LEGO was born from fire and death, rising from the ashes to become the billion dollar company
it is today. On one hand, the story of LEGO is an inspiring story of tenacity, family love,
and quality craft. On the other, it’s a tragic tale rife with controversy, feuds,
and sorrow. All these things together went into the creation of the company that makes
the bricks so many have grown up playing with. But of course, LEGO is so much more than toy
bricks - it’s an empire - they have lego world, lego games, lego movies, and so much more. And
the story of how that happened is absolutely insane. Welcome to the untold truth of LEGO.
Ole Kirk Christiansen was born in 1891 in a small village in Denmark called Filskov. He was
born to a very large, but very poor family. However, he worked hard to receive a basic
highschool education and began to apprentice with his older brother as a carpenter.
As an apprentice, Ole found a deep love for the craft as he spent days working on
and building a variety of wooden objects under the tutelage of his older brother.
Ole was a hard worker and in a few years he had saved up enough money
to be able to open up his own small shop in the nearby town of Billund,
where he sold goods he made himself by hand like tables and chairs.
During that time, he fell in love with a woman named Kirstine and before too long
they were married, and had 4 kids together. The family settled down in Billund next to
Ole’s workshop with the expectation of living their modest, but happy, life.
Unfortunately, that would not be the case. In 1924, Ole’s sons were playing with old wood
shavings in the shop when they accidentally set those shavings ablaze. The fire quickly spread
throughout the building, causing it, along with much of the supply, to go up in flames.
By the time the fire was put out, the shop was a pile of ash and charcoal on the ground. Luckily,
no one in the family was hurt, but the fire completely devastated the business. Ole would
have to rebuild the shop himself, whilst making no money at all during that time.
To make matters worse, The Great Depression hit Denmark in 1930, and so even once Ole’s shop was
rebuilt, he was still barely able to make enough money to put food on the table for his family.
The final straw came in 1932, when Kirstine, Ole’s beloved wife, passed away. He was now
broke and alone, a single dad of four sons. He had no idea what to do or where to go.
One
day, Ole came across some extra wood in his shop and used it to make some toys
for his sons to play with, a gift for them during these trying times. He made a duck
on wheels that could be pulled around with a chord like a dog on a leash. After seeing
the joy it brought his children, he began to make them more toys out of the spare wood,
and found that not only did his kids enjoy playing with them, he enjoyed making them.
So, Ole began to make and sell toys out of his shop. He refused to sacrifice
the quality of his crafts, and only used the finest wood he could get.
He also knew that his business needed a name, and after much contemplation he decided on the name
LEGO, inspired by the Danish phrase “Leg Godt” which meant “to play well.” Surprisingly and
completely unplanned, the name also closely resembled a Latin phrase which meant “I put
together.” An omen of what was to come for the carpenter and his fledgling toy business.
However at first, with the economic situation in the whole country so bleak,
sales were not good at all - many people were just worried about buying enough food,
let alone buying a high quality wooden duck toy.
So despite Ole’s passion for his work, he grew closer and closer to bankruptcy.
As things got dire, he reached out to his siblings for aid. After much discussion,
they agreed that they would help him get out of the hole he had found himself in,
but on one condition: he gave up making toys and went into an actually lucrative
profession. He had to “get a real job,” according to his siblings.
Even though they were offering him a financial lifeline, Ole refused to give up this craft that
he had found himself to be so good at. Rather than accept their help and give up his dream,
he said he would figure out a way to get out of financial trouble himself,
so he could continue making his beloved toys. He remained focused,
never faltering, but the world continued to conspire against him.
On April 9th, 1940 Nazi Germany invaded and took control of Denmark. Times went from bad,
to worse incredibly quickly. The future was looking dark
for Ole - in fact one of his sons had begun to work in his shop with him,
and his son said he was having trouble seeing how the business could continue.
In a final cruel twist, during the Nazi regime of Denmark,
Ole’s carpentry store burned down for a second time. Flames engulfed the store and
all of the wooden toys inside, and Ole saw his dreams burn down right along with them.
On May 4th, 1945 the Allies freed Denmark from the control of the Nazis. While the country hadn’t
suffered as bad as other occupied countries, the economy was still very hurt from the occupation.
This led Ole to search for a new, cheaper material he could use to make toys with.
Enter the plastic injection machine. During wartime, Denmark, along with many many other
countries, had put a ban on the use of plastic for non-essential items, which toys fell under.
However, this ban was lifted a couple of years after the liberation of Denmark.
Ole attended a conference in Copenhagen where he got to see the machine in action,
and witnessed what his new material for his toys would be.
Now, there was still much debate on the validity of plastic toys,
as many people thought kids wouldn’t want to play with cheap looking things.
But Ole could see the potential and was willing to take the risk. He used what very little money
he had left to buy a plastic injection machine. He had found his new material,
and he was ready to make plastic toys and embark on a new phase of his business.
