#261: NY Toy Fair 2025 Exclusive Interview with Thin Air Brands
Are tariffs here to stay or not? That was the hot topic at New York Toy Fair 2025, and trust me—it’s still got the toy industry buzzing. In Q1 of 2025, the Trump administration announced a 20% tariff on Chinese imports, and with 80% of all toys made in China, manufacturers, retailers, and consumers are all bracing for impact.
So, who's really going to absorb these extra costs? Will factories take the hit? Will retailers adjust their pricing? Or will consumers end up paying the price?
Inspired by a thought-provoking LinkedIn post from Mike Searls, founder of Thin Air Brands, we sat down for a post-Toy Fair deep dive into how these tariffs will shake up the toy industry. Mike brings over 30 years of experience to the conversation, and he’s seen the industry survive some major shake-ups before.
In this chat Mike breaks down:
🔥 Why Chinese factories can’t absorb the tariffs, and what that means for production
🛒 How major retailers are pivoting their strategies to stay competitive
⚖️ If companies should rush their products to market before the tariffs take full effect
🔍 Shifting buyer patterns at Toy Fair 2025
This episode is part of our New York Toy Fair Interview Series, our conversation ends with a closer look at the recent show. Find out what might you expect from Toy Fair moving forward, by hitting play on this episode.
Listen For These Important Moments
[02:31] – Meet my guest, Mike Searls, founder of ThiN AiR Brands. With over 30 years in the toy industry, he’s seen it all and is here to break it down.
[03:43] – The toy industry isn’t all fun and games. Mike shares what really goes on behind the scenes and why competition is tougher than it looks.
[09:38] – Mike breaks down how tariffs impact different players—from factories to retailers to consumers—and who’s going to take the biggest hit.
[16:33] – What happens next? Mike shares his predictions on pricing, supply chains, and how companies can adjust to stay ahead.
[21:36] – Why can’t we just manufacture toys in the U.S.? Mike explains why it’s not that simple and what businesses should know before considering a move.
[24:24] – We discuss how toy companies can adapt, rethink pricing, and adjust strategies to survive and thrive.
[26:12] – Mike shares how he’s handled past crises like COVID and 9/11, and what toy businesses can do to prepare for the unexpected.
[28:05] – Is New York Toy Fair still worth it? Mike shares how the show is changing, why specialty buyers are taking over, and what that means for exhibitors.
[33:50] – E-commerce is growing, but brick-and-mortar still matters. We discuss why in-store shopping is key for toy sales and how businesses should balance both.
[37:03] – Before we wrap, Mike shares his best advice for toy entrepreneurs, including why having a strong product pipeline is a must for long-term success.
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This episode is brought to you by www.thetoycoach.com
Connect with Mike on LinkedIn: @MikeSearls for expert insights on the toy industry, tariffs, and business strategy. Plus, check out THiN AiR Brands at thinairbrands.com to see their innovative toy lines in action! 🚀
Read Mike’s LinkedIn post that inspired this episode.
UPDATE: Mike shares on LinkedIn, China plans to fight back on tariffs, read more here.
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[00:00:00] Azhelle Wade: You are listening to Making It In The Toy Industry, episode number 261. Hey there, toy people! Azhelle Wade here, and welcome back to another episode of Making It In The Toy Industry. This is a weekly podcast brought to you by thetoycoach.com. Today, we're continuing our New York Toy Fair 2025 exclusive series but with someone I actually didn't catch up with at New York Toy Fair. However, their conversations on LinkedIn throughout the show were really just all the buzz. They were really hitting a hot button. So I had to invite our guest back to the show. Now really quick. Let's do our recap. As I promised last week, we learned licensing equals growth.
[00:00:56] Azhelle Wade: Jayson Esterow turned a Jeep ducking a viral trend into an official and much loved licensing deal. We learned the FBO strategy for success from Gavin Lawler's Deddy Bears, because he found an untapped market between creepy and cute and one big being the best first and only in this category. If you missed any episode in our New York Toy Fair 2025 exclusive interview series, head over to thetoycoach.com/podcast to check them out.
[00:01:20] Azhelle Wade: Now, today's episode, we are diving into a hot topic that is hot in many industries right now in the U. S., and affecting customers nationwide in the future, tariffs. Recently, the Trump administration implemented significant tariffs. I know we've heard them on and off.
[00:01:37] Azhelle Wade: Let's figure out where they're at right now. We've heard a 25 % levy on imports from Canada and Mexico, 20 % duty on Chinese goods, and these measures are going to impact a wide array of products. From automobiles to electronics to everyday items like groceries and our focus, toys. So with nearly 80 % of toys sold in the U.S. being sourced from China, a number of toy companies based in Canada, some of our students and listeners, and some of our newer, more promising paper based factories in Mexico, the toy industry is bracing for serious pricing chaos.
[00:02:13] Azhelle Wade: Prices are expected to rise at least by 15 or 20 % by the fall and affect every category of play in our industry. So what does this actually mean for toy company? Should we be rethinking supply chains, raising prices? What's a long term game plan here? Will the government back down or is this our new normal?
[00:02:31] Azhelle Wade: So to break it all down, I've got the perfect guest cause I don't know everything about this, but I'm inviting my new friend, Mike Searles, founder of Thin Air Brands, who's been in the trenches of this industry for over 30 years. And he's got strong opinions on where this is headed. Mike Searles, founder of Thin Air Brands has over 32 years of experience as a founder, owner, and CEO in the toy industry. His company, Thin Air Brands, is home to hit toy lines like Nature Bound, Playful Minds, and Dr. Stem Toys. Thin Air Brands has been recognized by Inc. Magazine as one of the fastest growing companies in America for the last six years straight.
