turned entrepreneur, Dan Lauer, co-founder of Haystack Toys,
helps fellow toy inventors throughout the nation bring their creations
By Carol Schwab
Ceating is toy inventor Dan Lauer’s passion. Just shy of 40, Lauer
has not only invented Waterbabies®, which in the ’90s was the
second-largest and second-longest selling doll in the nation,
(after Cabbage Patch Kids); but now he’s started a company to
help fellow inventors bring their toys to fruition—Haystack Toys,
The toy company takes a fresh approach to the discovery, sales
and marketing of unique, innovative toys for children ages 3 to
6. Founded in 1999, St. Louis-based Haystack Toys is e-centered
and e-structured—conducting the majority of its sales, marketing,
service and communications via the Internet. In addition to serving
as an online store for the company’s toys, www.haystacktoys.com
is also a resource for parents seeking information about quality
first rendition of Gabe Ruegg's Airmaze began
with a fan blowing through garbage bags that were
taped together. Now he's taken the tent idea one
step further to create these colorful, connectable
tunnels, Airmaze already sold out on its first
Haystack’s latest claim to toy fame is “The Great American Toy
Hunt™,” a nationwide search for "needles in the haystack" -toys
that are so ingenious and involving that they withstand the test
of time. "We want children who play with our toys to remember
them as their childhood favorites when they've grown up," Lauer
says. "All of our toys are more than just one-trick ponies, they
have multiple play options."
The first annual Toy Hunt took place last October. More than 560
experienced and amateur inventors presented their concepts. From
the Hunt, five toys were chosen to bring to market and were recently
released as the companyÕs first toy line:
AirMaze...an air-tent system made of connectable tunnels in which
children scoot and play.
Cuddle Fish...a plush set of cuddly, huggable, musical fish dolls
that have hair to be combed.
designer and inventor Frank Young and product
development artist Liz Farley came up with Cuddle
Fish together. They wanted to make a toy fish
that was "huggable and lovable rather than
slimy, stinky and wet." the fish dolls' hair
makes them even more unique.
Flutterwings...oversized, butterfly and fairy wings that can either
be worn on a child's arms or attached to a swing or bicycle.
Cunningham came up with the idea for Flutterwings
while she and her daughter were pretending they
were butterflies. These wearable wings are one
of five products recently released as the company's
first toy line.
Jumbo Tumbles...oversized, overstuffed building blocks that can
form different shapes and can be played with and tumbled upon
for soft, safe fun. (The creation of St. Louis businessman Mike
SeaPets...a realistic line of sea creatures- a Great White Shark
that comes with its Tuna prey that "bleeds," an octopus that sprays
purple, and a Humpback Whale that spouts and sings real whale
The SeaPets line was created by Lauer himself. "When I was 8,
I was fascinated and intrigued by sea creatures. I wanted to touch
and play with them," recalls Lauer. "Now, with Sea Pets, kids
The toys were manufactured in the Orient and Airmaze has already
sold out on the first production run.
The second Toy Hunt just took place in September in seven different
cities, St. Louis being one of them. One hundred some odd inventors
in St. Louis were invited to the City Museum to show their wares.
More then 700 were invited to compete nationally.
Six Haystack judges are now busy evaluating the 100-plus toy finalists,
which will be whittled down to 10 winners who may have fairy tale
endings to their toy stories.
Winning inventors will then be invited to enter into a relationship
with Haystack Toys - outlined in the "Haystack Handshake Agreement"
-which includes a $5,000 advance, a 5 percent royalty on wholesale
sales of the toy, a commitment by Haystack of $50,000 toward the
development and production of their toys, and the inventor's inspirational
story printed on toy packaging. The toys will be brought to market
under the Haystack brand and sold on the company's website and
in specialty toy stores nationwide.
"There wasn't a Haystack Toys for me when I was looking to bring
Waterbabies to market," Lauer says. So he's providing fellow inventors
with the opportunity he never had.
Ten years ago at age 29, inspired by memories of his sisters playing
with water balloons with hand-drawn faces and dressed up like
dolls, Lauer decided to abandon his banking career and create
Waterbabies, a water-filled doll that feels like a real baby.
Receiving rejection after rejection from 700 submission letters
to toy companies, Lauer single-handedly developed his toy idea,
raised about $370,000 from angel investors, manufactured and marketed
"In spring of 1998, I had the idea for Waterbabies. By Christmas
of 1990, it was sold in six St. Louis stores and was the best
selling doll in the metropolitan area. By 1991, it was number
one in the country, selling 2.2 million dolls," Lauer says. That
year Lauer licensed the rights to market Waterbabies in the United
States and internationally to Playmates Toys, Inc. He adds, "They
are still shipping one million dolls, and they're in the 11th
Lauer puts it into perspective, "In our business, selling 500,000
dolls a year is good."
