Warner, Ty

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Warner, Ty

(1944-)
Ty Inc.

Overview

Ty Warner created a billion dollar industry based on an idea for a $5 pellet–filled toy cat that turned into a line of hundreds of avidly collected and traded Beanie Babies. His company, Ty Inc., became the number one toy maker in 1998 using Warner's unique marketing techniques that kept his company shrouded in mystery and his Beanie Babies in high demand with limited volumes of an ever–changing line–up of cuddly characters. The Beanie frenzy of the late 1990s has created an entire industry around the aftermarket sales of the toys, including trading clubs and auction websites, sometimes fetching $5,000 and more for rare or most–wanted Beanies. Selling toys with names like Legs the frog and Chip the cat has made Warner himself a billionaire, ranked on the Forbes 400 list.

Personal Life

Warner has never been married and lives in Oak Brook, Illinois, with his long–time girlfriend Faith McGowan and her daughters Lauren and Jenna. He also owns a Mediterranean–style home near Santa Barbara, California. He is an accomplished classical pianist, taught by his mother, and enjoys tennis, baseball, and Italian cuisine. Warner also collects luxury cars.

H. Ty Warner was born September 3, 1944 in Chicago, Illinois to parents Harold Warner, a toy and jewelry salesman and Georgia, a pianist. Warner claims he was named after baseball great Ty Cobb and president Harry S. Truman. Some say the H. in front of his name stands for his father's name Harold, but Warner claims it stands for nothing, just like the "S" in Harry S. Truman. He grew up in suburban La Grange, Illinois, with his younger sister Joyce, in a house built by famed architect Frank Lloyd Wright.

He was educated at Cossit School in La Grange until fourteen and then Lyons High School in Chicago. After only a few terms at Lyons, Warner was transferred to St. John's Military Academy, a boarding school in Delafield, Wisconsin. He was a member of an elite academic club, the Star and Circles, and was active in football, basketball, and baseball. Warner attended Kalamazoo College in Michigan for one year, studying drama, before dropping out and moving to Hollywood to give acting a try. To support himself, Warner sold cameras door to door and worked at a gas station. Disenchanted, Warner soon moved back to Chicago just before his parents divorced.

Career Details

He got his start in the toy business, in 1962, working with his father as a salesman at Dakin toy company. His former boss told People, "He was probably the best salesman I ever met." At Dakin, Warner learned the in's and out's of toy business by selling the company's plush animals. Warner began dabbling in unorthodox marketing techniques, arriving at distributors in a white Rolls–Royce convertible he had purchased, dressed in fur coat complete with top hat and cane. He guessed, correctly, that that would intrigue retailers enough to see what he had for sale. After eighteen years at Dakin, Warner was making more than $100,000 at the company, but he left in 1980. Warner told People he left to pursue other interests, but his former boss told the magazine he was fired for creating a competing line of toys.

Warner traveled to Sorrento, Italy, where he was inspired by the number of unique stuffed toy cats he had seen there. Upon his return in 1983, his father died of a heart attack and left Warner $50,000. With that money, in addition to his savings from his time at Dakin and a second mortgage on his condo home, Warner began to develop a line of toys. In 1986 he formed Ty Incorporated and, after working out of his home, moved to a small office in Oakbrook, Illinois. He hired two employees and on a trip to Korea, found a production plant to manufacture his stuffed animals. His first toy was a white Himalayan cat named Angel. In the first line, there were ten cats, all with different names like Peaches and Smokey in all different colors. "Kids identify with names. In the beginning, I thought of the cute names. Now I take them into the office and everyone makes suggestions," Warner told People. He was able to get buyers through his old Dakin contacts and sold the small, loosely filled pellet animal for $20. They sold well. At the Atlanta Toy Fair, Warner sold 30,000 in one hour.

After his success in Atlanta, Warner moved out of the little Oakbrook office and into a 12,000 square foot warehouse in Lombard, Illinois. He began a new line of toys, the Collectable Bears Series, in 1991. They were limited edition bears, each with a numbered stripe on its right foot. Ty, Inc.'s 1992 catalog featured these bears and the original cats, in addition to a variety of new animals like dogs and monkeys in the $5–$20 range. Warner then decided to put his focus on a toy that children could easily afford and would like to collect. He wanted to create a quality toy line for the retail price of $5, which he felt, to that point, didn't exist.

In 1993 the first Beanie Babies were born: Brownie the bear and Punchers the lobster. After tweaking these early attempts, there were nine Beanie Babies all together in the first line unveiled at the New York Toy Fair. Warner called the flagship Beanies Chocolate the moose, Cubbie the brown bear, Flash the dolphin, Legs the frog, Patti the platypus, Pinchers the lobster, Splash the whale, Spot the dog, and Squealer the pig. By early 1994, the little toys with the characteristic heart–shaped tag were in stores.

