The Most Popular Brand Isn't the Most Profitable (Beckham, Claude & a $1B Raise)

I was speaking at a conference in New York last week and one of the MCs, he's chairman of the board for IMA, the David Beckham brand. And I noticed he was wearing these really nice shoes. And I was staring at his shoes before he went on to speak. And as I was staring at his shoes, he walked up to me, I told him where I was going. He's like, where are you going? I'm like, I'm going to Lake Combo next week. He's like, oh my God. And he pointed at his shoes. He's like, this is where I got these shoes from, right? I never even asked him about the shoes. And he's like, yeah, these are these like super craftsman shoes. And these are shoes that typically you could probably buy them for like a grand or more, but he's selling them for like a hundred fifty dollars, right? There's this brand called Rolando in Lake Como. So anyway, I go to his store and then I, I, I buy from him. But then the hotel that I'm staying at is like a, you know, pretty, it's a pretty, pretty, you know, decent hotel. And I noticed that there was, there was this little, I don't know what to call it. It's like this little display of his shoes and like all the stu. And every day I was walking by it. But then when you have like, I was just thinking about the hotel traffic. You have all these people that are, you know, doing pretty well in their lives to stay at that hotel and they're, they're, they're just walking by that, that case every day, that display case, right? And then so I went back to the store and I asked him, I was like, how much are you paying for the advertisement per month right now? What do you think he's paying for that for that advertisement?

0:00

0 percentage of sales. Instead of.

1:24

No, he's paying. It's actually really good deals. I'm not gonna reveal it, but he's basically paying like a couple thousand dollars a month, right? And if you think about it, if you're having pretty affluent people visit the store, like it pays for itself many times over. But not only that, Neil, he has a fourth generation store, which means, you know, his grandfather started the store, right? And then that hotel was also a fourth generation hotel too. So these connections go a long way. So it just kind of reinforces that it's more about sometimes it's about who you know, but also when you have a really good advertising budget, you blow it all on that ultimately, right? And then what Ends up happening is. And, you know, there is. There is a. I was thinking about. I was looking at the quality of the build, right? Like, sure, you can have private equity come in, and then they could definitely charge 4 to 5x their price, so they can definitely scale. But the other business lesson here is, like, sometimes you don't need to scale. Like, I was doing the math on the business. I'm like, maybe he's making, you know, four or five million dollars a year, maybe a little more than that. But if you're living in Lake Como, that's a beautiful lifestyle, right? You don't need it. You don't need much more than that. So some people might come in and say, okay, well, he could be charging a lot more. And that's true. But sometimes, you know, the. The trade off from. From not scaling is you get to live a beautiful life and not have to deal with a lot of headaches. So those are just a couple lessons I learned on this trip so far.

1:27

I thought Lake Coma was expensive. I didn't know that a few million bucks gets you a long way. In Lake Coma, I thought real estate was just absurd.

2:40

Real estate's crazy. No, real estate's like $50 million plus if you want waterfront, like $90 million plus for, like, there was a George Clooney. We. We drove by, like, a George Clooney. And that one, he bought it for $10 million about 20 years ago or so. So it's definitely appreciate. You're talking $20 million plus for Lakeside property.

2:48

Wow. On a side note, did you watch the World Cup?

3:07

I did not watch the final. I just know. Oh, let me. I. I have a few stories to share, but you go first.