Ole rebuilt his now twice burned store, and began making plastic toys. He started by making
plastic teddy bears and then made a plastic tractor, which he named the Ferguson Tractor.
There were two different models someone could purchase;
one already constructed and one in pieces that someone could make themselves.
After years of struggle for Ole and LEGO, the tractor was a success and between the years of
1951 and 1954, the company ended up selling around one hundred thousand Ferguson Tractors. Thanks to
Ole’s new creation, things were finally looking up - but things were about to get a lot crazier.
Ole was invigorated by the success of the Ferguson Truck, as was his son, Godtfred,
who had become more involved with the business as the years passed on. In fact,
he was appointed junior manager at LEGO by his father,
and together, they brainstormed ways to elevate the company even further.
And that’s when Ole discovered Kiddicraft’s Self Locking Building Bricks,
small plastic bricks that could be stacked together to make new
models. Ole immediately realized the potential such an idea had.
The Self Locking Building Bricks had been patented by Kiddicraft’s owner,
an English businessman named Hilary Fisher Page. But despite the patent,
LEGO still released its own bricks, called Automatic Binding Bricks.
Now, there’s a lot of dispute over if LEGO stole the idea from Page and Kiddicraft. LEGO
claims that it had received permission to use the brick design as it saw fit,
but those close to Page claim that the toymaker had no idea of LEGO’s existence,
much less their usage of his design, before his death in 1957.
Whatever the case may be, LEGO ended up buying the design of the Kiddicraft’s
Self Locking Building Bricks in 1981 for £45,000 pounds in an out-of-court
settlement. Whatever the case may be on whether or not LEGO stole Kiddicraft’s idea,
what’s clear is that relatively speaking, they bought the rights to it very cheaply.
But anyway, back in the ‘50s when Ole first discovered this brick design,
he and his son Gotfred began focusing most of their attention on these bricks,
as they felt they could turn them into something more.
At this point their business was selling a variety of different toys,
but Godfred wanted to encourage more creativity within children. His mind whirred with ideas,
and in 1955 he had his first breakthrough: LEGO released the Systems in Play set, a townscape
which kids could build using LEGO’s Automatic Binding Bricks. This proved to be very successful.
Ole was thankfully able to see the success his son was bringing to his business before his death
in 1958. Gotfredt was of course devastated by his father’s passing, they had become so
close whilst working on the business together, and he vowed to continue his father’s legacy.
Following Ole’s death, Godtfred was made CEO of LEGO.
However, soon after, complaints began coming in about the Systems in Play
set that had been released, all saying that the bricks would not stay together
and anything kids built simply fell apart. Godtfred worked with his team to design a
way that the LEGO bricks would stick together so that children could make anything they wanted,
but that would actually stay in position. They put pipes inside the bricks and studs on top,
which would keep the bricks locked together as the studs and pipes were tightly wedged to
one another. This was the introduction of the LEGO brick as we know it today.
With this update to the brick, Godtfred looked to the future. He wanted the bricks
to work throughout time, so whatever bricks they may release later would work with what
they were making now. He pledged then that their new and improved design for
the brick would never change, meaning they’d work with any future kits LEGO released.
Soon after the reinventing of the LEGO brick, LEGO re-released Systems in Play,
and began to release more sets, which were all well received.
The fact that the bricks could be assembled in
basically any arrangement and were now sturdy enough to stay in place,
all meant that LEGO’s bricks quickly became the company’s best-selling product by far.
The business that a few decades earlier had burned
to the ground and been barely able to stay afloat, was finally making good money.
Now of course, you could say that this success was built off the back of a
stolen brick design from another company. But.. that’s a bit of an
oversimplification. It does seem that LEGO took the brick design from someone else,
but they also vastly improved the idea and made the product better.
But either way, if you thought it was all going to be plain sailing from here, think again.
You see, even though Ole had passed away, it seemed as though his bad luck lived on,
as another disaster was right around the corner.
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While the plastic bricks were a huge success, LEGO didn’t stop making wooden toys. In fact,
they began incorporating plastic components to them with the same idea of kids building
toys themselves, and called the product BILOfix.
This product was managed by Godtfred’s brothers, Karl Georg and Gerhardt.
Despite the success of the plastic toys, they figured it was nice to still have
woodwork involved with the company, because it honored the store's humble beginnings.
However, as is the recurring case with this family, things didn't end up going
as planned - in 1960, their old enemy, the flame, made itself known again.
One night a bolt of lightning struck their factory, burning it down for the third time.
After the workshop was burnt down yet again,
Godtfred made the controversial decision to stop making wooden toys and focus purely on plastic,
in particular their toy bricks. He felt the wooden toys must be cursed or something,
and they didn’t sell anywhere near as well as their new plastic bricks anyway.
But this decision for LEGO to stop producing wooden toys completely enraged his siblings,
since that was the part of the business they worked on and they
wanted to continue. Godtfred was the CEO though, so his decision was final.
