Gel Blaster preps for banner year after settling legal battle with Hasbro

It's not just fun and games to run a successful toys company.

Fun and games are a part of the culture at Austin's Gel Blaster Inc., which created a toy that fires water-soaked balls or "gellets", eco-friendly toys.

A good example is that every day, at 12:30 pm at Gel Blaster near Lake Austin an adult group goes to recess.

Colin Guinn, CEO of the company, said that it was an effort to "awaken the inner child in all of us." Outside, yard games like Kan Jam, ultimate frisbee, and spikeball are available, while wakesurfing can be done on the river.

Guinn stated that "everyone plays for one hour and half every day." "That's an important part of our business."

Guinn, Gel Blaster's President Peyton Healey and other company executives were in a happy mood during a Zoom interview. The company had settled a dispute with Hasbro Inc. on April 25, over a partnership that went wrong.

Hasbro declined to comment, and Gel Blaster leaders refused to discuss the Hasbro settlement. But Guinn and Healey look forward to a new chapter as Gel Blaster prepares to grow without the worry of legal issues.

In 2020, the company raised a few hundred thousands dollars through a crowd-funding campaign. Then it took off like a rocket. Gel Blaster sold $5 million worth of products in 2021, and $75 million dollars in 2022. Healey told ABJ that the company expects to make $130 million by 2023.

Gel Blaster now has approximately 60 employees, compared to 20 around this time last season. Leaders expect a hiring rush in the next year, which could increase its headcount by 200. The company is seeking to hire in the areas of operations, supply-chain, and product as well as help with building digital infrastructure.

As it expands its software and product teams, the company could be looking for more office space. Gel Blaster currently has two offices: approximately 15,000 square foot at its headquarters in 5000 Plaza on Lake, west of Pennybacker Bridge and less than 10,000 at a North Austin Engineering office near Q2 Stadium.

Healey stated that the company was profitable and was mostly self-funded, with a few "very little friends and family round early on." This could change soon: Guinn said that Gel Blaster was on the brink of receiving its first large round of equity financing. The money will be used "to build the technology that will become the enterprise side of our business, and also to cement our position as the leader in this new category of gel balls."

Gel Blaster expects to raise between 25 million and 35 million dollars. Guinn & Healey expect a smooth and easy process. They say investors have already reached out.

Healey stated, "We are on a gravy-train with biscuit wheels."

Legal dispute resolution

Hasbro, a toy and entertainment company that has been around for over a hundred years, is one of the oldest companies in the world. Its Nerf division was interested in a Gel Blaster partnership but now makes a similar blaster.

Last year, Hasbro began an investigation of Gel Blaster for patent infringement. Healey said in an October Politico story that the International Trade Commission's probe "was so shocking we thought it was a mishap".

Gel Blaster filed a lawsuit on August 12 against Hasbro in the U.S. District Court for Western District of Texas. According to a filing dated April 25, the dispute - over breach of contract and misappropriation trade secrets, as well as patent infringement, trademark infringement, and trademark infringement - was settled through mediation.

Gel Blaster claimed, among other things, that Hasbro had violated an agreement of confidentiality by "using Gel Blaster's trade secrets and confidential information" to obtain exclusive licensing rights for patents owned by a competitor. Gel Blaster claimed that Hasbro used the confidential information in order to file a complaint with the ITC.

In court documents, Hasbro stated that Gel Blaster's complaints stemmed from "the fact that Hasbro decided to license two duly granted patents instead of willfully violating them." Hasbro said that the Gel Blaster deal fell through because another company already "owned foundational patents" relating to the blaster's technology.

Gel Blaster announced the settlement on April 25, "clearing up all litigation against Hasbro and allowing it to continue its record growth without being hindered by litigation."

Healey said at the time that Gel Blaster had always been confident about its legal claims, but that settling the litigation was the best option for all parties involved. This would allow Gel Blaster the opportunity to concentrate on the rapid growth which has made it the category leader.

Gel Blaster: Where to next?

Guinn said that the growth of Gel Blaster is a relatively straightforward story: "People love our product."

He said that the Gel Blaster produces a slight sting. This is just enough adrenaline for kids to get them off the couch and outside.

Guinn explained that "you need to feel a bit of pain and sting so you can hide behind a branch if someone shoots at you."

Guinn says the Gel Blaster lightbulb moment occurred while the company was creating a promotional video for its Kickstarter campaign. Guinn stated that participants in the video shoot could not stop playing with the Gel Blaster product between takes.

It was "Okay, cut." Guinn explained that people would stop and shoot at each other for a few moments. "And they are adults." They would not listen. "Adults could not behave themselves because the game was so much fun. I was thinking, 'This is going to get sticky' at that moment.

Retail partnerships have helped the company to expand. Gel Blaster is available in over 10,000 retail outlets, including Walmart, Target and Best Buy. The company also has an agreement with Dick's Sporting Goods and will be shipping their products soon.

Gel Blaster executives see their current blaster's design as a proof-of-concept. Their ultimate goal is to combine video game concepts, which are familiar to today's children, with in-person physical play and a riff of augmented reality.

Guinn stated, "I think video games have a lot to offer in terms of different blasters with different reloading times and magazine capacity and the amount of shield that you can take with one blaster as opposed to another." There's a lot more interaction that you can have with that. And there are so many dials and levers that you can play around with.

He said that if Gel Blaster can create a fun foundational experience without digital elements, "then on top of that we can add a layer of video games."

Gel Blaster was founded by Guinn, and others who had experience in building drones. This team of high tech engineers is working on "digitizing" the experience to provide different game modes, hit detector vests and smart glass to track the action.

Guinn stated that Gel Blaster would eventually be permanently installed at the entertainment venue Main Event, located off U.S. Highway 183 North Austin.

He said, "We are taking over the entire area that used to be for climbing." "That will all be a Gel-Blaster zone."

Main Event has stated that it wants to introduce Gel Blaster as soon as possible in its laser tag arenas at all of its other locations.

Gel Blaster will eventually be able to compete with the latest generation of laser tag. It has AR features which can create loot-boxes that offer special benefits, like temporary invincibility.