The Best Idea Yet - 🧱LEGO: Earth’s Biggest Toy Biz | 11

Episode Date: December 24, 2024

Click… That satisfying sound of Lego bricks has brought joy to millions of kids - and adults (kidults?) for more than 70 years. But did you know it all started in a Danish carpenter's workshop during WWII? And that boxes of Lego were used to smuggle grenades to resistance fighters? Today, family-owned Lego is the biggest toy company on earth, but this plastic empire almost came tumbling down more than once. Lego dodged disasters (four fires), product mis-steps (bangle bracelets?), and some spectacular business snafus before taking over the world brick by brick — All thanks to the founder’s visionary son. Find out why every Lego piece is precision-engineered to 0.005 mm, how Jar Jar Binks breathed new life into minifigures, and why Lego is the best idea yet.Be the first to know about Wondery’s newest podcasts, curated recommendations, and more! Sign up now at https://wondery.fm/wonderynewsletterFollow The Best Idea Yet on the Wondery App or wherever you get your podcasts. You can listen to new episodes early and ad-free on Wondery+. Join Wondery+ in the Wondery App, Apple Podcasts or Spotify. Start your free trial by visiting www.wondery.com/links/the-best-idea-yet/ now. See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Wondery Plus subscribers can listen to the best idea yet early and ad free right now. Join Wondery Plus in the Wondery app or on Apple podcasts. Jack, can I make your ears day? I'm gonna make both of your ears happy. No one's ever asked me that question. Okay, okay. You ready? Close your eyes. Close your eyes for that. You ready? All right. Just trust me on this. I'm listening.

Oh, that was so satisfying. You know You ready close your eyes close your eyes. All right, just trust me on this. I'm listening The opening of a can of coke or something you think so that was the opening of a dr. Pepper, which is a very distinctive ASMR like sound but what you hear you like I know exactly what that is. Yeah Yeah, you know, there's some sounds that are just truly satisfying. They're not just iconic, they're transcendent. I'm actually going back to Chad that thinking about some sounds. All right, what do you got, what do you got? You know what I just introduced to Wilder? Hear me. One of those swirly twirly straws,

and I demonstrated how to blow bubbles into a cup of chocolate milk. Oh, I can hear this right now. Now, it's just the sound of any bubbles. Everyone's made that sound. But it hits harder because you're using that twirly straw and you know your cup is overflowing with milk. But Jack, there is a third sound here that is the most universal of everything that we just said and anyone has ever heard.

You ready? What's the sound? I know exactly what that is. Yetis. That is not just the sound of two Lego blocks coming together in that satisfying click. It's the sound of money. Cha-ching! Because LEGO has become the biggest toy company of all time. Yeti's LEGO success.

It comes down to something every product wishes it could have. It short circuits the hedonic treadmill. Is that like Peloton's answer to the Happy Meal? It sounds like it is, Jack, but the hedonic treadmill is the psychological term for how your level of happiness has a baseline. It's why when you finally get that promotion you've been after, or the car you've been wanting to buy,

you feel incredible for like a week or two. And then you establish a new higher baseline happiness. The shiny new thing in your life becomes just another part of your everyday. Life goes back to normal, and you're looking for your next dopamine hit. That, yetis, is the hedonic treadmill. And it's not just adults who fall into this trap.

Think about all the big toy crazes. Every holiday season, there's at least one must-have toy that all the kids and all the parents are raiding the shelves at Target and Walmart for. In the 90s, your mom tackled a lane so she could grab your last Tickle Me Elmo on the shelf in aisle six. But here's the fascinating thing. There is one toy that is immune to the hedonic treadmill, and that toy is LEGO.

LEGO created a toy that, thanks to future purchases of more LEGOs, never gets old. They created a gateway to a lifetime of fun, satisfaction, and recurring revenue purchases Ching! Legos appeal it transcends age The only downside is the more you own the more likely you are to suffer a horrible foot injury on that midnight trip to the bathroom You've been there Yetis Legos is in fact the largest toy company in the world beating Mattel beating beating Hasbro, and even beating the McDonald's Happy Meal.

But few know that LEGO actually started in a Carpenters' Workshop in rural Denmark in the 1940s. Today we're going brick by brick, block by block, ouch by ouch, to tell you the story of... LEGO is here. Hey kids, look! It's the toy people keep repeat buying down the generations and across language Lego is here. Hey kids, look! It's the toy people keep repeat buying down the generations and across language bearers. And through franchise tie-ins, like Star Wars, Harry Potter, Marvel, and Minecraft. And when you're tired of building Lego Hogwarts or the Home Alone house, you can tear down your builds and recombine them into endless permutations. It is this evergreen appeal that has created the passionate superfan

communities of LEGO. And it's at the heart of LEGO's success. In 2023, LEGO generated revenue of nearly 10 billion dollars. Billion! That's enough money to buy you 4.4 million sets of the coveted and discontinued Ultimate Collectors LEGO Millennium Falcon. Which goes for a cool $2,000 or more at auction. To put that in a wider market context, I would love for you to do so, Jack. LEGO's $10 billion in annual revenue is more than Lululemon, JetBlue, and DoorDash, and it's double Mattel. Sit down, stand up, and play with your toys again, because those are numbers you don't mess around with on a playdate, man.

