How do you structure equity vs. cash for a celebrity deal?

We got Leonardo DiCaprio, Serena Williams, and several dozens of other celebrities on board that drove a lot of free acquisition. Obviously, we ended up losing to Instagram. How do founders get or attract the best celebrities or the best influencers? People always overvalue visibility and undervalue credibility. Don't make that mistake. The one pet peeve that investors have is when you send them something that So, how do founders get or attract the best celebrities or the best influencers? Yeah, I think it's a combination of art and science, right? The science is being really, really thoughtful about how you would use a specific celebrity and crafting a case where the celebrity no longer views this as a traditional endorsement deal, but actually views this as something that broadens what they have have to offer to the world. And we have to understand that celebrities, I grew up in a world where celebrities were untouchable. You know, Madonna was Madonna. There was no other Madonna. Uh that's not the case anymore. Celebrities have a very short shelf life. If they make one mistake, they can get cancelled. There are at any given moment tons of people who look very much like them, who are just as funny and just as beautiful and just as talented as them, who are willing to do more to to take their spot. They're willing to take more clothes off. They're willing to tell jokes that are more crazy. They're willing to step over other people to get to that role. So, they're always at a threat and any mistake can threaten their career. And so a lot of them are one very concerned about what could happen to them and two always looking for what happens next like how do I become more than an actor? How do be become more than a YouTuber? And we see success stories. Look at the honest company with Jessica Alba. Look at Mint Mobile, right? We see examples where celebrities have transcended beyond what made them famous by partnering with these startups. And that's the pitch that we want to make to a celebrity typically when we bring them on board to one of our companies. Yes, there's a lot you can do for us by being involved with us. People will hear about us, people will know about us, people want to write about us, and people will think that we're a real serious company, but also they'll start perceiving you as a sophisticated business person, as more than someone who can tell a funny joke or can take their clothes off. And so that's that. So basically finding the angle that aligns with that motivation for for a celebrity. Um but how do they get access is that you guys that's obviously your solution but you know for inst founders that you are curious about this process like how do they get access to these celebrities? There there are a lot of ways to get access a lot of people try to mingle right they'll they'll go to the events they'll they'll befriend people who who are who say that they're friends with the celebrities and I can't tell you that never works. There are cases where you'll hear about celebrities joining startups or they knew somebody or their cousin recommended it, but I feel like it's getting less and less uh prominent. What's happened is that this idea of bringing on board a celebrity has been embraced by the agencies that manage them and they now have people whose jobs are similar to the ones at VCs to vet these opportunities to be very very serious about it and bless you. And so when I when I talk to founders, I say it's in your best interest to one be very very thoughtful about who you want to go after to understand what is the value that you're guaranteed to get from this. What is the value that you're hoping to get from this that isn't guaranteed? And then who are the celebrities who can actually deliver those values? The fact that they're just famous is not going to be enough a lot of the times. And I'll tell a story of a company that reached out to me that we didn't invest in a while back that had this idea of um selling life extension medication, which I don't even know if it worked or not, but they thought it would be really funny if they got OJ Simpson to be the face of the brand. Um which of course he's known for anything but extending lives. Yeah. Terrible. This was when he was still alive, obviously. Um um and I said to them, look, that's going to get you attention for sure. or is it going to convince people that you're a serious company, that your medication is serious, that it really works? Probably not. And that was one of the main reasons why we weren't interested in it. Um, and then you said, "So, how do you reach them?" Uh, it's it's going to be really boring and sad. You craft a very very attractive letter with some video of what you do and and something that would make somebody serious read it and think that this is very, very serious, similar to how you would cold outreach to a company, to a uh VC. and you send it to uh the agencies that represent this talent, you go on IMDb Pro, you identify who does it. Now, if you similar to the way that you would approach a VC, if you happen to know somebody who knows somebody, right? If if you get recommended by another VC or if you have me on the team and I already know the agency and we've already done a few deals together and we've made money on some of those deals, those things make it easier, but nothing replaces having an amazing pitch that's hard to say no to. And when it comes to your experience doing this, like what's kind of like an interesting story that you have uh around kind of architecting one of these deals and what the outcome was? Um I wish you know people expect this to be like really sexy and really interesting. Um the famous story about my original company is how Leonardo DiCaprio uh was wooed into the company. Um so so Mobly was a company that was basically kind of Instagram before Instagram. definitely not as good on the execution and definitely not as successful. But the concept itself was, hey, these mobile devices are becoming very prominent. Let's build a tool that allows you to share um photos and videos. At the time, it was premature, but photos and videos through so through