What a Consumer Investor Actually Looks For in Celebrity Brands | Brian Folmer, FirstLook VC

0:00Brian Folmer:You always wonder, are celebrities today bigger than they were, we'll say, in the 80s or the 60s? Or even, you know, further back. Like, you cannot replicate yourself as a NBA basketball player. I never knew that Ed Sheeran liked Hot Sauce. Is the company that they're a part of now aligned with what they've been already talking about for years and hopefully even decades? Each month, we'll review all these brands, figure out who we think the top six are, and then we take their samples, put them all in a box, and send those boxes out to all the members in the group. In today's episode of the Hot Start Podcast, I have Brian Fulmer on, the founder of First Look Ventures.

0:35Brian has invested in several celebrity and creative founder brands, like Home Court by Courtney Cox, Most by Patrick Schwarzenegger and Maria Shriver, The Absorption Company by Ian Sommerhalder and Nicky Reid, and many more. We talk about what makes celebrity brands interesting investment propositions, what he looks for in celebrity founders, and more. Let's get into the conversation. Brian, thanks so much for coming on. Yeah, appreciate you having me here, Scott. This is great. Yeah, I'm excited to talk to you about investing in brands founded by celebrities and creators. But before we do that, I actually want to start with the beginning.

1:07When did you actually get into venture and what inspired that?

1:10Brian Folmer:So I go way back. After college, I went to law school. And between my first and second year of law school, I landed an internship at a startup accelerator in my hometown, Cleveland. And yeah, I absolutely loved it. It was the kind of first time in my life that I was excited to wake up every morning and go to work, which is kind of a weird feeling. And then while I was at the accelerator, I submitted a business idea that I had been working on on the side during that first year of law school. And yeah, I got lucky and ended up getting into the program. And so I took an investment and started the company and dropped out of law school in the process.

1:45Brian Folmer:And then also kind of, I guess, went from employee to founder overnight in the program. And that was my first foray into the venture world. And then unfortunately, that first company didn't have the legs to go on or continue on. And so I had to shut it down. But yeah, I jumped over to the corporate world for a bit and then got back into the VC world when I got to New York because I always knew I wanted to be in this space. Yeah, I love it. And now you obviously run your own fund, First Look. Could you kind of give an overview of your own fund? Like what do you typically invest in? How do you invest?

2:19Yeah, so we're actually doing something kind of interesting.

2:20Brian Folmer:We're not a dedicated fund and we have essentially two things going on, but there could be a fund soon. So I run First Look, which is a private investor group focused on early stage consumer brands. The thing that we pioneered or that made us famous, I guess, is each month we'll review all these brands, figure out who we think the top six are. And then we take their samples, put them all in a box and send those boxes out to all the members in the group. And so everyone gets to try everything out, whether it's at their office with their teammates or at their coffee table with their family and kids.

2:52Brian Folmer:And then they also get a chance to review data rooms so they can learn about the brands. And then afterwards, the members let me know who they want to connect with. I loop them together from there and let them take it away. That's First Look. And there's a lot more to it, but that's the main gist as far as the deal flow side. And then we also run First Look Ventures, which is us using SPVs, essentially an LP syndicate, to invest in Series A and Series B consumer brands. And so for that side, we try to focus on better for you products. Average check size usually falls between$400 ,000 and$600 ,000.

3:24Brian Folmer:And the investor group in those boxes that we send out, that essentially is the feeder system for us on the venture side. And so we're able to build relationships, support founders early when they're at the seed and preceding seed. And then when they do get to the Series A, even if it's a competitive round to get into, we almost always still have the privilege of investing. Just because we supported the founders way back in the day when they maybe really needed it most. Hey, quick one before we get back to the episode. If you love conversations like this one, you would love The Fame Game, our weekly newsletter in which we break down how celebrities and creators build billion dollar brands.

3:59Sign up for free via the link in the description. And now back to the episode. Yeah, no, I love that. And I especially love the boxes because like instead of like the relationship starting with like, hey, here's my pitch deck. Let me know if you want to connect. It actually starts with the product experience, right? It's like you receive a sample and it's like, hey, this looks cool. Let me try it. You actually enjoy it or you don't. And that is kind of the starting point of the conversation. So I really love that instead of looking at a pitch deck and seeing things that you particularly don't like on a particular slide.

4:29And although you're not dedicated only to celebrity and creative on the brands, you've made several investments in the space. So you've invested in Homecourt by Courtney Cox, the absorption company, Final Boss Sour, Moss and several others. How did that all came about?

