Celebrity Startup, The Next Reality TV Show is Due to Premier……
Disclaimer: For those in the reality TV production world, including the folks who produce ABC’s Shark Tank, CNBC’s The Profit, Adventure Capitalists, or the various other shows of similar genre, and to those pitching similar-themed reality TV ideas to the cable TV or major networks, you are officially on notice the story concept is proprietary, the script elements for “Celebrity Startup” has already been written and those elements are in the hands of the entertainment industry’s top law firm. Any infringement or hijacking of this concept will be met with a brute and forceful response from intellectual property attorneys who you don’t want to be sitting across from.
The premise is simple: We know that “fashion land”, the specialty foods and the spirits world, multiple consumer product silos, and even the tech landscape are all populated with startups that have been launched and led by celebrities whose Q Scores aka “Q Rating” have served as the “wind-in-the-sail” that has propelled their respective innovative products (and/or services) from startup stage to billion-dollar enterprises. Many of those celebs are smart business people and their creative talents have transcended into original ideas for compelling consumer market products. Its also true that more than a few celebs are really not so smart when it comes to launching a real business, and a handful of celebrities have absolutely no business pretending to be entrepreneurs delving into the world of startup businesses.
But, we also know that the number of celebs who have leveraged their professional sports stardom, their modeling fame, or respective stage and screen credits for purposes of building a consumer brand is a big number. Or, as former celebrity TV host-Donald Trump of “The Apprentice” and spin-off show “Celebrity Apprentice” fame would say “the number is HUGE!” Here’s a link to 17 top celebrity startup brands.
Notable “celeb-turned-startup entrepreneur” include among others, Jessica Alba (“Honest Beauty”), Gwyneth’s “GOOP”, actress Kate Hudson’s “Fabletics”, Bethenny Frankel’s “Skinny Girl”, the too-hard-to-count Kardashian consumer product lines, Clooney’s “Casamigos” spirits company, the Olsen Twins apparel line “The Row”, etc., etc., etc. And let’s not forget the Godfather of Celebrity Startups, Paul Newman, whose “Newman’s Own” line of food products were first cooked up in his Westport, CT garage (this writer was first hand observer!). Newman’s Own products are now ubiquitous across retail store shelves in every part of the US, and plenty of other places too.
We also know of the many ‘celebrity-branded’ products that are otherwise not much different than other existing products easily found at many stores or online. The differentiation is the celebrity name on the label. Some celebs-turned-entrepreneurs have had wild success, others a modicum of success, while others consumer product initiatives started up by celebs have died on the vine.
But, not a week goes by when a Hollywood star or starlet, or sports icon celeb isn’t thinking about or actually working towards a starring role in their next act. That is the thesis for the new show “Celebrity Startups.” This idea is entirely thanks to a real life episode this business strategy consultant experienced not more than 10 days ago, courtesy of a referral to JLC Group from a friend of a friend, who suggested that yours truly is “just the right expert who can help guide a startup company, regardless of the industry.” Who doesn’t like a referral that comes with a nice endorsement?
And, yes, this self-described Entrepreneur-In-Residence and “grey beard” advisor to multiple clients of boutique advisory firm Prospectus.com LLC does have compelling experience within the realm of business plan writing and startup and fast-growth company strategies. Prior, and while working inside the financial services space “for more than 15 minutes”, it is also true that this writer has provided business plan writing, business strategy planning and implementation, as well as positioning value propositions and providing corporate branding guidance to no less than 6 investment firms, including the world’s second biggest bank, the online brokerage industry’s most recognized platform (with a $60bil market capitalization), and several widely-recognized institutional brokerage firms. Post Wall Street / Finance Industry CV includes a stint as interim CEO of a NASDAQ-listed company that operated NYC’s 2 top tourist destination venues, co-founder of (2) consumer product companies whose products found their way to 1500 big box stores and who has served as “CEO Consigliere” to (7) other consumer product companies, (6) early-stage technology companies.. And is currently Board Advisor to a fintech merchant bank as well as a cannabis brand initiative.
This expert is also a former stand-up comic, an acclaimed parody writer and someone who has been to more [startup] rodeos than Roy Rogers and Dale Evans combined. Those latter experiences also turned moi into a Chief Serial Cynic, thanks to having read through more business plans and more pitch decks than the number of acting scripts read by our upcoming Celebrity Startup Star and her even more famous Celebrity Start Husband. But, when offered the opportunity to guide a famous celebrity into the world of commerce, it is hard even for me to resist the star attraction element.
