Build-A-Bear: Maxine Clark. A Former Shoe Executive Launches a Stuffed Animal Empire

When Maxine Clark left a top job in retail to start a make-your-own stuffed animal store, people thought she’d lost her mind. Investors doubted it. Friends questioned it. Retail experts couldn't understand how it would scale. But drawing on more than 20 years as a retail executive, Maxine built a massively successful shopping “experience,” where kids could stuff, dress and personalize their own stuffed animals. Today, Build-A-Bear has generated billions in sales, survived the decline of malls, weathered the financial crisis, and become a global brand. WHAT YOU'LL LEARN How a failed errand—and an offhand comment by a kid–inspired a business plan How Maxine leveraged two decades of retail experience to launch Build-a-Bear How Willy Wonka and Walt Disney were early inspirations How she built a wedge against competitors How she got through the financial crisis How she knew when to step down as CEO– and how to collaborate with her successor TIMESTAMPS: 05:52 - A mom Who Worked for Eleanor Roosevelt 09:18 - The Impromptu Interview That Changed Maxine’s Career16:00 - Becoming One of the Few Female Fortune 500 Executives18:43 - Why She Walked Away From Payless21:27 - The Beanie Baby Disappointment That Sparked Build-A-Bear26:14 - Designing the First Store: “Make it Like Willy Wonka.”37:53 - Opening Day — and a Line Out the Door39:53 - Defending the Brand Against Copycats and Lawsuits45:53 - Scaling to Hundreds of Stores and Going Public58:25 - Letting Go: Stepping Down as CEO and Building a Legacy This episode was researched by Rommel Wood and produced by Kerry Thompson, with music by Ramtin Arablouei, and edited by Neva Grant. Follow How I Built This: Instagram → @howibuiltthis https://www.instagram.com/howibuiltthis/ X → @HowIBuiltThis https://x.com/howibuiltthis Facebook → How I Built This https://www.facebook.com/howibuiltthis Follow Guy Raz: Instagram → @guy.raz https://www.instagram.com/guy.raz/ Youtube →guy_raz https://www.youtube.com/channel/UCNSfrxNEmCruNtjIzxCBHjg X → @guyraz https://x.com/guyraz Substack →https://urldefense.com/v3/__http:/guyraz.substack.com__;!! Iwwt! RZoD751oWzUzoqqdJiqaoL6HdJfRHDUO1TKvYJ424d3Udn7-Pw9Nj6nEsauh9zcgEvLjUEc$guyraz.substack.com http://guyraz.substack.com Website →https://urldefense.com/v3/__http:/guyraz.substack.com__;!! Iwwt! RZoD751oWzUzoqqdJiqaoL6HdJfRHDUO1TKvYJ424d3Udn7-Pw9Nj6nEsauh9zcgEvLjUEc$guyraz.com http://guyraz.com See Privacy Policy at https://art19.com/privacy and California Privacy Notice at https://art19.com/privacy#do-not-sell-my-info.

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:05Guy Raz?

  I have to imagine there were some people, maybe they didn't say it to you, who thought this was so weird. Maxine Clark, the lady who ran Payless, like, is starting a stuffed animal thing? Like, what is she thinking? Is she nuts? Like, I just have to imagine people were saying that, maybe behind your back.

• 0:25Speaker 01

  No, they said it to me. They weren't shy.

• 0:35Guy Raz?

  Welcome to How I Built This, a show about innovators, entrepreneurs, idealists, and the stories behind the movements they built.

• 0:46Guy Raz?

  I'm Guy Raz, and on the show today, how a fruitless search for a Beanie Baby inspired Maxine Clark to start Build-A-Bear, a make-your-own-stuffed-animal store that grew into a global phenomenon.

• 1:04Guy Raz?

  In 1992, an article in Forbes magazine pointed out that of all the top positions in Fortune 500 companies, only 5% were held by women, which makes today's guest, Maxine Clark, kind of a pioneer. Because that year, 1992, she became the president of Payless Shoes, which, at the time, was a fast-growing subsidiary of a Fortune 500 company, the May department stores company. Up until that point, Maxine had spent her entire career working for the May company. It was a huge, sprawling empire, one of the largest department store chains in America. Maxine was 43 years old and at the top of her game.

• 1:47Guy Raz?

  And just four years later, Maxine decided to give it all up, the prestige, the salary, and the perks, to go out on her own. So you might assume she'd try and launch a new fashion concept, or a footwear brand, or something related to what department stores generally sold. But instead, Maxine came up with a concept that seemed out of left field, a store that would allow kids to build their own stuffed animal. Now, there were plenty of people who couldn't really understand how this idea would scale, but Maxine knew two things about kids. They loved stuffed animals and they

• 2:25Guy Raz?

  loved craft projects. She opened the first Build-A-Bear store in St. Louis in late 1997. And within five years, Build-A-Bear had 100 stores and malls across America. Over the next 20 years, as shopping malls went into decline, Build-A-Bear managed not only to survive, but in many cases, to become the reason kids wanted to go to the mall. Today, there are hundreds of Build-A-Bear stores around the US and the thriving online business. And that's saying a lot for a brand that's often been written off as a fad. Last year, the company reported over half a billion dollars in sales, all from kids wanting to

• 3:07Guy Raz?

  stuff and dress and personalize their own teddy bear. As for Maxine, she grew up in the 1950s and 60s in Coral Gables, Florida. Her dad was an electrician and her mom was a social worker who, during the 1940s, was actually a secretary for the first lady, Eleanor Roosevelt.

• 3:26Speaker 01

  My mother was hired into the typing pool in Albany when she was the first lady of New York. And Eleanor took my mother with her to DC because my mother was a very fast typist and also a very fast stenographer. And my mother also invented her own form of stenography so that nobody-- job security--

• 3:47Guy Raz?

  Wow.

• 3:48Speaker 01

  But also because things Eleanor told her were very confidential. And so she kept a record of those, but she didn't want anybody else to read them. So she was in Washington DC also. And my mother was on her traveling team--

• 4:00Guy Raz?

  Yeah.

• 4:01Speaker 01

  And they went to places to see what was going on in the country so she could share it with Franklin, because he couldn't travel like that. And they went to asylums and they went to hospitals and they went to orphanages. And they saw how poorly people were treated. And her dictate to the people, when Franklin died, to my mother and other women on her staff were, "When you're going home to settle, wherever you're going to be, do something that's going to change the lives of the children and the families that we saw on our travels." And so that's exactly what my mother did. Basically, she and three of her friends ran a school for children with Down syndrome. That was what they did after Eleanor Roosevelt. And so-- She wasn't making a lot of money. She was basically still being a secretary,

• 4:44Speaker 01

  an organizer, an advocate for children that were differently abled.

• 4:49Guy Raz?

  Yeah. Given that your mom, you know, had worked for Eleanor Roosevelt for almost 15 years, or maybe about 15 years, and it sounds like she was very into social justice and was probably a very committed sort of New Deal Democrat, I imagine she probably worshipped the Roosevelts, right?

• 5:05Speaker 01

  Mm-hmm.

• 5:07Guy Raz?

  You know, you're growing up in the 60s. This is the civil rights era, right? You've got all kinds of things happening. Was your mom, did she get involved in some of that, some of those protests? Did she ever bring you along?

• 5:21Speaker 01

  Yes. When I was 16, my mother, we went on the bus from Miami to Selma, Alabama, and we marched in Selma, Alabama, but we were in the, way in the back of the line. I had no idea the impact that that would have on my life, or on America's life. No idea whatsoever. And that I was so appreciative of my mother exposing me to such incredible opportunity.

• 5:45Guy Raz?

  Yeah.

• 5:46Speaker 01

  But my mother was not a doting mother. I mean, she was not that kind of person, but she would definitely encourage it. You know, you can be anything that you want to be. And I don't think she felt she could be anything that she wanted to be, but she loved what she did.

• 5:58Guy Raz?