[00:03:07] Azhelle Wade: That's longer than I've even been in business. That's a testament to their incredible team and to the toy industry. Now with deep expertise in finance, sales, and manufacturing, Mike has built a reputation for cutting through the industry noise and tackling big challenges head on. Right now, one of those challenges that we're all facing, tariffs.
[00:03:26] Azhelle Wade: So let's get into it. Mike, welcome to the show.
[00:03:29] Mike Searls: Thank you. Glad to be here.
[00:03:31] Azhelle Wade: So excited. I haven't had this conversation on this podcast. I've been waiting.
[00:03:35] Mike Searls: I don't know if you should be excited or not. I don't know, but we're going to find out. We'll get into it.
[00:03:39] Azhelle Wade: I love it. I can't wait. So, finish this sentence for me, Mike. The thing that surprised me most about the toy industry was?
[00:03:47] Mike Searls: It's a knife fight.
[00:03:48] Azhelle Wade: Oh my God. Okay, that.. that's pitting.
[00:03:51] Mike Searls: Supposed to be positive, right? No, it really is. I've been in this business a long time. Everybody tells me, Oh, you're in the toy business. You must be having so much fun. You get to play with toys all day. No, we're in the trenches every day. We're fighting with bigger companies, littler companies, legal, investors, designers, retailers, all the problems.
[00:04:11] Mike Searls: It is a complicated business and you're in there fighting in the trenches every day, and that's why I love it.
[00:04:18] Azhelle Wade: that is, that's true, honestly, I didn't, even in my side, now I'm more in like education and press than I am in product, it gets a little dicey, there's like a very limited space in this industry, people don't like it when you come into their space.
[00:04:31] Mike Searls: Oh, no, you gotta be looking over your shoulder all the time. It's a great industry. I love it. There's so much leverage in this business. That's what I love but it is not an easy business. It is not for the faint of heart. But if you like a good scrap. This is it.
[00:04:46] Mike Searls: This is a great business to be in. So that was the most surprising thing to me. I thought it was a sweet, innocent little business that everybody was just having fun and it is a brutal business, but that's what makes it cool.
[00:04:56] Azhelle Wade: Like, I thought it was a sweet little innocent place where people go to enjoy their childhoods. No,
[00:05:01] Mike Searls: No, not that, but it is. But the end result is that.
[00:05:04] Azhelle Wade: It is. Yeah. It feels good when you see some, a little kid playing with your product and they don't know who you are and you're just seeing them have fun. That's the moment you really live for.
[00:05:12] Azhelle Wade: And then that happens like once every couple of months, maybe if you're lucky.
[00:05:17] Mike Searls: Yeah. It's like spotting your toys in the wild. That's the.. that's the greatest experience. Or you're on an airplane and somebody asks what you do and they Oh, I know that I had. But what the problem is, though, now they tell me, Oh, yeah, I had that when I was a kid. And I'm I was.
[00:05:33] Mike Searls: "Thanks for that."
[00:05:34] Azhelle Wade: That's so funny. All right. Let's get into the impact of tariffs on our industry. So you've been really vocal on LinkedIn about the current tariff situation. I'm going to share the link to your most recent post in the show notes of this episode. And I just want to start this by saying back in January, I know there was an organization Astra that had a meeting with manufacturers and retailers when the tariff buzz was just getting started, and there was a discussion that there might be a potential split of the cost of the tariffs, each side taking on 10 % to make up for the loss or even conversations around a 5 % split between the factory manufacturer, retailer and customer while those would ideally be perfect situations from your perspective and what you've seen at Toy Fair, what do you think is going to realistically be the immediate impact of a 20 % tariff on this industry?
[00:06:21] Mike Searls: A split is not going to happen. A split is, it's bunk. It's not going to happen. Let's do. Okay. So let's challenge your listeners with this. Let's do some math.
[00:06:29] Azhelle Wade: Okay. Oh, yeah.
[00:06:30] Mike Searls: You opened the show and you said what? 80 % of the industry is from China.
[00:06:34] Mike Searls: All right. So the industry is arguably 40 billion a year. So that's, if we do some math, 80 percent of 40 billion is 32 billion. Alright, 20% tariff on 32 billion is $6.4 billion.
[00:06:48] Azhelle Wade: That's it. Okay.
[00:06:50] Mike Searls: Who's going eat that? Alright, let's say that China eats a third of it. Let's say that the factories play ball and they eat a third. I think that's optimistic. I think that's.. best case scenario.
[00:07:02] Mike Searls: But let's pretend. So that means that leaves 4.2 billion, that what? the factories are gonna eat? So last year, Mattel made 500 million, Hasbro made just under 400 million. That's not even a billion. So 4.2 billion wipe out profits of the toy industry from probably more than half the industry. So they're not gonna to eat it.
[00:07:27] Mike Searls: So if China picks up a part of the tab. The rest of it has to be passed along. Maybe the factories, when I say factories, companies like mine, Spinmaster, Hasbro, Mattel, Lego, et cetera. We're going to have to absorb part of it, but it's got to be passed along.
[00:07:44] Mike Searls: It has to be passed along, there’s not enough money..
[00:07:45] Azhelle Wade: To the consumers? Is that where you're going with this?
[00:07:48] Mike Searls: Correct. It's got to be passed along in price increases. There's nowhere else to bury it. You can't bury it in the backyard. It has to go somewhere. So, sure, China will particularly take a part of it, possibly we'll get a softer currency, so maybe that picks up a point or two, but there's 20%.
[00:08:06] Mike Searls: You can hide 5% somewhere, 15% has got to be passed along, so you will see price increases. And if you want, we could break it down by how does that affect each player in the industry? But bottom line, it's got to be passed on.
