This is the story of how the most promising toy company in Massachusetts went bankrupt, got purchased at auction by someone trying to save it — and then got sued by Lego.
Yes, I said toy company. In more than two decades of writing about startups for the Globe, I’m only aware of one maker of old-school physical toys — not video games or robots — that has raised millions of dollars in venture capital funding. That company, Oyo Sportstoys, was founded in 2011 by Tom Skripps, an engineer and entrepreneur who had worked in the medical equipment and recycling industries.
Oyo’s product: posable plastic minifigures, compatible with Lego’s brick toys, and customized to look like sports stars, from Tom Brady to Zdeno Chara. Skripps came up with the idea after attending a Red Sox game with his young son, who wanted a toy as a souvenir. But Fenway didn’t sell toys.
Skripps developed the idea for Oyo’s minifigures, and started to hash out an initial licensing deal with Major League Baseball, while he still had a day job designing surgical tables for hospitals. (His first investor was a surgeon at New England Baptist Hospital.) Oyo had already sold about 20,000 toys before Skripps decided to quit his day job at the end of 2011.
Things were off to a sizzling start. The company nailed down licensing agreements with other sports leagues to allow it to make hockey, football, and basketball toys. It set up a factory in Acton, buying its own machines to mold plastic parts. The logic was that making the product in the United States, rather than a lower-cost country, would enable it to be more nimble. For example, instead of making tens of thousands of Mookie Betts toys — and then seeing him get traded — it could make smaller quantities, and then quickly change the printing on his uniform when he started playing for a new team.
The company raised more than $14 million in funding, and grew to 120 employees. Its products could be found in independent toy stores, stadiums, Target, and Dick’s Sporting Goods.
Despite that success in the marketplace, Oyo was running into trouble behind the scenes. Skripps says 80 percent of the company’s distribution was through brick-and-mortar retailers. As those stores were battling Amazon, he says, they were reluctant to take on too much merchandise from Oyo; even though its products were selling well, they had lots of other stuff on their shelves that wasn’t.
Another issue was that the company was suffering from an identity crisis, says former Oyo executive Jeremy Shea. When investors put money in, they wanted Oyo to create games and digital media related to the physical toys. But the license deals Oyo had inked with the leagues “didn’t include digital media — just making toys,” Shea says. “We asked the leagues, ‘Could we build something that is free, but makes the physical product worth more,” and more fun to play with? “Their answer was, ‘You can do that, but it would require a license payment,’” Shea says.
Making toys in Massachusetts was also a financial challenge. “There are probably only a small number of products you can efficiently build in the US,” says Shea, “and injection-molded toys is not one of them. We were paying $13 to $15 an hour to people in manufacturing, and someone in Mexico is getting $1 or $2 an hour. The company thought ‘Made in USA’ would be worth something to the leagues and to the consumer — and it isn’t.” (Oyo later shifted manufacturing to China, and only did customization and finishing of products in the States.)
The investors replaced Skripps with a new CEO who lasted less than a year, and then in 2016 they sold the company back to Skripps. “We took on about $6 million in debt” as part of that transaction, Skripps says. It became tough for the company to keep up with the payments, and Skripps filed for Chapter 11 bankruptcy protection in the summer of 2017.
If that wasn’t bad enough, one of Oyo’s partners produced some toys and put them into stores without getting approval from the NFL and Major League Baseball. (Dallas Cowboys running back Ezekiel Elliott’s name was misspelled, among other problems, Skripps says.) The company had to yank baseball and football products from store shelves. “It just became a mess,” Skripps says. In 2018, Oyo was sold in a bankruptcy auction for $600,000.
Its new owner is David Solomont, a Brookline investor who in the 1980s and 1990s was a key player connected to CommonAngels — a prominent angel investing group — and the Massachusetts Software Association, a trade group. (Solomont himself filed for bankruptcy protection in 2009.) Solomont says that he acquired Oyo “to fix it” and “have toys for my grandkids.”
But there was not much evidence of the company getting fixed over the past year. The company’s NFL license lapsed at the end of the 2018-2019 football season, and has not been renewed. Paychecks for some employees stopped showing up regularly last spring. Many left. A handful who were still with the company in October arrived to work one day to find the office doors padlocked, says Shea. Around the same time, Lego sued the company in Connecticut, where Lego’s US headquarters are located, for violating its copyrights and trademarks related to plastic minifigure toys. On New Year’s Eve of last year, Oyo lost a lawsuit over unpaid wages and was ordered to pay $171,301 to Daryl McKay, Oyo’s former head of sales.
Solomont didn’t want to comment on the Lego lawsuit, but suffice to say it will not be cheap to fight it. The Lego Group’s general counsel, Scott Slifka, sent a statement by e-mail that Oyo’s minifigures “are substantially similar to, and likely cause confusion with, genuine Lego Minifigures,” and that the company “considers its intellectual property rights, including the world-famous minifigures, among its most valuable assets.”
Skripps, who is no longer involved with Oyo, says, “I think what Lego is doing is wrong,” and that Oyo’s figures are different enough in shape and geometry from Lego’s to not cause confusion for consumers. Skripps speculates that Lego may want to get into the sports figures market — something it has dabbled in in the past.
Solomont tells me his plan is to shift the company’s product line more toward products that don’t require it to pay licensing fees to the leagues — like customized minifigures made for a Little League team, or a line of ex-presidents. (At a coffee meeting this month, he pulled out a Richard Nixon Oyo minifigure.) While Oyo today doesn’t have any employees, Solomont says he is raising money to relaunch the company, and has lined up two star hires with toy industry and manufacturing experience.
“I think this is a great $20 million-to-$30 million-a-year business,” Solomont says. “I can imagine selling these figures in vending machines at airports,” he says, and through pop-up kiosks in malls.
But right now, if you go to the Oyo website and try to make a purchase, you can enter your address and payment information, click “buy,” and receive an e-mail confirmation promising shipping in a few business days. But no toy will arrive.
“The consumers want the product,” says McKay, the former head of sales. (He is still trying to collect the salary he is owed from the company.) “They just really love the product. It makes me very sad where we are at the moment.”
Hopefully, McKay says, this is not the end of the Oyo story.