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Copyright 1998 G. Wayne Miller, renewed 2019.
The "Toy Wars" Table of Contents is at the end of this excerpt -- and also, a video of Alan today. For rare and never-before-seen images, video, audio and more, visit the "Toy Wars" Facebook page. And follow "Toy Wars" on Twitter: @toywarstv
Alan G. Hassenfeld
had no appetite for breakfast when he awoke the morning of February 14, 1996,
after a long night of little sleep. Only cigarettes and coffee interested him.
He dressed in a blue suit and favorite pair of loafers, pinned a purple button
to his lapel, kissed his wife goodbye, and walked alone in bitter cold from the
Waldorf-Astoria to The Pierre, a hotel thirteen blocks away.
Through his socks,
his feet were in contact with the seven lucky pennies he'd found recently on
the streets of New York. They gave him some small measure of comfort for the
ordeal ahead.
Hassenfeld
recognized many of the hundred or so people in The Pierre's Grand Ballroom, a
cavernous chamber outfitted with velvet drapes, mirrors and crystal chandeliers
below a gold-trimmed ceiling. They were mutual fund managers, institutional
investors, and analysts employed by the host of the Eleventh Annual Toy and
Video Game Conference, William Blair & Company, a Chicago investment firm.
Some considered
Hassenfeld a capable, even exemplary, captain of industry. Others believed he
was chairman and chief executive officer of Hasbro Inc., America's 423rd
largest public corporation, only because a Hassenfeld had headed the firm since
its founding early in the century. They couldn't understand why a man of his
stature wore rubber bands as bracelets, and a scarf indoors in winter -- but
rarely a necktie or jacket, or even a shirt with a collar. They didn't share
his humor, which could be uncommonly silly for a man of forty-seven. And they
remained incensed that Hassenfeld and his board three weeks ago had rejected a
merger offer from longtime rival Mattel that would have brought shareholders
more than fifty-three dollars for stock that had been languishing near thirty.
What was wrong with him? He, his sister and his mother, a strong-minded woman
who'd been a member of the board for thirteen years, had stood to gain almost
six hundred million dollars themselves! Not only had he rejected the offer --
in doing so, he had opened Hasbro to a withering attack which, in the darkest
moments, seemed certain to destroy it.
The lights dimmed
and Hassenfeld took the podium. With his wire-rim glasses and full head of
untameable brown hair, he looked as if he could just as easily be lecturing on
Faulkner or Twain, two of his favorite authors.
``Good morning,''
he began, his voice slightly tremulous, but only to someone listening for it.
``Today we are here to review our 1995 performance and share with you Hasbro's
outlook for 1996 and beyond. For that reason, I will not be talking about the
now-ended Mattel proposal.''
Looking to the
last row, Hassenfeld saw Mattel's two leaders. Chairman and CEO John W. Amerman
was a slender man of average height whose white hair, baritone voice and
expensive tailoring projected an image of someone considerably larger; at
sixty-four, his passions were golf, German shepherds, and thoroughbred horses.
Sitting to his left was Jill E. Barad, forty-four, who had risen to chief
operating officer and president largely on her success with Barbie, a doll that
promised glamorous fantasy to little girls and handsome bonuses to executives.
Worldwide sales of Barbie last year had reached an extraordinary $1.4 billion,
a feat no other toy of any kind had ever accomplished. Amerman and Barad were
unusually attentive, for today was the first time this year Hassenfeld had
faced the industry's powers. Mattel insiders pictured themselves as sharks, and
the agony they'd caused Hasbro over the last month -- the battering punishment
that had pushed Hassenfeld and his inner circle to exhaustion, if not the verge
of breakdown -- had more than confirmed that reputation. Even if Alan didn't
discuss Mattel's spurned offer, Amerman and Barad might learn more clues about
the damage they'd inflicted. No telling when they might be tempted to strike
again.
Even before
launching its stunning takeover attempt, with a fax to Hassenfeld the morning
of January 16, precisely two hours after he'd returned from winter vacation,
Mattel had become the new darling of the toy industry. Its flagship brands --
Barbie, Fisher-Price, Hot Wheels, and Disney -- were all vigorous, helping the
company to end 1995 with its seventh consecutive year of record sales and
earnings. No toy company had ever made $358 million, but one had come close.
