April 1, 2020
98% of the Brands You Love Will Collapse

98% of the Brands You Love Will Collapse

– The old world was you got, you started a brand and you fucking paid to get even a prayer of getting in. Now you build a $100
million dollar business, direct to consumer, and
you’re going in with leverage. This is one big game of leverage. (upbeat music) (cheering) You got your perspective. I just want to be happy,
don’t you want to be happy? (upbeat music) Super excited that you’re here. Excited for this fireside chat. We have plenty of seats
so everybody standing in the back feel free to fill out. I apologize if I rush out on a whim. I gotta get to the airport and I’ve learned my
lesson on missing flights in this town in the past, so I’ll be following D-Rock’s call
and so let’s get into it. – Yeah nice, so my name’s
Rebecca, I’m a senior reporter at The Drum and I cover brand, digitals, and I’m excited to be here today to chat about pure digital brands, and I guess we can kick
off by talking about Empathy Wines, which
honestly I want to try. Can you give me a bit of
insight into into why you wanted to chat, seeing big
trends and brands moving into the DtC space. We were watching your clip. You got that? – For context you know, I
wrote one of the first checks into Birchbox and a lot
of early kind of 2011, 12 DTC movement and obviously
in the last 24 months, because of the sheer scale
of the underpriced attention of Facebook and Instagram and
the amount of capital that is available and the growth
of Shopify and Amazon. All these macrotrends have
led to an enormous growth of direct consumer brands. So I’m watching that and
obviously my great thesis of creating VaynerMedia was
to buy nostalgic brands, so I haven’t been highly
motivated to do Gym Shark, or Fashion Nova, or you know, Hims. Like that, that’s not
where my passion lies, though I’ve been seeing all the growth. In parallel, I had two specific
executives at Vaynermedia that were part of a team
called the Office of the CEO so in theory, a couple
years ago, I realized how stretched I was so I
created a team to act like a chief of staff and
there was four of them and after a year of it, it
just wasn’t as efficient. You know, I moved to
on chief of staff which has been working much
better, but I had these you know, multiple executives
that were super talented. Two of them, John Trowman and Nate Troder, who are my partners in
Empathy Wine, have been with me since they were interns
in my wine business before VaynerMedia and then came to Vayner. John had left and worked
for a distributor even, for a year and 1/2 and came back. So, as an entrepreneur, we’re
making this macrodecision on the Vayner side, I’m sitting with these incredible human
assets which is really, kind of the KPI of the whole
Vayner thing to begin with. There’s this incredible push
of DTC and, as a third layer, I’m weirdly missing wine
for the first time, right? When you do something for
20 years, and its like the only thing you’re passionate about, you get burnt out, and so
when I left Wine Library to do Vayner, it was so refreshing and I was excited to not
even think about wine, and then a couple years later it was fun because I started looking
at wine like a consumer, you know my whole life, I’d go out to a restaurant like
they’re making a fork-ton of money off this and this wine sucks and all that kind of stuff and so, that got fun and it
started becoming fun again. Nobody was doing anything super crazy. There were some wine clubs that were doing incredibly well
but there’s no purebred, direct to consumer brand
at the kind of scale, so that’s why it happened. We’re off to an incredible start. We’ve sold almost $2,000,000
worth of inventory in the first six months without spending any media dollars, all off
organic, against my brand. We did that as a strategy to see if we could gleam insights at scale for my audience to make
us deploy the media even in a better way, the AB testing against Gary fans versus wine drinkers as a whole. And so, the next year
for Empathy is gonna be really exciting because
I think we’re really now gonna act like a brand more so than the leverage off a personal brand. – Well yeah, you mentioned that actually. I’m interested to find out
more about the media plan and what that looks like for Empathy Wine ’cause you launched it on Instagram. Is that the most important
platform in your business? – You know, the funny part is I’m not sure and we launched it everywhere, right? You might have saw it on Instagram, but we put out YouTube
and podcast and Twitter and Linkedin and email and
you know, we’re pretty excited to go as many platforms as possible. To bring this much value here, I think one thing for
everybody to think about with direct to consumer
brands is to understand, I set up earlier, the phenomenon
