
Toys 'R' Us Founder Charles Lazarus Dies at 94 - shahocean
https://www.bloomberg.com/news/articles/2018-03-22/charles-lazarus-who-founded-toys-r-us-retailer-dies-at-94
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dmix
What poor timing, oh well he had a great life and great accomplishments during
his prime.

> saddled with more than $5 billion in debt

Wow, I haven't yet followed the story of Toys R Us but that is a huge amount
of debt. I can't imagine what severe mismanagement happened at the company to
allow this. Must have had some ex-government workers managing finances (/s)...

> Since Lazarus stepped down as chief executive officer in 1994

Ah, so it was well after he left. It's sad to see your creation falter but it
wasn't his baby anymore. Many great companies end up failing after their
original founders leave. I'd be curious to read more about how they messed it
up so badly.

~~~
xigency
Two words: leveraged buyout. I'm not sure what purpose they serve other than
to create debt.

Working at a company that was acquired by a smaller fish with a $4 billion
loan, it made things painful when cuts were constantly made to pay interest on
debt. Somehow, the situation benefited the shareholders that signed off on the
deal.

~~~
jackfraser
Well yeah, it's pretty straightforward. Company A borrows $4 billion; it's
leveraged against the company they're going to buy; they buy Company B, paying
out the shareholders, and B merges into A and keeps the debt.

I'm having a struggle with whether this seems moral or not. B is saddled with
a big debt, and employees of company B may suffer as a result of this
(anything from losing bonuses or profit sharing opportunities, to losing
headcount, or having the very future of the company put into question). The
new owners also have to live with this situation, while the old owners skip
merrily away with their profits gleaned from the future work that will be done
to pay down the loan.

This seems negative, but has to be balanced with the fact that the
shareholders of company B are the owners of the company, and it is their
decision to do as they wish; if they're offered a certain sum for their
shares, it's their choice to take it. It's unfortunate that this comes with
blindness to the future impact of that action, but this may be a necessary or
at least presently contingent artifact of capitalism.

~~~
adventured
The morality of it depends on what you believe owners owe employees. There's
clearly no objective basis there, it's down to a given person's moral beliefs.
In my observation, you'll get a very different response to that from one
business owner to the next. Some owners/operators take it as an intense matter
of morality to safeguard their employees, others could care less and believe
they owe their employees between nothing and very little.

If you look at the top dozen economies in terms of prosperity or economic
growth, you'll find a lot of different cultural approaches to that
owner/operator-worker relationship, and they all have managed to generate
rather spectacular results. France, US, Germany, South Korea, Japan, China,
Sweden, Switzerland, Australia, Denmark - all have between slightly and very
different approaches.

It also takes you down a road of other similar questions.

Joe loads up on his credit cards and puts his family at risk. Should that be
illegal? Is it immoral? (arguably it's immoral)

Social contracts are a fascinating thing and they're essentially all-pervasive
across everything people do. We go out and drive on the roads with a sort of
social contract, that properly we're not going to act like maniacs and
endanger each other.

~~~
beojan
The difference here is that it's the acquired company that owes the debt, as
opposed to the acquiring company owing a debt with the acquired company as
collateral.

~~~
asmithmd1
Here is how it worked:

Bain Capital decides to acquire Toys-R-Us so they set-up NewToyCo and invest
$5B in it.

NewToyCo buys Toys-R-Us with that $5B and installs new managers at Toys-R-Us.
Since the invested cash was investment and not a loan, NewToyCo owns Toys-R-Us
free and clear

The new managers of Toys-R-Us get a $5B loan from banks secured by the assets
of Toys-R-Us and pay a one time $5B dividend to shareholders of NewToyCo.

If everything goes well and Toys-R-Us can service the loan, Bain owns Toys-R-
Us for free and sells it or takes it public. If things don't work out, they
collected huge management consulting fees for s few years. Bain ran this exact
same play on KB Toys with the same (bankruptcy) result.

~~~
ars
So it's basically the opposite of going public?

You use that $5B to pay all the original owners (shareholders), and now have
debt instead.

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jordanmoconnor
Just realized the phonetic connection between Lazarus and Toys 'R' Us.

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swalsh
My son just had his birthday, we took him there and gave him a $20 (we got him
a few other things, but we wanted to teach him about money) and let him choose
how to spend it.

You could do that online, but when you get to run around the store looking at
the toys, it's clearly more fun for him.

There are a few bespoke toy stores around me, but Toys R Us is his favorite.

