6 ms·

Brokering Bricks: The World of Lego Investing

66 points by areoform 7y ago

iooi 7y ago
As a kid I adored Lego. I think fondly of all the time I spent playing with my collection and all the creations I made. As I entered my early teen years my collection had grown considerably and it was taking up a lot of space, and I was spending less and less time with Lego. I knew a younger kid down the block who was in the peak of his Lego phase and I donated my entire collection -- around five or so 30 gallon trash bags. A couple of years after that, when I was just shy of 17 years old, I was diagnosed with Hodgkin's Lymphoma and had to take some time off of school to go through chemotherapy. Naturally I had a lot of time on my hands. For some reason I _really_ wanted to play with my old Lego, but I didn't have any around anymore. I found some of my favorite sets on eBay and was able to purchase them albeit for quite the markup. It was great to get to experience those older sets and fulfill that spat of nostalgia. On the other hand, it was a huge bummer. I was obviously on a limited budget and every set was 2-4x what they were originally. I understand Lego can't possibly keep producing every set forever, but this kind of speculation described in the article seriously ruins the experience for a lot of people. It's not a simple supply and demand situation if people are hoarding sets and creating artificial scarcity. Lego is big enough as a company to put these people out of business, they would just have to occasionally re-release older sets that are ludicrously overpriced in the second-hand market. Lego holds a really special place in my heart as I'm sure it does for a lot of the people mentioned in the article, I'm just not sure if they are aware of the consequences of their behavior on some of the less fortunate that want to experience Lego for what it is meant for -- playing.
- Max_aaa 7y ago
  Or they can have a website where one can order a set and have a robot setup the kits from standard bricks. This should work for the majority of sets and would require a relatively small set of custom bricks.
  - froindt 7y ago
    I'm an industrial engineer and geek out about manufacturing stuff. Lego used to make custom pieces all the time. That, along with other missteps, nearly killed the company. Product variety means changeovers (switching molds in the plastic injection molding machines). More quality problems will occur. Low volume parts for one set may use a tiny fraction of the mold's useful life, making the unit cost much higher than a 2x4 brick. You need more inventory to successfully fulfill any bulk order you receive. You also need to store the molds in an environment where they won't degrade over time. Single Minute Exchange of Dies (SMED) and Economic Order Quantity (EOQ) work hand in hand dictating how to economically run a facility like this. EOQ considers storage costs, the fixed cost to setup the tool, demand per unit time, and time value of money to minimize the per-unit cost. SMED reduces the fixed costs which are spread across a batch of pieces. This is the lever you can pull to reduce batch sizes, reduce inventory levels, reduce working capital, and help maximize profits. To your specific comment, the difficulty lies in fulfillment. Making sure the robot picks up the right number of pieces which are unceremoniously ejected from the injection molder in no particular order. Having inventory of all the pieces people want - or having a relatively long lead time hoping you get enough demand to run batches on a make-to-order basis. SMED would make this a much more viable business model. This article goes into more depth on the turnaround they went through. https://www.theguardian.com/lifeandstyle/2017/jun/04/how-lego-clicked-the-super-brand-that-reinvented-itself https://www.theguardian.com/lifeandstyle/2017/jun/04/how-leg... https://en.m.wikipedia.org/wiki/Single-minute_exchange_of_die https://en.m.wikipedia.org/wiki/Single-minute_exchange_of_di... https://en.m.wikipedia.org/wiki/Economic_order_quantity https://en.m.wikipedia.org/wiki/Economic_order_quantity
    - systemtest 7y ago
      The upside of custom pieces is that I was able to identify all my LEGO sets from a single pile of bricks. By grabbing the custom pieces and looking them up in online databases, I could see which sets they were used in. It was usually two or three sets and based on my memory I would pick the one I most likely owned. Going by the database I was able to grab all other bricks belonging to that set and build the item. I would mark the missing bricks online, tear everything down and put it in a ziplock bag labeled with the number of set. After a couple of days of going through the pile I was able to find all my LEGO sets and have them separated in labelled ziplock bags. I can now browse through my personal database of LEGO sets, pick one, find the ziplock bag and build it. It's also nicely preserved for future generations.
- PhasmaFelis 7y ago
