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  • Toy Wars
  • Written by G. Wayne Miller
  • Format: eBook | ISBN: 9780307818805
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Toy Wars

The Epic Struggle Between G.I. Joe, Barbie, and the Companies That Make Them

Written by G. Wayne MillerAuthor Alerts:  Random House will alert you to new works by G. Wayne Miller

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List Price: $11.99

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On Sale: November 21, 2012
Pages: 352 | ISBN: 978-0-307-81880-5
Published by : Crown Business Crown Archetype
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Synopsis|Excerpt

Synopsis

This is the real toy story, an unprecedented behind-the-scenes journey through a world of influence, fantasy, and multimillion-dollar Hollywood deals, a world where the whims of children make millionaires and topple titans.

This is also the story of an unusual man.  Alan Hassenfeld, the chief executive officer of Hasbro, never intended to run a Fortune 500 company.  A free spirit who dreamed of being a writer and exploring Asia, he was content to remain in the shadow of his older brother Stephen, a marketing genius who transformed a family firm established by immigrant Jews into powerhouse and Wall Street darling.

Then tragedy struck.  Stephen, and intensely private man, died of AIDS, a disease he had not acknowledged he had, even to his family.  Alan Hassenfeld was named CEO, just as Hasbro was facing a daunting onslaught of challenges.  Toy Wars is about Alan's struggle to balance the demands of the bottom line with his ideals about the kind of toys children deserve, as well as the ethical obligations of management.

Wayne Miller, an award-winning journalist and novelist, was granted unprecedented access to Hasbro, the maker of G.I. Joe, Star Wars toys, Mr. Potato Head, Batman, Monopoly, Scrabble, Trivial Pursuit, and countless other favorites.  For five years, he sat in on design sessions, marketing meetings, and focus groups, and interviewed employees in every part of the company.  He witnessed a major corporate restructuring; crucial deal with Dreamworks SKG; a hostile takeover bid by archrival Mattel; the collapse of a $45 million virtual reality game; and the company makeover of G.I. Joe, Hasbro's flagship product and one of the most popular toys of all time.

Toy Wars is filled with many colorful characters, including:

Hollywood moguls Steven Spielberg and George Lucas, whose kid-friendly movies can translate into licensing gold for toymakers

Mighty Morphin Power Rangers creator Haim Saban, who tapped into a popular Japanese TV series and made it a worldwide television and merchandising phenomenon

Mattel CEO Jill Barad, the second-highest-paid woman in corporate America, who promotes and defends Barbie with the zeal of a religious crusader

Hasbro executive Al Verrecchia, the loyal second in command who did not let friendship or tradition stand in the way of a dramatic restructuring

Larry Bernstein, arguably the best toy salesman ever, a riotous raconteur whose divisional presidency crumbled when he was unable to meet Hasbro's profit goals

Rich in family drama and written with sly wit, Toy Wars is a deeply compelling business story, a fascinating tour through a billion-dollar industry that exerts tremendous influence on the lives of children everywhere.

Excerpt

The Last Hassenfeld

I

The hearse bearing the body of Stephen Hassenfeld left New York the afternoon of June 26, 1989, and reached Mitch Sugarman's Mt. Sinai Memorial Chapel in Providence, Rhode Island, by nightfall. After being washed in accordance with ancient Hebrew custom, Stephen was dressed in a burial shroud, a simple garment that is white, to symbolize death's democracy, and pocketless, a reminder that nothing material from this world survives to the next. At the family's request, a business suit was placed over the shroud. Stephen was laid out in Sugarman's finest mahogany casket and wheeled into the chapel, where a memorial candle with a Star of David burned.

The coffin was closed. Dark haired and handsome in life, an impeccable dresser with exquisite taste in everything, Stephen in death was devastated by AIDS, which had finally claimed him after almost a month in a coma in Manhattan's Columbia Presbyterian Hospital. Stephen's callers the next day were only those closest to him. His mother, Sylvia, was in from New York, along with his sister, Ellie Block; during Stephen's hospitalization, the details of which they'd kept fiercely private, they'd maintained a bedside vigil. Stephen's life partner and longtime business associate, Robert Beckwith, came, as did Leslie Gutterman, Rhode Island's foremost rabbi.