on the consumer’s side of why it’s happening. There’s a very important thing that I said very quickly and I’ll say it again. There’s so much capital
in the world today, that VCs have to deploy it. That’s how they live and one thing that everybody really needs
to realize about some of these incredible
brands that we all love, on Instagram, or pre-roll
YouTube, or wherever you see them is most of them are actually underwater. They’re raising so much
capital is so they can play a game where their
customer acquisition is $31 but their margin on that is 19 so they’re 12 bucks underwater. Our clients at VaynerMedia, for example, or established businesses that are held accountable to Wall
Street can’t do that and so, there is some
incredible things that are going on with these
brands but if tomorrow, the global economy starts
to start the process in the other direction,
98% of that brands that we think are crushing it
will be out of business ’cause they won’t be able
to raise the next round, they’re too underwater,
the math doesn’t work on customer acquisition and profitability and it’s game fucking over. And so we need to have a little bit better of a conversation, we need to have more of a practical conversation around DTC brands to realize
many of the ones that we put on a pedestal,
I would say my friends, it doesn’t take a hero to
lose money every month. And I think we need to be thoughtful that a lot of these brands are
not building actual brand, they’re really CAC and LTB
conversion sales machines that are arbitraging against
influencers or Instagram and they need to be very thoughtful about building brand right now because when shit hits the fan, it will be brand that will get them through the dark time. – What is a nice way for DTC
brands to build brand then? We’re seeing a lot like our
old, instructional TV ads from these companies. (sighing) – I think it’s a huge mistake and I think you’re seeing it because
they’re wasting money and they don’t care and I
think that the biggest delta is we literally, what’s amazing
to watch these brands go so heavy on traditional,
above the line creative, is that the great case study
of modern creative comes in the form of Dollar Shave Club. The Dollar Shave Club
video is this generation’s Just Do It or Where’s the Beef. It really is an iconic
piece of creative that birthed the billion dollar brand. The number one mistake that
direct to consumer brands at scale are making
right now is not creating long form video on Facebook and YouTube to build brand equity. And that’s how I see it
and I think there are a couple brands that are
actually, for that matter, Purple Mattress. If you nerd on this stuff, you should go look at what
Purple Mattress is doing as a company versus what Casper is doing as a company, right? One is very hardcore DTC
and is growing as a leader, Casper, the Purple is
creating a lot of creative. The $180,000 production
and creative execution risk of making a funny video, a
video that makes you cry, a video that makes you
think, if you hit that, your CAC and LTB numbers
get really good real fast, ’cause now you’re trading on brand and that’s the ultimate goal. – And then in terms of platforms– – Yes – Does that mean for
social media platforms, retailers, what does the shift mean? – Well, it means that the
Facebooks of the world, the Googles of the world
are getting more of their, I mean it’s crazy, ou have
two gals in the middle of nowhere, starting a direct to consumer peanut butter brand and two
years later, spending more money on Facebook and Instagram than does. – Mhm – Like if you go talk to
Facebook executives that run their business, they’re
getting way bigger budgets from companies you’ve never heard of and that is probably my favorite thing that’s kind of going on. Literally, literally, when
you look at the top spenders on these platforms, it
will blow your mind. Literally a brand you’ve never heard of and that’s because one
trades on sales data and another one trades on
internal MMMs or reporting. – Coming back to your earlier
point, is there danger in building your whole
brand on one platform? – Yes. – What’s the danger of that? – You become one dimensional
and a one dimensional fighter is vulnerable. (chuckling) – Well what I resear– – And again, instead of
just making a fun statement, let me add a little bit to that. Look, every time you’re
looking for growth, you know, this is actually a fun
way to create some clarity about how I think about the world. I don’t hate traditional media. I think over a long period of
time, it became overpriced. I actually love outdoor, for example. Outdoor gets seen, you know? Not everybody’s looking at their phone every second and if you really like, I love UIing apps in real life so I like outdoor quite a bit. I just like to buy it when it’s remnant and I can buy it for one
