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STRATEGY

The Marketing Genius Strikes Back

How Kenn Viselman made his name, lost his company, and is taking the biggest gamble of his career.
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Get one thing straight: Kenn Viselman used to be The Guy, the guy who could make everything stop in the toy business. If it hadn't been for Viselman, American toddlers might never have known the likes of the Teletubbies or Thomas the Tank Engine. A true showman, Viselman has an unmatched reputation for taking unknown or faltering toy properties and turning them into overnight sensations, which is why there was a time when those who matter in the toy business would drop everything for Viselman. When he picked up the phone, the CEOs of FAO Schwarz and Toys "R" Us took the call.

But then Viselman lost control of his company, The itsy bitsy Entertainment Company, and wound up descending into a period of depression, despair, and isolation. Finally, with some trepidation, he started placing those calls again. "There were a lot of people who thought I was just gone," says the 41-year-old Viselman. "I needed to tell people that I was still alive."

First, he issued a press release to announce that he had started a new company, Kenn Viselman presents ..., and that he was developing several new product lines. He did this even though the plans for his second coming were embryonic at best. Then, at the February 2002 American International Toy Fair in New York City -- a crucial showcase for new products -- he invited scores of the top people in the industry to gather in the Presidential Suite at the Waldorf-Astoria hotel for a formal unveiling.

All of those people came expecting a show. This is, after all, a man who describes himself as the Madonna of the toy business; who routinely speaks of himself in the third person; who added a second n to his name just for the fun of it ("I put that n on, and it's been part of my thing ever since"); and who on the eve of one trade show took scissors to his famously long hair just to attract attention ("I knew on some innate level that people would go, 'Viselman cut his hair! Viselman cut his hair off! Oh, my God!").

On this night at the Waldorf, as Viselman stood before the crowd, he thought he might faint. He had a reputation for flair and flamboyance to uphold; he knew there were people, perhaps some in the room, who believed that he was more buzz than substance; and he knew that the prototypes he'd brought with him represented the biggest gamble of his career. In the past he had been a licensor. He didn't create Teletubbies or Thomas the Tank Engine; he made them ubiquitous by licensing millions of dollars worth of spinoff toys, videos, and books. This time, with his new company, he was doing it all -- the design, the manufacturing, the distribution, the marketing -- and he was doing it with his own money.

In the suite, after his guests listened to Gershwin tunes, sipped champagne, and dined on chÂteaubriand and lobster, Viselman unveiled what is known in the trade as a "plush" -- that is, a stuffed animal. But not just any stuffed animal. For what he called Li'l Pet Hospital, Viselman had created warm, cuddly, and luxuriant stuffed animals with eyes that actually look upward when you hug them. And what's more, he'd injured them, giving them wounds and broken bones. Inspired by the events of September 11 -- and, in many ways, by Viselman's own sadness and soul-searching after he lost his company -- Li'l Pet Hospital gives children the chance to nurture and heal.

The next day, when Viselman marched through the toy fair -- wounded animals in hand -- the buzz was palpable. "People were all over us," says Kim Winkeleer, a consultant for Kenn Viselman presents.... " 'Is that the new plush, the one that Kenny showed last night? Can I see it? Is that what Kenny has been working on?' " As Viselman recalls with a smile: "People were stalking us."

Energized by the reception, Viselman accelerated his plans to launch the line, which debuted in June at FAO Schwarz and then rolled out nationally in Toys "R" Us and KB Toys -- in plenty of time for the all-important Christmas season. And as the orders grew, Viselman began to feel more and more like his old self. "You have to understand that my presence in this industry is huge," he says. "Modesty aside, humility aside, I'm the guy that the industry looks to for direction. I'm the guy that keeps finding innovative ways to introduce projects into the marketplace. I'm the guy."

The grand illusion

Though he seems to understand the needs of children intuitively -- many liken him to the Tom Hanks character in the movie Big, a kid in a grownup's body -- Viselman is the first to admit that he has not always bonded with kids. Not only does he have none of his own, but he also was often that testy adult who parents dread -- the one who levels annoyed stares and urges them to shush their children in restaurants and movie theaters. All of that changed, however, in one moment in the early 1990s.

