📽 “Crazy Until Successful” - The MrBeast Deep Dive

Overlooked #110

Apr 20, 2022

Hi, it’s Alexandre from Eurazeo (ex. Idinvest). I’m investing in seed & series A consumer and consumer enablers startups all over Europe. Overlooked is a weekly newsletter about venture capital and underrated consumer trends. Today, I’m sharing a deep-dive on MrBeast that I co-authored with my friend Ariel. You should read his blog here.

Introduction

The story of MrBeast is the story of hyper-obsession. It is the story of Jimmy Donaldson, a 11-year old North Carolinian kid, who through unparalleled intrinsic willpower and global platform changes became MrBeast. It is the story of how this kid became the greatest Youtuber on the planet. This is the paramount 21st-century story: absurd and awesome.

If you don’t know yet about MrBeast, you need those two quick facts: his Youtube channels have more than 200 million subscribers and have generated more than 23 billion views.

This piece is divided into two parts: history and facts, and playbooks. It explores the major milestones in MrBeast’s meteoric rise and the playbooks that made it happen. Jimmy Donaldson is not a random kid who has been blessed by an obscure almighty algorithm. Jimmy is the ultimate entrepreneur: a hyper-focused leader, driven by a clear vision, setting objective milestones, achieving them through stellar work ethic.

This piece is not about how to become the world’s greatest Youtube star but about how to become the greatest at anything, period.

Jimmy had no headstart, no connections in Hollywood, no money. This is not a story about luck. Yet this now-23-years-old guy built a multi billion-dollar global media brand from a small town in North Carolina. His story proves it: hyper-obsession and unequaled work ethic breed greatness.

Where does Jimmy’s rise end? Nobody knows. But upon doing research for this piece, we felt more and more confident in this prediction: within ten years, MrBeast will be the biggest celebrity on the planet. Now let’s dive in.

Part I: History

In 1998, Jimmy Donaldson (aka MrBeast) was born in Kansas and grew up in North Carolina where he still lives today.
In 2010, he started on Youtube at the age of 11 - when Youtube was only a 5-year old platform.
In Feb. 2012, at the age of 13, he launched his current channel (MrBeast6000 which was a Xbox account hashtag and now MrBeast). He started with gaming videos on Minecraft, Pokemon and Call of Duty Black Ops 2. He was doing commentary videos on gaming gameplay. Sometimes, he would speak about the game. Other times, he would talk about other topics about his life or Youtube.

“A lot of my earlier videos, they sucked because I just wasn't entertaining back then, I was stupid. Every night before bed. I'd just be like, it sucks. It's a lot of work. And I feel like I'm not getting anywhere, but if I just do it long enough, eventually it will click, eventually I'll figure it out."

In Sep. 2013, he published a 1-min video in which he said that if the video generates 1m views, he will use all the advertising revenues generated by the video to make an epic video. Interestingly, this concept of leveraging its ad revenues to fund production of new video concepts is now at the core of MrBeast's strategy.

In 2013 and 2014, he published a series of videos in which he estimated the revenues generated by top creators on the platform like PewDiePie or CaptainSparkles or FaZe.

In 2015, at 15 year old, MrBeast was diagnosed with Crohn's disease causing inflammations to his digestive tract. It was a turning point in his life. He waited several months to find the right treatment. He lost weight. He had no energy. He did not want to go to school. He had to stop baseball which was his second passion in life besides Youtube. When he felt better, he decided to go all in on Youtube. He moved away from gaming videos and started to show his face on videos. Mid-2016, he had less than 30k subscribers.
In 2016, he dropped out from University as soon as he started making enough money on Youtube to make a living and to move out from the family house. His audience exploded on Youtube with several IRL formats: challenges, vlogs, money giveaways, absurd tasks.

"From the moment I dropped out of college that is where I just went all in. I would wake up, work on videos and then I'd go to bed. That's where I just went hyperdrive is definitely where I got really weird with it."

In Jan. 2017, he went viral on the internet by publishing a video in which he took 40 hours to count to 100,000. It was its first extremely viral video. It worked because the video was absurdly unique and people were willing to watch unique concepts.

"I kind of just realized that like, if I really go all in, I really be creative and unique and I do things that just no one else would do because they're so hard and takes so much effort, right. People have no choice, but to watch it because it's just interesting."

