Beanie Babies: A Manufactured Bubble

In the late 1990s, small bean-filled stuffed animals became objects of genuine financial speculation. People bought them by the case, sealed the tags in plastic, and believed they were building retirement portfolios. Ty Warner engineered the frenzy with two levers: he limited distribution to small gift shops to fake exclusivity, and he periodically "retired" designs so collectors would rush to buy before they vanished. Retired Beanies traded for hundreds on eBay, with price guides and grading services to match. Then, in 1999, Warner retired the entire line, and the market simply froze.

The tell came earlier, when buyers stopped wanting the toys and started wanting the resale. The case hands founders a sharp diagnostic for one of the most dangerous things to misread: demand that looks real but is actually contingent on the next buyer. It sharpens how you'd segment your own customers by why they truly want the thing, without naming the exact signal that the music is about to stop.