The Lego Group began in the carpentry workshop of Ole Kirk Christiansen, in Billund, Denmark. In 1916, Christiansen purchased a woodworking shop in Billund which had been in business since 1895.:8 The shop mostly helped construct houses and furniture, and had a small staff of apprentices. The workshop burned down in 1924 when a fire ignited some wood shavings. Ole Kirk constructed a larger workshop, and worked towards expanding his business even further. When the Great Depression hit, Ole Kirk had fewer customers and had to focus on smaller projects. He began producing miniature versions of his products as design aids. It was these miniature models of stepladders and ironing boards that inspired him to begin producing toys.
In 1932, Ole Kirk's shop started making wooden toys such as piggy banks, pull toys, cars and trucks and houses. The business was not profitable because of the Great Depression. Farmers in the area sometimes traded food in exchange for his toys; Ole Kirk continued producing practical furniture in addition to toys to stay in business. In the mid-1930s, the yo-yo toy fad gave him a brief period of increased activity until it suddenly collapsed. To reduce waste, Ole Kirk used the leftover yo-yo parts as wheels for toy trucks.:15 His son Godtfred began working for him, taking an active role in the company.:15
In 1934, Ole Kirk held a contest among his staff to name the company, offering a bottle of homemade wine as a prize.:17 Christiansen was considering two names himself, "Legio" (with the implication of a "Legion of toys") and "Lego", a self-made contraction from the Danish phrase leg godt, meaning "play well." Later the Lego Group discovered that "Lego" can be loosely interpreted as "I put together" or "I assemble" in Latin. Ole Kirk selected his own name, Lego, and the company began using it on their products.
Following World War II, plastics became available in Denmark, and Lego purchased a plastic injection molding machine in 1947.:25 One of the first modular toys to be produced was a truck that could be taken apart and re-assembled. In 1947, Ole Kirk and Godtfred obtained samples of interlocking plastic bricks produced by the company Kiddicraft. These "Kiddicraft Self-Locking Building Bricks" were designed by Hilary Page. In 1939, Page had applied for a patent on hollow plastic cubes with four studs on top (British Patent Nº.529,580) that allowed their positioning atop one another without lateral movement. In 1944, Page applied an "Improvement to Toy Building Blocks" as an addition to the previous patent, in which he describes a building system based on rectangular hollow blocks with 2X4 studs on top enabling the construction of walls with staggered rows and window openings. The addition was granted in 1947 as British Patent Nº 587,206. In 1949, the Lego Group began producing similar bricks, calling them "Automatic Binding Bricks." Lego bricks, then manufactured from cellulose acetate, were developed in the spirit of traditional wooden blocks that could be stacked upon one another but could be "locked" together. They had several round "studs" on top, and a hollow rectangular bottom. They would stick together, but not so tightly that they could not be pulled apart. In 1953, the bricks were given a new name: Lego Mursten, or "Lego Bricks."
Plastic products were not well received by customers initially, who preferred wooden or metal toys. Many of Lego's shipments were returned, following poor sales. In 1954, Godtfred had become the junior managing director of the Lego Group. Godtfred's conversation with an overseas buyer struck the idea of a toy "system", with many toys in a line of related products. Godtfred evaluated their available products, and saw the plastic bricks as the best candidate for such a "system". In 1955, Lego released the "Town Plan" as such a system, using the building bricks.
The building bricks were moderately received but had some problems from a technical standpoint: their "locking" ability was limited, and they were not versatile. In 1958 the bricks were improved with hollow tubes in the underside of the brick. This added support in the base, enabling much better locking ability and improved versatility. The company patented the new design, as well as several similar designs to avoid competition. Ole Kirk Christiansen died that same year, and Godtfred inherited leadership of the company.