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98% of the Brands You Love Will Collapse - YouTube
Channel: GaryVee
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the old world was you got you started a
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brand that you thought paid to get even
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a prayer of getting in now you build a
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hundred million dollar business
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direct-to-consumer and you're going in
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with leverage this is one big game of
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leverage you got your perspective
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[Applause]
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super excited that you're here excited
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for this fireside chat we have plenty of
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seats everybody's standing in back feel
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free to fill out I apologize if I rush
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out on a whim I gotta get to the airport
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and I've learned my lesson on missing
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flights in this town in the past so I'll
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be following Dee rocks call and so let's
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get into it so for context you know I
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wrote the one of the first checks into
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Birchbox and a lot of early kind of
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2011-12 dtc movement and obviously in
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the last 24 months because of the sheer
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scale of the underpriced attention of
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Facebook and Instagram and the amount of
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capital that is available and the growth
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of Shopify and Amazon all these macro
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trends had led to an enormous growth of
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direct consumer brands so I'm watching
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that and obviously my great thesis of
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creating vaynermedia was to buy a
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nostalgic brand so I haven't been highly
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motivated to do Jim shark or fashion OVA
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or you know hims like that that's not
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where my passion lies though I've been
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seeing all the growth in parallel I had
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to specific executives at vaynermedia
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that were part of a team called the
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office of the CEO so in theory a couple
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years ago I realized how stretched I was
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so I created a team to act like a chief
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of staff and there was four of them and
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after a year of it it just wasn't as
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efficient you know I moved to one chief
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of staff which has been working much
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better but I had these you know multiple
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executives that were super talented two
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of them john Troutman and mate Schroder
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who are my partners in empathy wine have
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been with me since they were interns in
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my wine business before vaynermedia and
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then came to Boehner John had left and
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worked for a distributor unit for a year
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and a half and came back so as an
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entrepreneur we're making this macro
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decision on the Boehner
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side I'm sitting with these incredible
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human assets which is really kind of the
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KPI of the whole Vayner thing to begin
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with there's this incredible push of DTC
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and as a third layer I'm weirdly missing
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wine for the first time right when you
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do something for 20 years and it's like
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the only thing you're passionate about
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you get burned out and so when I left
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Wine Library to do Lehner it was so
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refreshing and I was excited to not even
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think about wine and then a couple years
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later was fun because I started looking
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at wine like a consumer you know my
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whole life I'd go out to a restaurant
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like they're making a ton of money on
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this and this wine sucks and all that
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kind of stuff and so that got fun and it
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started becoming fun again nobody was
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doing anything super crazy there were
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some wine clubs that were doing
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incredibly well but there was no
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purebred direct-to-consumer brand at the
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kind of scale so that's why it happened
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we're off to an incredible start we've
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sold almost two million dollars worth of
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inventory in the first six months
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without spending any media dollars all
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off organic against my brand we did that
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as a strategy to see if we could glean
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insights at scale for my audience to
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make us deploy the cat the media even in
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a better way the a/b testing against
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Gary fans versus wine drinkers as a
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whole and so the next year for empathy
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is gonna be really exciting because I
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think we're really now gonna act like a
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brand more so than the leverage of a
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personal brand liaison you mentioned
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that actually aces find it more than a
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media plan and what that looks like she
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wants to Instagram I you know the funny
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part is I'm not sure and we launched it
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everywhere right you might have saw it
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on Instagram but we put on YouTube and
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podcast and then Twitter and LinkedIn
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and email and you know we're pretty
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excited that goes as many platforms as
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possible to bring as much value here I
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think one thing for everybody to think
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about with direct to consumer brands is
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to understand I set up earlier the
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phenomenon on the consumer side of why
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it's happening there's a very important
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thing I said very quickly and I'll say
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it again there's so much capital in the
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world today that B C's have to deploy it
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that's how they live
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and one thing that everybody really
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needs to realize about some of these
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incredible brands that we all love on
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Instagram or pre-roll YouTube or
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wherever you see them is most of them
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are actually underwater they're raising
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so much capital so they can play a game
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where their customer acquisition is
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thirty one dollars but their margin on
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that is 19 so there are 12 bucks
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underwater
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our clients at vaynermedia for example
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or established businesses that are held
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accountable to Wall Street can't do that
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and so there's some incredible things
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that are going on with these brands but
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if tomorrow
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the global economy decides to start the
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process in the other direction 98
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percent of the brands that we think are
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crushing it will be out of business
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because they won't be able to raise the
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next round there are two underwater
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their math doesn't work on customer
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acquisition and profitability and it's
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game [聽__聽] over and so we need to have
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a little bit better of a conversation to
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have more of a practical conversation
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around DTC's brands to realize many of
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the ones that we put on a pedestal I
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always say to my friends it doesn't take
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a hero to lose money every month and I
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think we need to be thoughtful that a
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lot of these brands are not building
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actual brand they're they're really CAC
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and LTV conversion sales machines that
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are arbitrage against influencers or
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Instagram and they need to be very
