Turnaround Strategies

How One of America's Most Beloved Toy Makers Rebounded From Near Death

Wham-O created the Frisbee, Slip 'N Slide and more. Then it fell into disrepair -- until a new leader came along.
How One of America's Most Beloved Toy Makers Rebounded From Near Death
Image credit: Doug Chayka
Magazine Contributor
Executive Editor
21 min read

This story appears in the March 2018 issue of Entrepreneur. Subscribe »

John Hinnen always wanted to make things. A born tinkerer, the son of Illinois spent the better part of his 20s designing toys and novelties in his parents’ garage. He created a line of greeting cards and peddled them all around downtown Chicago in his cowboy boots. He created an elaborate child’s educational toy that got good feedback but was so complicated to build that he couldn’t make the economics work. He had a little wooden toy that twisted from a heart to an egg that, he says, he “thought was the next pet rock.” It wasn’t. 

Life would go on. He married. In May of 1989, he and his wife were expecting their first child. “I had to get real,” he says. He got a job at the Diamond-Star Motors plant in Bloomington. He had two more kids, bought a house by a park in Peoria. It was a happy life, though with a sacrifice: “I kind of put the dream on hold,” he says.

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Then he turned 50, and that unrealized dream began to gnaw at him. “I thought, If I get to 65 or whatever and never do anything with this, it’s going to be a bummer,” he says. He’d never stopped sketching ideas, but now he began in earnest -- designing games and dolls, and trying to sell them to the few toy companies that accepted unsolicited ideas. For this he received an inbox full of rejection letters. 

Then, in 2015, his auto plant closed. Hinnen got a good severance package, but still: Change was in the air.

One day Hinnen was watching the movie Elf with his kids, and during the snowball-fight sequence -- when Buddy the elf turns back an ambush on his half-brother by firing off snowballs like a Gatling gun -- he had an idea. Hinnen and his youngest son, Nate, took a plastic bat they’d sawed the top off of for a previous invention, took it out to the snowy park, packed it with fresh powder and took turns swinging it at each other, unleashing “an arctic blizzard of snow crystals.” 

Hinnen started getting excited. If tweaked and loaded with stickier snow, here was a bat with which you could make snowballs, throw snowballs and defend yourself against snowballs. 

This was the idea he’d been waiting for. Hinnen and his son spent a year working on it, even persuading a local grocery store to let them scrape the “snow” out of their freezers so development could continue apace during the warmer months. When they got the concept down, Hinnen made a video of his son using the bat to throw a snowball some 80 feet at the back wall of a Kohl’s store. “From the parking lot,” Hinnen says, laughing. “This is a basement inventor thing. You do whatever you can.” 

They called it the Snow Slugger. The only question was to whom to submit it. And the answer came as a surprise. Through a peer, Hinnen had heard that Wham-O -- “the company of my youth,” as he calls it, the one that created such legendary toys as the Frisbee, the Hula Hoop, the Superball, Silly String and the Slip ’N Slide -- had recently resumed its long-discarded practice of accepting submissions from random inventors. 

Hinnen had never thought to send it anything before. Why would he? The company had slid into obscurity, having spent the better part of 30 years being passed from owner to owner, its business prospects and cultural resonance ever fading. But recently it had come under a new regime, Hinnen had learned, one determined to restore its fortunes in part by tapping into the spirit of entrepreneurship that made it great to begin with.

That meant that for the first time in a many year, Wham-O would lash its fate to inspired basement inventors like John Hinnen. John Hinnen, who after 30 years of nurturing a dream that never came to fruition, walked in from the Midwestern cold one day and sat down to make his pitch.

“My name is John Hinnen, and I’m a product designer from Illinois,” he wrote in an email. “I’m writing for a couple of reasons…”

And lo and behold: It worked.

Todd Richards didn’t expect to wind up running Wham-O. A big, amiable guy and a talented athlete, Richards was signed as a free-agent out of college by the San Francisco 49ers but quickly realized he was outclassed. So he quit and started looking for other ways to make a living in the sports business. He worked some connections and ended up in a sales role for Fleer, the trading card company. This was a golden age. “At that time in the early ’90s,” he says, “selling trading cards meant you were doing better than a stockbroker.”

The bottom eventually dropped out of the trading card industry, and Richards landed a job with multinational toy-making behemoth Intex. He had a good run heading up sales, and then in 2002 he got a call from his former boss at Fleer. He said he had just taken over a fund that had a company that was disorganized, riddled with turnover, and just couldn’t seem to get it together. He wanted Richards to come on as senior VP for sales.

“Well, what’s the company?” Richards asked. 

“It’s Wham-O.”

