An image of Warren Buffett at the Berkshire Hathaway Shopping Day, May 5, 2023.
Yun Li | CNBC
Shrewd business legend Warren Buffett has a whimsical side, buying companies whose products he personally enjoys like Dairy Queen and See’s Candies. Now count plush toy phenomenon Squishmallows.
Squishmallows made its Berkshire Hathaway annual meeting debut this year in Omaha, Nebraska, with shareholders snapping up 10,000 snuggly dolls in the span of hours, including ones modeled after the “Oracle of Omaha” and his longtime business partner Charlie Munger. Berkshire inherited Squishmallows parent Jazwares through its acquisition of Alleghany in the fourth quarter of 2022.
Jazwares founder and CEO Judd Zebersky and president Laura Zebersky now report to and are in regular communication with Greg Abel, Berkshire’s vice chairman for non-insurance operations and Buffett’s successor. The South Florida-based couple, who are lawyers-turned-toy-entrepreneurs, said they are excited to be under the Berkshire umbrella and enjoy having the autonomy to run their own business.
“It’s an amazing structure. We’re thrilled to be part of it,” Laura Zebersky said in an interview. “It’s better than we could have ever anticipated and being around the greatest leaders in the world is phenomenal, and being able to explore the synergies is also something we are interested in.”
The 92-year-old Buffett sang Abel’s praises recently, saying he’s taken on most of the responsibilities. Abel has been overseeing a major portion of Berkshire’s sprawling empire, including energy, railroad and retail.
While Buffett only got into Jazwares indirectly through Alleghany, he has shown the willingness to invest in far smaller businesses that don’t have the heft to move the needle in terms of Berkshire’s massive earnings and revenue. Often Buffett admires the business’ management and expects it to continue to grow and remain profitable.
A whopping 100 million Squishmallow units — with prices ranging from $5 to $30 — were sold last year alone. Laura Zebersky said the pandemic turbocharged Squishmallows’ growth. Endorsements from celebrities from Kim Kardashian to Lady Gaga on TikTok also helped.
“The idea of having something that was nurturing, cozy, cuddly, it was affordable and accessible. Instant gratification,” Zebersky said. “We really touch on all walks and areas. So it’s been really interesting to see that it’s not just kids, it’s adults. Our demographic is very wide and broad and it’s very unusual in our business to have that.”
In April 2020, Jazwares bought toymaker Kellytoy, which created the Squishmallow brand in 2017.
Not a flash in the pan
In order to sustain the success of Squishmallows, Jazwares is conscious about oversaturation and tends to be very selective about partnerships, Zebersky said. The plush toy brand has driven 40% of Jazwares’ entire revenue for the past two years.
“We’re on year six of the brand … it’s not a flash in the pan,” Zebersky said. “It’s growing smartly and sustainably. We make sure we limit the amount of production. We make sure that there’s something different for each channel of retail, that there’s collectability, that there’s unique styles, unique sizes.”
Squishmallows recently announced a partnership with McDonald’s Happy Meal, which will roll across 70 different countries throughout 2023.
Last month, Jazwares participated in VidCon in California, an annual convention for content creators and online brands. The company featured a pit stuffed 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 largest gathering of influencers,” Zebersky said.
Squishmallows is one of Jazwares’ fully owned intellectual property, but the company also sells products with licensed partnerships with Disney and Pokemon, etc.