Only two years ago, at this same conference, Hassenfeld had reported the
largest revenues and earnings in Hasbro's history. Without gloating, which was
not his style, he'd reminded Wall Street that a thousand shares of Hasbro stock
purchased for less than $15,000 in 1982 would have been worth almost a million
dollars twelve years later. He'd joked about his mother's approval of such
arithmetic and shown a slide of his greatest philanthropic achievement: a newly
opened children's hospital, in his hometown, that bore his company's name.
Two years ago,
Mattel had been in second place, a position that vexed its corporate soul.
•
Unlike his older
brother, Stephen, a masterful orator who'd preceded him as chairman and CEO,
Alan did not relish public speaking, even to friendly audiences. Financial
presentations were his nemesis.
Ordinarily, he
relied on humor to get underway, but his advisers had persuaded him this was no
time for frivolity. Nor had it been considered wise to begin with one of
Hasbro's brilliant television commercials, as he customarily did to lighten the
atmosphere at what otherwise was a half day or more of undiluted dreariness.
And he would not close with his usual remarks about Hasbro's commitment to
social responsibility, which was at the core of his corporate and personal
beliefs. Wall Street had wearied of Hassenfeld's causes. Especially in light of
the Mattel offer, Wall Street was interested only in earnings and the price of
stock -- and how the chairman intended to multiply both. Wearing a purple
button with the letters ESV, for Enhance Shareholder Value, would not suffice.
Hassenfeld had to get directly into the numbers -- the area of the business
where, he was first to admit, he was least expert.
He began with the
fourth quarter of 1995, the first billion-dollar quarter in Hasbro history, and
moved on to the full-year results. Hasbro's revenues had risen modestly and
earnings, while down, were nothing to be ashamed of: $155 million, or $1.76 a share.
Many a private businessman would have uncorked champagne over such numbers, but
Wall Street judged Hasbro (like Mattel) by the merciless measure of growth. It
was an expectation established by Stephen, and one price to be paid for
continuing membership in the Fortune 500.
``While our 1995
full-year results were essentially flat,'' Alan said, ``we have momentum coming
into the new year.'' The games and international divisions, he reported, had
had impressive years. Batman and Star Wars toys remained hot and retail sales
on many other lines were encouragingly strong. Mr. Potato Head, Hasbro's first
hit more than forty years ago, was the surprise star of Toy Story, the
Christmas season's box-office smash. All had contributed to Hasbro's continuing
strong balance sheet.
And it was there,
in the middle of cash flow and debt, that Hassenfeld's heart started to race
and the Grand Ballroom began to go black.
Almost seven years
into his chairmanship, Hassenfeld still sometimes felt like an impostor. It was
a feeling of wicked wonder, like the Tom Hanks character in the movie Big, a
boy who one day wakes up an adult in the eyes of the world -- an adult who just
so happens to be a major toy-company executive responsible for, and in love
with, design and development of toys. Unpleasurable moments at financial forums
were the price to be paid for being Kid Number One, as Hassenfeld sometimes
called himself, but this was different than any discomfort he'd experienced
before.
Lucky pennies and
all, Hassenfeld was about to faint.
He reached for a
glass of water, praying it would sustain him.
•
He did not faint;
his twelve-second pause seemed eternal to him, but went unremarked upon by most
everyone else. He drank his water, found his confidence and continued on with
his presentation, rich with references to global brand-building, the key to
Mattel's success and, he now believed, his own company's future. Financials
dispensed with, he rolled a dozen of Hasbro's finest new commercials, outlined
some of the steps he would take to improve his company's performance, and
hinted at even greater changes to come. Hassenfeld closed with a kind of
prediction he'd never made: a specific dollar amount ($65 million) for
increased profit in the year ahead, offered as a token of his newfound resolve
to enrich his stockholders. General applause and a private handshake from
Amerman followed. The ugly questions his advisers had prepared him for --
``Alan, if you can't enhance shareholder value, will you step down?'' ``Alan,
how bad is the blood between you and John Amerman?'' -- failed to materialize.
``It's done, baby!
