The Hasbro Brothers: When You Build a $10 Billion Toy Empire and Lose Control

[00:00:00] Speaker 1: on the 29th of july 2019 the stock market put a price on hasbro that no one named hassenfeld had ever seen during trading that day the toy company's market value touched roughly 16 billion dollars the highest figure it had ever reached for a business that had started with three brothers selling leftover cloth in providence rhode island it had already crossed 10 billion dollars in market value a few years earlier and the climb had kept going by the summer of 2019 the investors buying hasbro shares were buying a catalog of childhood that stretched across most of a century built one bet at a time by a family that no longer ran it consider what sat inside that number there was mr potato head the toy that pioneered the television commercial a plastic face kit that children once had to pair with a potato from their own kitchen there was gi joe the soldier that a hassenfeld forbade his own salesman from calling a doll there were transformers the robots that folded into trucks and jets and my little pony the pastel horses that had filled toy aisles in the 1980s there was play school for the youngest children scrabble for their parents and the cabbage patch kids whose maker hasbro had bought out of bankruptcy and there was wizards of the coast the games division behind magic the gathering a card game with a following so devoted that it would one day carry more of the company's profits than the toys themselves the man presiding over all of it was brian goldner he'd been the company's chief operating officer and in february 2008 the board named him chief executive succeeding al varekia a lifer who'd spent 43 years at hasbro goldner took the top job that may and for more than a decade he steered the company toward the screen treating the old brands as stories to be told rather than products to be shipped goldner was a hired executive and so was the man before him neither one carried the surname the founders had put on the company and the gap was the whole point of the story wall street was cheering the empire had outgrown its founders family and the market was rewarding it for that there was still one hassenfeld in the picture alan hassenfeld the grandson of a founder had joined the company in 1970 and run it as chief executive from 1989 until 2003. then he handed the job to varekia retired as an employee and gave up the chairman's seat as well by the time of that record day alan held the honorary title of chairman emeritus he still had a place at the board table and his family's name still sat in providence on buildings and causes the business had paid for but the decisions that moved the stock price were being made by people who had married into hasbro through a job offer rather than through blood the clearest monument was a hospital hasbro children's hospital opened in providence in 1994 with the founding gift coming from the company's charitable trust and the hassenfelds giving generously to its cost their name would later go up at a pediatric center in new york and a child health institute at brown university that was the family's mark by 2019. they were famous for giving money away admired in rhode island and remembered at every ribbon cutting while the brands their fathers and grandfathers had gambled on were managed by strangers answering to shareholders scattered across the world how a family loses a company like this is rarely a single event there was no midnight boardroom coup and no raider who marched in and through the hassenfelds out and the family even fought off a rival that once tried to swallow hasbro whole with an offer worth billions the real story is slower and stranger than a takeover it runs through a feud between two branches of the family that split the business in half a california competitor that came calling with a fortune sudden deaths that emptied the corner office before anyone was ready and a grandson who finally decided on his own terms that it was time to let go each generation added something the next generation couldn't quite hold the founders built a trade out of scraps their sons turned it into a toy company and their grandsons turned that toy company into the largest in the world but every handoff left the family owning a smaller share of what it had made the irony of july 2019 was that the record rested almost entirely on things the hassenfelds had bought licensed or launched the potato kit the soldier the robots and the ponies all carried the family's fingerprints and none of the people now profiting most from them had ever met the men who first took the risks within a month of that peak goldner would sign the biggest acquisition in hasbro's history a deal that was meant to secure the next chapter and instead became a long and expensive lesson that story belongs to the end of this one when the last thread connecting the family to the company would finally be cut to understand how the hassenfelds came to be guests in their own house the story has to go back to the beginning to a family that had to flee one country before it could build anything in another it has to go back to providence in the early 1920s where a few young immigrants with no capital to speak of were making a living from the part of the cloth that the mills had already decided was worthless every brand in that record-setting catalogue descends from a single unglamorous idea that three brothers had before any of them had touched a toy which was that the scraps other men threw away could still be sold to someone the hassenfelds came to america as refugees from fear they were polish jews and by one account their parents sent two of the boys across the ocean to escape the anti-semitic violence of the old country with hillel aged 17 and henry only 14 when they left whatever the exact ages the shape of the decision is plain enough a mother and father chose to put their sons on the far side of the world rather than keep them close to the danger at home which meant the boys would have to make their own way in a country whose language and customs they still had to learn the brothers settled in providence rhode island a city that would become inseparable from their surname for the next hundred years it was there that they would find the trade that started everything on the 6th of december 1923 henry hillel and herman hassenfeld founded a business called hassenfeld brothers it was a modest family enterprise carrying a name that announced exactly who owned it and how the work was divided among brothers who trusted one another more than they trusted anyone else some accounts of the family tell the founding differently with earlier dates and only two brothers named but the version most accounts accept begins in late 1923 with three hassenfelds and a stock of goods nobody else much wanted what they sold was textile remnants a remnant is the leftover end of a bolt of cloth