4:44Brian Folmer:Yeah, I mean, the boxes were the starting point for all those deals. So yeah, there was the investments by the First Look investor group that went into those companies. And then specifically for the absorption company, that one's an interesting one in that so we invested on the venture side the founders had previously started a company that went through first look and then eventually it got acquired and so yeah we knew we knew them from that experience and then we saw they launched the absorption company obviously they're making a lot of you know getting a lot of coverage and so we reached out and yeah we were able to jump in that round and it all started with that relationship from their previous company that went through our boxes.

5:25Yeah. But going forward, like is focusing on brands founded by celebrities and creators, is that a thing for first look or it just happened to be like an exciting company in the consumer space? Yeah.

5:35Brian Folmer:It happened to be an exciting company. I mean, I do love brands that have a celebrity founder. Obviously there's a graveyard of examples where it didn't work out, but there are certainly many examples where it did work absolutely amazing. And so, yeah, we will certainly look at those brands and see if we can possibly invest in them or at least have them in the boxes if they're a little bit. Yeah. And what would you say is like the unique advantage that these celebrity co-founders add to those companies? Obviously, there's the amplification of their marketing and just coverage. And yeah, it's funny.

6:05Brian Folmer:I always wonder, are celebrities today bigger than they were, we'll say in the 80s or the 60s or even further back? And I do feel, I personally think the answer to that is yes, because there's so many touch points that consumers can now see what their favorite celebrities are doing. And it's not just in the magazines, for the most part, like it was back in the day. Now it's all across the internet, all these social media apps. And so I do find it helpful when a brand does have a celebrity attached to it. And we can go into, if you want, how do I think about grading those brands. But I do think it's helpful because, yeah, one of the Achilles heels with any brand is customer acquisition.

6:48Brian Folmer:And so if you can't figure out how to get customers in the door at an affordable rate, you probably won't be able to go the distance. And so yeah, I think celebrities certainly help with that part of the story. Yeah, no, I would love to get into that due diligence because obviously on the venture side, you have invested in a couple. What does the due diligence on these companies particularly look like compared to your non-traditional, your more traditional consumer investing? What is different and what is also the same? So I guess if I had to make a checklist, I certainly like to see who else is investing.

7:19Brian Folmer:Not because we need to have others just to make our own decision, but certainly some firms, whether it's Hotshot like you guys or Sandbox Studio, you guys are much better at grading the quality of that celebrity partnership than we certainly are. And so that's always a good sign when someone like you jumps in. So thank you for doing some of the homework for us. I guess the second part is, so when I see a partnership or whoever the celebrity is, I'll go pretty much Google the crap out of them as far as like, all right, how many partnerships have they done before? What worked? What didn't work? What's their status as a celebrity?

7:56Brian Folmer:Are they still on the up and up? Or are they already super established and have more money than God and this is not as important to them? And so, yeah, it's like what point in life are they in the celebrity, I don't know, life cycle, I guess you can call it. you know what they're involved in previously and then i do try to look at if they've already put out content for that brand i mean do they look passionate is this something that they have a story with which then you can look back on us you know the basically everything a celebrity has previously put out and you can kind of figure out like is the company that they're a part of now align with what they've been already talking about for years and hopefully even decades and so because yeah sometimes it's like these celebrities get attached to a brand and they've never cared about this category this mission this problem you know pain point and so I do try to figure out if there's actually alignment from that standpoint but yeah so I'd say it's kind of the I guess the light checklist that I go through yeah no I think you're spot on and these are definitely things that we also look at like so many times even some of the brands behind me like you have like Tingley Tetsier which is like a hot sauce brand co-founded by Ed Sheeran I never knew that Ed Sheeran liked hot sauce.

9:07And then all of a sudden he starts to say like, hey guys, this is a hot sauce I produced. And I'm like, oh, that's weird. Like that doesn't really like feel like an authentic fit or whatsoever. And I also kind of love the example that you highlighted of what have they done in the past. I think like if you look at the absorption company with Nicky Reed and Ian Somerhaler, they've been entrepreneurs before. Ian has his own whiskey brand, which is doing well. So it clearly shows that he knows how to leverage his platform and turn it into a company. Is that something that you also kind of look for?

9:35like an entrepreneurial ad. So they're not just famous, but they're also really like a founder.

