How I Invest with David Weisburd
E143: From Fame to Fortune: How Celebrities Turn Fame into Billion-Dollar Brands
Fri, 07 Mar 2025
In this episode of How I Invest, I interview Scott van den Berg, an expert in celebrity-founded brands and the managing partner of Hotstar VC. Scott shares deep insights into how celebrities are leveraging their platforms to build billion-dollar businesses and why some partnerships thrive while others fail. We discuss the shift in celebrity investments, the rise of creator-led brands, and key lessons from success stories like Ryan Reynolds' Mint Mobile, Kim Kardashian's Skims, and George Clooney's Casamigos.
Chapter 1: Who is Scott van den Berg and what does his team do?
Tell me about your team. A little bit about my team and myself. So we have been involved in 55 celebrity-founded brands, including some of the most successful ones. So I've worked with a lot of celebrities over the last couple of years to help them do equity deals with startups. And I've also been like an angel investor in companies of people like Selena Gomez, DJ Khaled.
We are officially co-investors in Jake Paul's Better and some others. And I also create a lot of content online about celebrity-founded brands. So whenever people are thinking about launching their own brand as a celebrity, oftentimes I'm one of the first people that they reach out to. And then the rest of my team consists of people like Ben Aycott, who co-founded Feastables together with MrBeast.
And that company is doing like $400 million in revenue in its second year of business. So one of the fastest growing consumer brands ever. Another one on my team is actually one of the co-founders of the Honest Company, Christopher Gaffigan, which he started with Jessica Alba and IPO'd in 2021. Honest Company and Feast of Walls are two of the most successful celebrity-founded brands.
So we like to think that beyond capital, we can also add expertise to these portfolio companies.
How did Ryan Reynolds sell Mint Mobile in three years for $1.35 billion?
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Chapter 2: How did Ryan Reynolds build a billion-dollar brand?
The company was founded in 2015 and Ryan Reynolds was actually an early customer and he absolutely loved the product. And they were able to strike a deal in 2019 where he became like a co-owner of the brand and also got like a 25% equity stake. And this allowed Mint Mobile to leverage Ryan Reynolds' millions of followers to basically promote the product for free.
And this is something that traditional brands have to pay millions of dollars for.
When it comes to Ryan Reynolds, he not only did it with Mint Mobile, he also did it with Rexham Football Club and Aviation Gin. What is his unfair advantage?
Chapter 3: What is Ryan Reynolds' strategy for business success?
I think his real unfair advantage is actually the way how he looks at business in comparison to other celebrities. So to be honest, like having a celebrity nowadays involved with a company is quite of a commodity. There's like thousands of startups that have like a celebrity co-founder, co-owner, creative director, whatever title you want to give it.
And if you also look at the type of companies that they want to align themselves with, it's often like luxurious products or aspirational products, that type of companies, often in saturated markets. And then Ryan Reynolds had like a click and said, why am I not focusing on unsexy, highly practical companies. So that's why he's focused on telecommunication.
He's involved with one password, a password protection company. Those companies still have like high acquisition costs. So thinking, Hey, can I leverage my platform? So instead of being a walking billboard today, promoting this, and then tomorrow promoting something else, he works together with four or five companies on a day-to-day basis and promote those companies for the next five to 10 years.
That's what he does. he's not working with 20 or 30 companies at the same time.
Chapter 4: How can startups successfully partner with celebrities?
You help startups partner with celebrities in order to found and scale brands. What's important when you think about combining a startup with a celebrity?
These companies always have to be product first. Obviously, having a celebrity on board will help sell the product, but they might help sell the first product, but the quality of product is actually going to determine that people buy a second, third, and fourth product. They always have to be product first, instead of like a celebrity first.
It's also really important is that there's an authentic fit between the celebrity and the brand. We call this celebrity product market fit, where basically the brand is aligned with the celebrity's persona, content, and audience. Before you actually make a jump in making this person like a co-owner or co-founder of the brand, we call this like dating before you get married.
So you first get dating, then you obviously get in a relationship, then you get engaged and then you get married. And this also makes it much more authentic. I think it's always so random when a new celebrity launched like a new hot sauce brand while they never talked about this openly. And you're like, okay, why are you an authority in hot sauce? And they're like, oh, I ate it with every dish.
