eToys priced its shares at $20 and watched them close near $76.50 on day one. It was May 1999, and the online toy store in Santa Monica was suddenly worth more on paper than Toys "R" Us. Parents were just starting to trust websites with their credit cards. eToys promised them a toy store with no lines, no parking lot, and gifts wrapped and shipped. The question was whether it could deliver all those boxes in December without running out of cash.

Toys Without the Aisles

Toby Lenk, who had run strategic planning for Disney's theme parks, launched eToys in 1997. He saw that buying toys meant crowded stores and sold-out shelves, while the web could list everything at once. eToys organized its catalog by age and by type of play, and it sold well-known brands alongside harder-to-find toys. The company spent heavily on advertising and on its own warehouses, betting that being first and biggest online would win the holiday season.

One Bad Christmas Too Many

eToys sold its shares on Nasdaq on May 20, 1999, raising $166 million. The stock touched $85 that first day. Holiday sales grew, but costs grew faster, and the dot-com crash in 2000 closed the door on new money. In February 2001 eToys announced it would shut down, and it filed for bankruptcy weeks later. KB Toys bought the eToys name and website from the wreckage for about $5 million.

Cover: Yamauba with Kintaro Holding a Toy Mask, Kitagawa Utamaro. Art Institute of Chicago, public domain. Chosen for a child holding a toy (toys).