Celebrity Startup/ Backstory. Our first Celebrity Startup Star is a former fashion model and accomplished actress (60+ TV & Motion Picture credits) who also happens to be married to one of the most famous Hollywood actors of this generation. He is a fellow whose first TV show credit was the 1970’s era sitcom “Welcome Back, Kotter.” And now, he has more entertainment industry trophies than Imelda Marcos has shoes. He’s also one heckuva disco dancer. Let’s not forget to add that he even pilots his own private plane to Scientology events in different parts of the world.
Scene 1: Our celeb startup star, who for the past several years has been “passionately-focused on creating a full-fledged organic lifestyle brand in the form of a cosmetic line for women”(and maybe men at some point). Apparently, she has ‘partnered’ with a “organic product entrepreneur” (someone whose name and credentials are displayed in one reference on the Internet. Due diligence has not yet been done via the “Dark Web”). Our celebrity startup star reaches out via conference call with an immediate request: to have a business plan written, an investor presentation deck assembled, along with investor offering document prepared ‘so that [she] can follow up with the senior executive of a multi-billion dollar asset management firm [who she just met with] and who “has just told me they want to back my company with a $10 million Series A funding.”
Startup Consultant:-“Did you actually meet with this ‘investment firm’?
Celebrity Startup Star: Yes, I explained that our enterprise value is $100 million and I’d sell them a 10% equity stake.
Startup Consultant: Have you ever operated any type of consumer product business before this?
Celebrity Startup Star: No, but I have bought and tested literally hundreds of cosmetic products since I was a teenager, throughout my modeling career and my acting career. Let’s say I have more than 30 years of using these products.
Startup Consultant: Do you have any sales for this new business?
Celebrity Startup Star: No.
Startup Consultant: Have you distributed any samples of your product to anyone?
Celebrity Startup Star: No. We’re still working on the first 3 “skus”. They are being made for us by a manufacturer in Italy and we should have the first 1500 sample packages shipped to us within 3-6 months.
Startup Consultant: Do you have anyone who has prepared estimated figures with regard to cost-to-manufacture, cost-to-package, landed cost here in US, tariffs and order fulfillment costs?
Celebrity Startup Star: A fellow I met (via Scientology) is going to handle this stuff. He ran a company specializing in organic products a few years ago. The projections are in a draft format.
Startup Consultant: Is that company still in business?
Celebrity Startup Star: I’m not that sure. He’s based in Florida and he is very successful.
Startup Consultant: Will be you selling into retail stores, or selling directly on line?
Celebrity Startup Star: We’re going to start by selling online. I have 100,000 followers on Instagram and 50,000+ who have ‘liked’ my FaceBook page. I have another 50,000 Twitter followers.
Startup Consultant: OK. While we’ve chatting, I’ve been researching online and I found two other companies with the exact same name as your company. One has been selling an organic product line under the name of your brand since 2011. Have you, your designated CEO, your lawyer or even your husband researched their trademark or the possibility you might be infringing on it?
Celebrity Startup Star: I came up with this name a few years ago and the man who will be CEO and co-founder registered our LLC in Florida recently.
Startup Consultant: You indicated that your first round is asking for $10 million and you are putting a $100mil valuation on this startup. Have you any type of business plan, even if on the back of cocktail napkins, that could help me help you where you came up with the valuation and what you’re use of proceeds is going to be? Or, can you point me to competitors that you are basing your valuation on?
Celebrity Startup Star: Yes, while we’ve been on phone, I just emailed a very rough draft that was put together by a video production firm owned by the fellow who recommended you.
Startup Consultant: Opening your email now, thanks. Let’s walk through it…I see 12 pages discussing social media strategies that seems to have been sourced from various websites. Is that the document?
Celebrity Startup Star: Yes, there is also projected financials. But I am coming to YOU because it needs to be put together in a more business-like way. I told you, I just met with a big investment firm and they love the idea, they just want some documents for their files.
Startup Consultant: OK, I’m looking at projected revenue going from zero to $3mil in 12 months, $6mil in 24 months and $30mil in Year 3. Is that about right?
Celebrity Start Up Star. My CEO and I both think that is very conservative. I’ve got 100,000 Instagram followers. If each were to buy at least 1 package per month at a price of $18 per package, we’re looking at a run rate of nearly $20mil in the first year alone.