month for 2000 bucks instead of the 24 thousand they want when you buy it for six month contract. So to me, the danger of
being one dimensional is, why would you wanna be
one dimensional, right? You’re gonna squeeze the
crap out of one fruit and you’ve squeezed all
the orange juice out of the orange but there’s
a grapefruit right here and you should start, and even
if the grapefruit’s small, there’s still juice in there and so to me, I think about overpriced
and underpriced attention and as real estate prices
come down in a soft economy and more internet business,
inevitably its gonna turn and storefronts are gonna be a good buy. So, there’s a bunch of companies
that are about to go out of business because they signed
big leases seven years ago, didn’t factor in e-com,
and they’re underwater, they’ll go, demand for retail, everyone’s a headline reader like don’t buy retail, it’s the internet. So, what will happen is
demand will go down so retail, in two to three
years, especially if the economy gets soft, is gonna be a fucking deal for these brands that get walk in traffic. Still, I mean everybody
here bought something in the store recently, so
yeah, there’s just no reason to be one dimensional. – Mhm, What do you think
about these brands moving into physical retail spaces? Hardee’s in the U.K.
has just done a big deal with Boots pharmacy. – I saw. I’m into it. I think you expand your business, you’ve got the leverage as a DTC brand. You know, the old world
was, you started a brand and you fucking paid to get
even a prayer of getting in. Now, you build a $100 million
business direct to consumer and you’re going in with leverage. This is one big game of leverage. – Well, I want to take some
questions from our audience if there are any, before
Gary has to catch his flight We’ll just do it now. – [Man] I’ll ask a question. Your recent campaign with K
Swiss, you were out, I saw them. – Thank you. – [Man] it’s incredible by the way. – Thank you. – [Man] That’s very much a branded piece by yourself I imagine. Where do you see that going, you know, and where does this kind of fit into your vision of doing brands? – So, just to catch up everybody, this week we launched the fourth
collaboration with K Swiss and what we decided to do
this time was do an above, you know I love eating my own dog food, so I’m yelling at everybody
for not doing longer form brand videos to drive their business, and so I said then I’ll do it for this. And then I said what’s
underpriced attention? Influencers are underpriced
so I reach out to a huge slew of influencers who follow
me and offered to pay them and we made a very long form
video at Vayner productions. I was very uninvolved obviously, besides sitting and answering questions, which they used some of it in the video, but very little me in
comparison to everything else. We made a long form video that
a bunch of influencers posted for awareness and it
was just a brand piece. It was just kind of more
similar to the stuff I normally put out but
more production value. No different than the Dwyane
Wade Budweiser piece we did or the Maxwell piece we did and the impact on sales was extraordinary. It drastically outperformed
clouds and dirt, which was more sales,
more of that approach and so you can imagine,
and here’s the best part, back to not caring about about outdoor or radio or television. I didn’t care if it was gonna
fail because I know creative is the variable of success,
but it worked extremely well. – [Man] There’s a lot of emotion as well that you put into it. That was– – Yeah I mean look– I apologize for cutting you off, if you’re gonna make content, you need people to feel
something when it’s done. Whether they laugh, they cry, they think, like, yo I mean that was,
that was the most important. If the video sucked shit, we wouldn’t have sold sneakers, you know? And so, we went with the
brand approach on digital because, like I said
in some meetings today with some of the leaders,
I believe that digital, Facebook, Instagram, YouTube LinkedIn, is the place to build brand, not do lower funnel sales. I think that’s the place
to do two, three, four, five, six minute videos
’cause I think that’s the place where people
are consuming information. It’s not super complicated. And once everybody wraps
their head around it, it’s so funny to see the
creative landscape push against this ’cause they put the emotion and the ideology of TVC
on a pedestal, meanwhile, every creative on Earth
would much rather have two minutes and 13 seconds
to tell a story than 30 or at least the appropriate amount of time to tell the story versus being confined to a 30, a 15, or a six. – You mentioned influencers there, what influence do they
have in this DTC world? – A huge role. Influencers by nature are a creative and distribution media
all in the price of one with the word of mouth
