Stephen Berman, president and chief operating officer of Malibu-based toy company Jakks Pacific Inc., started working in his teens and hasn't stopped. While attending college, he started a fitness company, Balanced Approach. That's when he found his calling as an entrepreneur and left school. Jack Friedman, now chief executive of Jakks, was a customer at one of his gyms. Berman helped him start video game company THQ Inc., then sold Balanced Approach and joined THQ to expand its business internationally. In 1995, Berman and Friedman both left THQ to co-found Jakks; the name comes from the children's game of jacks. Friedman, 69, handles the company's acquisitions, such as the recent takeover of San Diego-based costume company Disguise Inc. Berman, 44, supervises the day-to-day operations of the company. About 70 percent of the company's merchandise is licensed, including Cabbage Patch Kids, Care Bears and Hannah Montana toys. About 30 percent of the company's toys are designed in-house, including EyeClops Night Vision Infrared Stealth Goggles. The company also manufactures and sells stationery, recreational sports products and pet accessories. The Business Journal sat down with Berman at the company's offices on Pacific Coast Highway, with a stunning view of the ocean, to discuss his career, approach to work and life and his lack of sleep.

Question: How did you go from owning a fitness company to starting a toy
company?

Answer: I had started a company called Balanced Approach while I was in college. We opened up gyms, and did personal wellness and fitness programs for individuals and companies, and sold equipment. I met Jack Friedman in the late '80s when he was working out with one of my trainers. He was looking to start THQ at the time.

Q: Then what happened?

A: I introduced investment bankers to Jack, and that was how THQ started. Then I sold my fitness business, and I started THQ International with him. The video game business at the time was a very segmented business. But you know toys I know toys, my kids know toys, your grandparents know toys everyone gets it. We wanted to get into something that people of all ages truly understand. That's why we got back into the toy business after having gotten out of it to focus on video games at THQ.

Q: What was going through your mind then?

A: I thought about the toy industry as a happy industry. I think I would have been successful in any business because of my drive, whether it was a small business or big business, and I fell into toys and consumer products. When it's right, it's right. When it's right to get married, it's right to get married. It was a gut feeling that I just took and ran with. And I got here with perseverance, with drive.

Q: Where does that drive come from?

A: I've always done everything on my own. My first job was bagging groceries at age 15 or 16 at Lucky's Market in the Valley, and then I went from that to unloading the produce trucks at Food Basket while I was in college in Mission Beach in San Diego. I've never taken time off. I've always worked. I'm always working and always striving to do more. I definitely get it from both my parents, but a lot of it is internal. Having my three children Arianna, 8; Logan, 6; Sienna, 4 is a huge drive. They push me.

Q: Do they like having a dad in the toy business?

A: They're in heaven. They come in often, and they've invented and critiqued items. Because I watch TV with them, I get to see what they like, what one of them likes and what another doesn't like. So they're a great driver as well.

Q: What's your educational background?

A: I went to San Diego Mesa College, but I never finished. When I was in college, I wanted to do telecommunications and film, but I was just doing general education. So I stayed a couple of years, then got involved in my fitness business. It started growing and took off to where I decided I thought I should focus on it.

Q: How did you get involved in that?

A: I was personally passionate about fitness, and I also went to the National Academy of Sports Medicine in Chicago. I enjoyed fitness and wanted to learn more about it. After I started the business, I brought a partner in. Then I sold it about five years later.

Q: Was school just not for you?

A: I really enjoyed doing business. I think starting something really pushes and energizes me. When we started Jakks, we acquired 10 to 12 businesses, and that was exciting to me. There are a lot of ups and downs, it's not all blissful. But it's exciting to build something and go through the challenges that it takes, and if you're very fortunate and the time is correct, you get to have success with it as well.

Q: Where were you born?

A: Mind if I call my mom? (He calls and asks her.) Cedars of Lebanon Hospital in downtown Los Angeles. I've never paid attention to these things. Life goes so fast that sometimes you don't sit back to digest it. But when you have children, you need to. When you have people to educate, it becomes more important. I had no idea where I was born until I talked to you. Now you know I'm not joking when I say I don't remember details.

Q: Where do you live now?

A: Malibu.

Q: What did your parents do when you were growing up?

A: My father, Larry Berman, was in Wall Street and the film industry, and my mother, Patty Berman, worked at Saks. They supported me, whether I played soccer in the Valley or surfed in Malibu. As long as I kept my grades above average, they allowed me to do whatever I wanted, with some boundaries of course. And I would be disincentivized if things didn't go well.

