Barbie and California’s Toy Empire: How Mattel Made Kids’ Toys an Economic Force in the State

Garages play a major role in the history of California innovation, or at least in the mythology of it. Hewlett-Packard, one of the original Silicon Valley tech firms, started life in a Palo Alto garage. That was in 1938. Four decades later, two guys named Steve built the earliest version of the Apple personal computer in a garage, or so the legend goes. 

Mattel dominates the state’s toy industry, as the fourth-largest toymaker in the world. But according to the Toy Association, about 97 percent of California toy companies qualify as small businesses.

In between those two famous garage breakthroughs another iconic company got its start in a California garage located in an industrial district in the southern reaches of Los Angeles. That’s where Elliot Handler and wife Ruth Handler, together with the couple’s friend Harold “Matt” Matson, started a small business they named by splicing Matt’s name together with Elliot’s. They told Ruth that they couldn’t fit her name in there anywhere, so “Mattel” it became.

The company started out from the garage making picture frames, and used the leftover scraps from the frames to put together miniature furniture for doll houses. When the doll furniture took off in sales, they knew they had something—toys.

Toys Put Billions in State Coffers

Today, Mattel still ranks as the largest toy maker in California, a state that has seen an influx of toy companies in the intervening eight decades, to the point where, according to the site Global Toy News, the region near Los Angeles International Airport is gaining a reputation as “the Silicon Valley of toys.”

The most recent numbers on the California toy industry’s economic impact available from the industry trade group the Toy Association date from 2015, but even those are impressive. The group estimated that the business of making toys supported 76,789 jobs paying $5.53 billion in wages and contributing $2.46 billion in tax revenue to state coffers.

In an era when women did not typically rise to the CEO level, Ruth Handler not only guided Mattel to annual sales over $100 million by 1960, she almost single-handedly created the mass market for children’s toys.

Mattel dominates the state’s toy industry, as the fourth-largest toymaker in the world (Danish company Lego ranks first, followed by Japan’s Bandai and New York-based Fisher-Price). But according to the Toy Association, about 97 percent of California toy companies qualify as small businesses.

Nationwide, the available numbers are more current, with the Toy Association recording $29.2 billion in 2022 toy sales—growth of 33 percent since 2019, the final year prior to the COVID-19 pandemic.

How did toymaking become such a significant industry helping to power the state’s economy? It all started with the California creation of one of the most successful, iconic and controversial toys in history.

The Woman Who Built California’s Toy Industry

Just two years after founding the company, then called Mattel Creations, the Handlers and Matson had their first real hit toy product—the Uke-a-Doodle. Basically a plastic ukulele for kids, the toy was an instant hit at the 1947 New York City Toy Fair, and became the first in a long line of toy musical instruments that Mattel would produce over the decades.

Soon after that, Matson bowed out of the fledgling company, suffering from health setbacks. The Handlers paid him for his shares in the then-private company, but more importantly Matson’s departure cleared Ruth Handler to take over as Mattel CEO, while her husband focused on coming up with ideas and designs for new toys.

In the 1950s he became fixated on the idea of creating a doll for girls that could actually talk. The idea eventually hit the market in 1963 as “Chatty Cathy.” When you pulled a string dangling from the little doll’s back, it activated a miniature record player inside “Cathy,” allowing the toy to “speak” 18 phrases.

In an era when women did not typically rise to the CEO level in American corporations, Ruth Handler not only guided Mattel to annual sales over $100 million by 1960—that would be more than a billion dollars in 2023 money—she almost single-handedly created the mass market for children's toys by a single, daring (at the time) innovation—television advertising.

Ruth Handler Bets Big on a Burp Gun

In 1955 when the entire net worth of Mattel was $500,000 against annual sales of just $6 million she bet the entire company on a purchase of advertising on a new TV show for kids called The Mickey Mouse Club. A California product itself, the hourlong daily show was filmed not far from Mattel’s south Los Angeles headquarters, on Stage 1 at Disney Studios in Burbank. In 2013 that stage was renamed the Annette Funicello Stage, in remembrance of the original Mickey Mouse Club’s most publicly beloved “Mouseketeer,” who died earlier that year.

But six decades earlier, The Mickey Mouse Club was brand new and untested, an uncertain proposition at best for advertisers—especially when the accepted wisdom in the toy business was that it was a waste of money to advertise toys at all, except during the Christmas season. In fact, no one had ever done it. But Ruth Handler took a gamble on 15 minutes of Mickey Mouse Club advertising not just one time, but in each daily hour, ads that announced the Mattel name to the nation’s children in no uncertain terms.

Ruth Handler revolutionized the way toys were marketed. Previously, parents were the industry’s main targets; by advertising directly to children, she turned kids themselves into consumers.

The specific product that Ruth chose to plug to America’s young Mickey Mouse fans was the Thunder Burp Machine Gun. This plaything was a realistic-looking plastic machine gun that operated without explosive caps or batteries. But when the lucky lad who owned it squeezed the trigger, it made an extremely loud, realistic rat-a-tat sound using something called a “Vibrasonic Chamber.” In those days, parents had few reservations about indoctrinating their kids in the use of firearms. Toy guns were a staple of the market.

It took all of six days on The Mickey Mouse Club to make the burp gun a runaway hit. By diving headlong into TV advertising, Ruth revolutionized the way toys were marketed. Previously, parents were considered the industry’s main targets; by advertising directly to children, she turned the kids themselves into consumers.

By 1962, Mattel’s ad budget had expanded more than tenfold, to $5.7 million, and 60 years after that Mattel spent $534 million on worldwide advertising.

