How Steve Glue made 4 Million giving the people what they wanted by beating the system; and how Pez ran him out of the business.
Dave Young:
Welcome to the Empire Builders Podcast, teaching business owners the not-so-secret techniques that took famous businesses from mom and pop to major brands. Stephen Semple is a marketing consultant, story collector and storyteller. I’m Stephen’s sidekick and business partner Dave Young. Before we get into today’s episode, a word from our sponsor, which is… Well, it’s us, but we’re highlighting ads we’ve written and produced for our clients. So here’s one of those.
[ASAP Commercial Doors Ad]
Dave Young:
Welcome back to the Empire Builders Podcast, Dave Young here with Stephen Semple and part two of the PEZ story. We’re going to talk about the PEZ collectibles, the whole frenzy. Stephen, I’m going to turn it over to you because I’m fascinated with this. I did just 30 seconds worth of Googling, and yeah, there are PEZ dispensers that are worth bucks out there.
Stephen Semple:
And the whole collectibles and the PEZ story is crazy. And as we know, the ’90s is when this whole idea of collectibles just took off. You had Swatch watches come onto the market, and in fact, stay tuned, we’re going to do an episode on Swatch. Swatch is probably going to end up becoming one of my favorite all time stories. So Swatch is going to be coming up. Because as I was going down this whole collectibles thing, it opens other doors. But you had Beanie Babies and you had Pokemon, and of course, PEZ. And PEZ is so popular that it ended up being on the cover of the Forbes magazine edition on collectibles. And people who collect PEZ dispensers call themselves PEZ heads. And one of the biggest people in the space is a guy whose name is Stephen Glew, who’s also known as the PEZ Outlaw.
Dave Young:
The Pez Outlaw.
Stephen Semple:
The PEZ Outlaw. You’re immediately intrigued, aren’t you?
Dave Young:
Oh, sure.
Stephen Semple:
And Steve Glew is a machine operator from Michigan, and he started doing collectibles as a side hustle. And he started by collecting cereal boxes. So he would go to the local recycling plant and clip the coupons and ask for the toy to send them, things like those secret decoder rings. Have you ever noticed that there’s a disclaimer now on those things that says only one per customer
Dave Young:
Because of him?
Stephen Semple:
It’s because of him. Because at a certain point, Kellogg’s notices that they’re sending tons of toys to this one address-
Dave Young:
To one guy.
Stephen Semple:
… in rural Michigan, to this one guy. He’s basically getting these things and then going to trade shows and selling them.
Dave Young:
Nice. That’s smart.
Stephen Semple:
That’s smart, hey.
Dave Young:
Yeah.
Stephen Semple:
It’s funny, I bought a book a little while ago that is somebody had put together a book of all of the ads and the products that we saw in comics.
Dave Young:
Oh, sure.
Stephen Semple:
And in fact, the reason why I had got the book is when I did my comic, I was looking for ideas for fun, made-up placement.
Dave Young:
My dad had a story about when he was a kid, he sent off for something and it was a model airplane, a Balsa model airplane, send a dollar or whatever. I think this had to be a joke. Basically, he got back a big block of balsa wood and a knife. There you go.
Stephen Semple:
There you go, that’s awesome. Yeah.
Dave Young:
Yeah, so Steve Glew.
Stephen Semple:
So we thank Steve Glew for the origin of the disclaimer of one per customer. So Steve’s got a problem. He needs to find new things to sell because this side hustle is about to disappear because he’s no longer able to scavenge these boxes and send in and get all these toys to sell. He’s clearing out the last of his inventory and he notices a nearby vendor selling Pez dispensers. And he’s selling these dispensers for like $25 a pop, and his head explodes because you can buy them for a buck. And he’s like, “How’s this possible?” But here’s where he notices, the value lies in the ones that are either discontinued or sold outside of the United States.
Dave Young:
Okay.
Stephen Semple:
Because remember, this is the time of before pre-Amazon selling crap. So if something’s available outside of the United States, it’s hard to get in the US.
Dave Young:
Before eBay and all of that.
Stephen Semple:
Yes, it’s before all of that. So Steve figures out that the plants in the US make the dispensers for the US market, and the plants in Europe make the stuff for the Europe market, and the plants in Asia make the stuff for the Asia market. And there’s one in Slovenia. So Steve travels to Slovenia with duffel bags of cash. He mines the factory. And remember, this is 1999. This is Cold War Europe.
Dave Young:
Is he the guy that ruins traveling with more than $10,000 as well? Did he ruin everything?
Stephen Semple:
No. I think from the research I saw there was still limits on cash and he would literally be just a dollar underneath what it was.
Dave Young:
Okay.
Stephen Semple:
And he finds the factory and he convinces the guards to let him in. He shows up unannounced with these bags full of cash, convinces the guards to let them in and convinces them to sell him a bunch of PEZ dispensers.
Dave Young:
At wholesale, no, he’s not going out and finding the stores.
Stephen Semple:
No.
Dave Young:
Yeah, yeah.
Stephen Semple:
Loads up the duffel bags full of PEZ dispensers and heads home. Now here’s the other funny thing. There’s another loophole he exploits.
