Lessons From Billionaires: How To Start A Successful Business

Celebrities are starting businesses. A lot of them are out earning their careers as entrepreneurs. What can we learn from this trend and what strategies can we implement? We'll look at that. Plus we'll predict the next young upcoming billionaire. This and more Today on Capitalism TV. I'm Ryan Daniel Moran. This is capitalism.com.

You may have noticed that celebrities are becoming entrepreneurs, that Instagram stars and movie stars and sometimes even podcasters are starting businesses that reach tens of millions of dollars, sometimes hundreds of millions of dollars. Some of them become billionaires as a result. I was first introduced to this trend when I started following the work of Brian Lee, who has become an acquaintance and a little bit of a mentor, at least from afar. But we met for the first time at the Capitalism conference and in 2016, I think. And Brian has four, three or four billion dollar companies on his resume as a 45ish year old man. This is insane. He built Legal Zoom. He started Shoedazzle with Kim Kardashian. He built the Honest company. He was the first investor in Honey, the discount app, and now he's building Art of Sport with Kobe Bryant. And I asked Brian Lee a little bit about his strategy. What the heck is he doing differently than most entrepreneurs? That gives him several billion dollar companies in a relatively short amount of time. And it didn't take long to be able to distill his strategy into being based around the idea of going where the eyeballs are concentrated. So LegalZoom was built around one influencer. Honest company was built around 1.1influencer. ShoeDazzle is built around one influencer. And we see this trend continue where we have influencers, celebrities, people who have audiences who are launching brands and hitting the jackpot as a result. What can we learn from this? There's several things that we can take away from this strategy. But before we go into any of this, you might be sitting here thinking, yeah, well, I don't have an audience, I don't have a following, I don't know any celebrity. So I want you to see the clip of Brian Lee saying, the first time he pitched an influencer, we contacted.

Robert Shapiro and got him to be the face of it. And then once he was the face of it, we started seeing that he would go onto tv and we didn't even ask him to do this, but he would go on to CNN to talk about some trial. And then he'd also mentioned, oh, and I started this company called legalzoom.com and he would talk about it and then we get more orders and that's when we realize the power of media, if you are going to work with an influencer or a celebrity, you want to make sure that it comes from a place of authenticity. Because consumers are smart. They're not just going to buy something because someone tells them to buy something, especially if there's a disconnect. But when it came to, let's say, Robert Shapiro and Law, it made perfect sense when it came to Kim Kardashian in high heel shoes. And it made a lot of sense, right? Jessica Alba being a new mom and starting a baby company made a lot of sense. And so it has to come with that type of kind of relatability.

Now, of course, that was 20 years ago, but even Bryan Lee started out knowing nobody and making some phone calls. I always say the easiest way to get your foot in the door, go for the easiest, yes, possible. Can I share your content? Can I sponsor you? Can I xyz? Everything comes down to relationships. Now we can look in the media and see examples of this strategy working. Ryan Reynolds has a successful tequila brand. George Clooney has out earned his acting career. Rihanna has made over $100 million in her beauty line. Drake has out earned his entire career. Now, on the business side of things. So we see this all over the place. So celebrities and influencers starting businesses and becoming rich in business as entrepreneurs, you as an entrepreneur can take a few lessons from this. If we look at the strategies built around some of these influencers, some of these brands, it really comes down to three pillars. There is the product line, there's your sales channel, and then there's your audience. Those are the three pillars. Product, sales, sales audience. Most entrepreneurs focus on just one of these. So if you sell on Amazon and you only ever sell on Amazon and you're using Amazon to make your decisions and launch your products, you're Amazon specific. You're only thinking about your sales channel. Well, if you look at something like Quest Nutrition, Quest Nutrition at one time was the number one selling product on all of Amazon. But they weren't an Amazon company. They used influencers and had an innovative product. If you are just product specific, if you're just creating new product without any sales channel and with no audience, well, now you're an inventor who is broke.

And if you're just focusing on audience, then you might have fans, but you have no product and you have no sales. It's the combination of all three of these pieces that determines when you've really got fire in a business. I know a lot of entrepreneurs struggle with this, so I recently gave a presentation about bringing these three pillars together. I want to show you a clip from that talk. When you've got this.

Audience and product and you don't have this, you got audience and product, you know what you.

