How to start a toy company, Part 1 of 2

Welcome!  This account is part one (1) of two (2), which will be posted to our blog, sharing with you the year in review. Part one — mostly a review of the start-up itself — is published today, New Year’s Day, by Will Haughey, one of Tegu’s founders and its “Chief Blockhead”. Part two — mostly a message about our social impact in Honduras — will be published later in January by Chris Haughey, Will’s brother, co-founder and Tegu’s “Head Elf”. Will lives in the comfort of suburban CT, heading up the USA operations and working with an incredibly talented team to build the brand. Chris, a true hero, lives in the turmoil that is Tegucigalpa, Honduras, making the world’s most advanced wooden blocks in the third poorest country in the western hemisphere.

Best friends from youth, Chris and I knew we would one day work together

From left to right: Chris, Dad, Will. Partners in crime since a young age.

Tegu is a socially-motivated business and was created to effect change in poverty-ridden Honduras by connecting it to the rest of the world through inventive, winning products. We call these products “relevant goods,” or those which matter to sophisticated consumers the world over. To be clear, despite being fueled by a social motivation to help those in need, we are not seeking compassion-driven purchases; our model doesn’t hold up unless we can go head-to-head with the brands you already know and love. In short, the more toys we sell globally, the bigger the social impact in Honduras (for more info on why we chose Honduras, see here).

Consequently, as an existing or potential Tegu customer, you’re not being asked to dig deep when considering the purchase of Tegu toys; in fact, we’re asking you to do what you always do: buy a product that might improve your — or your family’s — life. Without getting in over my head in psychoanalysis, I do think it’s important to admit that we do this every day. We buy gas so we can travel to see our friends, take our kids to school, and go on vacations with our family. We buy iPhones so we can communicate with loved ones, stay connected and have fun with technology. We buy good food because it tastes better than bad food. Some of us seek out great coffee because our morning ritual helps us prepare for stressful days at work (and because it tastes a heck of a lot better than bad or even mediocre coffee ;-)). In short, we search, often unknowingly, for products that are unique, better made, and likely to bring us (or others) joy. In order for us to successfully convey to you the basis of our approach, we urge you to admit that, regardless of your income level, unique spending habits or consumption patterns, you buy products that have the potential to deliver delight.

Our effort at creating a "relevant good"

Our effort at creating a “relevant good”. We’ve purposefully chosen to make ours in Honduras.

In the winter of 2008, Chris and I paid a visit to Treebones Resort on the Big Sur coastline in California. An awesome yurt resort with stunning views, Treebones was created by John Handy (and his wife, Corinne), a former Mattel executive who’d spent 25 years establishing and growing multi-million dollar household names like Teenage Mutant Ninja Turtles and Hotwheels. He was the head of product design at Mattel and, as such, a revered industry icon. Honored that he would spend an hour with us, Chris and I arrived with notebooks, pens, and a small brown sack containing some fairly crude magnetic wooden block prototypes, created for us by a model shop in Palo Alto. Although Chris and I wouldn’t fess up to it at the time, we were nervous that John might — albeit politely — shut us down and frown upon the simplicity of our concept. He had, after all, somehow helped mastermind the worldwide stardom of goofy looking turtles who ate pizza for strength.  We had arrived with rectilinear wooden blocks which incorporated magnets.

However, what ensued over the next 90 minutes was nothing short of inspiring, uplifting and energizing. After exploring the prototypes, testing their limits and listening to our vision for Tegu, John concluded that our toys possessed a critical “delight factor.” As he explained, it was that certain “je ne sais quoi” that some products possess and others don’t, that certain something that compels us to spread the word (”Here, try this!”). You may have experienced this delight in the gratifyingly solid click of a Montblanc pen, or, since 1949, the perfect degree of tactile friction between two LEGO bricks (not too loose, not too tight).