  Hmm. I know that you studied journalism at the University of Georgia in the 1960s. And I guess you originally thought about becoming a civil rights lawyer. And I read that you actually moved to Washington DC after college with the intention of going to law school. But somehow, I guess your plans got sidetracked because you decided to earn some money and you went and worked for a department store. What's the story?

• 6:22Speaker 01

  Yes. I got a job at the executive training program at the, at Hack Company in Washington DC. But that was an interesting story, too, because when I called up for the job, they told me that they were all filled. But I wanted to work at the Hack Company. I don't, you know, it's like how, how random things happen to you, but I wanted to work there. And I walked back down there and I told them I had an interview at 2 o'clock, or whatever time it was. I did not have an interview at 2 o'clock. But they would see if somebody would meet with me. And Stanley Mott was his name. He was a very tall man. He said, well, let me take you for a cup of coffee. We, you know, we went into the, into the restaurant and it was empty. It was after lunch, around two o'clock. And a man comes in, a bald headed

• 7:07Speaker 01

  man, kind of heavyset, and he sits down at our table and he introduces himself as Alan Bluestein. And he said, hi, I'm Alan Bluestein. What's your name? And I told him my name. And he said, tell me about yourself. And I told him about myself. And when he got up from the table, he said to Stanley Mott, I don't know how many people you have in that training class, hire her and pay her $150 more a month than you paid the last person. And so I had a job. I think part of it was that I wasn't afraid, I wasn't on an interview. I was just talking to a nice man. I did not know he was the president of the company at the time, the president of that division of the heck company. And I just was myself.

• 7:44Guy Raz?

  So you are, you know, you get this meeting with this guy Stanley Mott, who's running Hecht's.

• 7:52Speaker 01

  He's running HR. He was the HR guy.

• 7:54Guy Raz?

  HR, right. And Alan Bluestein is the head of Hecht's, which is this mid Atlantic.

• 7:59Speaker 01

  Yes.

• 7:59Guy Raz?

  And he, he happens to come to the lunch and sees you and says, hire this kid.

• 8:03Speaker 01

  Yes, yes. And I lucked out on that because when I walked into the store, it wasn't as fancy as Woodward and Lothrip or Garfinkel's. And I wasn't a fancy person.

• 8:13Guy Raz?

  Right.

• 8:14Speaker 01

  I thought I could really help because I was very tuned into the consumer. I was the consumer. I was this young working woman coming to work. I needed everything. I had nothing. I didn't have furniture in my apartment. I didn't have clothes to wear to work. I had to buy everything. And I did not have a lot of money to do it with. And that company was just coming into its own. Alan Bluestein, who was the president, was a very creative guy also. And he took to me, you know, it's like just really a nice guy. I didn't think of him as he's the boss and I better, you know, stand up straight and, you know, I didn't think, I wasn't intimidated. And part of that was also my upbringing because while my father and mother were not unusually successful people, they had friends that were successful.

• 8:53Guy Raz?

  Mm hmm.

• 8:54Speaker 01

  And that I was around those people. And so I saw what, what success looks like in it. I wasn't as intimidated. I was, I was comfortable, actually. And I was a student, always a student, listening and, and learning and taking notes in my head.

• 9:07Guy Raz?

  So you are, so you get this job and you're not going to be a sales rep on the floor of a Hecht's store, right? You're trained to work. In like purchasing or marketing, right? You're trained to be an executive. So what were you learning how to do?

• 9:24Speaker 01

  I was an executive trainee to be an assistant buyer to a buyer. And the buyer that I had, he got ill early in my career, very early in my tenure there. And I had to fill in for him.

• 9:36Guy Raz?

  Wow.

• 9:37Speaker 01

  And all the people that he sold to, that sold to him, the manufacturers, were so worried that I was going to destroy. I'm sure this was what they were thinking. She'll destroy the department. What did I know? I was just two months out of college. And so they helped me. They wanted him to be successful and in turn made me successful. And I learned so much from that scary, very scary nine months of time that I, you know, was basically just pulling things out of a hat. My gut was, it was my gut instincts that were leading me.

• 10:07Guy Raz?

  Yeah.

• 10:08Speaker 01

  They had no idea what a soak up a sponge I was. And I loved data and I loved digging in. I wanted to be successful. I wanted to do it. I loved it. I loved being around clothing and apparel. I loved it far more than I could have imagined. And I was good at, I was better at it than I could have imagined also.

• 10:27Guy Raz?

  Yeah, I'm curious. I mean, you clearly are digging into this and digging into what customers were going to want to buy. And I imagine, I mean, you know, you were, you had to learn about different product lines and things that you were not as familiar with. But I guess probably you naturally, you knew like women's apparel because you're a woman and you wore clothing.

• 10:51Speaker 01

  Right.

• 10:51Guy Raz?

  Did you eventually, or was that what you were focused on? Or did you kind of eventually move in that direction?

• 10:57Speaker 01

  No, that's what I was focused on.

• 10:59Guy Raz?

  Right.

• 10:59Speaker 01

  Because I really needed to buy clothes for work and there wasn't anything that I would even want to wear. You know, it was like really ugly and very masculine influenced. You know, little bow ties, you know, suits. And then I got curious as to when people did buy in my department, where else were they buying? What else did they go, what else went with it? And one of the good things at that time was that every department store had its own credit card.

• 11:22Guy Raz?

  Yeah.

• 11:23Speaker 01

  And so I went to Silver Spring, Maryland, where we had our credit card offices. And I started plotting out on my big green legal pad, how, when somebody bought something in my department, what else did they buy? What was the shoes they went with it? And then I started looking at what they did in the first three months that they had been in our department. It was just eye opening and I was so excited. It was like I discovered gold. And I came back to show my boss's boss what I had discovered. And I said, I think we have something here that we could put together a catalog and use vendor money, co-op advertising, to get it in the customers' hands. He said, if you can sell the advertising, go for it. When I came in on a Monday morning after we dropped the catalog, the ladies in the call

• 12:07Speaker 01

  center, and there were these old ladies that worked in a call center, on a real telephone, they said, you're in trouble. And I said, what do you mean, I'm in trouble? And they said, well, I think you sold out of everything that was in this catalog already because that's all the calls we've gotten all weekend long.

• 12:20Guy Raz?

  Yeah.

• 12:21Speaker 01

  And because I was successful, my boss's boss and the boss in St. Louis and people, it was noticeable. The results, that's what I tell people, get a job where your results are, you can take credit for your results because I was in a position where those results were catching attention.

• 12:38Guy Raz?

  Okay, so you're clearly on the up and up at Hacks. And about four and a half years after you start working for the company, I guess you get an opportunity to go work for the parent company, for May Department Stores in St. Louis, which is their headquarters. And that, I mean, that must have been exciting because, I mean, now you're going to be, I mean, this, you know, this looks like it's a career, right? I mean, it seems like you had put law school on hold because you had this opportunity. So, I mean, I imagine you liked it, right? Were you happy with the job?

• 13:11Speaker 01

  I definitely loved it. Mostly, I worked for the CEO of the company, and I got to travel all around to all of the different divisions of the May Company. I also got to work on acquisitions for the company, which required some knowledge of legal mergers and acquisitions. And I would take it to our legal department, and they would explain to me about it, what I had to do, what I needed to think about. And I kept getting promoted to one of the divisions. I was involved in the acquisition of the Volume Shoe Company for the May Company. And I think that not too long after that, they promoted me to go to Venture Stores, which was our discount store division, to be the head of marketing for Venture Stores. And that was a whole new experience, too, because I had not been over a marketing department.

• 13:56Speaker 01

  And that was a really interesting business because we were creating fashion at affordable price points. And that was where I met my husband, because my husband worked at that division. And then, at this point, I'm pretty high up in the chain of a division and probably on a track to go run a big division someday. And that division became Payless Shoes eventually, about 10 years later. And I got passed over a few times for a department store, for Venture Stores. But the job that was meant for me was Payless. That was the job that I was supposed to have. And I appreciated that after I got it, but not before. I was mad that I wasn't getting the other jobs earlier. Payless was the largest division of the May Department Stores.