[00:08:20] Azhelle Wade: So, okay. But I did hear, in a recent talk about tariffs with Chris Cox I didn't know this actually, that the margins of factories can be as low as 3 to 4%. I don't know if you are aware, and when I say factories, I'm talking the factories in China, and I don't know that real number, but if it's even 10%, there's no room for them to even want to stay in this industry, and I know in COVID and in the shipping container crisis, there were a lot of factories that were already exiting toys, because they were like, no, y'all aren't making us enough money, and we could go do electronics and make chips, I literally was in the middle of developing a product with a client, and the person helping me was like, so our factory is switching to electronics.
[00:08:58] Azhelle Wade: And I'm like, okay. So there's no room, there's no room. Right. You're saying?
[00:09:02] Mike Searls: No, there's no margin in the business and I don't want to get your podcast shut down. So you might not want to listen to this part, but there is also the rumor that the CCP subsidizes the factories.
[00:09:14] Azhelle Wade: Oh, what?
[00:09:16] Mike Searls: So, in some cases, well I can't prove it. They all deny it. But it seems to be what's shared in the industry that the CCP is subsidizing the factories so they can work on those lower margins. So the point is, the factories have to cut costs, the factories have to cut costs. So a whole bunch of things are going to happen. Can we break it down by the players and kind of see exactly.
[00:09:36] Azhelle Wade: Yeah. What are you thinking? What are you thinking?
[00:09:38] Mike Searls: Okay, so here's the players in the industry. There's inventors. Right, inventors get a royalty. I think they're in for a little pay raise. I think they're going to have a royalty on a higher revenue. So, because prices are going to go up, but people like me might hesitate or Mattel and Hasbro might hesitate on bringing new product.
[00:09:56] Mike Searls: So maybe they'll have a harder time getting new toys selected, but their existing royalties should go up a bit. Factory. The Chinese factories, they're going to get squeezed. They're gonna have to eat 2 to 5 percent somewhere in that range, which means they've got to get faster, cheaper in how they produce.
[00:10:15] Mike Searls: They'll cut corners when they can. So you've got to have your Q. A. In place. Suppliers, that's people like me.
[00:10:22] Azhelle Wade: Well, hold on. Let me slow down there just for people that don't know. When you say, so you've got to have your Q.A in place, he's saying your quality assurance team because if the factories are cutting costs, they will cut costs by any means necessary and that might negatively affect your product.
[00:10:34] Azhelle Wade: Okay, go on.
[00:10:35] Mike Searls: You better count screws, you better measure thickness of plastic because there might be some missing.
[00:10:40] Azhelle Wade: Count screws!
[00:10:41] Mike Searls: You know, but that's normal. We do that anyway. So that's nothing. Okay, suppliers like me. So Hasbro, Mattel, Spin Master, Thin Air Brands, we're stuck in the middle. So we got to take some of the hit.
[00:10:53] Mike Searls: And then we've got to pass the rest on. So what does that mean? Maybe we have to then offset by not hiring that next person we wanted to hire. Maybe we have to put off big decisions. But here's the other thing that's going to happen that nobody's talking about. Big accounts like Walmart, Target, Walgreens, CVS, you name it.
[00:11:10] Mike Searls: They're not going to want to import goods anymore. They're going to want me to import the goods, me, to pay tariffs on my cost so that they can buy it in LA and avoid having to pay the trumped up speaking of the word tariff costs on their costs.
[00:11:25] Mike Searls: In other words, if I make it for $10 and sell it for $12, it's better for me to pay the tariff on $10, than them to pay the tariff on $12.
[00:11:31] Azhelle Wade: A hundred percent.
[00:11:32] Mike Searls: So that's going to push me to bring more goods in than I..
[00:11:35] Azhelle Wade: Well, hold on. Now you're making me think of something. Does that mean that the store brand, toy lines might be in jeopardy. Like, you know how all of these retailers like Target has their own doll line. They came out with their own, they have like Giggle Scape, are those ventures going to be less desirable now to retailers?
[00:11:52] Azhelle Wade: Cause before they did it because they could get more margin than going through us. So now is that going to open up space for us? You think?
[00:11:59] Mike Searls: Possibly, but. Likely not --
[00:12:02] Azhelle Wade: Okay. He said no.
[00:12:03] Mike Searls: That trend is going to stop because their costs are still lower than if they would buy it for me. They're working factory direct. And so, yeah, so they're just going to have to pay a little more and just have to absorb it in the retail.
[00:12:15] Mike Searls: Okay, what's next? Sales reps. Sales reps will probably get a little bump in pay because everything's going up. So they'll get a little bump in pay. Retailers, I think there's where it comes in. The retailers are going to have to pay a higher price somewhere you can't bury it. So I think the biggest challenge in late 25 is.
[00:12:35] Mike Searls: Are retailers going to let go of these round price points? $19. 99, $24. 99, $29. 99. Maybe a product doesn't need to go to $19. 99 to $24. 99. Maybe it needs to go to $21. 99. So I think the big trend is going to be getting rid of these round, big numbers and go to opt in pricing. Otherwise, you're gouging the customer.
[00:12:59] Azhelle Wade: I also wonder if we'll go back to 97 pricing because 97 was always that more psychological make people believe they have a deal. So do you think that there might be, so say something is 1999 and they have to jump now to 23.99 maybe they do 23.97 because that sounds cheaper.
[00:13:18] Mike Searls: A lot of people use the fives. Walmart was heavy on the eights. The sevens are good. So sure, that could be a part of it as well.
[00:13:25] Mike Searls: So bottom line. So who's the last to be affected? It's the consumer. The consumers are going to pay probably 5 to 15, let's call it 10 percent more for toys. Now, historically, 50 % of toys are $19.99 and less.
[00:13:40] Mike Searls: So the customer is going to pay $2 more. I don't think in the end, it's going to affect the toy business a lot. I think money is going to get moved. Things are going to look different, but at the end of the day, the toy business is very resilient. And I would bet we have very little movement in the overall revenue of the toy industry when it's all said and done.
