“We’re All Kardashians Now:” Secrets Of The Kardashians’ Success by Tobias Carlisle, Greenbackd
Hey New York pic.twitter.com/HRZIv5VErd
— Kim Kardashian West (@KimKardashian) June 6, 2016
Charlie Munger on Discount Rates and Opportunity Cost
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If you are as perplexed by the Kardashians as I am, you will love this analysis from The Private Investment Brief:
[T]he Kardashians are at or near the top of a very large heap. And they climbed there from quite a low base not nine years ago, without any conventional celebrity merit to speak of beyond a cable TV reality show of modest ratings success. Information about these things is notoriously unreliable, but it’s not crazy to speculate that the family collectively takes in something approaching $100 million per year in gross income. A typical industrial company might have to gross over $1 billion to earn that much in operating income, and a typical hedge fund might need more than $2 billion in assets under management. If like me you like to study business success, then perhaps you should study and even admire the Kardashians, despite the fact that—or is it because?—their pre-eminence is in a much different field than your own.
…Whether we like it or not, in other words, we’re all Kardashians now, so perhaps we shouldn’t be so dismissive. Back in old Europe, young women from good families would sometimes pay discreet visits to their counterparts in the demimonde, seeking some insight into the duties of a new wife. So too should we acknowledge that true expertise doesn’t always with status and credentials. Kim Kardashian may well be a better marketing professor than the ones you find at Kellogg.
…When people my age get on the subway in the morning and find themselves surrounded by 50 millenial heads buried silently in 50 iPhones, they tend to think the world is ending. But the basic business model of the modern mobile celebrity is no different than Milton Berle’s nearly 70 years ago: the celebrity commands the attention of the public, and then that attention is transformed into money via some type of advertising or endorsement…
While conceptually the modern mobile celebrity is the same as the celebrity of yesteryear, there is a huge difference in the execution. In the 1940s, a movie star would have to appear in public maybe twice a year to promote a new movie, and that was considered an annoying but necessary burden of fame. Today, the mobile celebrity entertainer must appear in virtual public twice a day at a minimum, or else risk falling to the bottom of a smartphone user’s feed. That is to say, in the new world of mobile entertainment the required velocity of fame is much higher than it used to be. And with the need for more velocity comes the need for more ephemerality: Each appearance by the celebrity on the smartphone screen must manage to be both instantly attention-grabbing and instantly forgettable, so as not to overtax the brain of the viewer while at the same time building up the “mental availability” that is crucial to selling brands, especially in highly fragmented, mass-market product categories like fragrances, mobile apps, and clothing where the Kardashians do especially well. The goal is not to get 40 million people to love you, it’s to get 40 million people to at least think of you when they are buying perfume.
I doubt she’s ever used this term explicitly, but what Kris was describing is the concept of risk bearing economies of scale, one of the oldest and simplest strategic competitive advantages a company can enjoy—and the third success secret of the Kardashians. Risk bearing economies of scale are the reason movie studios and record labels and insurance underwriters like to be big, because they diversify the risk of individually risky investments and decisions. And they’re crucial in the world of mobile entertainment, where the name of the game is to generate tweets and photographs and stories that become “hits” for that day or hour….