Toby Lenk

Chief Executive

eToys

Last year at this time, Toby Lenk was an entrepreneur with little more than an enticing, but untested, idea: that shoppers would prefer buying toys on the Internet rather than deal with the chaos of brick-and-mortar retail stores like Toys ‘R’ Us.

As Lenk’s Santa Monica-based firm, eToys, gears up for its second holiday shopping season, the only question is how much more successful it will be this time around.

In its initial year, eToys exceeded sales expectations by 80 percent. After almost a year of intensive brand building striking deals with key Internet portal sites like America Online Inc., Yahoo! Inc. and Excite! Inc. eToys is the preeminent retailer of toys on the Internet. And the Web-based firm is preparing to launch its first big off-line marketing push, purchasing ads in newspapers, magazines, radio and television.

“That’s going to take us to a completely different level,” says 36-year-old Lenk. “You can’t build a truly big retail brand solely by advertising online.”

Lenk, an ’87 Harvard MBA and former Walt Disney Co. executive who helped develop the entertainment giant’s theme parks, is not the only one who harbors such faith in eToys’ long-term brand potential. The firm has attracted more than $10 million in venture capital funding so far this year from Silicon Valley heavy hitters like Sequoia Capital, a founding investor in Yahoo!, and Highland Capital, an early investor in Lycos Inc.

That’s a far cry from just 16 months ago, when eToys was one of the promising but unproven Internet start-ups trying to find its legs in Bill Gross’ Pasadena-based Idealab! incubator.

Much of the success is credited to Lenk’s hard-driving personality and strategic savvy. “Toby is the prototypical entrepreneur,” says Tony Hung, vice president of DynaFund Ventures, a Torrance-based venture capital firm that has invested $3 million in eToys. “He really is a visionary who can get people behind him, rallying behind his vision. A big part of eToys’ success is the fact that Toby is the guy driving it.”

Last year, eToys had scant competition on the Web, but this time around, Toys ‘R’ Us has entered the fray with a small but growing online presence of its own.

Lenk is unfazed by the challenge. “I think we’re better,” he says. “We have a better site now, and it’s going to get even better in the near future. We’re going to be staying a couple of steps ahead we have to. Online is one of many things that they do. This is all we do.”