• 14:41Speaker 01

  And they may be the president of Payless Shoe Source. And it was like a family business, because I had been part of the acquisition team. And it was so different than I could have imagined. I would have not imagined myself being in that job. I thought of lesser divisions, smaller divisions, that I would have been running.

• 14:57Guy Raz?

  How many people, do you remember, that worked at HQ?

• 15:01Speaker 01

  A couple thousand, probably.

• 15:03Guy Raz?

  Just for Payless?

• 15:04Speaker 01

  Yeah, that were between our distribution center that was in Topeka and Payless are a lot of people that worked there. It was a $4.5 billion company. I mean, $2.5 billion company, 4,500 stores.

• 15:18Guy Raz?

  Okay, so it's like, I mean, a big company, a lot of bureaucracy, a lot of meetings. And because I've read that you actually didn't love it. You didn't love that job.

• 15:31Speaker 01

  I didn't love the job because the further away you get from the customer...

• 15:37Speaker 01

  The further away you get from the customer. And that's where my juice came from, being with a customer, being in the stores. And I knew that, this was, you know, 1992, retailing was starting to change pretty dramatically. And technology was changing. And May Company was not a forerunner. They were not at the future of technology. In fact, we weren't allowed to email anybody out of the company, only inside the company. I think there was a worry about trade secrets getting out or something. And I knew that this technology, I didn't have to do those spreadsheets anymore. I could use Excel, you know? This was like really, why are we not using this technology? I was starting to see that my vision for what I wanted to do and could do was getting

• 16:21Speaker 01

  out ahead of where May Company was. And I did know that they wanted to take Payless public. And I did not want to be the CEO of Payless and to be Kansas the rest of my life. You know, I didn't. I decided that I would take my money and I would go back home and I would figure out my next step.

• 16:37Guy Raz?

  So what were you thinking of doing?

• 16:39Speaker 01

  Maybe working for somebody else, maybe starting my own company. I did not have any idea what it would be. There was a long runway still. And I had learned a lot, been a lot, been to many, many vendors, knew how to do a lot of things I'd never had, didn't know to do 20 years before. And was thinking about what could we do to reinvent retail? And I didn't know, but I did think it was going to be something, if I was going to open a business, it was going to be something for children. Because this computer stuff was happening pretty quickly. And I was afraid that kids would not remember what a retail store was like and have those experiences with their parents that I had with my mother, just looking in the windows even.

• 17:21Speaker 01

  And so I came back to St. Louis to kind of get my kid think back. And I don't have children. I immersed myself with my friends' kids. And I spent, this is my kid think, you know, when you're a little kid and your mother says you can't do this. Why not mommy? You just can't. Well, I think I had too much of that because corporate life is like that. You can't do that. You can't spend that money. You can't build that store there. You can't, you can't, you can't. I wanted to get my kid think, yes, you can, yes, you can, back. And it was the beginning of the technology in this country. And I knew that was going to be something really exciting. I had a couple of business ideas around that technology, by the way, for children. And I needed the time to go and investigate some of these things.

• 18:03Guy Raz?

  So tell me, just... What were some of the ideas that you initially were thinking of?

• 18:08Speaker 01

  Well, part of it was customer service, you know, like, how do we teach children? How do we treat them like they're really valuable to us in society and also in their retail experiences? I had this idea that we could use technology to do so. Like, we would create a store that might be a super duper learning store. That when the child walked in the store, the store would say hello to them. It would know them because they had a, they had a, a membership card. They were a member in the store. It would say, hi, John, how are you? When you walked over to the book department, it would say, did you enjoy Harry Potter? And when I looked into it more, I realized we couldn't really do that because of COPA and all these, you know, security things. But there was, the technology was there to do it.

• 18:49Speaker 01

  So I just kept thinking about, what could I do to make the experience for children more personal?

• 18:54Guy Raz?

  Yeah.

• 18:55Speaker 01

  And I immersed myself with my friends' kids to kind of get their point of view. And one day, I picked Katie and Jack out, my next door neighbors, up from school. And we went looking, they wanted to get, stop in a store that had Beanie Babies, if you remember the Beanie Baby craze.

• 19:10Guy Raz?

  Sure. Made billions of dollars, or a billion at least.

• 19:14Speaker 01

  And the store in our neighborhood, the toy store, had a big sign in the window that said, we have Beanie Babies. But we went in the store, they didn't. They were sold out because the parents trolled the stores all day, looking to collect them for their kids. And they took the discovery away from the child. And Katie was really sad. And Jack, he didn't care so much. But Katie said, you know, these are so easy, we could make these.

• 19:40Speaker 01

  She meant go home to my house and do a craft project because I had a big room in my basement that was all crafts. And the kids loved to come over and do stuff. But I heard something different. The light bulb went on. And that was the day that the idea of her Build-A-Bear workshop was born.

• 19:53Guy Raz?

  Yeah.

• 19:54Speaker 01

  I knew that kids love field trips. They love knowing how things are made.

• 19:58Guy Raz?

  Yeah.

• 19:58Speaker 01

  I knew that this, that she had spouted something very...

• 20:04Speaker 01

  Just normal kid, like just like I did when I was a kid, just a normal thing that came out of her mouth, but mostly people don't listen to kids. I listened to her and I could see it because I'd been in factories. I knew exactly what it was going to look like in my head. Willy Wonka. It's like Willy Wonka's chocolate factory. I could see this place where kids could make their own stuffed animals. And that day that Katie said that, when I told her that, I said, she asked, she came upstairs and I was at the computer, "What are you doing?" And I told her, "Well, I didn't mean that." I said, "I know you didn't, but I think it's a really good idea. What do you think?" And she said, "I don't know, maybe we could do it."

• 20:39Guy Raz?

  So you're really excited about this. And tell me, like, what you do?

• 20:43Speaker 01

  Yeah. I started to look whether it existed, whether there was a factory in America making stuffed animals that I could actually buy and retrofit to be customer-facing versus a factory, a real factory. And I had a lot of experience in building brands, although they were brands for my company. And I called my friend Adrian Weiss, who is a brand builder in Chicago. We'd done many things together. And she loved the idea. And, you know, the more I told her, the more she sketched, so to speak. She could hear what I was saying in my voice. And it just came out, you know? I started writing a business plan, literally, a very detailed business plan of what I would want if I was this child walking into the store, because I loved stuffed animals.

• 21:28Speaker 01

  My teddy bear, I loved my teddy bear. Teddy was his name. And I took him everywhere with me. And Katie and Jack both had their own bears too when they were little, and they took their bears everywhere. And so, this was not a new trend, this was not something that is like a trend. I had to invent kids-loving teddy bears. How could I make it so that kids would be so much more engaged with their stuffed animal and maybe even have more of them? That was, the research was, I really built a board of advisors that were children. The other part of it was that my favorite place to go for all of my birthdays was to go to Disney World with my friends. And the magic, growing up with Walt Disney, had a huge impact on me. And I thought, could we create a version of this?

• 22:14Speaker 01

  In a small way, something Disney-esque at a mall in America. Could we do this?

• 22:22Guy Raz?

  So you start to come up with this idea. And from what I gather, you identify a couple of factories in the US that were still making stuffed animals. And I guess you go and visit with the idea that you would buy those. You just buy, maybe they are for sale, maybe you could buy the factories?

• 22:42Speaker 01

  Yeah, because a lot of the bankers were telling me that if I bought something, it would be easier than inventing it from scratch, that you could use it as collateral.

• 22:50Guy Raz?

  I see.

• 22:51Speaker 01

  That it would be maybe a better, a faster way to get where I wanted to go. They were wrong about that, but that's what they, so I was investigating that, doing my homework, competitive shopping.

• 23:00Guy Raz?

  And the idea would be, because I'm trying to, I mean, I'm trying to figure out why it would make sense, right? I mean, OK, there's a factory in Vermont, there's a factory in California. But you had this idea to have a shop where you actually see the process being made. So what would the benefit of owning a factory in Vermont or in California be if you actually wanted a sort of a whole experience onsite?

• 23:25Speaker 01

  Yeah, I was going to reinvent those companies from being what they were into being a store. Because they gave tours to people in their factory. They sold teddy bears that they made in those places.

