Blockchain startup Abra adds Gwyneth Paltrow as advisor
Abra (a payment app for any currency that slashes remittance costs by using a network of human tellers on the ground as well as the Bitcoin blockchain in the background) chief executive officer Bill Barhydt chose Gwyneth Paltrow, actress and chief executive officer of Goop, to help his app. Entrepreneur advisor Gary Vaynerchuk, who invested in payment app Venmo, was so anxious to hear Barhydt’s choice. “I go into this, not knowing how people will react — are they going to get Abra at all? Will they think we’re crazy? Will they be scared of blockchain technology? Will they get the consumer benefits?, etc., etc.,” says Barhydt. “What happened totally blew me away because not only did all four of them get it, but all four were super excited about working with Abra, and I had to choose one person. To be honest with you, I didn’t think I was going to be put in that situation.”
Barhydt says of Paltrow, who has joined Abra as an advisor, “She has been a huge value add. She’s opened up her network to us, given us valuable business advice, her insights on running a consumer business with hundreds of thousands of paying customers.”
Other fintech startups turn to celebrities to boost sales too — singers Will.i.am and Tom Odell show interest in UK neobanks. Rapper Jay Z is putting his money to work in start-up and technology investing. By setting up a firm, Jay Z joins a growing crowd of celebrities that are bringing their brand to the tech world. Ashton Kutcher, Kobe Bryant, Lupe Fiasco, Robert Downey Jr. and Justin Bieber and about 10 celebs more have also done technology deals.
Jay Z, also known as Shawn Carter, will partner with venture capital firm Sherpa Capital, which has invested in companies like Uber, Airbnb and Slack. The “99 Problems” singer — who is married to pop star Beyonce — is no stranger to the business world. Jay Z’s entertainment company, Roc Nation, has made some investments in tech startups such as private-jet rental company BlackJet and French audio equipment company Devialet, according to Crunchbase. Jay Z will partner with Roc Nation president Jay Brown for the new fund, the report says. On top of Roc Nation, Carter has invested in Uber and music streaming service Tidal.
Two of the UK’s new digital banks are bringing on board celebrities and raising millions of pounds from investors in an attempt to boost scale and appeal to millennial customers. Monzo and Atom are among a new breed of app-based banks that are focused on customers who want to manage their finances via their mobile.
Monzo, an app-based bank that gained its licence from financial regulators last year, has raised £19.5m from a group of investors, paving the way for the launch of its current account in the summer. The mobile-focused bank is also set to raise money from angel investors in the next few months, which could include British singer Tom Odell, who is also a customer of Monzo, according to a banker close to the plan. As well as raising money from institutional investors Monzo is targeting £2.5m in crowdfunding from its customers. Tom Blomfield, chief executive of Monzo, expected that 4,000–5,000 people would be able to invest in the latest crowdfunding round. He is aiming to turn Monzo into the main port of call for customers to manage their money. It will initially launch a current account, and will then connect with a range of companies, such as other banks, so that customers can change their energy bills or obtain a mortgage through the app. “A customer might have 10–15 financial services providers, and wants to control them through one interface — Monzo is building that interface,” Mr Blomfield said.
Monzo has closed £19.5 million in Series B funding — the second injection of institutional money — and is planning to raise a further £2.5 million through crowdfunding. The £19.5 million has been raised from New York-based Thrive Capital, with participation from longtime Monzo backers Passion Capital, and Orange Digital Ventures, the VC arm of telecoms network Orange. The funding values the two-year-old business at £65 million pre-money. Monzo is returning to Crowdcube for its £2.5 million crowdfunding campaign, opening pre-registrations for potential investors from February 28 to March 14. Investors will then be given the opportunity to invest through a random ballot. Last year investor demand was so great that Monzo — then known as Mondo — raised £1 million in just 96 seconds. Blomfield told BI that the total £22 million is “the big chunk of cash needed to launch the bank.” Monzo gained its banking licence last August and Blomfield told BI last year that the startup would have to raise at least £15 million to get certain operating restrictions lifted. Monzo employs a team of 80 people in London that Blomfield expects to rise to over 100 by the end of the year. While some of the money raised will satisfy banking capital requirements, Blomfield says “most of it is for operating expenses.” The startup is currently trialling current accounts and overdrafts internally and plans to begin transferring its existing customers — over 100,000 who are on pre-paid cards — to current accounts shortly. New customers should be able to sign up for them by the summer. By the time Monzo’s latest crowdfunding campaign completes, the startup will have raised £35 million since launching in February 2015.
