Permission to Fail: A case for youth entrepreneurship

Permission to Fail: A case for youth entrepreneurship

[0:00] Ronnen Harary

I think it’s the most exciting time to be an entrepreneur ever, The fact that AI is in the marketplace is disrupting everything and in disruption creates opportunities. And if you’re younger and you have the energy level and you’re closer to the tech, you are going to run circles around the bigger companies.

[0:20] John Stackhouse

Today we’re talking about a really positive disruption. It’s called entrepreneurship. But unfortunately Canada does not have enough entrepreneurs. Not nearly enough.

And there’s a whole new post-pandemic generation emerging that is not gravitating towards starting their own businesses.

Which is why it’s so important to hear from Ronnen, because he’s just written a book called No Experience Necessary And why being in your 20s is the best time ever to start a business.

Ronan is the kind of new entrepreneur that we need a lot more of.

A few decades ago, when he was just 23 coming out of university, he and some friends launched a company that became Spin Master.

Now, you may not have heard of Spin Master, but I’m pretty sure you’re familiar with its products and brands, things like Hatchimals and Air Hogs, or that global TV sensation Paw Patrol and all the toys that go with it.

That all started with just $10,000 and a lot of youthful ambition.

Today, Ronnen is still helping to drive and relentlessly grow a global champion right here in Toronto.

Ronnen tells his story in no experience necessary, but he really uses the book to to push a generation of 20 somethings to embrace entrepreneurship the way he did when he was 23.

It’s the biggest, most positive disruption anyone can take in their lives.

Ronnen, welcome to Disruptors.

[1:43] Ronnen Harary

John. Great to see you again.

[1:45] John Stackhouse

Great to see you again and to be talking about your book No Experience Necessary. That’s so liberating for those of us of any age. We can do things without experience.

[1:57] Ronnen Harary

You can bet on yourself at any age.

[1:59] John Stackhouse

What inspired you?

[2:01] Ronnen Harary

You know, I when I hit middle age, I was thinking back to my 20s and all the amazing things that accrued to me and my business partners and everybody that joined us on the journey in that decade and how magical that decade was. And I didn’t realize at the time, like, everybody’s rooting for you and the power of not knowing.

And like, there’s so many things and your energy level that that you’re gifted in your 20s that recedes in your 30s, 40s and 50s. You have other things that accrue to you in your 30s, 40s and 50s.

[2:30] John Stackhouse

Tell us a bit more about what what’s the magic elixir and combination that comes together in one’s 20s?

Yeah.

[2:37] Ronnen Harary

I think that if you’re inclined to start a business, one of the things you have going for you is that you’re very close to the zeitgeist, and you’ve been in your parents’ home for the last 20 years. You’ve been in university. You’ve been observing, observing, observing. And once you graduate from school or graduated from high school, or once you hit your 20s, you have the you finally have agency to take your thoughts and bring them out into the world.

Right. And I think that the key thing about business is always identifying the white space opportunities, like what’s different and being part of the zeitgeist. You are practically the zeitgeist when you’re in your 20s and suddenly you’re like, I see the way I want to serve food differently, or have a restaurant be differently, or a food cart, or the way I want to open up the service.

Or it could be anything. And that’s what I’m trying to encourage people to do, is that if you see the world differently and you see an opportunity, you should go for it, especially if you have like this, this desire. And but what happens is that we always conventional wisdom is you need more experience to actually go into it.

So that’s what you have in your 20s. Seeing the world differently, you have other things like the power of not knowing. Sometimes when you know too much, it holds you back.

And so for us, you know, our big power of not knowing moment was when we brought out Air Hogs into the marketplace?

I don’t know if your kids play with the Air Hogs. You know, the airplane you pumped up and it flew for 45 seconds. When the inventors pitched it to us. We went to this park, we flew it, and me and Ben, we were like 25 year old kids. We felt like we were ten and we were like, we need to make this product.

This is so magical. We knew there were safety issues. We knew that it was a plane and it was going to fall out of the sky and it may break. So there’s going to be some returns and we’re like, we’ll figure it out. So we took all our money for our first two products. We plowed it into the Air Hogs spent a year and a half engineering developing it, and just about when we were about to bring it to market, we found out that Hasbro Matel had passed on it.

We thought we were the first to see it, and I think that if we would have been a bit more of a mature company, we would have. We would have intellectualize the returns and the safety issues too much and would have said, you know, it’s it’s too much of risk. But we didn’t know as much. And we went with our gut and it turned out to be great.

And it launched as we were producing flying toys for the next 15 years, doing hundreds of millions of dollars in flying toys.

But when you’re in your 20s. You have so much energy, right? And so I write about the book I write, passion delevers risk. If you’re super passionate about something, it becomes less risky at the end of the day because you will feel you will figure out so many different ways to make it a reality, right?

