SQUISHMALLOWS joined Warren Buffett’s business empire two years after Lady Gaga, Kim Kardashian and others helped make the plush stuffed toys a viral sensation on TikTok.
For Judd and Laura Zebersky, whose company Jazwares makes the toys, the success of Squishmallows is hardly what they imagined when they met 33 years ago at the University of Miami law school.
They married in 1993 and embarked on law careers, but Judd Zebersky soon realized that wasn’t his destiny. Four years later, he started Jazwares, where he is now chief executive.
“I have really loved pop culture since I was a kid,” Mr. Zebersky said in an interview at this month’s annual shareholder weekend for Mr. Buffett’s Berkshire Hathaway, Inc. in Omaha, Nebraska.
“I was into comic books and toys, and I’m also an artist — a not very good one,” he said. “I looked at my wife, and I said, ‘I want to make toys.’ She said, ‘Follow your dreams,’ and that’s what I did.”
Laura Zebersky, a litigator, sold her practice in 2005 and joined him, becoming Jazwares’ president.
Jazwares sales topped $1 billion in 2021. About 40% came from Squishmallows, as the number sold passed 100 million, and the rest from in-house and licensed brands including Fortnite, Pokemon and Star Wars.
Berkshire bought Jazwares’ parent, insurance holding company Alleghany Corp, for $11.5 billion last October. It has not since discussed Jazwares’ business performance.
“Jazwares is a gem,” Mr. Buffett said in an emailed statement. “And, Judd and Laura are the ideal Berkshire managers.”
STRIKING A NERVEOther businesses in Berkshire’s stable also make toys, including Oriental Trading’s rubber ducks resembling Mr. Buffett and his longtime business partner Charlie Munger.
But it was Buffett and Munger Squishmallows that were arguably the hot item during a shopping event at the Berkshire weekend, with shareholders scooping up 10,000. Before long they were fetching more than $500 at auction on eBay.
Launched in 2017, Squishmallows became part of Jazwares when it bought another toymaker, Kellytoy.
The Zeberskys thought the squishy toys could be a hit but had not been marketed well to a mass audience.
There are now more than 2,000 Squishmallows, each with its own name, birthdate — or “Squish date”— and biography.
“This was a brand that needed a lot of love,” Judd Zebersky said. “It struck a nerve, and when you strike a nerve in the toy industry, great things can happen.”
In 2014, seeking help in expanding, the Zeberskys sold a stake in Jazwares to Alleghany, which took a majority stake two years later. Terms of both transactions were not disclosed.
“Another company was courting us,” Laura Zebersky said. “We weren’t looking to sell, but we knew we could not grow properly without acquisitions. When Alleghany wanted to buy a minority stake, we were all for it.”
Led by Joseph Brandon, who previously ran Berkshire’s General Re reinsurer, Alleghany now has Mr. Buffett’s deep balance sheet as support.
“Joe said that our lives would be really, really good, we’re working with the best and most respected company in the world,” Judd Zebersky said.
STAYING CURIOUSThe Zeberskys now report to Greg Abel, a Berkshire vice chairman who oversees non-insurance businesses and is Buffett’s designated successor as Chief Executive Officer.
“Greg is exactly what we have all learned about the Berkshire model,” Laura Zebersky said. “He lets us run our business, he lets us operate in the way we see best.”
The Zeberskys said they had met Mr. Buffett once, at a 2017 charity dinner in Florida to encourage investments in Israeli bonds.
Jazwares counts Hasbro, Lego and Mattel among its main rivals.
Its products come mainly from China, as well as Vietnam and eventually Cambodia and Indonesia — the United States costs too much.
Judd Zebersky said Jazwares is looking to expand into business “ancillary” to toys, such as costumes.
Curiosity, he said, helps drive where Jazwares might go next in a fast-changing world.
“Whenever you think that you’ve hit the top of the mountain and you’re not curious, that’s when your company will fall down,” he said. — Reuters