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

0:00I was speaking at a conference in New York last week and one of the MCs, he's chairman of the board for IM8, the David Beckham brand. And I noticed he was wearing these really nice shoes and I was staring at his shoes before we went on to speak. And as I was staring at his shoes, he walked up to me and I told him where I was going. He's like, where are you going? I'm like, I'm going to Lake Cabo 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? And never even asked him about the shoes.

0:26Eric Siu: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$100 or$150, right? There's this brand called Rolando in like Como. So anyway, I go to his store and then I buy from him but then the hotel that I'm staying at is like a pretty decent hotel and I noticed that 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 stuff that he makes. And every day I was walking by it. But then when you have like, I was just thinking about the hotel traffic.

1:04Eric Siu:You have all these people that are, you know, doing pretty well in their lives to stay at that hotel. And they're just walking by 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 advertisement? Zero percentage of sales instead. No, he's paying, it's actually really good deals. I'm not going to 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, it pays for itself many times over.

1:40Eric Siu:But not only that, Neil, he has a fourth generation store, which means 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 I was thinking about it, 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 four to five extra prices, they can definitely scale.

2:12Eric Siu: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 four or$5 million 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 much more than that. And 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 trade-off 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 that I learned on this trip so far.

2:40I thought Lake Como was expensive. I didn't know that a few million bucks gets you a long way in Lake Como. I thought real estate was just absurd. Real estate's crazy. No, real estate's like$50 million plus if you want a waterfront, like$90 million plus for like, there was a George Clooney.

2:54Eric Siu:We drove by like a George Clooney lake house. And that one, he bought it for$10 million about 20 years ago or so. So it's definitely appreciated. You're talking$20 million plus for lakeside property. Wow. On a side note, did you watch the World Cup? I did not watch the final. I just know, let me, I have a few stories to share, but you go first.

3:21Neil Patel:yeah it was so a lot of people in 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 cutout of him and he's like if holland comments i'm gonna lose 20 kilograms over the next three months or something like that and then he'll comment like starting now you know um and uh 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 um the word the way he used the way he adapted to not only american culture but um 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.

4:20And he was on like a bicycle, just pushing hard. He's just like, my body's tired. And I'm paraphrasing. He'll be like, my body's tired, but I know it's good for me. So I'm going to do it. Why stop?

4:32Neil Patel: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 watched 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 players.

5:12But 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 U.S.

6:07for MLS league 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 cashed 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

6:34Neil Patel:that we work with are some of the biggest and most profitable and financially fast-growing companies. And all I'm getting at is 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 Claude or Anthropic by far, right? And if you look 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 chat GPT. Which one should I use? Eric Claude or Anthropic?

7:25Neil Patel:Let's go to... You can type Claude. Claude is probably more popular. Do both. Yeah.

7:39Neil Patel:Anthropic. 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, Claude or Anthropic is crushing ChatGPT in revenue by far, right? And they're supposedly already profitable too. they may hit$100 billion in revenue just alone this year, which is kind of ridiculous. So yeah, you can optimize to be super popular, but it's not everything. Yeah, so I think, by the way, one of the things to call out too is the issue that Anthropic slash Cloud is having right now is that they didn't bet hard enough on data centers, right?

8:38Meaning they're compute constrained right now. So when you look at OpenAI 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 and Thropic 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,

8:59Eric Siu: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 a Fable 5 available to everyone, but it just goes to show you, I think Dario from maybe a year or two years ago, he was just talking about how the problem with data center investing is that you don't know. You can actually end up 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. Now, I'm not saying that's an easy bet to make, but Openite did make those bets and now they have more compute, right?

9:29Eric Siu: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 even 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?

9:58Eric Siu: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 go to the nice clubs or be at a summer Europe location, right? So it's like a place to be, a place to be seen, and it took away from the authenticity of the championship game.