• 23:35Guy Raz?

  I see.

• 23:36Speaker 01

  So their factory was like Yankee Candle, or they sold bears from their factory. Anyway, I knew if people were going on tours of a factory that made stuffed animals, imagine if it was in their hometown, what they might do. Could we miniaturize it, make it feasible to be in a mall with the right, some equipment, you know, like our stuffing machine, make it magical, like Willy Wonka?

• 24:01Guy Raz?

  OK, here's what I'm wondering about. You had this, this 1996, 97. You had a 25-year career, right, more, in retail, right? Including running one of the biggest shoe brands in the United States. I'm just wondering, we know what happened, but I'm just going back to 1997.

• 24:24Guy Raz?

  I have to imagine there were some people, maybe they didn't say it to you directly, who thought this was so weird. Like, wait, Maxine Clark, the lady who ran Payless, like, the boss of the bad, that is starting a stuffed animal thing? Like, what is she thinking? Is she nuts? Like, I just have to imagine people might were saying that, maybe behind your back.

• 24:47Speaker 01

  No, they said it to me. They weren't shy.

• 24:51Guy Raz?

  When we come back in just a moment, Maxine ignores the doubters and starts building the machinery for Build-A-Bear. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 25:10Guy Raz?

  Our presenting sponsor today is Anthropic, the team behind Claude. Every founder on this show started with a hard question, not the marketing plan, the 2:00 AM kind. Is this idea any good? Am I the one to build it? Should I quit my job? Anthropic got built the same way, a public benefit corporation founded on one hard question. How do we make sure AI goes well for people? So they asked over 100,000 people their hopes and their fears, and are publishing what they find, even the uncomfortable parts. Me? I've got my own hard question about AI. Here it is. If everyone has access to something that

• 25:54Guy Raz?

  can help them write the business plan, build the prototype, analyze the market, maybe even come up with the idea, what separates the people who actually build something from everyone else? I don't have a clean answer yet, so I've been sitting with it with Claude. There's hope in hard questions. Ask yours at claude.ai/hibt. We get support from US Bank, a question I love asking founders. What's the one decision you almost didn't make, the one that changed everything? Because it's never the obvious stuff. It's never, "I decided to start a company." It's the small, boring, Tuesday afternoon decision

• 26:35Guy Raz?

  you barely remember making until you realize it's the reason everything after it either worked or didn't. Say you're 18 months in. Business is growing. You've got expenses coming from six directions. Gas for the van, office supplies, your phone bill, team lunches that are actually client meetings, and you're putting it all on whatever card you grabbed in year one. You're not thinking about it. Why would you? You've got bigger problems. But here's the thing. Path A: You keep going like that. End of the year, you're sorting through statements, trying to figure out what went where. You've left hundreds, maybe thousands, on the table in rewards you never earned. Money that could have gone back into the business.

• 27:17Guy Raz?

  Path B: You pause and get the US Bank Triple Cash Rewards Visa Business Card. Now, you're earning 3% cash back on gas and EV charging, office supply stores, cellphone service, and restaurants. You pick up an extra $750 cash back as a bonus. And you've got a low APR on purchases and balance transfers for 12 months while you're scaling. Same business, same expenses, two completely different outcomes based on one small decision. Visit usbank.com/business to learn more. The creditor and issuer of this card is US Bank National Association, pursuant to a license from Visa USA, Inc.

• 28:02Guy Raz?

  Some restrictions apply. If you travel often, you'll want to hear about this unprecedented offer. For the first time ever, new Delta SkyMiles Reserve American Express Card members can earn two Delta Comfort Round Trip flights for travel within the 48 contiguous US states, Puerto Rico, or the US Virgin Islands. Plus, you can earn 50,000 bonus miles towards your next getaway. And who doesn't appreciate an elevated airport experience? Delta SkyMiles Reserve Card members get access to the Delta Sky Club, your pre-flight oasis to recharge, with 15 visits and four one-time guest passes each medallion year when flying Delta together.

• 28:47Guy Raz?

  That's up to $950 in annual value. Value estimate based on $50 per visit rate to purchase additional visits or bring a guest to the Delta Sky Club. Make every trip feel more rewarding with the card that upgrades your travel. Apply today at delta.com/cardsocial. Offer ends November 4, 2026. Minimum spending requirements and terms apply. Flights are fulfilled as flight certificates valid for Delta Comfort or Delta Maine to select domestic destinations. Book 21-plus days in advance. Up to $80 per person and taxes and fees apply. Other restrictions apply.

• 29:30Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's 1997 and Maxine is prepared to sink a big chunk of her savings into a stuffed animal store. And even though a lot of folks are telling her she's kind of nuts, a few people are warming up to the idea.

• 29:47Speaker 01

  Yeah, it grew on them. So just sort of an example, when I went to the couple of banks to talk to them about a line of credit, I really didn't need their money, but in order to do this shipping, you have to have this line of credit. So at first, they all thought I was great. The third or fourth meeting, they were wearing teddy bear socks or a teddy bear tie. They were getting in the mode. They started to notice teddy bears in their life more than they maybe had noticed before. And I think that it was really an interesting thing because Ralph Lauren has teddy bears on his clothes. That was the time of his teddy bear moment. And so it was, people were starting to say, maybe there's something to this, even though teddy bears were not our whole product line, only a few of our, maybe 20% were bears.

• 30:30Speaker 01

  And I was so, I had such a detailed business plan.

• 30:33Guy Raz?

  Yeah.

• 30:34Speaker 01

  You know, 10-year business plan. And I had a lot of friends in the shopping center business because Payless had stores and shopping centers. I was shopping, my office was right next to the shopping center people at May Company. I went to the ICSC.

• 30:47Guy Raz?

  The ICSC is the Council of Shopping Centers, I think, right?

• 30:50Speaker 01

  Yes, yes. I talked to people that were very forward-thinking, Simon, the people that owned Mall of America.

• 30:56Guy Raz?

  Mm-hmm. I just want to, I just want to jump in and say, Yes, you had incredible experience and contacts because you'd been in the retail business for so long. And May, of course, was in the mall business. They had stores in the malls. So like your contact, like I'm just thinking of me as, as a friend or consultant or a possible investor. I would have been like, yes, Maxine Clark, she's the real deal. She's a person I'd want to invest in. But then I would probably say, but Maxine, like, you have incredible, deep experience. You know, the malls, you know retailers, you know, the supply chain, you've got contacts and people who want to help you. But I mean, this seems like a, you know, a business that might work for

• 31:40Guy Raz?

  five, 10 years at most. Like, kids are so fickle. You look at toys, one toy lasts for a year or two and they move on. How did you have conviction that, that this could be more than just a, a passing fad?

• 31:55Speaker 01

  The kid in me knew, knew this. My favorite thing to do at school, one of my favorite things was going on field trips, was going to the bakery, going to the, the dairy that we made a field trip to. Kids still like doing all these things and they don't get to do it. I mean, I wasn't building a big theme park.

• 32:10Guy Raz?

  Right.

• 32:11Speaker 01

  I was building a store that was a theme park in a mall. And Mall of America was really successful. And, and the mall in Canada, West Edmonton Mall, that is such a big mall, they, they all had entertainment features in them. Mall of America, they had that big Snoopy Village, you know, they had all that stuff going on. And retailing was starting to change. And, and you needed a reason that families were going to come to the mall.

• 32:33Guy Raz?

  Right.

• 32:34Speaker 01

  And this was a reason that families would come to a mall. But I wasn't, you know, there's no guarantees, anything. I decided I could invest about a million and a half dollars. And if that, if it went bust, it went bust. You know, that was it. I didn't have any investors at that, at that moment in time. And I didn't owe anybody anything. And I went to people that I trusted, like Adrian Weis.

• 32:54Guy Raz?

  Adrian Weis was somebody you knew from May, from the May world?

• 32:57Speaker 01

  Yes. Well, I met her from one of the vendors we did business with, but ultimately we used her in May.

• 33:02Guy Raz?

