How Licensing Fuels the Toy Revolution: Insights from Brad Reese’s 20-Year Journey

EP033_06-21-24_Brad Reese

Intro: [00:00:00] Welcome to Toy Business Unboxed, your gateway to the secrets of the toy industry. Here, Jason Hsieh, a toy entrepreneur and expert in the field. “Every product we develop is really inspired by some of the real life experience that we have with our son.” “60 percent of all toys last year were sold on Amazon.”

“Be passionate about it. Because it’s a road. It’s a journey.” “Like when you have an idea that you think is gonna somewhat change the world, make things better, I’d say go for it.“

Jason Hsieh: Hello, Welcome to another episode of Toy Business Unboxed. I’m your host, Jason Hsieh, where we uncover the story behind the toys that shape our childhood. In today’s episode, I’m honored to have Brad, the VP of design at Life, joining us discussing about his career in toy design [00:01:00] from Disney to all the different big toy company. And currently he’s working at his latest adventure designing wonderful toys for outdoor. So, thank you so much for joining with me on the podcast today. 

Brad Reese: Thank you for having me. 

Jason Hsieh: Can you walk us through your journey in the toy industry? Because I know you have quite a bit of years in the toy industry. 

Brad Reese: Yes. I don’t want to sound like I’ve been doing this too long, but this is my 20th year in the industry. So it’s been a little while. My journey started 20 years ago as a new college graduate looking for job opportunities. I always had an interest in children’s products, but never really knew it was a the level of career that it is for so many people. So I was actually. Essentially introduced to the industry through my first company I was with. I started as an intern, they came to our school. That’s how I learned about, oh, there’s a toy company that I could join and that just opened up a whole world to me. So I [00:02:00] was, 

Jason Hsieh: what is the name for the company back then? 

Brad Reese: It’s the kids too, is the company and they’re based in Atlanta where I was in school. And so I was able to start an internship in my senior year in college, really loved the industry, the types of products it was all so new compared to what I’d been doing in school, which was traditional industrial design. It had just such a lighthearted nature about a lot of things we were doing and being in a the company was fun, energetic, and so I went on full-time as soon as I graduated. And I was there for 14 years straight in and I was committed. A lot of it was because there was so much newness and change always happening that it just kept opening up new opportunities. Whether it was opportunities to grow my career and kind of take on bigger challenges, the company was growing in terms of the age group that they were selling to and the breadth and the depth of their portfolio was growing year by year. They were [00:03:00] picking up licenses. So very very early on in my career, I was introduced to brands like Disney, and smaller brands like Boppy and Taggies and things like that. So the company’s foundation was in baby toy. They kept growing and it went into toddler toy and just their new category. So it was a really exciting time. So that was my basic training in toy industry and it lasted for a long time, of course. But yeah learned, a lot there and then I moved on to a slightly smaller company. But one that is much more well known, which is Elf on the Shelf. Not a lot of people know that A, it’s a brand and it’s owned by a company called Lumistella. And B, it includes a whole product line, probably 50 plus different toys. 

Jason Hsieh: Do you also sell that as a license to other toy company?

Brad Reese: Yes. So that was actually at Kids 2, I was really focused on inbound licensing, working on products under brands like Disney, John [00:04:00] Deere, pixar, things like that. Lumistella, Elf on the Shelf was the flip side of that. It was more outbound licensing to about, I think probably over 50. I think at the time it was over 70. Different licensees. And so 

Jason Hsieh: you manage all 50 of them. How does that management look like? 

Brad Reese: It’s not easy. It’s not a large company. It’s a relatively small company with a hugely popular property. So during my last year there, I was responsible for managing the creative side of the licensing.

Jason Hsieh: Oh, wow. Okay. 

Brad Reese: Building style guides, my team handled the review and approval of every licensed product. And then we had a business arm of the company that handle the contracts, the kind of onboarding new licenses. 

