Lovevery: How Our Toy Startup Brings In $226 Million A Year

[00:00:00] Jessica Rolfe: Really there was nothing that wasn't a challenge in the beginning. We thought we could just go for it and people would want it. It was a big risk, but it paid off. [00:00:09] Speaker 2: This is Jessica Rolfe, co-founder and CEO of Love Every, a company specialized in toys designed to complement children's developmental windows as they age. After discovering a doctoral thesis written on infant brain development in June 2010, Jessica and her friend Rod were inspired to start a toy company centered around early development. If you've just had a baby or have purchased a baby gift in the past few years, you've probably come across a Love Every play kit. [00:00:35] Jessica Rolfe: My deep interest in early childhood development happened when I had my first baby because I really wanted the very best for him, but there's not a whole lot of information for parents. And so I just thought about it and I was like, how could I make this a more universal experience for families? And that's when I started dreaming about building this vision for Love Every. [00:00:53] Speaker 2: Want to turn the page? Yeah. The global kids activity subscription box market is valued today at nearly $9 billion and is on track to reach $20 billion by the end of 2030. With this model, Love Every's goal is not only to harness and enhance a child's developmental windows in regular intervals, but also translate to parents what is happening with their child's development [00:01:14] Rod: along the way. From the very beginning, we never thought of it as just a toy company. We thought of it as this platform that was going to help parents and children both work on early childhood together. [00:01:27] Speaker 2: There are three numbers to look out for in this story. $2 million, the seed funding raised from friends, family, and investors. $226 million, Love Every's revenue for 2023. And over $350,000, the number of Love Every active subscribers today. Here's how two friends reimagined children's toys and revolutionized playtime. This is Founder Effect. After reading a doctoral thesis and tired with all the plastic electronic toys dominating the children's market, Jessica chose to carve her own path. [00:02:04] Jessica Rolfe: I realized that I could do some very simple things that would make a difference in my child's future and had nothing to do with those plastic toys. I started making my own toys, discovering all these things in our environment, and realized that I wanted to share this with others. [00:02:19] Speaker 2: No stranger to starting companies, Jessica had previously co-founded organic baby food brand Happy Family in 2005 and the nonprofit Climate Collaborative in 2017. After Happy Family was sold, Jessica reached out to her friend Rod in June 2014 about starting a new company. [00:02:36] Jessica Rolfe: Rod and I have known each other for over 20 years. He is my best friend's husband. [00:02:40] Rod: I was already interested in early childhood just because I was really interested in being a good dad and being involved in my kids' lives. Jessica and I had known each other for such a long time. It was pretty organic when we started talking about this idea. [00:02:53] Jessica Rolfe: And he said, "I get this. This is a big vision," and said, "Let's co-found this company." We decided to split the company 50/50. I would be the CEO. He would be the president. From there, Love Every really became real. [00:03:06] Speaker 2: Jessica and Rod founded Love Every in March 2015. For seed funding, they raised $2 million from friends, family, and early investors. [00:03:14] Jessica Rolfe: We found that we needed to raise $2 million in financing, and they came from Happy Family. Some came from our new network. [00:03:21] Rod: We were going out to people who we knew largely. They were writing checks of $25,000, $50,000 primarily. And it was really more of a personal sell, and it was on an idea. And that was basically to fund us getting to market. [00:03:34] Speaker 2: Jessica and Rod hired three employees to help get the company started and create prototypes. [00:03:40] Jessica Rolfe: Really, there was nothing that wasn't a challenge in the beginning. Getting the product right was probably the very hardest thing, and taking the time that we needed to make sure that we were at the [00:03:50] Speaker 2: right place to go to purchase order. For creating the initial play kits, Jessica and Rod consulted many academics, researchers, and practitioners, and drew from many different inspirations. [00:04:00] Jessica Rolfe: There's a lot of different philosophies that you can use to approach early learning. We wanted to bring in the best of all of them. And one of them that inspired us because it had a lot of physical tools and learning tools was the Montessori method. There's a lot around independence, discovery, and really natural materials that we found really appealing about the Montessori method. [00:04:19] Rod: We're looking at the science behind what a child is going to be hungry to learn at any given moment in time around a particular stage that we're focused on. [00:04:27] Jessica Rolfe: So we started with the Play Gym. We had a paper version where we were figuring out these flaps that could open and close so you could evolve the stages. And the cost that we got from the factory was $150. We wanted to retail for something like $100. So there was no way we were going to get to product market fit. We continued to iterate, we continued to evolve the product, and we got to a better manufacturer and got to a cost that made sense. [00:04:53] Speaker 2: In November 2017, after 17 months in development, Love Every officially launched its first product, the Play Gym, retailing for $140. [00:05:03] Jessica Rolfe: That was triple the price of the most expensive Play Gym on the market at the time. With all of this value, we thought we could just go for it and we thought people would want it. It