  And she was a consultant. I think she helped you name the business, right?

• 33:05Speaker 01

  Yeah. Yes, she did. Well, she was one of the people. The name came from our advertising agency in. Topeka for Payless, they helped me think of the name, but Adrian loved it too. She did all the branding, the logo, the store design. And she knew people who built stores. She worked with a lot of it. So she introduced me to the person who actually designed my store, the architect. And then he introduced me to the people that could make the fixtures, who used to make fixtures for theme parks and for Mattel and all kinds of people. They sketched out what I wanted and it was exactly what I envisioned that children would want. And Pleasant Roland, who was the founder of American Girl.

• 33:42Guy Raz?

  American Girl Dolls, yeah.

• 33:43Speaker 01

  Yeah, she and I were in a women's organization together and I went and talked to her. And she was very helpful, even though she wasn't negative on the idea. She was negative on the idea that I thought boys would do it also. She said, we've had boy dolls and the girls buy them. So, you know, your customer is going to be all girls. But in the end, about, it's at least 60, 40 now, girls and boys. And also, it wasn't as young as I thought it was going to be. Older kids really got into making that. And parents, adults got into making it to teenagers and older adults and college kids. Because the bear, the bear itself, a teddy bear, a bear, is a symbol of, I think, like 50% of the colleges in America have a mascot as a bear,

• 34:28Speaker 01

  some crazy thing like that. It's a high number.

• 34:30Guy Raz?

  And did you, I mean, of course, this is not like, you know, you weren't starting an automotive company, right? It's not like the complexity is, but still, like, you had to figure out, okay, this is how it's going to be. The kid's going to come in and they're going to have these different options. And then they go here and then there's going to be a machine that's going to, they can watch their bear being stuffed. And like, you probably had to create that technology, so to speak, right? Or was it just off the shelf? Could you just buy like a stuffing machine?

• 35:02Speaker 01

  We did, we bought an upholstery stuffing machine and put a cover on it. That first one. We made a bath, so it was choose me, stuff me, stitch me, fluff me. The fluffing machine was like, looked like a bathtub. And it had an air, the nozzle that where water would come out of the bathtub and a brush that you would brush your bear and fluff up the fur.

• 35:23Guy Raz?

  And I should mention, this kind of... There's this cool thing that you also did where kids could buy a heart and the heart would be sewn into which be into the bear, which became kind of a trademark.

• 35:33Speaker 01

  It wasn't for sale. It was included in the.

• 35:35Guy Raz?

  Included in the, in the.

• 35:36Speaker 01

  Right. And then we had Name Me, which was the Name Me commuter. And that came actually from Katie, who, when she was on a bus, on a, on a vacation, she almost lost her bear, George, in the Avis bus. He was going around and around. And I didn't want any child. I lost my teddy bear when I was 10 years old. I didn't want her, anybody to lose it. So we created this find a bear ID system that went inside of every bear. And we could notify you if the bear was returned to us, we could open him up and scan the barcode.

• 36:03Guy Raz?

  Wow.

• 36:03Speaker 01

  And bring him back to you. And we did bring back about 10,000. Prior to COVID, I think it was around 10,000 bears that we had found over the years and brought back to kids.

• 36:12Guy Raz?

  Yeah. And just to, just for people who aren't familiar with it, it was going to be like, almost like going to the car wash, where you see your car going through the car wash, right? Like, the kids were gonna see the bear being made in front of their eyes. And at the end, they can name it and, and they can.

• 36:29Speaker 01

  Dress it.

• 36:29Guy Raz?

  They get it.

• 36:30Speaker 01

  Yeah. That was the, that was the real novelty was dressing of the bear. I didn't create any of this, this, I didn't invent any of these parts. The, I just brought the parts together, which is what a great merchant does. Like, Jeff Bezos didn't write the books. He just put the books together on a platform that you could, we all could buy a zillion books from. So, and Howard Schultz didn't invent coffee, and Ray Kroc didn't invent hamburgers. They just invented how to sell more of it. And that's exactly what I did.

• 36:56Guy Raz?

  All right. So you, you have everything in place. You've got a name. You've got this concept. And I think within nine months of when you first had the idea, you opened the first store in St. Louis, and it's gonna be, kids can go and basically build their stuffed animal, bear, whatever it was gonna be. And.

• 37:18Guy Raz?

  How did it do like from the opening?

• 37:21Speaker 01

  It was phenomenal from the opening. We did as much business in the first quarter, October to December, as I thought we were going to do the whole year, the whole first year we were in business. The real clue was the day that we opened the store to the public. The Sunday night, we had a party on the Sunday night for all my friends and family, people that came. And the next day, I came to the store to open it up at nine o'clock in the morning, and there was a line out the door. People had kept their children home from school to come to this opening. I couldn't believe it. I was actually in shock that people would keep their children home from school. But it was a very important indicator. And we didn't have enough people planned for that morning. You know, we had a few people. I had to call over to the office to my CFO who was there, and my marketing

• 38:06Speaker 01

  person that was helping me. And when they all came over, and we waited on customers. Put your shirt on and get over here. We're coming. Your denim shirt. We've got customers waiting outside the door. And I heard people, and I was working the registers, and I heard people saying, this is owned by Disney. This is a new Disney concept. This is Warner Brothers still had a store in the mall. No, no, it's Warner Brothers. And we didn't have one Disney product or one Warner Brothers product in our store at the time. And

• 38:32Guy Raz?

  Yes.

• 38:32Speaker 01

  I was afraid we were going to sell out. I had bought enough merchandise to last till Easter, because Chinese New Year comes in there, and I'd bought enough merchandise. But I was afraid I was going to run out.

• 38:42Guy Raz?

  Because you were bringing, you were importing from China.

• 38:45Speaker 01

  Yes, importing from China. And all those relationships, all those people I'd done business with before, and May Company, they had made something for me. The shoe vendor that made our shoe vendors, made shoes for Payless. Bears had shoes now. Bears had underwear. Bears had dresses, and jeans, and t-shirts, and skates, and all kinds of products that people had made those for me. Those relationships. The resources that I had because of my 20 some years of May Company history, all paid off in ways I could not have imagined, including the landlord of the Galleria, gave me a 10 year lease at a very reasonable price because he too wanted to be the first store in the country to have this idea. And he knew that if we, if it didn't work out, he could get, he could rent the space to somebody else.

• 39:29Guy Raz?

  Here's what I'm wondering about, right? Like, if there were people waiting in line saying, oh, you know, this is the Disney, new Disney concept, it's the new Warner Brothers concept. It's actually a Maxine Clark concept. And it's not like it's trademarked. It's not like you could, I mean, just Build-A-Bear is trademarked. But the, but the idea of opening a store where people could stuff an animal, like anybody in theory could just do, I mean, Disney in theory, or Warner in theory could do that. So was there any concern, at least at the beginning, that, you know, you, this could happen, some bigger company could come in, see your success, and just basically replicate it?

• 40:13Speaker 01

  I was aware that that was possible, but I protected every single thing I could. I over legalized the company. I had a major investment in the law firm that was represented our trademarks. And believe me, people did try to copy it and we, we took them to court. It's not so much that you protect it, it's that you make sure that you can afford to protect it. And then also, when we did leases with landlords, we signed exclusive agreements to be the only make your own stuffed animals store. I knew how to do that, too. One thing we didn't talk about that I think is really integral to this story, was there was a story written about Build-A-Bear in July, before we opened our store.

• 40:51Guy Raz?

  Right.