Jason Hsieh: I always find licensing very interesting. It’s like a very interesting sub niche. We in the toy industry. And I was just at a licensing expo earlier this year in Las Vegas. And Matt was quite a bit of different type of people. There’s software company dedicated for licensing. There is [00:05:00] like consultants specializing in licensing. There’s even like auditor that specializing auditing the company for licensing. It’s like a whole cottage industry. Just,

Brad Reese: it really is. It’s just become so huge because as soon as a brand reaches a certain level of recognition, they instantly want to reach as many audiences as possible so that especially for a company that is not built with all those resources to add on licensees that can cover all 

Jason Hsieh: the interesting part about your experience is you done both, you done outbound licensing and inbound, can you share with the audience, like the nuances between the two?

Brad Reese: Yes it’s interesting. It’s great to have both perspectives because you can see the challenges faced on both ends. The inbound side, you have to, especially when handling multiple licenses, cause typically a company if they have one inbound license, they probably have quite a few others, right? So a lot of companies have a core product strength and then they translate that across multiple licenses. So you have to be able to jump from one [00:06:00] story to another. 

Jason Hsieh: I have not done any inbound licensing for my toys brand yet, so I’m also trying to learn a little bit on how it works.

How much time do you have after you get a license to design and launch the voice prototype and show it to your licenser? Because I’m pretty sure they wanna see that. 

Brad Reese: They do wanna see that. Usually there’s a good kind of 1st year that is typically with the licensing agreement, there will be some upfront guarantee. And so that there’s a financial period, that’s initially covered and certainly they’re not expecting in a matter of weeks to have the product on shelf. But usually before the agreement’s ever been inked, there are usually some creative conversations have already happened. In most of my experiences, there was a pitch involved. Even if there was a relationship already in place, there’s still these let’s talk about what we can do. Here’s some examples of what we can do. So a lot of that gives you a headstart then on actually executing some of that. One of my favorite pitches was for the finding Nemo. 

Jason Hsieh: Oh, okay. What was the toy that was designed? [00:07:00] 

Brad Reese: Within a pretty small category initially, which was play gym. So baby play gyms.

Jason Hsieh: Oh, I saw it was going to be a water toy, 

Brad Reese: water themed for sure. A lot of times you’ll start small with a light, you’ll attract a licensor with either a capability that you have that others don’t, or you’re just your company culture around how you develop product. Yeah. A lot of those things can attract. In this case, we had an existing relationship with Disney, not with Pixar. And We were able to. 

They were then as well, but different management teams, a lot of times and sometimes different decision makers. So even though we had disney, we still put together a pretty formal pitch to the Pixar team for the Nemo property, and it was really centered around that one category of play gems. But the work that we did to develop that pitch, actually the sketch from that pitch became one of the products, [00:08:00] which then I worked on with my team and 

Jason Hsieh: I never did any kind of license pitch yet. Is that very similar to like an investor pitch? So to speak, for example, you’re trying to raise money. 

Brad Reese: I would say it probably has more even mix of the creative and the financial piece. Certainly you need to show what you believe the projections to be, you’re going through all the fun discussions around agreeing to the licensing rate and terms and guarantees and all that good stuff. But I think there’s an equally weighted part of communicating that we understand your property, we understand who you are in the case of the toy industry a lot of it is we understand the story you’re trying to tell, who you’re trying to reach, what you’re trying to do with your brand, or your movie or your story or your book, whatever. And so I think that everyone responds to that in the context of a toy license. 

Jason Hsieh: For those audience, that’s new to this whole concept of licensing. Can you explain [00:09:00] what is a typical licensing agreement? How long is the term? What is the percentage and what is a typical minimum guarantee look like? 

Brad Reese: Sure, it can vary widely. A company that maybe has more narrow IP might be willing to license it out for, let’s say 5%, something like that. The big brands, the globally known brands can be in the 12 to upwards of 16 more percent of the revenue for the year. So a lot of the initial financial discussion is around, okay at that rate and certainly the bigger companies, they have plenty of leverage, so they don’t really get those rates. It’s really up to you to show, how are we going to bring the product to life? That supports that brand and that story how quickly can we do it? There’s typically a date where the license amount kicks in. So there’s a minimum guarantee in just about every contract, but it doesn’t start immediately. So they have a grace period, but usually you’re established by this date. [00:10:00] 

Jason Hsieh: How long is the typical grace period? Like six months?