So it’s a, it’s a combination of, of those sorts of things.

[5:31] John Stackhouse

Let’s get into the Spin Master story. But Ronnen first start When did you first see that entrepreneur in yourself?

[5:39] Ronnen Harary

You know, I probably say probably around 15, 16, you know, in and around there. You know, I grew up with classic immigrant, middle class family, right? And so I was an immigrant, middle class kid in an upper middle class neighborhood so that, you know, highlights a lot of things. And it drives you to actually, you know, when you’re a kid, you want to fit in.

So my allowance was always like less than everybody else’s. So I always had to like, work and I always had jobs and stuff like that. So that was a combination. And then also growing up with a learning disability called dysgraphia.

[6:21] John Stackhouse

Explain that.

[6:22] Ronnen Harary

It’s basically it’s the inability for your hands to keep up with your thoughts. So as I start writing my handwriting, my hands start to cramp up and then my handwriting becomes illegible and even illegible for me. So I got to go back and rewrite the words so the teacher can read it, and I can read it, and then you lose your train of thought and you kind of have to reboot.

So an exam that.

[6:43] John Stackhouse

But your thoughts are already down the road.

[6:46] Ronnen Harary

There, down the road. But you’re having but you have to go back and then you have to think about what you’re thinking, what you were just thinking about. So an exam that would take person an hour would take me two hours. And so I was very lucky to get it identified as a kid. And I got a lot of accommodations as a result of it in school.

And I’m so fortunate to the public school system for identifying me, because a lot of kids actually don’t get identified. And if you don’t get identified it’s very hard to actually graduate school. So I was lucky, but my learning disability forced me to because I knew academics was not going to be my career path and I probably would not be a doctor.

It forced me to be entrepreneurial in nature. So it was the immigrant and the learning disability mixed together and also my curiosity. Right? I was just curious about a lot of things. And I actually it’s funny, we’re in the Royal Bank building, and when I was a kid, like I always used to look at this building, I looked at this specific building and I was like, what’s going on in there?

Like, I was a kid, I would always read the business section and I was always looking up. I wouldn’t read sports or anything like that. It wouldn’t read entertainment. I was reading business, I was reading those magazines, and I was always aspiring to like the people that were working in buildings like this. So it’s actually cool that I’m actually here doing this with you.

So I, I don’t know, just innately. I love business, I love the I love the art of business.

[8:05] John Stackhouse

The art of business. Yeah. And at university, you may make made friends, deepen friendships, but decided out of the gates that entrepreneurship running your own business is going to be your path.

[8:19] Ronnen Harary

For sure. I knew it since I was ten years old and then we go to university. It was a bit of a necessity because I had to pay for school and, you know, and I were selling fertilizer door to door for our first two weeks after first year. And we were like, this is a tough gig, so we better figure something else out.

And then we started Campus Faces, which was like this poster, marketing poster with advertising and pictures of students. And so that’s that was our first real entrepreneurial journey.

[8:45] John Stackhouse

And then talk a bit about the birth of spin Master and how you got into the toy business instead of the fertilizer business.

[8:53] Ronnen Harary

Well, it was funny because we actually started with plants – Earth Buddies.

You know, when we graduated from university, I was waiting for Anton to graduate, and we said we were going to continue this business. And Anton’s my business partner. I met him when I was 12, and we have another partner, Ben Varadi, that went to business school with Anton and Ivy. And literally we found out about this product called Earth Buddies, which is a little potato head.

You put them in water, gross grass for hair after seven days. And it was doing really well in Israel. And I went to Anton, drove up to Western. I said to him, no one was doing this in Canada. What do you think about doing them? And he said, I think you’re crazy. Like this is never going to sell.

It took me two weeks to convince him. He finally said yes. We said, we’re going to make 5000 pieces for Mother’s Day. I got my brother in law to help us with the machinery, gave him 5% profit sharing. My sister made the packaging, she got 5% profit sharing and we started selling those 5000 pieces on the streets of Toronto.

Came into the office on Monday. We still had like 4000 in the warehouse. Found a distributor that we went to. He called us up three weeks later. He’s like, when can you order? When can you deliver us 26,000 pieces? And then we move factories and then, you know, the most amazing thing happened. A couple months later, we got this big order from Kmart Corporation for half a million pieces.

And the craziest thing is, you know, I was actually talking about it today is like, for us as Canadians, we never we never thought about Canada as like the single market. We were always thinking global. And we got our first big order from an American retailer within three months of being in business.

[10:32] John Stackhouse

You tell the story in your book how the buyer from Kmart, and it took chutzpah on your part, going to Kmart headquarters and tracking her down in her office. But she took a chance on you because you were in your 20s, correct?