In Jun. 2017, Jimmy gave away $10k to a homeless person in the street. It was the 1st time that a brand offered to sponsor one of his videos. The brand offered to give him $5k. Jimmy negotiated $10k to create a more powerful title for the video. The video went viral and paved the way for a mechanic that was later used over and over in MrBeast videos, which is using revenues from advertising and sponsorship to give away money to people.

"So I had this idea if I take this branded money and I give it away in the video, that video will do well. And then I take the money from that video and I give away in the next video and that video will do well and kind of like create this cycle. That's when I was like, I want to use brands to allow me to help people. I was like, I think this would be like a really cool thing. And I was just like freaking out. I was like, I think I just cracked the code."

In 2018, he published several videos orchestrating a fake battle between a music channel called T-Series and PewDiePie to become or remain the largest channel on Youtube. He bought billboards in his city, he attended the Superbowl wearing shirts promoting PewDiePie and bought online ads to support PewDiePie. He said PewDiePie 100,000 times in a video.
In Oct. 2019, after reaching 20m subs, MrBeast announced its intention to raise $20m to plant 20m trees in a project called Team Trees in partnership with the Arbor Day Foundation. He raised money from people like Elon Musk, Tobi Lutke, Marc Benioff, Jack Dorsey, Susan Wojcicki as well as from corporations like Verizon, Discovery, Elf, Cookpad or Electronic Arts. 1k+ creators participated to this crowdfunding campaign by publishing videos on their channels.

In 2020, MrBeast stroke a deal with Spotter to get cash upfront to be invested in new videos in exchange of giving away to Spotter the rights to monetize for a limited period of time a part of his back catalogue. Among others, he used Spotter services to fund the initial cost of doubling its videos for its Spanish channel (cf. infra).
In Jun. 2020, in partnership with MSCHF, MrBeast released a one time multiplayer mobile game called "Finger on the App" in which people competed to hold one finger as long as possible on the phone screen. The winner was supposed to win $25k. In the end, 4 people ended winning $20k each after keeping their finger more than 70 hours.

In Oct. 2020, MrBeast invested into Backbone which is a controller to transform your I-Phone into a real gaming console.
In Dec. 2020, MrBeast launched a virtual burger chain called MrBeast Burger.
In Feb. 2021, MrBeast signed a deal with Jellysmack to distribute its content on social media platforms including Facebook and Snapchat.
In Mar. 2021, MrBeast's management company called Night Media and led by Reed Duchscher launched a $20m venture fund to invest up to $300k initial tickets in startups in consumer, gaming and in the creator economy. Night Media is a talent management company working with creators like MrBeast, ZHC, Preston, Matt Stonie or Unspeakable.
In Mar. 2021, MrBeast partnered with Creative Juice and will invest up to $2m in a fund investing $250k tickets into Youtube channels in exchange of an equity stake.
In Apr. 2021, MrBeast invested into Current which is a neobank for teenagers.
In Nov. 2021, MrBeast published a remake of Netflix’s show Squid Games with 456 people and a $456k cash prize. He recreated and adapted several games from the successful Netflix series. It was his biggest video concept ever published costing more than $4.5m and generating more than 220m views. MrBeast partnered with Supercell to promote Brawl Stars' mobile game.

In Jan. 2022, MrBeast launched a D2C food brand called Feastables starting with a line of chocolate bars marketed with $1m in prizes for buyers.
In Mar. 2022, MrBeast passed the 90m subscribers threshold.

Part II: Facts

Figures

MrBeast's main channel growth really started to take-off in 2018. It means that it took MrBeast 8 years publishing recurring videos without exponential growth and without being able to make a living out of the platform.

In 2021, he was the fastest growing creator on Youtube adding 37m subscribers (vs. 92m subscribers today).

In 2021, MrBeast launched new channels in which he translates his content with voice actors in other languages (e.g. Spanish, Portuguese, French, Japanese, Arabic). It's working well. For instance, in January 2022, MrBeast en Espanol added more subscribers than MrBeast's main channel (2.6m vs. 2.4m). Another example: in Nov. 21, MrBeast launched its French channel. In Jan. 22, he sponsored an Amixem's video to promote its French channel (Amixem is a big local Youtuber with over 7m subscribers). Today, MrBeast has already 930k subscribers on his French channel.

