Transcript

Stardust: How To Make The Fame Economy Work For You | Zack Greenburg | TEDxPrincetonU

not too long ago I found myself in a crowded restaurant in Boston next to Ashton Kutcher who happened to be trying to fold himself behind a rather large pillar at the bar now he wasn't trying to hide from autograph seekers now he was actually running away from the hordes of thirsty young entrepreneurs who were hounding him to invest in their startups you see we were here at the Forbes 30 under 30 summit which brought together about 6,000 of the world's top young entrepreneurs and Ashton Kutcher who had just written a cover story about had begun investing in startups Airbnb uber Spotify you name it and over the period of a few years had actually had a 8.5 x return on his initial investment for himself and his fellow investors who came in and that's really the current state of what I like to call the fame economy which is the world of sports and music film TV of course as well and it's a scenario now where people like Ashton Kutcher can invest in some of the top startups in the country in the world even and and it's really an incredibly different case than the fame economy was when it started out about century ago so I'm gonna tell you about that today and and why me I'm a forbes entertainment editor the media entertainment editor I've been there for 10 years I've written three books on the business of Fame and I've also had a little experience acting myself that's me in 1992 young Lorenzo up there with Nick Nolte and Susan Sarandon and most importantly hopefully you'll all come away today with a little bit of information in how you two can use those secrets from people like Ashton Kutcher and apply them to your own life as well so in order to really fully understand that we got to begin at the beginning Hollywood stars born about a century ago Hollywood came into its own because people were escaping Edison and what I mean by that is early on in the 1900s the entertainment business mostly surrounded New York New Jersey that whole area and that was because Thomas Edison had kind of invented most of the filmmaking techniques that we know today right there and he owned all the patents and so a lot of these young film decided well we got to go someplace where we're not going to be getting into any trouble if we run afoul of those patents so they left for Southern California so they could slip across the border if anything went awry true story and quickly what developed in Hollywood it was a system of employees and owners so you had the talent he had the actors and they had the capital in the form of the studio and they almost became one with a company called United Artists that was founded by DW Griffith who's a famous director and three stars of the time including Charlie Chaplin and the idea was well we'll create our own studio we'll own the means and we'll you know we'll be able to be more than just employees it was a great idea but within a couple of years all of them had either dropped out sold their stakes or died and along with it went their dreams of owning Hollywood in its infancy and so what really sprung up next was the system of employees only right so you have a situation of somebody like James Cagney the number one movie star of his day in 1932 he was earning $400 a week and he went to Warner Brothers and he said that's not going to cut it and you know I just heard that Edward G Robinson got $40,000 for his next film so he actually threatened to leave to go back east to go study medicine at Columbia University because at the time stars made actually less than doctors and going to medical school was an acceptable Bluff if you will but they didn't call his bluff because it was such a good bluff and they gave him the same deal that every g robinson had to come and be in movies so this model still continued though and even Marilyn Monroe in the 1950s she was still making a mere hundred twenty dollars a week it wasn't until Elizabeth Taylor who you see there did Cleopatra for a million dollars in 1963 that we really started to see some of the figures that were beginning to become familiar with today what really started to change things was what I like to call the floodgates opening in 1969 there was a baseball player named Curt Flood and he was traded in the offseason he said you know what this is bogus I'm not just some piece of property to be bought and sold at will I'm going to challenge this thing called the reserve clause which is the part of most professional sports contra it says or said that you could only be on one team you could not become a free agent he did not win his initial lawsuit against major league baseball and in fact was sort of blackballed from the game entirely he was out for the entire year he came back in 1971 only played a few more games he received death threats his bed scene and he retired somewhat in disgrace but then four years later an arbitrator actually ruled in his favor and said yeah you can become a free agent and in fact everybody in professional sports can become free agents and this kind of led to what we know now the modern day of free agency and everybody switching teams willy-nilly but also making a lot more money and that kind of emboldened a lot of people as well not just in terms of the contracts that they got to go from team to team but in the kind of things that did off the field as well and I think there's no better example of that than Michael Jordan you see right there iconic Air Jordan one shoe he came into the league in the early 1980s when all of the