3:13

Yeah, it was. So a lot of people in North America, or specifically in the United States, a lot of people, as you know, don't watch soccer too often. The World cup was extremely popular. Holland was getting a ton of praises. I don't know if you've seen all the Instagram posts of Holland. Like, someone will take a picture next to a cardboard cut out of him, and he's like, if Holland comments, I'm gonna lose 20 kg over the next three months, or something like that. And then he'll comment, like, starting now, you know, And I would say he was a big winner of the World cup from a marketing and brand standpoint. I think he's just very authentic the way he adapted to not only American culture, but some of the funny stuff that he said. Like with Dallas, I won't go into what he said, but you can assume what he said based on the name Dallas or him just working out. And he was on like a bicycle, just pushing hard. He's just like, my body's tired. And I'm paraphrasing here, but he's like, my body's tired, but I know it's good for me, so I'm gonna do it. Why stop? You know? And people are like, oh, this is how he thinks. Yeah, he's human, just like everyone else, but he just keeps pushing it forward. But interesting enough, I watched the World cup and I watch it with quite a few different people over the series. And the constant thing, I was watching a lot of the England games. You would see David Beckham, of course, because he's a big supporter and he's English. Everyone's just like, yeah, he's one of the best soccer players. He's super popular. They're correct on super popular. He is a good soccer player. But when people are like, he's one of the best, he is. I don't even think he ranks in the top 50 best playing soccer players. But what's interesting is of all time, yes, but because his brand is one of the biggest, people assume large brand equals big. And in marketing, we all strive for massive brands because we think massive brands create success. In Beckham's case, he has made a killing, but he made a killing due to his brand popularity, not necessarily being the best. And there are some cases where being the best or being the most popular makes you quite a bit of money. But in many cases in business and marketing, being well known doesn't necessarily equate to financial success. I get Beckham did really well because of his stardom. And he had a deal in which by playing in the US for mls, Lee, he had a deal where he could open up his own MLS team for pennies on the dollar. I think it was like 15 or 20 million dollars. And he eventually, you know, cash in on that deal. And he made a lot through sponsorships and he was really popular. And his wife is really popular. She's a Spice girl. But in business, in generally, some of the most unknown companies that we work with are some of the biggest and most profitable and, you know, financially fast growing companies. And all I'm getting at is, you know, being the most well known doesn't guarantee financial success. An example that I can use for everyone here is a lot of you marketers know about Anthropic and Claude, but if you go around the world, anywhere, OpenAI, specifically ChatGPT is much more popular of a brand than. Than Claude or Anthropic, by far. Right. And if you look at a lot of data, like you can look at Google Trends, let's see, I'll actually pull it up right now. Let's do ChatGPT. Which one should I use, Eric, Claude or Anthropic? Let's go to.

3:21

You can type Claude. Claude is probably more popular.

7:27

Do both. Yeah. And. So to put it in perspective, if I just look at July's data, It looks like ChatGPT is a 77 on a popularity scale, Claude is a 19, Anthropic is a 3. Yet Cloud or Anthropic is crushing ChatGPT in revenue by far. Right. And they're supposedly already profitable too. They may hit a hundred million dollars in. A hundred billion dollars, sorry, in revenue just alone this year, which is kind of ridiculous. So, you know, yeah, you can optimize to be super popular, but it's not everything. Yeah.

7:30

So I think, by the way, one of the things to call out too is the issue that Anthropic Claude is having right now is that they didn't bet hard enough on data centers, right? Meaning they're compute constrained right now. So when you look at OpenAI's Solve 5.6 right now, they're not compute constrained. They can offer it to everybody and they're letting you go to town on it. Right. Whereas when you looked at Claude Anthropic a few weeks ago with Fable 5, they're like, oh, we're going to let you use it for a little bit and then we're going to move you to usage based. Right? They can't do that anymore because if they do that, they're going to be at a competitive disadvantage if they don't allow their best frontier model available to the public. And so they just made it Fable 5 available to everyone. But it just goes to show you, like I think Dario from maybe a year or two years ago, he was just talking about how, you know, the problem with, you know, data center investing is that you don't know you can actually end up like upside down. Right. But the problem is they didn't do it. They didn't make the bet. And look at where they are now. I'm not saying that's an easy bet to make, but open, I did make those bets and now they have more compute. Right. And so we'll see what ends up happening there. But Neil, I wanted to call out something else with the World cup too. So one of our mutual friends, he was texting me because he was at the game, right? And he saw a group of my people, so Chinese people in front. It was like four daughters, right? And they're just all on their phone, right? They didn't care about the game. In fact, he kept taking pictures of the family and, like, they just disappeared. The four chairs disappeared. Then he saw a Chinese businessman right next to him. I'm assuming it's the father. And the father bet a million dollars on the Spain game, right? He bet a million dollars on Spain winning, right? And then when it went to extra time, he bet another 400 grand. So you have to assume this guy's probably a billionaire. And so all that to say is that our mutual friend was like, dude, this World cup, it didn't seem like the final, that there was actually a lot of people that were interested, that were true fans of the game. These were people that just wanted to be there, to be there. You know, how typically people just want to, you know, go to, like, the nice clubs or. Or be at, like a summer Europe location, right? So it's. It's like a place to be, a place to be seen, and it took away from the authenticity of the championship game real quick. If you want to acquire customers faster and more efficiently this year with the latest strategies and tactics, then check out single grain.com, that is my ad agency again, www.singlegrain.com. check it out, and if it seems like a fit, we'll get in touch and help you with a free marketing plan.