MrBeast Multi-Channel Strategy

MrBeast has developed a multi-channel strategy on Youtube:

MrBeast (92.7m subs): main channel with big concepts, 1-2 publications per month.
Beast Reacts (16.5m subs): channel where MrBeast watches and reacts to videos or other content formats (e.g. most viewed TikToks, Moments Before Disasters, Most Dangerous Tourist Destinations).
MrBeast Gaming (26.6m subs): started in Apr. 2020, MrBeast plays with friends on video games like Minecraft, GTA 5 or Among Us.
MrBeast Shorts (12.8m subs): launched in Aug. 2020, TikTok-style videos (vertical format, under 1 minute) where MrBeast and his friends are doing random and funny things.
Beast Philanthropy (8.0m subs): channel on which all the revenues generated (merchandising, ads, sponsorship) are used to fund a food bank.
MrBeast in French, Spanish, Portuguese, etc.: back catalogue from the main channel as well as from the gaming channel is progressively translated and republished. MrBeast plans to have 30 foreign languages channels by translating MrBeast, MrBeast Gaming and Beast Reacts videos in the 10 most spoken languages in the world.

A Multi SKUs Creator

MrBeast is a Multi-SKU Creator. He combines several revenue streams. Contrary to most creators, he has not built diversified revenue streams to be less dependent on a stream or to generate more profits. He added revenue streams just to increase his content production budget for its main channel to produce bigger videos and grow its viewership even faster.

He generates revenues via (i) advertising on Youtube, (ii) sponsorship deals in his videos and on social media, (iii) merchandising with MrBeast branded items as well as via side businesses such as (iv) MrBeast Burger (virtual burger chain) (v) Feastables (D2C food brand) and (vi) venture investments.

1/ Advertising on Youtube

Youtube creators can leverage Google Ads to monetize their videos with automatic ads that will be place at the beginning, in the middle and at the end of videos. It's the main revenue stream and the most automated one as you just have to upload content to make it work.

2/ Sponsorship Deals

Within videos, MrBeast will promote a brand with a 30-60 seconds pitch. He did sponsorship deals with companies like Supercell, Experian, Coinbase, etc. For a creator, the challenge is to make a pitch that is entertaining, that fits within the video perfectly instead of being an add-on at the beginning of the video. With sponsorship pitches, your watch-time can be damaged if you're not good at integrating them in the broader video. Sometimes, sponsors are also offering temporary rewards to viewers to increase conversion rate (e.g. get $10 of Bitcoin when you join Coinbase with MrBeast's code).

3/ Merchandising

MrBeast has also a shop where he sells merchandising items (mainly clothes). He has multiple collections over the year with limited items available and a drop distribution strategy. He also does collaborations with third party IPs (e.g. Dreamworks and Shrek).

4/ MrBeast Burger

In Dec. 2020, MrBeast launched a virtual burger chain called MrBeast Burger. He partnered with Virtual Dining Concepts and it took 1y to make it happen. MrBeast Burger does not rely on dark kitchens but have been working with 300 local restaurants across the countries. You can order from MrBeast Burger on all delivery apps (DoorDash, Ubereats, Postmates etc.) as well as on the proprietary MrBeast Burger app. It was an instant hit with only one video and several post on social medias. The app was downloaded more than 1m times. The restaurants were overwhelmed by orders. Today, MrBeast Burger is close to having generate more than $100m in sales, is working with 1.6k restaurants (+50 per week) and is planning to open a physical restaurant in the coming months.

5/ Feastables

In Jan. 2022, MrBeast launched a D2C food brand called Feastables. It's a gamified commerce brand in which anytime you buy a product, you enter into a gamified experience in which you can get rewarded (a mystery ticket, appearance on MrBeast's videos, Teslas, headphones, etc.). It's distributed directly on Feastables.com's website but also indirectly with GoPuff, Walmart.com and on certain MrBeast Burgers' locations. They've hired a strong team to run business led by Jim Murray who has a 10-year experience and he was president at RXBar (snack D2C brand with simple ingredients).

6/ Venture Investments

MrBeast has invested directly or indirectly into several startups. Night Media, his talent management company, launched a $20m fund in Mar. 21 to invest into consumer, gaming and creator economy startups (e.g. Italic, Lolli, Pearpop). MrBeast has also invested into companies like Backbone (gaming controller), Creative Juice (tools for creators) and Current (neo-bank for teenagers).

Part III: Main Learnings for Creators & Entrepreneurs

Hyper-Obsession

When Jimmy Donaldson posts his first Youtube video, we are in 2010. At that time, Jimmy is not yet MrBeast. He is an awkward 11-year old North Carolina kid. Call it luck or destiny, his first post reached a couple thousand views. From this very moment, he was stung and Youtube became his only obsession.

