Defining celebrity, and how to deploy them for your startup

Defining celebrity, and how to deploy them for your startup

Celebrity is defined by an ability to draw attention. Attention is valuable for a startup because attention is necessary to distribute and sell product. All business models simplify to three components: capital, product, and distribution.

Capital is the most commoditized component out of the three. Money is by definition fungible, which means that a dollar you pick up off the street, the dollar you get by selling company stock to the most prestigious institutional venture capitalist, or the dollar that you earn from a customer is the same equivalent dollar. Cash is the least scarce. There is more money in the world swirling around than good founders and businesses. There are myriad money allocators and fund managers who’s job is to find ways to invest money, and it’s one of the largest and most popular career fields today.

Product and distribution are more interesting components. Defensible product and durable distribution is scarce, and truly excellent product and truly excellent distribution are the ingredients for business empires.

The more differentiated the product, the less excellent the distribution needs to be, and vice versa. Achieving both like what Apple has accomplished with its iPhone — the best phone and the best marketing — makes Apple the most valuable business in the world. However, having one or the other is usually good enough to make a phenomenal business. Build artificial general intelligence (AGI) and you dominate purely through product. OpenAI is showing early signs of success on this path and is working to reach escape velocity with investments into software infrastructure, models, and training and reinforcement learning data. LVMH, on the other hand, has little true product differentiation but has amazing distribution driven by brand marketing and ability to durably draw attention. This conglomeration of European leather and textile soft goods and variations of fermented grape juice makes LVMH’s owner Bernaud Arnault the richest person on the planet (depending on which stock market day you pick).

Celebrity can be utilized to accelerate distribution. Rather than spending money to buy attention and reputation through marketing, a company can instead rent the attention and reputation a celebrity has accumulated. For the right business model and celebrity combination, this saves time and money for the company and builds tremendous wealth for all stakeholders including the celebrity. Just as product and distribution quality must be evaluated for its attributes, case by case, we must evaluate each celebrity in the same way. The key three attributes to consider are distribution channel control & ownership, authenticity and affinity strength with their demographics, and durability.

Celebrities traditionally have built their attention and reputation through entertainment. They entertain society with their music, art, film, commentary, or athletic prowess i.e. musicians, artists, actors, public intellectuals, or athletes. This past decade has been a unique development in celebrity with differentiated attributes from their more traditional kin. I call this a verticalized celebrity (vert-celeb) vs. a traditional celebrity (trad-celeb). Some may call vert-celebs creators, podcasters, Youtubers, but I find this imprecise and narrow in scope for this essay.

The key business difference is that a vert-celeb owns their own media and distribution channels. A trad-celeb does not; their media and distribution channel is actually owned by another entity. Music entertainers are captured by record labels, who own their masters and thus the economic rights. Acting entertainers are captured by the studios, who own the movie and thus the the economic rights. Athletic entertainers are captured by their respective leagues and team owners, who own the TV, ticketing, and advertisement rights, and thus the economic rights.

Vert-celebs verticalize the entertainment and the distribution media into one entity, and with internet distribution are putting up viewership and engagement numbers that compete directly and often surpass the biggest traditional music, movie, and athletic products.

Now that we have clear definitions of celebrity for business, we have a straightforward approach to evaluate celebrity for business.

For the reader who’s a company founder: this is guidance on how to think about celebrity partners. Most celebrity collaborations fail because the company nor the celebrity understand the fundamental tension, dynamics, and frameworks for success.

  1. Evaluate trad-celebs as a name, image, likeness (NIL) licensing deal.
  2. Evaluate vert-celebs as a media and distribution channel deal.

Most early stage start-ups have no distribution, so a NIL deal cannot be fully exploited because you have no channels to distribute the NIL. You have to pay twice. Thus, a vert-celeb a/k/a a media and distribution deal is often more favorable and thus must be evaluated against buying direct media via advertising platform. It is much easier to buy direct media, so that's why Google and Meta are some of the largest companies in the world worth hundreds of billions of dollars. But the ease here potentially means less efficiency than working through a vert-celeb.

For the reader who’s an aspiring celebrity: in addition to your art and craft, own your distribution and cherish it like the equity in yourself (which it actually is). Develop your own business skill and/or bring on partners who can complement your ability to command attention with an ability to harness and capture business value. This is the future of the celebrity and entertainment industry.

For the reader who’s a trad-celeb: you must immediately deploy your remaining clout into the assets and attributes of vert-celebs. For many of you, it is often too little, too late as celebrity is fleeting.

For the reader who owns traditional media channels: you’re in a better spot than your trad-celeb counterparts. Distribution and media channels are much more durable than celebrity. This is why you’re the one that actually has the wealth. Use your assets and wealth to your advantage and convert and re-position those legacy assets in a way relevant to the new paradigm.

For the reader who’s an agent or manager: this is also guidance on how to navigate the new attention battlefield. The traditional wining-and-dining and the old boys clubs are being disrupted. Understand the new paradigm and adapt with your clients to compete.

For the reader who’s a vert-celeb: you are better positioned than trad-celebs, but you still face the same problem as any celebrity. Celebrity is fickle and fleeting. How will you prioritize deepening your affinity to your core demographics versus broadening your content? The forces that made you possible will also increase the fractionalizing of your affinity groups and spawn newer and fresher competitors.

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