celebrity-business.jpg


Call it phase three of the celebrity invasion.

First, they were in front of the camera, taking big paydays to pitch products.

This story first appeared in the January 13, 2016 issue of WWD.  Subscribe Today.

Then they were in the design studio, giving hands-on inspiration for capsule collections, or testing top notes for their fragrances.

Now, they’re entering the boardroom, taking equity stakes, founding businesses and getting into the nitty-gritty of operations.

Jessica Alba is the poster child, having cofounded The Honest Company, which raised $100 million in August. She’s also gotten her feet wet as an executive with a much-covered consumer controversy, having parried with grassroots campaigns claiming the brand’s SPF 30 sunscreen fell dangerously short. But there are more. Drew Barrymore is expanding her Flower business at Wal-Mart; Mary-Kate and Ashley Olsen have built fashion cred with The Row; Jessica Simpson drives revenues of more than $1 billion with her licensed business, and Halle Berry, Jennifer Aniston, Gwyneth Paltrow and Kate Bosworth are all jumping in. The musicians are there as well: Jay-Z made his mark with Rocawear; Pharrell Williams has Billionaire Boys Club; Gwen Stefani branched out with L.A.M.B. and Kayne West is, well, everywhere and keen to become even more of a force in fashion.

They are easy on the eyes, talented on the screen and catnip for the tabloids — but business has its own kind of fame machine and it requires a different set of skills to crank up.

If done right, celebrities can build valuable businesses. When the now-struggling Iconix Brand Group was closer to its high in 2007, it bought Rocawear for $204 million plus additional payouts. Alba’s Honest represents a new high, though, and its latest capital raise reportedly valued it at an eye-popping $1.7 billion.

There are pitfalls, though. A business closely tied to a big name carries what’s known as “key-man risk.” Much of the enterprise’s reputation can be tied up with the individuals and, while people are always fallible, celebrities are under both a microscope and extreme pressure to perform.

They have to exude authenticity while knowing how to turn their own personal brand into something that can promote a product to the masses, while actually getting said product to those masses.

It’s been a step-by-step process with many iterations along the way.

“People have gone from being ambassadors to entrepreneurs,” Barrymore says. “With each new decade or generation, things evolve and I think the door has been opened by some very smart people….You could say Elizabeth Taylor opened the door for Sarah Jessica Parker when she went into fragrance. You could say Jessica Alba has opened the door to never underestimating what an actress can do. Gwyneth Paltrow was a very early person on [the lifestyle scene with] Goop. You can smell the difference between a name slap and that person who’s really trying to build a company.”

Barrymore is working hard to deliberately grow her business, moving from color cosmetics to glasses and thinking about how watches could fit in.

“You go out, you go big, you grow too fast and you’re always kind of grasping,” she says. “If you do it carefully and thoughtfully, I think it’s a better process. You can be a celebrity all day long, but what you have to realize is that it’s only going to open the door to get a meeting and maybe try something out in the world of goods. It’s really about how you use your opportunity and do you have the goods to back it up.”

Bond girl Berry also stressed the necessity of putting in the work at Scandale, an 80-year-old Parisian luxury lingerie label she’s invested in. Ahead of the brand’s launch in Target in 2014, she said: “You have to really want to do it. It’s time-consuming. You have to work hard at it. Along with the career you already have, it’s another job, if you will, that you’re tackling. Not everybody has the desire to do that, but I’m certainly not the first.”

Paltrow sounded decidedly business-y and down in the weeds as she talked about her first New York Goop Mrkt pop-up late last year. “One would think New York City would be the first location for a pop-up, and that is precisely why we waited,” she said. “What started as an experiment has become a viable business for us. We wanted to get the New York location operating at another level, which it will be, from a design and merchandising standpoint.”

Aniston bought into hair-care brand Living Proof and helps oversee development and creative marketing direction. “Who doesn’t want to have equity, especially at a company that is in its beginning stages?” she told WWD’s Beauty CEO Summit, neatly summing up the emerging movement.

Celebrities are not only looking to be more directly involved in capitalizing on their fame, they are taking part in a larger societal movement. This is the moment of the entrepreneur, with billion-dollar businesses started in dorm rooms and people of means with a platform and an idea looking to get into the action — the Ladies Who Launch are overtaking the Ladies Who Lunch.