[00:13:57] Mike Searls: But it's like the duck on the water with the feet going fast. You're not going to see all the movement underneath that we're having to deal with on a daily basis.
[00:14:03] Azhelle Wade: Well, that's what I was wondering. Like do you really think that consumers are going to start paying these higher prices or we're going to actually see a dip in revenue.
[00:14:10] Mike Searls: For toys they will. They'll pay $21. 99 instead of $19. 99 all day long. I don't think it'll affect it. I think if I was in the refrigerator business or the, right, if I was in the big durable consumer goods business, I'd be a little more worried you know, because, selling a microwave is going to go up exponentially, but toys, if they even went from $10 to $12, or $20 to $22, or $30 to $34, I don't think the consumer is going to change their habits that much more.
[00:14:34] Mike Searls: I think we're fortunate for once that we're on this end of the scale.
[00:14:38] Azhelle Wade: So wait, actually you brought up a comment about pricing you're triggering another. question I have for you. You brought up the comment on the retailer not wanting to pay tariffs on essentially the higher price that they're paying for the product from the manufacturer, and I'm calling you Thin Air Brands and manufacturer in this case, and instead having you the manufacturer pay tariffs on the lower import costs that you're paying the factory.
[00:14:58] Azhelle Wade: I also have a student, she's actually in Canada, so she's getting double. She imports from China to Canada, sells to the U. S., and now it's like a whole, so that's her big issue. But yeah, so she's moving product to the U. S. a 100%. But that is my big question here. It's, do you feel like people's first inclination will be, "Oh, they have to raise prices", but depending on who's paying the tariff, the raising the prices actually could do almost the same amount of harm as good or, is raising the price to a certain degree going to help or hurt?
[00:15:33] Mike Searls: I think it's all relative. Look, we're all in this. We're all in the same boat. We're all in the same predicament. There's no hiding the fact, you know, some people were really smart. They moved their manufacturing from China. to Mexico. Okay well.
[00:15:44] Azhelle Wade: They're still,
[00:15:45] Mike Searls: We’ll see how that works out.
[00:15:46] Azhelle Wade: right.
[00:15:46] Mike Searls: But my point is that the tide's lifting everything. So everything's going up. And if everything creeps up and it's low price goods, I think at the end of the day, the consumer will still pay it. Maybe instead of buying six toys, they buy five. I don't know. But I think the dollars will be the same.
[00:16:02] Mike Searls: The dollars spent will be the same thing. I don't even think raising prices on toys is inflationary. I think consumers, if their budget is $500, they'll still spend 500. They may just get a few, a smaller basket of toys. They'll be more selective, but they'll still spend 500.
[00:16:18] Azhelle Wade: Yeah that’s an interesting.. yeah, but at the end of the day, it's gonna be the toy companies who's "Okay, we made the same amount of money as last year but the profit is down so then it's gonna be.. The result. What's the result of that?
[00:16:27] Mike Searls: I think you'll find profits not down. I think it'll be successfully passed through.
[00:16:32] Azhelle Wade: Interesting. Okay, so some companies are considering rushing products before tariffs hit. I actually have students that are wondering if they should be doing that. So how might a company choose, if that's a good idea, which products to do that with and which would be risky to do that with?
[00:16:46] Mike Searls: You know, we're faced with that. Like, okay, so all these decisions as an operator ourselves. You know, we have to make decisions based upon the information that we have today, that information could change. The tariffs could change next week, next month, next year. I'm not smart enough to know what is going to happen.
[00:17:03] Mike Searls: All I know is the rules that they are today. So I have to assume that today is it. We tend to not like to try to guess the future because they could as equally go away. And so if you rush them in, maybe you're paying 20 when you could have paid zero, who knows? I don't know. So I would rather err on the side of just bringing them when I need them, dealing with it as I can, passing it along as I need to at that time and not trying to time the market.
[00:17:30] Mike Searls: It's like buying stocks. If you try to time the market, I guarantee you're always going to be wrong. So just. Just dollar cost average, move forward and do what you need to do to support your business. You don't want to lose revenue trying to save money in the future. And you don't want to pile up on goods that might not be tariffed.
[00:17:48] Mike Searls: Who knows? We don't know what the future is. All I know is what it is today. And we have to act on those
[00:17:54] Azhelle Wade: What is it today? Because I, like, I feel like every day it changed.
[00:17:58] Mike Searls: We're assuming it's 20. Maybe it'll go back to 10. I don't know, but we're assuming 20 in April.
[00:18:02] Azhelle Wade: There's also students for me that are already getting preemptively charged. And there's getting, oh yeah, I've seen plenty of people actually posting about this, like, additional import duties being charged on them. Like, I guess I'm also unclear of if things are set or if they're just coming in the next month or so.
[00:18:18] Mike Searls: It's based upon when the goods hit the water. So if the tariffs are in effect when your goods sail, then they're going to be exempt. And if the goods sail after the tariff goes into effect, then there'll be tariffs. So you're probably too late now to be able to do anything. Just got to bring them in as soon as it’s 20.
[00:18:35] Azhelle Wade: Yeah. Geez. Okay.
[00:18:37] Mike Searls: We had some goods that sailed the day before the first tariffs came in. We just got lucky. I mean, you know, luck of the draw.
[00:18:44] Mike Searls: And then we got, we had some other goods that were delivered right after the tariffs went into effect.
[00:18:48] Azhelle Wade: Yeah. So like, how do you even, so like if you've sold something, are you just, you're just operating either at a loss very low tariff with those items that you've already sold. And then how do you broach that conversation with your retail partners of, yeah, I know you just bought this awesome thing for, you know, $10 and tomorrow, it's $20. Like,
[00:19:04] Mike Searls: So it's not going to go from 10 to 20, the cost is going to go from maybe 10 to 11, right? Probably not even 12. It's probably because remember, we're paying the tariffs on my costs, not what I sell it to you.