Have.

You got fans. Right here is actually where profit margin is made. Right here between audience and sales channel.

If you just have fans, you've got a really, really great group of people and you're broke.

If you just have revenue, then you make a lot of sales and you get to say you have a seven figure business and you're broke. If you have audience in a sales channel, you have really high profit margins, but you don't have scale when you bring all of them together. This magic circle, this magic section right here, this is a brand.

This is a business. This is something you can scale. That is something that is what people are buying. When you get acquired, if for nothing else, start to practice the collection of turning sales into customers and they're different. Peter Drucker had two functions of business. Get customers, keep customers. Taking a sale on Amazon is neither of these two. I think the easiest example of everything that we're talking about right now is Kylie Jenner. Kylie Jenner at 21 became the world's youngest self made billionaire. She made all of her money from her cosmetic line. She's 21, but she didn't make it from endorsements, she didn't make it from appearances. She. It came from creating an asset, it came from creating the business. Now that was years of building up the audience, building up the following and then having a smash of a launch. What we can learn from this is if you know who your audience is and they're listening to you and you come out with a product that serves that audience and you have a predictable sales channel, you get rich. Most entrepreneurs are looking for the short term win. They're looking for, okay, there's an opportunity to sell this thing on this channel and that can be a nice way to get started. But it's no way to build a business. If you're doing that, you have a hustle. You basically have an elevated version of going to garage sales and selling the things that you find at garage sales, which is an awesome way to raise some cash and get started. There's just no way to build a real business. The way you build a real business is by delivering good products to a specific type of person and putting them on a sales channel. I wish it was more complicated than that because I could do a lot more content. It was more complicated but it is those three pillars that brought together that create something out of nothing. That is why Kylie Jenner is a billionaire. That is why all these celebrities are able to have these big, big, massive wins very quickly, because they have an audience, and they're delivering something to that audience, and they can amplify it with a lot of attention. That's what we can learn from all these big successes. I work with a lot of product owners. Once in a while, I have workshops here at my house, and we were talking about Kylie Jenner's success at a recent workshop and talking about what. What else we can learn from her. So I want to show you a clip from that workshop. Are the products that great or that different? Are there no other. Is there no one else who could do a lip kit? Now, when I've asked this in front of other groups, I've been told they're great and people love them. Awesome. But the audience is the distribution play. She's the distribution. She's the audience that comes in and lights that on fire and creates a $350 million company. And just like the exercise that we went through this afternoon, it's a group of people that want to be a certain way, and Kylie represents who they want to be like, popular on social media, popular for physical appearances. Posh, rich.

Young.

She's the ideal representation of who those girls want to be like because she has the distribution to that audience. It's simply a matter of plugging in products that allow them to be the hero in that story. It's not even like this is the first time that a Jenner or a Kardashian has gotten rich building a physical product.

Kim Kardashian did it with my buddy Brian lee shoedazzle back 10 years ago, and her audience was a lot smaller back then. And so the reason why we go through all that hard work of identifying who is. Who is this. Who is this ideal core person is because if you go out and get the person or build the people that have that in one place, then this process just.

It goes. So before we go into some tactical implementation of this, we're gonna make a bold prediction about who the next billionaire is going to be using this strategy. As we look at the current market, we can see a lot of attention going into two places. We see it going into product brands, and they're going towards audiences. So if we look at how these two worlds might merge, where is there an audience that can be merged with consumer product brands? I think the next young entrepreneurial billionaire is Ryan From Ryan's Toy reviews.

Roblox YouTube star Ryan is only 7 years old, but he's already selling out aisles of toys at Walmart and Target like a retail veteran. What's it like to see yourself right there?

It looks so cool because I can see myself.

His eggs and Squishies are some of the hottest toys this holiday season. It all started with YouTube videos he made with his parents at age 3. See you next time. They've now been viewed more than 25 billion times, transforming the boy wonder into the eighth highest paid YouTube star. He made an estimated $11 million last year. And retailers have now turned to influencers like Ryan to get families into their stores. Why do you think all these kids out there like watching your videos?

Because I'm entertaining and I'm funny.

But like many first graders, he's just a kid, too, using his first tooth and avoiding his veggies. He is a picky eater and he's.

Also very sociable at school.