affirmation and cosigning. They’re the great deal of our
industry, yet there’s enormous scrutiny around it because people like headline reading instead
of being practitioners. – Does anyone have any more
questions that they want to ask? – [Sam] What’s the best– – What’s your name? .[Sam] I’m Sam. – Sam. – [Sam] And that’s some
smart work you guys. – Thank you. – [Sam] How do we keep
track of which channels are undervalued? Say at the moment Apple
might not be valued– – It’s a great question, we
were just having this debate upstairs like look,
what you measure against is so imperative, right? You know, to me, if I’m a business, I’m trying to suffocate the
shit out of everything I do to prove to me that it’s driving. So for example, if I’m a retailer, which I grew up one so this
one comes natural to me, I wanna do branded outdoor
with actually a product in offering and not offer that product in offering anywhere else in the world so that I’ve suffocated the
variables to understand that that was the channel
that drove the behavior in my 713 stores against
a $49,000 production cost and a $637,000 outdoor media spend. And the fact that we don’t do that, over time made me realize how much the industry doesn’t want to figure out the actual answers, you know? Suffocating, having the actual intent. We do a lot of digital buying
where we’re doing one mile, two mile radius media spend
against specific offer and we can show that, you know, there’s a uptake in foot
traffic versus your baseline and your average sale is higher than it was before because we
clustered out other stores where they didn’t do that. I mean, if you have true
intent to prove the ROI and you’re lucky enough to
have some sort of transaction of some sorts, or something
to anchor to, even if it’s a Nielsen rating on
TV, which is their currency, or votes or whatever it may
be, you will get the answer. If it’s simply brand health,
then somebody’s making a subjective call, no matter
what report they use as gospel. – Any other questions, anyone else? – [Audience Member] Empathy
Wine, is it coming to the UK? – Yes – When? – We just had this discussion with them, we’re working on it. We, one thing that was
very important to me is if this wine went into new markets, that that market didn’t pay a extra vig, where it was just paying more
than the American consumer or to the best of my ability
’cause sometimes you g– Like we’re going to
Canada, Canada is a Mafia. The whole country owns
the whole ecosystem, you can only do so much, so we’re looking at several options. I think I’d be surprised
if we weren’t here within the next six months. Yeah, I’m really excited about it. – [Sam] It’s Sam. – Sam. – [Sam] I have another question. – By the way, did you guys
see Gary will be extinct in the U.K. by 2050, you see that article? (laughing) – [Audience Member] Not since 1992. – There’s not been a single kid named Gary in the U.K. since 1992. (laughing) – I’m gonna super focus
on my brand in this region to inspire at least one transaction. Exactly. Real quick, and I apologize
because this is gonna be of value, I failed almost every
class I took except history and I never ever, and I mean
this, knew why until recently. Basically, the reason I
end up being right about a lot of things is the conversation you and I just had, everything repeats itself. It’s pattern recognition, that’s right. That’s why these brands
are in deep fucking shit if they don’t start building a real brand. What they’re doing that
scare the fuck out of me, is I think they’re wasting 85 to 90 cents on every dollar they spend
on marketing doing old things with old reports, which is
the only thing they can do, which is contemporary branding to build relevance to offset the deep technology disadvantages
they’re sitting with. – [Audience Member] So
what would you do if you were the retailers? – Build a brand, because
when this goes to voice, and I say, Alexa, book me a hotel, I’d better say Alexa, book me a Marriott or Marriott’s gonna be upset. Alexa, book me a Four Seasons
or they’re gonna be upset, because when voice becomes the toll booth, not search, everyone’s in
deep shit because with search, at least you have a prayer
of seeing another result. With voice, Amazon and
Google pick and then when Amazon and Google
actually buy Starwood, people are very confused what’s about to happen in the world. I think I’m less confused. (laughing) – And that’s what, I do
things that people make fun of and later revere. So, I highly recommend if
you’re capable of dealing with judgment and you
have conviction, to do it. It always works out in the end. – Nice, okay I think that’s
a real nice place to end on. Please stay in touch with us. – I agree, see ya! Have fun, I gotta run. I’m sure some people wanna talk, but I’m legitimately gonna
miss this so have fun, thank you so much. Thanks for coming. (applauding)