[00:19:15] Azhelle Wade: Right. Oh, fair. So the $5 cost.
[00:19:17] Mike Searls: So there's a, so it's not a 20 percent to wholesale. It's closer to 10%, 15, depending on what it is.
[00:19:26] Mike Searls: So here's what companies are doing. If you have an import that's already in place, your big customers have an import already in place. They're telling you, you got to give them a cost discount and they're pressing hard. And so now it's a negotiation, even for goods work in progress. So that's part of it.
[00:19:43] Mike Searls: Your domestic customers, people that we bring it into LA and then sell it to them. Let's say it's a retailer in Des Moines, Iowa. Most people like myself are going to do one of two things. They're going to pass along a price increase. Which I don't like, or they're going to pass along a tariff surcharge, which is a line item on their invoice, and that's probably the best way to go.
[00:20:06] Mike Searls: Here's why. If I pass along a price increase, And the tariffs go away. Now I got to do a price decrease. So there's this constant game of playing with it. So it's easier, I think, with this moving target to just do a line item surcharge at the end. It’s.. It kind of looks like shipping and handling, but it's called a tariff surcharge, and it might be, let's call it. 10%. So if that purchase order is $1, 000, then there will be $100 tariff surcharge at the bottom. And we'll see how everybody responds. But these retailers, they're not naive. They know it's coming.
[00:20:40] Mike Searls: Nobody will be surprised. They won't like it, but they won't be surprised.
[00:20:43] Azhelle Wade: If you had a direct line to policy makers, what would you tell them about how these tariffs are going to impact? American businesses, the toy business. What would you say?
[00:20:52] Mike Searls: Personally, I'm not a tariff fan. Don't like tariffs. I think it incentivize the wrong thing. I think If the U. S. government wanted us to make our toys in the U. S., I get it. You don't want us making the toys in the U. S. We don't have the capacity. So, let's take an example. We sell an ATM machine, right?
[00:21:11] Mike Searls: This ATM machine is, it's a toy. It has lights in it. It has sound chips. It has batteries. It has wires. It has paper. Okay, here's how it works in China.
[00:21:20] Mike Searls: Our factory buys pellets of plastic. They don't make them. They buy them from a factory down the street. They bring in the pellets. They extrude the plastic.
[00:21:29] Mike Searls: And then, okay, now they've got to install a light bulb. They get that from the LED factory down the street. They install that bulb. They need wires. They get that from their wire manufacturer down the street. The cardboard box from them. The plastic here. There are basically factories now are --
[00:21:45] Mike Searls: basically assembling and so they need that infrastructure. They're not making the Duracell batteries. They're buying them from the factory down the street. So to make that same toy in the U. S. I need that infrastructure. I need an entire city of suppliers that can supply that. You don't want that. It's pollutant.
[00:22:03] Mike Searls: It's dirty. It's hard. Nobody wants to do the labor. We're not geared up for it. It doesn't make economic sense to do it here. So why penalize me? So I don't like the tariffs myself, but I don't want to get political. That's my personal opinion. At the same time, it is good that it's a level playing field. If we're all getting cracked by it, then we all have to play by the same rules.
[00:22:24] Mike Searls: And it all works out in the end. I've been through a lot worse than tariffs in this toy business.
[00:22:28] Azhelle Wade: Like what? What was the worst thing you went through?
[00:22:31] Mike Searls: How about 9/11? How about COVID? Those were incredibly difficult challenges because they were things completely out of your control. Tariffs are out of our control, but it doesn't mean that the ships aren't going to sail.
[00:22:43] Mike Searls: It doesn't mean that we can't get the goods in. We just have to be smart. So I think what you're going to see is a couple of things. I think you're going to see it passed along. I think you're going to see a rush of new products come to market because of it, because what's the best way to bury a price increase?
[00:23:01] Mike Searls: Drop the old product to relaunch and you--
[00:23:02] Azhelle Wade: Oh, very interesting. Yeah.
[00:23:05] Mike Searls: Get rid of that, get rid of that UPC number, get rid of that style number.
[00:23:07] Azhelle Wade: What do you mean?
[00:23:08] Mike Searls: Launch a new product. Here's the new Wham O product. Oh, the price is a little higher, but we added these features. So you're going to have to get creative on relaunching. So instead of 40 percent of the products turning over a year, maybe it's 50, 60%.
[00:23:22] Mike Searls: So over time, it gets buried in the ashes, but it's a challenge at least. I can get the goods during COVID. I couldn't get a ship.
[00:23:31] Azhelle Wade: Right, yeah.
[00:23:32] Mike Searls: My stores were closed. Customers were out of business. That was rough. 9/11 was end of the world. I watched as the buildings came down. It was during Toy Fair.
[00:23:41] Azhelle Wade: Was it?
[00:23:42] Mike Searls: It was during, well, when Toy Fair was in the toy building,
[00:23:45] Azhelle Wade: Oh wow.
[00:23:46] Mike Searls: I saw the first plane as I was pulling up to the toy building and we're all in the building as the buildings came down and we're building stretchers across the street in the park next to the toy building, which never got used and we had to walk home.
[00:24:01] Mike Searls: I was stuck there for a week, finally had to rent a car and drive home. That was devastating in the toy business because the entire industry shut off. And everybody was frozen. So we've been through a lot. At least tariffs is something that's a financial challenge. It is not a structural challenge, that’s the difference.
[00:24:20] Azhelle Wade: Mm. Well said. Well said. That's so great. So you mentioned I'd like to shift over to our second focus in the conversation to adapting to market changes because this fits so well with that. So you mentioned in one of your LinkedIn posts that 60 percent of people in the toy industry, based on your conversations at Toy Fair, seem to be betting on a government rollback.
[00:24:42] Azhelle Wade: So them just rolling back on this whole tariff thing overall. What do you think makes them so optimistic about that?
