MrBeast Buys Vouch, a Sign of More Planned M&A?
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss MrBeast’s acquisition of Vouch, including the deal value prop, why it’s a bit of a head scratcher, and what the deal might signal for future MrBeast M&A.
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MrBeast bought Vouch, a “LinkedIn for Creators”.
This seems to be his first acquisition, and the rationale is a bit of a head scratcher to me.
It also raises the question; is this a sign of more M&A to come?
Let’s break it down…
💰SELLER: Vouch
- Online networking tool for content creators
- Has matched > 35,000 candidates with jobs
- Founded 2021 by Marty Pesis, was 5th employee at Cameo (VP of Growth)
- Goal = “Become THE hiring platform for creator economy”
- Competition includes Roster, CreatorEconomyJobs, YTjobs, YT.careers
- Used by creators like Yes Theory, Jesser, Stokes Twins, Safiya Nygaard, Danny Duncan, AMP
- Investors include Seven Seven Six, Liquid 2 Ventures, Shrug Capital, Niche Capital, WorkPlay Ventures, and angel investors including Andreas Klinger and Siqi Chen
🔎PRODUCT OVERVIEW: Vouch
- Candidates create profiles to showcase skills and list creators they previously worked with
- Creator can view applicant’s profile page and application, and DM them within app
- Careers pages and job boards for creators to showcase their teams
- AI-powered matching engine for candidates and creators
- Tool for creators to launch custom-targeted job posts
💸BUYER: MrBeast
- YouTube’s most subscribed creator
- Based in NC, estimated 200-300 employees
- Founder Jimmy Donaldson started posting videos in 2012
- Multiple biz lines, from content production to brand partnerships and CPG
- Has faced recent controversy about hiring practices, production environment
- Estimated enterprise value of $700M
🌟TENTPOLE PROJECTS: MrBeast
- Lunchly, a Lunchables competitor, with Logan Paul and KSI
- Feastables, a chocolate candy bar, estimated $100M+ revenue
- Host of upcoming game show, Beast Games, on Amazon Prime
- MrBeast Burger, a partnership with Virtual Dining Concepts
- Finger on the App, a multiplayer mobile game via a partnership with MSCHF
- Various investments: Backbone, Juice Funds, Current
- Philanthropy: Team Trees, Team Seas
🤝DEAL DETAILS
- Announced 10.3.24
- No deal details were disclosed
🤝DEAL VALUE PROP
- Improve MrBeast’s hiring experience
🧐POST DEAL OPS
- Vouch.app public-facing website is on pause (likely indefinitely)
- Vouch CEO will focus on other company Troveo, a content licensing biz that helps creators get paid by AI companies who seek content to train their models
🤔WHAT ELSE I FIND INTERESTING & DEAL INSIGHTS
No deep dive financial analysis this week, since no deal details were disclosed.
Also, seems this deal was a relatively straightforward one, and since I have LA travel this week, will keep the below analysis brief!
The deal rationale and planned internal-only use is a bit of a head scratcher…
The initial press coverage about the deal included some speculation that MrBeast was pausing the public-facing vouch.app, but then had plans to make it external facing again sometime in the future.
But that was put to bed quickly by Kara McLoud, the head of talent acquisition for MrBeast. In a comment on my LinkedIn post, she wrote…
“It’s just an internal tool 😁 nothing more than that. It wont be used externally, just helping us improve our candidate experience when applying to jobs.”
Alright, so the app will stay as an internal hiring tool for the MrBeast team.
That’s a bit of a head scratcher for me.
If there are no plans to make Vouch public again, grow usage, and in turn grow financial performance and thus enterprise value, then why do the deal in the first place?
Buying a company is a lot more work than hiring freelance recruiters, making 1 to 2 more HR team hires, or using a white label solution.
One way it could have made sense if it was an asset sale for < $100k, or some very low purchase price, where MrBeast only gets the tech platform / brand and IP / website urls / etc, and no team members.
And yes, these type of asset sales do happen – we actually did one over the past year.
But still, the time and fees in doing basic financial / tech / legal due diligence, papering the contract, and negotiating all deal points, even for a very early stage business, takes time and money.
And MrBeast would still need additional HR staff and support to support the increased talent flow from the now owned hiring marketplace.
Without further deal details, this makes me curious if there was something else to this deal.
Also worth considering, is that sometimes these deal announcements are a chance for the seller / founder to get a nice PR “exit story”, even if not a material financial outcome.
That may be the case here. Which is fine – its just important to be aware of this when evaluating merits and implications of M&A for broader deal market.
What might this signal for future MrBeast M&A?
When researching MrBeast, I thought I’d find a history of “lite” M&A in helping to grow the business and his staff. Perhaps acqui-hiring some production or brand partnership teams over the years. But I didn’t find any reports of these types of deals (though always a chance they happened below the radar).
Instead, I saw that Jimmy has extended his business through strategic partnerships, like Virtual Dining Concepts for the MrBeast Burger launch, leaning on former management company Night, and hiring seasoned execs to run his various business lines, from content production and philanthropy to Feastables (which has a VERY seasoned executive team in place).
From what I’ve read and gathered about founder Jimmy Donaldson, he has a very particular way of building and operating his businesses – he likes to set his own vision and path, and doesn’t follow other people’s playbooks. This is highlighted in his long form podcast interviews, like the one he did with Joe Rogan, and in his recently leaked production guide.
Therefore, this lack of M&A history is not surprising.
Though, with the purchase of Vouch, this could be a signal that Jimmy and his team will be opportunistic for deals that support key growth goals, and where they can help his speed to market. This sentiment makes me think about MrBeast leaving exclusive representation with management company Night earlier this year (my analysis here), which means Jimmy may newly want to bolster his on-staff sales executives and campaign execution teams. He can hire for these roles (and is likely already doing so), though if he desires speed to market, a pipeline of new and incremental deal flow, and experienced leadership and teams with defined systems for servicing deals at scale, an acquisition of a digital agency could be something his team is thinking about.
Though I bet Jimmy would want a brand partnerships team just fully dedicated to his business, which may not be appealing to a digital agency accustomed to working with a variety of talent and media partners. But, after the Publicis / Influential deal and its massive $500M price tag (my deal breakdown), many media and talent rep co’s are actively thinking about how to build larger brand partnerships businesses that can work with a wide variety of talent beyond just the “represented roster”. Jimmy has incredible inbound deal flow and brand cache, and could be well suited to catalyze rapid growth of a large, modern branded content and influencer agency.
But my gut says he just wouldn’t be into that.
He seems much more keen on building a 360 media brand, with a primary focus on developing new premium content initiatives, reaching more audiences and fans via new distribution channels (like the Amazon Prime deal), and creating new business revenue streams that build upon his and/or newly incubated IP (like Feastables and LUNCHLY) and that also reach customers through new channels and experiences, like CPG on retail shelves.
So maybe prospective M&A will be in these identified lanes.
But is Jimmy setup for this? M&A is a major new muscle that is hard to do at scale.
Does he have dedicated corp dev teams, who know how to source and find deals with strong strategic fit, and who have experience ensuring there is post-integration success?
Not sure he’s there yet. And again, he may not even want to be.
Jimmy’s flavor has always felt very DIY, but this Vouch deal does start to make one think. Is this an initial experiment to test the M&A waters, or are we just way overthinking this…
Alright, I have to start my drive to LA for some afternoon meetings. See you next week with another deal or industry breakdown.
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I’m the founder of RockWater Industries. We do financial and strategy advisory for media, agencies, and creator economy. From M&A and fundraising to consumer research and go-to-market planning.
DM me on LinkedIn or email me chris @ wearerockwater dot com
