131. What Can Legos Teach Us about Entrepreneurship and Innovation?

Legos are one of the world’s most cherished toys. But the untold story of the inventor of Legos is one of entrepreneurship and innovation.

Links:

Here’s a transcript of our conversation:

Brittany: Hi Connor.

Connor: Hey, Brittany.

Brittany: So fun fact about me. I am a huge collector of toys, mostly toys I used to have as a kid. one of my favorite, I actually used to collect classic Teenage Mutant Ninja Turtles action figures, which they have changed over the years, so I will only use the original ones, but it’s fun. I get to track them down on eBay. Like I get to find all these old toys I loved as a kid, but I’m also a huge fan of Legos. And even now, I actually have a limited edition Harry Potter Hogwarts set, sitting in my living room that I have not put together yet, but I’m very excited about it cuz they don’t make this version anymore. So, Connor, what about you? Did you play with Legos as a kid?

Connor: You know, I played with Legos, but I think you’d be good friends with my wife because she collects like all of the Harry Potter Lego things and is often talking about how, oh, these are gonna increase in value over time and they’re collector’s items. And in my mind I’m like, they’re little pieces of plastic that we’re paying, you know, crazy amounts of money for, but they’re fun. My kids love building stuff in Legos and I just love the creativity that it kind of sparks. So I really enjoyed Legos. I don’t like stepping on them accidentally. That’s never pleasant. but I, as a father, I love seeing my kids play with them too.

Brittany: You know, side note, my Hogwarts set is worth over $500 and a friend gave it to me for free and I’m never gonna sell it, cuz again, she gave it to me, but still tempting. So anyway, my brothers and I always had a ton of fun when I was younger playing with Legos, and they were older than me, so when they would go to school, I would go in the room and I would play with them. They were probably one of my favorite toys. I mean, I liked my Barbies and stuff, but Teenage Mutant Ninja Turtles and Legos were like, my thing. So Netflix has this really cool series called The Toys That Made Us, and if you are somebody who was an eighties kid, even a nineties kid, you have to watch the show because it’s so much fun. It is so nostalgic. But it turns out there’s a really cool backstory to Legos. And there’s also a really good lesson about entrepreneurship.

Connor: What I like though about Legos, I think the most is, you know, we’re in a digital world. I mean, kids are playing video games all the time, and I guess Minecraft is kind of like Legos in the sense that you’re kind of, you know, building different things and have that kind of creative spark. But even these kids who are kind of, you know, addicted to Minecraft or playing all these video games today, they still like Legos. I mean, these Legos have, have managed to stay popular in this digital era. And there’s something, I think there’s something to that. I think there’s, a reason why Legos have maintained their what do you call it, their kind of, you know, popularity in today’s world. And I think it does speak to this topic that we’re gonna discuss here. And that is, it kind of, helps kids create, it helps them kind of be innovative and it is kind of like a tool that they can use to express themselves almost.

Brittany: Yeah. And, that’s what struck me as well. But what also struck me is like what the actual company had to go through and how the company itself is entrepreneurial. So here’s a little bit of the backstory. There is a tiny little town in Billund and Denmark. It is known for pigs. I think they make beer there and Legos like that is all this town is known for so tiny rural town. And this is where the Lego company first came into being. So I’m gonna say Ole, I think his name is Ole or Ole Kirk Christiansen. He was a carpenter. he supplied Bill and with all its woodworking needs like he was the guy in town. And prior to the 1930s, he was known for billing houses and other large projects. I think rocking chairs may have been one of them as well. Then the great depression hits, right? global economy is starting to tank and demand for large-scale project kind of diminishes.

Connor: Did this guy have like a, I mean, was he a dad, or what was kind of his family situation?

Brittany: Yeah, not only did he have a family, but right after the Great Depression hit, his wife died. So he had four sons that he was left with, and he toyed around, pun intended, with small wor woodworking projects just to keep his family afloat. I think that’s actually when he started making rocking chairs. Like instead of houses, he started building small things just to keep his family and just keep food on the table. But eventually, he decided to switch his focus and he started making small wooden toys.