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csours
I can't even imagine how heartbreaking this would be.

~~~
aphextron
All in a day’s work for Bain Capital.

~~~
jjeaff
They have more wins than losses. And that's saying something, considering they
only take on highly distresses companies.

~~~
jacobolus
Where 'win' means they cut quality to shit, sell off assets, fire a bunch of
people and hire the cheapest contractors to do the work, everyone good leaves,
and the company reputation is forever ruined, ... but Bain comes out ahead.
And 'loss' means, well, pretty much the same thing.

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dugluak
I admired Toys R Us. It was a complete shock and utter disbelief when I heard
the news of the bankruptcy. Because the way the stores are run it never felt
that way, although the question that how do they manage to do all this was
always there in the back of my mind. I wonder why, if they are so much in debt
and not doing well, nothing much has changed inside the store over years. Its
the same huge store with loads of stuff pouring out of every corner. I don't
know why they didn't consider cutting down costs at the store level.

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menacingly
I've been having an interesting loop of thought about this chain's bankruptcy.
Obviously, I'm nostalgic about it, and it's sad, but I am hesitant to say that
a national chain going away is some cultural blow.

Given my age, I tend to think it's sad that shopping is less of a social event
now. However, I don't think it's a core spiritual need that we go somewhere
and spend money together. In fact, I'm not even sure it's a positive.

If people are taking care of their shopping at Amazon, maybe that's more time
to do real social stuff and not consumerism masquerading as social stuff.

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jonbarker
I still don't think online will take off soon as a popular way to buy for
toys. There is a reason why almost all toys come semi demo-able with buttons
you can push and open-ish boxes. Amazon is apparently behind in apparel for a
similar reason, you can't try anything on!

~~~
danvoell
I respectfully disagree. I think the only thing going for toy stores is last-
minute shoppers. Sure if you get a toy in a kids hands, they're going to want
it. Which is exactly why I don't want to go to toy stores with my kids. I can
find new toys online that my kids like instead of being forced to purchase
whatever mass consumer toy is in my face when I walk into toyRus because they
are getting a bigger kickback on it.

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neonate
[http://archive.is/FCZcE](http://archive.is/FCZcE)

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drawkbox
"I don't wanna grow up, I'm a Toys 'R' Us kid"...

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et-al
Might I suggest we link to the Bloomberg article which Kotaku references? It
offers a longer biography of the founder:

[https://www.bloomberg.com/news/articles/2018-03-22/charles-l...](https://www.bloomberg.com/news/articles/2018-03-22/charles-
lazarus-who-founded-toys-r-us-retailer-dies-at-94)

~~~
jessaustin
That is a nice article. What a strange maneuver from his second wife! He must
have been desperately in love, to sign a prenup like that.

 _...their only regrets were employees who would be losing their jobs,
suppliers who would be losing their best customer and all the kids who won’t
grow up with Toys “R” Us._

Ugh, if my nieces and nephews are any indication, kids will still get way too
many toys even without this store.

~~~
erickhill
I'll never forget going to Toys R Us and walking down the computer/video game
aisle. It was vast. Wall-to-wall Atari, Commodore, Vectrex (!!) ... walls of
just game boxes you could look over. Then pull a slip of paper out and walk to
a literal Cage where you could get the real deal.

That place was magical to me as a kid. (1980s, if it isn't obvious.)

~~~
gedy
Man, the Vectrex, I bought one on clearance from Toys R Us when they were
discontinued in 83/84\. Such a fun console

~~~
bartread
I've recently got back into retro gaming, having somewhat tired of the cost
and constant updates to modern titles, and looked into picking up a Vectrex
because I never had one as a kid: working examples are now going for £900+ in
the UK so I dropped the idea.

EDIT: Having said that, I just checked eBay again, and it seems like
availability is up and prices are down. A bunch of auctions under £100, and
some Buy It Nows for around £200. Hmm.

~~~
stevekemp
Our (richer) cousins got bored of their vextrex, so it passed to my siblings
and I. At the time I thought it was near magical, not needing to take over the
family-television, or load games from cassette.

I still remember the fun of playing games with the wrong overlay placed over
the screen. For those who don't know the vextrex used vector graphics, only in
white, and alongside the cartridges each game contained a transparent piece of
plastic with colours, score-labels, etc, which you placed over the screen.

The wikipedia article has a couple of brief pictures that make this more clear
than my early-morning words could:

[https://en.wikipedia.org/wiki/Vectrex](https://en.wikipedia.org/wiki/Vectrex)