some kind of social network. Um and so we had researched that Leonardo DiCaprio really hates paparazzi. Everywhere he goes, they bother him. Um, and our thesis was that if we can convince him that he if he had this app and he shared photos of himself all the time, um, then the paparazzi would have no reason to chase him anymore, right? Because his photos would be out there. It was a very naive perspective that we kind of convinced ourselves to believe as well. And what we did was we actually um uh tried to find ways to get to him. We ended up finding out that he goes to Laker games and he um has a very close to an expensive seat at those Laker games and we got tickets to those Laker games and we sat nearby and we started talking to people about our app. Um and that didn't work and we eventually went the regular way and we got somebody who knows somebody and they introduced us and we told him the story and he got excited and came on board. Um, but it was a fun route and we like to pretend that maybe it had something to do with it. But, um, yeah, generally it's it's the boring way. It's the lawyer way. It's the manager way. Um, and the ones that have worked really well really really really well for me like the ones with Galadote and Goodles, Victor Wanyama and Barcode. Um, we just did one with Dr. Phil uh for a company called Hidonia. They went the boring route. We found somebody who manages uh their business and connected with them, pitched them and um showed them that this is a good opportunity, convinced them and got the talent on board. So boring is accessible, which is great to see. It's replicable. Inspiration to the founders listening is like yes, you can. You just got to do the boring work. There's a there's a very clear process, right? Boring is you could do it again and again and again. We do it the same every time. and we're very thoughtful about who the celebrity is, but we come prepared and we pitch them the way we pitch VCs. Um, and if anybody's listening and thinking, "How can I do it?" That's my advice to you. Don't go to those parties. Don't mix. Don't think that you'll accidentally be discovered. Do it the right way. Interesting. Don't think you'll be accidentally discovered. I uh I've fallen victim to that in my my career at any point of just like I'm I'm awesome like but but my aura will be picked up at some point. He's like, "No, yeah, you can you can craft the the whole thing we had for the Anardi DiCaprio, the whole dog and pony show. At the end of the day, we didn't get a deal done until we sat with somebody who knew what they were doing to look at it and be serious. And it's kind of naive to think that someone like Leonardo DiCaprio isn't a very sophisticated business person." And so, could you shed some light into how these deals are structured? Is it all equity? Is it performance-based? do they just get like this grant and what if they don't perform? So, I'm just like curious like how how do you go about structuring these deals with celebrities? Yeah, the structure of the deal really depends on the company. Some companies are early stage, they don't have a lot of cash and they're happy to give away equity. It also says something about the company. If the person's a shareholder and so forth, others are much later stage creating revenues and are very very stingy on giving away equity and just want to pay cash. those are really easy to do those deals, but there there's nothing that really ties the celebrity deep into the company the way that being a shareholder does. Um, so you see both of those deals, but the structure itself is actually really similar to most service agreements whether or not it has an equity component. There's vesting. Um, there's a certain guaranteed amount. There's a certain amount that could be earned through performance. Performance could be either actual just doing things or hitting certain results. Um, and so those deals are structured this way. And this is how I tell the founders to think about it. I say, break it down into two. First, what do you absolutely need to get from this celebrity? You need to have the rights for their name and likeness and voice. You need their appearance and the rights to put it on your website and on your socials and in ads. And um, you need the right to um, say certain things about the celebrities's involvement. um and the and and the right to feature them in advertising has a time limits you needed for a certain amount of time and those are the guaranteed things you absolutely have to get. What are you willing to compensate for that? How much equity? How much money? How much bonus? And then let's think about the other stuff, you know, um how many users do you expect to get from this? How much um how many views do you want on their social post? How many social posts do you need? And what kind of reaction do you need to them? and let's build a compensation structure that creates incentives to both sides to hit milestones around those things. So, if it's you need to hit a number of installs, let's incentivize a celebrity by giving them a dollar every time somebody installs the app. I don't know, and I'm just making this up, but um it's really a two twostage deal. What you must have and against it there's a guaranteed return and what you're hoping to get, which against it there are bonus incentives. And like do these celebrities get greedy in these negotiations? Do their business managers get greedy or do they are they all just like, "Oh, let's all play ball." Like, how do these like negotiations go back and forth? It's uh it's as crazy as you can imagine. Um celebrities are not one sizefits-all. There are celebrities that are extremely easy and and nice to work with, that are very reasonable, that are um always doing more than they promised. And there are celebrities that are divas and impossible to work with. I can tell you that we have one company that got to the point where it was the day of the signature, the celebrity decided they don't feel like doing it anymore. At the time, the company was valued at less than 50 million. It's now valued at more than 500 million and the celebrity would have owned north of 10%. Um, so, uh, but you