9:41Brian Folmer:Yeah, absolutely. I mean, I guess maybe that's like the fourth part is really trying to understand, does this celebrity just want to remain a celebrity or do they have way bigger ambitions to, which obviously Ashton Kutcher is a wild example in that standpoint. And that, you know, who we're close with Kyle Kuzma and his team. And yeah, if you've been following the content that he's been putting out he's really at that point in his life where he realized basketball has been an amazing career and he certainly wants to play longer if he can but he's also looking at all right what are the next 20 to 50 to 20 to i don't know 40 years of his life and what that looks like and so if you can catch celebrities or athletes or whoever may be at that point in their life where there's much more to being a celebrity being an athlete that's kind of a nice tell or a nice sign that all right this could actually work out pretty well.

10:30Yeah, I think like the, I love the examples that you mentioned with like Aston Kutcher, Kyle Kuzma, Jake Paul, even has his own venture fund. What I think is surprising about them is that a lot of them are also now investing in more like tech companies or deep tech or AI or like space or whatsoever that actually is not so valuable to their audience, right? Like if Jake Paul, most of his audience are younger, they don't care about quantum computing or whatsoever. So how do you kind of also look at that? because Kyle Kuzma used to be kind of the face of Barcode. It's like a hydration brand. RIP.

11:02And then, indeed. And now he's much more into like the San Francisco type tech investing. Yeah.

11:10Brian Folmer:You know, also there's another great example is the Chainsmokers and that Mantis fine. Man, are they killing it? And honestly, if I was in their shoes, I would do the exact same thing because at the end of the day, when I think about, and I'm not the one that coined this, but there's kind of the four S's of how a VC firm spends their time. Sourcing, selecting, securing, and supporting. And so what you as a investor or as a general partner, however you are connected to a firm or if it's your own firm, if you have an alpha or an advantage, any of those categories, lean into it. And so not to go off on too much of a tangent, but I do feel like we're entering this third chapter of the VC asset class right now, where people from very far outside of traditional finance backgrounds are showing up.

11:59Brian Folmer:And they're bringing advantages that all the existing investors, and I'm not talking about the top dogs, whether it's Forerunner or Cavu, any of those, El Caterton, they have spent decades building an incredible reputation and value add for founders. And so they'll always be at the top. But everyone that's below them, everyone's in the middle right now, you have all these newcomers that are coming up and they have these value adds that, And these advantages, whether it's sourcing, securing, selecting, supporting, that existing investors simply cannot replicate overnight. You cannot replicate yourself as a world-famous DJ group.

12:34Brian Folmer:You cannot replicate yourself as a NBA basketball player. Or Jake Paul, influencer and now boxer and everything. And so I love it. I mean, they're leaning into the assets that they have, and that's giving them a very measurable advantage over people that don't have those kind of things. And so, yeah, it's really interesting. And my hat's off to them for doing what I would have done if I was in their position. Yeah. And on the venture side yourself, you've also said no to plenty of celebrity or creative founded brands. What are some of the common reasons why you actually pass on them? I mean, usually there's the brand itself.

13:10Brian Folmer:There's some parts to it that, you know, we either don't believe in or we're not convinced of yet. And then, yeah, I guess if the celebrity doesn't feel passionate about it, which I guess is the inverse kind of in a lot of respects to what we were saying earlier, but we do look for. And so when they kind of start failing and from those perspectives or falling short of what we think is right, that's when we will probably pass. Yeah, are you also thinking more about like looking at the opportunity, like the category or the product and then kind of figuring out what type of celebrity or create is the right fit?

13:41Because for example, if you look at your own portfolio, you've participated in Homecourt, which is more founded by like an A-list traditional celebrity with Courtney Cox. But then you've also participated in Final Boss Hour, which is then really founded by a TikTok creator, London Laserson, and both add different values to their companies. Is that something that you're also looking at, like figuring out what type of influential figure would be the right fit to accelerate this?

14:06Brian Folmer:Yeah, I mean, we don't, I guess we don't try to play matchmaker terribly often. We certainly have, so my partner JJ and I, we certainly have connections to athletes, influencers, celebrities of all sorts. And if we do think there is a match for one of our portfolios, for example, like Half Day Ice Tea, and we're having a discussion with them, we'll certainly bring it up and say, you know, there's really not too many athletes, celebrities, influencers that they're more than one or two emails away that we don't already know. But otherwise, we don't try to, I don't know, we never like force it on them.

14:42Brian Folmer:We just say, hey, if you want help in this area, we can certainly step in or do our best. But otherwise, yeah, we kind of leave it up to the founders. And we will sometimes mention, hey, this could be a good partnership. Or I was recently catching up with so-and-so and they have an interest in, you know, this category that you're building in. Might be worth the conversation. But otherwise, yeah, it's very light, I guess, in how we kind of approach that. Yeah, but in the case that they're already onboarded. So in the case with like London, with Final Ball Sour or Cornecox with like Homecore. Do you think that specific influential people have also different values to their company?