The World’s Most Famous California Girl

While her husband obsessively worked to perfect Chatty Cathy, Ruth had an idea of her own for a new doll—and as was characteristic of her iconoclastic approach, this idea had never been done before in the American toy business. The idea came when she saw her daughter, Barbara, playing with paper dolls that were designed to represent full-grown women.

The accepted wisdom in the industry was that little girls wanted to play “Mommy,” so the only dolls they’d be interested in were babies. Ruth believed that little girls might also like to envision themselves all grown up, in some role other than mothering an infant. They needed a doll that would allow them to “dream dreams of the future,” she said.

There was one feature that waved a big red flag in front of her husband and other male Mattel executives. Barbie had breasts.

On a trip to Sweden, she spotted a German-made doll sold under the name Bild-Lilli. The Lilli doll was so recognizably adult that it was marketed as a kind of sex novelty item. Ruth Handler knew she had her concept—a fully-formed adult doll that would be marketed to, and played with, by children.

She rechristened the German doll after her own daughter—Barbie. But there was one feature that waved a big red flag in front of her husband and other male Mattel executives.

Barbie had breasts. Indeed, rather large ones. 

“My whole philosophy of Barbie was that through the doll, the little girl could be anything she wanted to be. Barbie always represented the fact that a woman has choices.”

RUTH HANDLER

Once again, Ruth came up against the industry’s conventional wisdom, which held that “no mother is ever going to buy her daughter a doll with breasts,” as Elliot Handler told his CEO wife. To make her case, Ruth commissioned a study by psychologist Ernest Dichter, head of a marketing group called the Institute of Motivational Research. Dichter found that while some parents were initially put off by Barbie’s proportions, the little girls—who were Mattel’s targeted consumers after all—were not. In fact, Dichter found in his research, Barbie’s breasts were not big enough.

The Barbie Revolution

Barbie hit the world toy market in 1959 and was an immediate smash, moving 350,000 dolls off toy store shelves in its first year. Later, when the 1950s became the ’60s and then the ’70s, the burgeoning feminist movement pointed to Barbie and her unrealistic proportions as an example of how women were reduced to sex objects by popular culture. Leading women’s activists condemned the toy as anti-feminist, and as setting dangerously unrealistic body-image expectations for young girls.

They had a point. Experts calculated that if the Barbie doll were a real, 5-foot-6 female human being, her measurements would be a stunning 39-21-33, which according to one expert would occur naturally in no more than one of every 100,000 women. Ruth Handler remained undeterred. In her 1994 autobiography, Dream Doll: The Ruth Handler Story, she wrote, “My whole philosophy of Barbie was that through the doll, the little girl could be anything she wanted to be. Barbie always represented the fact that a woman has choices.”

Barbie’s eye-popping proportions, in reality, were born not out of misogyny, but engineering. Barbie was meant to be dressed in human-style clothes, but the Mattel designers found that adding four layers of clothing made Barbie’s narrow waist awkwardly wider than her hips. To allow the scaled-down garments to drape elegantly, the doll needed to a considerably more buxom figure than most real-life women.

Mattel Vice President Jack Ryan claimed that it was he, not Ruth Handler, who invented Barbie, and that he was entitled to $24 million in royalties, as he asserted in a 1980 lawsuit.

There were other controversies surrounding Barbie, perhaps most notably her origin story. Greiner & Hausser, makers of the risque German doll that inspired Barbie, sued for copyright infringement. Mattel reached an out-of court-settlement in 1963, and then bought the intellectual property rights to Lilli the next year.

The German company went under in 1983, and then in 2001, the company’s court-appointed liquidator sued Mattel claiming that Greiner & Hausser was defrauded over the Lilli rights in 1964 and was owed millions in royalties from every sale of a Barbie doll ever since. But two years later, the United States 9th District Court of Appeals ruled in Mattel’s favor.

Mattel Vice President Jack Ryan also claimed that it was he, not Ruth Handler, who invented Barbie, and that he was entitled to $24 million in royalties, as he asserted in a 1980 lawsuit. Mattel, after a decade of legal battles, settled with Ryan for $10 million. 

Ryan’s daughter later claimed that Mattel had “blacklisted” her father because he was an inveterate swinger who married five times—including once to Hungarian former beauty queen turned socialite Zsa Zsa Gabor (married nine times herself)—and was infamous for hosting sex orgies at his lavish home, an ersatz castle in Bel Air. Ryan also drank heavily, used drugs, and once held his own daughter hostage at gunpoint in the “castle.”

Ryan’s bizarre life, which ended in his 1991 suicide, didn’t mesh with Mattel’s kid-friendly image, causing the company to “blacklist” her father, Ryan’s daughter (not the one he held hostage) alleged in 2022.

Nor was Ruth herself free from scandal. In 1978 she was drummed out of the company after pleading no contest to charges of falsifying the company’s financial records to make Mattel look more profitable than it was, when it purchased the Ringling Brothers/Barnum and Bailey Circus in 1971. Elliot Handler also left Mattel due to the scandal.

Ruth died in 2002 at age 85. Elliot survived to the age of 95 before passing away in 2011. Barbie, of course, lives on.

After sales dipped by about 33 percent between 2011 and 2015, due largely to the various controversies over Barbie’s usual depiction as blue-eyed, blonde and white, a wide-ranging makeover saw Mattel introduce a whole line of Barbies in a wide variety of ethnicities and body types. In 2022, Barbie accounted for $1.5 billion in sales, more than one of every four dollars raked in by the California toy giant.