know, they made money elsewhere and I'm sure they're fine, but um, that kind of behavior came in after nine months of negotiations. So, uh, you see everything and you never know. Um, and I can tell you some stories about celebrities that I can name um, a little later, but um, yeah, it's very hard to predict. Some of them are are horrible. Some of them are wonderful. And we're very lucky uh with some of their companies um to have landed celebrities that have built the company. I mean Google and Galad uh Gal has been so powerful and instrumental in helping build that brand. Not to discount at all how amazing the founders are and and the team around them and the product itself. Um but sometimes you just have an amazing partner and sometimes you don't. I think it'd be great to talk a little bit more about Stardust and kind of your background at Hyper and how that kind of compared to now running a syndicate. I I started Hyper after working um in a startup called Mobly where the founder got into a lot of trouble later on but at the time was a young founder very excited about building a social network that would compete with Instagram at the time or preceded Instagram but would be similar to Instagram and the whole thesis was let's get familiar faces let's get celebrities on board and let's uh let that drive user acquisition and it worked really really well. We got Leonardo DiCaprio, Serena Williams, and several dozens of other celebrities on board. That drove a lot of free acquisition. Obviously, we ended up losing to Instagram for a v variety of reasons. But we were a player in the market for a short minute. And when I was done with it, I realized that the world had changed, that influencer marketing was becoming something real. that suddenly social networks actually had a way to let you understand who's really influential, what do they influence and that led me to build a company um that was focused on creating that value and fundraising was really really easy in that scenario. It was a sexy story. It was differentiated. Nobody else was doing exactly the same thing. It had celebrities. It had all the flare and and all the potential that you need in order to raise capital for an individual company that has its own story. It's it's got differentiation. It's got endless potential. You're selling a dream as opposed to raising funds or raising uh or getting LPs for um a professional investment vehicle, sorry, a professional investment vehicle where you don't really have a dream to sell. It's more about I have more access or I somehow understand this market a little bit better. And it's much more tied to the numbers, much more tied to um the mood of the market at that point. Do people want to invest in funds or do they have alternatives because uh interest rates are low or because there are other assets that pay a better return? And so I found and I don't have a fund, you know, I have a group of angels that invest alongside with me. I found that invest that that raising for funds is a lot harder than investing for a startup if you know how to craft a really really good story around that startup. And that seems to be your experience with with Stardust is you're picking companies that you think you can create this narrative for. So I guess tell the audience a little bit about what you focus on and what types of deals you prioritize. Yeah. So I started Stardust with the recognition that Andre and Seoa are not calling me up to say hey do you we have some room left on on this round you want to join in and I I really don't have access to the best companies unless I can as an investor differentiate myself and the one thing I knew how to do really well is get familiar faces on board um projects that they would otherwise think twice about or you know in the past celebrities always wanted to just get paid cash um and I was wanting to offer them equity for their services. So, um, we decided, my brother and I, who's my partner at Stardust, decided that we would target the best companies within a category that we can actually be beneficial to, and that would be consumer companies that have a product that is a great product, but for some reason hasn't gotten the traction that you would expect. It's hard for people to understand or it's hard for them to even reach people. Um, and we knew that by bringing on board familiar faces in a very thoughtful way, celebrities or high-profile influencers, we could one, generate more visibility, and two, generate more credibility um, and get people to actually pay attention when these founders are speaking and give their product a chance. And by doing that, we could maybe get a seat at the table at some of the better companies that otherwise wouldn't allow just two angels onto their cap table. So this is for the founders listening here. Uh and the question I want to bring up now is like when it comes to like this identification of these companies that maybe are struggling to, you know, get their messaging across or to get the reach, like how are you, like if they're having trouble convincing their customers, how are they convincing you? it like how are they pitching to you to to where the spark ignites for you to where you have conviction to jump in if they're already, you know, maybe not everything's up and to the right and drisk kind of thing. Yeah. Ironically, look, if everything's up and to the right, that's probably too late for me to join, right? I don't I don't join at high valuations and I don't join where I can't bring value. If everything is going great, you don't need me. You go go and get um whatever the best fund in your space is. Um and um but if it's not going great, then what we like to do is we'll come in and we'll try to be very thoughtful about it and understand whether the problem is that you're just not reaching enough people or you're reaching people but somewhere in the flow it's very clear that they're not paying attention or they don't understand your product. And then we try to generate a really thoughtful way to um explain the product to them and make sure that they do pay attention. And I always say, "My dream product is something that you put on your head and it grows your hair