10:32Real quick, if you want to acquire customers faster and more efficiently this year with the latest strategies and tactics, then check out singlegrain.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. I think that's actually with a lot of sporting events. When I was at the Super Bowl, I did not care for the Super Bowl and I couldn't wait to go home.

11:03Eric Siu:You went to the Super Bowl? When did you go to the Super Bowl? I thought it was harder to watch.

11:07Neil Patel:uh rams versus was uh what is it called uh kansas city i think it was a few years ago i think it was kansas city was it rams versus kansas city and rams won uh rams ended up i forgot who they played a few years ago but 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 uh so so would you would you do it again like did you get any value from being at the game no i did that i did the world cup in moscow uh 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.

12:06He wanted to go. So same with Super Bowl. 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, sweet 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.

12:42But 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. Yeah, I think at least what you and I have learned in our, I guess we're crap in our 40s now, but even in our 30s too, I think 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.

13:12Eric Siu: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 it creates different incentives and it's just not your you're in I think 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 out 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? no 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 Clips So he never made more than 350 grand in a single season during his playing career.

13:55Eric Siu:So keep in mind, this is in the 70s and 80s. But Neil, he ended up just buying a bunch of Wendy's franchises. 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 to David Beckham, but David Beckham was always really popular, but he was just never quite the best, you know?

14:43Yeah, and don't get me wrong, he's extremely talented in the field of soccer, and he's done well in business. 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 going to 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 I started Googling, why the heck does he wear suits? And it was answering, he's very particular on his style and his image and how people

15:20Neil Patel:perceive him. And he's well off. And I was like, man, I would never wear a suit just for an image if it's hot. Like, what's the point? But hey, he's where he is because he's David Becker. Well, let me tell you something. So here in Italy right now, whenever you go outside, it's hot, right? And it's humid. And they're wearing suits all the time. Now, the thing is this, right? It is a brand image thing. And 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?

15:56Eric Siu: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 he was always popular but he wasn't always the best player necessarily but that being said if you think about what he's done so far so you look at IM8 that's the fastest growing supplement brand right now they just raised a billion dollars and in fact one of 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 so I probably won't share but um 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 um like sorry if this reveals anything but basically he was going to get half um half a billion dollars okay so what ended up happening is like he and he was like why not a billion right 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 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 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

17:25Neil Patel:what the heck do they need a billion dollars for that's for them. Growth capital, let's just put it that way. I wonder who they raised it from. Takes a billion dollars from General Catalyst. Wow. Custom Value Fund, the company announced today. See if it does not make standard offers. They didn't raise a billion dollars. They took a loan for a billion dollars. Great. Well, they got some capital. I'll just put it that way. I didn't even see the terms of the deal. What do you see right now? I think it takes on the building and funding from General Catalyst's CVF fund, which is a customer value fund.

18:08And they don't make standard venture equity investments, but offers what are essentially loans with some non-traditional repayment terms.

18:17Neil Patel:So that way they can just use the money to just keep going. So startups funded by CFE repay the loan amount along with the fixed cap percentage of revenue they generate.

18:32so my point of saying this all is that david beckham is a very good businessman right he's partnered with amazing guy and he's not by the way he's not just used as a celebrity endorsement

18:41Eric Siu:he actually is involved with the business from right from what i read um danny feel free to correct me on on any of this and we're happy to talk more about this um and reveal kind of the story more but um junior bridgeman okay wasn't necessarily the best but became a great businessman He kept compounding over time. Michael Jordan, he was the best. He kept compounding. LeBron James, one of the best. Kobe Bryant, one of the best. He kept compounding over time. Shaq, 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.

19:10Eric Siu:You just need to continue to be interested and continue to compound. So that's all we're trying to say, ultimately.

19:19Neil Patel:So IM8, did you know, is owned by his other company that's public, pre-netics? Yep. So 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 pre-netics has quarterly revenue of$35.95 billion. Yeah, so pre-netics 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...