Whenever YouTube superstar MrBeast crops up in business or tech headlines, you’re guaranteed to find a slew of bewildered comments: Who is this guy, and why is a YouTuber such a big deal? Am I old if I don’t know who this is? Why is he younger than me, yet makes so much more money? Is this dude actually giving people free islands, or is he full of it?
If you don’t know who MrBeast is, that’s fine. That just means you probably aren’t on YouTube that often, or that you’ve never wondered what happens if you put 100 million Orbeez in your friend’s backyard. But let me ask you this: Have you heard of Cribl, Snapdocs, Sayo Bank or fabric? I haven’t either, those are just some names of companies worth more than $1 billion that I pulled off Crunchbase.
According to Axios‘ sources, MrBeast — the 24-year-old whose name is Jimmy Donaldson — is trying to raise $150 million for his business, valuing it at $1.5 billion. It might seem hard to imagine how a content creator’s business can be worth that much, but the North Carolina resident has built an impressive empire. With 109 million YouTube subscribers, MrBeast runs the fifth most subscribed channel on the platform, and he’s the top earner among U.S. YouTubers. Across his five other channels, he’s amassed another 82 million subscribers — and that’s not even counting his three Spanish language channels, which have about 33 million subscribers combined.
YouTube is one of the most profitable platforms for creators, because you can earn 55% of ad revenue as a member of YouTube’s partner program. But MrBeast has expanded his business beyond the realm of social media — he has leveraged his brand to open up MrBeast Burger, a ghost kitchen food chain, and a snack company called Feastables, which raised $5 million this year at a $50 million valuation from 776, Shrug Capital and Sugar Capital.
But MrBeast’s business model isn’t as straightforward as making videos and raking in ad revenue. His uploads, which center on extreme stunts and competitions for cash prizes, cost an obscene amount of money to make. Last year, his 25-minute “Real Life Squid Game” video required a whopping $3.5 million to produce, including more than $456,000 in prize money. For comparison, the nine-episode “Squid Game” series cost Netflix a total of $21.4 million, averaging out to about $2.4 million per hour-long installment.
A few weeks ago, MrBeast said that he spends $8 million per month on his businesses. Just last September, MrBeast told the creator-focused YouTube channel Colin and Samir that he spent $4 million every month. That’s a big jump.
Some companies reach unicorn status (a valuation above $1 billion) before even turning a profit. Yet Forbes estimates that MrBeast made $54 million in 2021, so he’s already proven to VCs that they can bet on him to return their investment.
“The videos get views even if I don’t upload, so if I really wanted to, I could just live off of the money that the views made,” MrBeast told Insider. But if the 24-year-old wants to grow even more quickly and turn a larger profit, then venture capital funding might actually make sense.
MrBeast has already taken funding on a smaller scale from companies like Jellysmack and Spotter. Jellysmack uses AI to maximize top creators’ cross-platform growth in exchange for a revenue cut; Spotter gives YouTubers large sums of upfront capital in exchange for revenue from their back catalog. But as one of the most successful content creators in the world, MrBeast can go even bigger with venture capital.
But is going bigger always better? MrBeast’s business model is like a snake eating its own tail — no one is making money like he is, but no one is spending it like him either. He described his margins as “razor-thin” in a conversation with Logan Paul, since he reinvests most of his profits back into his content. His viewers expect that each video will be more impressive than the last, and from the outside looking in, it seems like it’s only a matter of time before MrBeast can no longer up the ante (and for other creators, this has led to disaster). So, if MrBeast’s business really is a unicorn — I’d wager it is — then he has two choices. Will he use the cushion of $150 million to make his business more sustainable, so he doesn’t have to keep burying himself alive? Or will he keep pushing for more until nothing is left?
MrBeast’s ‘Real Life Squid Game’ and the price of viral stunts
Comment