Thus, Karl Georg and Gerhardt promptly quit LEGO,
and decided to continue releasing their wooden toys under a new separate company called BILOfix,
essentially now competing in the toy market against LEGO, with their own shop in Denmark.
And thus, the business that Ole had originally started because he wanted
to make toys to keep his children happy, had ended up dividing the family instead.
LEGO had begun to rake in a lot of money, and with its incredible
success Godtfred’s business ideas continued to grow and spiral into endless creativity.
Godtfred constructed an airport in Billund to help with LEGO’s international sales.
He also began to get involved in theme parks, creating LEGOLAND. When
Godtfred had told people he wanted to open a theme park, he said he anticipated three
hundred thousand people coming the opening year, which everyone told him was wildly
unrealistic. But in reality, around 625,000 guests visited LEGOLAND in its first year,
blowing all expectations of what the company could do out of the water.
The possibilities for LEGO seemed endless - and Gotfred had the creativity and
ambition to match. So, LEGO began to publish books, start clothing lines,
and eventually even start a video game division within its offices.
The company was on track to be able to accomplish anything it seemed,
and all the disasters of the past were beginning to seem like bad dreams.
On July 13th, 1995, Godtfred passed away, but died content knowing that his
and his father’s business had become the success they always dreamed it would be.
Thankfully, he passed away right before all of those dreams came crashing down.
When Godtfed died, his son took over as CEO of LEGO, meaning the family business was now
onto its third generation. But it quickly became clear the company was in trouble.
In 1998, LEGO reported its first loss in decades. The truth was, lots of poor financial
decisions had been continuing to pile up in the background despite LEGO’s amazing growth,
and those choices led to the destructive financial explosion that LEGO found itself in in 1998.
It started when LEGO’s patent expired in 1978,
and the ‘80s opened up a long list of lawsuits and court showings for LEGO.
Firstly, a company called Tyco released some new connecting bricks very similar to LEGO,
and LEGO challenged them in court. That challenge was somewhat ironic really,
given that LEGO themselves had been accused of stealing the brick design in the first
place - in fact they’d only very recently paid for the rights to it from Kiddicraft.
And so Tyco did eventually win the right to use the brick design themselves, though
their company never had the commercial success that LEGO had experienced.
Throughout the ‘90s, LEGO also had continual legal disputes with another
similar company Mega Bloks, which meant yet more money spent on lawsuits and lawyers.
Those legal fees, along with the amusement parks, video games, books,
and so many other endeavors that had been taken on by the company continued to drag
money away from LEGO at a higher rate than they were making it. Their expansion into
so many avenues had become a little too chaotic, and finally, in 1998, LEGO announced their first
major loss. They were forced to fire one thousand of their ten thousand employees.
The company was just stretched too thin and locked into a downward death spiral. It was so bad, that
in 2004 LEGO reported that it had lost hundreds of millions of dollars in that year alone.
After the 2004 disaster, Godfredt’s son stepped down as CEO and appointed the
first non-family CEO of the company, Jorgen Vig Knudstorp - with the obvious goal of
turning what had become a financial nightmare back into a success story.
There was a lot of work to do, and a lot of failed ventures that needed to be turned into successes.
Firstly, Jorgen began working on different merchandising efforts,
and selling off what wasn’t making the company money while keeping what was. He
discontinued projects that the company had no experience in and focused on what it did best.
He also focused on the rising success of video games and doubled down on licensing
their product to other popular brands, from Star Wars to Winnie the Pooh - which helped
boost sales massively by attaching LEGO to other popular franchises.
Soon, the changes began to make the company’s finances look a lot
healthier. Jorgen was just thirty five when appointed as CEO of the company,
and in no time at all he’d had a hugely positive impact.
Whilst much of his work involved reducing the amount of new business ventures LEGO took on,
there was one new avenue that LEGO embarked on - and surprisingly, that was movies,
as they released The LEGO Movie in 2014. Even more surprisingly,
the movie was a massive hit, grossing a little under five hundred million dollars.
On top of the movie’s massive success, Jorgen’s efforts continued to rapidly grow revenue for the
company, and turn its financial situation around. As of today, the company has been
experiencing double digit percent profit growths, something almost unheard of in the toy industry.
And so you see, from a small workshop run by a stubborn carpenter experiencing hardship after
hardship, to a multi-billion dollar global empire, LEGO’s success is nothing short of
spectacular. Ole started with nothing but his willpower, his love for carpentry,
and his joy of making his sons happy with the toys he made. And whilst the journey to success
was an extremely bumpy ride, spanning multiple generations, Ole’s relentless determination laid
the foundations for what LEGO has now become. You’d think if your business burns down three
times that’d be a sign to stop, but in true LEGO fashion, the family just kept rebuilding it.
However, there is another company with an even crazier story that I think you’ll like,
and that is the history of Nike - which you can watch right now by clicking the
thumbnail on screen. I’ll hopefully see you there in a second. Cheers.