MrBeast, Barstool Sports and the Transition Away from Nameless, Faceless Brands

Jimmy Donaldson, better known as MrBeast, is the Michael Jordan of YouTube.

In a recent episode of the All-In podcasts, David Friedberg mentioned:

"I have a really strong belief, in the next 30 years or so, all traditional brands are going to die. With the power of democratized media, things like us creating this podcast, there are now thousands of individuals who have stood up and created their own brand because of the content they've created on Twitch, Twitter, YouTube, and through podcasting. And as a result they've become the trusted source of influence. These influencers are becoming brands."

To be fair, its more likely than not Coke's still selling lots of Coke and McDonald's still selling lots of hamburgers in the year 2050.

Like most things, the truth probably lies somewhere in between when it comes to individual brands overtaking corporate brands.

MrBeast is the most obvious example of an individual who has created an enormous brand. He has more than 100 million subscribers on YouTube, making him the 5th largest channel in the world and the largest individual YouTube channel in the U.S.

The success of his YouTube channel has allowed him to move into other businesses.

In 2020, he launched the MrBeast Burger. It started as a virtual dining concept; restaurants could sign up to serve the burger, learn how to make it, and allow delivery through third party delivery apps.

In an appearance on the Joe Rogan podcast in March, MrBeast said 1,600 restaurants were offering the burger, they were adding 50 new restaurants a month and breached $100 million in revenue. All of that inside 15 months!

Last week, MrBeast Burger opened its first physical location in New Jersey. It looked like a tailgate before a big college football game.

It broke the world record for burgers sold in a day by a single restaurant. How you like them apples Ray Kroc!?

And MrBeast is not stopping with burgers. He launched a chocolate snack bar, Feastables, in January.

MrBeast launched the bar in conjunction with a video where he re-created Willy Wonka's Chocolate Factory.

The Willy Wonka video did 100 million views confirming the obvious; MrBeast's audience is extremely engaged.

Marketing is a lot easier when you have 100 million subscribers on YouTube.

Obviously, MrBeast doesn't exist in isolation. There are countless examples of celebrities and influencers leveraging their following to create lucrative side hustles.

• Kylie Jenner launched a make up brand and it became a billion dollar brand in a matter of years when it sold a majority stake to Coty.

• George Clooney launched a tequila brand, Casamigos, in 2013 and sold it to Diageo for a billion dollars in 2017.

• Pat McAfee quit a lucrative football career, and in a matter of years, signed a 4-year, $120 million deal with FanDuel and became a regular on WWE and College GameDay broadcasts thanks to his large following.

Just last week, Kim Kardashian announced she was launching a venture/private equity fund.

"What the $&^! does Kim K know about investing?!?!?" was a common refrain, by myself included, as the thought of Kim K. being an investor interferes with many of our romantic feelings about how investing should work (re: discipline, patience, consistency, etc.)

She doesn't have Marc Andreesen or David Rubenstein's track record but investing is about "edges" and she has an edge nobody else has, in that, she can create new customers out of thin air with a tweet or Instagram post.

It should not be a shock if advertising and marketing gets replaced by content creation in the future. The evolution of the influencer will almost certainly continue to move in the direction of individuals prioritizing their own brands versus pushing somebody else's.

David Friedberg continued on the topic of influence and content:

"Tell me I'm crazy but I think the most important M&A transaction of 2022 is Penn Gaming buying Barstool Sports. It shows every consumer packaged good or consumer services business ultimately needs to be a content business. And if you don't naturally have content creation in your blood, you have to go buy a content business or you will die. That's why I think all traditional brands that aren't oriented around content creation as their primary differentiating foundation will not be able to compete effectively."

Distribution (translation: getting people to care about your shit!) is the biggest hurdle for most consumer leaning businesses.

To Friedberg's point, if this does come to fruition, Barstool Sports is likely to benefit in a big way. Barstool has multiple personalities that have launched individual brands on the backs of strong followings:

• Dave Portnoy has pushed High Noon to the top of the hard seltzer category. He (and I believe Barstool) own an undisclosed equity stake.

• Pardon My Take (largest sports podcast in the world) recently launched a food brand, Pardon My Cheesesteak.

• Spittin Chiclets (largest hockey podcast) launched a vodka brand, Pink Whitney, which has been a tremendous success and recently launched a light beer, Big Deal Brewing, in partnership with Labatt Brewing.

In recent years, Barstool has also started doing live college football shows on campuses throughout the country. Last year in East Lansing, Michigan for the Michigan/Michigan St. game, Barstool went head to head with ESPN's College GameDay on campus and it's pretty obvious which brands hold more collective interest.

To be fair, I don't have the time stamps on these photos. The ESPN photo could have been taken at time that was less flattering intentionally. But the point remains, Barstool certainly is a viable competitor to bigger brands today and will likely continue to be in the future.

On a recent episode of The Dave Portnoy show, world's colliding, Portnoy mentioned a phone call he had with MrBeast a few years ago:

“I was talking to him on phone about his next business idea. It was something about a hard drive that he was going to allow people to buy space on and then put the hard drive on the moon or something. That’s when I knew I was dealing with a different cat. I hung up the phone and knew that dude was way ahead of me. He's a monster."

Reality seems to indicate the majority of people are more interested in individuals than corporations, and this trend will likely continue in perpetuity.

To be clear, big brands aren't heading for the obituaries but a question that should be asked is, "what's harder - building a network with millions of followers OR creating a great hamburger?"

The answer seems obvious; it's much harder to build a following. Because of this, it likely makes the case that creators will continue to push aside big brands in favor of their own.

The creators are coming and they're coming fast.

(Disclosure: I'm a PENN shareholder that owned the stock at $20, rode it all the way up $150, didn't sell a share, and rode it all the way back to $20. Keep me in your prayers!)