Brad Reese: I think it’s I’ve seen it, More like a year, especially companies that are familiar with toys and consumer products to allow a new product to run score. Now, certainly if there’s a some companies that don’t require a lot of product development, and maybe it’s more just translating some printed artwork to some apparel or some bed sheets or something like that, that can happen pretty quickly. So the terms might be different. Might kick in sooner, but that’s all part of the negotiation. The thing that I think a lot of people don’t realize is that about half of the licensing contract is how the licensing agreement could end if it needs to end oh, discussion and you wanna be prepared with going in with a very realistic viewpoint that we’re all excited about where this can go, but if it doesn’t work out, how do you unemployment? There’s a lot of that. 

Jason Hsieh: Can you give a few example on how you typically it will end? 

Brad Reese: Well, so a lot of it is If [00:11:00] there’s a period of, let’s say, it can range from a year where sales fall below expectations or six months for sales fall below expectations, or a lot of times there’s you can essentially set up a, let’s say, a quarterly minimum that you’re expected to hit. Oftentimes, if you don’t hit that, there’s a clause that allows you to simply pay that instead of and that’s just an option to keep the contract alive essentially. But usually if a lot of it just relates to, if this doesn’t go as well as we hoped, and we’re not making the money that we hoped, or we’re not achieving what we wanted, it’s usually more financially based and then it becomes, okay, how do we go our separate ways and pay out any remaining money and things like that. It’s not the most warm and fuzzy part of things, but I think it’s just a reality in really just illness, any sort of contract, whether it’s inventor licensing or licensing of a property that there’s always that part of it is both as on the licensee and you want to protect [00:12:00] yourself and make sure that you’re not essentially stuck paying out royalties, whether you are making the sales or not. And then from the license side, they want to be able to say, was this a success? Do we want to keep this going? Not, then we have met ways to measure that and to be able to move on. 

Jason Hsieh: I see. So when you used to work for that company that do inbound licensing, you say you get 50 license in the same year? Is that even possible? 

Brad Reese: So that was, so that the 50 licenses were at Elf on the Shelf and those were all outbound. 

Jason Hsieh: Oh, those are outbound. 

Brad Reese: Those are outbound. But no, they were not all established in one year. They were built up over a 10 year period or more. There would probably be, maybe up to five new licenses added.

Jason Hsieh: Oh, for inbound, for a toy manufacturer like myself, I have never done any kind of licensing deal in the past, what would be your recommendation for us to do the research and all that stuff? 

Brad Reese: I think it’s important to understand what your strengths are as as a creator of [00:13:00] toys. Because these companies have, especially the bigger ones have people coming out of the woodwork all the time to say, Hey, I’d to get this license. In general a lot of larger companies are pretty, open to licensing, but you have to establish What is your niche? Do you have access to a certain channel where you’re better at something than others? Or do you have an intellectual property of your own that is better than others? It’s really like why should it be you? And if you can tell that story, then you’ve established that foundation. That’s one of the most important things. Again, smaller licenses, you’ll have more of a openness, if you’re looking to get someone who’s an up and comer, property or let’s say a small animation property from YouTube or something like that, right? They’re going to have a little bit lower requirements and there’s probably more of a mutual benefit where you’re helping them get more exposure. And they’re helping you add some content.

Jason Hsieh: True. That might be a easier starting point as well. 

Brad Reese: Bigger companies, [00:14:00] you have to walk in understanding that they’re expecting return on their investment, return on their partnership and it’s a little bit more, I won’t say it’s one sided, but it’s certainly there aren’t a lot of companies that can.

Jason Hsieh: Since you have been sitting on both sides of the table. So let’s just say when you’re doing outbound licensing, what do you look for? 

Brad Reese: It’s the inverse at Elf on the Shelf, we would look for, first of all diversification. We would want both products that we don’t currently make, nor have on our roadmap for the future and we want products that are unique from other licenses. We have one licensee who’s doing pajamas. We’re not going to look for another one. But you then also look for, you certainly do look to, what does their current portfolio look like? And is it there, the quality is great and that’s what makes them the right partner for us. Is it their ability to translate storytelling? Is it their intellectual property or their sort of mental or emotional share of their market? Because yeah, there were some companies that were [00:15:00] chosen just for their quality. There were others chosen for their speed and their ability to quickly saturate a market. Then there are others that were chosen because they just make one product and they make it really well. That’s one of the last licensing deals that I was only initially part of the discussion was the company Tony’s that makes the interactive speakers that tell. 