Across the globe, between 80 and 90 million kids receive a Lego box every year. Meanwhile, around 10 million adults buy a box for themselves every year. Guilty. Today, we are piecing together the story of Lego and how its creator, Ole Kirk Christiansen, built it up from a small carpentry business

and how his son grew his father's legacy and strategically turned those little plastic bricks into a global obsession. Besties, we'll hear how LEGO survived fires, financial ruin, and even helped arm resistance fighters during World War II. Plus, we'll tell you why you need more than a killer product. You need a theory of winning. There is so much to cover, so let's dive right in to this jumbo-sized bucket of Legos.

This yetis is why Lego is the best idea yet. From Wonder and T-Boy, I'm Nick Martell. And I'm Jack Kravichy Kramer, and this is the best idea yet. The untold origin stories of the products you're obsessed with and the bold risk takers who brought them to life. They change the game in one move Here's how they broke all the rules The following is a message from Canada Action. Across the country, Canadians are feeling the effects of a slowing economy.

Canadian energy is key to getting our nation back on track. So why did the Federal Environment Minister proudly announce that Canada is the only country in the world to propose an oil and gas production emissions cap? No one else is doing this because it's a bad idea. We need to work together to ensure Canada is open for business. We can't afford more barriers to job creating natural resource investment. To learn more, visit Don'tCapCanada.ca. It's a pitch dark Nordic midnight. Snow dusts the chocolate box scenery of fir trees and peak roofed wooden houses. Somewhere, someone nearby is smoking some cod. Classic Nordics.

The crisp silence is broken by the faint clop, clop, clop of a horse's hooves on a gravel road. It's pulling a wooden flatbed cart with a green canopy, and the driver guides the horse and cart into a hollow in the trees and waits. A few minutes pass, then dark figures slip ninja-like from the forest and start unloading the cargo of wooden crates.

One of the figures opens a crate. Nestled in sawdust among the wooden toy horses and pull along cars inside, they see the prize. A bag of hand grenades. They quickly put the lid back on and drag the crate into the trees. As they do so, the moonlight catches the side of the crate, revealing a word in dark stencil. It says, Lego. During the Nazi occupation in Denmark in World War II, Lego helped supply resistance fighters. Think of that legacy the next time you break open a box at Tinkerbell Castle, Legos.

But there's more to the story too, because Lego's founder, a Danish carpenter named Ole Kirk Christiansen, ran this secret supply chain right under the Nazi's noses. During the occupation, he was forced to house Nazi officers at his family home in the small town of Billend, Denmark. Doing anything to help the resistance was a colossal risk. Huge risk, whole life on the line for this.

But that didn't stop Ole. He was known for his determination and his optimism. Optimism is an understatement, because even before this uninvited houseguest moves in, life hadn't been kind to Ole. He'd been knocked down more times than the Chumbawamba guy, and nothing kept this guy down. Ole started working as a farmhand when he was six,

and in his spare time, he loved to whittle. I mean, pre-Game Boy, nothing better than a good whittle jack. But all that whittling, it led to carpentry. By age 25, Ole had saved enough to open his own workshop. Nothing better than a good whittle jack. But all that whittling, it led to carpentry. By age 25, Ole had saved enough to open his own workshop. He made household goods like stools and tubs. Think Bed Bath and Beyond, but everything's made of birch.

But what Ole really loved to make was toys. Toys. Like those pull-along animals and the spinning tops. Handcrafted, old-fashioned wooden toys. The classics! As Ole closed in on 30 years of age, business was going okay. He got married, he had four sons, and he started employing more people

to keep up with the demand for his wooden creations. But then, disaster struck. A fire tore through Ole's workshop and his family's home. Everything was destroyed, and that wasn't even the worst part. To make matters worse, that fire it was actually started by two of his sons goofing around with some matches. They were five-year-old Carl and four-year-old Gottfried, known to the family as Gott. But Ole built back better.

He designed a larger workshop and business picked up so he hired a handful of more workers. But then the tragedies came thick and fast. By 1932, the Great Depression came. Business dipped, Ole had to lay off his workforce, and that same year, his wife died. Jack, so far, we have a devastating fire, we have economic collapse, and now we have bereavement? I mean, what more could go wrong for this guy?

A lot more, actually, but we'll get to that. As we talked about on this pod before, during times of economic depression, people need fun distractions for their kids even more. And since Ole's passion is making toys, he sees opportunity. This is when Ole decides to make a monumental change. He names his business Play Well. And Jack, my Danish is still a little bit rusty, so could you help me with the Google Translate on this? Play Well, abbreviated in Danish, is Lego. Lego.