As midnight neared and his mother and sister wearied, Alan [Hassenfeld, Stephen's younger brother] insisted they leave, to get what rest they could. Jewish tradition requires that the deceased be attended until burial, and Sugarman ordinarily hired elderly holy men. But Alan did not want Stephen with strangers. He'd insisted on watching, on reciting the Book of Psalms, by himself. Sometime in the predawn hours he put down his book, opened the casket, and tucked into a pocket of Stephen's suit the notes and pictures his nieces and nephew wanted their uncle to have. Alan had a note of his own, and he placed that in the pocket, too. Then he removed one of his rubber bands and placed it on Stephen's wrist.

Through his tears, Alan spoke of his love for his only brother and best friend, seven years his senior. His thoughts wandered to their childhoods on Providence's East Side--the fancy Porsche Stevie had driven, his reputation as a debater at the prestigious Moses Brown School, how Stevie always came to the rescue when Alan's shenanigans landed him in trouble with Mom. He pondered the tragedy of Stephen's disease, which Stephen had confirmed only to Beckwith. Only when Stephen was on his deathbed did his family confront the truth behind the maladies that had slowly consumed him until, at his last public appearance, Hasbro's annual meeting in his beloved New York showroom, not two months before, this man who'd once regularly worked eighteen-hour days was exhausted by a routine thirty-minute presentation. Forty-seven years old, Stephen had died without finding the way to unburden himself.

He was called the father of the modern toy company, but that hardly did Stephen D. Hassenfeld justice. In 1980, when Stephen became Hasbro's chairman and chief executive officer, toy companies were but a quirky footnote on Wall Street. Investors were wary of businesses built on the whims of kids, for good reason: one hit, and men became millionaires overnight; one bomb, and bankruptcy beckoned. Hasbro had been no exception, having made tremendous profits in the mid-sixties with the introduction of G.I. Joe and then sputtering into the seventies as Joe's popularity waned. Hasbro lost more than $1 million in 1978; two years later it made a modest $5 million, its stock traded at but $6 a share, and revenues were only $104 million. Mattel, the worldwide industry leader, was eight times as big and vastly more profitable. Under Stephen's leadership, Hasbro in the next five years surpassed $1.2 billion in sales, clobbering Mattel, whose investments outside of traditional toys had left it deeply in debt. Forbes magazine rated Hasbro first in a thousand-corporation survey of increased value during that tumultuous period, well ahead of other highfliers such as Wal-Mart and Berkshire Hathaway. Given Hasbro's roots in textile remnants, it was, quite literally, a rags-to-riches story.

Alan had been a force in all this, but a less potent one than Stephen. President and chief operating officer, he was responsible primarily for international, the side of the business he'd joined after graduating from the University of Pennsylvania, where he'd majored in English and creative writing. Stephen involved Alan in major decisions, and both took pains to describe their relationship as teamwork, an accurate description; until Alan married in spring of 1989, they'd even shared a house in Rhode Island, home of corporate headquarters, and apartments in Palm Beach and New York. But there was never a doubt who was in control, never a suspicion the younger brother coveted the older's job, for truthfully he did not.

"It's the old Chinese philosophy," Alan would say. "Two tigers can't live on the same hill." Until cardiac arrest sent him into irreversible coma, Stephen had believed he would recover. A wonder drug would be found, a miraculous new therapy perfected, something. He'd never discussed succession at Hasbro with Alan or anyone else. Stephen had confidence in his brother's potential, but he'd never wanted to believe he would be tested this way.

"Should I? . . ." Alan was talking aloud again. In the scented shadows of the funeral home, he imagined Stephen would respond. How tempting it was simply to walk away! A millionaire many times over, Alan could return to writing, an earlier passion he still carried within. He could devote himself to philanthropy, a new and growing interest, or pursue his distant dream of being a diplomat or holding political office. Alan had never shared his brother's single-minded focus. Life for him was a great feast, meant to be sampled in its many delicious varieties.

What would Stevie or their late father, Merrill, Stephen's predecessor at Hasbro, have wanted him to do? For that matter, what would their grandfather, Hasbro's founder, have thought? It was difficult to imagine that any of the Hassenfelds, even softhearted Merrill, would have approved of the final brother simply walking away. But Alan had someone else to consider: his wife, Vivien, a granddaughter of Prussian nobility who'd schooled in England and built a successful Hong Kong design firm.

She'd married Alan barely two months before expecting to continue her cosmopolitan lifestyle, not be anchored in Rhode Island, a post-industrial backwater that had no charm she could discern, except, perhaps, for Newport. Alan knew Vivien would support any decision he made, but her happiness was a concern he could not blithely ignore. Alan didn't question where Mom stood. He never had, not through his youth or later at Hasbro, when, regardless of where they were in the world, she telephoned her sons at least daily. Sylvia was a noted philanthropist, prominent in domestic and international Jewish causes, but no small share of her stature rested on the foundation of Hasbro. It mattered not that, unlike her firstborn, Alan had come reluctantly to the firm. Alan was the only one she had now in a position of corporate power, for her daughter, Ellie, herself a philanthropist, was of a generation whose women were kept from the executive suite.