[00:24:48] Mike Searls: I think because the precedence with Mexico and Canada, and I also think it's wishful thinking.
[00:24:54] Azhelle Wade: If we believe it as a collective, it will come true.
[00:24:56] Mike Searls: maybe, you know, cause here's the reality. Here's what I've seen over the last, 60 days. Talk. Everybody's talking and strategizing and nobody's doing anything.
[00:25:05] Mike Searls: Very few companies have announced, what are you doing? We were one of the first to announce, here's our go forward plan. And maybe we were early. I don't know, but it seems like still even at Toy Fair, everybody doesn't know what to do. So here's, I think there's just a lot of talk and I think it's a lot of hopefulness and nobody knows.
[00:25:24] Mike Searls: Nobody knows. We don't know what's going to happen. So it's hopeful thinking.
[00:25:27] Azhelle Wade: You mentioned that you didn’t believe that the tariffs were to get production into the U.S. Personally, what do you just think that’s there for then? Just to move it away from China cause they don’t have as much power.
[00:25:37] Mike Searls: I don’t wanna wanna get political --
[00:25:38] Azhelle Wade: Oh you don’t wanna get --
[00:25:40] Mike Searls: But I will.
[00:25:40] Mike Searls: So here's what you gotta watch. Here's what you gotta watch. A man by the name of Peter Navarro. Watch Trump in the meetings. Who's the guy on his right, Peter Navarro, read Peter Navarro's book called Death by --
[00:25:52] Mike Searls: China. That's the playbook now, you know, take some Pepto Bismol when you drink, when you read that book it'll upset you, but I think if you look at what Peter Navarro stands for and what Death by China talks about, that's what we're seeing rolled out. I think it doesn't have to do with bringing production over.
[00:26:08] Mike Searls: I think it's all about something else.
[00:26:12] Azhelle Wade: How do you personally prepare for uncertainty in the toy market? Like, I'm actually wondering now if 9/11 triggered this ability to respond quickly or started you thinking like we have to be prepared for the unknown and then COVID was like your second test and you're like, I got this and now, I mean, as you're saying, you're like, it's going to be fine.
[00:26:32] Azhelle Wade: We already have a plan. So how do you personally prepare for things like uncertain financial changes in the toy market?
[00:26:39] Mike Searls: I'll take you back to the market crash of 1987.
[00:26:43] Azhelle Wade: Oh, wow.
[00:26:44] Mike Searls: I was a young stockbroker.
[00:26:46] Azhelle Wade: Wait, you were a stock broker?
[00:26:48] Mike Searls: Yeah, I was a young, young stockbroker trying to make my way as a stockbroker. And I was new and I started in 1986. 1987 was the major market crash. And I remember at the time being a new broker, I'm trying to grow my business, trying to get clients.
[00:27:04] Mike Searls: Right. And it was really hard. But once the crash hit, here's what I noticed. All the stockbrokers were hiding under their desks. They did not want to talk to their clients because the market was down and everybody was like, my portfolio is down. What's going on? They didn't want to talk to them. They were hiding.
[00:27:20] Mike Searls: So what I learned, I need to step up, take market share. And I did, I grew my business dramatically in 1987 because I would talk to the people and nobody else would. And so they became my clients, not theirs. Fast forward to 2025, we're going to take market share. We're going to be aggressive. We're going to bring more product.
[00:27:39] Mike Searls: We're going to take that market share. Other people's indecision becomes our opportunity. So every time there is a problem in the market, we lean into it and try to take market share. So that's what we're going to do. So we're going to try to, that's what we're gonna try
[00:27:53] Azhelle Wade: That’s what you’re gonna do. No, I like that attitude. I love that. Okay, this is gonna be the most controversial episode in a while on this podcast.
[00:28:01] Mike Searls: Let's see. We touched on politics. I'll leave that one.
[00:28:03] Azhelle Wade: Oh my gosh. So, all right. And the next one's talking about New York Toy Fair. You are one of very few people who is willing to hint that New York Toy Fair is somewhat on life support.
[00:28:15] Azhelle Wade: But still valuable. What do you see as a future of toy trade shows in the industry?
[00:28:21] Mike Searls: This is just me. I haven't heard anybody else say this, but what I experienced was it feels like it's becoming a specialty show. So it was really good. So back in the day, it used to be a mass market show. We'd see, you know, Walmart and Target and all the majors and we go back to the days of Kmart and all those, KB and everybody else, Toys R Us.
[00:28:41] Mike Searls: It was a big show for all of them. Today, because of the way the marketplace has changed, it feels like it's become more key account and specialty. And it's really good for that. We walked into this show this year Internally saying, if the show was good, we'll be back. If not, we're done.
[00:28:59] Azhelle Wade: How, in defining, defining good by ROI.
[00:29:01] Mike Searls: Return on investment dollars. Dollars, not necessarily written at the show, but dollars you can see because of the show because it led to other things. So the show will easily pay for itself for us. So we'll be back next year. Bigger, better than ever.
[00:29:17] Azhelle Wade: Bigger? So it paid for itself and gave you marketing money. Okay.
[00:29:20] Mike Searls: Oh yeah it's good, but we're going, we're probably going to take a little different approach next year and run it a little bit differently.
[00:29:29] Mike Searls: So, we'll see what happens, but I'm still a believer in Toy Fair. I think that wherever your buyers are, you got to be there, like, you just have to be there. I feel good about it. I feel good about Toy Fair, but it's different than it is.
[00:29:40] Azhelle Wade: So yeah, when it was more of a mass show, like, was it more closed off? Like, did you not showcase a lot of your products on the floor and you would have more private meetings or now that you feel like it's shifting specialty, did you feel like, Oh, I should have more stuff out? Like, what was it, what's the actual difference from it being more mass than being more specialty?