• 40:51Speaker 01

  There was a story in the Business Journal, that reporter had seen the sign on the store, and she called me. And she found out that who I what, when she realized who I was, she says, well, why would, why would you do this? She had this big job. Why would you do this? And I said, well, I'm glad to come and talk to you about it. Come over to my office and we'll talk about it. She came over, and I sat her next to stuffed animals. And she was a mother of three daughters. And I told her exactly what I'm telling you. And she wrote this story, and it was in the Friday issue of the Business Journal. And about 11 o'clock that morning, I got a phone call from a person who I knew of in town, an entrepreneur. I knew of him, but I had never met him. His name was Barney Ebsworth. He owned a travel company, and he also owned cruise ships. And he said that he read this story in the paper and would I be willing to talk to

• 41:36Speaker 01

  him about his investing in my business? And I said, well, I'm not really looking for investors right now. He said, well, you know, but let's just meet. I'm going away for the summer. Can you come over on Monday? I went over there on Monday with my bag of tricks, my business plan, the stuffed animals. Our connection was that he loved animals. His wife was involved with the World Wildlife Foundation and he had two gigantic English sheepdogs. He said, how much do you think you need for the next couple of years? And I said, you know, four or five million. He said, is next Thursday soon enough? And I said, I don't need it next Thursday, but I'd be open to talk to you about it. I didn't even have anything. I didn't have a private placement memorandum. I didn't have anything. But he said, I've never been to the mall.

• 42:19Speaker 01

  I'm not a mall guy, but I love animals and I love your spirit. And I run a company that prides itself on its customer experience. I want to help you create a great experience for your customers. And I want to make, I want to ensure that you can continue to develop that over time because people will try to cut costs and take that away from you. Trust me, I've known, I've been there, he said. So when you have people like that on your team that advocate for what you know is right, you know, you know it's right.

• 42:47Guy Raz?

  Yeah. I know Barney, Barney's investment sort of yielded him about 20%, stake in the company. And I asked you about how you protected your brand, but I do want to ask you about, you know, other people claiming that you took their idea, which I've read all about. And I'll just say at the outset, I don't believe this is an idea that you can, you can't trademark a concept that is a kid goes somewhere, they build something and they walk out. You know, it could be a pottery, it could be ceramics. When about two years in, you yourself were sued by the owner of one of these factories that you actually made an offer for.

• 43:30Speaker 01

  Yeah, Basic Brown Bear Factory.

• 43:31Guy Raz?

  They basically claimed, hey, you learned all their trade secrets by going to visit. And your argument was, you know, not true. We, we.

• 43:42Guy Raz?

  You know, we went to your factory on a tour. And that probably was a headache for some time, but eventually, I think about three years later, you did, you did settle that. It's still confidential, but it was settled.

• 43:54Speaker 01

  Right. And honestly, I did go there as a customer because it was an open tour that you could, you know, and I called them after the tour and said I'd be open to talk to you about buying your business. And they wanted an unbelievable amount of money for their little business, but they didn't think it would work, you know, because they had sewing machines. They really cut out patterns and sewed things. They thought what I was talking about was too streamlined. But it was open to the public. Anybody could go and see the business. Nothing about that was protected. But I, but it wasn't that part of it. It was, because obviously there's many car manufacturers and many of the things. It was really the, the personal things that we did that, that nobody else had done that made it really special, that made it much more affordable as well and accessible.

• 44:35Speaker 01

  That was really important to me for it to be accessible price point wise, fashion wise. They may regret what they did now. I don't regret it. I'm glad I offered them the money. I'm glad I went and did everything the legitimate way. But, but we ended up able to create our own company the way we wanted to create it with the culture that we wanted to have.

• 44:53Guy Raz?

  Right. It would have been different had you ended up acquiring one of those factories. You're, you mentioned that you opened the store in St. Louis in October in 1997. And I mean, it's kind of amazing, within four months, you're doing like $400,000 in sales. And like, I think at the end of the first full year, that store did $2 million, which just to put in perspective, the average mall store at that time, certainly a new store, would do between 500 and 700,000 a year. So this Build-A-Bear store was like, it was going bonkers. And you had a plan, like in the business plan, I think you had this timeline for when you would open new stores, right?

• 45:37Guy Raz?

  Like you would, it was like going to be one store in 97 and then another four stores in 98.

• 45:43Speaker 01

  Two more, three stores in, in 98.

• 45:45Guy Raz?

  98, yeah.

• 45:46Speaker 01

  That would bring us to four.

• 45:47Guy Raz?

  And you were already, I mean, get this, this, you got this investment from Barney and you had people starting to say, hey, can I invest? Because I imagine you need the cash, right? The cash flow alone from the business wasn't enough to expand. You do need outside investment to start building these out. In other cities.

• 46:06Speaker 01

  The landlords also in the retail business, when they want you, they pay for you to come there.

• 46:11Guy Raz?

  Wow.

• 46:12Speaker 01

  And the only store, I think the only store we didn't get any money in was the Galleria, our first one. The St. Louis Galleria didn't give us any tenant allowance, but every store after that gave us something to build our store. They wanted us to come and they wanted to be the first one in their market. So in Chicago, we had, the next two stores were in Chicago and then the fourth store was in Kansas City. So we were, we were on a roll there and the landlords were the largest investors in Build-A-Bear.

• 46:37Guy Raz?

  But you were, I mean, basically, the, the attraction was you were going to bring kids to a mall, which means you're going to bring parents to the mall, which means, and, and so I understand why they would want you there. Because, and, and sort of the, the 90s into the early 2000s was like a golden era for malls. I mean, this, now, we know that now, but I mean, at the time, we didn't. So they wanted you in there and I think, because you, you opened the first store in October of 97. By the end of 1999, so two years in, you've got 14 stores. So just imagine you were traveling all over the country all the time. I mean, 14 stores in two years, a lot of stores.

• 47:19Speaker 01

  Yeah, and they were the best malls in America at the time and, and some of the toughest deals, you know, we, we had, it's not like they say yes in a minute, you have to really negotiate, but you have to find the right location. And, and our real estate reps would not let us settle for a bad location.

• 47:34Guy Raz?

  Sometimes you open stores and they didn't work. So what did you learn about that? Why would you open a store somewhere and it would be just gangbusters, but another place didn't work?

• 47:46Speaker 01

  Yeah, really interesting. We wanted to put stores wherever people go to have fun, literally. And so we thought that every tourist location, you know, would be really good. Our first tourist location was Myrtle Beach and it was phenomenal. You know, outdoor mall, Broadway at the beach. The next year, we had to make it bigger because we didn't have enough room for all the customers. But we also, the store that we closed was our store number eight in Aventura Mall in Miami, which was a big mall. I thought it would be a great store for us because it was such a big store in Miami, in North Miami. And we did terrible there. I mean, it was, it was just not good enough to keep, you know, to keep it open. And so we worked with the landlord to give it back. And we had another

• 48:28Speaker 01

  couple of stores like that, like Sawgrass Mills, another big retail establishment.

• 48:33Guy Raz?

  Yeah.

• 48:34Speaker 01

  Didn't do well there either, because the people that came there from South America and Latin America that came on vacation, brought their suitcases and wanted clothes. That's what they spent their time shopping for, clothes. So we learned that that wasn't necessarily the place for us. In fact, outlet malls now are, are more successful for us because we have a smaller store format to put in there, or a pop-up store that we can do when they're doing something great. But that wasn't necessarily the right place for a Build-A-Bear. Because we knew, we'd already learned what wasn't working, you know, what parts of the mall were better for us. And if we were near a limited to store, or Children's Place, we did way better than if we were near Nordstrom, and no children's stores away.

• 49:10Guy Raz?

  Interesting.

• 49:10Speaker 01

  But you learn, and you have to learn fast, and you have to learn with your partners. And, and the landlords were very helpful to us. I mean, they were our partners all the way, because they have a, you know, they're in debt to the banks, too, and they want to make sure that they get the return on their investment. So they were very much partners of ours. And, well, I mean, we were growing a little, you know, we started to grow a little, maybe a little bit ahead of our heels when we bought the UK business in 2006, right before the recession.

• 49:37Guy Raz?

  You bought which business?

• 49:39Speaker 01

  The Bear Factory in the UK in London.

• 49:42Guy Raz?

  Which was basically doing a version of what you were doing?

• 49:44Speaker 01

  Yes, yes. And we got wind of that, because they were in our Oakbrook store in Chicago. And our store manager called us, and she said, there's a person in here who's buying every, one of everything. What should I do? I said, sell it to them. And we tracked the transaction, and we followed them, and we, it was owned by Hamleys, you know, it was a part of Hamleys.