back, right?" Because if I if you just saw an ad for it, you would say, "Okay, this is It doesn't work. It never works." Right? And you'd probably not even, you know, skip ahead as soon as you can not pay attention for seconds. But if you saw The Rock using it every week and suddenly there was hair on his head, you might say, "You know what? Maybe there's something to this product." And that's what we look for. We look for not just bringing on a famous person, but being very thoughtful about it. Someone that you look at and say, "All right, this person, if this person is behind this product, if this person is using this product, one, I can understand what this product does with with ease because they're demonstrating it to me and I can see. And two is it probably works. It's probably real. these these people wouldn't put that um anything but the best food in their body or they wouldn't put this on their head if it didn't really grow their hair back or they wouldn't use this on their face if it didn't get the zits to go away. What's some stories that you can share in terms of success stories that you felt the founders and team managed the relationship well and the celebrity also participated accordingly like what's some like lessons that founders can take from that? Um so we have a lot of most of them are successful relationships. It doesn't necessarily translate to a successful startup. Um because when you when you there are a lot of things that just don't depend just on the celebrity and we know how startups are. You might have the best founding team but the market didn't turn that way or things like that. Um some examples of celebrities that surprised us in a um in a good way. Uh, at Moy, we had a deal with a very very famous rapper um that uh we signed and was supposed to create content for us and as and that content would be posted on our website and we had a good relationship. And one day out of nowhere, we woke up to realize that he posted a leak of his music video that was set to come out the next day without telling anyone, including us. Um, and that spread like wildfire. The only problem was we weren't ready for it. So about two million um um new users in who came in to see and we're talking about a very big name. We crashed and we crashed for 24 hours which ruined everything. Um but yeah, sometimes they they like you and they try to do the right thing and he did something very nice. It just didn't uh didn't work out the way that we could. On the flip side, you know, we signed a deal with Lance Armstrong and shortly after he was indicted for or not indicted, sorry, shortly after he was accused of um using uh performance-enhancing drugs. Um and we were like, you you don't think you could have mentioned that a little before. Um ironically though, um the the the fuss around it and and the issue around it actually drove a lot of traffic to our product. So sometimes you think something bad happened or you you think that somebody may not have treated you the way that you were hoping to and it still produces a good result for you as a company. Um so yeah those stories the stories can vary. Um usually it's a lot more calm though. Usually it's something simple like barcode signs Victor Wanama. Victor Wanama is 7 foot4. Um, he's got the body frame that if you just looked at him, you would say he's not going to make it in the NBA because he's too skinny and and he's going to be fighting these monsters who are 300 pounds and much much stronger than he is. And yet, he plays very well. He's extremely flexible and and Barcode is an energy drink that's all about health and uh caring about what you put in your body. And it makes a lot of sense simply by looking at him. He doesn't need to talk about it. similar looking at him, you understand why he chooses to drink barcode and not um some of the other products out there that are significantly less good. If I'm a founder, you know, looking at bringing on a celebrity and trying to structure a deal, like have you done any kind of analysis with your companies or companies you've been exposed to in terms of like the pre-valuation of signature of a celebrity to a post-valuation of a signature of a celebrity? Have you seen it move the needle for fundraising? Have you seen it move the needle and is it instant? Do they usually have to see it perform? So just curious from your perspective. So the way the way we approach it is we don't go to fund raise right after signing an influencer. What we do is we invest at a low valuation, bring on board the celebrity and execute on the strategy that is supposed to benefit from the celebrity. I think we're at a place where these later stage funds or even the series A or series B that come in after us, they no longer get excited about seeing a celebrity face. They're excited about seeing what the celebrity face did for the company. So if for example because you have a celebrity now Target wants you in all of the stores. So you have a purchase order that's really meaningful and also you featured the celebrity in your ads and you can show that the cost of acquisition dropped by 40% whenever the celebrity's face is in the ad compared to just a regular person. Um now you have a story you can craft around a competitive advant advantage of your market. Um, and so typically we've seen I mean I'm just looking at the last three or four jumps of 10x 15x within six to 12 months in the valuations. Um, but those numbers one more time say those numbers one more time. We've seen jumps of say 15 10 to 15x in valuation from one round to the other. Um but not again not just because there's a celebrity present but because within that time between the fundra those six months came in a major commitment from a huge retailer or a huge jump in online sales because customer acquisition costs were low. Um some kind of story that you can craft that says if you give me your money I can continue putting more o you know pouring more oil into this fire. Um and I have this asset that I can use to achieve those goals. See that that's so valuable. I feel like so many founders are like we have X like we have this celebrity, we have this person and it's like cool doesn't matter like