But Nick, you're not gonna believe this. Another fire hit 1942. His magical workshop burned to the ground again. Another fire? Dude, I did not have Lego disaster on my bingo card for this episode. I feel bad for the guy. I do too.

But he didn't let this bring him down. He rebuilt again. And after World War II, demand for toys was growing. It's around this time that Ole goes to a toy convention in Copenhagen, where he's dazzled by a futuristic new material that's being heavily promoted. Interesting.

It's cheaper and more versatile than wood. And Olay thinks this new material has huge potential. Not just because it's less flammable, by the way. I got one word for you, plastics. Yetis, during the war, the United States and its allies ramped up production of plastic. It was cheap, it was durable, it was easily cleanable. It was a material that let them quickly make clothes and car parts

and combat gear at way lower costs. When the war ended, there was a ton of plastic-making capacity, but no end market for plastic. This meant the field was wide open for innovators to create new plastic products aimed at consumers. And one of those innovators was Ole. He put down 30,000 kroner, or about six months worth of his company's profits, to buy a cutting edge injection molding machine. Here's how it works. It melts down tiny plastic granules

and then clamps them into a particular mold under hundreds of tons of pressure. Sounds fancy. At the end, it pops out identical copies of the same item. And now, Yannis, we've got to pause the pod and sprinkle on some context here. It is 1948. Plastics would reign supreme by the 1950s, but right now, plastics are uncommon, unprecedented, and unknown. So Ole is taking a huge gamble on a material with no history. That is entrepreneurial risk. Oh, and Ole's sons, they're all grown up at this point

and they're helping in the family business. So it's not just Ole. We've got Gott, who's in line to take over someday. He's the four-year-old fire starter, by the way. Right. But he's 28 at this point and he's a capable partner to run the business alongside Ole. Gott has turned out to be more risk averse

than his old man. If the old guy is the swashbuckling entrepreneur, then his son Gott is the careful bean counter. Their differentiation is their business inclinations. Oh, Gott is totally against plastic. Gott thinks plastic is a fad. He thinks it's far inferior to wood, and he doesn't even want to touch the stuff.

He's like, give me a Douglas fir, give me death. In fact, Gott's sure that if his dad doesn't stop with this whole plastic obsession, he's going to bankrupt the entire family business. But those words of caution do not stop Father Ole from pushing ahead. After all, he's the patriarch, he makes the decisions. So he starts making plastic versions of his wooden toys. There's also something new that Ole wants to experiment with. Something too complex to make it scale with wood, it's a sample of a British toy that a supplier gave him. Colorful plastic bricks that can fasten together

to build anything you could imagine. together to build anything you could imagine. Ole and his son, Gott, are in the basement of the family home. It's late 1951. Earlier that year, Ole suffered a stroke. So Gott is taking on more responsibility for the company. But when it comes to money, Ole still calls the shots. The basement is a playroom for Gott's kids.

In particular, his four-year-old son Kjeld. And right now, the kids are building a fort. They're adding a tower here, a drawbridge there, and a small throne at the center. And they're doing it all from the piles of plastic bricks scattered around the floor. Now Jack, our boy Gott, he has grudgingly come to accept that the plastic bricks, they're here to stay. But he still thinks of them as a small part of all the other toys that LEGO makes. Now surprisingly, these small bricks from 75 years ago, they're actually a lot like the LEGOs we know today. I'm looking at them now, Jack. They look almost identical.

There are, however, some key differences. Okay, what do we got? What do we got? The bricks have studs on top, those little circles that you click into, just like the modern Lego. But if you turn the Lego over, they're completely hollow on the inside. They don't have those little internal tubes that the circles click into. Today, I feel like I'm seeing a naked Lego.

Like, I feel like we shouldn't be looking at this part of the Lego right now. Now we'll come back to those inner tubes in a bit. Despite that missing detail, these are unmistakably LEGO bricks. The variety is super limited, though, by today's standards. There's just the basic 2x2 and 2x4 bricks, and they only come in yellow, green, white, red. Oh, and they're not called LEGOs. They're called automatic binding bricks.

Does more syllables mean more fun? This sounds like the name of a construction business in Brooklyn. You know, like Sal's automatic binding bricks of Bed-Stuy. Ole starts making and selling these automatic binding bricks in 1949, based on the samples he got from that British toy supplier. Yetis, these early Legos are copies of those British bricks, invented by a toy maker named Hilary Page. His company, Kittycraft, didn't have much success with them, but Ole was a believer.

According to LEGO, Ole made his version of the bricks with Hilary Page's blessing, and in 1981, LEGO officially bought the rights from Page's descendants to make it all patent official. But back to the early 1950s, Lego's automatic binding bricks were doing, eh, okay. The most popular Lego product at this point is a plain plastic toy tractor. This is also when they drop that catchy name, automatic binding brick, and rebrand to Lego bricks. But Gott, who is much more business-minded than his old man is, sees peril on the horizon.