the piece too short or too irregular for a mill or a tailor to bother with the scrap that falls to the floor once the profitable work has been done to most people in the cloth business remnants were waste or at best an afterthought to be cleared out cheaply to the hassenfelds they were inventory and inventory that could be bought for very little was the best kind for young immigrants with almost no money of their own there's a logic to that choice that runs through the whole history of the company the brothers had no capital to spend on fashion or on the mills themselves so they went where the bigger players had stopped looking and made a living out of the margins of somebody else's business the trade rewarded patience and a sharp eye a remnant had value only if someone could see a use for it that the original owner had missed and that meant the brothers had to think constantly about who might need a small piece of fabric and what that person might pay for it it was a business built on small sums repeated many times where the profit on any single scrap mattered less than the habit of never letting a usable piece go unsold over the following years the answer they found was surprisingly practical by the middle of the 1920s the hassenfelds were turning their remnants into hat liners and into the cloth covers that wrapped around children's pencil boxes neither product was glamorous and that suited a family that cared more about a reliable customer than an admired one those two products tell you a great deal about the family's instincts a hat liner was a hidden piece of fabric that customers rarely noticed and a pencil box cover was a piece of cloth bound for a school child's desk but both took scrap that had been worth almost nothing and gave it a steady buyer the pencil box covers also pointed towards something larger than the brothers may have realized at first for the first time hassenfeld cloth was ending up in the hands of children and the family's fortunes were becoming tied to what parents bought for their sons and daughters at the start of every school year meanwhile the business was becoming a real company rather than a partnership of relatives on the 8th of january 1926 hassenfeld brothers was incorporated in the state of rhode island putting a legal structure around the work the brothers had been doing together incorporation also settled the question of who would lead hillel left to pursue another textile business and henry the younger brother who had crossed the ocean at 14 took charge of the corporation that carried the family's name that choice would shape the dynasty for generations hillel and his wife had two daughters neither of whom joined the business and it was henry's line through his sons harold and merrill that would inherit the company and eventually fight over it henry's leadership gave the company a clear center at the moment it needed one he was the brother who stayed the one who would guide hassenfeld brothers through the next decades and the one whose temperament would leave the deepest mark on what the business became it's worth pausing on how unpromising the whole venture looked from the outside three immigrant brothers selling scraps of cloth in providence had none of the advantages of the established manufacturers around them and nothing about the enterprise suggested that their surname would one day be shortened into one of the best known brands in the world yet the habits that would make hasbro were already visible in those first years the family bought cheaply looked for second uses kept the work among relatives and followed its customers wherever they led even when that meant moving from one product to another with very little ceremony most of all the hassenfelds were willing to change what they made the moment a better opportunity appeared they'd started as sellers of other people's leftovers then become makers of linings and covers and each step had pulled them a little closer to the people who would eventually make them rich the children of america by the second half of the 1920s the brothers had built a dependable small trade wrapping cloth around boxes that someone else was manufacturing and someone else was profiting from henry was about to learn that the cheapest way to sell a cover was to own whatever it covered the textile remnants that carried the hassenfelds through their first years in providence with a kind of stock most merchants treated as an afterthought odd lengths of cloth left behind once the real business of the mills was finished the hat liners and pencil box covers the brothers cut from those scraps pointed toward everything that followed since a family that covered other people's pencil boxes was one short step from building the boxes the boxes and then the pencils itself the covers led to a bigger idea if the family was already dressing somebody else's pencil boxes it could build the boxes too and keep the margin that had been flowing to the box maker so the hassenfelds started making the boxes themselves in an operation with eight employees every one of them family that detail explains much of what came later a company that would one day sell heroes ponies and board games around the world began as a handful of relatives in rhode island turning cloth scraps into school supplies and from that first day the line between the family and the firm of the house and the family and the family and the family hassenfelds barely existed at all growth came fast by 1930 the operation employed 200 people which made the hassenfelds a genuine providence employer within a few years of selling leftover fabric then the depression arrived and by any reasonable forecast it should have finished off a young firm selling small goods to families who suddenly had nothing to spare instead the hassenfelds held their ground bringing in about half a million dollars a year from pencil boxes and zipper pouches through the worst stretch of the american economy in living memory the lesson they took from it was simple cheap practical objects that children need for school are among the last things a household gives up and a business built on them could survive conditions that ruined fancier trades the man steering through those years was henry hassenfeld who had taken charge of the corporation after its incorporation in 1926. he was the one who turned an ordinary supplier quarrel into a new line of business that would shape the family for generations the quarrel began with the company that supplied the hassenfelds with pencils that supplier decided to start making pencil boxes of its own which put it into direct competition with one of its own customers henry's answer was to vow that his family would go into the pencil business and in 1935 hassenfeld brothers began making its own pencils it was a defensive move born of a grudge and it turned into one of the steadiest sources of revenue the company would ever have a quiet earner