You can enable subtitles (captions) in your video player
Lego's basic business model is to buy ABS plastic for about $1 a pound and sell it back to us for about 50 times that amount.
There are probably more minifigures than humans on the planet. In other words, there should be.
We sell and purchase new and used Lego in units of one item. Currently, the number has decreased to 1,965,000.
Lego is one of the most extraordinary companies I cover. In the toy space, it competes with companies like Mattel and Hasbro, which have thousands of products and hundreds of brands. And Lego basically only has bricks and minifigures.
I think it's pretty rare that a toy that was invented in the late '40s and '50s is still being played with by people today with the same passion and joy.
They have seen some pretty impressive growth, especially in the last few years. They are growing faster than ever. It's very rare in business for a company to grow this much and not change that much.
So, at one point, Lego was the largest tire manufacturer in the world based on the number of tires it produced.
It is a software model that mostly pursues profitability. It's like a software business because the profit margins are so high.
The company is making great efforts to be sustainable. And they have one service that might provide an answer, but it's complicated.
As a seller they did nothing for me.
When you think of Lego, you probably think of kids buying new sets, but it's so much more than that. It's really an ecosystem now. Products come with games, TV shows, movies, and apps.
They've evolved from just a company that makes brick boxes to actually a minifigure talent agency. They strive to create vibrant minifigures that people want to spend time with in a world they want to immerse themselves in. And it was very successful for them.
It's no longer just about children. There are many resellers around the world who buy and sell bricks, minifigures, and entire sets, as well as many adult customers who buy very large sets such as cars and buildings.
When I was researching Lego, this was many years ago, a research project had just been done that showed that the average adult fan of Lego was the average family that bought Lego for their child. I found myself spending 20x more on Lego.
I have around £50,000 worth of Lego hidden away at home, at my parents' house and in my university dormitory, but my mum isn't as happy about it as I am.
So kids in the late 60's and 70's were the first to play with Lego. As these kids grow up and become adults, we start to see the emergence of his AFOL, the adult LEGO fan.
When I started, I had been a Lego fan for several years. I picked it up during lockdown so I started selling it and realized I was making quite a bit of money. I've kept it up ever since and it's gotten bigger every year.
I earned up to 2 million yen, but there was a sale at the beginning of the month. In four days, 191,000 units were sold.
I'm a medical student at the University of Sheffield, so I'm studying to become a doctor. And I'm doing this to fund my degree and accommodation. I started taking attending these shows seriously after less than a year. And in that time the value has more than tripled.
Ah, thank you internet. Now people can find and connect with other AFOLs around the world, start going to these events together, and start sharing photos of what they've been up to. The key is to sell and trade with each other. So this is like a revelation to many.
BrickLink is a site where people can get used Lego sets, Lego parts, and new Lego sets that they want to buy and resell. It's like a vast eBay for Lego.
My computer system takes me to BrickLink, my marketplace. They sell everything there. Then I entered the ID of the part.
BrickLink originally started as a trading website. And mainly it was a place where people could come and trade Legos.
BrickLink is part of a large ecosystem that has sprung up around Lego, where people resell Lego and also create new types of pieces that can be combined with Lego pieces to create different types of structures. To do.
It eventually grew into what it is today, the largest online database outside of the LEGO Group.
BrickLink has started something really interesting: design sets that you can build using the elements available on BrickLink. Some of those set designs were really good. And I don't think it's a coincidence that Lego acquired BrickLink right after BrickLink started doing this. It was beginning to infiltrate Lego's core business in interesting ways.
Lego, by comparison, is the world's most profitable toy maker. It's this kind of alchemy that takes cheap plastic and turns it into expensive toys. It was on the brink of bankruptcy in 2003, but has since come back from strength to strength.
I see hiring LEGO as a way to move from just building a box of bricks to becoming less of a product company and more of an entertainment company. Lego no longer really sees itself competing with Mattel or Hasbro, but with Universal Studios. Now it's Disney. And it can compete in a much larger market than just making plastic toys for children.
Lego's revenues are more than 50% larger than those of Mattel and Hasbro, but only a fraction of Disney's size. And when you talk to LEGO executives and the founding family, you'll see that their ambitions only get bigger. There's a Legoland theme park, store, and app. So how far can they carry the bricks?
I think the big multinational entertainment companies are starting to realize that Lego has a new competitor. Lego is releasing a feature film. Lego is publishing a TV show. Although Lego creates the characters, and hence the intellectual property behind them, Lego is increasingly entering into Disney's core market and has been very successful.
There was once a great fear that Lego, like other toy companies, would be destroyed by digital devices, iPhones, and game consoles. But today, there are more physical sets than ever before, and a dizzying number of bricks and minifigures. And since almost all of them come with digital or entertainment tie-ins, there's plenty for fans to choose from to purchase or collect.
