How two brothers and sister set up a $ 1 billion business selling cheap toys
The Mowbray family’s path to success in toy production was thorny – it had cheap rented housing in Hong Kong, courts with competitors, and goods that no one wanted to buy. Now that their business is worth more than $ 1 billion, entrepreneurs want to explore new territories
Nick Mowbray works in a 12-room mansion in the New Zealand town of Coatesville. Previously, there lived a cybercriminal Kim Dotkom – here he was detained in 2012. The 34-year-old Mowbray has a calmer life. In his estate, occupying half a hectare, he holds a vineyard, giving a harvest of 2000 wine per year. A man can afford such a life thanks to his fast-growing business. He manages the toy company Zuru with his older brother and sister, Matt and Anna. Walking through his library, the entrepreneur explains: “My philosophy is that the efforts made should always be proportionate to the goal.”
Founded in 2003, Zuru specializes in producing inexpensive toys like Bunch O Balloons, a device that fills 100 balls with water in a minute.
The company sells its products in 120 countries, it can be found in all major US retail chains. The company’s annual sales are more than $ 400 million. The company is based in Hong Kong, where Matt and Anna live. Thanks to a Hong Kong registration, Zuru pays taxes at a low rate.
The company never borrowed, with the exception of an initial loan of $ 20,000 from the parents of Mowbray, an engineer and teacher. The business now costs more than $ 1 billion and is wholly owned by Nick, Matt and Anna. But if the plans of this trinity are realized, then in the future the enterprise may become even more expensive. Toys are just the first step. Then a line of consumer goods is expected – for example, diapers and pet food.
“We are ready to do anything to make the company even more profitable. For me, this is the meaning of running any business, ”says Nick, who holds the position of CEO along with Matt. Their sister Anna is more restrained in her remarks: “We are from New Zealand, and therefore very modest. But business has become a real adventure for us. ”
Nick and Anna Mowbray, two of the three cofounders of Zuru. Nick and Anna Mowbray, two of the three cofounders of Zuru.
The company started as a hobby. At the age of 12, Mat made a mini-model of a balloon and won this project at the New Zealand Science Fair. Together with Nick, they went to the neighboring houses and sold sets to everyone. At the age of 19, Matt left college and started a small production at the parents’ farm. When Nick turned 18, he also decided not to continue his studies. Together, the brothers went to China to make a full-fledged business out of their hobby. The path from the very beginning was very thorny. “On the first night, we had to sleep in the bushes at the Hong Kong airport,” Nick recalls. Then the brothers settled in the city of Shantou, 300 kilometers from Hong Kong, and rented an apartment there for $ 20 a month in an eight-story building without an elevator. Anna joined them a year later.
Future entrepreneurs did not waste time in vain. They began by taking on the development of other companies. The first fakes were a piggy bank and a luminous frisbee disk from two small toy manufacturers. “We found them on the Internet and just copied them,” Nick admits. With these products, the company participated in one of the most important events in this industry, the New York Toy Fair. There they signed a contract with a distributor. However, even before the end of the event, the original manufacturers found out about the copies of their goods, and the manufacturer of frisbee sued Zuru. The dispute was eventually settled out of court.
After the commotion, the Mowbray family switched to establishing distribution in foreign markets – for example, Zuru began to purchase toys from the Hong Kong company Zing for resale. Over time, in search of new sources of income, Zuru began to produce toys herself. However, the most difficult was yet to come.
In 2005, Zuru, in partnership with a Chinese manufacturer, bought for $ 1 million the rights to a handheld game console, on which the user could play for football player David Beckham. The partners had an order from Walmart to buy 2.2 million for $ 29 million. When production began, the American retailer canceled more than 80% of the ordered volume, which immediately led Zuru to huge losses. “I flew back and forth and literally begged Walmart to get into our position,” recalls Nick. With great reluctance, the trading network nevertheless agreed to pay for 800,000 devices.
However, the appearance of consoles on the shelves Walmart turned into a complete failure. According to Nick, “the goods stood on the shelves as if someone had glued them tightly.” The path to Walmart for Zuru products has now been ordered for many years.
However, failure did not stop the Mowbray family. They returned to work and eventually brought to the market toys that were financially successful.