Of Legos and Luxury PR Firms: Investing in One and Interning at the Other
Business Bytes, Ashoka Business Review’s weekly newsletter, is back for the Monsoon 2023 semester! Watch your inboxes for insightful business stories, hot takes, polls and quizzes every Thursday :)
In today’s edition:
Investing in Legos: Is that really a thing? Should you do it? What’s the market like?
An Ashokan’s account of her summer internship at a luxury PR firm (There’s a lot more to PR than meets the eye)
Building Your Wealth, Brick by Brick? The Lego Investment Phenomenon
As far as alternative investments (as opposed to traditional ones like stocks and bonds) go, you’ve probably heard of crypto and art. And if you’ve watched The Big Bang Theory, you’re probably aware of the existence of a thriving market for sci-fi comics and action figures as well.
Basically, anything can be an asset if enough people are interested in it and are willing to pay high prices for it. And apparently people seem to be willing to pay a lot for Lego sets.
The Appeal
Lego sets are first and foremost, toys. As fun as they might be to play with and satisfy your inner architect, why would you want to invest in them?
One factor is scarcity — Lego sets are typically produced in limited quantities, especially special collections dedicated to iconic films, books or historic events. This rarity, especially if the sets are in mint condition and still sealed in their original packaging, can cause their value to skyrocket.
A study by economists at the Higher School of Economics University in Moscow looked at the prices of 2,322 Lego sets between 1987 and 2015, including information from primary sales and online auctions, and found that the prices of unopened, retired Lego sets grow by 11 percent annually on the secondary market.1
The Returns
According to the paper cited above, the average return on unopened Lego sets is 11 percent, or 8 percent in real terms, which outperforms a lot of traditional and alternative assets.
However, data from BrickEconomy, a site that tracks and analyses secondary Lego markets, underscores the importance of picking your sets wisely. While sets from The Hobbit and The Lord of the Rings franchises have seen a CAGR of 13-14% between 2010 and 2023, sets from the DC Comics Super Heroes and Toy Story collections have only grown at a CAGR of 8-9% during the same period.
The Risks
Like any other investment, Lego sets are not infallible. (In fact, some might argue that they shouldn’t be investments at all — but more on that later.) They require tons of care and maintenance, with numerous blogs and articles dedicated to storing and preserving them properly (“Don’t stack them,” “Don’t put them on the ground,” etc, etc). Anecdotal evidence from this Reddit thread indicates that at least one person ended up opening a toy shop simply because of the costs associated with storing it.
Moreover, some sets do lose value, as discussed in this insightful BrickPicker blog. Another factor to consider is geography — most of the data analysed so far has been from the US and other high-income countries, and trends in countries like India might not be similar, and shipping costs might wipe out any short or medium term gains.
The Community
The Lego enthusiast community and the Lego investing community don’t always overlap. Some people tend to collect for passion — for building stuff with the bricks, like you’re supposed to, while others keep them tightly sealed in mint condition, to make money off them. These threads (here and here) on the Lego subreddit summarise the frustrations of Lego enthusiasts, with some wishing for the “bubble to pop” and others comparing the reselling to scalping.
Regardless of which side you support, platforms like BrickLink facilitate this market, and prices continue to trend upward, at least on average. Our take? Play with your damn Legos. But don’t break or damage them, and don’t lose their instruction manuals and parts. That way, you get the best of both worlds.
Internspeak: Ashokans Get Real About Their Internships is back! Check out the previous articles in this series here
Behind the Glitz and Glamour: Lessons from My Summer Internship at a Luxury PR Firm
Like many eco-fin students at Ashoka, I had once been seduced by the glitz and glamor of Wall Street, envisioning a fast-paced world filled with extravagant bonuses and high-stakes deals. But an internship at an investment firm last summer made me realize that staring at spreadsheets and crunching numbers for hours on end is not my thing.
One day as I found myself shamelessly immersed in the rabbit hole of Paris Haute Couture Week photos, my "wasted" time suddenly felt like a hidden treasure trove of inspiration. Maybe, just maybe, fashion was more than just a fleeting interest for me. Yet, faced with the reality of my zero experience in the industry, I knew that securing a position at major fashion houses like Dior or Sabyasachi was unlikely. So, I made the decision to apply to PR and marketing companies that specialize in catering to exclusive brands (Gaurav Gupta, Louis Vuitton, Moet etc.), believing that this could provide the gateway into the world of high fashion. After bombarding their inboxes with polite reminders twice a day and engaging in constant back-and-forths, I finally managed to secure an internship opportunity at a boutique PR and marketing firm catering to a bunch of upscale clients.
On my first day, I was in for a delightful surprise. I witnessed people casually chatting with influencers and celebrities, while strategizing the next big campaign with designers. However, what caught me off guard were the heaps of excel sheets! Surprisingly, this time, I didn't mind them as much. As an intern, I was entrusted with grunt work, and my initial assignment involved meticulously combing through a list of thirty magazines and newspapers.
My task? To manually go through every article, checking mentions of our clients. This task was essential in generating coverage reports for all our clients, enabling the company to evaluate the effectiveness of their media and marketing strategy. It was daunting at first, spending six straight hours on this. However, there was a silver lining — I finally had a valid reason to read magazines (pssst, fashion lovers, The Established is a must-read) and explore profiles of my favourite fashion influencers, all without any guilt weighing me down.
After a while, I noticed that nobody was assigning me any tasks. It seemed like everyone was too caught up in their own work, and assigning tasks to an intern would only mean wasting time explaining them. So, I had to take the initiative and ask around for work, which wasn't always easy. It meant stepping out of my comfort zone and mingling with people from other departments. However, conversing with them presented its own challenges. They used lingo and casually mentioned names of editors and journalists that I wasn't familiar with, so I had to start learning and remembering those names.
After three long weeks of waiting, I finally got some real work from my seniors! They assigned me with an important task— industry research for a brand CEO's interview with a major business magazine. It felt like a big responsibility, and I was excited to dig in. On top of that, I was given the job of doing background checks on all the attendees for a major alcohol brand's launch. The goal was to make sure there were no red flags that could harm the brand's reputation like a homophobic comment or something insensitive in the past.
I won't lie; the work I have been given hasn’t always been the most exciting. However, what I have come to realise is that simply being around these people is enough. Engaging in conversations, where discussions extend beyond popular designers like Louis Vuitton and Gucci to encompass unorthodox designers like Jean Paul Gaultier and Jeremy Scott, is a unique connection I haven't found anywhere else. It is a refreshing change from being judged elsewhere for being too "stuck up" in my interests.
Now, as I write this, it's been a whole month2 since I started this internship. With the Indian Couture Week coming up, who knows what opportunities might come my way! But to be honest, I'm still not sure if PR is the right path for me. One thing's for sure though, this internship has shown me that my interest in fashion is definitely worth exploring further.
This information can be found at https://www.nerdcube.eu/guides/investing-in-lego/. We were not able to access the original academic article and verify the conclusions stated in the blog.
This article was written in July. The author of this article, who prefers to remain anonymous, confirms that they did indeed get the chance to manage the guest list for a couture show hosted by one of India’s most renowned fashion designers :) This meant long hours, often working until midnight each day, interactions with celebrities, and arranging to accommodate their unusual requests (someone wanted an escort to follow them around¿)