  As an intermittent toy collector, I've had the same frustration with a lot of childhood favorites. But the nice thing about Lego is that it's...well, Lego. You can be just as creative and have just as much fun with new sets. If the only thing you want to do is build the same set from your childhood in exactly the same way, and then sit back and admire it, then yeah, unfortunately, you are kinda compelled to pay collector's prices for it. I'm just not sure why you'd limit yourself to that.
  - errantspark 7y ago
    > You can be just as creative and have just as much fun with new sets. You absolutely cannot. Don't get me wrong, I love Lego to this day but late 90's Technic is unmatched in it's versatility by a looooong shot.
    - HeWhoLurksLate 7y ago
      Current Technic is honestly pretty good, IMO.
      - errantspark 7y ago
        Yeah, it's pretty good. I love Lego, it's still undoubtedly the best toy. But it's also way worse than late 90's Technic, which really felt focused on piece versatility above all else.
        rhn_mk1 7y ago
        What kind of things could be done with those that can't be done now?
        lacker 7y ago
        I still have my 90’s Technic car with multiple gears and a working stickshift. Nowadays, the sets tend to have some set-specific pieces. Back then, no individual piece was anything nonstandard.
primitivesuave 7y ago
I used to conduct arbitrage of individual Lego bricks on bricklink.com when I was in high school. Was a great way to make a couple extra bucks and amass the Legos I needed for some really big builds. Surprisingly the most lucrative investment was not sets, but rather the minifigures - discontinued minifigs, especially the Star Wars ones, could 10x in value within a year.
droithomme 7y ago
Lego has brought back into production a couple of extremely popular sets, but as new and improved better models. One was the Millennium Falcon UCS set, another is the Imperial Star Destroyer UCS which is the first example the article gives. The article notes the Star Destroyer sold for $280 and is now going for $1500. But it's not selling for $1500 if you look carefully at the listings. Since the new version was released the bottom has fallen out of the market for the older version. Also, the high prices tend to be for unopened sealed boxes, stored somewhere for many years. Obviously there is a very small number of those brand new old stock and with each sale and opening the number decreases. Obviously unopened sealed new sets of long out of print and highly desirable models are going to be expensive. For someone that just wants the set, desirable used sets sell for considerably less than new sealed ones. Also most sets don't really appreciate that much. The ones that do tend to be the very large sets that cost a lot, in particular modular buildings and certain Star Wars sets. The people that speculate on these stockpile them when Lego is still selling them. Lego makes more of each set until sales slow down enough, then they discontinue the set. Most sets are sold for at least 2 years before retiring. No one is deprived of any sets because the speculators are buying new sets. There's not a limited supply of sets during the time the sets are in production. The speculation mostly goes to Lego's bottom line and profitability. Most speculators don't make money because it's hard to guess what rare set will be one of the few that becomes worth a lot more than you paid for it. For the others, you might be able to sell for what you paid, but then you may have to cover the cost of shipping a big heavy box far away, and if it arrives damaged or bent yet was advertised new, they'll file a return. In short, this is not really a great way to get rich and these sets are not really investments.
v3nn 7y ago
Looking for the kraggle...
dwoozle 7y ago
The risk reward profile of the S&P 500 is way better. Buy Legos if you like them, sell them opportunistically, but don’t get into it as an asset class.
xref 7y ago
I’ve recently gotten back into wanting some Pirate Lego sets from when I was young, but to play with not as an investment. Purchasing used-but-complete sets are actually cheaper when adjusted for inflation than when new, at least if you put a little effort into shopping (eBay price alerts for example)
jrrrr 7y ago
I've begun gradually giving my ~30-year-old childhood Legos to my son, and am impressed with how well they've held up. I haven't noticed any yellowing or fading. I wonder if the new plant-based plastics will have the same longevity.
AdrienLemaire 7y ago
Sorry if I'm starting an off-topic discussion here, but I can't read the article due to Medium's reading quota. https://i.imgur.com/uWY1kaw.png https://i.imgur.com/uWY1kaw.png I don't think I have spent that much time on their site, didn't try to. Maybe the fact that many of HackerNews' link go to medium and I started following HN actively recently? Have people here just accepted to pay Medium 5$/month?
- counterpig 7y ago
  Nah just open in incognito. Also only some articles are premium(those with a star) that means that the people who write them actually make money from the subscription.
  - AdrienLemaire 7y ago
    Got it, thanks!