Read more: 7 New Banks For “Snapchat Generation”
Another app-based lender, Atom, which launched last year, is finalising a capital raising of about £100m from existing investors — and has signed a deal with record producer and singer Will.i.am to act as an adviser. Will.i.am is expanding his CV in a perhaps unexpected direction, striking a consulting deal with Atom Bank which could see him take a multimillion pound stake in the fintech firm. In return, Will.i.am will have the option to acquire up to 3.55m shares in the digital bank at £1.15 each during a three-year period. Will.i.am’s new role at the digital-only bank, which officially launched last October, will include taking part in public relations activities, attending board meetings and publishing social media posts about Atom.
Sources said that Atom had received commitments from existing investors BBVA, Woodford Investment Management and Toscafund to inject a further £78.5m into the company, with discussions continuing with other institutions about raising roughly £20m more. That investment is expected to mean that BBVA, one of Spain’s biggest lenders, would own more than 30% of the company — a level that would usually trigger a mandatory offer for the remaining shares under the UK’s takeover code. The company, whose chief executive is Mark Mullen, the former boss of First Direct, said in December that it had taken more than £110m in deposits across its fixed-rate saver accounts. It intends to diversify into mortgage products in the coming months. Headquartered in Durham, Atom now employs more than 250 people.
TV star Ashton Kutcher and Madonna and U2 manager Guy Oseary teamed with billionaire Ron Burkle to turn $30 million into $250 million with investments like Uber and Airbnb. Ashton Kutcher, one of the world’s highest-paid TV actors, can obviously afford that most essential of Los Angeles celebrity luxuries: a car and driver. But he still prefers Uber. Five years ago he and Oseary invested $500,000 in Uber — that stake is now worth 100 times what they paid.
Kutcher’s and Oseary’s portfolios, which number more than 70 investments combined, include a roster of grand slams way past Uber — Skype, Airbnb, Spotify, Pinterest, Shazam, Warby Parker — with valuable startups like Zenefits and Flexport still gestating. Except that a slew of self-made billionaires — including Ron Burkle, Eric Schmidt, Mark Cuban, David Geffen and Marc Benioff — gave them millions from their personal stashes to invest. And while those five have all been known to enjoy the taste of fame and glitz, a decidedly more staid backer, Liberty Media, recently tossed them $100 million to put to work — and to do so without Burkle, who until now has partnered actively with them.
Over six years they’ve turned their $30 million fund into a cool $250 million. The guy who until recently starred in Two and a Half Men has generated almost 8.5x. “If you can routinely return 3x, you’re considered one of the best VCs,” says Marc Andreessen, a Midas List regular who’s raised more than $4 billion over the years with his firm, Andreessen Horowitz. “If you can return 5x, it’s considered to be a home run. I took my math classes: 8x is seriously higher than 5x.” Andreessen invited him to plow $1 million into Skype in 2009. When Microsoft bought the company 18 months later, Kutcher’s outlay quadrupled in value. He was hooked. More important, he impressed his new friends in San Francisco, who were still recovering from the Great Recession.
Read more: “I am running a fintech VC without any finance or PE background — and who cares?”
Andreessen isn’t alone in his appreciation. Talk privately with the heavies in Silicon Valley who have spent time with Kutcher and Oseary and watched them in action, and you hear and see the same story: These guys are legitimately smart. No “for Hollywood types” caveats. Their surprising success underscores two universal truths: how simple it is to manage other people’s money and how hard it is to do it well.