In the case of Tegu blocks, it was the surprisingly animated experience of wooden cubes snapping together by an invisible magnetic force. The blocks’ attraction to one another culminated with a consistent “clack.” The delight factor was further reinforced when north met north and two of our blocks thrust themselves away from one another, as if to say “no way, try again.” As he predicted, these blocks, although simple, would attract evangelist owners, or those who can’t wait to share them with their world. Thus far, it seems he was right.

Emboldened to accelerate the introduction and proliferation of this delight factor, Chris and I ran the numbers, finalized the business strategy (become the Apple of toys, go direct to the consumer through the web), and started meeting with anyone who would hear our story. For more background on how we raised the money needed to get launched, see this blog posting which describes the process and our pitch in greater detail. By God’s provision (and I really mean that), we launched with the needed capital at the end of March 2009, excited to bring our high price point discretionary item into the worst consumer recession in decades. I trust that many of us can speak to this experience, but when the cards gets stacked against you, the fight gets a lot more fun…and stressful.

In April, I flew out to meet Chris in LA, packed his 4Runner to the brim and took off for the border. We spent the next six days (and thousands of miles) on the road, snaking our way along the western coast of Mexico and then on into Guatemala. Having punctured a tire on the ridiculously bad Honduran roads, we limped our way into our city of destination, Tegucigalpa, and Chris began to setup shop (more coming on this topic from Chris later in the month).  For a video snapshot of the road trip, click here.

Over the next few months, Chris negotiated the lease of our facility space and darted all over Honduras to find used equipment at bargain prices. Machines that couldn’t be found in Honduras were sourced in the USA and prepared for container shipment in July. Meanwhile, the team we had recruited for the USA operations was starting to join in a full time capacity. Nate Lau — our Lead Creative shown below in his product introduction video — helped us put meat on the bones of the brand. went into development with the great team at Inspired Environment, and we started plotting our market entry with other Tegu advisors. One of our recruited advisors, Kari Boiler, was the woman responsible for bringing the ubiquitous Bugaboo stroller to the USA from Holland. She introduced us to Unlock PR, Kerry Fitzmaurice’s LA-based outfit, which is, unequivocally, the strongest launch partner in modern parenting. The Tegu family began to emerge.

In September, we went live on (taking pre-orders) and had a really solid start with a feature on DailyCandy Kids. Later that month, we encountered some manufacturing challenges that unfortunately capped the amount of inventory we could build and sell this year. Developed over the last two years, our manufacturing process of precisely getting the magnets into the blocks is patent pending. That said, we started to get picked up across the blogosphere and eventually in mainstream periodicals like New York Magazine, Interior Design and US Weekly (thanks to Nicole Richie). In November, we made the decision to stop taking orders on the website for fear that we wouldn’t be able to fulfill them by Christmas. It was a tough decision, but we made the most of it; and again, thanks to some heavyweights in the blogosphere like Gizmodo and CoolHunting, our waiting list exploded. The positioning for 2010 is fantastic; we’re wondering if we can find a way to make enough for the demand we’ve seen and will see.

Like everyone these days, Tegu is active on Facebook, growing a nice and supportive family of followers. We’re a bit lazy on Twitter; but, of course, you can follow us there as well. We encourage you to join the movement, support the cause and spread the word.  You can do this out of compassion for the people we serve in Honduras; however, as I mentioned above, there’s a Tegu delight factor waiting for you, so why not join the waiting list and line up for your first set?

In summary, it’s been an incredible year for our little block company, and we‘d like to say thank you to everyone who has played a part. There are tremendously exciting things in store for next year, but we’ll keep you in suspense just a little while longer. Let’s just say that our four wooden block shapes are just the beginning…

Tegu Design Video – Nate Lau from Tegu on Vimeo.

Reader comments (4)

  1. oh god. thank you so much for this. Finding any info on how to launch a toy brand is practically impossible. could you e-mail me? I’d like to have more details if possible.

  2. I love your story, I hope this will kick start my lazy self to do something about my ideas.

    Your company story is very inspriring and i hope to see you guys very soon.

    very good idea (tegu), I have a toddler myself and i can see this being utilized by her.

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