Back then, Viselman was handling the American marketing and licensing for Thomas the Tank Engine, a British toy that was a character on the PBS show Shining Time Station. One day, he received a telephone call from a Chicago mother of a six-year-old who was acutely autistic and had never spoken but who loved the Shining Time show. The mother contacted Viselman, who hastily assembled a care package of Thomas accessories he had lying around. Several weeks later, he received a thank-you note that recounted the child's extraordinary reaction to the package:

"When his mother pulled out the T-shirt," says Viselman, "the child looked up and said 'Choo-choo.' Those were the first words the kid had ever spoken. And that moment my life changed. I really got it that I could do stuff that could make a difference in children's lives. And there was a huge responsibility that came with that. It was like, 'Oh, my God! Why can't we make great stuff for kids and make a lot of money at the same time? We can do both!"

Then employed by Quality Family Entertainment, a licensing company that later changed its name to the Britt Allcroft Co., Viselman faced several challenges with Thomas. For one, there was confusion because the television program was called Shining Time Station, but the toy was named Thomas the Tank Engine. Among other things, Viselman clarified the packaging and repositioned the toy in train museum shops and specialty stores such as FAO Schwarz. At their peak in the early '90s, Thomas the Tank Engine products brought in an estimated $800 million annually at retail.

In the winter of 1995, suffering the first of his midlife crises, Viselman left Britt Allcroft. He wasn't sure what his next move would be, but he knew he needed a change. At the urging of a friend, he traveled to England to attend a U.K. licensing show. There, he spent a day with Anne Wood of Ragdoll, a successful producer of television for preschoolers in the U.K. Wood was looking for the kind of U.S. exposure that Viselman could provide; Viselman believed he could find a U.S. television outlet for Ragdoll's shows and also maximize the company's licensing potential.

After he returned from England, he formed The itsy bitsy Entertainment Company with offices in an extra bedroom of his Manhattan apartment. The first call he made was to Dean Koocher, an old friend who was working at Brown & Williamson as a regional credit manager. Viselman knew he needed someone with credible business experience to satisfy potential investors and financiers. At first Koocher agreed to help out in his spare time; eventually he signed on for good. "Dean just started taking on credit cards with my name on them and we started charging things," Viselman recalls. "It was very, very frightening."


Children's entertainment "is just one big card game and one big optical illusion."

In the meantime, Viselman and Koocher, neither of whom took a salary for at least a year, searched for investors. In the spring of 1996, itsy bitsy had $130,000 in the bank, much of it from the sale to PBS of Ragdoll's Tots TV series, a show that featured three children living together in a cottage. It was at that point that Viselman announced to Koocher that he wanted to spend $120,000 at the company's first licensing show. Not surprisingly, the audacity of Viselman's plan stunned Koocher. "We had finally started taking a little bit of salary and stopped eating pasta every day," Koocher says. "I'm like, 'Kenny, what are you doing?!"

What he was doing was following the lead of Blake Carrington. To explain his go-for-broke strategy, Viselman -- who is unabashed about his penchant for drawing life's lessons from the plots of TV shows -- recalls a scene from Dynasty, the '80s prime-time soap. "Blake had just lost everything and Krystle was like, 'Oh, no, what are we going to do? What are we going to do?' And Blake says something like," -- and here Viselman lowers his voice to mimic Blake -- "'Krystle, you open up that safe and you get out your best jewels. We're throwing a party tonight!"

By the end of 1996, they had convinced Troy, Mich.-based Handleman Company, the country's largest distributor of pre-recorded music, to purchase 19% of itsy bitsy, which allowed Viselman to invest further in promotions. Indeed, making a splash for itsy bitsy -- particularly at industry trade shows -- was key to his strategy. Typically, there are thousands of properties displayed at the licensing show; Viselman made sure his stood out. "What I've learned in this industry," he says, "is that perception is reality. The licensing show, children's entertainment, the entertainment industry in general is just one big card game and one big optical illusion."

The secret series

Tots TV, which debuted on PBS in October 1996, did not prove to be a breakout series. One of the kids spoke Spanish, and perhaps, Viselman suggests, America was not ready for a bilingual program. Still, by the end of its first year, itsy bitsy had six employees -- and the rights to a mysterious, hush-hush Ragdoll property that for a long time was referred to only as the "the secret series." Catherine Lyon, who at the time was at PBS and who now works with Viselman, recalls PBS's early discussions with Ragdoll's Anne Wood: "We would say, 'Anne, tell us about the new show.' And Anne would reply, 'I can't. Kenny won't let me."

