By Malcolm Harris
How social media, celebrity promoters, and banks looking for a quick buck transformed the markets.
In his 1910 book, Finance Capital, the Austrian-born economist Rudolf Hilferding introduced the idea of “promoter’s profit.” Unlike an industrial capitalist, the promoter harvests their gains not from the sale of a widget at a price above its cost but from the sale of promises — of claims to future profits. Hilferding saw the promoter as being particularly useful for selling stocks, to the benefit of big banks and others that managed those sales, and he predicted that corporate dividends would dwindle as the financiers captured an increasing profit share for themselves. For a promoter, being famous clearly helped. If you’re famous, someone will want you to promote their stock, and if you promote a lot of stocks, you might find yourself getting famous all on your own — as well as very wealthy. It’s an old tradition.
Finance Capital was received as a worthy update to Marx, and Hilferding became a leading voice on economic policy for the German left in the Weimar period, rising to finance minister. An Austrian Jew by birth, he died in Gestapo custody, but his predictions were harder to kill. Soon after Hilferding’s book, Charles A. Lindbergh helped define the modern celebrity, starting with the inaugural transatlantic flight of 1927. The Guggenheim family, which invested millions in aviation-related programs, paid him to barnstorm around the country, boosting the idea of air travel and convincing capital to invest in air companies. It worked, helping to create a “Lindbergh Boom” as Wall Street raced to finance the new industry. But Lindbergh was more than a celebrity endorser; he was also a promoter with a stake in what he was promoting. In 1934, facing rumours of impropriety, Lindbergh’s team released financial statements revealing millions of dollars in inflation-adjusted profits from the sale of airline stocks over the previous six years, with more still held in Pan Am shares. Not bad, especially considering it was the Great Depression. In comparison, his annual salaries from two airlines were token.
There were echoes of Lindbergh and Hilferding when Amazon founder Jeff Bezos took the inaugural spaceflight on his Blue Origin rocket ship in the summer of 2021. He too was trying to interest people — and capital — in flight, and, like Lindbergh, he was personally invested in the result, though his company is closely held and not yet on the public markets. Still, doing an ostensibly death-defying stunt while yelling “Look at my company!” is perhaps the ultimate act of a promoter.
If the figure of the promoter isn’t new, it has made a qualitative jump during the young 21st century. More than anyone else, Tesla CEO Elon Musk defines the archetype. In the supercharged pandemic stock market, he proved the value of a celebrity profile by vaulting over rivals like Bezos and Mark Zuckerberg to become, by some measures, the richest man in the world. Tesla is at least partly propelled by Musk’s personal brand, and the equity markets translate celebrity into cash. “It’s hard to fathom how somebody could make more money faster than anyone ever has by tweeting, yet that’s pretty much what happened,” as Lane Brown has written of Musk for this magazine.
Convincing people to buy something regardless of its underlying value is the job description of our era’s version of the celebrity spokesperson: the influencer. In “influencer marketing,” firms hire — or, on the lower end, offer freebies to — popular social-media users to post about a product or service. These influencers are taking over an increasingly large slice of promotional budgets, with some even dancing off the screen into real-world branded collaborations, such as fast-casual chain Cava’s deal with YouTube influencer Emma Chamberlain to promote a $14 falafel salad as “Emma’s Fire Bowl” — a conceit that, for some reason, included aggressively barefoot posters of the then-20-year-old. Reviewing estimates about the size of the influencer market, The Economist cited numbers between the tens and hundreds of billions of dollars, concluding, “Their posts seem frivolous. Their business isn’t.”
In terms of bang for your buck, influencers have quickly become the gold standard for marketing products and creating fast wealth. Even the multimillionaire investors on Shark Tank have started to value their social-media influence more than their capital, and now they promise to promote prospective partners as often as they offer to handle manufacturing. In this situation, you want Mark Cuban to buy part of your company not so much because he can run it well or finance growth but because he’ll tell people about you. That’s often worth more — and when it works, it’s certainly a quicker and easier path to success than a traditional business plan. And if being a company founder is about influencing the capital markets more than it is about running a business, then it makes sense to get the most influential founder you can.
In 2017, George Clooney and a couple of buddies sold their superpremium tequila brand, Casamigos, to the British multinational Diageo for up to a mind-boggling billion dollars only four years after the bros launched their project. Stories about the deal emphasize the tequila’s quality, but Diageo wasn’t paying ten figures for the secret recipe. Analysts evinced concern: Diageo was obviously overpaying from a numbers perspective; only star power could explain the price. Yet the purchase came in the middle of a great year for the firm, whose stock ended the year up 40 percent, more than 20 points ahead of the extraordinarily hot S&P 500. What’s $1 billion when your market capitalization is up $25 billion?
