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Toy story
The event that changed him from one to the other was landing his first licensing agreement.
It was 1989. Silverglate’s agent had shown his latest invention — a flying ring covered in soft, stretchy material — to a long list of toy manufacturers across the country.
They all passed.
But Silverglate decided to make another pitch — to a company just over the hill that already had turned him down.
Oddzon Products, maker of the Koosh Ball, said "no" four more times. Then they said "maybe." Finally, the answer was "yes."
Oddzon, a company later absorbed by Hasbro, agreed to manufacture, market and distribute Silverglate’s toy, and dubbed it the ‘‘Woosh Ring.’’ More inventions followed, and Silverglate’s family lived mostly off toy royalties for the next 10 years.
Today, David Silverglate and his wife, Suzanne, are attempting another transformation. The challenge this time is to shift from being a successful toy designer to building an independent toy company that creates, manufactures and distributes its own line of products.
The difference between the two is another exponential leap.
Big risk, huge potential
The Oball is made of 32 colorful, rubbery rings fused into a hollow sphere about the size of a softball. It’s made from a soft, tactile plastic shaped into a springy globe rugged enough for a dishwasher but too light to do damage during indoor play. You can run over an Oball with a car, and it will pop right back into shape.
"It’s a great toy," said Frank Kaehler, owner of the Pacific Avenue toy store Game*Alot. Recently, Kaehler handed an Oball to a 3-month-old customer in his store. "This little girl just reached out and grabbed it, and the ball sold right there."
There are 10,000 Oballs occupying the Silverglate’s garage, and another 15,000 have been shipped to toy stores across the country. Seventeen thousand are chugging across the Pacific Ocean from a factory in China, and 17,000 more set sail in October.
The risks of bringing a toy to market are huge for an independent toymaker. In fact, the Silverglates have mortgaged their home to get the Oball rolling.
"A lot of what we’re doing now is really scary, especially in this economy," said Suzanne, who is in charge of marketing, sales, accounting and shipping for the family business.
One of their biggest challenges is cash flow. By the time a shipment is stacked inside the Silverglate’s garage, it’s practically time to pay the factory — and still months before retailers are ready to pay their bills.
But the potential payoff, in an industry that grossed $33 billion last year, is huge. Inventors who license products to big companies like Hasbro, Mattel or Fisher Price typically reap royalties of about 5 percent of wholesale. In contrast, after paying the overhead, independent toy makers keep a substantially larger share, said Carol Rehtmeyer, owner of Rehtmeyer Design and Licensing in Chicago.
"What I tell inventors is, if you can produce 10,000 units and sell them yourself, you can make a lot more than you could by licensing to a company that makes 500,000 units," said Rehtmeyer, whose company engineers, develops and manufactures games and toys for large companies as well as independent inventors.
Keeping costs down
Independents also pay for the entire operation.
Naturally, keeping overhead low is crucial to staying afloat — which is why the Silverglates have 10,000 Oballs sitting in their garage instead of in a warehouse.
"We have a big garage," David said. "It keeps costs down."
Nonetheless, more inventors are making the decision to strike out on their own, Rehtmeyer said. One factor behind this, she said, is the economy. As stocks continue to be a volatile investment, some inventors feel more comfortable investing in themselves.
Moreover, large toy makers are being more cautious these days, leaving more room in the market for smaller manufacturers, she said.
"More and more people are making their own products, because it’s getting more and more difficult to get a product licensed," she said.
Another advantage of manufacturing your own toys is that inventors maintain control of the product. Once a toy company agrees to license a toy, it can change the name, choose new colors, combine it with another toy or decide to drop it.
"When you license to a Hasbro or a Mattel, they’ll just take the idea and run with it, and do as they see fit," David said.
"You totally lose control," Rehtmeyer said. "It’s not your product anymore. They’re going to say, ‘You, little inventor, you are not of my world, and if you’re going to license this, you’re going to have to trust us to do the right thing.’ "
In fact, Fisher Price originally agreed to be the licensee for the Oball. After kicking it around in committee awhile, they decided the Oball wasn’t for them.
That’s no reflection on the potential of the toy, Rehtmeyer said. Large companies, driven by the need to produce larger and larger stock dividends, deal in toys that sell half a million units a year or more. They have no qualms about dropping a toy that smaller manufacturers would consider wildly successful.
The Oball strategy
Rhino Toys, which sent its first shipment of Oballs to retailers in July, is marketing Oball to small, specialty toy stores across the country, such as Game*Alot in Santa Cruz and Kaleidoscope in Capitola.
"When you’re a little toy manufacturer, it’s much easier to deal with smaller stores," David said. While mass-market outlets like Wal-Mart and Toys R Us can move bigger numbers, their shipping and payment requirements can be frustrating, as well as costly, he said.
"If Kmart goes out of business, and this is your biggest account, you’re dead," Suzanne said.
"We are gambling over a wide group, rather than just a few," David said.
Suzanne said Oball appeals to a large age range. For infants, the Oball is a clutch toy that’s squeezable and colorful, as well as safe for small fingers to grasp.
For 3- and 4-year-olds, the Oball makes a good catch toy. It’s soft and flexible, and its 32 circles make it easy to catch with only a finger or two. It can also bonk a young one in the head without hurting.
For kids 5 and up, it makes for a good game of catch, volleyball, soccer or a round of "monkey in the middle," Suzanne said.
The toy has won three industry awards: the Gold Award from the Oppenheim Toy Portfolio, an independent consumer guide that reviews thousands of products annually; the Best Vacation Products 2002 Award from Dr. Toy; and as one of the industry’s best new toys, chosen by the American Specialty Toy Retailers Association at the Share the Fair New York Toy Fair 2002.
The toy was test marketed locally — at both Game*Alot and Kaleidoscope, as well as a couple of Palo Alto stores. It also can be purchased at The Tree House in downtown Santa Cruz.
Kaehler, of Game*Alot, says he sees a lot of potential for the Oball. But he said the Silverglates face a marketing challenge. While he can see the toy’s benefits, he’s been in the business for years. To the casual buyer walking down an aisle, the Oball looks a lot like every other ball.
And while the Oball is a new twist on an old idea, Kaehler believes the idea is tried and true.
"We forget that if we’re young enough, a ball is an educational toy," he said. "A block, a ball or something you can stack — these are toys that go back thousands of years, and there’s a reason for that."
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