. They played to their individual strengths as well, with Handler in charge of marketing and her husband heading up product design. (Matson was bought out very early in the game). Together, the talented couple managed a series of innovations that helped put Mattel on the map. For example, Mattel was the first company to make toys out of a mixture of materials. Additionally, the Handlers were quick to realize the advantages of recycling components in a variety of toys, such as placing a music box in a jack–in–the–box. Paul Lukas of Fortune Small Business quoted Handler from her 1994 autobiography, Dream Doll, "We'd developed a basic mechanism around which new products could be designed year after year." But it may be that Mattel's most revolutionary advancement was the use of television in its advertising.

In the 1950s, television was still in its infancy. The advertising of toys was still primarily through catalogs and trade shows, and generally focused on the Christmas season. The Handlers changed all that in 1955 when Mattel offered to buy a year's exclusive sponsorship of ABC's new program, The Mickey Mouse Club. The show was a hit, and sales of Mattel's Mouseguitar and Burp Gun went through the roof. A brand new toy advertising style was born, and Handler's later wry characterization of herself, cited by the Economist, was hardly an exaggeration. "I was a marketing genius," she said.

Barbie

Baby dolls had come into vogue in the late 19th century and remained in fashion in the 1950s. Handler, however, had noticed that her daughter had little interest in playing with them, preferring instead to dress up adult paper dolls and pretend to be grown up. Thus inspired, she pitched the idea of a manufacturing an adult doll to her company, but met repeated resistance from Mattel's predominately male sales force and executives. "Every little girl needed a doll through which to project herself into her dream of her future," Handler said in a 1977 New York Times interview quoted by Sarah Kershaw in the same paper in 2002. "If she was going to do role playing of what she would be like when she was 16 or 17, it was a little stupid to play with a doll that had a flat chest." Then in 1956, she found a voluptuous German doll in Switzerland. Unbeknownst to Handler, the doll was intended for an adult male audience, but its original purpose was to be far overshadowed by its evolution at Mattel.

Using the German doll as a model, Mattel designers spent three years creating the doll of Handler's dreams. The finished product, an 11 and 1/2 inch blonde with an improbable figure and permanently high heels, made her debut at the American Toy Fair in New York City in 1959. Officially called "Barbie Teenage Fashion Model" (Barbie was the Handlers' daughter's name), the doll did not thrill the show's buyers. But Handler was vindicated by the delighted reception of little girls. 351,000 Barbie dolls were sold that first year, a sales record for Mattel, and it took the company a full three years to begin to keep up with demand. The fortunes of Barbie and Mattel had become inexorably entwined.

The success of Barbie soon led to the creation of her boyfriend, Ken (named after the Handlers' son). With time, other friends and family were produced, along with hundreds of outfits and accessories. The latter were no small part of the business, as Handler's husband pointed out in the Barbie Chronicles (cited by Lukas). "You get hooked on one, and you have to buy the other. Buy the doll, and then you buy the clothes. I know a lot of parents hate us for this, but it's going to be around a long time." And right he was. Barbie's popularity continued to grow so that by the year 2002, over a billion dolls had been sold in 150 countries. She had been showcased in the Smithsonian Institution and included in the official U.S. bicentennial time capsule. Fan clubs, magazines, and collectors obsessed about her. Yet, Barbie did have her detractors.

Handler's hit doll drew fire from feminists and others, who were concerned that Barbie's unlikely proportions sent the wrong message to young girls. Her measurements, if translated to a woman of 5–foot–6, would have been 39–21–33, an extremely rare occurrence in the natural world. But Handler maintained that Barbie, whose numerous "careers" had ranged from ballerina to surgeon to rock star, was all about giving girls options. The Times of London quoted her thoughts on the matter from her autobiography: "My whole philosophy of Barbie was that(,) through the doll(,) the little girl could be anything she wanted to be. Barbie always represented the fact that a woman has choices." Whatever her faults, Barbie became an American icon.

Triumphed, Failured, and Challenged

Mattel continued to be a market leader throughout the 1960s. The company scored wins with such toys as 1960's Chatty Cathy, who talked, the educational toy series, See 'N Say, and the Hot Wheels miniature car line, introduced in 1968. Investors were pleased as the $10 share price of 1960 zoomed to $522.50 at the stock's pinnacle in 1971. Such heady times did not last, however.

Business woes began with the failure of a battery–powered miniature car line called Sizzlers. This was compounded by Mattel's expensive acquisitions of such diverse enterprises as a pet supply company and the Ringling Brothers–Barnum & Bailey Circus. Combined, the troubles caused the company to post its very first loss in 1971, and yet another the following year. The losses led to shareholder lawsuits and an SEC (Security and Exchange Commission) inquiry that revealed accounting irregularities. In 1975, the Handlers were forced out of the company they had founded, although they denied any knowledge of wrongdoing. Difficulties came to another peak in 1978, when Handler was indicted for fraud and false reporting to the SEC. Still maintaining her innocence, she pled no contest, and was fined and sentenced to community service. Disappointing as all the business upheaval undoubtedly was though, it paled against the parallel challenges facing Handler.

In 1970, just as Mattel was heading for problems, Handler was diagnosed with breast cancer and underwent a modified radical mastectomy. She later blamed the worry and distractions of the disease on her trials at work. Luckily, Handler was able to turn even such a devastating experience as serious illness into a positive.

Second Career

After her mastectomy, Handler was frustrated in her efforts to find a suitable prosthetic breast. The unappealing and limited options ranged from rolled up gloves or stockings to shapeless blobs that bore little resemblance to the real thing. According to Veronica Horwell of the Guardian, Handler concluded that "the people in this business are men who don't have to wear these." So, she set about to change things.

With the help of expert craftsman Peyton Massey, Handler designed a line of realistic artificial breasts fashioned from foam and silicon. She called the product "Nearly Me" and formed the Ruthton Corporation to sell it. Intent on demystifying what was a taboo subject in the 1970s, Handler became an outspoken advocate for early detection of breast cancer and offered her prosthetics as a way for women to feel good about themselves again. One rather unorthodox method she used to get her point across was to open her blouse during interviews, demanding that the interviewer physically determine which of her breasts was real. She also arranged showings of Nearly Me at upscale department stores and made certain that sales staffs were properly trained in fitting the product. As Elaine Woo of the Newark Star–Ledger quoted, Handler's unabashed goal was to enable breast cancer survivors to ". . . wear a regular brassiere and blouse, stick her chest out(,) and be proud."

Handler made the business a successful one, counting former First Lady Betty Ford among her many customers, before selling it to a division of Kimberly–Clark in 1991. But profit was not really her motive in this second career. Horwell quoted her saying, "I didn't make a lot of money in it. It sure rebuilt my self–esteem, and I think I rebuilt the self–esteem of others." And she was not unaware of the ironic connection between Barbie and Nearly Me. As Lukas noted, Handler was fond of saying, "I've gone from breast to breast."

Handler spoke of her life's challenges at a luncheon for the Allied Jewish Federation Women's Department in her hometown in 1996. One of the things she said, according to Joanne Davidson of the Denver Post, was, "I like to think of my life as an impossible dream. We've had a lot of nightmares, but we've always been able to pick up and move on." Perhaps even more to the point was her husband's comment to People Weekly upon Handler's death on April 26, 2002. "She was brilliant and brave," he said.