For years, Denmark's government has used import restrictions to protect its fragile post-war industry. But those protections are about to end. Gott's worried that the Danish market is about to be flooded by better funded rivals and more impressive toys, potentially even at lower prices. We're talking serious competition, especially from neighboring Germany. Instead of waiting, he tries to pull off a chess move. He decides to go on the offense

and enter the German market before they can beat him on his own turf. It's the classic, the best form of defense is offense. And there's only one big question. How's he gonna do it? By 1954, with his father's health declining, Gott is running LEGO. And where Ole had a happy-go-lucky approach to business, Gott is a little more serious. He's all about the details.

And he's looking to get ahead of the game. So he's embarking on LEGO's international expansion. And he starts with Norway. Sweden and Iceland? they're next. LEGO is covering Scandinavia like a svelte cross-country skier. Beautiful. But the real gold medal is Europe's biggest economy,

Germany. Jack, can I sprinkle on a little geopolitical context and hit the whiteboard, please? Yes, and I'll be fact checking you along the way. Now at this point, Eddie, the eastern half of Germany is behind the iron curtain. So Gott is targeting the affluent democratic West Germany. The country is going through what will later be called the Wirtschaftswunder. I'm glad you jumped in. Or also in translation,

the economic miracle of post-war investment and rebuilding. The money is flowing like beer at a Bavarian Oktoberfest, and demand for toys in particular is huge. Gott is hitting toy conventions across Europe to find the right entry point into the German market. One day he's returning from a trade show in England by ferry. He gets talking to the head toy buyer of a big department store, and this guy says something that stops Scott in his tracks. He's complaining that all the toys he sells in his department store are one-offs. And this makes it hard for him to build up repeat business.

Yet, as Jack and I like to say in our daily show, there is nothing better than a return customer. Profit puppies are nice, but repeat rabbits are nicer. Here's the problem, though. Think about traditional toys that you may get. You know, like cars, planes, hot wheels. The zombies are nice, but repeat rabbits are nicer. Here's the problem though. Think about traditional toys that you may get. You know like cars, planes, hot wheels, easy-bake ovens, these are stand-alone products.

Your kid, you see one, your parents get it for you, and then a few weeks later, it's at the bottom of your toy box and the play date has moved on. The hedonic treadmill. But now, I see why God is stopping in his tracks. Because that problem is God's opportunity. God realizes there's one Lego toy that could be the answer to this problem. It's those plastic bricks. It's almost impossible to

give a kid a few Lego bricks and not have them build something. Then the kid will probably want to build something bigger. Which means their parents will need to buy them more bricks. The more bricks a kid has, the more they play with them, and the more they play with them, the more LEGO they'll ask their parents for. They get LEGO for their birthday, for Christmas, bar mitzvah, anytime they can get a gift, they will ask for LEGO. Every LEGO set a kid gets will work with the sets that they already own. It short circuits the hedonic treadmill, while supercharging

demand for the product. And this is when Gott hops on the LEGO bricks bandwagon. Once he thought plastic would bankrupt the company, now he thinks plastic will save the company. In fact, he thinks this can help LEGO overtake even the big, well-funded German toy makers. He also realizes that LEGO's secret power is how every brick can connect with each other brick. It is a system, and that system put LEGO above all those other standalone one-off toys. He calls it the system in play. The system in play.

It's LEGO's theory of winning, something every successful product really needs. Forgot, this system in play is the key to putting LEGO at the top of every kid's wish list and conquering the all-important German market. He just may have found his repeat rabbit. So Nick, to make inroads into Germany's toy market, LEGO made roads. Literally. They created LEGO products that kids could use to create cities and streets. Perfect for every Hansel and Gretel who dreamed of driving their father's Porsche one day.

And at the heart of this grand road plan was the LEGO Town Plan. It's a LEGO baseboard with streets drawn on it and studded spaces where you could put the buildings. It comes with LEGO bricks, windows and doors, and instructions for building houses and shops, gas stations and hotels. This is the first LEGO set built with Gotts new system in play as its guiding principle. And this is wild yeti. But LEGO even got the sets endorsed by Denmark's traffic police as a way to teach kids about road safety at a time when the use of cars was on the rise. LEGO's was DMV approved.

Although we should point out, Jack, that at this point there are no LEGO cars. True. LEGO wouldn't come out with their cars until 1961. Instead, kids were expected to use like their regular toy cars. As for people, by the way, the Lego minifigures that we all know and love today wouldn't appear until 1978. But the Lego town plan was launched in 1955. That's when they felt ready for the big time.

