Startup movement has gained significant pace in the latest years: it is even considered “trendy” by some people to launch a risky business based on the tremendous idea you carried in your head for years. Not surprisingly, celebrities are also a part of this movement. But more often, they are not startup founders: famous people can also make a living just by participating in the brand promotion or joining a promising investment round. Some time ago, celebrities avoided being associated with startups at all: as you know, many startups do not live for very long and often cannot afford a good honorarium. But in 10 years, things have changed: not only do celebrities are engaged in startup and tech companies’ promotion, but they also actively invest in new projects, launch venture funds and even found their own startup companies.
The first and most obvious type of “celebrities+startups” cooperation is celebrity endorsement: advertising of brands, goods, and services performed by famous people, who create a specific image of the product and make it truly memorable and in a way trustworthy to the audience. One of the first such cases is inviting William Shatner to be the model for a new service of an American travel agency Priceline – Name Your Own Price (NYOP). The service allows a user to name a price for some goods or hotel services online, and in case there is a match with a provider’s offer in the system, the purchase is made automatically. Priceline got the first-ever patent for an online business model in the US and built the whole promotion campaign around Shatner – “Negotiator”.
2 years after Shatner had joined the NYOP campaign, Priceline was already estimated at billions of dollars. And this is even before Priceline acquired a small Dutch company Booking.com! Shatner was in shootings for Priceline until 2012 and then continued to articulate his video character. In return, William providently asked for Priceline shares instead of money, which are more than $100 million worth.
Endorsement deals actually turn out to be so-called ventures: celebrities participate in numerous similar campaigns, but only a few of such deals bring huge profits.
Another celebrity-connected brand strategy comes from endorsement evolution: a celebrity becomes a brand ambassador. Such an ambassador gets highly integrated with a set of the brand values and establishes an emotional contact with target customers. This promotion has certain weaknesses: brand and celebrity influence each other a lot, reputation of one may influence the reputation of the other. However, while both are doing fine, the brand with a famous ambassador becomes unbelievably profitable.
Have you heard of so-called “value-added” business angels for startups a.k.a famous investors? Not only does a celebrity invests in a startup, but he or she also attracts their own audience to the emerging company. That is why most of celebrities’ personal investments are usually targeted at mass B2C services, where the effect promises to be impressive. Interestingly, the “star” status does not bring any special benefits to celebrity investors: they have to enter highly perspective investment deals (the competition is tough!) on the same conditions as other people (plus consider the “star” status of some classic investors with their amazing experience). Eventually, celebrity investors simply buy a lottery, given that most of them have no that special feeling for potentially successful deals. According to statistics, a sample of less than 10 investments in startups does not guarantee an optimal ratio of profitability and risk. Unfortunately, not so many celebrities can afford to support at least 10 startups.
The key role celebrities can play in the world of startups is CEO: currently, more and more celebrities are turning into startup founders, seeing great opportunities to work with the target audience via social networks and other free-of-charge media channels. Celebrity brands are created and developed in various segments – from a whole range of goods by Jessica Simpson to specific weed cultivar by Snoop Dogg. A case that deserves a closer look is creation of a truly strong brand Beats by Dr Dre.
Andre Young, more recognizable as Dr. Dre, once received an idea from his friend Jimmy Iovine to create a line of audio equipment. Both entrepreneurs finally came up with a project of “luxury” headphones that would stand out from competing models thanks to the unique sound and design. Premium headphones Beats ended up as the headphones of lower quality than expected and an extra high price. However, mass promotion of this brand made millions of people buy them. Finally, Apple got interested in the branded audio equipment and in 2014 acquired Beats for $3 billion.
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