The show was Teletubbies, and Viselman knew from the outset that it would be controversial. It was a show that appealed to a TV audience that previously had not existed, the one-year-old and younger demographic. It featured four characters -- Tinky Winky, Laa-Laa, Dipsy, and Po -- who have televisions embedded in their abdomens, who barely speak except for a syllable here or there, and who dance, fall down, and give each other "biiiig huggggggs." To some adult eyes it was an acid trip; to others it was visual Muzak, an attempt to narcotize the youngest generation of TV viewers ever. To Viselman, though, it was mesmerizingly innocent, perfect for very young children, whose parents, like it or not, often plop them down in front of a TV. And, of course, it was a potential gold mine in licensing.

Not surprisingly, given the show's controversial nature, PBS was slow to commit. To hurry the network along, Viselman faked a hunger strike. Every day for 33 days, he would fax Alice Cahn, then PBS's director of children's programming, messages such as, "I would eat my right arm off for the taste of a knish. Please respond," or "Please hurry. My mom is starting to worry."

"It was silly," laughs Cahn, "but you have got to love him.... "

Viselman was determined to place the show on PBS because he wanted that "PBS Good Housekeeping seal of approval, that quality-assurance thing." How could Teletubbies be bad for kids if it's being shown by the same folks who gave us Sesame Street?

He finally sold Teletubbies to PBS in late 1997. By then, the show had debuted in the U.K. to much fanfare -- and much consternation. "Anne Wood was pilloried as the woman who wants to ruin early childhood," says Cahn. As a result, by the time PBS was readying to launch in the United States in April 1998, "Anne called us and said, 'I can't. I just can't go through it again," Cahn recalls. That left Viselman and Cahn to promote the series. "We were doing the news shows and taking flak from parents and critics calling up and accusing us of being the devil incarnate," Cahn says. "And Kenny was a tremendous spokesperson for the series, because he truly believed in it."

Viselman was also able to capitalize on the fact that, even before the television show arrived in the States, it had taken on a life of its own. In August 1997, seven months before the U.S. debut, The Wall Street Journal ran a front-page article on the Teletubbies craze in the U.K. Among other things, the article reported that Tinky Winky had become a gay icon; that scholars were forming groups to delve into the gender and race subtext of the Teletubbies; and that an Anglican minister had pronounced that the Tubbies represented ancient Christian rituals.


As if on cue, Falwell went public with charges that Teletubbies promote homosexuality.

But the article also detailed the Tubbies' ardent following in the U.K. And all of a sudden, potential licensees in the United States, who had been leery of the show and not returning itsy bitsy's phone calls, sprung up. " The Teletubbies had been a hard sell," says Kim Winkeleer, who was then itsy bitsy's executive director of off-screen entertainment. "After we hit the cover of The Wall Street Journal, the switchboard lit up. It was lunacy!" As the launch neared, PBS took out large billboards in New York City and Los Angeles. By May 1998, when the Teletubbies dolls were introduced into FAO Schwarz, lines of people were clamoring for them.

At the licensing show in June 1998, the image of the Teletubbies danced off of everything from the staircases in the convention center to the tables in the restaurant. "I don't believe Teletubbies would have done as well as it did merchandising-wise had it not been for that kind of marketing," says Andy Krinner, author of The Licensing Book. "The show played to a very, very small audience and not everybody loved it. But the marketing machine called Kenn Viselman got it to work."

And then, as if on cue, the Rev. Jerry Falwell went public in February of 1999 with accusations that Tinky Winky was, indeed, intended to be a gay character and was thus subliminally promoting homosexuality to children. The evidence: Well, Tinky Winky is purple, his antennae form a triangle (a gay symbol), and he carries a purse. Viselman, who played no role in the character's creation, calls the entire flap ridiculous -- "moronic" -- after all, they're all silly, brightly colored children's characters who are deliberately gender-neutral. And the purse -- well, it's a "magic bag," Viselman says.

Despite the enormous publicity that the brouhaha brought, Viselman and others at itsy bitsy feared that Falwell's charges would hurt the show's image. Today, Viselman believes that the toy's core audience "bought less" because of the controversy -- although gay people undoubtedly bought more. In any case, by some estimates Teletubbies garnered more than a billion in wholesale licensing revenues in North and South America during its peak years in the late 1990s. Viselman declines to comment on how much flowed to itsy bitsy, but licensing royalties generally range from 10% to 20%. Even some Teletubbies viewers could probably do that math.

The golden rule

In early 1998, shortly before Teletubbies took off, Handleman upped its investment in itsy bitsy to 75%. That meant that, although he maintained voting control, Viselman was no longer itsy bitsy's majority owner. But he now had more cash to invest, and his first goal was to start producing his own programming. In June 1999, itsy bitsy purchased the rights to the Eloise children's books, beating out major Hollywood studios.