• 50:07Guy Raz?

  Yeah, the big toy store.

• 50:08Speaker 01

  Toy store. And they were willing to sell it to us. And we learned so much from that transaction. In fact, we were thinking of, of looking for a franchisee to take it over. But in the first few weeks of owning that store, we got to know all the store people, and we started to put in some, in our stores, some of their Habits that they had created for the London customer. We really did. It was great for us.

• 50:31Guy Raz?

  Okay, you're having profitable quarters virtually every quarter, right? And you're expanding. And so it's obvious that, I shouldn't say obvious, nothing's obvious, but you take this public. You launch your IPO October 2004. It's like, you know, what, seven years after you opened that first store, you're 55. I mean, it's awesome. And, I mean, you raised $150 million in that IPO. It was a, it was a successful IPO. But now you're running a publicly traded company, which is a different, it's different. You're, you're, you've got your quarterly calls, you're dealing with shareholders. That's a different beast. That's, that's running a completely different kind of operation.

• 51:17Speaker 01

  It was, but it was a really experience I didn't have. And it was, you know, part of the American dream to own a company on the New York Stock Exchange. For me, anyway, I really looked at that as a, a big dream. And all the, you know, we did a lot of things differently than other companies would do. We, we put pictures in our IPO documents. We gave teddy bears to all the traders on the floor. We did a lot of fun things that made people smile. They let us decorate the outside of the New York Stock Exchange. And I didn't, I didn't take any money out of the company at that particular point, but our investors wanted out. They, we had taken on investors. Barney did not want to sell. Barney called me from the roadshow and said, I'm not selling. I don't want to sell. I want to be there with you through thick or thin. And I said, Barney, we already sold it. We're oversold. We, you know, we can't go backwards at this point.

• 52:02Speaker 01

  He was, he was so disappointed. He just still wanted to stay 100% in. We were all just apportioned out of it, you know? We all had to sell. And we had to pay back those original, those venture capital people that we did take on that were phenomenal partners, by the way. And we still always controlled our own business. To this day, we still run our own business. And we weren't merged into some other company and, and made cheaply or anything like that. We were able to still operate Build-A-Bear with the heart and soul of Build-A-Bear as it was intended.

• 52:31Guy Raz?

  Okay. So, you know, the brand has just been such a success, right? And we're like, you start in 97, you go public in 2004, and you hit 250 stores in 2007. 10 years in, 250 stores, which I think was your original goal and your business plan. And then the financial crisis hits. And, and from what I've read and what I have heard, this was really the first serious test. I mean, it was a, it was like the stock price plunged. You start to see some losses in the business. Tell me about, about that period of time. I mean, you know, I think at one point the stock price is down to $4, $4.5 or something.

• 53:16Speaker 01

  Yeah, I think it was a little bit later than that, but it did go down. We also had created two other concepts during this time. So we had friends to be made, which was make your own dolls, that we had just a few stores of. And we also had invested in a concept called Ride Makers, which was make your own cars, not stuffed cars, real cars, meaning like boys love, you know, plastic cars as model cars. And we had to pull out of those, those endeavors because even though they could have been successful in the long haul, we couldn't focus on that when we had, the rest of the business was, you know, challenged by the economy. We had to tighten the ship. We decided not to open as many stores.

• 53:58Speaker 01

  We pulled back on the store openings that were planned for those, for eight and nine. We worked with our landlords. We, we went in and cut everything we could cut and renegotiated every lease we could renegotiate because they did not want us to leave. They wanted us to stay. They wanted us to be successful. And we used that time to really kind of rethink the store model. You know, what, what equipment did we need? Was the store needing to be refreshed? What, we knew it wasn't just us, but, but we also used that time to really dig into us and what could we do to be different? It was very hard. I thought that Christmas 08 was going to be really successful because who was going to not buy a teddy bear for their child? And I, that was one of the biggest mistakes I made.

• 54:40Speaker 01

  I should have realized sooner and let the people that, we had to cut about 50, maybe 75 people, that I should have let them go earlier because it would have been easier for them to get a job than it was in January of 2009.

• 54:54Guy Raz?

  Yeah.

• 54:54Speaker 01

  It was very heartbreaking to me because some of those people were in our first people that we hired. And I, I really was mad at myself that I didn't realize, there was, I never made that mistake again. You know, when you see us, you see the train come and get out of the way.

• 55:10Guy Raz?

  Did you, I mean, you're tightening up, you're renegotiating leases. Was there ever a moment during that time where, you know, you were worried about whether the business would make it through?

• 55:24Speaker 01

  No, I don't think I worried that we would make it through. I worried about how hard it would be to get through it.

• 55:31Guy Raz?

  When we come back in just a moment, Maxine steps away from the role of CEO and learns the delicate art of working with the next one. Stay with us. I'm Guy Raz, and you're listening to How I Built This.

• 55:49Guy Raz?

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• 56:34Guy Raz?

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• 57:57Guy Raz?

  Hey, welcome back to How I Built This. I'm Guy Raz. So it's around 2010, the end of the financial crisis. And to keep Build-A-Bear profitable, Maxine has cut costs and laid some people off. And then she starts to think about her own future.

• 58:13Speaker 01

  I remember I started the business when I was 48 years old. I wanted to stay till I was maybe 15 years at the maximum. And we were getting close to that mark because I had other things I wanted to do. And not necessarily start a new business, but other things that I wanted to do, and my husband as well, that we saw we could do here in St. Louis, for St. Louis.

• 58:32Guy Raz?

  You start to feel like, you know, maybe it's time for me to step aside. Obviously, you still were going to be a part of the company, but you started to think that that's what you wanted to do?

• 58:45Speaker 01

  Yeah, and I had to get it back on track. I had to make some decisions. We had to take some write downs. We had to do some things. We had to close that doll concept. We had to take out of our investment from the make your own cars. We had to do a lot of those things. And I didn't want the next person to have to do that. I wanted to make sure that we did that. And also, I had an internal person that I thought would be the person to take over the company, but that did not work out. So I stayed probably an extra year longer before we decided that I would, we would now look for a new CEO. But that wasn't really that hard. I know people looked at me, they thought, you'll never leave, you'll never give it up, you'll never this. I wanted Build-A-Bear to last as long as Disney has lasted, longer. You know, like, I wanted to build something forever, not for just my, it wasn't for my ego. It was forever for children and families to enjoy.

• 59:30Speaker 01

  But I had a great board. The board cared as much about the legacy of the company as I did. But they also cared about the, they knew I cared about the fiscal responsibility to the shareholders as much. And I was a large shareholder. I was a shareholder too. So, you know, I still had a lot of stock in the company. So it was a big deal to me and to what I wanted to do for St. Louis with that money. So it was very important to me that that stay successful.

• 59:55Guy Raz?

  So in, so June 2013, you formally stepped down and you find a replacement. And we've done hundreds of episodes about this on the show where the founder leaves, a replacement comes in, sometimes it works out, often it doesn't. And we've had stores like Clifbar, they came back twice. Howard Schultz has had to come back a few times to right the ship. It's really hard when you're the founder's CEO to find and trust somebody who can really steward the brand. It's a lot of its luck, but a lot of it's good research, but a lot of it's luck. And you guys end up hiring a former executive from Hasbro, Sharon Price-John. This is in 2013.

• 1:00:39Guy Raz?

  And I'm just gonna kind of reveal the plot twist here, which is she is still the CEO today.

• 1:00:47Speaker 01

  Yes.

• 1:00:48Guy Raz?

  13 years later, so clearly it worked out.

• 1:00:49Speaker 01

  Yes, she just announced her retirement.

• 1:00:51Guy Raz?

  I mean, it's amazing. So when she took over, your baby, be honest, like, how much did you step back and say, hey, it's yours, ball's in your court, you go for it? Or did you continue to kind of weigh in?

