Barbie and Ruth: The Story of the World's Most Famous Doll and the Woman Who Created Her

by Robin Gerber

  Barbie accounted for a huge part of the company’s success. In nine years the doll had brought in retail sales of more than half a billion dollars, which included sales of 103 million complete costume sets. Barbie now had a number of relatives and friends, including Christie, the “lustrous ingénue,” as Mattel described the African American doll. Barbie had, among her innumerable accessories, a house with a 3-D fireplace and a bedroom fit for a doll focused on fashion.

  It took a small army to turn out Barbie products. In Japan, ten thousand workers were employed to maintain inventory for Mattel’s World of Barbie, with its thirteen million fans. Elliot described the Barbie phenomenon as if it were an addiction. “You get hooked on one and you have to buy the other. Buy the doll and then you buy the clothes. I know a lot of parents hate us for this, but it’s going to be around a long time,” he told the New York Times in 1968.

  Ruth still roundly rejected criticism of Barbie as encouraging a sexist view of women or as harmful to young girls’ view of themselves. Barbie, Ruth told a reporter, “is a very educational product: the children learn color coordination, fashion design, good grooming, hair styling, good manners, and people relationships—they interrelate through social situations.” Ruth seemed to embody the lessons she described. “I had a nice figure,” she said. “I was well built, and I was proud of my breasts. I was proud of how I looked. I wore designer clothes, and they fit me tight and showed my body.” Her wardrobe was stylish and in fashion, and her hair, makeup, and nails were as perfect as Barbie’s. Unlike Ruth, of course, the new talking Barbie did not spout four-letter words or have an imperious side, and none of the doll’s many pursuits included running the biggest toy company in the world.

  Ruth’s young executives had enormous responsibilities, often outside the expertise that had gotten them hired. “She did not care about past experience,” Marvin Barab recalled. “She just put you where you’d be best. Management and foresight were what counted for her more than technical background, but she never hesitated to fire people who weren’t making it.” Sometimes Ruth’s tactics were oblique. Stan Taylor was an advertising manager she wanted out. One day he came to work to find that an advertising director had been named. “I don’t need any f-ing director over me,” he protested. Shortly thereafter, Taylor went on vacation. He did not come back.

  As Mattel grew, Ruth felt a responsibility to keep it growing, worried that her young tigers would leave if growth seemed to stall. “We had to believe that the business had to grow or we would die. We did not know how to slow down. Maybe we knew how but were unwilling to slow down.” The costs of research, development, and tooling, however, were increasing. Layers of middle management had added large year-round personnel costs, just as the company’s biggest moneymaker, Barbie, seemed to be waning in popularity. Ruth and Elliot agreed that toys would probably top out at about two hundred million dollars. The only way to keep growing was to diversify. It was a crucial decision that pulled the Handlers away from their core mission and the source of their success. Years later Ruth would say, “The thing that made Mattel great and permitted it to flourish as it did was its product, and I always trace Mattel through its product lines.” But to keep the young tigers from growling, Ruth spun away from her company’s center of gravity.

  As Ruth began to focus on diversifying, Elliot kept his focus where he had received the most reward, on toys. “When you see your displays used in toy fairs all over the world and thousands of people producing for you, it’s a little overwhelming,” he told a reporter. He was still bursting with ideas, his imaginative genius undiminished, and Ruth never lost her zeal for selling what Elliot designed. Their love story had not changed either.

  Elliot respected Ruth’s natural business gifts, leaving her to her own devices, knowing she would respect his opinion if he felt he had to weigh in. “They were lovely together,” Derek Gable remembered, and they did not need much beyond each other. They had few friends and did little socializing. “We are very simple people living a very simple personal life,” Ruth said in interviews. “Our travel and entertaining is related to business; we’re just not swingers…. A really good leader probably can’t be a really good social mixer. Our favorite guests are our children and grandchildren.” Ruth and Elliot had each other, their large Mosko and Handler clans, and Mattel, which was still a favored child. “They work too damn hard,” a colleague told the New York Times in 1968, “and they put business before everything else. They have well over $50 million in stock, yet they don’t seem to know how to enjoy it—they still worry over every penny.”