Clooney was hardly the first celebrity to start a brand — he wasn’t even the first to make a deal with Diageo, which offered Sean Combs a fifty-fifty profit split to develop and market the vodka brand Cîroc — but the Casamigos billion marked a new era. No longer was it enough to vouch for a product; now we expect celebrities to have ownership stakes. Even when they’re dressed up in partnership language, it’s important to distinguish these more traditional celebrity endorsement deals from genuine promotional plays like Casamigos. The difference here isn’t just the tax category — labor income versus capital gains — it’s volume: In the age of promoter’s profit, successful owners make much more money than even the most elite workers.
After Casamigos, a comically large number of celebs followed Clooney into the liquor business — and not usually from the ground up, the way he did. His fellow Hollywood leading man Ryan Reynolds, for example, bought a significant minority stake in a reputable Portland, Oregon, gin brand in early 2018. He ostensibly took the controls of Aviation Gin as owner, spokesman, board member, and creative director, starring in a series of commercials that drew on his sarcastic Marvel character, Deadpool. Though majority owned by Davos Brands, “Ryan Reynolds’s gin company,” as everyone now calls it, landed a $600-million-plus sale to Diageo in 2020. Charles Lindbergh, eat your heart out.
While founding a middle-fancy hard-liquor brand was the best way for male celebrities to make big, fast money, women accomplished something similar in fashion and makeup. In 2013, the venture-funded JustFab set out to leverage increasingly social-media-based celebrity promotion to skip the store and sell clothing directly to consumers. It purchased the ShoeDazzle subscription service, co-founded by Kim Kardashian, and launched Fabletics with actress Kate Hudson. Fabletics was a huge success, racking up hundreds of millions of dollars in revenue from customers, most of whom probably realized they were signing up for monthly athleticwear subscriptions.
The somewhat scammy precedent was so strong that JustFab — renamed TechStyle Fashion Group — teamed with Rihanna in 2018 to launch a lingerie version of Fabletics: Savage X Fenty. In 2021, Fabletics entered serious talks with Morgan Stanley, Goldman Sachs, Barclays, and Bank of America about what it expected would be a $5 billion IPO, though the plan seemed to stall amid market volatility. After over $300 million in venture funding, Bloomberg reported that Savage X Fenty has been working with Goldman Sachs and Morgan Stanley on an IPO in the $3 billion range.
Though ShoeDazzle wasn’t exactly a hit, and neither were some other early attempts at branded products, the Kardashian crew has been among the most successful celebrity promoters. Teaming with more experienced industry figures, the family has launched a series of brands. With fashion strategist Emma Grede, Khloé created Good American jeans and Kim did Skims shapewear. With beauty incubator Seed Beauty, Kylie Jenner made Kylie Cosmetics and Kim had KKW, both of which later attracted nine-figure investments at billion-dollar valuations from French American beauty conglomerate Coty. These are not mere product endorsements or licensing deals — they’re start-ups, built with a venture capitalist’s eye toward exit via acquisition at a puffed-up price or a hyped public offering. Selling stuff is just a way to sell a dream; that’s where the quick billions are.
What scrappier industry players lack in existing cachet they make up for in growth potential. Beauty for All Industries — parent of subscription beauty services Ipsy and BoxyCharm — launched the Madeby Collective incubator in 2019. In a cover story for The New York Times Magazine in 2021, Vanessa Grigoriadis profiled TikTok star Addison Rae, spending time with her as she launched and co-founded Item Beauty, the first Madeby brand. Item was followed by Becky G’s Treslúce, and they’ve been successful enough to convince the big capitalists, yielding Beauty for All Industries a $96 million investment from private-equity firm TPG this past February.
One of the most successful attempts to parlay influencer fame into direct-to-consumer promoter’s profit is in the ghost-kitchen space, where entrepreneurs set up “restaurants” that function exclusively through delivery apps like Uber Eats and Grubhub, avoiding costly real-world overhead. The reigning champ is MrBeast Burger, the fast-food brand extension of YouTube performer Jimmy Donaldson, which offers simple burger-and-fry meals wrapped in MrBeast logos. The brainchild of Virtual Dining Concepts, MrBeast Burger is just the top name in a series of similar partnerships, including Mariah’s Cookies and Pardon My Cheesesteak. These are profit-sharing deals, and VDC makes sure to talk about participating celebs as partners rather than endorsers.
