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‘We’re really happy about what we’ve accomplished:’ Funko CEO on growth amid the pandemic

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Yahoo Finance’s Alexis Christoforous and Brian Mariotti, Funko CEO, discuss growth amid the COVID-19 pandemic.

Video Transcript

ALEXIS CHRISTOFOROUS: Funko just launched its very own line of toys called Snapsies. Here to tell us about it and the outlook for the holidays is Funko CEO, Brian Mariotti. Brian, always good to see you. So these toys are exclusively being sold at Target, they've been on the market for about a week. Why did you decide to do this line, and what has early demand been like?

BRIAN MARIOTTI: Yeah, you know, we wanted to-- we feel like we have a really unique insight to collectibles. And we've obviously been doing it for 20 years with adults, and we understand their mentality. But we also understand that kids are collectors as well. And so, our goal was to create something that felt very Funko, very collectible, with a technology that we thought was simple, but addictive, almost like a fidget spinner.

And we came up with Snapsies, very excited about the idea of children being able to create their own environment within the figure. And everything is so cool. It's-- you take a little figure like this, and you decide you want to change her back in and turn her into a mermaid, and it's just that quick, and you snap them in, and it's a completely new figure. And that's really exciting. I think they're cute, they're whimsical, and they're fun, but they're completely customization.

You can do anything you want with them, create unique characters, you can do a dragon that's also a bride or a groom that happens to be a shark. And the idea of they can completely customize their faces, their hair, their accessories, their tails and their hindquarters is something really neat with a really fun snap technology that really allows them to mix and match, you know, in a very unique way that hasn't been out in the toy market before.

ALEXIS CHRISTOFOROUS: Yeah, and speaking of customization, I know you've got Pop People, right? Which allows us to sort of stick little things on the Pop figurines so that they can look like us or a family member. Those have got to be a good gift idea. That's relatively new for you as well, right? The Pop people?

BRIAN MARIOTTI: It is. It's very exciting. We've been seeing fans for the last 10 years customize their own self or their loved one or their girlfriend or their friend by just being artistic. And so, we have designed a system-- think Build-a-Bear meets Funko Pop, where you can absolutely create whoever you want, whether it's yourself, multiple poses, multiple outfits, multiple props, or any loved one you want. And then it comes as a customizable Funko Pop box with your own name, or your loved one's name on it, and a Pop protector.

And we're offering that at our Hollywood store starting on Friday. It's a 44,000-square-foot experience. We lost a little over a year ago, and obviously, our headquarters up in Everett, but what's really exciting is next year, you're going to be able to go online, build yourself or your loved one, press a button, and we'll ship it to you anywhere in the world. We're really excited about that offering the tail end of next year.

We think it's a gift that is so unique, but it's something that we feel is going to be bringing people that aren't diehard Pop culture collectors to our website to get this one-of-a-kind unique gift. And then you'll see all the wonderful things we have, whether it's purses and backpacks and wallets from Loungefly, the Funko games and they were created with our Funko Games team, or all of our traditional items like action figures, Pops, and plush.

ALEXIS CHRISTOFOROUS: You talked about your website. I mean, you are seeing incredible traffic there. Your direct-to-consumer business, I think, has risen triple digits. What is driving that growth right now? And, do you see it being sustainable into the early part of next year?

BRIAN MARIOTTI: Yeah, you know, obviously, unfortunately, it's the pandemic. We have to take advantage of a really bad situation. We were very fluid with our ability to move products from specialty where there was no mall traffic, to our direct-to-consumer. We went from only 200 of our own products as late as June of this year to now well over 2,000 products available on our website. We launched-- almost two years early-- Funko Europe, which is direct-to-consumer for now six countries. And that is, again, an amazing accomplishment in very difficult times.

And we're up with between mass third-party e-commerce and our own direct-to-consumer, 44% of the business this year is that. So with the ability of Funko to be liquid as a company to adapt to a very difficult situation and to thrive in tough times, we're really happy about what we've accomplished.

ALEXIS CHRISTOFOROUS: You know, we're seeing some of the Pops here as video, as you and I are talking. I want to talk about some of the ones that are just flying off the shelves, or out of the warehouse, I guess I should say. I know Selena the singer, and now there's a Netflix series on the singer, a very popular singer who passed away young. I understand that those Pops are not even available right now. Didn't they just sell out within minutes of being offered?

BRIAN MARIOTTI: They did, and the social media response to Selena and her fan base has been amazing. The music Pop licenses sometimes can be very difficult to attain. Sometimes you're working with the states and you're working with bands that're very busy. Music, anime and sports are huge initiatives for us as a company to grow. We feel that that segment of the population is a little bit different than the diehard "Mandalorian" fans, Marvel fans, "Star Wars" fans, Disney fans. So we're really excited about music.

But Selena is just another testament to us as a company. When we really have a fandom for somebody, we want to make sure that we connect those fans to that fan. And that's what the whole company is based on, whether it's "Golden Girls," "Seinfeld," Selena, Metallica, the LA Kings hockey team, we're going to find a way to make whimsical, fun, affordable products, and connect them to their fan bases.

ALEXIS CHRISTOFOROUS: I got another one for you, though, Brian, before we let you go. "The Queen's Gambit," another Netflix series, very popular. I loved it. I wish there were more than just a few episodes. Do you have an offering for "The Queen's Gambit" in the new year?

BRIAN MARIOTTI: Yes. Netflix is such an amazing partner, and we are rushing-- call it speed chess-- to create figures for a "Queen's Gambit," and we've already had a wonderfully humorous internal dialogue on what the three outlets are going to be. The bashing was amazing in that show. I was obviously-- I consume a lot of pop culture, loved that show. So yeah, we'll be rushing those out very, very quickly. Great show, and we're excited with that partnership with Netflix.

ALEXIS CHRISTOFOROUS: All right, I am excited for that one. Brian Mariotti, CEO of Funko. Happy holidays to you.

BRIAN MARIOTTI: Happy holidays. Thank you so much for having us on.