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Companies That Almost Weren't: Hasbro

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Childhood dream maker originally produced another kid favorite: textiles.

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Ah, youth. The era of whimsy and blithe fabrication. Life's fanciful interim. Who can look back at their childhood years and not drum up a memory or two of playing with their favorite toy? Detailing and understanding the complex inner workings of a Transformer. Painstakingly aligning the construction paper diagram onto a Lite-Brite pegboard. Lighting a fuse leading to a bundle of M-80s engulfing Cobra Commander.

The makers of such wonderment vary from country and child, but one company certainly had its hand in a collective majority: Hasbro (HAS).

The brand is world-renowned for a bevy of cherished toys: Lincoln Logs, My Little Pony, GI Joe, Nerf Guns, Pay-Doh, Transformers, Tinkertoys, and on and on. Hasbro is arguably responsible for more carefree summer afternoons and jubilant Christmas mornings than most toy purveyors.

But in its early years, Hasbro had a much different business model. One that's almost the antithesis of youthful glee. One more akin to a dreary day spent with your mother in the craft store as she's busy choosing the perfect doily pattern.

In the beginning, Hasbro was in textile remnants.

Founded in 1923, Hasbro began as the brainchild of brothers Henry, Hilal, and Herman Hassenfeld who emigrated from Poland to Providence, Rhode Island. The Hassenfelds specialized in peddling leftover cloth, reworking them into hat liners and pencil box covers. The latter proved popular in the mid-1920s and subsequently all eight members of the Hassenfeld family began manufacturing the whole pencil box -- which led to the Hassenfeld Brothers Incorporated name.

By 1930, Henry was running the company and its 200 employees. Even during the turbulent markets of the Great Depression, Hilal was able to lead the company into $500,000 in annual sales -- this by simply designing zipper pouches and pencil boxes prepacked with pencils and school supplies.

A few years later, the Hassenfeld's pencil supplier opted to become a competitor and both raised the prices of pencils and offered supplies for a lower price. Undaunted, Henry accepted the challenge and the Hassenfelds began manufacturing pencils in 1935, which proved to be an immensely successful enterprise for the family.

It wasn't until the late-1930s that the future Hasbro team began designing toys.

Appealing to the interests of the li'l Greatest Generation, the Hassenfelds manufactured junior air-raid warden kits, complete with flashlights and toy gas masks. (Propaganda posters sold separately).

On the opposite end of the spectrum, the company also provided modeling clay and makeup playsets, as well as doctor and nursing kits -- presumably leading to more "interesting" cases of childhood play.

But in 1951, toymaker George Lerner introduced an idea to the Hasbro team that would change the landscape for toy products -- and television marketing -- forever.

Lerner devised a set of plastic googly eyes, protruding ears, and other pronged body parts to be stuck into various types of produce -- creating comical figures with wacky features.

Toymakers balked at the idea, citing recent wartime rationing as reason enough to reject the waste of food. Lerner was able to market the plastic parts to cereal manufacturers to include in the boxes, but when the Hassenfelds were shown the product, they jumped at the idea and bought the rights.

In 1952, the original Mr. Potato Head kit -- to be used with a natural tuber body -- debuted on the shelves and was the first toy advertised on television. Its rampant popularity led to one million sales its first year and a standard in television marketing.

So the next time your kids run into the bedroom screeching about the next plastic creation, thank the Hassenfelds for starting a very lucrative trend.

Today, Hasbro stands as a giant among toy makers. Board games, action figures, and a blockbuster movie or two has brought its annual revenue just north of $4 billion. It's none-too-likely that the company would be as successful had it stuck with its original textile business model.

That is, unless Mr. Burlap Sack became a similar runaway hit.

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