Everything about Kutcher’s journey has been intuitive. Born to middle-class parents in Iowa, he didn’t grow up with any business know-how or lessons other than the most important: a strong work ethic. He was working construction with his dad by age 10; in high school he had a series of odd jobs, including janitor, butcher and factory worker at General Mills. The brains were always there: When he enrolled at the University of Iowa, he planned to major in biochemical engineering — until he won a modeling competition, dropped out and moved to New York, then Los Angeles.
He learned his lessons well. Kutcher is fluent in the language of tech startups, and it isn’t just token jargon. At a private dinner at the Forbes Under 30 Summit last year, Kutcher spent a half-hour leading a vigorous debate with a bunch of media heavies on the correct ratio to optimize Web traffic and digital advertising revenue. He is, in essence, the football jock who started hanging out with the math nerds and eventually demonstrated that he was one of them. “Once you learn how to identify a snow leopard,” says Kutcher, “it’s pretty easy to see a snow leopard coming along.”
Oseary, meanwhile, was undergoing a similar metamorphosis. Born in Israel, he moved to Los Angeles at 8 and ended up at Beverly Hills High School, where he started managing small-time hip-hop acts and mingling with the children of Hollywood power brokers like Freddie DeMann. The music manager hired a teenage Oseary to work for him at Maverick Records, the label he cofounded with Madonna. Through the mid-1990s Oseary rose from talent scout to chairman, overseeing a roster that included Muse and Alanis Morissette. “A lot of what I do now is very similar,” he says, “which is trying to identify talent and then help them market their music [and] their vision.”
Kutcher leveraged his massive social media influence — he holds the distinction of having the first Twitter account ever to top 1 million followers — to drive viewers to their portfolio startups. Kutcher’s career turn began attracting attention, albeit as a novelty. (The New York Times dubbed him a “handsome ditz” who “mastered the utopian lingo of Silicon Valley.”) He was most often lumped in with other celebrity investors, the likes of Justin Bieber and Lady Gaga, who knew enough to listen to their managers but not much more.
“There are a lot of celebrity ‘tourists’ in our industry these days,” says billionaire investor Chris Sacca, who graced the cover of last year’s Midas List issue. “Famous people lurking around trying to get a piece of the pie but without bringing any value to the table. For Ashton in particular it’s been a daily commitment to tech for at least eight years now.”
In 2011 Kutcher, Oseary and Burkle put $2.5 million into Airbnb, a stake now worth about $90 million. They also placed $500,000 in Uber — one chunk via Sacca’s Lowercase Capital, which got in at seed stage, and another directly in later rounds — now worth north of $60 million. “Every single person in our portfolio has our personal phone numbers,” says Kutcher. “They can call us at any point in time, 24 hours a day, whatever it is.”
Gwyneth Paltrow is an actress & model, investor & author, startup founder & creative director, and “a big believer in the ampersand.” If you know Gwyneth Paltrow only as an actress, you might be surprised to see how many places she’s been hitting her marks.
The Oscar winner has appeared in nearly 50 films and TV shows. The Iron Man movie franchise alone has raked in $2.4 billion worldwide. Paltrow spent four years as Elizabeth Hurley’s successor as the face of Estée Lauder, pulling in $3 million annually, and has endorsed several other brands, including Max Factor, Coach, Baume & Mercier, and Tod’s. In 2013, she inked a $2 million deal with Hugo Boss to represent the company’s new fragrance. Although the New York Times alleged that her 2011 release, My Father’s Daughter, was ghostwritten, Paltrow insisted via Twitter that there was “no ghost writer on my cookbook, I wrote every word myself.” That book and her subsequent one, It’s All Good, were New York Times best-sellers. A new book, on “clean comfort food,” is due out in early 2016. Famous (and infamous) for her unwavering exercise regimen, Paltrow is a co-owner of her personal trainer Tracy Anderson’s eponymous global franchise, which includes six studios. In May 2015, Paltrow, Anderson, and entrepreneur Maria Baum launched 3 Green Hearts, which offers organic meals on the go (free of gluten, soy, and dairy) at Tracy Anderson’s studios in New York’s Hamptons. Goop, the website and e-newsletter Paltrow began in 2008, now counts nearly 1 million subscribers, according to the company. Paltrow is an investor, with her hairdresser, David Babaii, in the 48-salon international franchise Blo Blow Dry Bar. She just became an investor in and creative director for makeup at the organic skin-care company Juice Beauty. The Arts Club, a private, culture-oriented London social club cofounded in 1863 by Charles Dickens, plans to open an outpost at the site of a former Hustler store on Los Angeles’s Sunset Strip, reportedly featuring a nightclub and restaurant. Paltrow is an Arts Club adviser and investor, and designed some of the interior spaces at the London location.
