There’s a great podcast with Harary on How I Built This, where they cover Spinmaster/PAW Patrol. As with most businesses, they had to get lucky with a few hits at the start to get where they are today.
I think the only difficulty I have is wrapping my head around the R&D to ensure that they keep investing in new products. I think having the founders still on the board likely help to keep that mindset going.
I very much enjoyed his podcast, I should have mentioned it (think I'll add an edit), it was a key part of my research. The R&D is a big question, I myself would have. You're right that, at least from that podcast, it really seems like Ronnen, Anton, and Ben would not let Spin Master slip into neglecting R&D, the creative process, etc. The company has had excess free cash flow for a while, and so I don't take the new focus on returning capital to shareholders as coming at the expense of R&D, but there's an argument to be made that it is. A creative company probably always needs to be run a little inefficiently - you don't create hits without a bunch of failures, and you don't create hits by paying dividends.
Agree 100%. The company barely had any R&D budget for a while after it was founded, and it seemed to have a good batting average in terms hit toys. Obviously the R&D budget is much larger today, just have trouble wrapping my head around the effectiveness of the spend. Seems like there’s a minimum scale required to take ideas from simple inventions to actual products, which bodes well for keeping smaller upstarts out.
The ROI on R&D is much less of a concern given the cheap valuation though. Harary also mentioned that Paw Patrol was a once in a lifetime brand. If that turns out to be right, then it is incredibly mispriced.
It's been mentioned on that podcast and conference calls just how valuable Paw Patrol is, so as I was looking at Spin Master I just kept thinking about how much that one brand would be worth to an acquirer. Would an acquirer pay $1 billion for Paw Patrol? I have to think someone would. Would they pay $2 billion? I'm less sure about that... Thought about this way, the valuation seems like a no-brainer. But since they won't be selling it, you take on some brand management/mismanagement risk
There’s a great podcast with Harary on How I Built This, where they cover Spinmaster/PAW Patrol. As with most businesses, they had to get lucky with a few hits at the start to get where they are today.
I think the only difficulty I have is wrapping my head around the R&D to ensure that they keep investing in new products. I think having the founders still on the board likely help to keep that mindset going.
I very much enjoyed his podcast, I should have mentioned it (think I'll add an edit), it was a key part of my research. The R&D is a big question, I myself would have. You're right that, at least from that podcast, it really seems like Ronnen, Anton, and Ben would not let Spin Master slip into neglecting R&D, the creative process, etc. The company has had excess free cash flow for a while, and so I don't take the new focus on returning capital to shareholders as coming at the expense of R&D, but there's an argument to be made that it is. A creative company probably always needs to be run a little inefficiently - you don't create hits without a bunch of failures, and you don't create hits by paying dividends.
Agree 100%. The company barely had any R&D budget for a while after it was founded, and it seemed to have a good batting average in terms hit toys. Obviously the R&D budget is much larger today, just have trouble wrapping my head around the effectiveness of the spend. Seems like there’s a minimum scale required to take ideas from simple inventions to actual products, which bodes well for keeping smaller upstarts out.
The ROI on R&D is much less of a concern given the cheap valuation though. Harary also mentioned that Paw Patrol was a once in a lifetime brand. If that turns out to be right, then it is incredibly mispriced.
It's been mentioned on that podcast and conference calls just how valuable Paw Patrol is, so as I was looking at Spin Master I just kept thinking about how much that one brand would be worth to an acquirer. Would an acquirer pay $1 billion for Paw Patrol? I have to think someone would. Would they pay $2 billion? I'm less sure about that... Thought about this way, the valuation seems like a no-brainer. But since they won't be selling it, you take on some brand management/mismanagement risk