Connor: So that’s kind of interesting. I mean, one little entrepreneurial lesson that we can already see stand out from the story is that, is that he adapted, right? So there’s this kind of, crash in the market and as you said, the demand for these big projects went down. and so, you know, he had to adapt. That’s what entrepreneurs do because the circumstances of our world change, and the conditions of the market change. And entrepreneurs are always trying to be adaptable and looking for new opportunities, to kind of pivot to change to. And, so I don’t know, I just kind of took that away from that story that like he’s already like you say, he is focusing on, you know, chairs or, things like that. And, so that’s very entrepreneurial of him.

Brittany: Exactly. And you know, we’ve also talked about entrepreneurs doing things that, make them happy, things are passionate about, and he loved making his children happy, especially after the loss of their mother. So I think that also gave him an outlet to do that.

Connor: So what, help me understand, maybe you looked into this, where the name Lego actually comes from. I’ve never looked,

Brittany: This is really fun. So in Danish, I think it’s Lego and I might be saying that so wrong, but it means to play well. So eventually it just got shortened to Lego. So you know, anyone who’s in, you know, who speaks Danish would know that it plays well, which I think is so perfect. So with the brand name set, these wooden toys we’re ready to go to market, and Christiansen was able to make some money. Now, while the US market was still crashing, thanks to the Great Depression, Europe was actually doing better, and then World War II happened, so they got, you know, slammed once again.

Connor: Well, and during wartime, a lot of governments would require that the public give them, you know, extra scraps of metal and things like that. And sometimes, you know, food, anything that could be used to help soldiers. and this was a problem I think, you know, not, my problem is maybe not the right word, but this was kind of a requirement of all kinds of governments all over the world because these scarce resources, the government wanted to kind of hoard them and, collect them for using in wartime. So, I’m curious if, you know, like, if he, face that problem at all, cuz he’s, he’s trying to like, build all these things. Did that kind of come into play in his story at all?

Brittany: No, and here’s kind of, again, the genius behind it. You can tell I’m such a Lego enthusiast, I get so excited. his toys were wooden, not metal, and they didn’t have a lot of demand for wood, right? Yeah, yeah. So other toy companies were still making their toys out of metal. So they were having to sacrifice their stuff for, you know, for wartime. It actually reminds me of the kids are probably too young to watch The Patriot as a very brutal movie, but there’s one scene where the dad actually has to melt down his kids’ metal soldiers, as bullets. So kind of reminded me of that, right? So there’s a metal that people need for wartime, but not a lot you can do with wood. So he took great joy knowing he could still make children’s smile during such a hard time. I think there’s an interview where he said that’s really got to me. So obviously eventually plastic comes into play and it becomes so cheap to manufacture. But, we’ll get to, the plastic aspect. But another aspect I love of the story is that in his wood shop, he hung a sign that said, only the best is good enough. And I love this because as an appreciator of innovation and you know, entrepreneurship, I, just love it. It’s so great.

Conno: I can almost imagine someone like Elon Musk having something like Hung in his house that says that, right? Like.

Brittany: Right, yeah,

Connor: Only the best is good enough.

Brittany: So eventually as they mentioned, plastic became the better and cheaper option. So the first plastic Lego bricks didn’t have any mechanism to secure each brick to each other. So that meant that many children were building these like, great designs. They were so proud of them. And then they would fall over and just collapse before completion.

Connor: I remember doing that with like soda cans as a kid, and we’d kind of like make these big towers and then, you know like you said, there’s nothing keeping ’em together. And so they crash out. And frankly, if I’m being honest, that’s half the fun, you know.

Brittany: knocking down.

Connor: Big thing. But yeah, that’s interesting. I didn’t know that. So the initial Lego bricks didn’t have the little bumps on ’em to kind of hold them together?

Brittany: Nope. They were hollow so they didn’t, so it was just kind of stacked. it didn’t cling to anything. So it wasn’t until 1958 that Legos started adding the tubing, allowing for, you know, that stable construction, and there were other building bricks on the market. I mean, what is it called? Just regular blocks were huge. I remember my grandma had ’em that were around since like the fifties, but Lego was the first to create the solution to the hollow brick problem by creating those little bumps that now, you know, stick together. And, this took several years and many different models before finding something that met the perfectionist standard of the creator. And it was so perfectly designed that the actual Lego brick since 1958 has not been altered. It has been exactly the same.

