Ty Warner Manufactured a Speculative Bubble in $5 Stuffed Animals on Purpose
Beanie Babies were rationed by store, retired by design, and sold on eBay for tenfold markups — the playbook was the entire product.
Ty Warner introduced his first nine Beanie Babies — a frog called Legs, a lobster called Pinchers, a few others — at the New York Toy Fair in 1993. They were small bean-bag animals, retailing for around $5, mostly understuffed because Warner thought traditional plush looked too rigid. They sold modestly. The interesting part is what Warner did next.
He rationed them. Stores were allowed to order no more than 36 of any one character per month. He "retired" individual designs at unpredictable intervals, instantly turning the most recently shipped specimens into collectibles. He used hangtags to make the toys feel like serial-numbered editions, and in 1995 — when only about 1.4% of Americans were online — Ty Inc. launched what is sometimes credited as the first business-to-consumer commerce website, with a hangtag that told children to "Visit our web page!!"
What followed was a textbook bubble in something that did not need to be one. eBay, founded in 1995, made the secondary market visible: by the late 1990s, Beanie Babies briefly accounted for roughly 10 percent of eBay's gross merchandise volume, with retired examples flipping for ten times retail and the rare ones for thousands. People took out home equity loans. In December 1999, Warner announced he was discontinuing the line and released a black bear named The End; demand cratered as collectors realized the secondary market was ten thousand identical pieces of polyester. Ty himself had, by then, become a billionaire, and the line continues, smaller, today.
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