Why I Invested in Mr. Beast’s Chocolate Bar

What's up, everyone? This is Alex Lieberman, co-founder and executive chairman of Morning Brew. Welcome back to Founders Journal, my personal audio diary, where I give you, the business builder, the tools you need to think better in order to build better, whether that's building a business, a team, or a new product. Today I am talking about my investment in MrBeast's new snack brand, Feastables. Also, make sure to listen to the end of the episode because I'm giving away free shit. And who doesn't like free shit? Let's hop into it. I recently invested in a chocolate bar brand. It may sound random, but I promise that it is calculated and it leans into what I know well. For those of you that don't know, MrBeast is one of the largest content creators on the planet. Beast has more than 155 million subscribers across 6 YouTube channels. His most watched video is a Squid Game reenactment that has 216 million views, and he makes millions of dollars through different lines of business, including merch, brand deals, a burger brand, and now Feastables. So here's how Reed, MrBeast's manager and co-founder of Feastables, describes the brand.

We kind of call it like gamified commerce business. And so that's really the model that we're running with. New products, not going to get into that. I'll say there's a lot of things in the works, starting with chocolate bars. We'll see where this goes. I'll let Jimmy probably leak that stuff, which he probably will in the next few weeks. But yeah, there's a lot of things. This is a snacks company. This isn't a chocolate company. I think for us, it was launching it with chocolate with the hook around You know, getting a mystery ticket, being able to compete in a MrBeast video to win the Feastables Chocolate Factory.

To understand why I invested in a chocolate bar brand, you need to understand a few trends that I'm betting heavily on. The first trend: we are in the early days of the creator economy. The power of creators will continue to grow as they build audiences and have more and more tools to monetize themselves. You see, people resonate with people. It's always been that way. But for decades, people didn't have the tools to build as large of an audience as institutions. And with the internet and social media, that totally changed. And with platforms to earn money, more and more people are going to have the ability to turn being a creator into being an entrepreneur and a business person. I believe we're early in the creator economy and we're going to see more and more individuals become creators and ultimately become massive businesses over the next several years. Second trend, that in a world of abundance, distribution is as important as product, and distribution is harder and harder to come by these days. It's very simple. There is a supply and demand imbalance. Supply of content around the world is skyrocketing because of all of the tools that I just mentioned. More and more people feel empowered to create new content every single day. This is leading to an overwhelming amount of supply of content hitting social media and the internet at every moment. That said, our attention is not changing, and it's actually more fragmented than ever because there's more choice of things to do with your attention than ever before. Supply completely outweighs demand, which means that content quality really matters, and the best creators will attract the limited attention that's out there. Then the other piece of this formula or this trend is from a company perspective. Not only is it wildly difficult to cut through the clutter as a content creator, it's equally as hard to cut through the clutter as a brand. More companies are being created than ever before, and because of the limited attention that I just spoke about, companies are finding it more difficult than ever before to build distribution, a.k.a. a loyal customer base. Now, for a long time, companies relied on paid advertising to solve this problem. If you had the money, you could buy attention via platforms that aggregate attention— platforms like Facebook, Instagram, Google, etc. Heck, it's how Morning Brew grew so quickly in 2018, going from 100,000 subscribers to 1 million subscribers. At one point, we were spending $500,000 a month to acquire subscribers. But that strategy is changing quickly as well. Paid marketing, paid advertising is more expensive than ever before. According to one source, Facebook is 33% more expensive today than it was in Q3 of 2019. Instagram is 23% more expensive over the same time, and Google is 23% more expensive. This is partially due to companies having more competition for digital advertising as businesses shift their marketing budgets from traditional advertising— think billboards and TV ads— to digital— think social media. It's partly because there are more companies competing for finite ad space, like just more companies exist and are being created every single day. And then it's partly because of Apple's new data privacy feature that makes tracking significantly harder for platforms, especially Facebook, which is causing costs of advertising to go up. Now, there's a third trend that I'm betting on as well, and it is that brand really, really matters and that there are a ton of old school brands that don't yet have contemporary competitors but will in the coming days. Just think about how many big direct-to-consumer companies disrupted older incumbents. Harry's and Dollar Shave Club disrupted Gillette. Casper disrupted Sealy or Serta. Bombas disrupted Nike or Puma socks. Yes, some of these new digitally native brands are introducing totally new and innovative products and in some cases creating new categories. But I'd argue that the majority of new brands are making marginal improvements and leaning into brand to win over a new base of customers that are just simply looking for something different than what legacy companies offer. And so I think a formula for success for a number of new brands today is marginal product improvement and massive brand improvement. So let's now bring it back to MrBeast and Feastables. MrBeast and Feastables is a bet on these 3 trends that I mentioned above. It's a bet that it's early days of the creator economy and audience will continue to flow to great creators. It's a bet that audience building and distribution is really, really hard to build. And since MrBeast is one of the best in the world at it, his brand and audience will continue to explode. And it's a bet that new products that are wrapped in really compelling brands can beat out incumbents purely on brand resonance with a digitally native audience. But beyond that, I think they've done a few really smart things with Feastables specifically. I believe that chocolate bars are a great authentic wedge into a way bigger brand around just snacks. When you think of kids with a sweet tooth snacking on unhealthy treats, The first thing that pops into my mind is a chocolate bar. And at the same time, I can't think of a chocolate brand that's catered to a millennial or Gen Z audience. When I think of chocolate, I think of Hershey's or Godiva. Combine the market opportunity with the fact that I think this also just plays really, really well into MrBeast's existing brand. MrBeast, the YouTuber, is all about games and giveaways. Well, by launching Feastables with chocolate first, he literally is making himself into a modern-day Willy Wonka. He is gamifying the Feastables experience with surprise giveaways that customers can earn, ranging from Teslas to jet skis. But on top of that, MrBeast, as the modern Wonka, is giving away a chocolate factory, like a literal chocolate factory. And that factory will be featured on an upcoming video to his 90 million main channel subscribers. Now, there's one last thing that I love about Feastables, and it's probably what makes me most bullish on the long-term success of this brand. And that is the fact that Beast and his team have an awareness around what they don't know. MrBeast and Night Media know how to create great content, build a massive audience, and monetize that audience with brand deals. They know nothing about launching a physical brand, The supply chain, the logistics, ongoing R&D. It's a completely different business, which is why they decided to hire a 10-person team at launch for Feastables with a CEO who is the former president of RXBAR and grew the brand to ultimately a $600 million acquisition by Kellogg. And that is why I put my money where my mouth is and invested thousands of dollars in Feastables. It bets on the power of creators. It bets on the importance of branding. It bets on the value of owning a loyal audience. And it bets on specific decisions that the team made to help this brand stand out. Now I'm going to turn it to you. As I mentioned at the top, I'm giving away free shit and here's how it's going to work. I told you how impactful Ray Dalio's book has been on me. For those of you that didn't listen to my recent episode, Ray Dalio is a prolific investor and billionaire, But he's also just an amazing sociologist and historian who helps you develop better mental models for yourself. Well, I want to spread that knowledge, so I'm giving away 5 copies of his book Principles. To qualify, it'll literally take you 1 minute. First, rate and review Founders Journal on Apple Podcasts or Spotify. Second, email me at alex@morningbrew.com with a screenshot of your review. I will be picking the 5 lucky winners at the end of this week. Thanks again for listening, and best of luck in the giveaway.