that kept paying for decades pencils were only half the story though because the hassenfelds were drifting toward a different kind of customer their first toys were doctor and nurse kits and modeling clay and by 1942 the company was primarily a toy company the family itself was changing at the same time hillel hassenfeld died in 1943 and henry became chief executive with his son merrill as president while the name hasbro cut down from hassenfeld brothers appeared as a trademark the following year with hillel's daughters outside the business the future rested with henry's two sons harold and merrill and it meant that whatever divided those two brothers would eventually divide the company what divided them was the pencil in 1946 harold persuaded his father to buy a pencil factory in shelbyville tennessee and from then on the company effectively ran as two businesses under one family name harold took the pencils and the tennessee factory merrill took everything else and stayed in providence where the toys were made sold and dreamed up on paper it looked like a sensible division of labor between two capable brothers in practice it created two very different ideas of what the hassenfeld fortune was really built on harold's view was straightforward and by the numbers hard to dismiss pencils were the steadier performer and for long stretches they accounted for a higher share of profits than toys yet the pencil division received a lower share of the company's capital investment while the money flowed toward merrill's side of the house from harold's chair the family was taking the reliable earner for granted and pouring its cash into a fickle trade that lived and died on whether children wanted the same thing next christmas from merrill's chair the toys were the future and pencils were the past that paid the bills both men had a point which made the arrangement dangerous a disagreement between a right brother and a wrong brother usually ends quickly but a disagreement between two brothers who are each partly right can simmer for decades henry held the two halves together while he lived when he died in 1960 merrill took over the parent company and harold ran the pencil business which by then carried the name empire pencil the handover settled the question of rank without settling the question of money merrill now sat at the top of the whole enterprise including the division his older brother ran and harold's grievance about capital and credit had nowhere left to go except deeper underneath the family had built a structure in which one brother's success could look like the other brother's loss every dollar sent to toys was a dollar harold could point to and every hit that came out of providence made the pencil side look a little more like a supporting act the split would take another generation to break fully into the open for now the two businesses lived side by side joined by a surname and pulling in opposite directions what tipped the balance between them was a decision merrill made in providence about how to sell a toy a decision that had nothing to do with pencils and everything to do with a new box that had started glowing in american living rooms merrill hassenfeld was born on february 19th 1918 and he became president of the family company in 1943 while he was still a young man his father henry remained chief executive but the toy side of the business the side that would define the hasbro name increasingly carried merrill's stamp he inherited a company that had only recently decided what it was hassenfeld brothers had been a toy company for barely a year when he took the president's title and its catalog still leaned on doctor kits nurse kits and modeling clay rather than anything a child would beg for by name what merrill needed was a product that could stand on its own and it arrived from outside the family in 1949 an inventor named george lerner came up with a set of plastic face parts that children could stick into an ordinary potato to make a funny little character the idea was almost absurdly simple which was part of its charm the toy came with the features and the family at home supplied the vegetable from the kitchen so the most important component cost the company nothing at all getting the toy into hasbro's hands took some untangling by one account the hassenfelds even paid a cereal company to stop producing it clearing the field so that the funny face kit would belong to hasbro alone in 1952 hasbro began distributing the toy as mr potato head the original kit sold for 98 cents and came with 28 plastic face pieces and the potato itself was left to the child that pricing told you everything about the market merrill was chasing this was an impulse purchase for an ordinary family cheap enough that a parent could say yes without much thought and open-ended enough that a child could spend an afternoon rearranging eyes ears and mouths a good toy at a good price still had to find its buyers though and here merrill made the decision that would separate hasbro from the rest of the industry in april of 1952 mr potato head became the first toy to appear in a television commercial the importance of that step is easy to miss from a distance toy makers had always sold to adults to store buyers who stocked the shelves and to parents who paid at the register and the child was the end user rather than the audience the commercial could speak to children directly in their own homes and send them to their parents already knowing exactly what they wanted richard gottlieb of the global toy group later put the advantage in a single line if you're the first toy ever advertised on television you've got no competition while rivals pitched store buyers hasbro was talking straight to the customers who would do the asking the money came quickly mr potato head brought in more than four million dollars within its first few months an extraordinary haul for a toy that cost less than a dollar and required the buyer to bring their own potato by the end of its first year more than one million kits had been sold the little plastic face had turned a mid-sized family business into a company with a national hit and a new way of selling that it could use again and again for merrill personally the potato strengthened his hand inside his own family where the case for toys over pencils had always needed proof his older brother harold could point to the steady profits of pencils but no pencil had ever sold a million units in a year off a commercial and the toy side now had a triumph that nobody could wave away what the potato really gave merrill was a method rather than a single success find a toy with a simple irresistible hook price it for ordinary families and put it in front of children on television before anyone else thinks to do the same that formula sounds obvious now in the early 1950s it was a bet and merrill made it with a product invented by an outsider and a medium that toy