Paltrow, who slowed down her acting career to spend time with her children and took a break from acting in 2015 to focus on Goop, says her career path has been inspired, in part, by her mother, the actress Blythe Danner. Paltrow considers Goop “really my principle business,” though she realizes that varying amounts of time she spends on her other entrepreneurial projects can sometimes add up. “Being who I am, sometimes I can have a very small equity percentage in something and they make a big deal out of my involvement and sort of infer that I have a massive day-to-day role in the inner workings of the company, which I don’t at all. That’s true for all the businesses except for Goop,” she says, with the possible exception of Tracy Anderson’s fitness empire, which is “a project I’ve worked on for eight years and so it’s very close to my heart.”
Goop, which also sells fashion and home products, now has nearly 1 million newsletter subscribers, according to the company[16]; analytics firm Alexa.com estimates Goop receives more than 3.75 million page views per month. In the past year, Goop has been gearing up for a major expansion, hiring Lisa Gersh as CEO, moving its headquarters from the U.K. to Los Angeles, amassing a 25-person team, pitching investors, building an advertising unit, and planning its first private-label product: an organic skin-care line due out in 2016. Gersh has restructured the company so that it’s in a position to realize a vision she and Paltrow share: to turn Goop into a “contextual commerce” brand, in which editorial and sales work hand-in-hand to sell product in a more seamless way than other lifestyle brands (such as Martha Stewart Living Omnimedia, from which Gersh stepped down as CEO in 2013). Gersh and Paltrow hope to sell Goop fashion and home collections and make the brand synonymous with chic, minimalist, high-quality living. Pop-up stores like the one in Chicago may act as testing grounds for more Goop-branded brick-and-mortars in the future. The pop-ups seem to serve another purpose: exposing the brand to people who have a strong opinion about Paltrow but have never visited her website.
“We’re living in such an exciting time where women feel that they have the capability and the permission to expand and to go into different areas,” Paltrow said[17]. “It’s wonderful to see women feeling entrepreneurial and bullish about what they can bring to the market and to the culture.” For her part, Gersh believes that brands gain their strength not simply by being attached to famous names, but for what they stand for. “I think you look at businesses that are being launched, I know they’re associated with celebrity, but they’re really associated with a set of values,” she told. “A brand is a set of values, so you look at Gwyneth’s values, everyone understood what that was, they understood the aesthetic, whether it was the conditioner for your hair, whatever it was, you understood what those sets of values were,” Gersh continued, referencing Paltrow’s propensity for pared-down, high-end style. “You look at Reese [Witherspoon’s Draper James], everyone understands it’s a Southern sensibility, everyone associates with that.” “When you’re thinking about it,” Gersh continued, “whether you’re a celebrity or anyone else, you need to have that set of values before you can go off and build a business, because you’re building it around a brand, which is a set of values. Once you have that set of values, you can start to build a business around it — I think you have to first figure that out.”
In October 2015 at the Fast Company Innovation Festival, Gwyneth Paltrow announced that she and her business partner Lisa Gersh are launching a new enterprise: a publishing imprint called Goop Press[18]. It will complement Goop, her weekly lifestyle newsletter that offers readers advice, recipes, travel guides and the opportunity to purchase products that Paltrow and her team have curated. “We’re really thrilled because we are starting a book imprint with Grand Central Publishing,” the actress and entrepreneur told journalist Katie Couric on the Fast Company stage in New York City. Grand Central published Paltrow’s previous cookbooks. “They’re great publishers, and so my next cookbook will be the first book on the Goop imprint.” Goop Press will start off by publishing four books a year.