Lauer's success has been recognized nationally by Forbes, Inc.
magazine, Investor's Business Daily, Kiplinger's Personal Finance
Magazine, Newsweek, People magazine, and USA Today. He has also
been profiled on the prime time television show (CBS), How'd They
Do That? Lauer was named one of Entrepreneur Magazine's 40 most
successful entrepreneurs under the age of 40.
When his story got out, "every inventor came to me and said 'make
my dream come true.'"
And that's what Haystack Toys set out to do.
In August 1998, Lauer and an early Waterbabies investor, Jeff
Loeb, founded Haystack Toys, a company that "honors play and celebrates
Originally, Lauer met Loeb, while looking for Waterbabies investors.
"I took an interest in what he was doing. He had a really good
product, and I saw the fire in his eyes," Loeb says. "I knew he
about one-and-a-half years ago, they reconnected, and talked about
starting a company together. "I realized that what I really liked
about my previous jobs was building a business, rather than maintaining
one." Loeb says.
"Our skill sets really complement one another. I have the marketing
background, and his strength is in product development," Loeb
points out. Loeb, who is vice president of sales, spends most
of his time "getting products sold into retailers.
"We're both involved in all of the strategic decisions. Our common
goal is to advance the dream. Dan's vision is the inspiration
behind the company. He won't let go of it, and that is why I like
being affiliated with him," Loeb states.
Prior to co-founding Haystack Toys, Loeb was a vice president
of International Sales and Marketing for Brown Shoe Company. In
1987, he helped found University Games, a $45 million company
that designs, manufactures, and markets adult and children's games
Earlier in his career, he was the product manager for Kenner Products'
$135 million Star Wars¨ line, the toy industry's largest product
line at the time.
Loeb and Lauer's Haystack Toys is the antithesis of the big toy
manufacturers. "The big toy companies don't take risk and most
of them are interested in toys that are spin offs from movies,
television or comics." Or they just want to expand already popular
brands such as Barbie dolls.
"If the Toy Hunt works it can be applied to any industry-book,
movie, music, etc.," Lauer says enthusiastically. "We're giving
creation an opportunity and dignifying the inventing process."
For Lauer and Loeb, being native St. Louisans has worked to their
advantage. "St. Louis has adopted us. This city protects its own,"
Haystack has many local supporters. Investor and Haystack board
member, Sanjay Jain is a staunch believer in Lauer and his business
models. Jain, chairman and founder of WorkNet Communications,
a high-speed, wireless telecommunications company in St. Louis,
is confident Haystack Toys will be successful. "Lauer's got a
lot of energy and good ideas and people are attracted to him,"
he says. "Lauer is democratizing the creative process, giving
the power to the creators.
"Not only does Lauer have creative ideas, but by leveraging the
Internet, he has broader, more focused distribution," Jain adds.
Another investor is high-tech entrepreneur Greg Sullivan, founder,
president and CEO of G.A. Sullivan. He met Lauer through Mark
Sundt, now Haystack's chief technology officer, but formerly with
Microsoft. "I've known Sundt for a long time, and the fact that
he left Microsoft after many years there to work for Haystack
said a lot about the budding toy company.
"Now they're a big customer of ours," states Sullivan, who has
a dual interest in Haystack Toys.
"Dan is one of the most creative people I've ever met," he says.
"He's unique in that he has an incredible creative capacity and
ability to recognize creativity in others. He has the business
acumen to pull all that together. A lot of people have one or
Sullivan continues, "I view him as a visionary in that he's taken
an old economy concept-kids toys-and is bringing it into the "New
Economy" in a way that has never been conceived of before. Here's
a guy who's really going to change the world."
A third investor, Drew Bauer, chairman of Mississippi Valley Bancshares,
was equally enthusiastic. And what really convinced him to invest
was "the three principals, Lauer, Loeb and Sundt. These guys understand
the toy business and they have a product that will appeal to parents
and children alike."
Not only does Lauer know toys, but he knows young children, with
four of his own-three girls and one boy-all under 6 years old.
His family is very supportive of his concept and business.
Lauer is thrilled to have so much support from family and investors,
but at the same time it creates pressure. "We're in the toughest
spot right now, with no revenue," he states. His projected revenue
this year is $6 to $12 million. And he has projected a profit
of $22 million by 2003 on sales of $180 million.
"I'm on the line. We take people's money and make promises. Everyone
believes in us, and we have to deliver."
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