Connor: That’s interesting. And like another little entrepreneur idea to pick out of there that even the best entrepreneurs don’t always get things right the first time. Like, so this guy, as you said, created these like hollow bricks that were kind of a first, you know, model and kind of caught on some interest, which probably allowed him to sell enough to earn money to then spend time in what’s called R and D research and development, right? so you can spend time thinking and experimenting and innovating, which led them to create that. It’s called Tubing, is that what you said? It’s called

Brittany: Yeah. Tubing. Yep.

Connor: And, so, you know, it takes him several times it, it sounds like, to get something right. And, there’s that quote I think from Thomas Edison who’s like, you know, took him all these tries. He says, I just found 2000 ways not to make a light bulb. I only needed to find one way to make it work. And his point was like, failure is the way that you find out that that’s not the way to do what you wanna do. So that helps you move forward, right? Okay, check, you know, that’s not the way to do it. Let’s go try the next thing. And, entrepreneurs almost embrace that failure because it teaches us, right? Like, it teaches you the wrong way to go. It, you learn from that opportunity and it probably gives you a little bit of knowledge that helps you do things even better when you find the right way to do it. Yeah. And, so I, like that from the story that he didn’t get it right the first time. It took him a little bit to do it. And, that shows, I think the hallmark of an entrepreneur is you’re persistent, you’re sticking with it, you’re trying, trying improving until you, until you get it right.

Brittany: And another lesson was specialization. So, we’ve talked about that in previous episodes as well. Plastic blocks were now his thing. And so he stopped using wood altogether. He knew what he was best at.

Connor: I wonder, I mean, cuz like we grew up with, I mean, I grew up with Legos for sure, but this’s also when video games were becoming, you know, more popular than your Teenage Mutant Ninja Turtle action figures and, you know, other toys out there. And so, I guess I’m wondering like, Legos are still popular today, but what was it like when, when all these video games were coming out? Like, and if Lego was still able to be successful during kind of the rise of the video game?

Brittany: It actually almost destroyed them. It led to a series of disastrous new product ideas, that actually cost the company money and reputation. And I mean, it was, it reminded them that they were best when they stuck to their strengths, but they almost went completely bankrupt.

Connor: Interesting.

Brittany: So yeah, veering from the bricks or steering away from that direction that helped them make a name for this themselves, they decided to do a cartoon called Jack Stone that nobody washed. It had nothing to do with Legos, so then they release a live-action futuristic series called Galidor Defender of the Adder Dimension. Wow. Also tanked. Yeah, cost the company millions. So they were trying too hard to be modern. They abandoned their specialization so desperate for something new. They tried to make Legos catered for girls. I had these as a kid, they were awful. It was like, it was kind of demeaning. They were pink, they were purple uninteresting. They were like, build a nursery. And so I still went and stole my brothers instead.

Connor: I mean, again, another lesson, like if you get out of touch with consumer demand, what people actually want, you’re gonna waste resources In this case, you’re gonna, you know, spend a lot of money that goes nowhere. You never, get your investment back, because you don’t know what the people actually want. And, I don’t know, that’s kind of interesting little story. I had no idea that they were venturing out into those other things.

Brittany: Yeah. And I know we’re kind of running outta time here, but I wanna tell this story, so I’ll try to tell it pretty quickly. So people assume that Lego made a lot of money when they partnered with Harry Potter and Star Wars and they did, but the first year they did Star Wars-themed Lego sets. It coincided with the release of the prequels, which are terrible. But that was another discussion, So then Legos were off the charts, right? They were selling, but they underestimated the market and they didn’t produce enough. So within weeks completely sold out. So the next year they over-corrected and they got it wrong by producing too many Star Wars themes, Legos, but there was no film release that year. So they had relied on the branding alone, but with no new film, nobody was buying them. And the same thing happened with the Harry Potter line. So at this point, like Lego can’t catch a break, they almost had to sell their company to Mattel, the company that makes Barbie at this point, they actually sold Lego land to another company. And this was the first time in their history that a Christiansen didn’t own the company anymore. And so this forced them to go back to the roots. And can you guess what saved them?