Jason Hsieh: Oh Yeah. I saw them. I saw them. 

Brad Reese: Yeah, they now have an Elf on the Shelf version of that, but that’s because they have a true core competency. They could 

Jason Hsieh: tell that well, because to be honest, that product is super simple. It just like a speaking, talking story time box. 

Brad Reese: It is. They had a good mashup of good quality sound product, but then they had the collectible figurines that 

Jason Hsieh: yeah. I guess that’s a good combination of stuff.

Brad Reese: And so that’s what we saw in it and what drew us to that, and certainly if, there’s something that’s central to the brand, obviously Elf on the [00:16:00] Shelf is a very Christmas season focused brand. 

Jason Hsieh: So back to the example of Tony’s, I believe they have a patent on that music box of theirs?

Brad Reese: Yes, I believe so. 

Jason Hsieh: So when you are doing the outbound, do you consider, since this company have a patent, that’s like a higher priority on your list? 

Brad Reese: Yes. It certainly, helps a company stand out from others in the space. I do think that helped back at kids too. I think that helped us in a lot of cases on the inbound licensing side where we had a patent or some strong IP around. We did this brand. That the company purchased and owned called oal. Which is this type of thing. That like material and that. But this was patented. That creates something unique that only we could create and then we converted that into a concept for, actually for multiple brands. Initially it was Pixar. That was actually our first toddler Pixar product was because we had that patent, no one else could do anything that looked like.

Jason Hsieh: It makes sense because otherwise going back to your example of pajama, everyone can do a [00:17:00] pajama. There’s nothing easy about it. You just throw it like a random license on it. You could call it whatever you could be sponsored by if you want. 

Brad Reese: A lot of companies just get the business by having a an existing relationship or being in a different region. But if the priority for the licensor is quality, then you’re not going to just be open to every single person, you’re going to look at the top tier of pajama makers. It depends on the priority of the company licensing out. 

Jason Hsieh: How do you deal with a knockoff? Because let’s just say there’s so many counterfeit on license, I mean from China, let’s just say Elf on the Shelf that’s a whole bunch of knockoff too.

Brad Reese: There are a lot of knockoffs. 

Jason Hsieh: Which one is actually a real license product versus just another, a knockoff that you find on the, like in the dark alley somewhere, . 

Brad Reese: And that is part of what the licensor is, there to do. And oftentimes that’s certainly part of the value that they provide and why you pay them royalty is that they are signing up to continue to protect their property right can tech. So it’s not the licensee’s job to [00:18:00] run around and shut down factories that are knocking off. The company has that responsibility and for a company of the size that Of that, that Luella was, they had a huge team dedicated to that. Cutting down factories, cutting down, actually going into China, raiding factories with the police.

Jason Hsieh: That’s the next level of stuff, man. 

Brad Reese: It’s a crazy world out there and counterfeits pop up. Almost instantly these days.

Jason Hsieh: Yeah. 

Brad Reese: Yeah You have to, it’s like playing whack a mole sometimes. 

Jason Hsieh: Out of all your experience with working with all the different, do you have any memorable story that you would like to share with the audience with all the different product design you have been in part of?

Brad Reese: The majority of my career was at kids too and there’s lot of categories and it’s a global company. So there’s just a lot of opportunities to see other parts of the world, I’ve had a lot of great opportunities to travel to China, to Europe, all in the name of 

Jason Hsieh: have you been to Taiwan and Japan [00:19:00] yet?

Brad Reese: I have not. I would love to. But I think one of the most memorable trips was probably. One that we actually took to have a meeting with the UK, Disney team. We’re actually we’re holding some meetings, but also doing a brainstorm with them. It’s such a cool experience because it was not your typical, it was a sign of a good relationship between two companies because we went out shopping with them, they came to the stores in London with us, we had a brainstorm at their office. We we’re able to get to know each other more. We even, we took a trip down to Paris to do some research there. We went to Disneyland to get a really understand the brand and all of that was that’s the sign of a company that is really standing behind understanding the story that they’re licensing and getting truly immersed in the in a company. For us it was just, it was a lot of fun, yeah, to travel with your coworkers and do all these really cool things. That’s what building these relationships can lead to. [00:20:00] And I think that’s why it’s so important to foster every relationship that you can. 