makers had never used the toy also proved that hasbro could take an idea from someone else and make it far bigger than its creator ever could alone lerner had the concept but it was the hassenfelds who put the character on the screen that pattern buying or licensing a sharp idea and then outselling everyone on the marketing would follow the company for the rest of the century it began with a handful of plastic face pieces an outside inventor's idea and a family willing to gamble its name on a new kind of advertising with henry gone after 1960 merrill could chart the toy side's course without a senior partner in providence looking over his shoulder though his older brother harold still ran the empire pencil factories down in tennessee he had a proven way of creating demand and a toy line that had outgrown the school supply business that had fed the family through the depression he had shown that a toy could be sold to children rather than through their parents and that the right commercial could turn a modest product into a national craze the next question was what hasbro could do with that method if it aimed higher than a kitchen vegetable mr potato head was a toy for small children and their parents grocery bags a clever novelty with a short reach and merrill's ambitions were larger than one novelty however profitable it had become he was looking for a toy with a story behind it a product that could carry its own world and keep children coming back for more pieces long after the first purchase and when he found it he would warn his own salesman in no uncertain terms about the one word they must never use to describe it by the early 1960s merrill hassenfeld had already proven that a set of plastic features pushed into a potato could sell on television and now he was running the whole company his father had left behind henry had died in 1960 and the family business sat in two pairs of hands with merrill overseeing the toys in providence and his older brother harold running the pencil operation in tennessee merrill needed a second act and once again the idea came from an outsider a toy creator named stan western brought hassenfeld brothers the concept for a soldier figure and the company bought it outright for a flat one hundred thousand dollars a clean fee that left western with no stake in whatever the idea might become inside the company the job of turning that idea into a product fell to don levine the head of research and development the man who would come to be called the father of gi joe the figure went on sale in 1964 at four dollars a piece and from the start the hassenfelds faced a problem unrelated to plastic paint or price the problem was a single word a small figure with movable limbs and a wardrobe of outfits looked to plenty of people in the trade like a doll and merrill had built this product for boys he settled the matter with his own sales force at the 1964 toy fair and he did it with a threat don't you dare call gi joe a doll merrill told them if i overhear you talking to a customer about a doll we're not shipping any gi joe's to you it was an extraordinary thing for a company president to say to the people whose job was to sell his goods he was willing to withhold his own hottest product from his own salesman and that told everyone in the room how much of the family's future he had placed on the shoulders of one plastic soldier the rest of the industry thought he had placed it badly wayne charnes who later ran marketing at hasbro remembered that hasbro was the laughing stock of the toy fair because no one assumed gi joe would sell the laughter did not last through the year that first year we had a monster hit charnes said and while the early sales figures differ from one account to the next every version describes a toy that left the doubters behind and kept climbing within two years of the launch gi joe accounted for roughly two-thirds of the company's profits for a family that had started out selling textile remnants and then spent decades making pencil boxes and school supplies this was a new kind of business one where a single idea bought from an outsider could carry the entire enterprise on its back that kind of success came with a hidden cost that the pencil side of the family understood better than anyone pencils were the steadier business while a toy line could rise on a sales pitch and fall just as quickly once the fashion moved on and hasbro had now tied most of its profit to one character merrill pressed ahead regardless and remade the whole company around the toy business in 1968 the name changed to hasbro industries and the company went public which meant the hassenfelds were now answerable to outside shareholders who had bought in on the strength of a soldier the same years brought the next generation into the building merrill's son steven born on january 19th 1942 had come aboard in 1964 the very year the soldier reached stores and by 1968 he was executive vice president of marketing and a member of the board while still in his 20s steven grew up inside the family business at the exact moment it was learning to live on hits he watched a product that the rest of the industry had mocked become the engine of the company and he watched his father bet the family name on keeping one word out of every sales conversation the 70s were harder and the hardest fights were inside the family rather than in the stores harold's old complaint about capital that steady pencil profits were bankrolling the toys returned with new force from his base in tennessee and the more the company leaned on one soldier the sharper his case became then in 1974 merrill retired as president and handed the title to stephen who was barely past 30. the move split the family along the old line between the two branches and the mid-70s became a stretch in which hasbro was torn apart by a feud set off by what looked to the other side like a premature promotion the two halves of the company now wanted different things from the same family name harold's side had pencils steady profits and seniority while merrill's side had the toys the public company and a young heir already sitting in the president's office merrill was still the patriarch of the toy branch as the decade drew toward its close on march 21st 1979 he died of a heart attack in providence at the age of 61 and leadership of hasbro was suddenly up for grabs stephen was the obvious heir on merrill's side of the family harold however refused to acknowledge his nephew as hasbro's new chief executive which left the company with a successor that half of the family would not accept the business that three brothers had started together was now split between two branches that faced each other across a boardroom table each holding a claim that the other would not honor with neither henry nor merrill left alive to broker a peace harold's refusal left stephen holding a title that half the family would not recognize