By Vijay Singh
“The highest form of wealth is the ability to do what you want, when you want, with who you want for as long as you want. It’s priceless.” Morgan Housel sure did understand the psychology of money. But when it comes to understanding the psychology of understanding celebrities, it’s a whole new ballgame.
There are several other factors that come into play, from how the media perceives them, what other celebrities are up to, to so much more. While fame and fortune favor successful celebrities, it’s also hard on them as they’re always in start-up mode even after delivering a blockbuster. You will still be judged – by critics and fans – on your next release. Shelf-lives can be short – true especially in sports, or with celebrities who’re reinventing themselves. There’s no ‘automation’ of income or wealth-creation that happens. Ancillary revenues – be it from brand endorsements, live appearances, social media are all still dependent on the artist’s time and involvement. Several actors have backward integrated into setting up production houses, record labels and even managing other artists. But being in the same media and entertainment business means that all their eggs are still in the same basket. The thing to figure out is whether their money is working for them even when they’re not!
The investing landscape is changing, we have seen this in the west with several international celebrities who’ve been able to diversify, de-risk, and build great value for themselves beyond their core areas of entertainment. George Clooney sold his tequila brand Casa Amigos to Diageo for upwards of $1billion making him the highest-paid actor of 2018 despite not appearing in a single film in that year. Ashton Kutcher, known mainly for his role in That 70’s Show, on MTV’s Punk’d and a bunch of forgettable films is considered one of the sharpest investors in the valley. He’s invested in over 150 companies and his successful exits include the likes of Airbnb, Uber, and Duolingo. His new investment fund, Sound Ventures focuses on tech/ crypto and metaverse-driven opportunities that continue to add to his empire. Dr. Dre with Beats, Jessica Alba with the Honest Co., Kanye with Yeezy, Ryan Reynolds on Aviation Gin, Mint Mobile there are multiple examples of celebrities who’ve managed to also crack the code on ventures. Clooney and his team bought a factory to produce the tequila, Alibaba took 10 years to build out Honest before it went IPO and was listed on NASDAQ at a billion-plus. Done right and strategically, venture deals can add not just cash but also tremendous value to brand imagery.
Closer home, that trend has begun. Hrithik Roshan’s HRX that will clock a sizeable number in revenues is a great example. There are also investments by a bunch of artists across areas non-core to them – Virat Kohli in Digit Insurance, Alia Bhatt in Phool, Deepika Padukone in Epigamia, Sonu Nigam in Artium Academy among others. Unfortunately, traditional talent agencies aren’t equipped to curate/identity, evaluate, monitor, grow, and help successfully exit these opportunities. Hence, the approach is to barter ‘time’ and ‘tweets’ against sweat equity. Or a very short time view of concern over blocking a category on an endorsement opportunity that has immediate monetisation vs. a medium to long-term perspective on a venture deal that can translate to a potential 10x value. But short-term opportunity cost over long-term profits is always tricky to punt on. Resulting in deals going sour, businesses that flounder, brands that could even erode core equity of the talent. Look at the apparel/ fashion lines of multiple Bollywood celebrities that don’t sell goods even with heavy discounts now. So, it’s not as simple as playing ‘Celebrity Shark Tank’.
Clearly, there’s no dearth of great ideas, see the number of unicorns coming out of India – 44 in 2020/21 alone! And some of the biggest innovations are popping up from tier 2 and 3. Across tech, bridging consumer gaps and sheer human innovation. Jugaadu Kamlesh, anyone? However, this is a new space that requires new skills. A mix of hard Private Equity/ Venture/ Asset Valuation/ M&A/ Negotiation knowledge & experience balanced with a softer understanding of talent brand/ imagery/ headspaces to find fitments, to help fulfill their aspirations, and more. And the ability to navigate deals that can genuinely be a win-win for both parties. So, the business also grows to build and unlock great value for all.
That’s when artists would have successfully cracked their MBA – Management By Absence. Future-proofed themselves. De-risked themselves beyond one egg basket. Unlocked sizeable wealth. And set up the ability to wake up each morning to say, “I can do whatever I want today!”
The author is CEO of Sony Entertainment Talent Ventures India (SETVI). Views expressed are personal.
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