100 thoughts on “98% of the Brands You Love Will Collapse

  1. 1:10 How Empathy Wines started
    5:00 Why most of the brands you love will collapse
    8:15 Top spenders on Facebook
    9:00 Being one dimensional is scary for brands
    10:00 Retail can still be a huge leverage for brands, consumers only care about convenience
    13:30 The role of influencers in DTC
    14:30 How to measure the success of the business
    16:45 Gary will be extinct in the UK in 2050
    17:30 History repeats itself
    18:00 When voice becomes the tollbooth, most brands are in trouble

  2. Hey Gary, just some idea for your videos. People like me are not from Amerika and dont understand every word in your videos, so what about putting some subtitle so people like me can understand everything (and for all the other people : Youtube subtitles are shi* )

  3. I'm doing a tour to schools this coming September, I must say you inspired me to finally get the guts to do it! 🙏

  4. Hey guys! Check out my music if you want something clean and meaningful to vibe to. https://www.youtube.com/watch?v=6op4vrFgjek Comment on the video and lmk if you dig it!

  5. Is it just me that kinda thinks they get what he’s saying but also feel like it’s just words and no real meaning

  6. This guy is a knowitall.
    All he does is tell people to quit school and buy Facebook ads .
    Anyone who is friends with ARod is garbage

  7. Cream rises to the top. Things are gonna change. That's a given. Amazon is building a drone airship blimp from what I heard from a patient of mine who works there.
    That's why I doubled down on Amazon stock today. =-')

  8. I'm 8 years old my nname is Marley. Let's say you bought a broken car and you fixed it try not to make to expensive to fix it and sell it for more money let's say you used 500$ to repair it and 200$ to buy it and sell it for 900$ and make $200

  9. He is all his money but still too stupid to be able to put a mic on the other person's asking the question 😂

  10. ALL I WANT FOR XMAS is that GARY launches his own chain of GARY GYM.
    it will be lit >> entrepeurners SHOULD BE working out! and gary could create this trend.

  11. Times are changing. Can’t wait for brands that don’t want to change and keep blaming the economy to become obsolete.

    There is no sympathy in business!

  12. Invest in something that is gonna change someones life. You cant lose

    Edit: this is not my quote some millionaire or billionare told this to Shack and I noticed Shack does insurance and icyhot

  13. You're the real deal Gary, authenticity wins in the end and you are shining with your wisdom, thank you for the inspiration, you're a model for how we should all be sharing our passion and ideas for free. Incredibly dialed chat, I'm looking forward to meeting you. Lots of love from The Mafia, oops, I mean Canada xx

  14. I'm embracing the next recession.

    Can't wait to buy some great businesses at a discounted price 🙂

  15. Howzit Gary!
    Keen to hear your thoughts on Instagram taking away likes in Australia and testing going forward!
    Looking forward to seeing you again in Brisbane!

  16. To answer there question , "of " how would I feal like if everything I have been told was a lie … Humm…like oh so now you boycott women…but we just can't lie in bed together and I did back her as much as I could and getting our licence and vehicle "just" leagle and I still would not be able to pay my house payment … And this is a straight up couple of pairents that are like "wow this one might be gay or stupid" let's try as hard as fuck to ignor him send people to bust him . So now for Lynn I need about two thousand dollars a month so I can get her a Tooter and a bully guard because all the coaching buy the expected and we'll trained peepee heads you know what ,thank you sir..
    It would be for the scocial school house because my and Lynn's forefifty plus stamps needed to be cut well how much it hurt if I said I need money for two retards a old lady with alls- hi-mer and a feeling in the house??ok??

  17. "..If you're capable of dealing with judgement, and you have conviction, to do it." @GaryVee for the last 12months – it's really hitting home.

  18. The captions are really good. Does anyone know if Gary's team transcribe the videos manually or is this YouTube at work?