and the only way to keep it was to cut the company in two the settlement that ended the hassenfeld feud looked less like a reconciliation and more like a divorce drawn up by accountants in 1980 hasbro spun off empire pencil by then the largest pencil maker in the nation and harold traded his hasbro shares for shares in the pencil company he had run for years the arrangement gave each branch the thing it valued most harold walked away with the steady factories and the dependable profits he had always defended and stephen walked away with the toy business its listed shares and no uncle left on the other side of the table it also severed a line that ran back almost half a century pencils had been a reliable source of money for the family since 1935 when henry decided to make his own after a supplier dispute and with one transaction the business that had carried the company through the lean years belonged to someone else empire pencil would eventually end up inside what became the newell conglomerate absorbed and forgotten as a separate family enterprise hasbro meanwhile now belonged to the toy branch alone and steven hassenfeld became chairman and chief executive of the company his grandfather and great uncles had started what he inherited was modest when steven took over hasbro was the sixth largest toy maker in the country with sales of about 100 million dollars a year and the rival he would spend his career chasing was mattel a company that was far bigger and vastly more profitable steven had spent his entire working life learning how a toy company could rise or sink on a handful of products he had arrived with the soldier in 1964 had run marketing through the boom that followed and had then sat in the president's chair through the feud that nearly broke the family apart his answer to the gap with mattel was to buy size the family had learned from gi joe how much a single line could earn and how exposed a company became when one product carried most of the profit so steven looked for growth that did not depend on the next lucky idea within two years hasbro had brought gi joe back with help from marvel comics but the larger ambition was on the corporate side steven wanted hasbro to grow through ownership and in the spring of 1984 he went after the biggest prize available to him on may 4th 1984 hasbro announced that it would acquire milton bradley a company with a famous name and a long history of its own the structure was aggressive and carefully built hasbro would buy a large block of shares for cash purchase another slice from the heirs of james shea and pay for the rest in stock by september the transaction was done the merged company stood as a new giant of the toy business and the final price came to 360 million dollars in cash and securities for a company that had been a distant sixth only a few years earlier it was an enormous wager placed by a family that had just finished dividing itself in two the combined business took the name hasbro bradley and it brought play school into the fold along with milton bradley's own lines the family firm that had once sold textile remnants in providence now owned the name of the rival it had just swallowed the scale of the jump was hard to overstate by 1985 the combined company's sales had reached 1.2 billion dollars and hasbro was described as the largest toy company in the world a title that would have sounded absurd to anyone who had laughed at the soldier figure two decades earlier steven was now running a giant and he could not run it alone in 1984 the same year as the milton bradley deal his younger brother alan became president of the company while steven kept the titles of chairman and chief executive alan had been born in 1948 and had joined hasbro in 1970 so he too had come of age inside the business with henry and hillel in the first generation and merrill and harold in the second steven and alan became the third pair of hassenfeld brothers to lead the company the arrangement between them had a clear order steven held the top job alan held the second one and the family's leadership ran through the elder brother just as it had once run through henry rather than hillel when steven was asked in 1986 why he and not alan had become chief executive his answer was brief i got here first steven said the line was dry and it was also accurate steven had joined years before alan had been in the president's office when the family split and had been the one who made the decision to buy a rival rather than wait to be overtaken by it the two brothers had watched the previous generation tear itself apart over who deserved capital and who deserved the top title under steven the question of rank was settled before it could become a fight and the energy that had gone into family warfare now went into deal making the deals kept coming as the decade went on steven had shown that hasbro could close the distance with mattel by acquiring companies with established names and the pattern he set in 1984 would define how the company grew for years to come he had turned a family business with a pencil problem into the industry's biggest player in barely half a decade and he had done it by treating acquisitions as seriously as his father had treated a single word at toy fair a company that size now had to be fed with hits on a scale the family had never attempted and the characters that would test it were already marching toward the shelves by the early 1980s steven hassenfeld sat alone at the top with the pencil quarrel finally behind him and harold's branch gone its own way with empire pencil what he needed now was a run of products that children would demand year after year and the decade was about to hand him several of them at once the first move was a resurrection in 1982 hasbro brought back gi joe the figure that had kept the company afloat through the 60s and this time the toy was tied to marvel comics so the plastic figures arrived with a running story already built around them the same year produced something far softer a line called my pretty pony had appeared in 1981 and moved half a million units and hasbro reworked it into my little pony which went on sale in 1982 under the name that would stick the ponies became one of the defining toys of the decade by the time the 80s ended roughly 150 million of them had been sold and a company that had once been known for a soldier its founder's son had refused to let anyone call a doll now owned one of the most popular girls brands in the country then came the robots hasbro took two toy lines from the japanese company takara called diaclone and microchange and reshaped them into a single brand of robots that change shape and in 1984 it launched them as transformers the launch came in the same year stephen pulled off the milton bradley purchase so hasbro entered the middle of the decade with a famous board game maker under its roof and a new robot franchise moving out of its