Connor: Okay, so not Harry Potter and not Star Wars. I’m trying to think of what other big thing, they did in the movie, right? Was it the Lego movie?

Brittany: Almost So great storytelling saved them. And we have talked about this so many times. the story went and they or the company sought help from a man who actually had an inoperable brain tumor and he was dying and he knew he was gonna die. So using his own fight with cancer, his name was Christian Faber, he used his disease for inspiration, Lego Bionicles, which became huge. I remember my nephew had them told the story of robots fighting off this dark presence called Makuta, and he was supposed to be a representation of his cancer, right? So Faber used this whole idea to create an entire world where children could get lost in and Bionicles then became hugely profitable. And this was all because it was the storytelling that resonated with kids. So by 2004, the company starts to see really positive changes, and they started to actually have some success, even though they weren’t doing just the bricks.

Connor: That’s interesting. No, I had no, I didn’t even know that Lego bionicle’s existed. So that’s super interesting.

Brittany: And as you brought up, the movies helped too. Yeah. So by producing the children’s movies, but remember they used the Bricks, right? Like, is it Batman is the, and what is it? Everything is Awesome, which I hate so much, Yeah. So, that helped save them and it started putting, it started reminding kids that they could be put in the driver’s seat of their own creativity. You know, the Batman success was so good. The kids were now buying real Legos. And so that saved their company. And while it took them a long time to get there, Lego Group is now officially the largest toy company in the entire world. Oh, wow. Yeah. And according to Fast Company, and this is a quote from them, in the last 10 years, Lego has grown into nothing less than the apple of toys, a profit-generating, design-driven miracle built around premium, intuitive, highly covetable. So like much wanted hardware that fans can’t get enough of.

Connor: I, this is so interesting. I mean, there’s so many, nuggets that we’ve kind of been able to pull out of this. And it’s funny to hear the story behind it because, you know, as you said, the specialization, persistence or perseverance, innovation, and I, really like that because here they are a success, but it wasn’t always that way, right? Yeah. You look back at that story and it was not a given that they would be as successful as they were. And, entrepreneurs, like, part of the hard thing about being an entrepreneur is that it’s not always, you know, roses and big bank accounts. you know, it’s like sometimes it’s really hard and you’re on the brink of failure and it forces you to really, innovate. Sounds like the Lego bionicles, right? Born of this like, necessity of like, we gotta figure something out, you know, And that’s really cool story and I think makes me appreciate those little plastic bricks even more that, I think are way overpriced. So maybe I’ll feel better about that now, knowing the entrepreneurial history behind the company. Thanks as always, Brittany. That was a fun topic to talk about. Entrepreneurship is so important. The kids out there are listening. We gotta always have, I think that inspiration for how we can improve our lives and other people’s lives as well. And entrepreneurship’s a great way to do it. So until next time, Brittany, we’ll talk to you later.

Brittany: Talk to you later.

 

Interested in more content?

Check out our latest email…

The Federal Government is Dumbing Us Down

I was thinking earlier about how easy it is to think that things have simply always been the way they are now. For example, my kids have never known travel without long security lines, having to take off their shoes and jackets, and witnessing their parents occasionally groped by power-tripping TSA goons. They can’t imagine the days that represented most of my life where you would walk your loved one all the way to their gate, watch them board, and wave as their plane pushed back from the jetway and taxied off. Or how about the generation of kids growing up thinking that masks are a normal part of life, or that grocery store workers have always been encapsulated in plexiglass? Or that someone can be fired for choosing not to undergo a particular medical procedure? The way things are tend to make us forget that all of these practices

Read More »

From the trusted team behind the Tuttle Twins books, join us as we tackle current events, hot topics, and fun ideas to help your family find clarity in a world full of confusion.

Want More?

The Tuttle Twins children’s book series is read by hundreds of thousands of families across the country, and nearly a million books (in a dozen languages!) are teaching children like yours about the ideas of a free society.

Textbooks don’t teach this; schools don’t mention it.

It’s up to you—and our books can help. Check out the Tuttle Twins books to see if they’re a fit for your family!