what does it actually do for the business? Often it's it's in my perspective it's often a negative. So if you've structured a deal we we were pitched a company with a very very uh a celebrity that I would have loved to work with and they said we already have a deal with her and she's committed and I said well let me look at the deal. And in the deal, you could see that it basically chokes the company to death because she takes 10 cents on every dollar the company makes um on a company that's not going to make money for three years. And I said, "You can't do a deal like that. Like that. That just doesn't work. You can give her 10 cents on her version of the product. You can you can structure some kind of a cash bonus against hitting certain milestones after you reach certain amount of sales, but you're losing money. And now you're losing 10% more money every every month. and it's just going to make it impossible to do the deal. The celebrity wouldn't renegotiate and I said I have to to walk away. So sometimes a celebrity deal is is actually negative. Or sometimes they have a celebrity but the celebrity has nothing to do with the company and it's literally okay but the celebrity will get you visibility but everybody will be thinking in the back of their mind what does this celebrity have to do with this product? Um which isn't as bad obviously as them squeezing the company dry but I just you know I don't know if we can work with that. and also it leaves no room for another celebrity or someone else that you could use. Um, another issue is when they bring on board a celebrity that doesn't own their own channel. So, we love to work with people who have real channels, big YouTube channels or they have a talk show or they have a really popular podcast because right now if you have a really big Instagram account, it doesn't really guarantee any visibility. The algorithms have taken over. But if you have a really popular YouTube channel, we can predict how much visibility you can create every time you post. same thing for podcasts or or talk shows. And so we can price in price into the deal um repet repetition of the message that you're involved with this thing. So, in a perfect world, you know, you back in the day, we had um Oprah and if Oprah was your celebrity and you were featured on her show every week, that was far more valuable than Madonna, that was great, but she only had a song come out one, an album come out once a year, and that's when she would command her attention, unless she was going on tour and committing to put you front and center on stage every time she goes on stage. No, I think that's uh what what I'm really hearing the common theme is like data matters and it's not a vanity to you the vanity metric of saying a celebrity doesn't really mean much until you actually have the numbers that prove the economic impact on the business. Uh well, back in the day, it was it was really interesting because a lot of when when influencer marketing just started getting its its um starting being used like uh across many companies, a lot of the beauty companies would hire u uh Sports Illustrated swimsuits models to be the face of their makeup. And I always wondered, what are you thinking? And when I built Hyper, which was my startup, I could see that 95% of their audience were men. We didn't have Only Fans back then. this is what they were looking for or swimsuit models and small bikinis and you're not going to sell any makeup. Not only were you not going to sell any makeup, but women despised these women. They thought they were, you know, a lot of women really didn't like them. So, you're putting your makeup on someone that has a big audience, not an audience that uh most of your audience is not going to be interested in this or even see it because it's mostly men. That is so sadly true. Yeah. But you bring up this other point around yeah the the prioritization of channel distribution too just like owning the channel uh I think is often underrated like oh they have this many they millions of Instagram followers is like I've seen plenty of Instagram accounts with like very low engagement where it's just like you can post and just doesn't go anywhere. You're likely having trouble raising money or selling your company. Personally, I've had four exits and I've raised over $145 million. If you want a free coaching session with me, just like, subscribe, and leave a comment down below letting me know what you think of today's video. For a chance to win a free coaching session with me, I'll select three winners every single month. You just have to like, subscribe, and leave a comment down below for a chance to win. Now, on to the video. So I'm curious on this you see YouTube, you see podcast like uh from your perspective when you're analyzing these relationships like what have you seen across these channels like what how have you seen them kind of perform in comparison to other channels? Yeah. So performance starts with you defining what the KPI is. If if the KPI is I want to run ads and I want to have a familiar face in them, it's very different than I don't have money to run ads. I need someone who has their own media because they post all the time and they see it. And that should drive whether you go after a big YouTuber or a Hollywood celebrity. If you need a familiar face that people trust, a Hollywood celebrity might be better than a YouTuber. But if you need people to see you every time, every week, you need a YouTuber that posts every week and can use your product on that video every week. And so it really depends. You know, there's this amazing campaign by this company called SodaStream. I don't know if you know them. They basically they have these these that carbonate. You like them? Yeah. So they they I like them, too. Um, and they they didn't have a huge budget, but they were looking to do an a celebrity campaign, and I was not involved, so I have no credit on this, but it's still today one of my favorite uh campaigns that I've seen. Uh, back in the day, everybody was watching Game of Thrones. There was this epic scene where the queen was kidnapped by the uh church in the show, and they made a walk, this walk of shame