[00:29:57] Mike Searls: Yeah. So in the old days, it used to be in the toy building and we wouldn't even be on the floor like we didn't want to be on the floor. But now then it's kind of transitioned. So for us, I think what it's going to look like next year is going to be more of a hybrid where we'll have an open show for specialty and we'll have a closed section for the accounts because I did feel like we maybe missed out on some opportunities to sit down with people.
[00:30:20] Mike Searls: And some people wanted to sit down and roll up their sleeves and work. And we weren't really totally prepared for that. So I think for next year, it'll be this kind of this hybrid show for us.
[00:30:29] Azhelle Wade: Really interesting. And I also, can I ask you this question again? I asked this before we started recording. What percentage of your time is on scheduled official meetings and open people say they'll stop by? Let's see when they come.
[00:30:44] Mike Searls: I think we only had 30 or 40 scheduled meetings for the show. Which last year we had almost none. So it's odd. It's. But the scheduled meetings weren't with just the big accounts. They were also with some. Here's what we're finding is, at least in my company, we've got a lot of mid-tier accounts that are really leaning into us and wanting to do more development and do more bigger things with us.
[00:31:08] Mike Searls: Maybe that's just our life cycle too. But I just think the people that were there seemed like they really wanted to work. And it was half appointment or less than half appointment. It was A small amount appointment, but there was a lot of I'll stop by. I'll stop by and they all did.
[00:31:23] Mike Searls: But then there was a lot of also surprises. There was also a lot of buyers that told us they weren't coming that way.
[00:31:28] Azhelle Wade: Interesting. I wonder, so people were saying that this new time of Toy Fair this year was going to turn it into more of a marketing show and less of a buying show. But then with you saying that it became more specialty, that also aligns because for specialty, they're kind of getting ready for spring.
[00:31:42] Azhelle Wade: Like they're buying all year round versus mass that kind of buys two key times in the year. But I'm curious, like what's going to happen next year. Cause it's going back to February.
[00:31:51] Mike Searls: Yeah. I was really worried about this year because it followed so closely. For instance, Vegas and Toy Fest. I didn't see a ton of people from the West of the Mississippi. I didn't see a ton from the West. I think they, because we had exceptionally good shows in Vegas at Toy Fest and the Vegas showroom, Atlanta was booming.
[00:32:10] Mike Searls: Yeah, so I was a little worried that it was going to be really a soft show. And so we were pleasantly surprised, but it's one of those shows where if you just judge it by the number of the quantity of foot traffic, I would say. It was a disappointment. Quality of foot traffic was very good
[00:32:26] Azhelle Wade: Mm. Oh, that's a great statement.
[00:32:29] Mike Searls: Do you remember a couple of years ago that was all the Amazon resellers that were out on the show floor trying to, I don't, you maybe not, didn't see that, but we used to get, we used to get, yeah, 2020, yeah, 2023 and before we'd have a hundred people coming that just wanted to resell product on Amazon. you had this artificial, like, Oh, we're busy. But those are folks that we couldn't do business with. So, this year, none of those were there.
[00:32:57] Azhelle Wade: That's so interesting.
[00:32:59] Mike Searls: So you weed out like that and you end up with good quality. So I felt it was a good show.
[00:33:04] Azhelle Wade: Oh, that's so interesting. I did have other people say that, oh, the show feels so empty, but those people that said that were more people that were walking the show, they weren't selling product there, but then quality over quantity. That's a great marketing message. They could probably lean into. That's good.
[00:33:18] Mike Searls: It felt to me like maybe it was just me, but it felt like we were upstairs. It felt to me like downstairs was busier.
[00:33:24] Azhelle Wade: Yeah, I agree. But I think that could happen just because people upstairs tend to have appointments. Like you, when you go upstairs, usually you're going to a place and you're planning, you're staying there. Like I went into a booth and I was like, it's been 40 minutes. Like, when do I get to leave?
[00:33:36] Azhelle Wade: It's like, it takes a while to go through all the product.
[00:33:39] Mike Searls: That's their strategy. As long as they can keep you in their booth. You're not going to be somebody else's booth.
[00:33:43] Azhelle Wade: True. Yeah, that's actually really true. I can't report on many many booths because I only went to Soview. What's one industry shift that you think people aren't talking about enough right now?
[00:33:54] Mike Searls: Gosh, they're probably talking about it too much. It's this ecom shift. It's just not going to go away. But I think people are underestimating the value of brick and mortar. I think.
[00:34:05] Mike Searls: So many people talk about e-com and their e-com strategy in there. But I think if you go back and look at how much business has done, I don't know what the stats are now, but what is it?
[00:34:13] Mike Searls: 80 percent is still done at brick and mortar. I think people it's massive. The toy industry is huge online but it's even bigger at brick and mortar. So I think that the e-com gets all the buzz. The dollars are still on brick and mortar.
[00:34:27] Azhelle Wade: I'm so curious about where e-com is going to go. Like, it's definitely convenient, but as everything has shifted online, I feel like people want to do something. in person. And what I find myself happening myself, when I'm going to order something that I care about the quality, I actually get hesitant going on Amazon and Target because they don't vet very well.
[00:34:47] Azhelle Wade: And it's from anyone and anywhere. So I get very like, I don't know, I guess I could order it from Amazon. And then I ended up returning it because the quality of what comes is not the same as what I could find in store. So yeah, I'm also very curious about how Ecom will evolve over the years.
[00:35:00] Mike Searls: If the statistics are right, 50% of toys are $20 or less.
[00:35:04] Azhelle Wade: Oh, and that doesn't work for e-com, right?
[00:35:06] Mike Searls: You can't make money $20 or less on e-comm, you used to. You used to it. Like last year it became around $15. Now it's closer to $20, is kind of that break-even point where you can eke out a profit, but it's tough. You really need to be at 30, 40 or more on e-com.