Jason Hsieh: And that’s transition to talk about your current role in life is better outside. Tell me a little bit more about the current, role in the current company you work for. 

Brad Reese: Sure. Yeah. So life is better outside is a brand new company. And so this is a new experience for me. Being on the front end of a company that is just launching. So we are as fresh as can be still developing. It’s new for me because my career has gone backwards in a lot of ways in that I started at. The biggest company that I’ve been on and each company that I’ve joined since then has been smaller and smaller. Now we had a newborn company but it’s a really good mission for the company, which is getting kids outdoors, getting them active having them appreciate their own backyard in new ways. And so we develop outdoor games outdoor activities and a lot of really exciting properties and we have our owning company is a big global company called [00:21:00] Hape around for decades. We’re the, one of the newest members of that family. And so it’s really interesting for me to have both the brand new baby company, but the support of the parent company at the size of Hape. It helps in a lot of ways, add on all the resources that you don’t necessarily have as a brand new company. It’s exciting because I’m participating in functions of the company that are beyond even the experience that I got over the last 20 years. A lot of the things that you know well, which is how do you get started? How do we get started on Amazon? 

Jason Hsieh: Yeah, one of my specialty.

Brad Reese: And I’m like, no, as a product designer, as a toy designer, no one ever approached me and said Hey, can you work on infographics for Amazon or what’s our SEO keywords be and things like that. I’m learning on the fly. A lot of those things while still having my kind of core product development. It’s been, a lot of fun and it’s a new chapter and new kind of world of product categories and for 

Jason Hsieh: you also doing inbound licensing right now for this new [00:22:00] company?

Brad Reese: Not yet, but there are some conversations. Some licenses that really make sense for that. 

Jason Hsieh: What would be a good license for outdoor brand like the one you’re building right now? 

Brad Reese: I think any sort of, I shouldn’t name, I won’t name names just because some of them are in discussion, but really brands that focus on active lifestyle and whether it’s fitness or just a property that involves people of all ages being active in some way. That’s certainly appeal. And then I think, as we, as a company continue to develop innovative products, then there will be other licenses that are appealing, where we have something to offer to that licensee that they don’t have in their portfolio or that they never thought of before. So that’s the exciting stuff for me. It’s I want to develop products that draw the attention of licensors, licensees, that’s what we’re just now starting on our journey here. 

Jason Hsieh: I see. Thank you for sharing that. It sounds like an exciting journey and a different type of a career. Almost like it’s called an [00:23:00] intro entrepreneur. It means you are an entrepreneur within a bigger company. 

Brad Reese: Yes. And that’s always been what I love doing. It’s great to have that continue to grow. 

Jason Hsieh: How big is the team that you’re managing right now? 

Brad Reese: The team, you’re looking at the team right now. Yeah, in terms of employees of the company, I am one of two in the U S and so we have through partnerships with different contractors, but also through hot pay as well certainly we have a lot of resources available, but there’s a lot that we’re hustling to do on our own and we’re going to do it some things the right way, some things the wrong way, but as long as we’re making progress that’s what we’re focused on. That’s what like I said, I’ve been going backwards in a good way, I had my years of managing large teams now It’s, 

Jason Hsieh: Back to the startup mentality, it’s very different startup really more about hustling a lot of different hats, like myself, I’m the director of sales director, operation director of finance, and I run two different businesses and one nonprofit, one nonprofit foundation. I have [00:24:00] a podcast and I also run a meetup group and I was writing a book, so I’m juggling all this stuff. 

Brad Reese: You need to take a nap sometimes. 

Jason Hsieh: I might need to take a nap after this. I’m pretty sure.

Brad Reese: You should. Hopefully you take vacations sometimes. 

Jason Hsieh: The nice thing about my business model, everything is digital. So I can, work from Japan if I want to. I can work in Okinawa, in Hawaii, whichever I want. And I guess that’s the nice thing about having a digital based business model. 

