Trend: Celebrity Investor Is The New Brand Ambassador
Trend: Celebrity Investor Is The New Brand Ambassador
David Schwab Contributor
CMO Network live the business of influence in the sports-and-entertainment world
Casamigos Tequila founders Rande Gerber and George Clooney celebrate the launch of Casamigos at Andrea's at Encore Las Vegas on January 9, 2013 in Las Vegas, Nevada. (Photo by Denise Truscello/WireImage)
Kobe Bryant made nine figures from BodyArmor, George Clooney made a fortune when Diageo bought his tequila business and Tyra Banks, Ashton Kutcher, Jared Leto, and many others have invested in and profited from companies that have recently sold.
These recent, success stories have generated a ton of attention. They also can take years to get to that point and are by no means slam-dunks. Nevertheless, they are emblematic of a greater shift in how talent is choosing to get involved with the corporate world. There is a tidal wave of talent moving away from simply being corporate ambassadors, and instead gravitating towards ownership of a business instead. More and more, athletes, musicians, actors, chefs and influencers are betting on entrepreneurs and putting their own skin in the game to give startups a unique marketplace advantage.
Before digging into this shift, let’s not overlook traditional celebrity and brand partnerships. There is still an enormous business to participate in transactional marketing deals; ranging from a one-off paid social video, corporate golf outing participation, media interviews, a global advertising campaign, and everything in between. That business is strong, and with the emerging important of influencer marketing, it’s not going anywhere. It’s tried, true and it works.
Back to the story du jour, the intersection of talent, startups and investment. At Octagon, I see this daily from all sides; the venture capitalist looking to invest in a business or raise capital for a new fund, to the founder and entrepreneur with an idea they need to beta into the market, to the talent salivating to ride something special into the sunset.
For talent, it’s key to have the right team in place to vet deals, provide diligence, determine if the business model is sound and ultimately figure out if the founder is someone you want to bet on. Influencers get early looks at opportunities and preferred pricing, but tap the industry experts to know if you should invest or not.
Below are a list of experts and thought leaders that will help you get a jump on that learning curve, as well as some tips for talent looking to get into the venture space, and emerging companies that want to leverage them.
The Experts (there are many, here’s a few to start your list):
Adam Bain is the former Twitter COO, now advisor for Reddit, Cheddar, GOAT, Tonal and more. He’s smart, articulate and poses insightful questions along with the responses he garners from peers.
Rohan Oza earned incredible business success dating back to the Vitamin Water + 50 Cent days, and has spent the last several years looking to invest in bright entrepreneurs disrupting the food and beverage industry. He appears as a guest judge on Shark Tank.
Frank Zecca is the managing director of Octagon Financial Services and there is a reason why Stephen Curry, Chris Paul, Devin Booker, Michael Phelps and hundreds of others trust their assets and business management to him. He understands diversification, the celebrity income stream and the amount of effort it takes to make sound long-term investment decisions.
Ron Conway is an angel investor, philanthropist, and is known as one of Silicon Valley’s “super angels.” From the time I have spent with him, it’s clear he is ultra-passionate about his work. He also spends an enormous amount of time raising dollars and attention to charities and the prosperity of America.
Rebecca Lynn is the cofounder and general partner at Canvas, an early-stage VC firm and is an investor in many other businesses. Her focus is in financial services, mobile, e-commerce, digital health and AI. Industry experts highlight her experience in consumer products and internet marketing as a tremendous asset for startups.
Mark Cuban is an NBA owner, Shark Tank regular and business executive. His insights into technology, media and the future are always worth listening to.
Jennifer Hyman is the cofounder and CEO of Rent The Runway and Project Entrepreneur. She is a savvy business executive and in her words, Project Entrepreneur ignites bold ideas by providing women access to the tools, training and networks needed to build and scalable, economically impactful companies.
Peter Pham is the cofounder of consumer internet incubator Science, which was behind Dollar Shave Club ($1 billion exit to Unilever). He has a venture fund and incubator, and challenges the norm with his thought provoking questions on Twitter.
Mark Suster is a partner at Upfront Venture, and a former entrepreneur himself who has successfully sold two businesses. He invests in passionate entrepreneurs in early-stage tech businesses.
Guy Raz hosts a podcast titled "How I Built This" and he dives into stories behind some of the world’s best-known companies. He weaves a narrative journey about innovators, entrepreneurs and idealists – and the movements they built.
The A16Z Podcast is the podcast home for Andreessen Horowitz, highly respected venture capital firm (a16z is a numeronym; the company’s first and last letter and the number of characters in between). The pod gives great insight from all sides of a venture deal.
Once you start to follow these experts, make sure to take stock of the people they choose to follow and interact with. The more people you follow and learn from, the great wealth and diversity of information you’ll be able to glean.
Getting Started Tips:
Talent must establish a clear and cogent investment thesis, and to determine why you are putting money into this type of investment class. Everyone wants to invest in a startup that becomes a unicorn (a company valued at more than $1 billion) but the truth is that it rarely happens. Be smart.
There are a number of reasons to get involved in this space – investment diversification, straight financial success, knowledge, relationships and reputation – a means to an end. Or simply because you love the industry and have a passion for the business. Before investing, be clear about your specific goals for this opportunity. The more you can narrow your focus, the easier it will be to decide if a company makes sense for you. Listen to the experts. Listen to your wealth manager.
Earmark a set amount or percentage of earnings for startup investment and spread the money across multiple businesses. It’s not a batting average game, it’s slugging percentage. Some of the investments will lose, some will do fine, but the hope is that one strikes gold.
Investment also has its own lexicon – from cap table to convertible note to dilution. Study it. Learn the different stages of a company’s capital raise and when you would have the most impact on a business. Reading a term sheet and figuring out factors that dictate a company’s success (or not) is like getting a real-life M.B.A. Be a sponge.
Remember, this is not a traditional marketing deal, you aren’t paid right away (at least not in most cases). You may earn annual dividends, but the payday comes when the company is acquired or goes public. While the brand builds its value, talent should identify ways they can contribute to the company’s long-term success.
Zecca says one should put as much effort into startup investing as they did to build their athletic or Hollywood career. This includes training, learning, surrounding yourself with the right people and measuring personal results (to help adapt and evolve).
From the founder and business perspective, collaborating with talent is a clear strategy to differentiate and accelerate growth. Talent can open doors, sweeten relationships, be the face of a marketing campaign or make a lasting impression at a trade show booth. They are underutilized in b2b efforts – attending prospect dinners, participating in product demos, investor gatherings or cocktails with a fund’s underlying portfolio companies. Know your audience. Know your investors. Know your clients. The more you understand how your company and potential talent partners can benefit each other, the more you will get out of the relationship.
Know that there is more than one way to strike a partnership with talent. It can be a straight investment for equity, or if the talent wants to provide some marketing services – and that is of benefit to you – you can do a combination arrangement, investment for equity and marketing fee for name, likeness and time. Each deal is going to be different, so treat them as such. Moreover, if a talent puts his or her money into the startup, you can expect their effort to be at a multiple over what they would exert if they were simply an ambassador.
Here’s hoping all of you are part of the next unicorn!