I think the adult fan community has had a huge impact on LEGO as a business. Not just the products themselves, but if you look at the Lego movies for example, these probably wouldn't exist if AFOLs hadn't created stop-motion animation with Lego. They were doing it long before Lego decided to develop it. To make a movie.
The Lego Movie is a playful way for kids and adults to play with blocks, but there's also big business behind it. People really want certain bricks, certain colors, certain minifigures, and are willing to pay for them.
When I first started, I took $1,000 with me and bought collections from teenagers. He was 16 years old and wanted to buy a car. And his parents say they've gotten a kick out of the game. He sold his entire Star Wars collection so he could put some money toward a down payment. And I bought it for $1,000 cash.
I was sweating the whole time. I thought it was unbelievable that my son would drop $1,000 on Legos that he wouldn't play with. Within two weeks I sold a third and got my money back. And I thought, wow, I can really do this. This is a viable business and can be profitable.
So, originally I was working in a store and put all the money I earned from that job into this business. So about £10,000 of my own money was put into it. And now we can actually be self-sufficient. This is great. So now I've been able to quit that part-time job and am doing it as a full-time part-time job. And I reinvest almost all of the money I earn back into the business. And why is it growing so fast?
Okay. And Miss Susan wants his two of them.
I moved out of my house and moved here in March of 2022 and into a 1,400 square foot lot. And the number of items went from 500,000 to over 2 million.
There's a lot of skepticism in the reseller community about what Lego really wants to do with BrickLink. Do they want customer data? Do they want to develop it? Or do they want to essentially shut down what was becoming a competition?
Lego has always been a disabling factor for the used goods community. They don't like us. They don't want us there. And they are quick to criticize anyone who sells Lego off-market.
BrickLink's situation is very unstable. Last year, we suffered a large-scale cyber attack that caused significant damage to companies such as Genie's.
Therefore, 1500 pieces are required. We haven't gotten that far yet.
So I want to be bright sunshine and roses when it comes to my business. The reality is, this year has been the worst year in my business in seven years. So when November 1st came around, I realized I couldn't pay my rent. So he ran a 50% off sale at the store. This is why we sold 191,000 bricks.
BrickLink is the world's largest online community and marketplace for adult fans, and we're proud to be part of the LEGO Group. Currently, he has 1.6 million members and over 18,000 stores. And we will continue to invest in our platform to grow our membership and engagement. We introduced the successful BrickLink Designer Program and recently launched a My Own Creation Shop pilot to improve our marketplace.
BrickLink presents a challenge for Lego in terms of its existing bricks, but Lego also faces major sustainability issues with the new bricks it is producing. Bricks are made of plastic, which makes them very durable. The last time I visited the headquarters he gave me this 1950s brick of his. This still pairs perfectly with his 2024 brick. However, there are still major sustainability issues that need to be addressed.
Lego is basically a product made from petroleum. In other words, ABS plastic contains petroleum as its main ingredient.
Their entire product is petroleum based. I don't see how you can really reduce it without offsetting it.
One of the analyzes I used as an example was Xbox vs. Lego. Which has a greater environmental impact? I took the median cost and complexity of a Lego set of just over 400 pieces. And I compared that to using an Xbox, which is about 300 watts. And if you played both for 9 hours, the environmental impact would be about the same. If you play with Lego for 9 hours straight, you're actually better for the environment and use less fossil fuels than if you played with Xbox for 9 hours straight.
We want our children to inherit a healthy planet. We are determined to play our part in making that happen by making our products and packaging more sustainable. That means overcoming some unique challenges. The material must be durable. It must also meet the highest safety, quality and accuracy standards.
The second is to minimize the environmental impact of our business activities. Third, create new ways to continue playing with LEGO bricks. We know there is no silver bullet, but we set goals, track progress, and are transparent.
Lego has invested heavily in sustainability, but it has also experienced setbacks. We wonder how large-scale attempts to produce fossil-free ABS plastic will lead to an increase in total emissions due to the need to buy new machinery, new molds, etc. A story was told about how it was abandoned. So now they're looking at a step-by-step approach to making each chemical part of plastic more environmentally friendly.
And they're looking at making bricks last as long as possible and looking at ways people can resell, recycle and reuse bricks. Because despite all these apps and movies, at its heart, it's still all about bricks.
These are really remarkable examples of essentially single-product companies that have grown dramatically in different directions while remaining focused on that single product, usually without acquisitions.
There are many questions LEGO needs to answer when it comes to sustainability, digital and resale, but LEGO has incredible strengths. The company is a family-run business in rural Denmark that outperforms large publicly traded companies in the United States. Parents like to buy toys that take their kids away from screens. If you can maintain it while dealing with other issues, you still have the recipe for success.