Episode 3: The Strange Story Behind the Beanie Babies Bubble

Tracy Alloway (0:04)

Welcome to Odd Lots, it's Monday, November 23rd, I'm Tracy Alloway.

Joe Weisenthal (0:08)

And I'm Joe Weisenthal.

Tracy Alloway (0:10)

Joe, I've got a question for you. What were you doing to make money in 1999?

Joe Weisenthal (0:15)

The summer of 1999 was the best summer, because I think I made about $2,000 from just a summer job that I had.

But then I put that all into stocks, because it was the internet bubble, and I basically paid for two years of college thanks to essentially what I did that summer. So it was a good time.

Tracy Alloway (0:36)

Well, I was making money too, a little differently. I was still in middle school. I was going to garage sales and selling old toys.

One of the things I sold was a tie-dyed beanie baby lizard. I sold it for $200 to a 40-year-old man. And at the time, me as an 11-year-old, I thought this was amazing money, and I was rolling in it.

Joe Weisenthal (0:58)

That is amazing money, objectively, for any age selling a stuffed animal for $200.

Tracy Alloway (1:03)

Right. So why are we talking about this? Today, we're going to delve into what can drive seemingly rational people to spend hundreds, sometimes thousands of dollars on stuffed animals. We're going to talk about the beanie baby bubble, and we're going to talk about something more than that. We're going to talk about bubbles in general, the internet bubble and the psychology behind speculative mania.

So here with us today is Zach Bissonette. He's the author of The Great Beanie Baby Bubble, Mass Delusion and The Dark Side of Cute.

It's a book that came out earlier this year, and I just happened to finish it this morning.

Joe Weisenthal (1:38)

Zach, thanks for joining us. So why did you write a book about beanie babies and stuffed animals?

Zac Bissonnette (1:44)

Like you, I was in middle school when the beanie baby craze hit, and I was kind of a nerd, and I was into like old books and antiques and that kind of thing. And every weekend, I would go to this flea market on Cape Cobb with my mother. And we had never heard of beanie babies. And then all of a sudden, out of nowhere, that flea market was like 80% beanie baby dealers, and they were wearing like fanny packs and visors and talking just really, really excitedly about how much they were going up in value and how this one they just paid $5 for was now worth $40, and they're not going to sell it this week because next week it'll be worth $50.

And that was like that for about two years, and then all of a sudden it was gone, and no one ever talked about it again.

Joe Weisenthal (2:23)

I just want to say during those same years that my mother was dating a guy who was an antique dealer, and so I also went to a lot of flea markets in New England, and I actually saw all the exact same thing, where suddenly there were these flea markets where there used to be people bringing out their old stuff from their barns, and then it was just people with stuff down.

Zac Bissonnette (2:41)

Oh, and the traditionalist antique dealers hated it.

There was one guy I talked to who he was so proud of this. He was a traditionalist antique dealer who had just railed against Beanie Babies. He would go on CNN. I'm not even kidding. CNN would have these debates between this guy, who they called the Beanie Meanie, and the Beanie Baby experts who were making millions of dollars selling. One of them sold a million copies a month of a Beanie Baby magazine that she was publishing. And they would have these debates.

A group of antique dealers in Indiana gave him a crucified skunk Beanie Baby with a certificate thanking him for being a traditionalist who stood up for traditional antiques.

Tracy Alloway (3:21)

So this is the amazing thing. Walk us through how the Beanie Baby bubble came into existence and how one day actually got to the point where people were debating the value of stuffed animals on CNN.

Zac Bissonnette (3:33)

So it starts out with this very sort of eccentric toy maker named Ty Warner, who dropped out of Kalamazoo College, tried to become an actor, failed at that, then became a toy salesman. He was wildly successful at that, but then he got fired from that and decided to start his own stuffed animal company. And he started to create these Beanie Babies initially because he thought at a $5 price point, they would be irresistible and that it would help him sort of a foot in the door with large accounts and that he would then be able to kind of upsell bigger stores on selling his larger stuffed animal line.