Mattel: Some (Re)Assembly Required

The big toymakers have a basic problem--they don't bother to come up with new toys anymore

Walk around the airy orange-and-yellow-hued loft of Rumpus Toys in New York City. Stick your hand down the throat of a plush Gus Gutz and remove his stuffed organs. Toy companies are supposed to be like this--creative places where adults dream up wacky stuff for kids. "I make the kinds of toys I love to play with," explains the 29-year-old founder, Laurence Schwarz, standing next to a showroom of Harry Hairballs, a cat whose stomach contains fish bones, slippers and hair balls. "We don't put this stuff through focus groups or watch kids play with it behind glass. This is from...

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