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Making videos with celebrities like Adam McKay and Will Ferrell taught Dick Glover, CEO of comedy video site Funny or Die, a few things about working with stars (besides the fact that adding a celeb’s two-year-old daughter to a video can make it go viral).
“Whatever the project is, whether as small as some short video or as big as the whole company, you want their heart in it as much as you want their mind and their pocketbook in it,” Glover said.
That’s why when bringing McKay, Ferrell, Judd Apatow and Chris Henchy on board to Funny or Die, the stars were incorporated as founders and given stake in the company. In Glover’s words, Funny or Die utilized the Silicon Valley model, where investments are made at certain milestones and early employees are motivated by equity, instead of the Hollywood model, where investors blindly buy in upfront and, in turn, profit the most.
Funny or Die could have easily signed on its core celebrities as sponsors for individual videos and used their fan bases to promote the site, but Glover said that the Gary Sanchez Productions folks believed enough in the company back in 2007 that they wanted to be in for the long haul.
The sheer amount of A-list heart backing the company, and the continued validation from Sequoia Capital, qualifies Funny or Die as a “good” model for celebrified startups – although Glover said he is “not at all certain that it’s a replicable model.”
“In fact, we tried the same model with different people in other areas and it didn’t work,” Glover said, referencing EatDrinkorDie.com and PwnorDie.com. “It really is about the people more than it’s about the model.”
Finding the right people to back a company, whether in search for a perfect celebrity or perfect cofounder, is key; and considering Silicon Beach’s proximity to Hollywood, it can be tempting for startups to just add on a celeb over top of their B2C business models through short-term endorsements or one-off investments. But falling for this business setup doesn’t always pan out well – as subscription commerce company 12Society, for example, found out when it was slammed by PandoDaily for its “slap a celeb on it” model.
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Walter Delph, CEO of celebrity social media endorsement company Adly, which has over 2,000 celebrities in its network, said consumers see beyond celebrities tacking their faces on products or sites: “Consumers are very savvy these days; I think the consumer can see directly through something that is inauthentic.”
So how should young LA companies avoid inauthenticity and ensure celebrity support for the long-term?
Lin Miao, founder and CEO of LA incubator Be Great Partners, recommends startups to not just focus on the financial return when pitching to celebs, but also to clearly communicate the ancillary value that will be brought to them.
“These days, celebrities are more than just a name: they're a brand,” Miao said. “If you're looking for more than just a monetary investment, make sure that your brand makes sense with the celebrity's brand.”
In addition to branding, companies must also consider celebrities’ passions, Glover said, because appealing to only celebrities’ wallets gets old: “They’re hit upon all the time like anybody who’s rich. Everybody is always hitting upon them for their favorite charity, favorite startup or whatever it might be.”
Even though cracking the celeb code may be intimidating, there are indeed LA startups who have found their Hollywood soulmates and “a lot of celebrities who are working behind the scenes in intelligent places,” Delph said. Kim Kardashian and ShoeDazzle, Soleil Moon Frye and Moonfrye, Jessica Alba and The Honest Company stand out, just to name a few. With these success stories in mind, it is clear that LA startups shouldn’t avoid the star power of Hollywood, Miao said. When that power is effectively harnessed and seamlessly integrated into a business, consumer awareness, high-profile investments and new opportunities no doubt will follow.
“At least for my business, the celebrities create the greatest amount of organic conversation in social media,” Delph said. “There is no way to replicate the reach or the engagement that a celebrity can garner.”