• 1:01:07Speaker 01

  A little bit at first, but I realized that she was on the right track. And I had an office at the office and I decided I didn't really want to go there. I didn't need to go there every day. I didn't need to be there. She and I were in contact with each other appropriately. And we had, we developed this rapport that was, to I say, to be a friend today. We're friends. We have a great relationship. She also was in the shoe business. She was the president of Stride Right Shoes right before she came to Build-A-Bear. And that was something we had in common. We had a lot of similar experiences. We just developed the right relationship and I trusted her and she trusted me that I wasn't gonna be complaining all the time, you change this, or you change that, or why are you doing this? I didn't do that.

• 1:01:49Guy Raz?

  How did you make sure you didn't do that? Because that's a natural human instinct, like when it's yours.

• 1:01:56Speaker 01

  Yeah.

• 1:01:57Guy Raz?

  Right? Or when you start it. And so how did you keep yourself disciplined by not doing that?

• 1:02:01Speaker 01

  Well, she's smart, and I knew she was smart. And I knew she cared about the brand, and I wanted to trust her. Some things worked and some things didn't. One of the things that she had to learn was, at first, one of the things I was saying was, you know, we tried that, and it didn't really work, but maybe your version of it will work. There's things she decided to do that I didn't really like, but they turned out fine. And I learned from that process.

• 1:02:22Guy Raz?

  Yeah.

• 1:02:23Speaker 01

  That was such an important part of my being a founder, was so I could inspire other founders from what I learned from my successor. Next to founding a company and coming up with an idea, the next most important thing is to make sure that you have somebody who can succeed you, that can do better than you did.

• 1:02:42Guy Raz?

  Yeah, and I should mention, I mean, she has successfully taken the mantle, right? I mean, today, I think she got the company back to profitability in 2017. Today, Build-A-Bear does well over $500 million in revenue, all kinds of interesting collaborations. I remember this with my kids, when the Star Wars collaborations, that's when they got their first Build-A-Bears, you know, back in 2014, 2015. You know, what's impressive about it, both of you, obviously, both as operators, is, again, maybe a lot of people would have said, no, no, this is going to be an enduring, generational business. But I wouldn't have. I don't think I would have said that.

• 1:03:21Speaker 01

  Yeah, no, I think, like I said, you write the business plan. The first person you have to convince is yourself. But I did think that this had potential, national and international potential, because of the partnerships that we wrote into our business plan, that we wanted to build with Major League Sports, with Hello Kitty, with Disney. All of those things came to pass, and Sharon, before Sharon, and then Sharon actually even enlarged them, and Sharon added, on the entertainment that we created, we started to create our own characters around holiday, and she took that to another level.

• 1:03:52Guy Raz?

  Yeah.

• 1:03:53Speaker 01

  And then we hit, the COVID was her, you know, come-to-Jesus moment. I mean, that was really hard enough for any CEO. So no matter how much it was growing, that was a leveling moment.

• 1:04:03Guy Raz?

  Yeah, I read revenue fell 45% in the first quarter of that year.

• 1:04:08Speaker 01

  That's awful. But we were both fearful of losing an iconic business. She had her moments of being fearful of that, and I had my moments of being fearful of that. And the kind of people we are, we weren't going to let that happen for our employees, for our shareholders, for who are sometimes the same people, for our mall developers. This was something that we both believed in.

• 1:04:28Guy Raz?

  All right. I read a really interesting analysis by a business school professor from the University of Georgia. I read it a couple of years ago. And his theory about, well, not theory, but one of the reasons he points out why Build-A-Bear has been a successful business. Because again, you know, it could have been just a hype product, or it could have been, you know, kids are fickle. We know that. We've done kids brands on the show. But his argument is that it's because the customers are involved in the process that it creates higher passion for the product, right? That it basically, you build brand loyalty by giving the customers a unique experience.

• 1:05:09Guy Raz?

  Today, every company wants people to be posting their shirts on Instagram, and hey, you know, hashtag us, and all this stuff. You guys were doing this before that was even a thing, right? People were, they were part of the product. Like, they're like, it's a memory for life, and you've got them.

• 1:05:30Speaker 01

  Yes. And our bears go to college with them, and go to, they're passed on to their own children. You're building something more than just a toy that you can, you know, give away to the goodwill. You're building goodwill. This is part of our culture. And I think that that's what we do. That is the, it's authentic. It's not fake.

• 1:05:48Guy Raz?

  You know, I know that when you stepped down, of course, you're still, we're still very much involved, and clearly are still involved, but you started to focus on philanthropic endeavors. I know that one of the things you do is you invest in women-owned businesses and startups. Is that where you see your work continuing over the next decades?

• 1:06:11Speaker 01

  Yes, it is joyful work. It is not, it's not the same kind of control that you have when you're running your own company. I invested women and minority entrepreneurs and, again, commitment to the time it takes to build a brand and to build success is something that's hard to teach if it's their first job out of college, you know, instead of having the experience that you can't really pass on to them. But some of these things are really, really working and are doing great, and I'm so proud of them. And it gives me great joy to be able to be a part of the changes in St. Louis that we need, which involve those young people.

• 1:06:46Guy Raz?

  Yeah.

• 1:06:47Speaker 01

  But also seeing in St. Louis what we can do when we all work together. And I'm a cheerleader for that, but I'm not alone doing it. There are a lot of other people in it with me.

• 1:06:55Guy Raz?

  Yeah. When you think about this arc, right? You started out, you know, moving to Washington DC to be a lawyer and turns out that by happenstance you end up meeting this guy, you work for Hecht's, and then you get promoted, you go to May, and then you are there and you move to St. Louis and that becomes your home, and then you are at Payless, and then you decide to start this, you have this very unusual idea to start a stuffed, stuffed animal, build your own stuffed animal brand that is a little quirky but clearly had legs, and here we are today, over half a billion dollars in sales. When you think about that journey and where you got to, you know, you're wealthy and all

• 1:07:39Guy Raz?

  these things, I mean, how much of this do you attribute to all the work you put in and all the, you know, grind? And how much do you think had to do with luck, getting lucky?

• 1:07:49Speaker 01

  It's a 50/50 deal for sure. It's being in the right place at the right time and making the most of that experience, whether it's asking the right questions, asking questions when nobody else will but you have them and you need the answers. I actually had great examples of people bringing me to the table. And seeing how those people think it was a shared investment and I invested in myself, they invested in me, it's everything. My husband was also incredibly supportive of my career and that is also part of the pie. But you make your own luck. Like, there's many times that I didn't want to, I was on my way to something and I said, "Why am I going to this? I'm so tired." And I left there saying, "I'm so glad I went. Look who

• 1:08:31Speaker 01

  I met here. Look who I talked to today." And so, I, you know, I remind myself of that every time I'm too tired to go someplace. I think, "No, I'm gonna, I'm gonna walk away with something more than I think when I, when I leave." And almost always that happens. And I think a lot of people just talk themselves out of doing that and they miss some great opportunities. They don't take the luck far enough and I think I've taken it to the max. And I feel really good about that.

• 1:08:57Guy Raz?

  That's Maxine Clark, founder of Build-A-Bear. By the way, not everyone who walks into a Build-A-Bear leaves with a stuffed animal. Some adults go there just for the clothes and no, they're not buying them for themselves. They're buying them for their dogs. In fact, a Build-A-Bear subreddit says popular options are the Star Wars outfits, particularly the Jedi Knight tunic, which, at least in the photos I've seen, looks pretty great on a Chihuahua. Hey, thanks so much for listening to the show this week. Please make sure to click the follow button on your podcast app so you never miss a new episode of the show. And as always, it's free. And if you're interested in insights, ideas, and lessons from some

• 1:09:39Guy Raz?

  of the world's greatest entrepreneurs, please sign up for my newsletter at guyraz.com or on Substack. This episode was produced by Kerry Thompson with music composed by Ramtin Arablouei. It was edited by Neva Grant with research by Rommel Wood. Our audio engineers were Patrick Murray and Robert Rodriguez. Our production staff also includes Alex Chung, Carla Estevez, Casey Herman, J.C. Howard, Chris Messini, Sam Paulson, Catherine Seifer, John Isabella, and Elaine Coats. I'm Guy Raz and you've been listening to How I Built This.