And I'm like, okay. but you never talked about this openly. Whereas like if you have been working together with this brand and after six months you say, hey, let's partner up and become like a co-founder. The audience is like, oh, this makes so much sense because there's a deeper alignment there. Lastly, I would say is having a strategy.
You need to have a clear plan in order to make sure you can leverage the celebrity platform persona and networks to accelerate the growth of your company and make sure your product is part of their story as well.
There's a lot of celebrity startup partnerships that haven't worked. What are some partnerships that have worked? If you run a fund, then you know, having instant access to fund insights, modeling, and forecasting are critical for producing returns, which is why I recommend Tactic by Carta.
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Chapter 5: What are the success stories and pitfalls of celebrity partnerships?
And then she got to a point where like, I don't want to talk like in front of the camera anymore because I'm a little bit insecure. After a month, she was like, why don't I share this as well with my followers? Because I've been open about my whole life. So she started to talk openly about it.
Tens of thousands of women were like, wow, thank you so much for being open because normally influencers are just showcasing the good and never the bad. And yeah, really helping her followers be more comfortable. And then she was like, Hey, why I'm actually not going one step further. Why don't I work together with an R&D team for 12 months to find a solution?
So that's where she actually created Divi Hair, which is a hair serum which helps you fight hair loss. First year, that company did $40 million in sales, and this influencer only had 2 million followers. So I think a lot of times people are mistaken, the follower count, thinking, oh, the bigger, the better.
But sometimes it's just about community and finding that perfect audience fit with the product that they're selling.
If I'm a founder and I started a consumer brand, that may make sense to partner with a celebrity. Walk me through the process I would go about finding the right celebrity for my brand.
Recruiting first. So like going through multiple profiles to understand who would be the right fit. Obviously, first I have to also create a persona. So what are you looking for from this person? Who's your audience? And make sure that that audience is overlapping with the celebrity. Also finding out what is their personal mission. How much do they still have left in the tank?
A lot of celebrities, they're very successful. They've made hundreds of millions of dollars. Are they still going to care about your little startup wanting to make it another success working for the next five to 10 years? Really understanding also the celebrity's mission. And then you just have to connect with them.
So whether it's like a direct connection or via the management agencies, and if they're interested, you can basically go to the recruitment process where you're like interviewing them. understanding their personal missions, understanding if they're fit, having them test the product, and then doing that multiple times. A big mistake is that people always fall in love with a celebrity.
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Chapter 6: How to find the right celebrity for your consumer brand?
They're able to get in touch with a celebrity. And then, yeah, they're kind of starstruck because this person has 20 million followers. And then they're like, what if only 5% of this 20 million followers will buy the product? I'm going to be like a billionaire. But that's not the way I should think about this.
You should really think about, okay, who's the right person, not only from an audience perspective, but also from a personal perspective. who can help my company move forward.
What are the most common mistakes that brands make when partnering with a celebrity?
Not doing enough due diligence on the celebrity. If they're able to get in touch with a celebrity or five tele-management agencies, they're being proposed to celebrity. After one meeting, they're like, okay, we really have to work together with this person instead of actually looking at their audience and seeing if it makes sense.
They immediately jump to the gun and they say, oh, let's become like co-founders here. You have a 20% stake in my company and let's work together. Then they do a couple posts and they find out it's not leading to anything. And now you have a disappointing startup and a disappointed celebrity who's also not motivating to keep on promoting the brand.
But now that person is like an equity owner in your company, so it makes it really hard to get rid of each other. So that's why it's really important to date before you get married. And another mistake that a lot of these startups make is actually that They're kind of becoming too dependent on celebrity. So they're taking a celebrity first approach instead of a product first approach.
Let's say you partner with an actress and that actress has to shoot a movie for the next two months in Hollywood. She's not going to be as involved with your company as before. So you see these spikes in revenue and that is definitely something that you want to avoid. We always kind of shoot, build your company that is supported by the celebrity instead of dependent on celebrity.
When you're dealing with celebrities, you're not only dealing with them, you're dealing with their managers, with agencies. What is it like dealing with these gatekeepers? Thank you for listening to join our community and to make sure you do not miss any future episodes, please click the follow button above to subscribe.