Obsession is what sets Jimmy apart from the bulk of other Creators. All his other successful traits stem from an abnormal focus on a crystal-clear objective: becoming the greatest Youtuber of all time. Listen to him speak and you cannot help but be reminded of the obsessiveness and intensity of the greatest entrepreneurs of our time. To be sure, Jimmy ranks among them.

North Star Metric

When Logan Paul tells Jimmy that he watches all his videos until the end, Jimmy smiles: “Man, there is no better compliment than this one”.

Because he knows the only thing that matters as a Youtube Creator. The root of success, the source of money and fame, it all comes down to one thing: watch time. Aka retention. Aka attention people trade you in exchange for entertainment. “Attention is the most valuable resource in the world”, Jimmy keeps on saying.

Youtube is an ad-supported business whose business model relies on people spending time on their platform. The algorithm is essentially based on retention. Follower count does not matter. Likes and comments do not matter. Only watch time does. Jimmy repeatedly states that a great video from an account with hundreds of subscribers would generate millions of views.

He trained himself to become allergic to boredom, to level up the intensity level in every new video. Because Jimmy knows that if retention means success, then boredom kills it, especially in the first minute of a clip. Take the first 40 seconds of this video where MrBeast got hunted by an FBI agent. In such a short time, context is set, the main characters are introduced, action begins, you know what will happen at the end. A new frame is introduced every second. So many narratives are laid down, you are just hooked.

A great video is a video people watch. Creativity, spending and efforts are worthless if they do not improve retention. Jimmy and his team make no compromise.

Studying Youtube like a Mathematician

In a mindblowing sequence of the Joe Rogan podcast, Jimmy explains he used to connect to Skype with three other Youtube friends and study the Youtube algorithm. He did that for 1,000 days in a row. He studied Youtube like others studied for college. As a result, his understanding of the platform reached an unmatched granularity. For months, Jimmy and his small group of friends delved deep into the most specific details of the recommendation engine: to what extent does brightness in a thumbnail influence viewership? How many angle cuts should happen in the first few seconds of a video? What is the optimal posting rate?

MrBeast approaches content creation like a cold-blooded mathematician. The goal is clear: watch time. The greatest Youtuber of all time will be the one with the highest retention. Every decision is carefully studied, backed with data, discussed with other creators and his team, sometimes even experimented in other channels. There are some trials and errors, but there is no luck involved.

This level of dedication from a then 17-year old is insane. So is the fact he is still doing that to this day. Jimmy sets up weekly calls with fellow creators. He coaches a handful of them on their thumbnails, titles, video dynamics, etc. He doesn’t ask to get paid - Jimmy needs no money - he just wants to test new formats, new ideas on how to game the algorithm.

MrBeast’s passion for learning about Youtube seems to have no limits. And guess what he does in his free time? He watches Youtube videos.

The Long Game

Although Jimmy Donaldson typically tips Lamborghinis and gold bars in his videos, he lived in a small house in North Carolina until recently (he moved out for security reasons). Jimmy may be a billionaire on paper, he is cash poor: every single dollar he generates is poured back into his content, that makes between two to five million dollars a month.

But this is not new. Since day one, Jimmy has reinvested all he earned through Youtube back into content. His first brand deal helped him buy a microphone. Then a camera. Then a better camera. Now, he is giving millions of dollars to his fans every month, building insane custom sets for each video, hiring literally the world’s best visual effects professionals, generating millions and reinvesting it all. His grand vision faces no production budget limit.

“Every dollar I made I spent it on content” Jimmy keeps saying. Jimmy does not care about money, Jimmy only cares about Youtube. From day one. Simple compounding strategy.

No Compromise on Quality

In an interview with the tech Marques Brownlee, Jimmy tells a jaw-dropping fact: one out of four videos they shoot never makes it to Youtube. Costs do not matter. Some challenges are simply not as impressive as they were on paper. Other videos just end up being scrapped because the editing is not powerful enough in Jimmy’s eyes. In 2019, Jimmy even deleted a video after publication as the compilation of clips of philanthropy did not match the $500,000 mentioned in the thumbnail.

Jimmy is uncompromising on quality to a degree that borders insanity. But MrBeast is unshakable because he is on a mission - and only this grand mission matters to him.

Contagion

When Youtubers Colin and Samir flew to Greenville to tour the MrBeast facility, they reported that during a creative meeting, an employee called out on one of Jimmy’s ideas for not being ambitious enough. How did Jimmy react? He loved it. Jimmy somehow managed to pass his drive and obsessiveness onto his team.