8:27

I think that's actually with a lot of sporting events. When I was at the super bowl, right, I did not care for the super bowl, and I couldn't wait to go home.

10:50

You went to the Super Bowl? Why don't you go to the Super Bowl?

11:03

Watch Rams versus. Was it. What is it called? Kansas City? I think it was Patriots a few years ago. I think it was Kansas City. Was it Rams vs Kansas City? Rams won.

11:05

Rams ended up. I forgot who they played a few years ago, but.

11:23

Yeah, yeah, but. But exactly. And I should know, being that I was at the super bowl and I bought six tickets and they were literally in the dead center, very close to the field, right? So I spent an arm and a leg. But, like, I look at that. I didn't want to end up being there. I was just like, man, I can't wait to go home. So.

11:27

So would you. Would you do it again? Like, did you get any value from being at the game?

11:48

No, I did that. I did the World cup in Moscow. I think that was like, Eight years ago or something like that, I took my dad, he wanted to go, and I started going to a lot of these finals because it was on my dad's bucket list. Like, he wanted to go. So same with super bullshit. I ended up taking him and a few other people. But when I was doing that whole experience, I was like, man, this stuff isn't for me. It's a pain in the butt. We have a client, a really cool client called dhl. It's a shipping company that everyone knows. I was in Singapore, and when I was there for Singapore, F1 was going on. And DHL is one of the biggest sponsors of F1. And they're just like, hey, you should come and join us. We have amazing suite tickets, whatever you need. And I'm like, I'm good. This isn't for me. Like, you know, I appreciate the offer, but I've learned that a lot of the sporting events aren't for me. But every time I go to one of those finals and sporting events, no joke, most of the people I run into aren't there for the actual game.

11:52

Yeah, I think at least what you and I have learned in our. I guess we're crap in our 40s now, but even. Even in our 30s, too. I think it's. It's. You'd rather just be at home in the comfort of your home, working. Because the working part is actually more exciting than being at the game versus being at the game to be seen is really not that interesting and frankly, a waste of time. And I think a lot of people are like that. But by the way, no knock if you're a true fan of the game. But being there to be seen, I think is a. It creates different incentives, and, you know, it's just not your night thing. And I think you have to think about, you know, what matters to you and be authentic to who you are. Anyway, one more thing to call up. So, Neil, you mentioned you don't have to be the most, like, the best player in the NBA. So do you know who. Do you know who Junior Bridgman is?

12:51

No?

13:36

Okay, so Junior Bridgman is a former NBA player. So he played 12 seasons, and he's mostly like a six man or like a guy that was on the bench. Okay. He played mostly for the Milwaukee Bucks, a little bit for the Los Angeles Clippers. So he never made more than 350 grand in a single season during his playing career. So keep in mind this is in the 70s and 80s. But, Neil, he ended up just buying a bunch of Wendy's franchises. Okay. And eventually he grew his portfolio of Wendy's franchises to 450 fast food locations. He has a bunch of Wendy's and Chili's, and he basically ended up selling all his restaurant holdings to become a massive Coca Cola bottler and distributor to a bunch of states. And then he ended up amassing a net worth of $1.4 billion, so making him one of the few 10 figure former NBA players. So you have Michael Jordan, obviously you have LeBron James, but then you have Junior Bridgman, who actually passed away last year, so rest in peace. But he basically, like, he just kept compounding over time. So it's kind of similar to David Beckham, but David Beckham was, was always really popular, but he was just never quite the best, you know?