15:17So London is much more content creator, Kyle Kuzma is an athlete, Courtney Cox is an actress. Do you think that these subcategories of like influence also bring different values to the companies that they co-found?

15:29Brian Folmer:Yeah, I mean, there has to be, I think, or at least an idea of like an alignment for like how they reach their audience and where this brand plays, who the celebrity, like what their audience looks like. You know, whether it's women between 40 and 60 years old versus someone who's, you know, just focused on Gen Z. But yeah, I mean, that's a great question. And we probably should think even more on that than we already do. But that's certainly a part of the equation. Yeah. And obviously, something that I've seen is that the fundraising cycle for a lot of these celebrity and creative founder brands, they look a little bit different than your traditional CPG brand.

16:05They often raise much larger rounds at also higher valuations, especially at the beginning days, just because they have different opportunities. Like some companies can launch nationwide in Walmart on day one. That is obviously for a non-celebrity founder brand unheard of. But that also sometimes means is that there's like crazy valuations. I've seen like celebrity brands raise like pre-market, pre-revenue at like nine figure valuations. How do you kind of like approach that when you look at like dynamics like that?

16:34Brian Folmer:It's a strategy. Yeah. Yeah, not every founder has that luxury, I guess, of being able to go out and raise a big round. And there are examples where it did work out well, and there are plenty of examples where it did not work out well. And so if you have the ability to pull off a huge raise right out of the gates and you are prepared to spend that capital wisely, then I would say certainly go for it. Obviously, sometimes having more capital can make you a little bit not lazy, but maybe you don't spend as much time trying to solve a particular problem because I could just throw more money at it and get it solved.

17:13Brian Folmer:And then the other challenge, though, is if you do raise a pretty big round right off the gates, which also probably has a higher valuation. Now the bar is very high for your next round. And so if you raise it 20 million right off the bat, like, OK, cool, you catch the headlines and the flash, blah, blah. but now it's like, all right, when you raise that next round, I think founders should always try to double up on their valuation. And so now next round will probably be around 40. And so do you have the sales to support a valuation at 40? All right, now it comes down to execution. And so if you're going to raise big, you better live up to it and blow it out of the water.

17:51Yeah, is that also an advice that you give to your portfolio founders saying like, look, yes, you can raise a$10 million seed round, but maybe you should actually raise a 4 million. and prove it first and then try to raise like a larger Series A or whatever. Yeah.

18:04Brian Folmer:Yeah, I'm always a fan of when founders do actually establish their company first and have some traction, and then they want to add a celebrity later on. Because now you have a story to tell to the celebrity, and there's traction. And yeah, I guess you could maybe be a little bit pickier, or you have more options for who might want to join you. because before you're just pitching an idea in your head. Now that there's actually something that's real and tangible, I think it maybe makes it a little bit easier to bring in a celebrity. But yeah, it's an interesting strategy at the end of the day. Yeah, and when it comes to retail, as I mentioned, some of these celebrity brands, they have unique opportunities where they can actually go nationwide in Walmart or on Target on day one.

18:48What would you advise such companies? I've talked to many operators on this show. Some love it because it immediately gave them traction. some hated it because they were like we were kind of not ready to play on that kind of level already

19:00Brian Folmer:how are you kind of thinking about that yeah i mean i guess i don't know what the what the ratio is here or the breakdown but usually with celebrity brands the operator and the other co-founder is pretty experienced and so hopefully they have the chops and skills to handle a pretty big roll out relatively early. If you're a first time founder, and this is your first baby, and you have, you know, you just got lucky and brought on a celebrity. Yeah, it can be pretty challenging. And so, but I do hear quite a few stories of founders, well, they'll have the celebrity join them at the like, the buyers meetings, which I think it's kind of cool.

19:44Brian Folmer:And I know those buyers do get kind of excited because you know, when you need a celebrity, it's, you know, always, It's always a fun, memorable moment. And so, yeah, it can certainly help you get in the door. But, yeah, you better be ready to actually execute if you do get the green light. Yeah. No, I love that example. I was actually on a call with, like, on a podcast with Scout Brisson. She was the CEO of the SWA that she launched with Katy Perry. And she told me exactly in a story like this that she was on a retailer call. And Katy Perry actually joined in. And the retailers are like, wow.