The Ryan Reynolds “Fast-Follower” Strategy
RockWater Roundup
RockWater analysis to make you a better investor and operator. Today we discuss Ryan Reynolds, Mint Mobile, and his “Fast-Follower” strategy to become a multi-billionaire.
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by Chris Erwin
Last week I saw the news about T-Mobile acquiring Ryan Reynolds’ Mint Mobile for $1.35 billion, and that Reynolds stood to make roughly $300 million from the cash / stock deal.
That felt like one of the largest celebrity paydays in a while from ownership specifically, VS endorsements or strategic partnerships.
I think of 50 Cent’s $100 million payday from his stake in Vitamin Water when it sold to Coca-Cola in 2007 (which inspired Flo Rida’s recent $83 million lawsuit win in Jan 2023 against Celsius energy drink), Clooney and his partners’ $1 billion sale of Casamigos tequila brand to Diageo in 2017, Kylie Jenner’s 2019 sale of a 51% stake in Kylie Cosmetics to Coty for $600 million, and Jessica Alba’s $130 million from the 2021 IPO of The Honest Company.
So the Mint Mobile news caused me to dig deeper into Reynolds’ business investments, and his journey from the silver screen to a widely diversified business empire. What I found is that Reynold’s team shows us a playbook for how creators can build a multi-billion dollar empire.
There are many key takeaways about this playbook that I highlight below, but the one that stands out is that Reynolds and his team seem to be extremely smart fast-followers, where they observe business and market trends, and then make very rapid and calculated moves to participate. Further, that they setup business vehicles that give the team ownership and control of IP and brand exploitation, and thus the chance to cross-promote their various holdings, and to earn ownership through commercial arrangements that also include revenue.
That means high upside at low cost.
Alright, to begin my analysis, I did a similar exercise to what I did for Channing Tatum last month….
The Ryan Reynolds Come-up Timeline
- In 1991 Ryan kicked off his acting career when he starred in Canadian-produced teen soap opera Hillside.
- In 1998 Reynolds had mainstream success with Two Guys, a Girl, and a Pizza Place, which ran for 4 seasons on ABC.
- Between 2004 – 2015, Reynolds hit widespread recognition with a wide body of working across comedy, action, rom-coms, drama, and animation including Blade: Trinity, Just Friends, X-Men Origins: Wolverine, The Proposal, Green Lantern, The Croods, and Turbo.
- In Feb 2016 Ryan achieved massive commercial and critical success with Deadpool. The movie cost Fox only $58 million to make, and it brought in $783 million in global box office.
- Of note, Ryan was only paid $2 million upfront, but was estimated to make $10M million due to box office success.
- Further, the movie was in development since 2000…yet another example of how long it can take projects to get made in Hollywood!
- Success led to sequel Deadpool 2, which was released in 2018. Global box office was $786 million, with a production budget of $110 million. Not bad for a sequel!
Now, this is when Reynolds and his business team start to make some incredibly smart moves. They leverage Ryan’s massive global fandom and audience, as well him (and his team’s) creative smarts, to create real business leverage.
Ryan Reynolds’ Timeline of Business Investments
- In Jan 2018 Reynolds founded production company Maximum Effort, and set up a first-look deal with Fox. This gave Reynolds a vehicle to more deeply participate in the economics of the various film, TV, advertising, and other content projects he’s involved in, and to also have control of IP that could later be exploited.
- In Feb 2018 Reynolds acquired a “significant stake” (I estimate 20-40%) in liquor company Aviation American Gin, a brand that wasn’t well known at the time. The timing was likely inspired by Clooney’s $1 billion sale of Casamigos to Diageo just the year prior, and the rise of Alba’s The Honest Company. After the investment, Reynolds became the brand’s creative director, board member, and got a title of “co-owner”, which was key to drive better marketing. Positioning celebrities as an owner VS an endorser helps build deeper trust and affinity between the brand and consumers in marketing campaigns. And Ryan has done this for other investments like Mint Mobile, saying in ads he’s “the owner”, though in reality he only owned a minority stake. Maximum Effort also produced the witty, tongue-in-cheek content ads for Aviation, which was very aligned with Reynold’s Deadpool personality. I’d expect there was a commercial deal done between Aviation and Maximum Effort as part of the investment deal, which would grant Reynolds additional revenue.
- In Nov 2019 Reynolds bought a 20-25% stake in Mint Mobile, when it was spun-off from Ultra Mobile. An interesting move when you consider the target demos of pre-paid phone plans, which typically target immigrants, youngsters, and low-income populations. I’m curious to what research Reynolds’ business teams did on his audience reach to understand the demo overlap. The Mint Mobile customer feels different from that of Aviation Gin, but perhaps Ryan’s audience is so large that the strategy was to build ownership in a portfolio of products that cater to his different audience personas. It clearly paid off.
- In Jul 2020 Reynolds joined the board of Match, the parent co of Match, Tinder, Hinge, OKCupid, and many other online dating platforms, when Match was spun out of Barry Diller’s IAC. Reynolds likely received a stock options grant. Based on website, it doesn’t seem Reynolds is still a part of board.
- Aug 2020 Diageo bought Aviation Gin for $610M, which also includes an earn-out over 10 years. Assuming Reynolds owned 20-40%, that’s a nice $122 million pre-tax payday. Reynolds still maintains an ownership interest, which I’d guess is in the low to mid single digits.