warehouses transformers sold fast and kept selling and it joined gi joe and my little pony as the third pillar of a lineup that rivals now had to chase stephen had a brother inside the business and the division of labor between them was clear allen handled the president's duties and the final word belonged to stephen who held on to the chairman's seat and the chief executive's title the order of command was never in doubt in 1986 asked why he and not allen held the top job stephen gave a blunt answer i got here first it was a joke with a hard edge and it described the family's habit of succession the eldest son of the eldest line had taken the chair the younger brother ran operations underneath him and the company grew so quickly that nobody had much reason to question the arrangement the growth was real by the end of the decade hasbro was regarded as the fastest growing and most profitable company in the toy industry one business magazine called stephen its guiding genius and the mid-sized toy maker stephen had inherited at the start of the 80s had become a giant that rivals measured themselves against there was a quieter story running underneath the expansion in 1987 stephen said he was being treated for endocarditis an infection of the heart and alan later said his brother never fully recovered partly because he was allergic to the antibiotics meant to treat him in 1988 hasbro bought some product lines from coleco the struggling company behind cabbage patch kids and in july 1989 it bought the bankrupt coleco outright adding scrabble and the cabbage patch dolls to the hasbro catalog in what turned out to be stephen's final business triumph he did not live to see what coleco would add stephen hassenfeld died on june 25th 1989 at 47 after weeks in columbia presbyterian hospital and the company's spokesman wayne charnas gave the cause as pneumonia and cardiac arrest that was the official account at the time and it stood for years later accounts said he had died of aids an illness he had reportedly been fighting quietly and privately since early 1987 which would mean the man who built the modern hasbro had spent his final years expanding the company while carrying a secret almost nobody around him knew the numbers he left behind were extraordinary by any measure hasbro's sales had reached 1.41 billion dollars in 1989 a measure of how far the company had traveled under a single hassenfeld in less than a decade a toy industry analyst named valentine put it plainly that week stephen hassenfeld stands out virtually without a peer in the toy industry over the past 10 years valentine said he created what i refer to as the modern american toy company stephen's death raised questions on wall street about the giant toy company's future and almost at once the rumors began that hasbro would be put up for sale since the man whose judgment had held it together was gone for the hassenfeld's the loss was personal before it was financial stephen had been the eldest the one who got there first the one who had settled the family feud and chosen the deals and the company had been organized around his instincts for nearly a decade his death also broke a pattern the family had relied on for three generations when meryl died harold had refused to recognize stephen and the family had split over it but this time there was no rival branch left to argue and the only obvious successor was the younger brother who by stephen's own account was second only because he had arrived later the robots the ponies and the revived soldier were all still selling milton bradley's games were still in the stores and the coleco brands were just arriving the company was larger than it had ever been and its future depended on a family that had just lost the man who had planned it wall street had already begun pricing in a sale and the one person who could refuse to sell was a brother who had never expected to be asked alan hassenfeld took over as chairman and chief executive within weeks of stephen's death and he made no attempt to pretend he had been preparing for it did i ever think this day would come about he said absolutely not he had spent nearly two decades as the second brother running operations under a sibling who held every title that mattered years later he described how little warning he'd had it was a really difficult time i'd actually gotten married only two months before and i didn't know that my brother was sick the rumors that had followed stephen's death assumed that a grieving family with a reluctant heir would sell alan did the opposite keeping hasbro independent and keeping the hassenfeld name at the head of the company his grandfather had founded while running it through the brands stephen had built and bought he also tied the family more tightly to its home state in 1994 hasbro children's hospital opened in rhode island funded with a founding gift through the hasbro charitable trust and the hassenfelds contributed the largest share of its cost that loyalty to rhode island would matter sooner than anyone expected in april 1995 mattel hasbro's largest rival quietly approached the company about a combination and the approach went nowhere in private mattel's chief executive john emmerman did not let it rest there on january 24 1996 mattel went public with an unsolicited proposal to merge the two companies in a stock swap worth 5.2 billion dollars the offer was designed to be hard to refuse it priced hasbro shares at a 73 percent premium to where they had closed that day and ammerman framed it as a friendly gesture writing to hasbro as you know we are only prepared to proceed on a negotiated basis strictly speaking mattel never launched a hostile tender offer what it did instead was make the proposal public which put the price in front of every hasbro shareholder and placed the pressure squarely on allen and his board ammerman also tried to answer the obvious objection before hasbro could raise it a merger of hasbro and mattel would draw the attention of regulators and ammerman wrote we are satisfied that any potential antitrust issues can be resolved without affecting the significant benefits that will be realized by the combined entity the money looked very different from inside the hassenfeld family the family controlled nine percent of hasbro's shares and the deal would have netted them about 500 million dollars a fortune for a clan whose founders had started by selling textile remnants alan later remembered his mother sylvia calling him after the offer became public sure that he would accept such a generous price he told her the decision was up to the board the board decided quickly hasbro's directors rejected the proposal unanimously and the company's statement went straight at mattel's confidence about regulators it is incredibly presumptuous of mattel and its board to believe that they could force a combination of their company and ours through the federal trade commission