was a big risk, but it paid off. It was one product, we had to get it right. [00:05:16] Speaker 2: In July 2018, nine months after launching the Play Gym, Love Every started its direct-to-consumer early learning program. A stage-based subscription service, this included six Play Kits costing $80 each and delivery every two months for the first year of the child's life. [00:05:32] Jessica Rolfe: And we really had one key question. Are families willing to invest a little bit more time and a little bit more intention into these early years? And what we found is that everyone wanted the very best for their families. And so we discovered this universal truth and we felt like we were really on to something. The first day that we launched the Play Kits, we got 112 customers. It was so amazing. I remember seeing those customers coming through. I wanted to know more about their families. It was just such an exciting day. [00:06:04] Speaker 2: By the end of 2018, Love Every brought in nearly $7 million in annual revenue. In May 2019, Love Every extended its early learning program by a year and launched four additional Play Kits to include one-year-olds as well. These were priced at $120 each and delivered every three months. Since then, four Play Kits each for two, three, and four-year-olds have also been released, also at $120. This brought the total number of Play Kits sold by Love Every up to 22, covering the first five years of a child's life. Love Every successfully completed its Series A funding in 2018, Series B in 2019, and Series C in 2021, raising $132 million total. [00:06:44] Rod: In 2021, we were actively building relationships with a lot of big institutionals when we ultimately did a $100 million round that was led by the Chernin Group. I think that was a well-run process because of everything we learned before. And also, at that point, we were quite a bit more sophisticated in terms of the way in which we were instrumenting the business and using data to drive the business, which is just something that big institutional investors want to see. Love Every's Play Kits program is only direct [00:07:11] Speaker 2: to consumer, but some of its products can be purchased individually from wholesalers like Amazon, Target, and BabyList. These include, among others, the $15 tricky topics books and the $90 block set. Half of [00:07:23] Jessica Rolfe: our customers say that they heard about Love Every through a friend, so this is really a business that is driven by word of mouth and recognition and that one-to-one recommendation from families. [00:07:36] Speaker 2: Today, Love Every's products are designed in Boise, Idaho and manufactured out of a network of suppliers in Asia. One of its products, the Slide & Seek Ball Run, was recalled in 2023 due to wooden [00:07:46] Rod: knobs breaking off during shipping. Well, of course, we put children's safety first. Everything we do here has to be your top priority in this business. And so when we heard about this mistake, which was driven by a packaging error in our warehouse, we immediately reached out to the Consumer Product Safety Commission and started working with them. The good news is we got ahead of it and there were no serious [00:08:05] Speaker 2: injuries involved. In the past few years, revenue has grown steadily for Love Every. However, despite ending 2023 with $226 million, the company says it is not currently profitable. Profitability is going to [00:08:18] Jessica Rolfe: come for us with scale and growth. And one of the most important things that we're doing to get there is to not change the quality of the product for consumers. So there's a lot that we can do around efficiencies, around shipping and logistics, and we're making all of those changes, but we're not changing the core fundamental value proposition for our customers. We got a lot of pressure from investors to find ways [00:08:38] Rod: to cheapen our products so that we could get more margin, make the business more profitable. We have instead focused on finding ways to take costs out of our structure that don't affect the products at all, because we care deeply about our customers and children just in general, having a great experience with our products, a safe experience with our products. That's just our top priority. In July 2024, [00:08:58] Speaker 2: Love Every launched its Reading Skillset, a three-part phonics-based learning program. Sold individually for $155 each or $420 as a set, it is intended to motivate elementary-aged children to read through [00:09:11] Jessica Rolfe: elements of play. We've made really dynamic, engaging books with photography of children, of families, of customers of ours, and these engaging stories really help inspire a love of reading. It's joyful and playful, so children can remain confident throughout the whole process of learning to read. So they learn to read through games and play and then practice with the books. [00:09:32] Speaker 2: Looking ahead, Love Every is considering integrating technology into their products [00:09:39] Rod: beyond their current mobile app for parents. If you look at children deep into elementary school, they're using screens for learning all the time. Will we never ever have anything screen-based for Love Every customers down the line? I think it remains a question to be answered, but for now, we're mostly focused on using tech to help parents more than kids. Today, Love Every has over 350,000 [00:09:59] Speaker 2: subscribers across 34 markets worldwide. As the company expands, it will continue to focus on [00:10:05] Rod: parents and each child's development. We can't hurry the process. We need to be as thoughtful and obsessive as we need to be to have things that people are going to love and that children are not [00:10:14] Jessica Rolfe: going to get tired of playing with. We really tune into this world of the child and help parents have a whole new window into what their child is capable of. And that's amazing for parents to see.