Selling celebrity has always been big business in America. But what happens when the stars start their own enterprises instead of just endorsing existing products?
Some of the ventures backed by famous people are obvious choices: Models like Kate Moss and Christy Turlington try their hands at designing clothes. They often partner with established retailers or apparel companies, so the models-turned-designers have existing manufacturing and distribution channels. The companies, in turn, get the cachet of a bold-face name associated with their brand (see BusinessWeek.com, Winter, 2006, "Star Search").
Other celebrity startups are more surprising. Did anyone in the theater watching Cool Hand Luke back in 1967 expect the gruff face of Paul Newman's chain-gang misfit to one day adorn salad dressings and salsa? Maybe more to the point, did anyone expect Newman's Own condiments to be as big a hit as his films? Newman uses the profits—some $200 million since 1982, according to the company—to support charity, including a chain of camps Newman founded for sick children.
The "business for the greater good" model motivates a few other celebrity entrepreneurs (see BusinessWeek.com, 5/24/07, "A New Model for Community Service"). Magic Johnson's development group brings dining and entertainment chains like Starbucks (SBUX) and T.G.I. Friday's into economically depressed communities, creating jobs and renewing neighborhoods. Bono's Edun Clothing company focuses on lifting up developing countries through trade. Both enterprises are linked to nonprofits—the Magic Johnson Foundation and Bono's DATA: Debt, AIDS, Trade, Africa—whose missions align with their businesses.
Profit and Self-Promotion
Some celebrities are as serious as any CEO when it comes to their enterprises. Bono also entered the private equity market in 2004, bringing star power to the firm Elevation Partners. Oprah Winfrey tightly controls her media empire, a brand that includes properties in film, television, and publishing. And Kathy Ireland built a $1 billion business selling a variety of retail products including apparel, flooring, and lighting. Fame may have helped launch these ventures, but their executives' business savvy made them successful.
Some stars' business ventures seem to value self-promotion as much as profit. And most also have ready-made markets: their fans. Fashion lines from J-Lo, Gwen Stefani, and Madonna appeal to customers in the same demographic that snatch up the singers' albums.
One star is even using a business venture as a form of damage control. Danny DeVito was widely ridiculed after a drunken appearance on The View gained instant YouTube (GOOG) notoriety. The actor explained that he had been up all night drinking limoncellos with George Clooney. Harbrew Imports is now selling a line of Italian liqueur with DeVito's name one it—it hits the shelves in August, but it's already behind the bar at the South Beach restaurant he just opened.
Stars, of course, have some clear advantages over less famous entrepreneurs. Most are loaded with capital to begin with (and can afford to prop up struggling ventures until they become profitable). Often they're already tapped into the highest levels of the entertainment world, and having a celebrity involved in a business creates instant buzz (see BusinessWeek.com, 5/8/06, "Running on Star Power").
For a slide show profiling 20 celebrity entrepreneurs' business ventures, click here.
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