  Ruth drove to work in her El Dorado Cadillac and Elliot in his Rolls-Royce, but they still ate in the company dining room when they could, enjoying the kosher deli food and exchanging jokes. Ruth’s intensity had not faded, and Elliot was still laconic, with a wry sense of humor. Asked by a reporter about a doll that recited fifteen full-length nursery rhymes and an equal number of long conversations, he said, “It recites when you punch her or kick her in the kidney, but then we found through voice-testing, the kids would kick her in the head if she went on for the full seven minutes she was designed for.”

  In 1967 Elliot had asked Jack Ryan to make improvements to a miniature two-inch-long die-cast car called Matchbox, which was made by Lesney Products, a British company. By that time, Ryan had amassed nearly one thousand patents in his name, including the joint movements for Barbie and sophisticated devices for talking toys. He was no longer on the Mattel payroll, but earned a half-million dollars a year on his royalties. With the toy gun market dying down, Mattel needed its next hit and Ryan was holding it.

  Elliot and Ryan shared a love of cars. Ryan kept several customized Mercedes in his garage. Elliot had set Ryan to his task after noticing that his grandson Todd was playing with a non-Mattel toy car. Elliot and Ruth had given their children only toys from the company, but Todd, just three years old, loved the Matchbox cars. He’d say, “Papa car!” when Elliot walked into the room, and push the little toy around. That was all the incentive Elliot needed. Bringing one of the cars to the office, he said to Ryan, “Look at this. It’s crazy. The wheels are molded right on the car. I want them to spin. See what you can do.”

  Three hours later Ryan stood in front of Elliot and put the retrofitted car on his desk. Elliot cleared a path across the desktop and watched expectantly as Ryan gave the car a hard push. It zipped across the surface as if a tiny accelerator had been pressed to the floor. “My God, those are hot wheels,” Elliot said. He still spoke of the moment with childlike glee four decades later.

  As the new little cars moved through the planning process, there was resistance. The marketing department was concerned that Hot Wheels were overpriced compared to Matchbox. Elliot thought they were wrong, insisting that sales would materialize despite the price. Even Ruth had her doubts, but she would not stand in Elliot’s way. Then marketing refused to generate a sales forecast large enough to justify making the car. Josh Denham recalled Elliot’s response: “Just raise the quota anyway.” In a company built on razor-sharp forecasting, Elliot’s command was out of the ordinary, but three million Hot Wheels went into production.

  Two months later, the head of sales, Herb Holland, presented the toy to the J. C. Penney representative, one of Mattel’s top accounts. As Elliot waited expectantly, the buyer said he liked it, without elaborating. “Well, how many will you buy?” Elliot pressed. “All three million and more if you have them,” the J. C. Penney rep replied. According to Denham, Elliot cast a look at the marketing staff that let them know he thought they were idiots.

  Sixteen customized cars scale-modeled with Mattel’s usual level of detail were made to look like the hottest cars of the time, including Mercury Cougars, Pontiac Firebirds, and Volkswagens. Mattel promised that the cars would “out-race, out-stunt and out-distance,” their die-cast competitors. To add to the play value, an elevated orange plastic track was designed, along with accessories like flags and a starting gate, so that cars could be rac
ed using the power of gravity. “The secret of their speed,” said an engineer, “is that we make the bearing diameters as small as possible—20/1,000ths of an inch.” The little cars flew down their tracks and flew even faster off store shelves. Hot Wheels were captivating and another example of Mattel entering a market with a toy that was better engineered, designed, and marketed than the competition. Hot Wheels generated twenty-five million dollars for Mattel in the first year. The cars would generate eighty-eight million dollars in their best year. That first season, other buyers, like J. C. Penney, were afraid they would not have enough inventory, so they overordered. At the time, Hot Wheels looked like another dream toy for Mattel.