Warner's marketing genius was keeping stores from carrying all the different kinds of Beanie babies in the line. That way, people went hunting for them and kept demand high. He shunned all advertising, and the toys weren't carried by toy retail giants like Toys "R" Us or Wal–Mart, yet soon Beanies were flying off the shelves of Hallmark stores and smaller retailers that carried the line. Warner also limited each store to a certain number of Beanies they could order each month. Making supply scarcer, he knew, would increase demand from avid collectors. In 1995 he came up with another scheme—retiring certain styles after a while and putting out new styles to keep interest up. Warner himself designed all the different Beanies, except one, Spook, now called Spooky, that was designed by Jenna, his girlfriend's daughter.

The mystique Warner likes to keep around his products, his company, and himself is well known. He has no signs anywhere surrounding his Illinois headquarters and no listed phone number, sometimes frustrating retailers wishing to reorder. Warner claims the unlisted phone number is simply because they can't keep up with demand. He swears his employees to secrecy regarding the company and himself and has only agreed to a very limited number of interviews with the press. Warner's success has allowed him to show his philanthropic side, though. His specially designed Princess bear raised more than $15 million for the Diana, Princess of Wales Memorial Fund. He donated Beanies to refugee children in Kosovo. He also shared the wealth with his workers. In 1998 Warner handed out bonuses to all 300 Ty employees equal to their annual salaries and often gave out special edition Beanies to them, as well.

In 1998 Ty was named the leading toy maker in the country. That year, Ty Inc. partnered with Cyrk Inc., a corporate promotion company to form the Beanie Baby Official Club. The club kit offered a chance to buy the exclusive Clubby bear. The next year, the partnership began producing BBOC Trading Cards, which only lasted for four series of the cards, and another kit offering the new Clubby II bear. Cyrk also produced a number of promotional items, including calendars, trading card accessories, and the special club bears. Cyrk was unable to produce the Clubby Beanie Buddies within the time when they were advertised, which is illegal, and was fired by Ty.

Chronology: Ty Warner

1944: Born.

1962: Began career in toys at Dakin.

1980: Left Dakin after eighteen years.

1986: Formed Ty Incorporated.

1993: First Beanie Babies were created.

1994: Beanie Babies hit the market.

1998: Named number one toy maker.

1999: Buys Four Season Hotel in Manhattan, the city's tallest hotel.

1999: Announced retirement of all Beanie Babies.

1999: Held online vote on whether to discontinue Beanies.

2000: Beanies voted to continue.

In August 1999 Ty Inc. enigmatically announced on its website that they would discontinue making all the 325 different Beanie Babies after December 31 of that year. Collectors, who sometimes pay in the thousands for Beanies in aftermarkets like auction sites eBay and Beanienation.com, went wild. Fans e–mailed frantic messages to the company, and prices bid online for the Beanies rose. Even the company's own employees were baffled. Some speculated that the reason behind the decision was that the secondary market had ebbed recently and the move was an attempt to boost sagging sales. Although Ty does not gain from secondary sales, many retailers purchase the Beanies based on the aftermarket values, which were dropping. Stores began stocking up in droves after the announcement. When December 1999 finally arrived, Ty Inc. decided to let the public vote on whether the company should produce Beanies in 2000. The vote was overwhelmingly pro–Beanie, with 91 percent in favor of continuing Beanie production in the new millennium. Votes cost 50 cents each with Ty donating the proceeds to the Elizabeth Glaser Pediatric AIDS Foundation. Year 2000 sales were up 36 percent at 800 million. In 2001 a special edition America bear appeared with 100 percent of the profit from sales to be donated to the Disaster Relief Fund of the American Red Cross in honor of the victims of the attacks of September 11, 2001.

Warner's personal fortune has allowed him to embark on a second career as a hotelier. He has purchased prestigious real estate, including the Four Seasons hotel in New York City, the city's tallest hotel, the Four Seasons Resort in Monetcito, and the San Ysidro Ranch near Santa Barbara, the honeymoon destination of John F. and Jacqueline Kennedy. He has renovated the New York and Santa Barbara hotels, with plans of expansion at the latter.

Social and Economic Impact

Beginning with a single stuffed toy cat, Warner created a line of 325 unique Beanie Babies that were avidly embraced by toy lovers and collectors worldwide. His company, Ty Inc., that began in his small condo in Illinois, grew into one of the largest toy makers in the country, boasting $800 million in sales in 2000. Warner has shared his wealth, generously rewarding his employees and donating a variety of Beanie Baby proceeds to a number of causes.

Warner also revolutionized marketing with his Beanie sensations. With no advertising or big name retailers, Warner managed to make the roughly four–inch, loosely stuffed Beanies a most–wanted collectible for adults and, at about $5 each, popular among children who liked to trade them with friends. The eccentric Warner, perfecting his unique marketing tactics, kept production of the toys a mystery, rotating the line frequently and limiting supply to create demand. While nothing lasts forever, Warner has managed to keep the Beanie craze going by announcing their demise and suddenly reviving them at the last minute. He has created a multi–billion dollar industry with the toys in sales as well as after-market, with trading clubs and websites popping up everywhere.