To help propel the explosive growth of the MrBeast footprint, VDC raised a $20 million round in the fall of 2021 led by Swiss private-equity firm Spice. The financiers’ hope, I have to imagine, is that a conglomerate or holding company in the fast-food space, such as JAB Holdings, will show up sometime in the next couple years with a billion dollars for MrBeast. It does not seem like a bad bet. JAB, in turn, might look to float MrBeast onto the open market, like it did with Krispy Kreme and planned to do with Panera until the deal ran aground earlier this past summer. You can see how, by following this financial path, these promoters can plausibly ascend from start-up to billions in an exceptionally short time frame. The end goal is a big pool of capital in the sky, either the public markets or one of the institutionally owned conglomerates. Whether MrBeast Burger’s burger is any good — based on reviews, it is not — is largely irrelevant.
After the promoters unload their shares for what they consider a worthwhile return, the pressure slacks off. Though divested celebrity owners like Clooney and Reynolds might sign promotional contracts to keep them involved, the underwriting banks don’t have to convince anyone once the shares are out the door. “Entrepreneurial profit is a continuous stream of income, but it is paid to the [issuing] bank as a lump sum in the form of promoter’s profit,” Hilferding wrote back in 1910. “The bank is thus compensated once and for all, and it has no claim to further compensation if this distribution of property is abolished. It already has its reward.” What happens after, in other words, is literally no longer its business.
As the levels of promotional abstraction increase and the tie to actual products and services grows tenuous, there appears a new efficiency: If what people really want is the MrBeast wrapper, then why bother with the burger? Go for pure promoter’s profit. The big problem with selling nothing, however, is that someone else can always knock you off and beat you on the price. How do you get a monopoly on nothing? That was the question to which non-fungible tokens were the answer. Digital instances of artificial scarcity, the only relationship NFTs have to generating operational revenue is that sometimes the promotional stories suggest there will be brand-licensing deals in the future. In practice, they’re nothing but promotion.
Some celebs hawked their own NFT collections directly to fans, grabbing cash in exchange for limited-edition electronic postcards. Many A-listers signed traditional promotional deals for cryptocurrency services, spawning the era’s first celebrity anti-promoter, actor Ben McKenzie, who began speaking out against the crypto space in general and endorsements from his fellow celebrities in particular. Crypto also launched its own category of capitalist promoters whose fundamentally insubstantial projects managed to break through and attract serious money. These men — such as Do Kwon (terra/luna), Alex Mashinsky (Celsius), Changpeng Zhao (Binance), Michael Saylor (MicroStrategy), and Sam Bankman-Fried (FTX, or what remains of it) — conjured larger-than-life personas and alleged fortunes out of code, and the phenomenon they represent deserves its own essay. But the person who ties this story together and illustrates the reductio ad absurdum of promoter’s profit is a guy named Gary Vee.
If you’re not involved with digital marketing and so-called hustle culture, you might not know the name Gary Vaynerchuk, but if you are, then you definitely do. He does not claim to be the richest in the game, but he’s the consummate promoter’s promoter. After getting his start trading baseball cards, Vaynerchuk turned his father’s New Jersey retail business, Shoppers Discount Liquors, into Wine Library, an online store with a YouTube channel and videos by Vee. A dot-com-era success, Wine Library turned its young promoter into an online-marketing expert at a time when there weren’t very many of those and everyone wanted one. Since then, he has become one of the industry’s top names, headlining conferences and inspiring the future business leaders of America with books like Crush It! and Crushing It! A fountain of energy and enthusiasm, Vaynerchuk is an icon to business-minded influencers and other would-be professional promoters.
“Everyone shut the fuck up. Here’s what you’re going to do, and you’re going to do it right now: You’re going to buy a bunch of CryptoPunks.” That’s what Gary Vee told a private video call full of top promoters in February 2021, according to a conversation between MrBeast and YouTuber Logan Paul. CryptoPunks are unique digital items — low definition, artistically worthless cartoon portraits — catalogued on a decentralized online register. MrBeast recalls of the conversation, “We’re asking questions, and he’s like, ‘Just buy it.’ I was just so pulled by his conviction that I bought a bunch.” Amid the Vee push and increasing NFThusiasm, the floor price for CryptoPunks tripled that February. At tens of thousands of dollars a pop, that’s a substantial chunk of change from MrBeast, but by the time of the conversation with Paul in September, he’d already made good, claiming returns of 20 to 30 times on some of the Punks, an absolute killing. “I basically sold them all and moved the money into VeeFriends,” he told the incredulous Paul. “It was the same thing. Gary called: ‘VeeFriends!’ I don’t fucking know, but last time I made money, so, sure!” VeeFriends, of course, was Vaynerchuk’s own NFT project.