- In Nov 2020 Reynolds and business partner / fellow actor Rob McElhenney acquired struggling Welsh football club Wrexham AFC for 2 million pounds. His company Maximum Effort then co-produced a 2022 TV docuseries Welcome to Wrexham on FX. The format was a “fly on the wall” POV of a new owner with no experience…I didn’t see the series, but this feels like it has some Ted Lasso vibes. Very smart, as the club needed both investment capital and new audience, which the docuseries likely helped. I bet this move was inspired by the success of Drive to Survive, the docuseries that has massively grown Formula 1’s US and global audience. It seems that Reynolds and his team observe key trends in the media market, and then move quickly to take advantage. Being a fast follower, and improving upon past industry benchmarks, can be a very smart move. Particularly when you have the audience reach and creative smarts of Reynolds and his Maximum Effort team!
- I also liked how Reynolds asked for Welsh subtitles for his action feature Red Notice on Netflix. A smart move to localize the content for the Wrexham AFC audience, and build even more fan affinity. Case in point, Reynolds and McElhenney won an award for promoting Welsh culture in 2022. The points keep coming!
- In 2021 the marketing division of Maximum Effort was sold to MNTN, an advertising software company (the production company will remain separate). As a reminder, ME marketing was behind the numerous ad campaigns for Aviation Gin, Mint, Match, Deapool, and more. Likely there were commercial deals done between ME and Aviation Gin, Mint, Deadpool, and Wrexham. More revenue streams, more control, more audience sharing, and more upside for Reynolds!
- The CEO of MNTN said it was a unique opportunity to combine creative with media. Today Reynolds continues to serve as Chief Creative Director. What I find unique about ME’s marketing efforts is how they blend sponsorships, like Arizona Iced Tea and Mint Mobile, or 1Password and Wrexham AFC, or this Inception-like ad blending Aviation Gin, the 6 Underground movie on Netflix, and Samsung. And most of the ads that I found on Reynold’s YouTube channel are under 1 minute long. Between the whip-smart creative, short length, punch lines, and celebrity owner association, the ads feel different than other ads out there. I was definitely impressed as I dug in.
- Another fun fact, ME marketing also produced the ads for BettyBuzz NA sparkling drink mixers, a brand owned by Reynolds’ wife Blake Lively…keep it in the family!
- In May 2021 Reynolds invested into Wealthsimple with Greylock, in a $610 million funding round that valued the company at $4 billion. Wealthsimple is a Canadian fintech company, and the round included other Canadian investors like Drake and Michael J Fox. Again, this is a smart strategy to align celebrity personalities and fandoms with target consumers, similar to the Wrexham AFC / Welsh example above. Of note, fintech was riding a massive wave during COVID e.g. the Robinhood / Gamestop / wallstreetbets subreddit craze. So I see this as another example of Reynolds and his team observing a market trend and quickly finding a way to participate.
- In Jan 2022 Reynolds invested in password manager and cyber security company 1Password, when the company raised $620 million at a $6.8 billion valuation. As part of the deal Reynolds would serve as face of the company and star in its commercials, through his Maximum Effort vehicle. And again, ME found a unique way to promote Reynolds’ various holdings in one fell swoop, like in this commercial promoting 1Password alongside the Wrexham AFC football club.
- In Aug 2022 Reynolds acquired a minority stake in Fubo TV by entering into a first-look unscripted production pack via Maximum Effort. The goal was to create a Maximum Effort linear channel with original content. The stake was estimated to be worth $10 million. Just 3 days ago Fubo announced it’s rebranding, and who led the effort?! You guessed it, Maximum Effort. The sports media and live rights market has exploded in recent years, which we covered extensively in our 2023 Exec Playbook and blog. Thus a good move for Reynolds to double down in sports media. And there are clear synergies with past investments, where perhaps planned original content and live rights for the Wrexham AFC club can live on Fubo. Another chance for Reynolds to will big success into existence!
- In Feb 2023 Reynolds partnered with an investor consortium led by Toronto real estate developer The Remington Group to bid on the Ottawa Senators NHL team, which would include the building of a new arena. The bid deadline in early March 2023 has already passed, and 9 bidders including the Remington consortium are up for consideration. This could be an interesting move for Reynolds to not only go even deeper in sports, but also expand into significant real estate exposure through the new arena (unless there are ownership carve-outs by Remington, though I don’t know the deal structure details). Again, I like the alignment of media / sports / audiences. In bid success, Maximum Effort would likely produce a content series similar to what they did for Wrexham AFC with Welcome to Wrexham, and help reinvigorate existing fans, and recruit new ones.
- In Mar 2023 Mint Mobile and its parent company Ka’ena Corp were sold to T-Mobile for $1.35 billion. While the deal is not yet closed, it’s estimated that Ryan will take home roughly $300 million based on his 20-25% ownership stake. Post acquisition, Ryan will stay on in a creative role.
When you put all this together, the above timeline presents an exciting playbook for creators and celebrities who aspire to be on a path to a multi-billion dollar empire.
It starts with building a critical mass of audience, which in today’s creator economy comes with A LOT of hours and efforts, extreme discipline and applied learnings, and definitely some luck. And then, setting up investment and operating vehicles to have ownership and control over IP and marketing opportunities, where you can own the audience, and push them to various portfolio holdings, and find unique ways for them to work together. And then making strategic investments that align with your content sensibility, audience demos, and reflects bets that ride the wave of market and dealmaking momentum.
As Reynolds is showing many of us, you don’t need to be the first-mover and innovator. You just need to learn how to listen and observe, and then have the ability to make rapid yet calculated decisions for how to participate.
Kudos to Reynolds and team. Excited for what they do next. Personally, I’d like to see some IP that they incubate and own outright, and then repackage for new consumer experiences outside the screen, similar to what Channing Tatum and his partners did with Magic Mike.
Reynolds and Maximum Effort, if you want to riff on these ideas, just DM me. Tatum’s team did 😉
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