Richards knew Wham-O well. He grew up a few miles from its former headquarters in San Gabriel, Calif., and he and his friend used to ride their bikes over, sneak into the warehouse and root around in the Dumpsters searching for treasure.

“I’m in,” he said.

When Richards arrived in 2002, Wham-O had a lot of miles on it, but a lot of history, too. The company was founded in a garage in 1948 by two prankster geniuses named Richard Knerr and Arthur “Spud” Melin. They invented a wooden slingshot and named their company Wham-O after the sound its projectiles made when they hit their targets. 

The years that followed have gone down in cultural history. The Frisbee in 1957. The Hula Hoop in 1958. The Slip ’N Slide in 1961. The Superball in 1965. And later, the Boogie Board, the Hacky Sack. These toys became full-on global phenomena.

The trouble began when Knerr and Melin sold the company in 1982 to toy maker Kransco, which shifted production to Mexico and laid off much of Wham-O’s staff. Mattel bought Kransco in 1994 and closed Wham-O’s fabled San Gabriel warehouse but also seemed unsure what to do with the storied company. The toys were too random, too seasonal. Mattel couldn’t build a big business around them like it had with Hot Wheels and Barbie.

So in 1997, Mattel sold Wham-O, this time to a newly constituted Wham-O group in Emmeryville, Calif. “This was a small business for Mattel, but we think we can build it into something much bigger with our more focused approach,” then-CEO Mojde Esfandiari told the media. 

The company had some early success but quickly stumbled. That’s when, in 2002, it brought in Todd Richards. He rebuilt relationships with retailers, launched some products that fared well and updated existing products like the Slip ’N Slide with new features. Revenue grew between 20 and 25 percent over his first two years, he says. 

But then: more problems. The owners had set a time limit on funding Wham-O, and, according to Richards, some accounting missteps came to light right as the money dried up, forcing Wham-O to scramble to find new partners. It wound up with new owners, a Chinese firm called Cornerstone Overseas Investments, in 2006. 

The plan then was to go big in China, with its well-known love for heritage American products. But in reality, Wham-O was in for more trouble. Richards says Cornerstone slashed marketing and moved operations to Hong Kong, leaving only the sales department in California. So he quit to go work at surf outfitter Body Glove, where the lifelong surfer would stay for a decade.

He kept an eye on Wham-O, however, and what he saw dismayed him. The new owners all but stopped introducing any new products, he says. They pulled back on the often eccentric, high-spirited marketing and promotion for which Wham-O had once been known. (Remember those Saturday-morning TV commercials?) They never built an e-commerce business, nor much of an online profile. Quality standards fell, Richards says, as the company started slapping the Wham-O name on cheap, open-market products and then sometimes failed to even deliver those shipments to retailers. Competitors ate at Wham-O’s market share by churning out “flying discs” and Hula Hoop–like objects. (Only the names and specific designs of Wham-O’s decidedly low-tech products are copyright protected, making them easy to knock off.)

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More critically, he says, a big gap had opened up. “A great strength of Wham-O as a heritage company is that kids develop a relationship with its products, and when they have kids, they buy those products for them.” There’s a generational continuity that makes Wham-O if not a sexy company, then certainly an enduring one. But that decade of neglect created a disconnect. A generation of kids grew up without Wham-O. That meant their kids might, too. 

All the while, business plummeted. When Cornerstone acquired Wham-O in 2006, sales were estimated at $80 million and the company had 300 staffers. By 2015, revenues had fallen a reported 75 percent, and the staff was a fraction of what it once was. “It was a complete strip-mine,” Richards says. “As I watched this deterioration take place, I thought, This is just too bad. This is such an iconic name.”

So Wham-O, what was left of it, anyway, was sold again, this time to a group consisting of Hong Kong-based Stallion Sport and California’s Intersport. And Todd Richards, erstwhile Wham-O Dumpster rifler, was tapped to come back once again, this time as president, to try to revive the fortunes of this beloved brand of his youth.

Given the company’s history, you’d expect Wham-O HQ to be a madhouse, as opposed to a quiet, chilly slab of tinted glass and polished concrete, located across the street from a yogurt factory south of L.A. But here it is. When the new owners took over Wham-O, they set it here. While “Frisbee Fridays” happen in the parking lot on occasion, Richards says, and the occasional prototype is hauled into the general population for testing, the 30-strong staff here mostly spends its days working. 

All to the good. Because, as Richards recounts, sitting in a blue oxford shirt and sneakers in a conference room off the lobby, this was a company in dire need of repair. 

As it happens, yes, some people love Wham-O. And some haven’t heard of it and can learn to love it. But there was a third group, too. They actively disliked it. And unfortunately, those people were central to Wham-O’s fortunes.