They hired an army of salespeople and set up a subsidiary across the German border It was time for Lego to go on the offensive and their first target was the port city of Hamburg That's right The German city that broke the Beatles on the international stage did the same for Lego and yes There is a Beatles yellow submarine Lego set toy stores in Hamburg start stocking Lego But got he's very picky about which German toy stores. He insists that they put up big eye-catching Lego displays in the windows. Lego also puts together training materials for the toy sellers, teaching them about the system in play. Now Jack, that's a smart move, because when they set up these displays, the store owners get hands-on experience

with building each Lego. Even more importantly, passing kids are spellbound by these huge eye-catching displays of like three-foot Lego merry-go-rounds in the store windows, and they drag their parents inside. This all helped Lego crack the German market. Sales doubled in 1957 and doubled again in 1958. German kids are Gaga for Lego. And so are the German children's parents. And that's key because while kids are

the users, parents are the customers. Parents are the ones making the actual purchase because the kids only have play money. So Lego is on track to break into Europe's biggest toy market. But then Gott starts getting angry letters from German toy sellers. They want their money back. Because the LEGO pieces have a fundamental problem. They're not sticking together. So as soon as LEGO was playing with success, it's now completely under threat. Gott's system of play is literally falling apart, and so are LEGO's chances in the all-important German toy market. By January 1958, Gott has been made managing director. LEGO's, they're available all over Europe. LEGO looks like it's hitting its stride. To keep up with demand, their headquarters in Denmark now employ 150 staff.

They got dedicated manufacturing, design, and marketing departments. In 10 years, LEGO's gone from one plastic molding machine to 40 of them. And now LEGO is cranking out LEGO bricks faster than Nvidia chips. But all of this progress is in danger. Remember, parents are demanding their money back. If the bricks don't even fit together, the entire system in play is out the window. So now, Gott and his designers are desperately trying to come up with a solution to this one major problem.

Now remember we said early Lego pieces were hollow underneath? Well not only did those somehow look kind of inappropriate and revealing, they also prevented the pieces from fitting together properly. And that is when Gott and his team introduce the tubes, the tubes for the underside of each and every LEGO. Adding them gives the studs at the top of each brick something to connect with. And you know what, Jack?

It's not just something to connect with. It's something to hear with. It's these tubes that result in the satisfying click when you push two bricks together. The tubes also mean that the bricks will stay together until you pull them apart. LEGO has a special term for this. It's called clutch power.

First of all, Jack, love that term, filing it away. But second, the clicking noise. You know, LEGO, they take those clicks really, really seriously. The clicks are there because of a firm fit between two LEGOs. And that's why LEGO is one of the most precision-engineered toys in the world. The molds of LEGO are accurate to within 0.005 millimeters. What?

Jack, you gotta sprinkle on some context for us. A millimeter is already crazy tiny it is we're talking 5,000 of a millimeter which is the size of a red blood cell So precise in fact that only 18 pieces per a million Lego fail to meet their quality standard This newfound clutch power saves Lego so got files a patent for the new studs and tubes design, then immediately stops making the old style bricks. And that innovation is when LEGO bricks, as we know them, are truly born.

In a brand new LEGO plant in Billend, Gott is standing in front of a crowd of smiling workers. The white walls contrast with the huge tubs of brightly colored plastic beads that will become Lego someday. When the foreman blows his whistle, the workers will spring into action and pour the beads into the gleaming new

plastic molding machines. It's 1961, three years since got created the new and improved Lego brick. It saved the company. They've got hockey stick growth in their sales right now. The sales are going Gretzky, baby. And LEGO is well on the way to achieving cherished toy status all across Europe.

But there was also tragedy during this time. Ole, the LEGO patriarch, has passed away. And then, I'm not kidding, another fire. Okay, besties, for anyone counting at home, we're up to three fires now. This one struck the warehouse that held Lego stock of wooden toys, destroying most of them. But Lego's plastic division is unharmed. Some reports say that the fire

was started by a lightning strike. Or perhaps it was the unseen hand of Ole trying to put an end to the wooden toy side of the business. And by this point Gott isn't gonna resist it. No. He can't see any place for wooden toys in LEGO's system in play, so he ditches the wooden toy division once and for all. This feels like when Netflix destroyed their final DVD. It's a major turning of the page moment for Gott. He's also all in on LEGO. He buys his brothers out of the business so that he can pursue his vision.

And that vision is going extremely well. By 1961, over 11,000 toy stores in Europe stocked Lego. They're turning plastic into gold, figuratively. In 1965, Gott kicks off product development for a new range of toys to appeal to more ages. One of them is Technic Lego, aimed at older kids. Oh, and then they also bring out bricks for toddlers who aren't, like, quite ready for, you know,

regular choking hazard Legos. Yeah, these bricks are double the size, so they're named Duplo for double. Good day, Nish. Now, there is another huge thing that happens for the company in the 1960s. Lego looks beyond Europe to expand. Next stop, America. Cue the Statue of Liberty, LEGO.