the state attorneys general and the european union merger task force hasbro said the company argued that the premium was an illusion if the deal could never close because of the very low probability of consummation the economic terms of the proposal were more than offset by the potential harm to hasbro and its shareholders resulting from a protracted antitrust regulatory progress the statement said alan made the same argument in his own words saying serious antitrust issues made a merger highly improbable and that the combined company would dwarf its nearest rival he also preferred hasbro's more open and creative culture to what he saw as mattel's hard-charging corporate style and he had no wish to watch one become the other then hasbro turned the contest into a political fight the company rallied rhode island's senators its representatives the governor and the general assembly behind it and the state's congressional delegation asked the federal trade commission and the justice department to investigate the proposed merger amerman kept writing letters but the ground had shifted under him a friendly merger needs a willing partner and alan hassenfeld had made it clear that mattel would have to fight through washington and european regulators before it ever reached rhode island on february 2nd 1996 barely a week after going public mattel withdrew in his third letter amerman blamed hasbro's scorched earth campaign which he said has created an intolerable climate it was a revealing phrase from the man who had started the fight amerman had tried to win hasbro by announcing a price to its shareholders and alan had answered by making the price the price beside the point turning a question of money into a question of law politics and loyalty mattel moved on almost immediately before the year was out it agreed to buy tyco a smaller rival for alan the victory settled the question that had hung over him since 1989 the understudy had faced down the rival that once dwarfed his family's company turned down a family fortune and kept the company in rhode island and in hassenfeld hands it also showed what kind of leader he was where stephen had built hasbro through acquisitions and timing alan defended it through relationships with the board with the state and with an idea of the company as something more personal than a share price that defense had a cost that would only become clear later the premium mattel offered was enormous the family's stake was small and critics would one day measure hasbro's share price against the offer alan had refused alan had won the war and the mattel bid became one of the defining moments of his career he had proved he could hold the company against a rival which left the quieter question of who after him the family would trust to hold it at all in may of 2003 alan hassenfeld did something no hassenfeld had done since three immigrant brothers started selling cloth remnants in providence he gave the chief executive's job to a man from outside the family al varekia a company lifer who would eventually log 43 years at hasbro and he did it while he was alive healthy and free to choose that last part mattered more than any title merrill hassenfeld had died in office and so had stephen and alan had inherited the top job within two weeks of burying his older brother newly married and unaware until the end that stephen had been sick alan framed the handover in the language of family business folklore where the first generation builds the second grows and the third squanders i avoided the curse of a third generation and turned it over to al in 2003 he said on its own terms the line was accurate because nobody had forced him out and nobody had bought the company out from under him still the grip he surrendered was thinner than the family name on the building suggested by the time mattel came calling in the mid-90s the hassenfelds held only a small minority of the stock and two seats on the board which meant their authority rested on the chairmanship the founder's surname and decades of habit rather than on ownership the scorecard on alan's years at the top would later become ammunition for his critics an activist investor would argue in appointed an openly partisan filing that when his tenure as chief executive ended hasbro's share price remained more than 30 percent below the value mattel had implied with its rejected offer the family had defended its independence and the market had not yet rewarded it for doing so alan kept the chairman's seat and for two more years the arrangement held varekia ran the business day to day while the last hassenfeld at the company remained its public face in rhode island the man whose grandfather's company had turned a pencil box into a toy business then on august 30th 2005 alan announced that he would retire as an employee and become a non-employee chairman from the first day of 2006 for a term set to run through the end of 2008 he explained that stepping back would give him the freedom to work on behalf of the children of the world that shift had deep roots the hassenfeld family foundation dated back to 1944 the same year the hasbro name first appeared and the company's charitable trust had given the founding gift for hasbro children's hospital in providence which opened in 1994 in the years after alan stepped back the family's giving grew more ambitious even as its role inside the company shrank in 2008 the same year he gave up the chairmanship the family created hassenfeld family initiatives a vehicle for its philanthropic work and the center of gravity in the hassenfeld story began to move from the boardroom to hospital wings and research institutes his mother sylvia hassenfeld led one of the largest of those gifts in 2011 she and her family gave 50 million dollars to create the hassenfeld pediatric center at nyu langone in new york the well-being of children is one of our great passions sylvia said and the sentence could have served as the family's motto for the decades that followed four years later a gift of 12 and a half million dollars founded the hassenfeld child health innovation institute at brown university the family that had once argued bitterly over pencils and succession had settled into a quieter role as benefactors whose name appeared on buildings while the toy company carried on under other hands those other hands belonged first to varekia and then to a younger executive already working beside him on february 11 2008 hasbro announced that brian goldner its chief operating officer would become chief executive in may with varekia moving up to chairman of the board the same announcement recorded alan's own retreat according to the company he would leave the non-executive chairman's role in may of that year and remain a director which meant that for the first time in hasbro's history no hassenfeld held either the chief executive's office or the chairmanship goldner was a marketer by instinct