And if he did seek the chairmanship of Hasbro--he supposed it was his for the asking, although he could not be certain until the board met--how would he fill this void Stephen had left? Alan's strengths were product, merchandising, manufacturing, and overseas. He knew little about balance sheets and investor relations--Wall Street, the treacherous soil on which the legend of Stephen had grown. The prospect of following him there was terrifying.

As dawn came, Alan thought he could hear Stephen giving him advice. Alan accepted it.

"He would have killed me," Alan said, "if I had basically thought of anything different."

From the funeral parlor Stephen was taken to his home in Bristol, on the east shore of picturesque Narragansett Bay. Stephen was no sailor, but during the America's Cup campaign of 1983, which was staged from Newport, he'd chartered three large sailing vessels for the exclusive summer-long use of business associates, family, and friends. Alan kept on his desk a photograph of him with his brother on one of those long-ago cruises.

Alan placed white roses on the casket, and he and the small gathering of family and friends bade Stephen farewell. The hearse returned to Providence, to Temple Emanu-El, where bronze tablets and a stained-glass window inscribed with the names of Hassenfelds attested to the family's prominence for most of the century. Stephen's senior executives awaited the deceased in the warmth of the summer day. Of the innermost circle, only Robert Beckwith was not standing with them, was not a pallbearer; the Hassenfelds had not asked him. But as he ascended the temple steps, he was hugged by all five of Stephen's senior people, each of whom Stephen had made a wealthy man.

Stephen A. Schwartz, chief marketing executive during the years of fastest growth, had been instrumental in returning G.I. Joe from retirement in 1982--the single most critical factor in building Hasbro's huge cash reserve, which Stephen had applied to acquisitions, which in turn had brought growth. Schwartz had a tremendous ego, but it was not undeserved. He was smart and stubbornly ambitious, a fast-talking native New Yorker endowed with great product sense. Two more of the industry's most profitable lines of the 1980s, Transformers and My Little Pony, had been introduced by Hasbro on his watch.

Lawrence H. Bernstein stood next to Schwartz, his close friend. Bernstein was the best salesman Hasbro had ever had--an exceptionally entertaining man whose jokes and mannerisms were reminiscent of Sid Caesar, a comic he'd idolized growing up in 1950s Brooklyn. Bernstein could make the unique claim of having coaxed Stephen, after too much wine, into reenacting a Marx Brothers routine at a company gathering. "The Three Musketeers" was what Bernstein had called himself, Schwartz, and research director George A. Dunsay, no longer with Hasbro. Standing there, consumed by grief at the loss of a man he loved, Bernstein could not possibly have imagined what fate would soon befall the surviving two Musketeers.

Barry J. Alperin, executive vice president and the only officer besides Alan to serve on the board at that time, was the lone intellectual on the temple steps. An aficionado of ballet, opera, and theater, as Stephen had been, Alperin had grown up in Providence, where his family's philanthropy brought him into contact with the Hassenfelds. Alperin was an attorney, a bespectacled man steeped in the arcana of acquisition law. Before his death, Stephen had given Alperin a new responsibility in marketing and product development, including development of a secret video game whose code name was Nemo. Like Bernstein, Alperin could never have guessed what his future at Hasbro held.

With Alperin was George R. Ditomassi Jr., Stephen's games vice president, entrusted with Candy Land, Chutes and Ladders, and other timeless jewels. Ditomassi had come to Hasbro with Stephen's acquisition of Milton Bradley, America's premier maker of games and puzzles. Dito, as he was known, had style that rivaled Stephen's. He was that rare man who could wear gold without seeming tacky or pretentious.

And then there was Al Verrecchia, who knew more about the business than anyone but Stephen himself.



Of all the chairman's men, Verrecchia most looked the part of senior executive. Six feet three, broad shouldered, fit, and uncommonly handsome, Verrecchia favored suits and wing-tip shoes, always freshly shined. Employees sometimes joked that his hair must obey different laws of physics, for a strand was never out of place. Having spent twenty-five years with Hasbro and recently promoted to president of manufacturing, Verrecchia had no equal with numbers. Many an underling had experienced a chill when he perched his reading glasses on the tip of his nose, took up his mechanical pencil, ruler, and calculator, and started into their business plans. Verrecchia knew the underside of Hasbro: the late 1960s and early 1970s, when Merrill, as president, had been forced to put up his personal property as collateral on high-interest loans needed to cover the payroll. It was Verrecchia who'd negotiated those loans, Verrecchia who'd begged resin suppliers for extended terms to keep the molding machines running, Verrecchia who'd analyzed when individual paychecks were cashed so that he could dole out the precious dollars to cover them.