Viselman had big plans for Eloise: an animated children's series, a prime-time series, a series of feature films that was to debut in the summer of 2002. To kick things off, he threw a launch party at the Plaza Hotel. Fifteen hundred guests attended. Joan Rivers was the master of ceremonies. "We took over the hotel," he says. "We had it awash in pink lights. We had 10,000 roses flown in from South America colored Eloise pink. We knew that if we were going to be players in Hollywood that that event was the one that we were going to solidify ourselves with. That event was the company's shining moment."

By January 2000, itsy bitsy was no longer itsy bitsy; it had 65 employees in six offices worldwide and was becoming a full-fledged children's entertainment company. A series, It's itsy bitsy Time, had premiered on the Fox Family Network in September 1999. NiNi's Treehouse, a television show that blended live action and animation and was geared to five- and six-year-olds, had launched on the Learning Channel in 2000. With the planned release of Eloise, The itsy bitsy Entertainment Company was well on its way to achieving Viselman's dream. "Everything was going extraordinarily well," he muses, "and then everything fell apart."

The end came swiftly in the summer of 2001. With litigation still pending at presstime, neither Handleman nor Viselman will discuss what led to their messy and emotional split. At the time, though, industry insiders speculated that Viselman's over-the-top spending had rattled the more conservative Handleman -- the classic tension between the entrepreneur and his backers. "Kenny is not a corporate guy," says one observer who admires what Viselman has achieved. "And he kind of felt like, 'You know what, you guys bought into my company, but you bought me. And you've got to believe in me and stop bugging me.' That was his attitude."

That summer The Licensing Letter reported that, near the end, Viselman had signed a deal -- "under duress" -- giving Handleman voting control of itsy bitsy stock. According to the trade publication, Viselman claimed that Handleman had threatened not to pay itsy bitsy's suppliers, which would have effectively sunk the company. Viselman's lawyer now says, "Handleman claims that he quit and he is claiming he was pushed out." Having parted company with Viselman, Handleman is not eager to discuss the feud publicly. A Handleman spokesman says, "We've moved on since then and have nothing to say at this time." The Handleman spokesman did confirm, however, that the company has since sold off most itsy bitsy properties or folded them into existing corporate operations.

Ultimately, one observer who followed the saga closely suggests, it may have been as simple as this: "Kenny neglected to follow the Golden Rule, which is that the man with the gold makes the rules."

A message from Lifetime

When Viselman lost itsy bitsy, he says now, he felt as if he'd lost more than just a creative outlet. Like many entrepreneurs, he had come to think of his company as his child. "I wallowed in the mire for a number of months," he says. "I was seriously damaged."

But once again, he found inspiration on the tube, in this case a made-for-TV movie starring Jaclyn Smith on the Lifetime television network. At a moment when Smith fears she is ruined, she seeks solace and comfort from a clergyman. "And the guy says to her, 'The Lord doesn't give you anything heavier than you're able to carry," Viselman recounts. "As a Jew, I had never heard that expression before, but apparently that's a big one in the church. I swear to you, when I heard that message in that Lifetime movie, that moment was the defining moment that changed my whole way. I was like, 'Okay, I've made it this far. What else have you got for me?' And I slowly started picking myself up out of the bed."

In October 2001, he founded Kenn Viselman presents ... with plans, first, for Li'l Pet Hospital. It was not a wholly original concept. A company based in the U.K. has been marketing a toy line called Animal Hospital since the mid 1990s. "At first you say, 'Gee, who really needs another line of plush animals?" asks John Eyler, chairman of Toys "R" Us. "But what was really different about Li'l Pet Hospital was the positioning, the way that they look right at you. It's an entirely different posing of these pets."


"To pick yourself up and have that passion a second time.... It's a lot harder."

Viselman has since hired 12 employees, most of whom work on a contract basis. Originally, he planned to license the toys out to a manufacturer, but, he says, "I did not get the deal that I wanted when I wanted it." Consequently, he is producing Pet Hospital on his own at a plant in the Far East. In so doing, the risks are greater -- among them, inventory accumulation if the products don't sell. But the potential rewards are also greater. As the manufacturer, Kenn Viselman presents ... can garner significantly more than what a typical licensor would (some estimates suggest that Viselman's take could be as much as 30% of what the toys sell for at retail). Furthermore, Viselman answers to no one and maintains total control of the product's rollout.