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thoughtful about building brand right
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now because when [聽__聽] hits the fan it
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will be brand that will get them through
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the dark time see friends to build brand
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bang you know we're seeing a lot like
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our role in traditional TV ads release
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I think it's a huge mistake and I think
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you're seeing it because they're wasting
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money and they don't care and I think
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that they the biggest Delta is we we
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literally what's amazing to watch these
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brands go so happy on traditional
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above-the-line creative is that the
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great case study of modern creative
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comes in the form of Dollar Shave Club
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the Dollar Shave Club video is this
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generations just do it or where's the
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beef it really is an iconic piece of
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creative that birthed the billion dollar
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brand the number one mistake that
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directed consumer brands at scale are
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making right now is not creating
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long-form video on Facebook and YouTube
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to build brand equity and that's how I
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see it and I think there are couple
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brands that are actually for that matter
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purple mattress if you if you if you
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nerd on this stuff you should go look at
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what purple mattress is doing as a
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company versus what Casper is doing as a
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company right one is very hardcore dtc
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and is growing as a leader Casper the
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purple is creating a lot of creative
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$180,000 production and creative
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execution risk of making a funny video a
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video that makes you cry a video that
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makes you think if you hit that your CAC
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and LTV numbers get really good real
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fast because now you're creating a brand
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and and that's the ultimate goal well it
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means that the Facebook's of the world
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the googles of the world are getting
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more of their I mean it's crazy you have
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two gals in middle of nowhere starting a
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direct-to-consumer peanut butter brand
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and two years later spending more money
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on Facebook and Instagram than like if
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you go talk to Facebook executives that
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run their business they are getting way
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bigger budgets from companies you've
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never heard of and that is probably my
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favorite thing that's kind of going on
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literally literally when you look at the
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top spenders on these platforms it will
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blow your mind literally a brand you've
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never heard of and that's because one
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trades on sales data
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another one trades on internal MMMs or
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reporting compact your other point is
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there danger in building your whole band
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on one platform yes
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you become one-dimensional and a
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one-dimensional fighter is vulnerable
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and Lamia now instead of just like
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making a fun statement let me add a
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little bit to that look anytime you're
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looking for growth you know this is
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actually a fun way to create some
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clarity about how I think about the
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world
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I don't hate traditional media I think
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over a long period of time it became
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overpriced I actually love outdoor for
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example about 1 gets seen you know not
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everybody's looking at their phone every
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second and if you really like I love UI
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and UX in real life so I like outdoor
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quite a bit I just like to buy it when
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it's remanent and I could buy it for one
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month for two thousand bucks instead of
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the twenty four thousand they want when
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you buy it for six month conch so to me
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the danger of being one-dimensional is
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why would you want to be one-dimensional
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right you're you're gonna squeeze the
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crap out of one through and you've
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squeezed all the orange juice out of the
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orange but there's a grapefruit right
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here and you should start them and even
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if the grapefruits small there's still
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juice in there and so to me I think
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about overpriced and under priced
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attention and as real-estate prices come
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down in a soft economy and more internet
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business inevitably it's gonna turn and
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storefronts are gonna be a good buy so
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there's a bunch of companies that are
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bout to go out of business because they
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side big leases seven years ago didn't
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factor in EECOM and they're underwater
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they'll go demand for retail everyone's
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a headline reader like don't buy retail
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it's the internet so what will happen is
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the man will go down so retail in two or
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three years
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especially if the Connie get soft is
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gonna be a [聽__聽] deal for these brands
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that get walk-in trap I mean still
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everybody here bought something in a
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store recently so yeah there's just no
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reason to be one-dimensional what do you
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think
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specifically detailed species hotties
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Indians just another big deal with this
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awesome
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I'm into it I think you expand your
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business you've got the leverage as a DC
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brand you know the old world was you got
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you started a brand and you [聽__聽] paid
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to get even a prayer of getting in now
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you build a hundred million dollar
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business direct-to-consumer and you're
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going in with leverage this is one big
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game of leverage so your recent campaign
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with k-swiss you are out I saw you thank
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you thank you that's very much a branded
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piece by yourself I'd imagine where do
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you see that going you know so just to
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catch up everybody this week we launched
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the fourth collaboration with k-swiss
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and what we decide to do this time was
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do an above you know I love eating my
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own dog food some yelling and everybody
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for not doing longer form brand videos
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to drive their business and so I said
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then I'll do it for this so I and then I
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said what's underpriced attention
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influencers are underpriced so I reached
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out to a huge slew of influencers who
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follow me and offer to pay them and we
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made a very long form video at Vayner
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productions I was very uninvolved
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obviously besides sitting and answering
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questions which they used some of it in
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the video but very little me in
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comparison to everything else we made a
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long-form video that a bunch of
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influencers posted for a witness and it
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was just a brand piece it was just kind
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of more similar to the stuff I normally
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put out but more production value no
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different than the Dwyane Wade Budweiser
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piece we did or the Maxwell piece we