sneakers were plain vanilla and the deals were just the same Kareem abdul-jabbar was getting about $100,000 a year for his shoe deal that was the best in the NBA at the time so Jordan comes in Nike gives him this five-year 2.5 million dollar deal they make these splashy red and black shoes and the most fascinating thing about that setup is that Nike said we will pay your fines if the NBA finds you for wearing these different looking shoes so of course Jordan shows up in the league he wears the shoes the NBA finds him and I keep aise him what happens when you try to prevent somebody from doing something or tell them they can't have it they just want it more and that's exactly what happened with the Air Jordans so Nike had projected that the shoe would do you know a few million dollars a year maybe was something like that the first year I did a hundred and thirty million dollars in revenues which just goes to show the power of telling somebody that you can't have something and then Michael Jackson comes along also in the 1980s puts out the best-selling album of all time thriller but that wasn't enough for him so he also went he started his own clothing line he did a endorsement deal with Pepsi the biggest endorsement deal of its age and then he started his own shoe line to did it I do as well as a Michael Jordan shoe line but it paved the path for people who would come next and namely guys like Diddy jay-z and dr. Dre who I like to call the three kings of hip-hop especially hip-hop monetization right so these guys were entrepreneurs by necessity when you think about it hip-hop started in the 1970s in the South Bronx and people weren't really wanting to pay rappers to put hip-hop on wax so it wasn't until really the 80s that you started to see mainstream hip-hop coming out and records and actually starting to move copies and it was even longer before major labels were really interested in doing that so a lot of the early record labels had put out hip-hop where companies like Def Jam by Russell Simmons and then later on you had bad boy by Diddy Rockefeller Records by jay-z these guys were entrepreneurs buy necessities not only in terms of records but in terms of endorsements and clothing lines and shoe deals so jay-z wanted to have his own endorsement deal for some kind of clothing so he went to a company called iceberg and this is in the mid 90s and he said let's let's do something let's have an endorsement deal they laughed him out of the room they wouldn't pay him they'd say hey you can have some free t-shirts if you want that was it so he said I'm gonna go start my own and so you ended up with this scenario where rappers started these gigantic companies that today have made jay-z Diddy and dr. Dre not only the three wealthiest rappers on the planet but the three wealthiest musicians of any genre in America and Diddy who I've interviewed a number of times traces a lot of his success to customer service he always likes to tell this story and he says when he was a kid middle school he had a paper not just one he had four because he's Diddy and you can't just have one paper route but the thing that he did to distinguish himself from his peers was that he would he would go and when instead of just tossing the paper willy-nilly into the yard he would go up and open the screen door and put the paper in between the screen door in the front door thereby saving his customers that extra step going downstairs going outside whatever the case may be and he was able to to use that to lure them back year after year so he's applied kind of similar philosophy in his business career when you think about it take his deal with sock vodka for di right he goes into nightspots into bars and clubs and and what-have-you and he'll actually go up to bartenders and say take that Ciroc off of the bottom shelf and put it up here where it should be because I'm Diddy and I say so and they listen to him it's paid tremendous dividends for him throughout his entire career now let's take a look at 50 cent he took that philosophy and brought it up to here in the mid-2000s he was gonna do an endorsement deal with vitamin water but he said instead of paying me in cash why don't you pay me in equity they did exactly that he started his own flavor called formula 50 and a few years later when coca-cola came in and bought vitamin waters parent company for over four billion dollars 50 cent walked away with over a hundred million dollars so Ashton Kutcher sees that and he said man what am i doing taking cash from Nikon for this endorsement deal that I just did at the time this is the the late-2000s down ashton kutcher was about to become the first person on the planet to hit a million Twitter followers and this was incredibly valuable to Silicon Valley right if you have that kind of reach and you're associated with the startup one tweet can really send something from you know being a nonentity to to a really hot young company and so Ashton Kutcher went up to Silicon Valley he leveraged that capital that political capital and he was able to get into the room with some of the the greatest minds the greatest venture capitalists in the world and pretty soon they started letting him get in on deal so one of the first was Skype he invested a million dollars in 2009 and then within a couple months Microsoft came in bought the company he quadrupled his investment he said this this is a pretty good plan I'm gonna start my own venture fund so we started a grade along with a guy named guy Oh Siri who's the manager for u2 and Madonna and they invested in uber