13:38

So. Yeah, and don't get me wrong, he's extremely talented in the field of soccer and he's done well in business. He's, you know, like, I was watching the England game because I sent my dad there. So I was watching tv and my dad's like, watch me, maybe I'll go on tv. And I'm like, dad, no one's gonna end up showing you. But they're showing Beckham and you're talking about, it was extremely hot. And this guy's just wearing suits every time he's at any of the England games. And. And I started googling, why the heck does he wear chatg. Why does he wear suits? And it was answering, he's very particular on his style and his image and how people perceive him. And he's well off. And I was like, man, I would never wear a suit just for image. If it's hot, like, what's the point? But hey, you know, he's where he is because he's David Beckham.

14:41

Well, let me tell you something. So here in Italy right now, whenever you go outside, it's. It's hot, right? And it's humid, and they're, they're wearing suits all the time. Now the thing is this, right? Like that it is a brand image thing. And it is like, I'm sure these people don't want to be wearing suits because these are people working there. But you do have businessmen kind of like riding their bikes around or driving in cars. And it's an image thing, right? I think it's just, again, it goes back to being authentic to yourself and deciding what's important to you. But going back to Beckham, like, he was always popular, but he wasn't, he wasn't always the best Player necessarily. Right. But that being said, if you think about what he's done so far, so you look at IM8, right, that's the fastest growing supplement brand right now. They just raised a billion dollars. He, and in fact our, our one of the, the co founders, Danny, he listens to this podcast. So shout out to Danny, but do you know how he got the billion? And I don't even know if it's okay for me to share this but. So I probably won't share. But Danny, if you're okay with me sharing it, I'll share. I didn't, I didn't share it yet though. Okay, so here's what I'll say. I'll say this and maybe I'll get in trouble for saying this. So Danny, let me, let me like, sorry if this reveals anything, but basically he was going to get half, half a billion dollars. Okay. So what ended up happening is like he, he was like, why not a billion? So that's how he got the billion dollars. He's like, because a billion sounds a lot better than half a billion dollars, right? Or like 500 million. He's like, why not just a billion? So sometimes when you think about.

15:36

Yeah, I'm confused. So he went to go raise money. Okay. Is he raising money to sell portion of the company or raising it to use to grow faster or both?

17:01

So they raised the billion dollars to grow faster because they're growing so fast right now as the world's leading supplement brand basically, or one of the leading supplement brands, one of the fastest growing, I should say.

17:12

What the heck do they need a billion dollars for?

17:25

That's for them. Growth capital. Let's just put it that way.

17:30

I wonder who they raised it from. Takes billion from General Catalyst. Wow. Customer value found the company announced today CS not be standing about offers. They didn't raise a billion dollars, they took a loan for a billion dollars. Great.

17:34

Well, let's just. They got some capital. I'll just put it that way. I didn't see the terms of the dealing.

17:56

And funding from General Catalyst is C. CF Fund, which is customer value fund. And they don't make standard venture equity investments, but offers what are essentially loans with some non traditional repayment terms. So that way they can just use the cap money to just keep going. So startups funded by CFV repay the loan amount along with the fixed cap percentage of revenue they generate.

18:01

Yep. So my point of, of saying this all is that David Beckham is a very good businessman, right? He's partnered with amazing guy and that he's not, by the way. He's not just used as a celebrity endorsement. He actually is involved with the business. From. From what I read. Danny, feel free to correct me on. On any of this. And we're. We're happy to talk more about this and reveal kind of the story more, but Junior Bridgman, okay, wasn't necessarily the best, but became a great businessman. Like, he kept compounding over time. Michael Jordan, he was the best. He kept compounding. LeBron James, one of the best. Kobe Bright, one of the best. They kept compounding over time. Shaq, right, one of the best big men in the game, kept compounding. And so all that to say is that going back to Neil's point, you don't necessarily have to be the best in the game. You just need to continue to be interested and continue to compound. So that's all we're trying to say, ultimately.

18:31

So own. So im8 did you know is owned by his other company that's public. Prenetics?

19:14

Yep.

19:26

So, yeah, I didn't know that. I thought it was a. It is another company, but it's owned by him. And they may keep the revenue separate, but Prenetics has quarterly revenue of 35.95 billion.

19:27

Yeah. So Prenetics was the publicly traded company that Danny founded. That was a COVID testing company that became really big during COVID and they just kind of nested im8 under it. So I don't know what's going to happen. Okay, well, guys, that's it for today. Sorry for the technical issues. That being said, we will catch you all later.

19:42