Despite their grief, Stephen's senior managers had not lost sight of succession. Few doubted the board would grant Alan the chairmanship if he sought it, but they had no clues about how, when, or even if he would restructure the top after taking charge. Alan's U.S. office was next to his brother's at world headquarters, and he was everywhere at Toy Fair, but there was an ethereal quality to him. With his international duties, he was always traveling, and when he was home, he was as likely to regale them with tales of expeditions through early post-Mao China as with marketing strategies for toys. Alan's closest confidants at the company were his mother and brother, and his wife to most was a stranger. No one knew his vision for Hasbro, because he'd never had to spell one out.

In his eulogy, Rabbi Gutterman spoke to more than company executives, for Stephen Hassenfeld would not only be remembered for stock options and dividends. Factory workers whose names and birthdays he'd never forgotten were present, together with politicians, religious and community leaders, and beneficiaries of corporate and family
philanthropy. "If every person Stephen Hassenfeld touched with happiness brought a flower to his grave," Gutterman said, "he would sleep tonight beneath a wilderness of roses."

Led by a state police escort, Stephen's funeral procession was more than three miles long. Those familiar with such matters said it was the largest motorcade in Rhode Island history, surpassing even presidential visits.

II

Seven days after Alan had thrown the last spadeful of earth onto his brother's grave, next to Merrill's in Lincoln Park Cemetery, the directors of Hasbro Inc. gathered in a conference room on the mezzanine floor of the company's New York showroom. Alan spoke a few words to the board, and he, his mother, and Alperin left. Directors were aware that Stephen's hospitalization and rumors about its true cause had troubled Wall Street before the chairman's death. Their concern was compounded by Hasbro's uncharacteristically flat performance in 1987 and 1988. Had Stephen lost his touch--or was Hasbro simply catching its breath after its extraordinary run? Whatever the case, Alan, this man with the rubber bands, gave Wall Street the jitters. Would he and Sylvia--they effectively controlled almost a third of Hasbro's stock--decide to sell? Speculation that the Walt Disney Co., entertainment giant MCA, video-game maker Nintendo, and Mattel were interested in acquiring the firm had led to a run on Hasbro stock. If Hasbro remained independent, more probable after adoption of a so-called poison pill a week after Stephen was hospitalized, would Alan be up to the job? The Wall Street Journal was among the doubters. It recently had described him as his brother's "shadow." Behind closed doors, director E. John Rosenwald Jr. had the floor. Newly named vice chairman of the Bear Stearns Companies, one of New York's foremost investment bankers, Rosenwald had been a close friend of Stephen's and was the most powerful member of the Hasbro board, except for Alan. Shortly after the funeral, Alan had visited him in his Fifth Avenue penthouse. Sitting on the terrace as the sun set over Central Park, the youngest Hassenfeld had poured his heart out. "I'd be a little bit different from my brother," he'd told Rosenwald, "but I know the business and I want my shot." Rosenwald related their discussion to the directors, some of whom had spoken privately with him of their inclination to sell Hasbro and, having turned a tidy profit, be done with it. He talked of the depth of Hasbro's management team and praised Alan's intelligence, experience, and desire. "He deserves his shot," Rosenwald said. "His name is on the door, too. He has spent his whole life here and he's ready to roll and he has a plan and I think you should support him."

The vote was unanimous. Alan returned with Sylvia and Alperin and was congratulated. He had not heard, of course, Rosenwald's caveat about the last brother--sole surviving grandson of the founder, a Polish immigrant who'd arrived in America, virtually penniless, at the age of thirteen.

"If it doesn't work out," Rosenwald had said, "we can always sell the company."
G. Wayne Miller

About G. Wayne Miller

G. Wayne Miller - Toy Wars
Award-winning journalist and acclaimed novelist G. Wayne Miller takes on one of history's most important medical advances and the man responsible for it. King of Hearts is the story of Dr. C. Walton Lillehei, the father of open heart surgery. Read an excerpt from the book and a conversation with Miller.

  • Toy Wars by G. Wayne Miller
  • November 21, 2012
  • Business & Economics
  • Crown Business
  • $11.99
  • 9780307818805

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