[00:35:24] Mike Searls: So I think there's a huge opportunity for e-com for that more impulse product, those 20 products. So for instance, e-com is really big on bundling. Retail should not be big on bundling.
[00:35:34] Azhelle Wade: Ah Yeah, yeah, interesting. That's great.
[00:35:38] Mike Searls: Sell them side by side, upsell, cross sell, downsell. That's great at brick and mortar, leave the bundling for e-com and I think that everybody can survive
[00:35:46] Azhelle Wade: Yeah, no, that's actually a great point, because then that gives retailers something special that you kind of doesn't have, and then they don't have to, that's great, yeah.
[00:35:52] Mike Searls: They can show a price point and people will bundle on their own and show in store, show a bundle. So our best is, you know, they used to, in the old days they used to call it basket. Like what's your basket? Have you ever heard that phrase before? Basket means of your brand, how many did mom buy?
[00:36:06] Mike Searls: Did she buy just one or did she buy three? And in the old days we used to have a basket of two point, You could measure two point two.
[00:36:12] Azhelle Wade: I've never heard this before.
[00:36:14] Mike Searls: Yeah. so I think that term is going to come back. I think it's going to go back to basket. Like can we create a portfolio of product for a brick and mortar retailer that has two, three, four SKUs?
[00:36:24] Mike Searls: So mom buys two, three, four. And creates a basket of product, creates your own bundle, if you will. And that way that retailer can stand out, be different, do something that can't be scanned on Amazon and still offer that value. So it's how they merchandise it, might become more and more important.
[00:36:42] Azhelle Wade: So do you create a basket by creating pro like individual products that work together or build off of each other? Or is it about creating a marketing dis, like a discount if you buy these three together?
[00:36:51] Mike Searls: Not so much the discount. I can't control that. Retailers should. I think retailers should. But for us, it's offering companion products that go together at various price points.
[00:37:00] Azhelle Wade: Got it. Got it. Got it. Okay, great. Oh, this has been incredible. We're already at our closing questions. And what a show. This is a great show.
[00:37:10] Azhelle Wade: All right, closing questions for you. What piece of advice do you wish more new toy entrepreneurs knew before they got started?
[00:37:19] Mike Searls: Oh, what do I wish they knew before they started out? You’re in this business for what's next. So as a toy entrepreneur, Our job is to live in the future, selling products that don't yet exist to people that don't want to buy them. So it better be really good. So you better have a great pipeline of product.
[00:37:37] Mike Searls: That's the answer. Once you sell a product to your customer, the next question they're going to have is what else you got?
[00:37:44] Azhelle Wade: Oh my god.
[00:37:44] Mike Searls: So you better have that coming. So it's always next. So the main thing to understand is you've got to have a pipeline of product coming through, if you're going to make it on one product, goodluck.
[00:37:54] Azhelle Wade: That's a great one. I always have students that are like, they'll show me a product and I'm like, Oh, this is really cool. And they're like, yeah, but you can also use it this way and that way. And I'm like, no, you present it one way and the next year you present the next version.
[00:38:06] Mike Searls: Three in one doesn't work very good in toys. It's better one is one and then do another one. So you don't want a toy that's this or it's that. And it's that. And those don't usually work. But having a pipeline of product is the-- I think it's the key that people need to know. It's not about an invention.
[00:38:22] Mike Searls: You know, when I watch a Shark Tank,
[00:38:24] Mike Searls: I always comment to my wife, that's a product. It's not a company. That's the difference. Are you trying to build a product? Or are you trying to create a company? And if you're trying to just create a product, that's a tough way to make a living. But if you're going to create a company, then you need to create a system of developing products.
[00:38:41] Mike Searls: And it needs to be a whole conveyor belt. It needs to be a process. You're creating a process, not just a toy
[00:38:48] Azhelle Wade: Oh, what a great quote. Thank you for that. And my final question, my favorite question to ask, what toy or game blew your mind as a kid?
[00:38:56] Mike Searls: I'm so old, I played with two rocks and a stick. That was about it,
[00:39:00] Mike Searls: but I would say Lincoln Logs and Army Men, and I combined the two. So, you know, that was the best, but yeah.
[00:39:06] Azhelle Wade: I loved Lincoln Logs. Yeah, Lincoln Logs, I remember. Yeah, those were great. Those were actually pretty cool. Yeah. Oh my gosh, Mike, this has been a great conversation. Thank you so much for sharing your insights on tariffs. We covered a lot how the 20 percent tariff is likely going to affect our consumers, that price has to get passed on somewhere and the tough decisions that businesses have to make during uncertain times like this.
[00:39:29] Azhelle Wade: Interestingly, we got into why bringing manufacturing to the U. S. isn't really the plan. We'll see about that. And then we also got an even an inside look at Toy Fair, like how it worked, why it worked, what's changing. And that was a really great tip for people as well. Where can people follow you to learn more about Thin Air Brands?
[00:39:48] Mike Searls: You can follow me on LinkedIn. I think it's Mike Searles, S E A R L E S, Mike Searles. Or thinairbrands.com. You can always catch us that way. But probably the easiest way is LinkedIn.
[00:39:57] Azhelle Wade: I will put the links to your LinkedIn and the Thin Air Brands website in the show notes. Thank you again so much for being here. Listener, if you love this podcast and you haven't already left a review, what are you waiting for? Your reviews keep me, an amazing guest like Mike, coming back week after week.
[00:40:14] Azhelle Wade: And every time a new interview comes in, I get notified on my phone. It puts a huge smile on my face. I show my husband, it's a whole thing. So please like this episode and leave a review wherever you're listening. As always, thank you so much for spending this time with me today. I know your time is valuable and that there are a ton of podcasts out there.
[00:40:31] Azhelle Wade: So it means the world to me that you tune into this one until next week. I'll see you later, Toy people.
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