66 points by areoform 7y ago

iooi 7y ago

As a kid I adored Lego. I think fondly of all the time I spent playing with my collection and all the creations I made. As I entered my early teen years my collection had grown considerably and it was taking up a lot of space, and I was spending less and less time with Lego. I knew a younger kid down the block who was in the peak of his Lego phase and I donated my entire collection -- around five or so 30 gallon trash bags. A couple of years after that, when I was just shy of 17 years old, I was diagnosed with Hodgkin's Lymphoma and had to take some time off of school to go through chemotherapy. Naturally I had a lot of time on my hands. For some reason I _really_ wanted to play with my old Lego, but I didn't have any around anymore. I found some of my favorite sets on eBay and was able to purchase them albeit for quite the markup. It was great to get to experience those older sets and fulfill that spat of nostalgia. On the other hand, it was a huge bummer. I was obviously on a limited budget and every set was 2-4x what they were originally. I understand Lego can't possibly keep producing every set forever, but this kind of speculation described in the article seriously ruins the experience for a lot of people. It's not a simple supply and demand situation if people are hoarding sets and creating artificial scarcity. Lego is big enough as a company to put these people out of business, they would just have to occasionally re-release older sets that are ludicrously overpriced in the second-hand market. Lego holds a really special place in my heart as I'm sure it does for a lot of the people mentioned in the article, I'm just not sure if they are aware of the consequences of their behavior on some of the less fortunate that want to experience Lego for what it is meant for -- playing.

Max_aaa 7y ago
Or they can have a website where one can order a set and have a robot setup the kits from standard bricks. This should work for the majority of sets and would require a relatively small set of custom bricks.
- froindt 7y ago
  I'm an industrial engineer and geek out about manufacturing stuff. Lego used to make custom pieces all the time. That, along with other missteps, nearly killed the company. Product variety means changeovers (switching molds in the plastic injection molding machines). More quality problems will occur. Low volume parts for one set may use a tiny fraction of the mold's useful life, making the unit cost much higher than a 2x4 brick. You need more inventory to successfully fulfill any bulk order you receive. You also need to store the molds in an environment where they won't degrade over time. Single Minute Exchange of Dies (SMED) and Economic Order Quantity (EOQ) work hand in hand dictating how to economically run a facility like this. EOQ considers storage costs, the fixed cost to setup the tool, demand per unit time, and time value of money to minimize the per-unit cost. SMED reduces the fixed costs which are spread across a batch of pieces. This is the lever you can pull to reduce batch sizes, reduce inventory levels, reduce working capital, and help maximize profits. To your specific comment, the difficulty lies in fulfillment. Making sure the robot picks up the right number of pieces which are unceremoniously ejected from the injection molder in no particular order. Having inventory of all the pieces people want - or having a relatively long lead time hoping you get enough demand to run batches on a make-to-order basis. SMED would make this a much more viable business model. This article goes into more depth on the turnaround they went through. https://www.theguardian.com/lifeandstyle/2017/jun/04/how-lego-clicked-the-super-brand-that-reinvented-itself https://www.theguardian.com/lifeandstyle/2017/jun/04/how-leg... https://en.m.wikipedia.org/wiki/Single-minute_exchange_of_die https://en.m.wikipedia.org/wiki/Single-minute_exchange_of_di... https://en.m.wikipedia.org/wiki/Economic_order_quantity https://en.m.wikipedia.org/wiki/Economic_order_quantity
  - systemtest 7y ago
    The upside of custom pieces is that I was able to identify all my LEGO sets from a single pile of bricks. By grabbing the custom pieces and looking them up in online databases, I could see which sets they were used in. It was usually two or three sets and based on my memory I would pick the one I most likely owned. Going by the database I was able to grab all other bricks belonging to that set and build the item. I would mark the missing bricks online, tear everything down and put it in a ziplock bag labeled with the number of set. After a couple of days of going through the pile I was able to find all my LEGO sets and have them separated in labelled ziplock bags. I can now browse through my personal database of LEGO sets, pick one, find the ziplock bag and build it. It's also nicely preserved for future generations.
PhasmaFelis 7y ago
As an intermittent toy collector, I've had the same frustration with a lot of childhood favorites. But the nice thing about Lego is that it's...well, Lego. You can be just as creative and have just as much fun with new sets. If the only thing you want to do is build the same set from your childhood in exactly the same way, and then sit back and admire it, then yeah, unfortunately, you are kinda compelled to pay collector's prices for it. I'm just not sure why you'd limit yourself to that.
- errantspark 7y ago
  > You can be just as creative and have just as much fun with new sets. You absolutely cannot. Don't get me wrong, I love Lego to this day but late 90's Technic is unmatched in it's versatility by a looooong shot.
  - HeWhoLurksLate 7y ago
    Current Technic is honestly pretty good, IMO.
    - errantspark 7y ago
      Yeah, it's pretty good. I love Lego, it's still undoubtedly the best toy. But it's also way worse than late 90's Technic, which really felt focused on piece versatility above all else.
      - rhn_mk1 7y ago
        What kind of things could be done with those that can't be done now?
        lacker 7y ago
        I still have my 90’s Technic car with multiple gears and a working stickshift. Nowadays, the sets tend to have some set-specific pieces. Back then, no individual piece was anything nonstandard.

