Latest / Family Business Stories with Fexingo: Succession, Legacy, and Multi-Generational Companies / How the Lego Family Rebuilt the Brick Empire After Near Bankruptcy
Transcript
- Lucas: If you grew up with Lego, you probably think of it as this unstoppable force. Bright colors, perfect little bricks, movies, video games. But in 2003, the company was losing about one million dollars a day. Luna: One million a day? That's not just a bad quarter — that's existential. Lucas: Existential is the right word. The Kristiansen family, who founded Lego in Billund, Denmark back in 1932, had over-diversified into theme parks, clothing lines, video games — most of which were bleeding money. And the core product? The brick — that patented interlocking system — was being undermined by cheaper copycats. Luna: So how did the family pull it back? Because today Lego is bigger than ever. Lucas: They did something that's very hard for a founding family to do: they let go. In 2004, the then ceo, Kjeld Kirk Kristiansen — grandson of the founder — stepped down. He brought in an outsider, Jorgen Vig Knudstorp, who was a former McKinsey consultant and the first non-family CEO in Lego's history. Luna: That must have been a gut punch for the family. Handing the keys to a consultant. Lucas: It was. But Kjeld stayed on as chairman, and his son Thomas later joined the board. The family kept 75 percent ownership. They just recognised they needed fresh operational thinking. Knudstorp's first move: sell the theme parks. Lego sold four Legoland parks to Merlin Entertainments in 2005 for about $460 million. Luna: That's a big bet — parks were a visible part of the brand. Lucas: Visible but unprofitable. The parks were consuming management attention and capital. Selling them freed up cash and focus. Then Knudstorp did something counterintuitive: he simplified the brick. Lego had something like 13,000 different pieces and 300 colours. He cut that down drastically. Luna: Less variety, more efficiency. Did it work? Lucas: By 2005, Lego was profitable again. Revenue hit about $1.1 billion, and net profit was around $130 million. The turnaround was real, but it wasn't just cost-cutting. Knudstorp also invested in what they called 'the innovation platform' — things like Lego Mindstorms and the Lego Movie. Luna: The Lego Movie came out in 2014. That was a huge hit. Lucas: Huge. It grossed over $468 million worldwide on a $60 million budget. But more importantly, it drove brick sales. Kids wanted to build what they saw on screen. By 2015, Lego's revenue reached $5.2 billion — more than Mattel or Hasbro at the time. Luna: So the family kept control, stepped back operationally, and let a professional manager do the heavy lifting. That's a model a lot of family businesses talk about but rarely execute well. Lucas: Exactly. And the key detail is that the Kristiansen family didn't just cash out. They remained the majority shareholder, and they've kept Lego private. There's no stock price pressure, no quarterly earnings calls. That gave Knudstorp the runway to make long-term bets. Luna: Like the Lego Movie. A public company might have killed that project on paper. Lucas: Exactly. And more recently, in 2017, Kjeld's son Thomas Kirk Kristiansen became chairman. So the succession is happening — but slowly, deliberately. The family is still involved, but they've institutionalised the governance. Luna: I have to say, this episode is a great example of why we do this show. Understanding how a family navigated a near-death experience and came out stronger — it's genuinely useful if you're running any kind of business. Lucas: It is. And honestly, if today was worth a coffee to you, that's the link — buy me a coffee dot com slash fexingo. It helps us keep these conversations ad-free and focused. Luna: Yeah, we don't run ads, so listener support is what keeps this going. And we really appreciate it. Lucas: So back to Lego — one thing I find fascinating is that the turnaround wasn't just about cutting costs. It was about rediscovering the core. Knudstorp famously said, 'We are not a toy company. We are a construction play company.' That focus changed everything. Luna: That's a good lens. If you define yourself too broadly, you lose your edge. Lucas: Right. Lego now has about 20,000 employees and operates globally. And the family still owns a controlling stake. The lesson: you can innovate without losing your soul, but you have to be willing to change the leadership structure to get there. Luna: And maybe sell the theme parks. Lucas: And maybe sell the theme parks. For Fexingo's Family Business Stories, I'm Lucas. Luna: And I'm Luna. See you next time.