But it’s not always rosy. In 2020, Nate Anderson started working for MrBeast as an editor. She only lasted one week. Anderson quit as Jimmy is too much of a perfectionist and making unreasonable demands, the New York Times reports. This degree of intensity is not for anyone.

The Rise of Youtube

When Youtubers Colin and Samir ask Jimmy what other platforms he likes his answer is cristal clear: nothing compares to Youtube. MrBeast started early on Youtube - he posted his first video on there in 2010. He must have been one of the firsts in the world to think of Youtube as a potential career. Needless to say, Jimmy was early on Youtube. He bet at the right time on the right platform.

Scaling Content

The two fundamentals of business are: product and distribution. This also holds true for content. MrBeast is not only pushing the frontier of content on Youtube, he is also scaling the way his content gets distributed across the internet.

MrBeast Reacts & MrBeast Gaming. Like most Youtube Creators, MrBeast has secondary channels: Beast Reacts (16.6M subs), MrBeast Gaming (26M subs) & Beast Philanthropy (8M subs). What’s the rationale? Lower production effort videos to increase views and generate extra cash. What for? To be reinjected in the main channel, of course.
Distribution across platforms. Every day, 5 billion videos get watched on Youtube but another 4 billion also get watched on Facebook. Professional creators need to edge platform risks by diversifying their presence on several platforms. Also, platform expansion means more fans and more revenue. Jimmy knows this. In April 2021, MrBeast announced his partnership with Jellysmack (disclaimer: Ariel works at Jellysmack), the global creator economy company helping video creators go multi-platform. Jellysmack is managing top Youtubers’ presence on other platforms like Facebook and Snapchat, enabling them to reach new fans and generate extra revenue using advanced technologies.
Translation. Only about 5% of the world’s population are native English speakers. And the United States is not even Youtube’s largest market (India comes first). How could MrBeast be the biggest Youtuber of all time then? In July 2021, MrBeast launched a new channel: MrBeast en español. He dubbed his videos by famous Mexican actors (MrBeast and Spiderman have the same Spanish voice). He then launched similar channels in Russian, French, Portuguese, Hindi, Arabic, Indonesian and Japanese.

Athlete Mentality, Athlete Lifestyle

MrBeast’s first video to go viral is a webcam recording of him counting from 1 to 100,000. It took him 40 hours. Call it genius, stupid or insane, it certainty was all three. This performance is an absurd demonstration of willpower.

MrBeast's videos are full of crazy challenges: last one to take hands off Lamborghini keeps it, last one to leave a circle wins $500,000. Jimmy is a competitor at heart. “I would win any of those challenges” says Jimmy. We surely would not bet against that.

This may not come as a surprise then, but Jimmy is a workaholic. Jimmy seems unbelievably down-to-earth for a 23-year old worldwide celebrity. But no human being is exempt from vice, and Jimmy is a gambler.

Jimmy is a dreadful poker player. He bought 8 crypto punks. Jimmy is consistently going all-in, placing big bets on himself. Playing big, plus drive, plus lucid competitiveness, is a guaranteed path to greatness. His vice serves him well.

But success did not make Jimmy move to Beverly Hills. He built his $10m studio facility in Greenville, North Carolina, the place where he grew up. The city of less than 100,000 inhabitants is the HQ of the world’s biggest Youtube brand.

As soon as he made enough money, his mom quit and she now works full time with him. So does his older brother, Charles Donaldson (who also has a 4 millions subscribers Youtube channel called MrBro). He employs his friends and family in his hometown.

Conclusion: Where does the Madness Stop?

Jimmy Donaldson just seems to be different. He has been obsessing continuously about Youtube since he was 11. He conveys an unusual intensity, a burning drive and passion that make others around him uncomfortable. His resistance to pain and discomfort stems from another planet. Jimmy Donaldson ranks amongst the Musks of this world.

What comes next for MrBeast? Will he ever get bored? Will he ever run out of ideas? How can someone over years and decades continuously outdo oneself? Where does the madness stop?

Jimmy Donaldson will be the greatest Youtuber of all time. No doubt here. But the road ahead is still unclear. Rarely in history has a man and a team put as many resources, creativity and passion for the sake of entertainment. His continuing meteoric rise will be fun to watch. Sit back and enjoy the crazy and the successful unfold.

Thanks to Ariel and Julia (🦒) for the feedback! Thanks for reading! See you next week for another issue! 👋

Overlooked by Alexandre Dewez