Wrapping paper is strewn across a burnt orange shag carpet. An eight-year-old boy is sitting next to a haphazard pile of toys, an X-wing starfighter, a Fisher-Price toolkit, and a bunch of hungry, hungry hippos. I got a scar on my pinky from a hungry, hungry hippo game with my sister in 1998. But the boy, he holds up a book-shaped gift up to his head and gives it a shake. He hears the magical clatter of small plastic bricks, so he tears off the wrapping paper to find a box of the hottest new Lego, the Space Command Center.

You smell that Yule-Law Yetis? It's Christmas morning, 1978, and Legos are in the stockings, baby! Lego made a major impression on American kids, thanks to the new town, castle, and space lines. All these were part of the new system within the system developed by Gott's son, Kjeld Kirk Christiansen, the same grandson who used to play with Lego in Ole's basement. A system within a system? I'm sorry, but I feel like we're getting hit

with a little Lego inception here. But Jack, there was a logic to this that even Christopher Nolan would admire. Because all Lego was still compatible. The system in play is honored. These sets also introduced the classic Lego minifigures that have since become the literal faces of Lego. Yeah, and they give Lego so much character. And of course, they paved the way for huge hits like the Lego movie. It's actually hard

to imagine Lego without those little cute yellow guys, you know? And of course, these Lego men and women's heads, they had a bump. Perfect to stick a brick onto. Believe in the system. In 1979, Kjell Kirk Christiansen takes over as Lego's CEO, just in time for Lego's breakout decade in the U.S. And that surge in popularity? It's also thanks in part to a very particular partnership with the perfect platform to launch Lego. McDonald's.

Yeah, McDonald's. The 1980s saw not one, not two, but three Lego Happy Meal tie-ins. This partnership gave away a total of 37 million bricks to Happy Meal buyers. In fact, there are more Lego Happy Meals in the 1990s and beyond, but it's those early ones that really helped introduce millions of American kids to Legos for the first time. And by the 1980s, 95% of Americans are familiar with the Lego brand. That is brand awareness. You can't print on a plastic mold jack.

By 1994, it has 80% of the toy construction market. Sorry, Lincoln Logs. Although that is a narrowly defined market we're describing here. But it's not too shabby. In fact, LEGO is doing huge business all over the world, selling in 60,000 stores in more than 130 countries. By 1994, LEGO's global revenue tops $1.4 billion.

From the outside, everything looks fantastic. But on the inside, it was all about to come tumbling down like Jenga. Yetis, it's another Christmas scene. There's still wrapping paper, but this time it's strewn across a low pile beige carpet, and a young girl sits among a stack of open gifts. A special edition Pokemon, a Game Boy Color, and I think that Tamagotchi is giving me the stink eye over there, Jack. That's right, Yetis. Get ready to party like it's Christmas 1999. The girl eagerly tears into her next gift to reveal the LEGO Naboo Swamp Set, complete with a Jar Jar Binks minifigure.

Star Wars LEGO has arrived. Big moment here, because this is the first ever Lego line based on outside IP. That set that Jack just mentioned, it's actually a tie-in with Phantom Menace, the fourth Star Wars movie. Or the first Star Wars movie, depending on how you're counting. Thank you Luke. But the key here is that because it's 1999, more than 50 years into Lego story, it is the very first time they've now licensed movie characters for their sets. Another fun fact, that Jar Jar Binks minifigure was the first ever to have a customized head created for them. The most hated Star Wars character of all time gets the first custom Lego head. He really must have been a Sith Lord.

But when it comes to LEGO innovation, he blazes more trails than a pod race in the hot Tatoine sun. The Star Wars tie-in helped reignite interest in LEGO. And LEGO needed it. Oh, because LEGO was in a really rough spot at this point. In 1998, they posted their very first annual loss. $38 million lost, and they had to lay off close to a thousand of their 10,000 employees. What Jack and I are saying is that while we were growing up, Lego's numbers were actually going down. And why? Well, some fundamental management problems actually.

An internal audit uncovered the mind blowing fact that no one in the company knew the manufacturing costs for a lot of their Lego sets. You say five Kroner or fifty Kroner? Some were actually costing more to produce than they were selling for. Jack this is unit economics 101. Like if you don't know how much something costs to make, how can you price it right? Bob Barker would be freaking out like that. It would beis, by 2003, sales were down 30%. And LEGO was $800 million in debt. The only sets that sold well were the franchise tie-ins

like Star Wars and Harry Potter. And for those sets, they had to give a cut of the sales to the movie studios. So LEGO is now in trouble. And we haven't even entered the digital era of kids eating dinner with their phones and lying around with tablets in their hands. True, but the traditional toy industry was facing competition at the time from video games.