That problem was buyers. Richards quickly discovered that a lot of buyers for big retail stores -- the gatekeepers toy makers must win over in order to secure space on store shelves -- had been burned. He recalls going into a sales meeting at a major retailer (he can’t reveal which) and being told, “Todd, I’ve known you a long time, you’ve had a long history of servicing us, but my boss would fire me if I put this on the shelf.” He got this response at other big chains as well.

Making matters worse, some of the gatekeepers Wham-O needed to win over also fell into the generational gap that had opened up. “I remember our first meeting at one of the big chains,” Richards says. “The buyer had been hurt by not getting deliveries, and she had this new assistant. She’s 24, 25, and she’s like, ‘Wait a minute; Frisbee is a Wham-O product?’ She had no idea.”

Turned off by Wham-O, or just ignorant of it, the big retailers had begun carrying competitors’ products -- those aforementioned flying discs and Hula Hoop-like objects. They found that the quality was good, the packaging was good and the items sold well. So why take the chance? For a company with no ecommerce arm to speak of, and a heavy reliance on a shrinking number of brick-and-mortar stores, this was an existential problem.

So Richards’ team devised a plan. They would leave the big retailers alone and instead go after midtier regional chains, which the company had ignored for years. Unlike the bigs, these operations were staffed by older buyers who knew Wham-O well. “We knocked on the door and said, ‘Hi; we’re Wham-O,’” says Richards. “They said, ‘Really? We haven’t had anyone here from Wham-O in years. Come on in.’ And we started making placements all over the place.”

The thinking was that if Wham-O proved itself valuable to the little chains, that could serve as proof to the big chains. And it did. After six months, Richards says, he started hearing back from those bigger corporate buyers. They said they’d seen Slip ’N Slides at Meijer stores, or Boogie Boards at Modell’s. They wanted to talk. Pretty soon, Wham-O was even placing some products at Target and Walmart. 

“We jokingly referred to it as our Ho Chi Minh philosophy,” Richards says. “Control all the villages and the city falls, right? But it’s working.”

With the retailers warming up, Wham-O moved on to its next critical problem: product. Wham-O’s core lines are ageless. They can sell themselves if you get them in front of enough people. But the toy business runs on hits and novelty -- things that have been in short supply at the company for a long time. “Wham-O was originally all about innovative new toys, and then they became an evergreen line,” says Richard Gottlieb, founder and principal of Global Toy Experts, a consulting and design management firm. “But they’re no longer known as a hit maker. And therefore they’re less attractive to inventors.”

This is a significant handicap -- especially for a company looking to make a big splash. Companies, including Wham-O, maintain design departments, but a lot of the best toy ideas come from independent inventors represented by inventor agencies (Tickle Me Elmo came from outside, for instance), and in order to attract these agencies, you have to be seen as a hit maker.

“You want to be the first place an inventor goes,” says Gottlieb. A place that has the vision, the relationships, the industry profile and the marketing horsepower to take a toy to a big audience and enrich its inventor. Wham-O needs to get back to this position. Richards admits as much. “The agencies work their way down the coast,” he says. “They hit Mattel. They hit this office, that office. And then by the time they end up here, it’s like, ‘OK, here are three items I still have left that nobody took.’” 

It’s certainly a problem, but to Richards, it also represented an opportunity. In the early aughts, the company hosted monthly Inventor Days, when people would line up down the block for a chance to pitch their creations. It was a continuation of the founding spirit of Wham-O, a company that was historically open to anything. Inventor Day was done away with in time -- the success rate was low, and there was a certain legal hazard associated with accepting designs from people not represented by agencies. But now, all that be damned, Richards brought it back. Only online.

“We made it very clear,” Richards says. “We’re interested in your ideas. We’re looking for people who have the next, greatest thing. Bring it to us.”

And so they did -- dozens of them, every week, with some ideas arriving fully fleshed out, others turning up as sketches on diner napkins or scraps of notepaper, others still utterly defying understanding. They all came to Wham-O. 

John Hinnen hit send on his pitch for the Snow Slugger, and it arrived in the inbox of a sharp-dressed, blunt-talking, Ukrainian woman named Olyvia Pronin. She is Wham-O’s head of marketing, and the point person for inventors. 

Much of the heavy lifting in helping turn around Wham-O these days falls to Pronin -- whose office, like the others, feels just-moved-into, heaped with catalogs, toys, newsletters, vintage marketing collateral and promo materials for Wham-O’s big 70th-anniversary push. Taped on the wall is a picture of a kid jumping a bike over another kid lying on his back on the sidewalk. It reads, “Before video games and computers.”