[10:48] Ronnen Harary

What happened was Anton was backpacking with a guy a year before in Europe, and his family was well connected in Michigan. So Anton called me and said, do you know, can you get us an appointment at Kmart? And he said, sure, no problem. And for some reason I took the appointment. Okay. I woke up at 3:00 in the morning.

I drove down to Kmart, 9:00 meeting. I do a presentation and after 30 minutes the buyer looks at me and says to me, I’m not the buyer for this product.

[11:17] John Stackhouse

You got the wrong guy.

[11:18] Ronnen Harary

You got the wrong guy. And I didn’t believe him. So I re-pitched him again. And after 15 minutes he says, I’m not the buyer. To which I said to him, you know what, we’ll give you the product on consigned sales. And if it sells, just pay us. And he said, I’m not the buyer. So I said to him, well, who is the buyer?

I just drove from Toronto. He went back and he gave me this, and he came back in the room and he gave me the piece of paper and written on it was Adrienne Zacks. And I took my box of Earth Buddies, and I walked around Kmart Corporation looking for this lady. And I got so lucky that she was sitting at her desk.

And I pitched her and she said, okay, I’m going to give you a meeting at 3:30. I go downstairs, Aaron Hermelin, Anton’s buddy, was there and the rep, and they were like, what happened? I say, got the meeting at 3:30. They’re like, great, let’s go for lunch. I’m like, I’m not leaving. I’m not going anywhere. I didn’t leave the office.

I go up at 3:30 and as I walk in the door, she’s got seven competing products sitting on the side. So I’m like, great. I found the right buyer and b, I was like, oh no, I better reduce my price. And before I sat in the seat, I reduced my price. I was going to go in with the price of 265, and as I sat down, I changed the price to 165.

I did a 20 minute pitch. I told her everything about Campus Faces our poster business at university. I told her everything we’ve done for the last three months, and then she did the most magical thing, and she turned around and she grabbed this book and she gave it to me and she said, this is the vendor agreement. Read the book.

I’m giving you an order of 48,000 pieces. And if it goes well, we’re ordering half a million pieces from you. And I share the story in detail because she gave the order to 23 year old guys over the seven other people that had that shipped in product to her, a because we got in the room. So it’s like, I’m a big believer.

It’s like you don’t go, you don’t get, you got to get in there.

[13:15] John Stackhouse

You don’t go, you don’t get.

[13:16] Ronnen Harary

And I was earning and genuine about what we were doing. And she felt the passion. And then on top of that, she was like, this is a young guy. They’re young but they’re passionate and I think they’re going to be able to deliver. And I think that’s what gave us the edge at the end of the day.

[13:38] John Stackhouse

So you start with the Earth Buddy, but it explodes from there to Spin Master, today is one of Canada’s great global companies. Even though Canadians may not be familiar with the corporation, we’re sure familiar with its products.

[13:56] Ronnen Harary

Yeah. I mean, it’s it’s I write about in the book about the inverse risk. You can’t I would never be able to write the story from selling nylons filled with sawdust and grass seeds to, you know, all the products that we’ve brought out into the world.

[14:17] John Stackhouse

You know more about what you mean by inverse risk?

[14:20] Ronnen Harary

Well, the inverse risk is like whenever you’re evaluating an opportunity, right? Two things happen. One is usually we get a lot of resistance. Right. And so it’s the ability to break through the resistance. Usually when we evaluate the opportunity we look at we can game out the downside. We know what’s going to happen right. Negatively go out of business, we lose money.

You know we lose the time. We lose our opportunity cost. But when you look on the other side of the ledger, of all the things that potentially could happen, it’s hard for you to write that story because you just don’t know. Right? It’s so unknown. Right. So it’s like once you start. So in our case, you know, like when we started with the Earth Buddy, we never knew a year later we’d be selling Devil Stick, right?

And we never knew that Devil Sticks would lead us into the toy business. And we never lose the. Once we were in the toy business, ten years later, we’d be making TV shows. And then we never realized. Like we’d produce, you know, one of the greatest preschool shows ever.

This is Paw Patrol. So you the journey, right? You you can’t write it all out. And so because you can’t write it out, you lean more to the conservative side of things, but you miss out on your ability to see what potentially could happen. And it’s actually even deeper because you almost give up, right? You give up on the upside of, of the of what’s possible.

And you give up on potentially the screenplay of your life and living out the screenplay of your life. And so it’s that it’s that balance between uncertainty and certainty. And I call it the inverse risk because it’s riskier to not know, to try and live it out.

even the failures I firmly believe are going to lead to your successes, It’s actually not so risky because you’re inclined to go in that direction. Right. And sometimes I would say is like resistance. Resistance is actually good a good thing. It tells you that you want to do something.

[16:43] John Stackhouse

One of the reasons I wanted to have this conversation Ronnen is that entrepreneurship is a big need in Canada.

Why don’t we have more of that.