It's a kind of a love hate relationship. It's a great question because kind of their business model is not really aligned with my business model. whereas I'm really focusing on long-term equity value. The traditional business model of these tele-managers is that they get a 10 to 20% cut of whatever the celebrity makes.
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Chapter 7: What are the common mistakes in celebrity partnerships?
No seed or series A startup just have a million dollars laying around for a celebrity, not knowing what they're going to get in return. So that is just quite frustrating to be respectful. A lot of them are talent managers. They're not venture investors, so they don't know how to analyze these companies.
The questions that you get in these calls, it's like the first question without actually having any context, it's like, when are you going to exit your company? And I'm like, well, maybe we should start with the mission and understand what the mission is and why they're doing this, what is unique about the company, and then talk about the exit later.
Because we're talking about early stage companies. And also if you approach them and you have like deal A, which is like a very high growth company, they have product market fit, but they only want to offer equity, and they have deal B. A normal startup, I would say, don't have product market fit, but they're willing to pay equity plus cash. The manager's influencing the celebrity to do deal B.
And what is very frustrating is three years down the line, company three goes bankrupt or B goes bankrupt. And then internally, the management firm is like, oh, we shouldn't do equity deals because it's not paying off. And I'm like, yeah, of course, because you're not picking the right companies.
Because if you pick company A, you actually would have been very successful even without the celebrity involvement. But luckily, a lot of them are now getting more entrepreneurial. The largest ones even get their own venture departments. But it's more like an exemption to the rule. And they're kind of being forced to as well.
Their clients, their celebrities are like, hey, my peers have been very successful in the space. So can you actually get me similar deals? So they're being forced to search for these deals. And if they can't find them, the celebrity is going to walk out of the door, including their 10 to 20% cut that they normally get.
It's interesting because there's this effect of seeing your neighbors or your friends get big exits. In Silicon Valley, nobody really believed in equity until their next door neighbor got $10 million or $20 million as an engineer from Google or Facebook. And then it started to become real, started to become visceral.
And I think same thing is happening in the celebrity world where you mentioned all the successful startups. The more of them that proliferate, the more celebrities will take equity. Post-earnings reports are more than just a data dump. They're a goldmine of opportunities waiting to be unlocked. With Dilupa, you could turn those opportunities into actionable insights.
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Chapter 8: What challenges arise when dealing with celebrity managers?
And it all has to do with their competitive advantage in company building as to have a building audience. They can basically drive near instant traction to their companies for free by simply posting on their social media channels. And that is something that traditional brands have to pay millions of dollars for. But not only that, it can also help you with retail. It can help with investors.
It can help you with PR. So there's a lot of benefits to these celebrity brands. And it has already resulted in companies like Skims by Kim Kardashian, which has set the IPO this year for $4 billion. MinMobile by Ryan Reynolds, we got like acquired for $1.35 billion. And Prime from Logan Paul and KSI, we did like $1.2 billion in sales in the first two years of business.
And many more seeing growth that traditional consumer brands have never seen before. And this is just the beginning. Literally every single celebrity is thinking about launching their own brand after seeing the successes of their peers. That leads to a lot of deal flow. We don't really care about the next celebrity tequila or beauty or apparel company.
We don't care about celebrities launching products in oversaturated markets. We care about celebrities launching and offering products and services that solve real customer problems. Those are the types of companies that we would like to invest in.
Tell me about your team.
A little bit about my team and myself. So we have been involved in 55 celebrity founded brands, including some of the most successful ones. So I've worked with a lot of celebrities over the last couple of years to help them do equity deals with startups. And I've also been like an angel investor in companies of people like Selena Gomez, DJ Khaled.
We are obviously co-investors in Jake Paul's Better. And some others. And I also create a lot of content online about celebrity founded brands. So whenever like people are thinking about launching their own brand as a celebrity, oftentimes I'm one of the first people that they reach out to.
And then the rest of my team consists of people like Ben Acott, who co-founded Feastables together with Mr. Beast. And that company is doing like $400 million in revenue in the second year of business. So one of the fastest growing consumer brands ever.
Another one on my team is actually one of the co-founders of the Honest Company, Christopher Goffigan, which he started with Jessica Alba and IPO'd in 2021. Honest Company and Feastables are two of the most successful celebrity-founded brands. So we like to think that beyond capital, we can also add expertise to these portfolio companies.
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