Dave Young:
Stay tuned. We’re going to wrap up this story and tell you how to apply this lesson to your business right after this.
[Empire Builders Ad]
Dave Young:
Let’s pick up our story where we left off, and trust me, you haven’t missed a thing.
Stephen Semple:
Now, here’s the other funny thing. There’s another loophole he exploits. Because bringing stuff into the United States, it’s not considered importing if it’s not a registered as a trademark item in the United States. And these weren’t registered as trademarked, so therefore they let him through.
Dave Young:
Wow.
Stephen Semple:
Now, this was at the time, I’m sure it’s different today. So for the next decade, he travels back and forth like 70 times.
Dave Young:
So he’s building up frequent flyer miles. Dude, he’s working it.
Stephen Semple:
He makes $4 million doing this. To put in perspective, at the time the Pez is an $18 million market in the United States, and he’s making 4 million bringing these Pez dispensers in.
Dave Young:
That’s hilarious.
Stephen Semple:
Isn’t that hilarious?
Dave Young:
And he’s probably having a ball.
Stephen Semple:
There’s a Netflix documentary on this.
Dave Young:
Okay.
Stephen Semple:
It’s pretty crazy. So the new Pez US President, Steve McWhinnie is not a fan of this.
Dave Young:
Sure.
Stephen Semple:
And he figures out what Steve’s doing, and he banned Steve from all factories. It’s like, “If anybody helps this guy out, you’re fired.”
Dave Young:
That’s funny.
Stephen Semple:
Isn’t that funny? Steve’s not done.
Dave Young:
No, no. Steve’s probably hiring people.
Stephen Semple:
Yeah, he’s not done, he hatches a new plan.
Dave Young:
Okay.
Stephen Semple:
He sets up a company to design and order his own dispensers, and he poses as a German who plans on selling them in Taiwan. So he comes up with some wild designs, black and white skull, creepy eyeball being held by a hand, things along that lines. And the orders 50,000 dispensers at five bucks a piece.
Dave Young:
Okay.
Stephen Semple:
But here’s the thing, Scott McWhinnie figures it out before shipping the orders, figures out what’s going on. Now, Scott is smart as well. And look, you could sue him. You could do all of these other things, but Scott decides to do something different. Before shipping, before filling Steve’s order, Scott copies all of them and starts selling them themselves as Pez dispensers. So when Steve gets the order, he suddenly realizes all the designs have been completely copied and released by Pez-
Dave Young:
Before.
Stephen Semple:
… before him. So what’s his dispensers worth? Nothing. He drops the price, Pez drops the price.
Dave Young:
Oh, man.
Stephen Semple:
So they basically just work him out of the business. But for Pez, all of a sudden Pez is selling these crazy designs and they go, “Wait a minute. There is this whole collector culture,” And they decide to embrace the collector culture instead of fighting it.
Dave Young:
Thank you, Steve, right.
Stephen Semple:
But I mean, what a crazy story. This whole idea of looking at it and going, “I’m going to take a duffel bag full of cash over to Slovenia, go to a factory, buy these dispensers, bring them back to the US and basically sell them at these trade shows.” And you do that 70 times back and forth so much, you make $4 million. He bought a house, put his kids through college, like crazy, right?
Dave Young:
Yeah. Pez looks at him like he’s some kind of arch enemy. He’s actually helping them. Yeah.
Stephen Semple:
Yeah. It is too bad that they drove him out of business. But what I also admire is actually the way they went about doing it. They could have done the whole legal lawyer thing. Instead they beat him at his own game.
Dave Young:
Just get down in the trenches with him.
Stephen Semple:
As much as I still would’ve liked to have had Steve win, I got to admire the way they went about doing it.
Dave Young:
Sure.
Stephen Semple:
Like, “Okay. You want to play this game? We’ll play.” I just felt like we needed to just talk a little bit about Steve, the Pez Outlaw.
Dave Young:
I’m going to have to find that now and watch it.
Stephen Semple:
Yes. And even how he started. This whole idea of finding cereal boxes and getting the toys and going to-
Dave Young:
Yeah, he’s just out hustling.
Stephen Semple:
He’s just out hustling. Yeah.
Dave Young:
Amazing.
Stephen Semple:
It is amazing. And I thought Steve Glew deserved his own separate recognition in the Empire Builders Podcast. So good for you, Steve.
Dave Young:
Yeah. All right, well thank you for sharing that story and go out and find a Pez dispenser if you can, and enjoy.
Stephen Semple:
Yes. Yeah, absolutely. And it is amazing how valuable some of them are, isn’t it?
Dave Young:
Yeah, it is. It is. All right, well we’ll talk to you on the next episode, Stephen. Can’t wait.
Stephen Semple:
All right. Thanks David.
Dave Young: Thanks for listening to the podcast. Please share us, Subscribe on your favorite podcast app and leave us a big fat juicy five star rating and review at Apple Podcasts. And if you’d like to schedule your own 90-minute empire building session, you can do it at Empirebuildingprogram.com.
