Just a few days ago, visiting my childhood home, I found a treasure. I don’t mean gold coins, precious stones or money. What I found was a simple shoebox, and when I opened it, my eyes sparkled a little, and my mind went back to the 1980s. I had before me the collection of model cars I had acquired during my childhood through pre-adolescence. There were all colours and brands, but the ones that undoubtedly gained all the attention were the Hot Wheels, not only for their aesthetics but also for the memories of victorious races in arduous competitions with my schoolmates.
Perhaps in childhood, we didn’t have the necessary knowledge to understand why those little cars reach a higher speed and stability than the average, but as the years went by, we began to understand the importance of a metallic chassis and the lack of friction in the wheels, which turns the little cars into mini racing cars that go off with a weak impulse. When the Handler couple set out to create a toy, they really thought it through down to the smallest detail.
In 1945, Ruth and Elliot Handler founded Mattel (NASDAQ: MAT) with their partner Harold Matson. They initially focused on making picture frames, but Elliot’s carpentry skills pushed him to go further, and he began creating houses for his daughter’s dolls, using scraps of material he discarded. By 1950 they were already shaping up to be toy makers, and in less than a decade, they caused a disruption in the industry, introducing the use of plastic and metal and replacing wood. In 1959 came the milestone that would catapult them to fame: the creation of the Barbie doll.
After dominating the market of toys for girls, it was necessary to pay attention to boys. And that is how Hot Wheels was born, a series of 16 cars based on real models, supervised by engineers from the automotive industry. As the story goes, the launch unleashed the wrath of General Motors (NYSE: GM), as the legendary Corvette saw the light of day first in its scale model before the real model out. Rumour was that a former General Motors (NYSE: GM) employee leaked the car’s blueprints. Needless to say, the cars were an immediate success, not only because of their quality but also their value. The most basic models cost around $1.00, a value they retain today, making them a product that seems to defy inflation.
Towards the end of the 1980s, there were hundreds of models, and meanwhile, I found myself accompanying my mother to the market without missing the opportunity to ask her on each visit to buy me a Hot Wheel from the bargain bin. At my school, a group of enthusiasts had practically taken by storm a corner of the playground, where we had designed a competition circuit by painting the floor with a brick. Day after day, we returned to repaint the circuit and compete in increasingly complex competitions. One day when we arrived at school, we were surprised to see that the circuit had been marked with permanent paint. Our enthusiasm had been such that our parents talked to the school authorities to create the definitive “racetrack.”
The competitions became official. We were no longer a bunch of outcasts marking the ground, so more and more kids wanted to participate. But the space of the circuit was limited, and the recreation time was too short to hold several races, so the racetrack became more and more crowded with cars, making competition difficult. It seems that the company Galoob, later absorbed by Hasbro Inc (NASDAQ: HAS), had detected our problem and decided to revolutionize the market with Micro Machines. These small plastic cars, much smaller in scale than Hot Wheels, were the kings of much of the 1980s and 1990s. With an aggressive marketing campaign and hundreds of models, they managed for several consecutive years to sell more units than all their competitors combined.
For us, the space problem was solved. These mini cars could sneak everywhere and compete with Hot Wheels, giving up speed in exchange for precision. But the resounding success of Micro Machines, which even had several video games, faded. Its strategy of making movie-themed cars could not compete with Hot Wheels’ perseverance toward the classic.
Today, Mattel’s (NASDAQ: MAT) creation has produced more than 4 billion units and has become a collector’s item among the greatest, while Hasbro’s (NASDAQ: HAS) creation is practically extinct, proving that winning a few races does not exactly mean winning the championship.