The Disastrous History Of Legos

Every kid loves Lego, unless you were one of those kids who lacked the sort of creativity it takes to build anything better than a large, straight-sided, multi-colored tower. Not that we know anyone like that or anything. Anyway, every parent loves Lego, too, especially when you're fumbling your way to the bathroom in the middle of the night and your heel lands right on top of a 1x4.

In those dark hours, you may stop and curse the name Lego under your breath, but not too loudly because then the kids will wake up and it really will be a nightmare. But think about it—if enough parents curse the name Lego at the same time, then perhaps the Lego company will fall under a spell of bad luck and do something stupid like start releasing sets of gladiator figures with interchangeable arms and then suffer the financial consequences of their poor choice. Who knows, maybe parents have been cursing the Lego company all along, and that explains the bizarre series of misfortunes that have been plaguing them since 1924. What bizarre misfortunes? These ones. So read on, and if you truly love Lego, try to bite your tongue the next time you step on a 1x4.

Kristiansen was not a man to be brought down by a little thing like the loss of his entire home and livelihood, so he built himself a new workshop and a new house. If you're Lego-obsessed, you can even go visit the house because it's still standing on Main Street in Billund, Denmark.

At some point, Kristiansen started making toys out of scrap wood, probably around the time he realized he should be giving his kids something to play with besides matches, glue heaters, and wood shavings. Pretty soon, things were looking up again, but then in 1929 Wall Street crashed, and by 1930 the UK and the USA had both placed restrictions on imports, including Danish farming imports. According to Lego, prices of things like butter and pork started to crash, and some of Kristiansen's biggest customers could no longer afford to commission carpentry work. Kristensen had to let his employees go, and by 1931 he had no journeymen left. And then, because things weren't already bad enough, in 1932 Kristiansen's wife died from complications of phlebitis, leaving him alone to care for four children between the ages of 6 and 15.

On the night of March 20, 1942, another fire swept through the Lego factory. Kristiansen's home—which was adjacent to the factory—was miraculously spared, but the entire wood products business was destroyed, and the disaster was enough to finally rob Kristiansen of his will to continue. According to Lego, "Only his sense of responsibility for his sons and employees persuad[ed] him to rebuild the factory." 

Kristiansen eventually secured a loan and was able to rebuild on the same site, and the new factory ended up being an improvement on the old one—it was more modern and designed specifically for producing toys. When it was finally completed in 1943, productivity went up. But on the flip side, Kristiansen lost all of his models and patterns and had to recreate everything from scratch.

When you've got a clean slate, though, you've got opportunity for change. After the fire, Kristiansen decided to add self-locking blocks to his product line, and 1947 the company bought its first plastic injection molding machine. For a while, the company continued to produce both wood and plastic toys, before finally abandoning wood and focusing solely on plastic.

It's probably a good thing Ole Kristiansen was already gone in 1960, because the news of yet another disastrous fire might have destroyed the poor man. According to Lego, fire struck the company again in 1960, wiping out an entire warehouse and all of the company's inventory of wooden toys. That was the incentive the company needed to finally discontinue its line of wooden toys.

Loads of new designs followed. In the 1960s, the company introduced a round brick with a rubber tire, and it now produces roughly 300 million of them a year (making it officially the world's largest tire manufacturer.) It came out with a line of larger, chunkier blocks for preschoolers and it even launched its own theme park—Legoland in Billund has been open since 1968. The little people (minifigs) came out in the 1970s, followed by medieval castles, spaceships, and astronauts. Lego became Lego as we know it, and it was kind of like the multi-primary-colored phoenix of plastic, rising out of the ashes of all those factory and warehouse fires.

Ultimately, companies are only as good as the decisions of their top people, and in the mid-1990s to early 2000s, Lego's top people made some really dumb decisions. According to Business Insider, in 1996 the company released a line of cool micro-motor and fiber-optic kits, but no one at Lego was dialed into the minor details like, you know, the cost of all those high-tech parts. As it turned out, it cost more for Lego to obtain the parts for these sets than the sets were actually selling for, so they were taking a loss and they didn't even know it. 

So who was the genius that came up with this particular product idea? Well, the top people at Lego had evidently decided the company needed to modernize, and in order to do that it needed to get rid of all the oldies. So it "retired" a lot of the designers who'd helped grow the company between the 1970s and the 1990s, and it replaced them with a bunch of hotshot young graduates from the top European design colleges. They were talented people, sure, but they weren't toy designers, and together they helped balloon the Lego product line from a sustainable 6,000 different parts to more than 12,000. That meant the company needed to increase its infrastructure even though it wasn't seeing any real increase in sales.

By the early 2000s, Lego was near bankruptcy. According to Strategy Business, they still looked pretty good to the outside world—in 2000 the British Association of Toy Retailers and Fortune magazine named Lego "the toy of the century," and in 2004 sales topped $1.35 billion. But between 1998 and 2004 Lego was actually losing money, and sales dropped a whopping 30 percent in 2003 and another 10 percent in 2004. Profit margins were in the red at -30 percent. According to some internal estimates, Lego was losing $337,000 in value every single day.

So was it all those seriously lame product lines? Partially. But some experts think Lego was also clinging too much to the things that worked for it in the old days—it was still spending a lot of time on brand building, even though it was one of the most recognizable brands in the world. And it had almost completely failed to recognize big box stores were replacing the smaller retailers that had formed its customer base for decades—so while other toy companies were adapting to the demands of those major chains, Lego was dragging its feet.

In 2012, Lego released the "Friends" line of products, which was basically a less lame but equally gender-stereotypical version of Scala. In the 2010s, though, consumers were starting to dislike products that pigeonholed kids into gender-specific play. Lego has always been seen as a gender-neutral toy, and a lot of parents were upset that Lego seemed to be trying to divide its products into for-boys and for-girls categories.

According to the Atlantic, Lego's own research revealed that around 90 percent of the Lego sets sold around the world were being purchased for boys. So there was a huge, untapped market for Lego sets aimed exclusively at girls, but the way Lego decided to confront the challenge just showed how out of touch it was about the modern market for girls' toys.

In 2012, Lego released said Friends line, which mostly included toys that showed girls doing stereotypical things, like going to the hair salon and the mall. Lego was almost immediately met with backlash—consumers and critics accused the company of "dumbing down" Lego because of a misguided belief that girls as less capable builders than boys. The line even got a TOADY award, which stands for "Toys Oppressive and Destructive to Young Children." Ouch.

A company that can bounce back from three devastating fires has the kind of resilience that can save it from almost anything, and today Lego is as strong as it's ever been. In 2014 the Lego Movie made $69 million in its opening weekend, so it's come a long way since the early 2000s. 

According to Business Insider, when Jorgen Vig Knudstorp became CEO in 2004, he immediately reined in expenses and hired some fresh new designers, many of whom were lifelong Lego fans, people who were clearly best-equipped to come up with the fresh designs and innovations that the company needed. Knudstorp cut the ballooning inventory of parts in two, linked design and manufacturing costs (at last!), axed the computer games business, and streamlined the business in general. But the biggest thing Lego has done to improve its bottom line is return to the sorts of products we all remember from our childhood—those interchangeable bricks that still have the look and feel of the original. That's what Lego has always done best, and in all likelihood, it's what will sustain the company in the future.