And toys are just the beginning.

What do you want to be when you grow up? I want to be a game developer.

With no plans to stop playing anytime. Jolene Kent, NBC News, Burbank.

We look at that audience and how raving that audience is. That kid can launch whatever toy brand he wants and have a billion dollar business. So let's put this all together. What can you learn from this trend of influencers getting rich by launching businesses? Well, I think that it's wise for any business to put their energy into audience building and audience partnerships. So if I look at my career, I think the best opportunity staring me in the face right now is to build brands around audiences that don't have the time or energy to put focus into developing products. It's something that I pursued and something that we're working into some of our existing businesses. But if you're starting something new, it makes a lot of sense to say, okay, who is this for? And who in my network can I partner with to create audiences so that I can grow these businesses faster? At one of our recent events called the Capitalism Conference, we had an audience panel. And this audience panel was either a group of influencers or there are people who worked with influencers or they worked with certain advertising budgets to be able to monetize audiences. And one of my buddies here in town was on the panel. His name is Zach, and he started a new, new food line that was kind of an experiment for him. He didn't know if it was gonna work. There was no data in the marketplace to say this was gonna be a great product. He simply had a really raving audience and it was something that they wanted. And so he just used that audience data to tell him what product to launch. He had a buddy do all of the product development. So Zach stayed in front of the audience. The two of them came together and partnered up to bring this new product that had never been created before and put it in front of his audience. Here are the results from 0 AD spend. Very little pre launch and not a perfect marketing plan. Here's what he had to say.

Your audience will tell you what they want. So we had built a brand around solving, obviously my first problem, which was creating a healthier option. So for example, you'd have to cheat on your diet and you'd have these cheap. You'd have to have a cheat meal. So wanted to recreate these cheat meals in a way that you can eat them on a daily basis and turn them into everyday meals. So we built an audience that loved that. But then there was one recipe that we gave them. They loved it like crazy. And it was a protein cookie butter recipe. And one thing that they loved was obviously it solved the craving and it had great nutritional value to it. But they wanted something that was like.

An add water product.

So something that they didn't have to mix on their own is super convenient. And they kept telling us that, like, okay, we've never created a physical product before. Let's figure it out. And so we created a physical product and we launched it. So we created 10,000 units, ran zero ads, zero ad spend, literally just from saying, hey, we created this swipe up, check it out, and we went through 10,000 units in a week.

It's a good start to a business. Of course, I think he would have had way more success if he had come out with a hair care line. If anything, to mimic what he's got going on, that that's a billion dollar idea right there. Every entrepreneur wants to make more sales, every entrepreneur wants to make more money. And most people will look at what they're doing right now and how they do more of it in order to create more sales and get more growth. I think a faster way to do that is look at where there are assets that you're not putting attention on and create a partnership there and bring it into what you've currently got going on. Gary Keller, the founder of Keller Williams, he says that the most valuable thing in your business is your systems. And systems are not simply a group of documented processes sitting on the cod somewhere being unused by Your team. It's how you go about creating value in the world. And when you partner your systems with someone else's systems, that's where one plus one equals five. So if you take someone like Zach, who we referenced earlier, who's got this system for getting a message in front of a group of people, and you go out and you create the systems or partner with the systems to create product, and you bring those two things together and you have a partnership. That's where real value is created. So a lot of entrepreneurs are protective of their partnerships because they have this idea that they're giving up something. But what we're really doing is creating new value together. If you own something that creates value for a group of other people, that's how you get rich. I think the most predictable way to do that is by creating a product, partnering with an audience, bringing them together. Magic happens. If you want to learn how to do that, go over to capitalism.com start. There's some free resources that will show you exactly how to do that. We've helped hundreds of people have successful businesses. It's a fairly simple formula that you can follow, and if it resonates with you, then the plan works really, really well. So that's@capitalism.com start. Look, the purpose of business is to solve problems, is to create value. It's to drive change. If you want to create change, it starts with you. It doesn't start with somebody else. It doesn't start with the government. It starts with you creating something that is in value to other people. So you, as an entrepreneur, you are the one driving change in this world. And it's an honor and a privilege to be serving and supporting and speaking to those of us who are creating change. So thanks for watching. It's a privilege and an honor. We'll see you on the next episode.