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didn't so and the impact on sales was
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extraordinary it it drastically
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outperformed clouds and dirt which was
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more sales more of that approach and so
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you can imagine and and here's the best
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part back to not caring about outdoor
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radio or television I didn't care if it
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was gonna fail because I know creative
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as the variable of success but it worked
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extremely well
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yeah I mean look I apologize for cutting
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you up if you're gonna make content you
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need people to feel something when it's
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done whether they laugh they cry they
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think like you know I mean that was that
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was the most important if the video
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sucks [聽__聽] we would have sold sneakers
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you know and so we went with a brand
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approach on digital because like I said
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in some meetings today with some of the
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leaders I believed that digital Facebook
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Instagram YouTube LinkedIn is the place
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to build brand not do lower funnel sales
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I think that's the place to do two three
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four five six minute videos because I
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think that's the place where people are
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consuming information it's not super
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complicated and once everybody wraps
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their head around it it's so funny to
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see the creative landscape push against
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this because they put the emotion and
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the ideology of TVC on a pedestal
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meanwhile every creative on earth would
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much rather have 2 minutes and 13
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seconds to tell a story than 30 or at
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least the appropriate amount of time to
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tell the story versus being combined to
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a 30 or 15 or a 6 a huge role
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influencers by nature are creative and
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distribution media all in the price of
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one with word-of-mouth affirmation and
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co-signing they're the great deal of our
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industry yet there's enormous scrutiny
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around it because people like headline
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reading instead of being practitioners
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Oh
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it's a great question we're just having
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this debate upstairs like look what you
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measure against is so imperative right
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you know to me if I'm a business I'm
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trying to suffocate the [聽__聽] out of
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everything I do
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to prove to me that it's driving so for
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example if I'm a retailer which I grew
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up once so this one comes natural to me
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I want to do branded outdoor with
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actually a product and offering and not
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offer that product and offering anywhere
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else in the world so that I've
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suffocated the variables to understand
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that that was the channel that drove the
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behavior in my 713 stores against a
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forty nine thousand dollar production
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cost and a six hundred thirty seven
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thousand dollar outdoor media spend and
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the fact that we don't do that over time
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made me realize how much the industry
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doesn't want to figure out the actual
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answers you know suffocating having the
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actual intent we do a lot of digital
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buying where we're doing one mile two
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mile radius media spend against specific
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offer and we can show that you know
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there's a uptick in foot traffic versus
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your baseline and your average sale is
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higher than it was before because we
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clustered out other stores where they
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didn't do that I mean it's you know if
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you have true intent to prove the ROI
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and you're lucky enough to have some
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sort of transaction of some sorts or
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something to anchor to even if it's a
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Nielsen rating on TV which is their
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currency or votes or whatever it may be
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you will get the answer if it's simply
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brand health then somebody's making a
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subjective call no matter what report
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they use as gospel
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if you want yes you get yes we just had
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this discussion with him we're working
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on it we um one thing that was very
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important to me is if this wine went
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into new markets that that market didn't
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pay an extra big where it was just
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paying more than the American consumer
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or to the best of my ability because
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sometimes you've got like we're going to
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Canada Canada is a mafia no country owns
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the whole ecosystem you can only do so
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much so we're looking at several options
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I think I think I'd be surprised if we
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weren't here within the next six months
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dance I'm really excited about it by the
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way did you guys see Gary we'll be
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extinct in the UK by 2050 you see that
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article there's nothing a single kid
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named Gary in the UK since 1992 I'm
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gonna super focus on my brand in this
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region to inspire at least one
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transaction real quick and I apologize
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cuz is a great value I failed almost
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every class I took except history and I
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never ever and I mean this knew why
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until recently basically the reason I
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end up being right about a lot of things
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is the conversation you and I just had
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everything repeats itself its pattern
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recognition that's right that's why
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these brands are in deep [聽__聽] [聽__聽] if
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they don't start building real brand
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what they're doing that scares the [聽__聽]
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out of me is I think they're wasting 85
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to 90 cents on every dollar they spend
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on marketing doing old things with old
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reports which is the only thing they can
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do which is contemporary branding to
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build relevance to offset the deep
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technology disadvantages they're sitting
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with
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build brand because when this goes to
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voice and I say Alexa book me a hotel I
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better say Alexa book me a Marriott or
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my aunt's gonna be upset
[1087]
Alexa booked me a four seasons or
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they're gonna be upset
[1090]
because when voice becomes the Tollbooth
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not search everyone's in deep [聽__聽]
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because with search at least you have a
[1097]
prayer of seeing another result with
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voice Amazon and Google pick and then
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when Amazon and Google actually buy
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Starwood people are very confused what's
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about to happen in the world I think I'm
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less confused and that's what I do
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things that people make fun of and
[1118]
letter later Revere so I highly
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recommend if you're capable of dealing
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with judgment and you have conviction to
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do it it always works out at the end hi
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Gracie yeah have fun I gotta run I'm
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sure some people want to talk but I'm
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legitimately gonna miss this
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so have fun thank you so much thanks for
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coming
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