Behind you!'' Wayne S. Charness, Hasbro's vice president of corporate
communications, said as their chauffeur-driven Lincoln Town Car traveled south
on Fifth Avenue toward Hasbro's showroom, crowded with buyers this third day of
American International Toy Fair, the worldwide industry's largest show.
Hassenfeld was in front, legs tucked into his chest, breathing in a Parliament
cigarette, oblivious to anything but the remembrance of his presentation.
Charness adjusted the seat to give his boss more room.
``With the
adrenaline pumping the way it was at the beginning, I was almost over-ready,''
Hassenfeld said. ``I think that's why I went blind for a minute.''
``It was
beautiful,'' Charness said.
``You wouldn't say
anything different.''
``I tell you when
you stink.'' Charness assured him that no one in the audience knew what had
happened in those twelve dark seconds.
``I was really,
really scared,'' Hassenfeld said.
``It's over,''
Charness said, but his reference was only to this morning. For new pressures
awaited Hassenfeld as he neared the Hasbro showroom, on West Twenty-third
Street. His board would meet the next day and directors were ornery. They'd
been put on the defensive for rejecting Mattel's offer -- Fifty-three
dollars a share, they kept hearing, are you crazy? -- and if Mattel
had truly given up, as some doubted, other sharks could be circling. No one was
pleased with last year's dismal performance in Hasbro's domestic-toys division,
headed by Hassenfeld's oldest business friend, Alfred J. Verrecchia, a man
whose prodigious financial and administrative skills had helped propel Hasbro
to the top. Relations with Toys ``R'' Us, Hasbro's biggest customer, were badly
strained since Hassenfeld had inadvertently disclosed information during the
Mattel affair that had led The Wall Street Journal to report the giant chain was
the subject of a potentially devastating federal investigation.
And it was all
well and good to promise great things for 1996, quite another to deliver.
Having failed on earlier promises of improved performance, Hassenfeld had a
credibility problem. Taken together, the stress was not unlike seven years ago,
when cruel fate had handed him the chairmanship of what was then the largest
toy company the world had ever seen.
Still, as his Town
Car turned onto West Twenty-third, Hassenfeld was starting to relax. Toy Fair
had always been his time -- a week of hosting celebrities, showing off the
latest toys, dining with family and friends, and otherwise being Kid Number
One. Hassenfeld genuinely enjoyed people. He enjoyed pleasing them, feeding
them, telling them stories, making them laugh.
The first smile of
the day crossed his face when Hassenfeld was asked what he'd dreamed last
night. In 1994 he'd seen, of course, Jill Barad posed with pillows and three
dozen Barbie dolls on a red satin sheet when People Magazine named her one of
that year's 50 Most Beautiful People. And he'd seen her on the cover of this
week's Brandweek, a marketing magazine, with the headline: ``G.I. Joe's Worst
Nightmare.'' Joe, Hasbro's most famous toy and one of Hassenfeld's sentimental favorites,
had ended 1995 below $15 million in sales, a pitiful performance.
``It was weird,''
Hassenfeld said, in a deadpan. ``Barbie was raping G.I. Joe.'' It was
uncharacteristically crude of Hassenfeld, and as he stepped into the cold, he
hastened to add: ``Just kidding!'' Then he ran across the street and
disappeared into the fabulous showroom -- a palace, really -- that his late
brother had built.
TOY WARS TABLE OF CONTENTS
Author’s Note
Lucky Pennies
BOOK
ONE
Chapter 1: THE
LAST HASSENFELD
Chapter 2:
PLASTICS
Chapter 3: REAL
AMERICAN HEROES
Chapter 4: ROSE OF
TIBET
Chapter 5: A
WEDDING AND A FUNERAL
Chapter 6: BEAN
COUNTING
Chapter 7: STAR
WARS
BOOK
TWO
Chapter 8: X-MEN
Chapter 9: MADE IN
JAPAN
Chapter 10: THE
KING LAYS AN EGG
Chapter 11: BLACK
TUESDAY
Chapter 12: SHARKS
Chapter 13:
EXTREMES
Chapter 14: KID
NUMBER ONE
BOOK
THREE
Chapter 15: GOTHAM
CITY
Chapter 16:
LILLYMERE
Chapter 17: BRAND
NAMES
Chapter 18: MORTAL
COMBAT
Epilogue
Notes
Bibliography
Acknowledgments
About the author