  Worried over both the pace of growth and sustaining it, Ruth and Elliot agreed on a crucial new hire in September 1967. Ruth recognized that she lacked the formal training in finance that a company as large as Mattel required. Her skill for forecasting did not translate into accounting acumen. She also knew that Mattel had to keep its stock price high to afford to buy new companies. Bob Mitchell, Ruth’s personnel manager, suggested a man at Litton Industries, the huge electronics company, who seemed perfect for the job.

  Seymour Rosenberg was a LIDO, a Litton Industries dropout, as former executives of the company were called. Litton had recently experienced an unusually high turnover of top people. Rosenberg was part of a group of four who left in the fall of 1967. They took large stock options and a hunger for more challenge, opportunity, and independence than Litton offered. After Rosenberg arrived at Mattel, he told Josh Denham, “I was the brains behind the acquisition side of Litton, but I did not get the credit.”

  Litton was talked about on Wall Street as the “daddy of conglomerates,” a company made rich through related but autonomous divisions and aggressive acquisitions. Divisions were meant to allow managers to be entrepreneurial. Central management was lean and focused on providing support services, and acting as counselor and critic. Litton grew into a $1.5 billion company with four large divisions and a continued focus on acquisition. Reasoning that diversifying through acquisitions was the only way to grow, Ruth and Elliot agreed on hiring Rosenberg, who presumably would bring with him what the Wall Street Journal called “Litton magic.” They did not know that the magic was fading. Rosenberg had left Litton at the right time. In the first quarter of 1968, the company would post its first decline in profits in fourteen years.

  Rosenberg had a reputation as a financial genius who wrangled many of Litton’s best-performing acquisitions, including Royal Typewriter. He was a confidant of Roy Ash, the company president. “Litton was the wonder company of Los Angeles,” Ruth said. “Rosenberg was immediately regarded as a savior. He had all the financial and Wall Street experience.” A brash, shrewd former patent attorney who had once worked for Howard Hughes, Rosenberg was so admired by Wall Street that Mattel’s stock ticked up several points on news of his move.

  A week or so after he arrived, Ruth went to Rosenberg’s office to discuss some financial and accounting matters. She sat down and talked for about fifteen minutes, suggesting the people he should speak to about certain items. She did not know much about the personal side of this chubby elfin man with the Cheshire cat grin. She had heard that his wife was severely handicapped by polio. Word had also spread around the building that he liked flirting with the secretaries. “He used to crawl under our desks,” said Pat Schauer, “and we all were just saying, ‘I don’t think so,’ to his advances.” As Ruth talked she noticed that Rosenberg was not taking notes. Suddenly he said to her, “Ruth, you won’t do.” Stunned, she said, “I beg your pardon, Seymour?” and he repeated, “You won’t do. You’re a woman, you’re Jewish, and your style is all wrong. If you were to deal with the investment community you wouldn’t create the right impression. To carry this company into the next stage of development you are simply the wrong person.” Ruth remembered being “too stunned to respond.” She got up and stumbled into her office, where she shut the door and cried. Elliot found her there, and she told him she wanted to fire Rosenberg, but he feared that such an abrupt move would hurt their stock price. Ruth agreed to let Rosenberg stay.

  Ruth’s story about the beginning of Rosenberg’s tenure has hints of exaggeration, if not an entirely false note. To distance herself from the fraud charges that came later, she may have revised history to appear the helpless victim. In her autobiography, she concludes the story of her confrontation with Rosenberg by saying, “He had to stay and that conclusion flooded me with dismay…and a feeling of complete powerlessness. In one stroke, a man had gained power over me in my own company by putting me down. Thereafter I steered clear of him and left him to operate more or less on his own. As it turned out, I should have taken my chances and fired him.” But her notes made after her criminal indictment for SEC fraud several years later seem closer to the truth. “We operated,” she wrote, “with an armed truce.”