Airbnb Pinterest Warby Parker Spotify and a host of others it did so well with that thirty million dollar initial investment that they gathered from friends including billionaires David Geffen Mark Cuban you name it they they were able to grow that to about a quarter billion dollars over just a few years and 8.5 x returned and now they have a deal with a giant company called Liberty media it's a hundred million dollar credit line to go out and invest in whatever the hell they feel like so some of the things that they're investing in now include zenefits which is an HR company and also handy which is a household chores company and kind of going to show that it's not always the most sexy investments that make the most money so now we come to dr. Dre who you know maybe is the best example of how normal people can use sort of their personal brand and make decisions in business that can lead to some of the most incredible products ever created so he was walking down the beach one day in 2008 with his buddy Jimmy Iovine who was then the CEO of Interscope Records and he had a shoe deal on the table much like Michael Jordan what I don't know if it was quite Jordan level but that was what he was hoping for and and Jimmy says forget sneakers using more colorful language let's make speakers so they didn't make speakers in the end they made headphones is you're probably aware it weren't just headphones so they were creating a category so when you think about it at the time there were other companies like bows and Sennheiser but they were just headphones Beach was a fashion statement and in order to really emphasize that Jimmy Iovine and Interscope Records made all of his artists wear these beats headphones in their videos so suddenly you had Lady Gaga and Justin Bieber and will.i.am all wearing those Beats headphones and having the beats speakers throughout all of their music videos and it really turned beats by dre into air Dre Dr Dre was able to now compete with Michael Jordan on those sneakers not by starting a shoe but by starting a headphone line so he and Jimmy Iovine told the CEO of Best Buy you got to tell your employees gotta tell your salespeople that they're not just selling headphones the the decision point is not do I spend $300 on this pair of headphones versus a hundred on a Bose or sennheiser kits do I pay 300 bucks for this pair of headphones or do I pay 300 dollars for those areas ordens and as a result Apple came in and for three billion dollars purchased Beats By dr. Dre in 2014 Silicon Valley had other ways of helping the fame economy as well so there's Jessica Alda and she's one of the celebrities who was able to sort of scratch your own itch and what I mean by that is when she was pregnant in 2008 with her first child she really wanted to a place to find organic baby products and diapers that had no chemicals in them and these kinds of things but she found that there were really no companies doing that so she decided to start her own she looked north through San Francisco and the venture capital world helped her raise about a quarter of a billion dollars over several years and she created what I like to call a billion dollar baby it's a company called the honest company it's worth over a billion dollars today and it all started because she said this is what I want it doesn't exist I'm gonna create it myself and now she's wealthy enough as well to invest in other startups like head space which is meditation app that I highly recommend as well so we've come a long way from the old days right in just a half-century since Curt Flood take a look at the NBA USA Team USA and and you'll see not just employees but owners right you got LeBron James he's got steaks and beets and also blaze which is a pizza start-up Kevin Durant stayed in Golden State so he could monitor his investment career a little more carefully from from close by acorns post mates and Zen reach are among his investments we got Carmelo Anthony over here he's got a fun of his own he's invested in lyft Casper and SeatGeek not too shabby for a amount of progress in just 50 years so that's the end or is it and I'd like to say it's not the end and there's another element to all of this which is what is it doing for the world and I interviewed Bono recently and he said this quote which i think is really important to keep in mind capitalism is not immoral but it is amoral it's a better servant than a master and to that end Bono has actually started his own venture fund along with Richard Branson and a bunch of other billionaires and it's called the rise fund what they do is they invest only in companies that are doing some kind of good in the world some kind of social good doing well by doing good and I think that's one of the key takeaways from the fame economy and some of these stars how they spread their star dust around all kinds of different things right to kind of recap you go back to Jessica Alba if you have an itch scratch it yourself it whew Diddy you can learn nobody's too big for customer service Ashton Kutcher proves that even sexy people invest in on sexy companies dr. Dre shows that really in order to have an incredible success you create your own category not just your own product and you aim it air jordan not just your competitors in your category and then bono do well by doing good so you follow these steps and perhaps someday you too may find yourself in a crowded bar in Boston surrounded by eager young entrepreneurs begging you for a little bit of your star dust and investment in their companies thank you very much you