[16:56] Ronnen Harary

It’s a great question. And I was talking to someone about this earlier today.

And I think it’s I think it’s a cultural thing. It’s a deep cultural thing because it actually doesn’t square because we have all these amazing resources. We have the best schools, right? We have such smart people. We have the most supportive society. Right?

We have we have everything best country in the world. So I think at the end of the it’s a cultural thing, going back to giving people permission to do things differently, giving people permission to fail. It’s okay to fail, right? It’s okay to try multiple times because it will lead to your success. And maybe it’s entrepreneurialism.

And starting your own businesses is a is not such a risky path at the end of the day, right?

[17:52] John Stackhouse

One of the many strengths we have in this country is a range of groups that do lean into entrepreneurship. One of them is Futurpreneur, ad organization that RBC has gotten behind, and we’re making even greater commitments. You’ve been a big supporter of Futurpreneur over many years. What is it in Futurpreneur that you see and how does it help young entrepreneurs?

[18:18] Ronnen Harary

We I think the amazing thing about Futurpreneurs is that they give out loans without collateral, right to people to start their business.

And that’s the biggest thing. It’s like, you know, it’s really hard. I will tell you, in the early days when we start our business, I’m not going to mention which banks, but we did not get loans from the Canadian banks.

[18:47] John Stackhouse

Is it harder to be an entrepreneur today or easier?

[18:50] Ronnen Harary

I think.

[18:50] John Stackhouse

It’s a young entrepreneur.

[18:51] Ronnen Harary

I think it’s I think it’s the most exciting time to be an entrepreneur ever, ever, ever, ever. Okay. It’s like the tools you have with AI are incredible. The fact that AI is in the marketplace is disrupting everything and in disruption creates opportunities. And if you’re younger and you have the energy level and you’re closer to the tech, you are going to run circles around the bigger companies.

The bigger companies are slow. They are lumbering. I know, okay, because we’re in middle age, you know, and we’re trying to keep up and we’re having to buy other people’s companies and pay a lot for them because we didn’t create what they just created. And we have a bigger machine to put it in. But you know what? I’d prefer if we would have created it, not have to buy it.

Right? We just had to do an we just did an acquisition right now. Case in point okay. The most beautiful, incredible product. It’s called Sticker Box okay. It’s basically it’s a beautiful red box. You press the button on the top, you speak into it and you say, make me a sticker of John riding a horse on a surfboard.

It’s the first ever amazing physical AI product that’s invented and brought commercialized, and we didn’t create it. I was with the guys today and I said to them, you guys will go down in history for actually creating the first ever amazing physical AI product in the world Sticker Box.

Congratulations. You guys will go down in history and we had to buy it from them.

[20:34] John Stackhouse

How old are they?

[20:35] Ronnen Harary

They are not in their 20s, but they’re in their 30s. Yeah. The one guy he actually has, he built the prototype, built it for his three year old kid.

There are so many amazing things happening out in the marketplace.

So I know the markets like it’s it’s dire out there because of Covid and the political situation and the uncertainty in the world. Like it’s an uncertain time for young people and I feel for them. But at the same time, there is some other stuff over here that’s going in your favour and you got to lean in where you lean.

[21:11] John Stackhouse

Does not just seize the day, seize the decade and.

[21:14] Ronnen Harary

Seize the deck. Seize the moment, seize the moment, and don’t let the moment define you. Don’t let the other stuff over here define you. Let the stuff over here, okay? And whatever’s and whatever’s. And I think whatever’s whatever is your definition of success. And I think that’s really the decade that we’re moving into. Right. Is that people it’s like you don’t have to follow conventional paths.

And I think the fact that there’s so much disruption is giving people the permission to follow other paths that are that are the past, that they want to take at the time, that they want to take them.

[21:50] John Stackhouse

What a great message to wrap up on. There’s never been a better time to be an entrepreneur. Ronnen f I can ask the last question, it’s, what would you tell your 23 year old self?

[22:01] Ronnen Harary

Life is long, right? And you don’t have to rush and enjoy the journey, But but at the same time, you know, like make sure you make sure you’re moving right. Because movement creates luck.

[22:15] John Stackhouse

Movement creates luck.

Thanks for being on Disrupters. Thanks for the book.

[22:18] Ronnen Harary

Thanks, John. Pleasure. Thanks for reading it.

[22:22] John Stackhouse

Permission to fail. Those may be the three most important words, Ronnen said. And it’s really a code for disruption.

You can’t disrupt in business, and you can’t disrupt yourself if you’re not willing to take a chance. And there’s no such thing as taking a chance if you’re not willing to fail In your 20s, you have more permission to fail.

You have more runway to recover as well.

It’s why it really is the greatest time in life to become an entrepreneur. This is Disruptors, an RBC podcast. I’m John Stackhouse. Thanks for listening.