  If Ruth was powerless from 1967 forward, she could not be complicit in the fraud that took place. But up to that point, Ruth’s reaction to male put-downs had been anything but tears and incapacity. Other than her private tears with Elliot over the initial reaction to Barbie at Toy Fair in 1959, neither she nor anyone who worked with her talks of Ruth being a person given to crying. Just the opposite. As her son, Ken, put it, “My mother was not very diplomatic always. She could be very tough.”

  Rosenberg also confronted Ruth near the height of her power. She had just taken the title of president, while giving Rosenberg and another executive the title she had abandoned: executive vice president. All evidence suggests she would have been more likely to fling a few expletives at Rosenberg and fire him on the spot or storm out than to stumble away.

  Ruth had ammunition to fire back at Rosenberg. She had been the point person for the due diligence that took the company public. She had dealt successfully with the investment community for years on many levels. She was Jewish but so was Rosenberg, so why would that be a problem? And she reveled in having made it “her way,” with her own style. Why would she collapse at the negative assessment of her style by a man she barely knew?

  While it appears true that Ruth disliked Rosenberg, it seems an exaggeration that she was totally cowed by him or that she left him completely to his own devices. In other notes, Ruth wrote that she “gradually warmed up” to Rosenberg and that there was mutual respect. “He put me before financial people and told me what to say and seemed satisfied that I was doing well enough.” There is no evidence that in the first years of Rosenberg’s tenure she distanced herself from him, his ideas, or her role as president.

  Rosenberg’s influence at Mattel was obvious. After he came on board, Mattel began even more aggressive acquisitions and Ruth began to create divisions. Rosenberg had brought the Litton way, and it was taking hold.

  In 1969 Ruth called a meeting of a six-member executive group and told them that she wanted to divisionalize the company. After several months of meetings a plan was developed that boiled Mattel operations down to four divisions. Each division ran like its own company, doing its own product planning, forecasting, marketing, and finances. Ruth now oversaw three toy divisions: Dolls, Wings and Wheels, and the catchall Toys. A fourth division, which Ruth had opposed, encompassed Standard Plastics, the New Jersey company that made Barbie carrying cases, and the general category of Games. Elliot insisted on this division, and he ran it with Art Spear. Ruth chose three of her most promising young tigers to head the other divisions, planning to go get the divisions operating in stages. “Divisions were meant to shift priorities so that everyone got a piece of the cake,” Josh Denham, who became a division head, remembered. “This was going to be Ruth’s thing.”

  As at Litton, there was a corporate umbrella of executives for finance, operations, and marketing, plus Ruth as president to service the divisions and provide oversight. The plan was supposed to phase in over three years. Ruth made it clear that initial plans for each division had to be run by her or one of the executive vice presidents, but the
re was resistance from the start. “Division managers were very possessive of the power I delegated to them,” Ruth said. Infighting and jealousy infected the plan.

  While the division plan had a shaky start, the company was still thriving. Hot Wheels was scorching the competition. The Wheels division head, Bernie Loomis, a large, effusive man bursting with marketing ideas, had pushed the bounds for the already popular toy.

  In a company of hard chargers, Loomis stood out. “On a scale of one to ten in terms of aggressive marketing,” remembered Josh Denham, “Bernie was an eighteen.” He was also stubborn and argumentative. He argued with Ruth over product testing the first day he met her at Toy Fair in 1961. She hired him anyway, never shying away from people who challenged her, but as the company grew, so did the tensions between them. Like Ruth, Loomis was never satisfied. He pushed buyers relentlessly. He pushed Carson/Roberts to expand television advertising well beyond ads. Why not a whole show devoted to a toy? The Hot Wheels–themed television show was born in 1969 on ABC.