Q: Was your dad entrepreneurial as well?

A: Yes, extremely. He was always thinking out of the box, and that's the way I do it here. If we were a normal toy company, we wouldn't be entering the pet or stationery business.

Q: What advice would you give to budding entrepreneurs?

A: I would say never stop pushing. If you have the choice, do something you love. That will allow you not to stop pushing.

Q: And in this economic environment?

A: Know your consumer, your business. In this economic turmoil, there are challenges every day, from retail to manufacturing to credit to consumers. You have to make sure you're as far ahead of your own industry as possible. And always look for new avenues to offset old avenues that may not be working as well.

Q: Do you have a favorite toy?

A: Right now, it's the company, Jakks. I get to play here every day. Growing up, the toy that resonates with me is the Big Wheel. I used to go down these big hills in Malibu on it as a kid.

Q: Are you involved in the selection of the toys Jakks makes?

A: Very. I'm not in the minutiae of it, but I am in the broad direction of where we're going with lines and price points. I don't pick a color it's more like, why this toy? Give me the reasons. I want to know the potential for profitability, for line extensions.

Q: Do you get an early start every day?

A: I don't sleep. I have a sleep disorder. I probably sleep two to three hours a night. So a typical day would be I'm up at 3:30 to 5 in the morning, and I read a bunch of newspapers then box or work out. If the waves are good, I'll go surfing, but that's more on the weekends than weekdays. I travel quite often. But even if I'm traveling, it's the same routine in the morning. Then I make a lot of overseas and East Coast phone calls, and I go through my calendar. If my kids are with me, I make them breakfast, get them dressed, spend a little time with them and then drop them off at school.

Q: What's the business day like?

A: I start with phone calls, executive meetings, but of course every day is different. At the end of the day, I go though any remaining issues and look for solutions. We try to never leave problems at the end of the day. Then I get on the phone with our managing director in Asia, which is a big part of our business. Then a business dinner, maybe. If I'm with my kids, I never go out.

Q: That's a long day; don't you get tired?

A: I take a half-hour nap every day that's a necessity. Sometimes I do get a little bit off-kilter, and when that happens I get a little more sleep. I think I love life so much, I don't want to sleep. I'm just wound up. I'm very spontaneous.

Q: What do you do outside of work?

A: I surf a lot; I box; I work out. But my kids are my passion. I love to hang out with them and learn from them. And work is a passion. It's all intertwined. I'm here more of my awake hours than I am anywhere else. I'm up late at night doing all the phone calls around the world. But it's something I love. Even though there's stress sometimes, it doesn't feel like work.

Q: What do you consider the turning point in your career?

A: When I left school to focus on business. Academics is a huge benefit for individuals, but I believe there's academics and learning on your own. I felt I had enough on the academic side and thought I could learn on my own. I'm a sponge for information, and I'm still learning today.

Q: Tell me about your travels.

A: Some of my favorite places are Italy, the Big Island of Hawaii, and Hong Kong. Italy is one of the most beautiful places in the world. Everyone is very warm, and it's a very romantic place. Hawaii is a true paradise, and the people are wonderful as well. My children love it there. And Hong Kong is like my home away from home. The people that work for me there have become like family. I'm in Hong Kong and China about four times a year.

Q: What was the worst day of your career?

A: The worst day of my career was 9/11. Jack and I were supposed to be going to New York on a United flight from LAX to New York that morning. As the flights left back east, the flights in L.A. were canceled. You never know what could have happened. I can't imagine a day that was worse in my career, or personally.

Q: What was the best day?

A: Going public approximately eight
months after we started the company was amazing. I felt extremely accomplished that people believed in us and that we had achieved our vision. But the best days are when I have my kids in the office with me. The company Jack and I founded isn't the typical company. It's not an investment bank or whatever. My kids can relate to their father's business. It's Hanukkah and Christmas every day for them.


STEPHEN BERMAN
Title: Co-founder, President and Chief Operating Officer
Company: Jakks Pacific Inc.
Born: 1964; Los Angeles
Education: Attended San Diego Mesa College and National Academy of Sports Medicine
Career Turning Point: Leaving college to start his own business
Most Influential People: His children
Personal: Lives in Malibu
Hobbies: Surfing, boxing, working out

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