uh when they released her. And so, SodaStream at the time was having legal issues. They were being sued by carbonated drinks companies. um for saying that those companies are bad for the environment and there's all these issues and they couldn't really say in an ad what they what people what they their perspective is which is you shouldn't use plastic bottles. And so they they have this video of this guy walking in the supermarket and he goes to pick up um a bottle of carbonated water or a six-ack of carbonated water. And as he's walking back, people start whispering shame similar to the episode. And nowhere ever is it mentioned anything. There's nothing mentioned about Game of Thrones, but you immediately get it, right? And he's walking the shame. He gets to the register and it's shame and as he's walking becomes more and more a Game of Thrones world. It's like bad neighborhood and then it's like um some of the people from game who look like they came out of Game of Thrones till he gets to the mountain, the character who played the mountain, right? A secondary character that was on definitely not the most recognizable character, but or sorry, very recognizable, but not very the most famous character on the show. And that character says to him, "Why are you hurting Mother Earth?" And it's just such a funny scenario. and and any anybody and everybody who's watching um that show immediately got it that it's shameful that he's buying carbonated plastic bottles when there's soda stream and um that worked really well. I know that they spent a relatively small amount of money on this. Uh I heard it's less than half a million dollars on the entire production and the talent. I don't know if that's true, but that's what I heard. Um but they spent millions of dollars on media. So they created an amazing piece of content and they realized that what they really need is a lot of people to see this and they needed people to pay attention. So they chose to focus on this concept that everybody was talking about. They could produce it really really quickly and I don't have any I'm not involved so I don't know what the data is but I would imagine this was extremely effective for them. Um I'll share with you the link to the video if you want to share it later. Well I'm I'm definitely fell for that one hook line and sinker because uh that's why I have a set of stream. Oh yeah. I got so tired of throwing away all the cans and bottles and everything like that and I love carbonated water. So, I just personally felt guilty. So, yeah, it's amazing how, you know, the the right personality, the right messaging can have such an impact and that's why I think your whole career and kind of the influencer world is is so meaningful to kind of share these insights for founders to kind of really think about, you know, how do you engage these types of campaigns because it posting on Instagram once doesn't do anything at all. No. um you you you have to be creative and interesting. Um another one that I love is Care France. It's this nonprofit that takes care of women in the third world and they created these 30 to 60second videos of I think it's seven or eight women in the third world showing their lives in 60 seconds. It's so beautifully done. Nobody's an influencer. It's just social media at its best. And then they said, "You don't have to donate money. Just repost this. It's like donating money." And millions of people reposted the videos. And um if you look at if you Google care France life of a woman in the third world you'll see some of these videos unbelievable uh storytelling um without any budget without any celebrities. So what are some of the underrated channels or platforms or strategies that you're starting to see you know be fruitful in terms of return on ad spend or you know just return on investment in general right now? Yeah. you know, unfor I hate to say it, but for me the most effective one is Facebook ads, meta ads that produces the most return. Um, and so um, when we are targeting advertising, we want we we target familiar faces within specific categories. So, um, if you're, this is a terrible example, but we'll use it because it'll I wouldn't use it in real life, but right. So, let's say I wanted to sell a book about how to be the best chess player in the world. One approach I could have is go take Jerry Seinfeld and George Castanza, pay them each millions of dollars, the actor who played George Castanza, right, and have them play a chess game and create content around it and have amazing content that would go viral and get it a lot and get a lot of attention, but it would cost me millions of of dollars and they don't have their own media. I'd have to spend on my own media. Or I could go to whoever the most famous people in chess are today, right? and that might be um Gary Kasparov who used to be the world champion or it might be the Botees sisters and I could have them create really really engaging content for me that I can use in advertising and know that they're very very familiar faces if you care about chess right just because you watch Seinfeld doesn't mean you know who they are but if you care about chess then you probably know who they are and so the thought that what's been really really cost effective it for us is to understand that we're not necessarily going after the biggest. We're going after the the most familiar or the most recognizable, the most trustworthy within the category of an audience that we are trying to reach. And that brings you back to really marketing 101. Anybody who's taken an MBA, they tell you first you understand who the audience is, then you understand what the channel is. The celebrity is the channel. And you don't want to spend on a channel where 90% will go to waste. But are there like so I I had a feeling it was going to be you know Facebook and that is going to be always the the big one as far as like when you get to the scale point. Um but are you seeing any kind of you know performance in Tik Tok over Instagram or any any kind of like other platform or you know distribution channels that are kind of outperforming from your expectations? Yeah. So, if you put aside um market, traditional