and he took charge of a company whose shelves were still stocked with the family's greatest bets mr potato head gi joe transformers my little pony and the board games inherited through milton bradley his task was to make those aging brands sell again to children who had never heard of the men who first bet on them alan by then a director rather than a boss grew close to the younger man their bond would later be described by alan himself in the most personal terms he ever used about anyone who was not a blood relative a sign that the founder's grandson had found in an outsider the successor his family never produced the independence alan had defended in the 90s stayed intact under goldner in june 2010 the same activist would later claim the private equity firm providence equity partners approached hasbro and was rebuffed with the board allegedly unwilling to sell the business for any price whatever the board's reasoning the bet on staying independent eventually paid off for shareholders who held on through the 2010s the stock climbed and it eventually reached the record high where this story began giving a company that had once survived on pencil boxes a valuation its founders could scarcely have pictured he had spent more than a decade running the house the hassenfelds built now with the share price at its peak and investors in a generous mood he decided to stop licensing other people's studios and buy one of his own and he went shopping in london for a cartoon pig on august 22nd 2019 hasbro agreed to buy entertainment one the studio behind peppa pig and pj masks for roughly 4 billion dollars in cash it was the biggest acquisition in the company's history larger than the milton bradley deal that had made steven hassenfeld's reputation and it closed on december 30th of that year the bet was that hasbro would own the shows that sold its toys the deal came with ambitious promises of savings and synergies and it turned a toy and game maker into a company that also financed film and television production around the world it also carried a secret its architect had kept for years in august 2020 goldner disclosed that he had been treated for prostate cancer since 2014 and he kept running the company while investors absorbed the news for a while the numbers seemed to vindicate him 2021 became the best sales year hasbro had ever recorded even as the company began trimming the e1 purchase by selling its music business to blackston on october 10th 2021 goldner took medical leave he died within days at 58 becoming the third head of hasbro to die in office after merrill and stephen hassenfeld and alan hassenfeld mourned him in words he had never used about anyone else i have lost the son i never had alan said the board turned to chris cox a former microsoft executive who had joined hasbro in 2016 and risen to run wizards of the coast the magic division he was named chief executive on january 5th 2022 and took over in late february while rich stoddart who had served as interim chief executive after goldner's death became chair of the board he barely had time to settle in before the first serious challenge from outside the family's orbit arrived in february 2022 alter fox a texas investment firm nominated a slate of directors and demanded that hasbro spin off wizards of the coast the very division cox had come from hasbro's board answered with open contempt its letter to shareholders called the fight ill-timed and said the activists nominees lack any relevant industry expertise and when alter fox floated a settlement that would have added a single nominee the board refused we are disappointed the board refuses to listen to listen to its shareholders an alter fox spokesperson said the firm kept shrinking its slate until only one candidate remained while the two leading proxy advisors iss and glass lewis lined up behind management glass lewis was blunt in its verdict the preponderance of the evidence validates hasbro's strategy and business model it wrote and on june 8 2022 shareholders re-elected every hasbro director though alter fox promised to continue to be an active shareholder the victory proved hollow within months in january 2023 hasbro began cutting jobs and by the end of that year the layoffs had reached about a fifth of its workforce as weak toy sales forced cox to slash costs the e1 bet came apart at the same time in august 2023 hasbro agreed to sell the film and television business to lionsgate including a library of thousands of titles for a fraction of what goldner had paid and the deal closed that december the full year results told the rest of the story hasbro reported a net loss for 2023 driven by enormous non-cash write downs and the studio that was supposed to make hasbro a media company had instead become its most expensive lesson alan hassenfeld watched the turmoil from the boardroom where his only remaining title was the ceremonial one of chairman emeritus on march 25th 2024 the company filed notice that he would step away from that role after the annual shareholder meeting and when he did no hassenfeld sat on hasbro's board a first in the company's century of existence it was time alan said he did not live long after his departure alan died in london in july 2025 and hasbro honored him as the last family member to sit on the board a phrase that closed the line running back to henry hillel and herman in providence the company he left behind had quietly become something its founders would barely recognize in 2025 wizards of the coast produced the vast majority of hasbro's adjusted profits while the toy division that bore the potato head and gi joe legacy took a large goodwill write down in other words the activist had been right about where the money was even if the shareholders had sided against him cox leaned into that reality for 2025 hasbro returned to revenue growth posted a record adjusted operating profit and announced a fresh share buyback and in july 2026 he reported a milestone for the card game that now carried the company magic the gathering eclipsed 500 million dollars in quarterly revenue for the first time in its 30 plus year history led by the record-breaking debut of marvel superheroes cox said on the same day he raised the company's outlook for the full year geography followed the money in september 2025 hasbro announced it would move its headquarters to 400 summer street in boston seaport with massachusetts offering tax credits for the jobs it would bring on october 8th 2026 hasbro filed a layoff notice covering 587 rhode island employees they must report to boston starting january 4th 2027 or leave the company by christmas eve the portucket property on newport avenue will be sold and third quarter results are due on october 20th in 1996 allen rallied an entire state to keep hasbro out of mattel's hands and it worked 30 years later hasbro left rhode island anyway and nobody had to buy it to take it away [01:00:32] Speaker ?: you