  19. do you know about islam ?

    why not you google it from Islamic sources to see if it is Big Problem that you are preventing yourself from such information !!.. 3 min read thats it

  20. 7:15 Gary mentions Purple Mattresses
    I analyzed what leverage the company has from building their brand over the last 5 years, check that analysis here: https://www.storegrowers.com/purple-google-ads/

  21. Do what he does, not what he says.
    Just look at the 0:35 how he drives attention to his shoes. He is creating subconcious awarness. Learning a lot from you Gary, ty!

  22. Where did twisted Cheetos go? Remember those? In the early-mid 2000's or so? Man those were the shit. Sooo much better than Puffs and puffs are my second favorite Cheetos (favorite now as twisted Cheetos are currently gone/not available).

  23. Legit, every time you say "Hey Alexa…" in your videos all my devices in the room start talking to me. hahahaah

  24. @garyvee I absolutely love your recent shoe tying in a few of the videos I've watched 😂 super subliminal marketing at its finest. 🥰 Your ability to drop your products and businesses in every video makes me smile. It's so simple.. and basic and working!! 😊 I would love to intern with you as I think my mind works a little similar to you and I know I'd help you and you'd help me. 🥰 I feel like you'd benefit from a little touch of a mom in your content. 😊

  25. I'm trying really hard and not seeing results yet but i did just start. I guess my problems don't matter though just be patient and keep building. Thanks Gary 🙂

  26. Love your stuff Gary. We are trying to build our brand and trying to bring value, but we are struggling to work out what we can offer of any value to our potential audience/clients.

  27. Just checked out Purole Mattresses and love what their creative and fun attitude. Going to adapt some of their magic to help my clients business. Kudos G.VEE

  28. When voice becomes the tollbooth, most brands will become niche markets. At that point, your business model must change to a micro-focused region. Storefronts and retail/wholesale real estate will become the knot at the end of the rope as brands downsize.

  29. Hey Gary how much you think instagram will change if they stop showing like count. I think its going to be bad for brands and influencers who benefit from engagement, for example how will you know how to pay influencers for sponsored post if you don't know what their numbers are I also feel like it would reduce engagement numbers for everybody because a lot of people engage with stuff based of the numbers they see. I honestly hope they don't dot it, a few months back they began testing this in Canada and is now testing in 7 more countries. This might ruin lots of businesses.

  30. Ask your kids what the value of time vs money is….Waiting for yor answer..or for some asshole you are paying ot read these comments. Make candid youtube with your kids about how mucc cash you lose a month vs. time from you kids…its not iconic creative to hang with your kids. Make a video with them about that. Now you are rich. That is the ultimate goal for you as a human. Make them happy. Not literal literately a bran i have never heard of..time with my offspring beats your time…

  31. He gary! I get it, finally I get your message. In the beginning I had an inner conflict on your content, but by your consistency of your message I am lucky enough to grow with it. I AM GRATEFUL

  32. I donno if u are right or wrong, I donno if ur advice has good value or not, but I'm sure as hell that I don't want to be like u ever.

  33. Hey guys! Lets grow our channels
    Subscribe to my channel the like the comment then i subscribe to yours too other should also comment lets get atleast 200 subscribers each..lets gooo….


  35. I’m an entrepreneur Looking to create a mastermind with likeminded individuals … comment and/or like if you’re interested

  36. Gary Yaynerchuk is❤️…Love…🍁
    his facebook buying instagram prophecy next level man
    Love from india…🇮🇳

  37. Being trapped in governmental systems I realized a few month ago that there is more for me to learn then I thought. Thank you for the content and even more for the context behind it.

  38. Holy shit. The last sentence regarding voice changing how searches are done and what happens if you don’t have a brand…was an amazing statement. I just got it. And wow is he right.

  39. @garyvee
    This is beyond gold. I am so grateful. Can anyone help me understand what would an example of LONG FORM content be for a business like Purple Mattress or say Body Lotions? I understand what it means to create long form COACHING videos around say, love or connection… but say my business is selling a health and wellness product. Is my LONGFORM content revolving around say, a PODCAST around the health benefits of body lotions? can someone illuminate this for me a little?

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