The famous are also feeling out the potential of their now-direct link to fans online.

“They’re not as reliant on department stores to showcase their brand as they were before social media and the Internet,” says Bruce Ross, managing director at the Traub Celebrity Group. “You have celebrities who have humongous social media metrics and they have the ability to reach their fan base, who’s dedicated to them. They have the ability to drive them to their own site or into a retailer who’s carrying their merchandise. It’s really changed and what we’re seeing is a number of celebrities are coming to us with the intent of developing their own brand on a global basis and going into a joint venture where they work together and they basically own their own brand.”

And there are plenty on both the corporate side and celebrity side wanting to make a connection.

“More and more deals every day that are passing through my office want something different,” says Ryan Schinman, founder of Platinum Rye Entertainment. “‘How can we work with celebrities in a different way?’ And the celebrities come in and say, ‘How can we be equity owners?'”

While some have written checks to take a stake in a company, Schinman says most are trading their social currency for equity.

“I think it’s working for some and for others, not so much,” he says. “There’s always a risk, whether you’re a celebrity or not, starting a business…a lot of it has to do with timing.”

The only real way to know if a celebrity has the business gene is to give it a shot.

“Skyline” actor Eric Balfour and his wife, Erin Chiamulon, launched a yoga line called Electric & Rose in 2014, when they were still engaged. It was not as a vanity project but as a labor of love.

“There was an innate passion from both of us,” he says. “We both live in Venice, [Calif.], and surf and do yoga and spend time outdoors. Clearly, there’s no lack of workout clothes, but even lines that brand themselves as fashion and fitness felt stale in some way. We wanted to tell a real lifestyle story. And if you want to build your own brand, in my opinion, you have to own it. When it’s your money — in my case, my life savings — it becomes very real.”

Balfour says running an apparel company exercises a muscle he doesn’t get to flex often in acting, an industry where studios or producers typically call the shots. “As an actor your only real power is to say no. As a business owner, your success is solely dependent on you.”

He’s not alone in wanting more control.

“More and more of our clients are interested in having an ownership stake,” says Peter Hess, who founded Creative Artist Agency’s commercial division with Steve Lashever more than 15 years ago.

“Where we are with new media and the ability to reach more consumers directly, it’s trending with clients wanting to be involved with their fan base, and reaching them with other things they can provide,” Hess says. Lashever adds: “Passion as it relates to building a business around our clients is one of the most critical elements. Time is precious and clients have their core business to focus on. They really have to roll up their sleeves and invest the time if they want to be successful at other businesses.”

“Chicago P.D.” actor Sophia Bush partnered with beauty entrepreneur Randi Shinder in “I Smell Great,” an online hair, bath and body line, in which she’s an equal stakeholder. Bush is also an active investor in several Internet start-ups, including the car service juggernaut Uber.

“I never wanted to be the face of someone else’s product,” she says. “If I am going to represent something it’s because I have a hand in it.” Bush describes most of her business ventures as “elevator tech” or companies that create innovation and efficiency in peoples’ lives. The use of science and technology in creating the I Smell Great line “is really what lights me up,” she says.

For Shinder, Bush’s social network and her engagement level with fans, combined with her passion for beauty and business savvy, made her an ideal partner. The actress has 1.8 million Instagram and 1.2 million Twitter followers. “I wasn’t looking to partner with anyone, let alone an actress,” she says. “But Sophia really walks the walk. She’s always on e-mail and she will do Skype meetings from set if she has to.”

When it’s done right, getting into business can be a long-term investment. Fame is fleeting, but consumer brands can have more staying power and outshine what initially brought a celebrity into the public consciousness.

Take Jaclyn Smith, who turned her stint as one of “Charlie’s Angels” into an apparel business at Kmart that marked its 30th anniversary last year, having sold apparel or accessories to more than 100 million women.

“I don’t think I’m a celebrity brand anymore,” Smith says. “I think I’m a solid brand in Kmart.”

But that’s a transition that’s taken a lot of effort.

“You have to be a hard worker and you have to be passionate about it and you have to be fair,” she says. “You’ve got to know your customer. That’s why so many [celebrity lines] don’t last, because they don’t do the work. You’ve got to do the day-to-day and you have to research and open your mind to new ideas. You have to move with the times.”

load comments
blog comments powered by Disqus