When Pronin took the job in 2016, the brand strength of Wham-O was immediately evident to her. It had history; its products were low-tech or no-tech -- which set them apart from the profusion of screen-based entertainment -- and they brought people of all ages together, usually outside. But the rot inside the company was significant. When Pronin joined, the company’s website looked “so bad.” It would have to be rebuilt entirely. Wham-O’s catalogs were “so obsolete.” Those would have to be redone. There was no ecommerce site. That would have to be built, too. Wham-O didn’t even sell directly on Amazon. “I know it sounds really crazy in the 21st century,” she says. 

Worse, there was virtually no social media presence. That also would have to be built. And the company would need to restore its profile in the industry, which had all but dissolved. That meant staking a more prominent presence at industry events and in trade publications to put Wham-O back in the minds of freelance designers and retailers alike. 

And it needed customers. That, too, was complicated. Here it had a boomer-approved product, for children, and a big doughnut hole between the generations. To plug the hole, it had to win over millennials. Here, Wham-O was in luck. Millennials may live on social media, but they also, as a group, possess a widely remarked upon (if not mocked) nostalgia for retro products and traditions. Many belonged to kickball leagues, or Ultimate Frisbee leagues, say.

“The group that we’re looking at is largely responsible for the resurgence of vinyl records,” says Richards. “For us, it’s ironic. There’s nothing really different. This has been around forever. You just now discovered it.”

If Wham-O could get millennials to engage with its products, it increased the chance that that cohort, which is starting to have kids, would buy Wham-O toys for them, thereby restoring the generational continuity the company had lost.

Pronin began by setting up social feeds on Facebook and Instagram that allowed older people to share their memories of Wham-O toys. It blew up, she says. “When we started the Facebook page, we received so many messages from people saying, ‘Are you the real Wham-O? Or is this a knockoff? Do you really exist?’” recalls Pronin. People started posting memories, photos, stunt videos. “Pretty much all of our Instagram is consumer-generated content,” she says. 

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Essentially, Wham-O had figured out how to harvest an older generation’s love for its products in a way that established them as suitably, authentically retro for younger people. From there, those younger people began engaging as well, egged on by stunts like a scavenger hunt where the company hid Frisbees all over Los Angeles and laid clues on social media. The event garnered press coverage and a robust turnout. “It was crazy,” Pronin says. “People were really looking for Frisbees -- and I’m like, ‘Come on, it’s just $5.99. You can buy it!’ But people loved it. I loved it.” 

It stood as proof that for Wham-O, success was going to be about more than just selling an item. It was about meeting an untapped demand for being outside, among people, away from your computer and your phone. And this narrative led perfectly into the company’s invitation to inventors: Put pen to paper, draw up a toy that isn’t another app and send it to us. As of summer 2018, Wham-O is developing or has released six items that came from this class of basement inventor. One arrived as nothing more than a hand drawing on a piece of paper. 

When Hinnen’s snowball-bat submission arrived in Pronin’s inbox, she considered it one of the best she’d seen. “Sometimes it’s so bad -- like, you can’t even understand what [the inventor] is talking about,” she says. But Hinnen approached it like a pro. He even sent in a proto­type with a fake snowball, and the staff tested it out in the office. “It was like hitting people’s heads,” she says. “We all loved it.” 

So Pronin told Hinnen Wham-O was interested. The process would move in stages after that. An agreement was signed, and the design was sent to the Hong Kong office -- which handles engineering and testing. If they liked what they saw and the numbers worked, the Snow Slugger would go to market. 

This year is Wham-O’s 70th anniversary, and the company has a lot of events and promotions planned. There’s also a functioning e-commerce operation, an Amazon store, a better website and more professional catalogs. According to Richards, Wham-O has nearly tripled the revenue that was projected from the previous owner. The goal is to hit $100 million by the end of its first five years. “We’re way ahead of where we wanted to be,” he says.

It has new toys coming out, too, including a line of indoor family games called Stay N Play. (In one, players strap a box full of balls to their waists and try to shimmy them out.) There’s a line of Superballs with off-kilter weights inside them that cause them to bounce erratically, and Hula Hoops with LED lights. There’s a new Frisbee that defies description, except to say it’s sort of square-shaped and floats strangely when thrown. It was launched on Kickstarter, also a first for Wham-O. “We want people to feel a part of this, and we want them to get it as soon as we make it,” Pronin says.

And then there’s the Snow Slugger, officially due out in fall of this year. “It’s like, Pinch me,” says John Hinnen. “When I would develop toys in the past and tell people, they’d get excited and then it’s like, well -- then it never happens.” But this time it did. His kids are thrilled, his wife is thrilled, and Hinnen is thrilled. He’s working on new designs, new ideas. He’s getting involved in the startup community in Peoria. After all these years, he has arrived.

“It’s taken me a long, long time to get to this point,” he says. “My whole mantra is ‘Never give up.’” 

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