marketing with a budget, YouTube is far outperforming any platform that I've seen. It's it's the one that where you get a lot more bang for your buck, even though it could be a little more expensive. Um the exception is, and it depends on the type of product you sell. If you sell a product that you can sell for a high margin at a low cost and Tik Tok shops is an amazing channel to do that because you can compensate the influencers on performance without having to put too much uh money down and you just need to send them a sample of your product. Um, so if you have a product where it cost you nothing to to get it to the influencer, they think it's very valuable because it cost you five bucks, but it's but you sell it for 200 bucks and you can sell it and you can let them sell it for a hundred bucks because I got it from this influencer. That's a model that works really really well on Tik Tok shop. They also have something called spark ads which is advertising similar to the way they could advertise on Instagram. I haven't done much of it. It hasn't been as effective for me. Um, and I haven't heard from people that they've had a ton of or the same level of success as they've had with Facebook and Instagram. But if you are going to spend a budget, there's also that option. Um, what's really really worked well for me as a channel has been YouTube with creators that post regularly where you can be featured again and again in the content. U because it's one thing about getting people aware and seeing it once, getting them to a decision that they want to buy requires repetition and requires them to see it again. with most products. That's been a channel that's worked much much better for me. I know that people um also use anywhere from WhatsApp to Snapchat to other platforms to Pinterest. Um I haven't had a lot of experience doing it. Okay. No, that's fair. And there's some good insights and it's good to know on on the YouTube front. I think that's something that uh from my own personal experience I'm seeing still a lot of value in terms of the reach that you can get for for a relatively low cost uh if you play your cards right. Um so most of your focus is consumer and most of the examples we've been talking about consumer but let's look at the other side of the coin B2B businesses B2B software whatever it is there a playbook for B2B software founders to to leverage influencers and how does that what does that look like? Yeah, look, at the end of the day, um, even in B2B, you're selling to a person, right? You need to understand who what your customer looks like. And you may typically most companies that are B2B have a persona within their customer company that they sell to. It might be the CISO or it might be um a business development person or it might be the CEO, but there's a type of person who has a role, who has certain milestones that they need to achieve. And those people, just like everyone else, rely on trusted voices to make decisions. And so you can decide who your influencers are based on who you think would influence that audience. So I'll give you an example of a an amazing um an an amazing uh B2B influencer. There's a woman named uh cyber security girl um Kaitlin Sarium. Um she talks about cyber security and the people who follow her are people who care about cyber security. And if you don't care about cyber security, you're probably unlikely to spend a lot of time on her channel. She's got north of a million, I don't know how many followers now on Instagram, but she's someone where whenever a company talks to me about cyber security, I say you have to go to her because um the audience that is going to buy for you from you, they're probably watching her videos. And if they're not following her, then somebody's sending her her videos just because it's relevant content to them and everybody's on social media. So, if I had to imagine what they were watching, that's what they were watching. Um, so when you think about a B2B campaign, you really have to think about it the same way. Who are these people um watching and do they trust those people? So, if you're targeting startup founders, you're probably going to fi target you you're probably want as influencers the gurus that startup founders listen to, the people who wrote the books that startup founders read. If you're targeting, we have a company that's targeting mental health. Who do mental health professionals listen to? And we have a group on there. We have Dr. Phil on there, but we also have a bunch of other less famous out less regular person famous, very industry famous people who've written um who've written the um the the articles that everybody shares, who write for the publications that everybody reads. Um and and those people maybe they don't post on Instagram but they create a video testimonial and they attend important meetings um to influence the decision-making and if we have a conference then we host them in a conference. By the way, if you are a B2B um company and you are trying to do influencer marketing with one of these people, then the best thing you could do is host a physical or online event where people have now access to this influencer. And that influencer might be talking about something that's important for their industry, but will also say why your company has contributed so much to dealing with that issue. So, kind of the fun question I have here is I imagine there's a lot of founders in this situation right now where they're maybe exploring different channels to pursue. If you had a founder come to you, they have $50,000 to spend on marketing, make a splash, they have an influencer, um, but they haven't struck a deal yet, like what would you what would just be like your strategy that you would take to maximize that budget and negotiate a great deal with that influencer? Yeah, I think it starts with understanding whether you're trying to get somebody who has an audience who who's comes with a built-in media package, right? They'll post and people will see it or it's a familiar face where you need to spend the money to um advertise. If it's a familiar face where you need to spend the money to advertise, typically the way we structure the