primitivesuave 7y ago

I used to conduct arbitrage of individual Lego bricks on bricklink.com when I was in high school. Was a great way to make a couple extra bucks and amass the Legos I needed for some really big builds. Surprisingly the most lucrative investment was not sets, but rather the minifigures - discontinued minifigs, especially the Star Wars ones, could 10x in value within a year.

droithomme 7y ago

Lego has brought back into production a couple of extremely popular sets, but as new and improved better models. One was the Millennium Falcon UCS set, another is the Imperial Star Destroyer UCS which is the first example the article gives. The article notes the Star Destroyer sold for $280 and is now going for $1500. But it's not selling for $1500 if you look carefully at the listings. Since the new version was released the bottom has fallen out of the market for the older version. Also, the high prices tend to be for unopened sealed boxes, stored somewhere for many years. Obviously there is a very small number of those brand new old stock and with each sale and opening the number decreases. Obviously unopened sealed new sets of long out of print and highly desirable models are going to be expensive. For someone that just wants the set, desirable used sets sell for considerably less than new sealed ones. Also most sets don't really appreciate that much. The ones that do tend to be the very large sets that cost a lot, in particular modular buildings and certain Star Wars sets. The people that speculate on these stockpile them when Lego is still selling them. Lego makes more of each set until sales slow down enough, then they discontinue the set. Most sets are sold for at least 2 years before retiring. No one is deprived of any sets because the speculators are buying new sets. There's not a limited supply of sets during the time the sets are in production. The speculation mostly goes to Lego's bottom line and profitability. Most speculators don't make money because it's hard to guess what rare set will be one of the few that becomes worth a lot more than you paid for it. For the others, you might be able to sell for what you paid, but then you may have to cover the cost of shipping a big heavy box far away, and if it arrives damaged or bent yet was advertised new, they'll file a return. In short, this is not really a great way to get rich and these sets are not really investments.

v3nn 7y ago

Looking for the kraggle...

dwoozle 7y ago

The risk reward profile of the S&P 500 is way better. Buy Legos if you like them, sell them opportunistically, but don’t get into it as an asset class.

xref 7y ago

I’ve recently gotten back into wanting some Pirate Lego sets from when I was young, but to play with not as an investment. Purchasing used-but-complete sets are actually cheaper when adjusted for inflation than when new, at least if you put a little effort into shopping (eBay price alerts for example)

jrrrr 7y ago

I've begun gradually giving my ~30-year-old childhood Legos to my son, and am impressed with how well they've held up. I haven't noticed any yellowing or fading. I wonder if the new plant-based plastics will have the same longevity.

AdrienLemaire 7y ago

Sorry if I'm starting an off-topic discussion here, but I can't read the article due to Medium's reading quota. https://i.imgur.com/uWY1kaw.png https://i.imgur.com/uWY1kaw.png I don't think I have spent that much time on their site, didn't try to. Maybe the fact that many of HackerNews' link go to medium and I started following HN actively recently? Have people here just accepted to pay Medium 5$/month?

counterpig 7y ago
Nah just open in incognito. Also only some articles are premium(those with a star) that means that the people who write them actually make money from the subscription.
- AdrienLemaire 7y ago
  Got it, thanks!