Brad Reese: It is, and I’ve been fortunate to be in a remote position now for my last Less three, really since 2020, as a lot of people have experienced. But while a lot of people have had to go back to the office, I’ve been fortunate to have this flexible approach that allows, work from anywhere and be anywhere I need to be at that time. 

Jason Hsieh: Is it ever on the horizon for you just to start your own toy business instead of working for the boss, be the boss instead? 

Brad Reese: Honestly, I’m not sure there’s a toy designer out there that doesn’t give it some thought. Just because I think that generally the belief is it starts with product. And of course, as a product developer, I’d love to believe that as well. So you’re like I have the [00:25:00] skills to make the product, so why wouldn’t I just do this myself? I would certainly never rule it out. I do really enjoy all the different viewpoints that come from Working inside a company, big or small and the kind of, I still feel like I have so many skills to learn and pick up that can help me in the future even after being at this game for a while but it’s still 

Jason Hsieh: one of the critical skill you have to pick up if you want to start your own toy business is digital marketing. Critical skill. Very critical. Yeah.

Brad Reese: Yes, it is. It doesn’t matter how good your product is.

Jason Hsieh: Yeah, if you couldn’t do it, then you die. Winding down in today’s interview and thank you again for sharing all the different resources and your experience in both outbound and inbound licensing and also sharing a lot of your stories. One of the last question I ask every single guest is, If you had to share just one piece of advice with someone that’s just getting started in the toy industry, what would that be?

Brad Reese: Is basically [00:26:00] embrace every turn and twist that your career or your journey might take. i’m a big fan of inertia and not losing inertia for anything. And so even if you feel like you’re veering off course, you’re like, Oh, this wasn’t the job I imagined, or this wasn’t how I thought this product would turn out, or, this, thing failed, whatever it might be. Make sure that you’re treating that as a step forward. It’s never a setback cause I’ve experienced that. 

Jason Hsieh: I believe in the same thing. I believe in the term is called failing forward. So every time you fail, you move a little bit forward while you fail and you get back up. That’s the essence of entrepreneurship. 

Brad Reese: It is, and it’s the only way to be able to move on to what’s next is to put those failures and those you might consider them missteps, but keep them in context. I’ll put that away in my archive of things I’ve learned, but it hasn’t slowed my progress. Hasn’t stopped anything. 

Jason Hsieh: Got it. Where can people find you and connect with you if they want to ask you additional questions? 

Brad Reese: Sure. They can reach out on [00:27:00] LinkedIn is pretty easy. And they can find me on, I’m not the most socially social media active person. So usually LinkedIn is best. You’ll find me there. Shoot me a message and. And I’ll be happy to answer any questions. 

Jason Hsieh: Sounds good. For the listener that’s either watching or listening to our podcast episode, you can find all the different resources, the website, everything that we mentioned in the show notes at toy-launch.com and looking forward to interview any more awesome guests and thank you so much for being on our podcast today. 

Brad Reese: Thank you for having me. 

Outro: You’ve been listening to Toy Business Unboxed, hosted by Jason Hsieh. Thank you for joining us and exploring the fascinating world of toys and the ingenuity behind them.

To stay updated with the latest episodes and continue your journey into the toy business, remember to subscribe and follow us. If you found today’s episode insightful, please leave a rating and review and share this podcast with others who share your passion for toys. Until next time, stay curious and keep [00:28:00] innovating.

Brittney Geleynse: Every Christmas. I get asked, what’s the trendy toy? We don’t carry it. But I’m not disappointed about that. I honestly feel like, when it comes to toys for us, there is a lot of customer input and I feel having a really good relationship and having those customer asking questions of my customers like, Hey, I saw that you bought this. I saw you bought this unicorn. I was looking at this other unicorn art set. Would that be something that your, child, your friend would enjoy? And I get a lot of really good feedback that way. The other thing that I have done is I keep my pulse on my core brands. I do a lot of work with plan toys. Eboo is another one that I do a lot of work with and probably for our trendy toys, Eboo is going to be my version of a trendy toy. They [00:12:00] do a lot of art kits and,