At the very end of July 2021, CryptoPunks purchases led by Gary Vee and an anonymous whale drove the price for Punks up into six-figure averages. On Thursday, August 5, sales spiked again. On August 6, MrBeast tweeted, “@garyvee I’m loaded up on some Vee friends, can’t wait to see what you do :)”. According to VeeFriends data, four of the five largest sales came in the days after the MrBeast tweet as Vee released previously withheld tokens from his “personal collection” onto the market. But aren’t they all from his personal collection? And what the hell is a VeeFriend anyway?
If you were trying to make a joke about finance and art, it would be hard to beat VeeFriends. Vee personally sketched 286 characters, mostly animals. To call them childish would be an insult to children; these drawings are flagrantly artless. Using them, he generated 10,255 NFTs, assigning the characters ridiculous modifiers, yielding tokens like Entrepreneur Elf and Adaptable Alien. Then he sold the pile of NFTs for tens of millions of dollars. Vaynerchuk claims to have put over $50 million into his personal pocket in the first month. If that’s true, and it appears plausible, that’s some of the most mind-blowing pure promotional profit-making I can imagine, far more than celebrities make on their NFT lines. As I wrote this piece, Vaynerchuk raised a $50 million round for VeeFriends led by Silicon Valley venture firm Andreessen Horowitz and its $7.6 billion crypto fund. Even the socialist Rudolf Hilferding would have to be impressed. Crushing it indeed.
Gary Vee doesn’t just play a money guru on YouTube; he’s also a lieutenant for serious capital, and in the age of the promoter, the guy who drew Entrepreneur Elf is also the guy who decides where you can go to lunch.
Vaynerchuk launched his marketing company, VaynerMedia, in 2009, and its first client was the NFL’s New York Jets, which is how he met and struck up a close working relationship with team executive vice-president Matt Higgins. (You might recognize Higgins from Shark Tank, on which he’s a recurring guest shark.) Together, they turned the Jets into a social-media leader, and within a few years, billionaire real-estate mogul and Miami Dolphins owner Stephen Ross brought in Higgins to lead his new investment firm, RSE Ventures, as well as to help out with the football team. Higgins’s job was to leverage Ross’s resources for new plays, and he knew by then that Vaynerchuk was one of the bigger assets he had; RSE’s first investment was in VaynerMedia.
In 2016, Vaynerchuk and Higgins must have realized that between Ross’s real-estate access and their marketing capacity, they were in a great place to run the same promotional sequence using fast-growing food-service chains, which, like liquor brands, can sell for big bucks. Ross’s half-billion-dollar renovation of the Dolphins’ stadium and his Hudson Yards development in New York City both offered mouthwatering opportunities for ambitious restaurant concepts that fit with the promotional program.
Two years later, Eater reported on a meeting of RSE brands at Ross’s Hamptons mansion, including celebrity chef Christina Tosi’s dessert brand, Milk Bar; David Chang’s Momofuku and its associated casual chain, Fuku; Australian coffee shop Bluestone Lane; and &pizza, a made-to-order personal-pizza concept. The flashy food strategy looks to be working for them, at least well enough for a double-down: In the summer of 2021, RSE acquired the Magnolia Bakery chain for an undisclosed amount.
RSE’s synergies give Ross’s chains a leg up, and so does his giant pile of capital. Profit matters, Higgins told Eater, but it’s not an immediate priority — business-speak for “profit doesn’t matter.” As promoters, they’re not thinking about near-term returns; they’re thinking about the brands’ speculative promise, and they’re willing to sink, say, tens of millions on expansion without a dollar of operating profit in sight. If Bluestone Lane or Milk Bar or Magnolia has a multibillion-dollar IPO valuation like Peet’s Coffee and Krispy Kreme both had for JAB Holdings, then it’ll all be worth it, whether or not they make any money from actually selling stuff. Krispy Kreme didn’t. After JAB took the doughnut company private in 2016 for $1.35 billion, it pushed expansion, turning a roughly $37 million annual profit into an approximately $33 million annual deficit. Still, the 2021 IPO valued DNUT at $2.7 billion and JAB wound down its position to 44 percent, recouping just fine.
If, when you’re taking a stroll through one of urban America’s new commercial developments, you start to hear an urgent voice in the back of your head saying, “Shut the fuck up. Here’s what you’re going to do, and you’re going to do it right now: You’re going to buy a bunch of Bluestone Lane coffee,” that’s the spirit of Gary Vee. And don’t be surprised to find Magnolia serving Bluestone with its cupcakes, too. As for the consumers whose preferences are supposed to drive retail competition, we’re just proof of concept: The promoters want our attention more than our cash.
Feature Image Credit: Getty Images
