April 10, 2020
Lessons From Billionaires: How To Start A Successful Business

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 CapitalismTV. I’m Ryan Daniel Moran,
this is Capitalism.com. (upbeat electronic music) 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 in 2016 I think. And Brian has four? Three or four billion dollar
companies on his resume, as a 45-ish year old man
this is this is insane. He built LegalZoom, 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 one influencer, ShoeDazzle was 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 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 celebrities. 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 on the TV and we didn’t ask him to do this. But he would go onto CNN
to talk about some trial, and then he had also mentioned oh and I started this company
called LegalZoom.com and he would talk about it
and then we’d get more orders. And that’s when we realized
the power of media. Now 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, right? Because the consumers are smart. They’re not just gonna buy something because someone tells
them to buy something. Especially if it’s if
there’s a disconnect. Right but when it came to let’s say Robert Shapiro and law,
it made perfect sense. When it came to Kim Kardashian
and high heeled shoes, 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 relatability. – Now of course that was 20 years ago but even Brian 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 x-y-z? 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
$100,000,000 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. 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 channels, and then there’s your audience. Those are the three pillars: product, 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 products without any sales channel
and with no audience, well now you’re an inventor who is broke. (disappointing brass music) 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 (snaps) 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. And I’m gonna 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 and 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.
(slow piano music) 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 cameit 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 (snaps) having a smashable launch. What we can we 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 predicable
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, it’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 with 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. ‘Cause 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 that once in awhile I have workshops here at my
house and we were talking about Kylie Jenner’s success at a
recent workshop and talking about what else we can learn from her so I wanna show you a
clip from that workshop. Are the products that great? Or that different? Are there no one is there no
one else that can do a lip kit? Now when I’ve asked this
in front of other groups, I’ve been told they’re
great, people love them. Awesome. But the audience is the distribution play. She’s the distribution. She’s the audience that
comes in and (snaps) lights that on fire and creates
350 million dollar 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 idol 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. About 10 years ago, and her audience was a
lot smaller back then. 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 we 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 ToyReviews. – Roblox!
– (gasp) Wow! – [Jolene Kent] YouTube star
Ryan is only seven 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’s 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 three. – See you next time! – They’ve now been viewed
more than 25 billion times. Transforming the boy-wonder into the 8th 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 1st graders
he’s just a kid too. Losing 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 wanna be when you grow up? – I wanna be a game developer. – [Jolene Kent] With no plans
to stop playing anytime soon. 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’ve 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 they were 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 food line, that was kinda 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 zero ads SPINs, 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 you’d have these cheat, 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 a 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. And we’re like okay we 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 SPIN
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. (slow jazz music) If anything to mimic
what he’s got going on, that, that’s a million
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 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 the most valuable thing in
your business is your systems. And systems are not simply a
group of documented processes sitting on the college 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 1+1=5. So if you take someone like
Zach who we referenced earlier whose 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 bring them together magic happens. If you wanna learn how to do that go over to Capitalism.com/start
there’s some free resources that will show you 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 at Capitalism.com/start. Look the purpose of business
is the solve problems, it’s to create value,
it’s to drive change. If you wanna 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 has a 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 ya on the next episode. (uptempo jazz)

8 thoughts on “Lessons From Billionaires: How To Start A Successful Business

  1. Ryan, what a great episode. Talking simply about the most important things helps keep the attention on what really matters.

  2. Another great point in regards to dealing with audiences and launching products to them is it reduces risk. These product we create can cost a lot of time and money to have developed and distributed and any way we can reduce the risk of a flop is awesome.

  3. What an amazing episode, I loved it! So exciting to see 'Lil' Ryan' rising towards being a Billionaire too! My kids have watched his videos for years and his audience is growing with him and will be ready to buy everything he releases. Your videos are the best gift for entrepreneurs who want to create real businesses and true value in this world. Thank you so much!

  4. Seems like you're adapting your content more to the YouTube platform now, adding the music, more structured rather than improvised, parts from the interview with Brian Lee cut in… really like it, keep it up!

  5. There is no reason why this video couldn't get 250k views… this content is literally gold and perfectly adapted to YouTube.
    Highly informative, super structured, so much inside-knowledge from someone with tons of connections and experience AND entertaining (laughed out loud at 16:10).

    Check the CTR of your thumbnail (after all your loyal subs clicked on it to get a more accurate estimate) and try to get it closer to 10% through split-testing. You'll definitely need to up your thumbnail game for it to pop, but the content definitely deserves 6-figures in views…
    Got my US visa approved, coming to Austin in January!
    – Leon

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