Startup Consultant: OK, that’s a plausible sales goal for a cosmetic company led by a celebrity. Back of envelope would lead one to believe you’d have maybe $10mil in profit, before accounting for COGS, operating overhead, taxes, tariffs, and a few other line items. What about a comparable company in your space? Who are you looking at to use as a comparison that can help justify your Series A $100mil valuation?
Celebrity Startup: The company on page 18. They’re doing $30mil in sales this year.
Startup Consultant: Right, I see it…Looks like they started 8 years ago with $50k in capital and grew organically, no pun intended. I’m now looking at an industry report that pegs their current enterprise value now at $75mil. They also manufacture their own product in their own facilities. Looks as though they’re hard workers.
Celebrity Startup: Star: What’s your point?
Startup Consultant: An enterprise valuation of $100mil for a company of this type at what is best described as nascent stage is pretty aggressive. But, let’s move on.Your Use of Proceeds regarding the $10 million is a bit unclear. I see that you have theoretical profit margins of 40%-50%, which is good for this sector. But, your first year is projected to have sales of $1mil, yet you have salaries for you and your CEO set at $250k/year, $50k for a Chief Financial Officer and $28k for accounting/bookkeeping.
Celebrity Startup Star: We’ll also be spending nearly $500,000 with a friend’s PR firm, $250k to create video commercials, and we expect media events will run another $500k-$1mil, including travel and hotel expenses.
Startup Consultant: OK. Since you were introduced via an acquaintance, I would suggest that putting together a proper business plan, including a deep dive with respect to industry comparables, competitive analysis, and also financial modeling that will make this story make sense to professional investors who know the space is going to take as much as two weeks.
Celebrity Startup Star: Well, we’re putting out a press release about the launch of the company in 5 days. Can you do it that quickly?
Startup Consultant: Did you say you were doing a full blown press release announcing your company’s launch in 5 days?!
Celebrity Startup Star: Yes, to all of the big magazines, including People Magazine and WWD.
Startup Consultant: We might have a bad phone connection. Your PR firm is holding a press conference in 5 days to announce the launch of your company, but you don’t really have a company, you don’t have any employees, you don’t have a product to sell (and won’t for another 3-6 months), you don’t have a logistics system in place, you don’t have a website to sell your products through, you don’t even have packaging. And most of all, you don’t have a business plan and you don’t have funding. Don’t you think it’s a bit premature for someone of your celebrity status to hold a press conference and announce the launch of a new cosmetic line?
Celebrity Startup Star: I didn’t come to you for PR guidance. I need the business plan and the offering documents for investors as soon as possible.
Startup Consultant: OK. And what did you think your budget for a project like this should be?
Celebrity Startup Star: My CEO told me it can be done for $5k-$6k.
Startup Consultant: I see. Can you hold on, I have several robo telemarketer callers that are trying to dial into me right now and I really should take them.
EPISODE 2-5: Video crews following our Celebrity Startup Star to meetings with investors, lawyers, hair stylists, luncheons, Scientology meetings, family dinners, meetings with publicists, meetings with the factory owner in Italy, meetings with social media/social marketing interns.
EPISODE 6: Meeting with Shark Tank Co-Stars Lori Grenier and Kevin O’Reilly
Grenier: You’re gorgeous, you’re talented and you have a great following all across social media. I absolutely love the idea of the product and the organic ingredients you want to use. However, you don’t have any background building or operating a startup, you don’t have any executives whose backgrounds can be researched anyplace online, you don’t have any IP, you don’t really have a product that you can sell yet and you’re still not sure what a UPC code is. The other problem I have is that your company brand name is actually one being used by a organic product company that started 8 years ago. All of that aside, here’s my offer: I’ll put in $250k for 90% equity and that cash will go towards taking care of every step you haven’t taken yet and I’ll have my secretary oversee everything. You can’t draw down salary until the company is generating revenue. The secretary who will run this for me just graduated from college and she binge-watched every episode of Shark Tank during her final exam week. I’ll throw in a credit line of $250k that can go towards funding inventory. I think we can make a bunch of money selling this on QVC, and I’ve got lots of influence at some of the big box chains.
O’Reilly: I was a BIG fan of Welcome Back, Kotter and this story is 10x funnier than any of those shows. Lori has put an offer on the table that you shouldn’t refuse. If you don’t, I can see Chilly Palmer coming to your house and the ending to your movie is going to be like the ending of that one.