© Reuters. FILE PHOTO: Investors and guests walk past a display of Squishmallow during the Berkshire Hathaway Inc show in Omaha, Nebraska, US, May 5, 2023. REUTERS/Rachel Mamie/File Photo
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By Jonathan Stempel
(Reuters) – Squishmallows has joined Warren Buffett’s business empire two years after helping Lady Gaga, Kim Kardashian and others make the stuffed plush doll a TikTok sensation.
For Judd and Laura Zeberski, whose company Jazzwares makes the toys, ScotchMellows’ success is hardly what they imagined when they met 33 years ago at University of Miami law school.
They married in 1993 and embarked on legal careers, but Judd Zeberski soon realized that this was not his destiny. Four years later, he started Jazwares, where he is now CEO.
“I’ve really loved pop culture since I was a kid,” Zebersky said in an interview at Buffett’s Berkshire Hathaway (NYSE:) Inc. in Omaha, Nebraska, this month’s annual shareholder weekend.
“I was into comic books and games,” he said, “and I’m also an artist — not very well.” “I looked at my wife and said, ‘I want to make games.’ She said, ‘Follow your dreams,’ and that’s what I did.”
Attorney Laura Zebersky sold her business in 2005 and joined to become President of Jazwares.
Jazwares sales topped $1 billion in 2021. About 40% came from Squishmallows, with the number sold over 100 million, and the remainder from in-house and licensed brands including Fortnite, Pokemon, and Star Wars.
Berkshire bought the parent company of Gasuares, the Ghanaian Insurance Holdings Company (NYSE: Corp), for $11.5 billion last October. It has not since discussed Jazwares business performance.
“Gazurus is a gem,” Buffett said in an emailed statement. “Judd and Laura are the perfect managers for Berkshire.”
hit a nerve
Other companies in the Berkshire stable also make toys, including rubber ducks for Oriental Trading that resemble Buffett and his longtime business partner Charlie Munger.
But Buffett and his Munger Squishmallows were the most controversial item during Berkshire’s weekend shopping event, where shareholders took home 10,000. Before long they were fetching more than $500 at an auction on eBay (NASDAQ:).
Launched in 2017, Squishmallows became part of Jazwares when it bought another toy maker, Kellytoy.
The Zeberskys thought squishy toys could be a hit but they weren’t well marketed to a mass audience.
There are now more than 2,000 Squishmallows, each with their own name, date of birth – or “Squish date” – and their own bio.
“This was a brand that needed a lot of love,” said Judd Zbiersky. “It struck a nerve, and when you strike a nerve in the gaming industry, great things can happen.”
In 2014, looking to help expand, the Zeberskys sold a stake in Jazwares to Alleghany, which acquired a majority stake two years later. The terms of both operations were not disclosed.
“There was another company courting us,” said Laura Zbirski. “We weren’t looking to sell, but we knew we couldn’t grow properly without acquisitions. When a Ghanaian wanted to buy a minority stake, we were all for it.”
Led by Joseph Brandon, who formerly ran Berkshire’s General Reinsurer, the rich now has Buffett’s deep budget as a backstop.
“Joe said our lives would be really good, we work with the best and most respected company in the world,” said Judd Zebersky.
Stay curious
The Zeberskys now report to Greg Abel, a Berkshire vice-chairman who oversees the non-insurance business and is Buffett’s designated successor as CEO.
“Greg is exactly what we all learned about the Berkshire model,” said Laura Zbiersky. “It lets us run our business, it lets us operate the way we think is best.”
The Zeberskys said they met Buffett once, at a 2017 charity dinner in Florida to promote investment in Israeli bonds.
Jazwares’ main competitors include Hasbro (NASDAQ:), Lego, and Mattel (NASDAQ:).
Its products come mainly from China, but also Vietnam and eventually Cambodia and Indonesia – costing the United States a lot.
Judd Zbiersky said Jazzwares is looking to expand into toy “ancillary” businesses, such as costumes.
He said curiosity helps lead to where Jazwares might go next in a rapidly changing world.
He said, “When you think you’ve reached the top of the mountain and you’re not curious, that’s when your company falls.”
(This story has been paraphrased to amend the list of companies in paragraph 25)