deal is a low signing bonus plus a bonus against company milestones. So, we'll be using your face in advertising for as long as we use your face in advertising. If the company hits these milestones, you get a bonus every once in a while, right? If it's somebody that comes with built-in media, then I typically like to give them a larger um upfront commitment in exchange for a larger commitment to post again and again uh on behalf of. So, if you have somebody who posts every week on uh YouTube and they get a million views on that video, you want to be in every single one of those videos. You want to be at the first three minutes of the videos to make sure that all the viewers have made it that far into the video. Um, and our and are typically will be much less success driven because we don't know if they'll convert or not. We can't really blame them for converting um or not converting and much more um how much do you post for us? So, I try to squeeze the most media out of them for that money. I don't know if that makes sense. So if if they have their own media, I try to squeeze as much of it out of them for my money. If they don't, I try to squeeze as much rights to use their name and as much advertising and then pay them against the results of that advertising. Yeah, I think that's valuable advice. And for the audience here, I think it'd be good for you to to share a little bit more about Stardust and what you look for and what types of deals you're you're prioritizing as a firm. Awesome. So whether you're a founder or somebody who's looking to invest in uh in the consumer space, the way we think about deals at Stardust is we like to come in after there's a little bit of traction, meaning the c the product has met its uh customers and we have some feedback. It doesn't necessarily have to be amazing feedback. It could be that we don't understand the product. It could be that it's it's a good product, but it's not good enough. It needs to be improved. Or it could be that uh we love the product, but it's too expensive. Um, and that we can then alongside with the founder craft a plan that would leverage familiar faces to solve that problem. Whether if the problem is a lack of visibility, we can create a lot more visibility. The product is a lack of credibility or understanding, we can solve that problem with a familiar face that simply by being involved gets you 80% of the way to explaining what the product does. Um, and if we if we can find that company, then we say, "Look, we'll come in. we need a lower valuation because we're we're doing all this work for you. However, we'll be with you for the next six months. And what we'll do in those six months is we'll close that deal for you. We'll ensure that that deal happens. We'll help you execute on the plan of what you're benefiting from that deal. And we'll introduce you to the investors that come in in the next round. So, if you're a founder that that sounds right to you, you think you have a great product, that's when you want to meet us. Now, we if you haven't met your audience yet, it's too early. And if you're making 10 or 20 million a year, not impossible. We are we have done those deals, but it's probably too late unless you you feel like you've hit an inflection point where a celebrity makes really makes a difference. And if you're an investor who's looking to get into the space, then we we say typically, look, the allocations we get are too big for us. So when when they are, we we can't afford them. We'll open them up to other investors and we love collaborating. So we'd love to hear from you. No. And what's the best way for people to to learn more and find out about uh Stardust and you and get in contact? Uh it's www.stardustvententures. us uh is the website and my email is gilstardust ventures. us. Uh I know that people say that investors don't love cold approach. I love cold approach. Just be uh succinct. Give me the important information in the email. You don't need an intro. Just send it over. Well, Gil, it's been an absolute pleasure having you on. I really grilled you on kind of the influencer celebrity strategy. I'm hoping that founders got some some good tidbits from there. Um before we part, what would be one word of advice to to founders that you want to share with them right now? Yeah. So I I would say two things. Okay. In the celebrity front, people always overvalue visibility and undervalue credibility. Don't make that mistake. Founders will uh celebrities will deliver significantly more credibility and significantly less visibility than you think most of the times. Um, and then on the VC side, when you're raising capital, be very, very thoughtful um, about the other side. Try to understand what are they looking for. The one pet peeve that investors have is when you send them something that has nothing to do with what their fund invests in. I get startups in the SAS place and in um, cyber security all the time and I'm sure that they're amazing startups. I just have nothing to do for you and it shows that you haven't been studying and haven't been really paying attention to me. So pay attention to who your audience. Send them a message that they'll appreciate. Look at who else they invested in. Look at what spaces they invested in, what they've said in articles, and customize your approach. You'll get much better results. Go. I appreciate you coming on the show and sharing your advice. It's been a pleasure having you. Thanks for having me. It's been so much fun. Thank you for watching today's episode. As a reminder, I'm your host, Jason Kirby. I have built and sold multiple companies with over 135 million in transactions as either a founder, operator, investor across multiple industries. I'm currently the managing director and founder of Thunder.bc, where we help companies and founders at all stages navigate what capital to raise and who to raise it from and help improve company's odds of raising capital. If you need help, reach out to us at help.under.c. If you like today's show, please share with your friends, give us a like or comment down below. And as a reminder, this show is published weekly. 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