Yeah, so Lego did what any business does when it's faced with an existential problem. They paid for really expensive consultants. Yeah, Lego, they called in a host of business consultants who put together a lot of PowerPoint decks and advised them to diversify beyond bricks. So Lego tried introducing new lines like jewelry and clothing and expanded into theme parks too. They're basically ditching the core strategy in their DNA, the system in play, their theory of winning. And losing your compass is the first step in getting totally lost at sea. Lego is about to learn this and it's gonna hurt because in 2004

it actually gets worse. Lego posts a loss of $320 million and Kjeld resigns as CEO. A 36 year old who had only been with Lego for three years named Jorgen Vikenneuterstrup takes over and his first job is to rally the troops. And Jorgen's speech includes these stirring words. We are on a burning platform. We are running out of cash. We likely won't survive. I can't believe you said that.

I've never heard that. These Danes, they get right to the point, Jack. I don't know about coach over there. That wasn't the most upbeat speech we've ever heard. Not exactly a pep talk. But Jorgen goes to work doubling down on the system in play. To cut costs and complexity, he reduces the number of individual pieces Lego makes from 13,000 to 6,500. And he sells off the theme parks and he stops making LEGO jewelry and clothes. He also encourages the company executives

to come up with ways to get LEGO fans more involved in the company. This includes the LEGO Ideas Platform, where fans submit their own designs for new LEGO sets, which is still going on today. Yeah, if a design gets 10,000 votes, LEGO will review the design, and if they approve it, the creator gets a share of the profits.

Nice! Really cool! Winning ideas have included the DeLorean for Back to the Future, the Female NASA Scientist set, and even the Home Alone house from Home Alone. The company also reinvigorates classic Lego lines like City and Space, and they launch entirely new themes, the biggest hit being the ninja-themed Ninjago. Ninjas, nunchucks, and skeleton bad guys.

I mean, Jack, how does that miss? When Ninjago sets launched in 2011, they were an instant success. LEGO sales jumped by 20%. Yeah, it was actually only meant to be a limited edition, but it's still going strong today. Here's another brilliant move that LEGO made. Let's hear it, Jack. This time to win over adults. They unlocked the Kedult market

by letting adults express their passion through their bricks. Jack, is travel your thing? How about a 2,500 piece rotating globe? Or if you're more of the artsy type, maybe you get a Lego Warhol or a Lego Van Gogh for your wall. For architecture aficionados, there's Notre Dame, the Taj Mahal, and the Eiffel Tower.

Space enthusiasts, they get the NASA Artemis Space Launch System or the Perseverance Mars Rover which are also pretty expensive. Now Lego has always marketed to grownups to convince them to buy bricks for their kids. Remember parents were technically the real customers. But now parents are just the customers. Oh nostalgia, it's a heck of a drug. were technically the real customers. But now, parents are just the customers. Oh, nostalgia. It's a heck of a drug. And those sets for kidults, they're a profit puppy.

Because the cost per block, the unit economics, it's the same as a kid set. But adults have a higher willingness to pay for that kidult set. Now, other kid-focused brands, they've also moved to catch the kid-Dolt dollar, notably Disney broadening its adult appeal with Star Wars and Marvel, and Barbie with the Barbie movie.

Even for Build-A-Bear, the adorable teddy bear company, 40% of their sales were to adults in 2023. And yetis, this entire Kid-Dolt revolution, it began with LEGO. This all helped put out the fires on Lego's burning platform. And between 2008 and 2010, Lego's profits quadrupled. So Lego, they got some swagger back

and they start pivoting from the toy industry to the media industry. And this is the interesting twist because what Lego is pulling off now is adapting just in time for the digital era, their biggest existential threat. And they did it all while doubling down on their North Star, the system in play. Instead of getting slammed by screens, Lego found a way to make screens part of that system in play.

We could build a submarine. A bad submarine patent pending. With the rainbows. And pre-encadres in case we take a nap. Like an underwater spaceship! system in play. The 2014 LEGO movie was a smash global box office hit, bringing in $470 million in tickets sold, the fourth highest grossing movie of the year. Not bad considering they were going up against Guardians of the Galaxy, Captain America, and The Hunger Games. Oh, and that was followed by the Lego Batman and Ninjago movies in 2017 and the Lego movie part 2 in 2019. There have also been Lego animated TV series and a live action building

competition Lego Masters TV show. Oh, and they didn't stop there because then they pivoted into the video game industry. Lego games came into their own in 2005 with the Lego Star Wars video game. After that we got the Lego game tie-ins with Harry Potter, Jurassic Park, and more. And to tie it all in together they leaned heavily into community building online and offline. There's over a thousand Lego stores worldwide with hands-on play areas, community events, and interactive displays. If you're looking for a good date night, head on over to the LEGO store. But when the pandemic hit, LEGO put away the director's chair and unplugged the internet

router. It was back to its brick-making roots. The COVID-19 pandemic saw a surge in LEGO sales as people used LEGO to beat the lockdown cabin fever. It was tough being isolated, but you know what? At least you can make a Lego version of SpongeBob's Bikini Bottom. Lego was digital when you were on your screens

and it's analog when you're not. Heck, it didn't disrupt Lego. It just gave Lego another business line. Besties, today, Lego is the world's biggest toy brand with $10 dollars in annual sales That is twice as much sales as Mattel and Hasbro the other big toy companies Oh and technically the way we see it like it was really a full-on media company because it's got theme parks movies and video games As a core driver of growth and to think it all started from a little woodworking shop in the Danish countryside and a family feud