The obvious tradeoff is that without investment money, it's going to be harder to make the kinds of splashes he so enjoyed in the past. For example, this is the first time he has showcased a major product that, for now at least, does not have a broadcast component to it. (Viselman says he does have plans for an animated children's series.) Keeping his spending under control is a fact of life that he seems to have accepted. "I'm probably going to have to go through another couple of years," he says, "until we get our business to the place where I can promote the same way and do the same kind of things."

This past Christmas season, he managed to get Li'l Pet Hospital onto the right shelves. In December, Viselman was reluctant to make any grand pronouncements about how the product would sell over the all-important holiday season: "It's just a matter of, is the grass-roots swell going to happen fast enough for the retail community to want to continue to promote it and support it." After Christmas, he declined to release any sales figures, although it's clear the animals didn't cause a Teletubbies-like sensation. Still, he professes to be "delighted" with the product's performance, suggesting that the warm response to Li'l Pet Hospital is enough to encourage him to speed up his plans for spinoff ideas.

They're like my kids

On a Thursday morning in mid-January, Viselman comes bounding through the front doors of the flagship Toys "R" Us in Times Square. He dashes by a greeter in costume, who is bellowing, "Welcome to the center of the toy universe!" He eyes a sign announcing an upcoming signing for Viselman's new book, I Love You Bunches!, which he is publishing himself and is in the midst of rolling out. And then he heads for "Animal Alley" -- "This is the most profitable place in Toys "R" Us," he crows -- and finds the Li'l Pet Hospital display. "Look," he says, "you can see that it's really out of stock. There is only one veterinary kit left in the whole store."

He's done the toy store stroll many times before, always scanning quickly to see how his products look. Today, as he stops for a moment by the Thomas the Tank Engine section, his eyes glaze with a slightly wistful look. "Here's all my Thomas stuff," he says, glancing around the space. "On a Saturday, this area is bedlam. If you are a three- or four-year-old boy, Thomas rules!"

Several weeks later, Viselman visits the FAO Schwarz in Manhattan for an I Love You Bunches! book signing. The book, which is about a monkey family, is designed to allow a child to hear the phrase "I love you bunches!" uttered repeatedly by a loved one. A little like an emperor on a throne, Viselman takes a seat in one of his favorite spots on earth: at the top of the escalator at FAO Schwarz. The store this day is hopping, and Viselman is waving to the sea of parkas, sneakers, and blue jeans that passes by. When Scott Stabile, one of the book's editors, begins reading, at least 20 kids start screaming "I love you bunches!" Viselman turns to the children, claps his hands to his ears, and announces, "Ohhh, that was loud! I think they heard you in Chicago!"

Each time he signs a book, Viselman gives out a bag of gourmet jelly beans and joshes with his new fans. To a mother of twins: "Is this their birthday or do you just love them bunches?" "We love them bunches," she dutifully replies. To six-year-old Victor, from Russia: "Did you swim all the way from Russia, or did you take an airplane?" To three-year-old Libby, who is holding the hand of younger brother Ridley: "Is Ridley your husband? Are you married?" "He's my little brother," she says, eyes widening. To a child sucking on a lollipop, "Come to a reading. It's fun. You get to yell a lot! Do your parents let you yell and scream at home?"


"It's taken me so long to get to the place where I do have this legend."

Coming up the escalator, a mother points to Viselman and says, "Look, this is the man who made the book. How cool is that!"

And yet, being in a toy store clearly takes an emotional toll on Viselman these days. It's not easy for him to come face-to-face with Teletubbies and Tank Engines and Eloise. "I'm thrilled on some levels because it feels like my legacy," he acknowledges. "I feel like Gypsy Rose Lee's mother -- because they are like my kids. I brought them up and I got them known, and I did all that work. But on the personal and emotional side, the separation is really difficult."

He is emotional too about the prospects of starting over. "Doing it the first time is hard enough," he sighs. "But you're too naive to know better. You kind of have this immunity. You kind of have this force field around you, the passion force field. Everything bounces off of you -- it's like Wonder Woman and her bracelets. But to pick yourself up and have that passion and that drive and that commitment to do it a second time.... It's a lot harder."

But then he thinks about Blake and Krystle, Jaclyn Smith and Wonder Woman, and he reminds himself of all the potential that lies ahead -- the books, the TV possibilities, the licensing shows, the toy fairs, the deals yet to be made. "It's taken me so long to get to the place where I do have this legend," he says with a sigh. "I don't want it broken."

Krystle, open up that safe.

Gay Jervey is a freelance writer living in New York City.


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Last updated: Apr 1, 2003




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