MrBeast Is Writing a New Consumer Playbook | So Good News
Let me explain his argument with a quick thought experiment:
Imagine you work at Procter & Gamble Co. It’s the early 2000s and you want to sell an heirloom Swiffer. How can you sell to millions of people? Well, first you’ll create the ad and then buy targeted ads: print, TV, radio and retail.
Today, the creation of popular consumer products is often done in a systematic fashion. Internet influencers build a large following on social media — in other words, attract attention — and then go out and create products to market to that audience.
That’s the playbook that Jimmy Donaldson (aka MrBeast) is fulfilling. At only 24 years old, MrBeast has built a large audience by creating viral content such as re-creating Willy Wonka’s Chocolate Factory, gathering more than 200 million subscribers on several YouTube channels (as of last week, his original channel – with 112 million subscribers – created. is the most followed person on YouTube).
And now they are selling products to that audience.
In December 2020, MrBeast launched a self-delivery burger called the MrBeast Burger that has sold over $100 million. They did this by creating a consumer ordering program and partnering with 1,000 locations in Europe and the US. In September of this year, MrBeast Burger opened its first location at the American Dream Mall in New Jersey (~10,000 fans reportedly showed up). On his own, in January 2022, MrBeast created a chocolate called Feastables, which has already generated more than $10 million in sales.
“Distribution is the number one problem for consumer goods and services,” according to David Friedberg at All-In. “If you don’t naturally have those things in your blood, you have to go buy a business or … you won’t be able to compete effectively.”
Why? Because consumer goods are so competitive – and easily infiltrated in many cases – that the best way to stand out is with news and content. And social media sites like Instagram, Twitter, YouTube and TikTok are where people consume most of that content.
Consumers who don’t play well are spending more on advertising. In fact, Procter & Gamble is the largest marketer in the world, spending $11.5 billion in fiscal year 2021.
MrBeast can stop using such ads because he already commands the attention of millions. MrBeast certainly has money. Any ad revenue they make from YouTube is plowed back into the business currently at $8 million per month.
Here’s a big difference, though: Marketing can generate short-term interest, while content creation creates wealth that can bring in new fans all the time.
Is the combination of content and marketing that MrBeast enjoys with someone who isn’t one of the biggest YouTubers in the world?
According to Ben Mathews – general partner at Night Ventures, a VC fund connected to the management company MrBeast Night Inc. – promoters can take a number of steps.
“There are less than 100 brands or manufacturers that are big enough to carry their white brand,” Mathews tells me via email. “Anyone is better off doing a franchise like Kanye [West]. Doing it alone is difficult.”
Mathews says the main trade-offs that promoters need to consider are margins, product quality, ownership and speed to market. In September, Night Inc. launched a $100 million fund with Peter Chernin’s Chernin Group to help successful internet developers run the business and build a consumer empire like MrBeast.
Let’s go back to Barstool Sports, which has done some interesting partnerships.
In October 2018, Barstool Sports launched a podcast that is now the most popular in the world of hockey – Spittin’ Chiclets, which is hosted by two former NHL players (Ryan Whitney, Paul “BizNasty” Bissonnette).
In the first episode, Whitney said her favorite drinks are pink lemonade and vodka. Pictures of fans making the drink at home started to go viral and – looking for an opportunity – Barstool CEO Erika Nardini teamed up with distiller E&J Gallo to create this drink mixer. They called the flavored vodka Pink Whitney and, when I wrote about the brand in March 2021, it sold more than $100 million in its first 18 months. (Full disclosure: I was recently a guest on a podcast to talk about dissolving FTX. Sadly, no pink lemonade vodka was consumed.)
Last month, the Spittin’ Chiclets team returned and launched a beer called Big Deal Brewing, in partnership with Labatt USA.
“Conventional wisdom is that the beer business is shrinking,” says Bissonnette manager Jeff Jacobson. “But if your audience follows you for a long time and trusts you, you can be vulnerable. Hockey fans may be a small segment compared to MrBeast’s audience, but as the success of Pink Whitney shows, you can have a big hit with the right product and the right way. “
In the end, the sports and comedy platform was attractive to Penn Entertainment because of its large built-in audience. Under Penn, Barstool launched an online sportsbook that informed casino operators (which would have been very expensive to advertise).
The marriage of goods and business is not only physical. Care is the only thing that has limits, which means that every business has to fight for it.
Hustle, the tech and business magazine with 2 million subscribers where I once worked, was acquired by HubSpot, and the marketing company now promotes a variety of products through newsletters. Other computer companies that have acquired media services include retail platform AngelList (and Product Hunt), fintech firm Stripe (and Indie Hackers) and self-development platform Zapier (and Makerpad).
Creating characters that are too tied to a character obviously has risks. Last month, Adidas AG and The Gap Inc. both canceled lucrative deals with Kanye West after he made numerous anti-Semitic comments. Now, Adidas has to replace the $1.8 billion in sales due to West’s Yeezy shoes, which account for about 45% of the company’s profits.
What’s next for MrBeast?
Recent reports indicate that the YouTuber wants to raise $150 million for his business empire at a cost of $1.5 billion. If the deal goes through, it will be a huge success. And it won’t be long before the most important M&A deal is a major manufacturer buying an old brand. More From Bloomberg Opinion:
• After Kanye, Will Adidas Have a Golden Age?: Andrea Felsted
• Tribes Realize Their Animal Spirits: Ben Schott
• Red Bull Billionaire’s Success Secret: Chris Bryant
This column does not reflect the views of the editorial team or Bloomberg LP and its owners.
Trung Phan is the co-host of the Not Investment Advice podcast and writes the SatPost newsletter. He was previously a senior writer for Hustle, a technology magazine.
More stories like this can be found at bloomberg.com/opinion