Over plastic like six fires so Jack now that you've heard the incredible story of Lego from a little woodworking shop in the Danish countryside and a family feud over plastic. They're like six fires. So Jack, now that you've heard the incredible story of LEGO, it is time to clean up our bricks and share our takeaways. So what's your takeaway on LEGO? To quote Sun Tzu in the Art of War, the best defense is a good offense. Back in the late 1950s, LEGO knew their window of exclusivity

in Denmark was ending and that the Germans would make a move. Instead of waiting for that German move, Lego went on the offense by introducing their Legos in Germany. And it worked. Oh, it totally worked. Lego flipped the narrative. Suddenly, German toy makers were on the defense from a Danish threat coming from the North.

All right, Jack, as you say that, I also want to point out the brilliance of the first product line from Lego introduced in Germany. The city models with the streets, the highways, the bridges and the tunnels, right? Yeah, yeah. This touched on the Autobahn and car culture unique to Germany. They use Germany's passions to break into the market. Like Sun Tzu wrote in The Art of War, the best defense really is a good offense. So, Nick, what's your takeaway?

So, Jack, I'm gonna take us from Sun Tzu to TLC. You ready for this? Here we go. Yetis, you don't go chasing waterfalls. You stick to the rivers and the lakes that you're used to. Here's how that fits in. LEGO, they lost their way in the late 90s and the early 2000s because they abandoned

their winning formula, the system in play. And that is what had brought them success. Instead, they were chasing waterfalls. Yeah, too many types of bricks, the like jewelry stuff. That was all distractions. As TLC would put it, Lego got a natural obsession for temptation.

And those distractions were just scrubs. But it later found its way again, and it returned to the system in play. Because I don't want no scrub. No. No. But besties, we are not done yet. It is time for our favorite part of the show,

the best facts yet. All our favorite tidbits and factoids that we couldn't fit into the story, but we couldn't leave you without. I'm going to kick it off. You got it, Jack. LEGO is technically the world's biggest tire maker by volume because they produce over 300 million teeny little tires every year.

Michelin Man who? Here's another one. LEGO minifigures of the Roman god Jupiter, his wife Juno, and the scientist Galileo traveled 1.7 billion miles to Jupiter aboard NASA's Juno space probe. Oh, and Jack, if you think stepping on your son's Lego is bad, listen to this. The world record for a barefoot walk over Lego bricks is 29,195 feet and 10.39 inches.

To be clear, we're talking about someone who walked about five miles on a river of Lego pieces with bare feet. And Jack, we should point out that Lego is dedicated to reducing its carbon footprint and being a global citizen because, you know, they're entirely built on plastic. In 2023, Lego abandoned a plan to use plastic made from recycled bottles.

Part of the problem, that recycled plastic wasn't durable enough to meet LEGO's exacting quality standards. But LEGO is still aiming to make half its bricks with renewable materials by 2026. On average, it takes 37,000 clicks and unclicks for a typical LEGO brick to get damaged. And on that note, Jack, I'm going to have to go full Beethoven and just whip you up a click symphony. Click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, click, that saved the entire Swiss timepiece industry. Next up, we're covering the story of Swatch. Follow the best idea yet on the Wondery app, Amazon Music, or wherever you get your podcasts. You can listen to every episode of the best idea

yet early and ad free right now by joining Wondery Plus in the Wondery app or on Apple Podcast. Before you go, tell us about yourself by filling out a short survey at Wondery.com slash survey. The best idea yet is a production of Wondery hosted by me, Nick Martell and me, Jack Kraviche Kramer. Hey, if you have a product you're obsessed with, but you wish you knew the backstory, drop us a comment. We'll look into it for you. Oh, and don't forget to rate and review the podcast. Five stars, that helps grow the show. Our senior producers are Matt Beagle and Chris Gaultier.

Matt Wise is our producer. Our senior managing producer is Nick Ryan and Taylor Sniffin is our managing producer. Our associate producer and researcher is H. Conley. This episode was written and produced by Adam Skjus. Special thanks to Adam Aseroff. Sound design and mixing by Kelly Kramarik. Fact checking by Molly Artwick. We use many sources in our research, a few that were essential for this episode were The Lego Story by Jens Andersen, the official Lego website. And Brick

by Brick by David Robertson. Music supervision by Scott Velazquez and Jolina Garcia for Freesan Sync. Our theme song is Got That Feeling Again by Black Alack. Executive producers for Nick and Jack Studios are me, Nick Martel. And me, Jack Ravici Kramer. Executive producers for Wondery are Dave Easton, Jenny Lauer Beckman, Erin O'Flaherty, and Marshall Lewin.