A picture of Warren Buffett at Berkshire Hathaway Shopping Day, May 5, 2023.
Yun Li | CNBC
Smart business legend Warren Buffett has a quirky side, buying companies whose products he personally loves, like Dairy Queen and See’s Candies. Now count the plushie phenomenon Squishmallows.
Squishmallows did it Berkshire Hathaway This year’s AGM was held in Omaha, Nebraska for the first time, and within hours, shareholders snagged 10,000 stuffed dolls, including ones modeled after the “Oracle of Omaha” and his longtime business partner, Charlie Munger. Berkshire inherited Squishmallows parent company Jazwares through its acquisition of Alleghany in the fourth quarter of 2022.
Jazwares founder and CEO Judd Zebersky and Jazwares president Laura Zebersky now report to and are in regular contact with Greg Abel, Berkshire’s vice chairman of non-insurance operations and Buffett’s successor. The South Florida-based couple, who turned lawyers and later toy entrepreneurs, said they are thrilled to work under the Berkshire umbrella and enjoy the autonomy of running their own business.
“It’s an amazing structure. We are happy to be part of it,” said Laura Zebersky in an interview. “It’s better than we ever expected and working with the greatest leaders in the world is phenomenal and the opportunity to explore synergies is also something we’re interested in.”
Buffett, 92, recently praised Abel and said he took on most of the responsibilities. Abel has overseen much of Berkshire’s sprawling empire, including energy, railroads and retail.
While Buffett only came to Jazwares indirectly through Alleghany, he has shown a willingness to invest in much smaller companies that don’t have the clout to impact Berkshire’s tremendous profits and sales. Buffett often admires the company’s leadership and expects the company to continue growing and remain profitable.
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Last year alone, a whopping 100 million Squishmallow units were sold – priced between $5 and $30. Laura Zebersky said the pandemic has accelerated the growth of squishmallows. Celebrity recommendations from Kim Kardashian to Lady Gaga on TikTok have also helped.
“The idea of having something nurturing, cozy, cuddly that is affordable and accessible. Instant gratification,” said Zebersky. “We really go into all the hikes and areas. It was really interesting to see that it’s not just kids, it’s adults. Our demographic is very diverse and that is very unusual in our business.”
In April 2020, Jazwares bought toy maker Kellytoy, which founded the Squishmallow brand in 2017.
No mayfly
To sustain Squishmallows’ success, Jazwares is aware of saturation and tends to be very picky about partnerships, Zebersky said. The plush toy brand has generated 40% of all Jazwares sales over the past two years.
“We’re in the sixth year of the brand … it’s not a flash in the pan,” said Zebersky. “It grows intelligently and sustainably. We make sure that we limit the production volume. We make sure there is something different for each retail channel, that there are collectibles, that there are unique styles and unique sizes.”
Squishmallows recently announced a partnership with McDonald’s Happy Meal, which will launch in 70 different countries throughout 2023.
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Last month, Jazwares attended VidCon in California, an annual convention for content creators and online brands. The company featured a pit filled with a sea of squishmallows for visitors to jump into.
“We don’t do traditional marketing. We are where our fans are. And a great example of that is VidCon, the biggest gathering of influencers,” said Zebersky.
Squishmallows is wholly intellectual property of Jazwares, however the company also co-sells products under licensed partnerships Disney and Pokemon etc.