Superstar NBA player LeBron James — one of the greatest basketball players of all time — earned approximately USD $88 Million in 2020.

To put this number in perspective, in 2018, in order to be in the top 1% of earners in the United States, you would need to have earned at least $737,697 per year. However, to be in the top .01%, you would have needed to earn at least $2.4 Million per year.

Needless to say, LeBron is head and shoulders above the minimum of the top .01%, but how does he stack up next to a 22 year-old YouTuber?

Enter Jimmy Donaldson, better known as MrBeast, and in 2020 at only 22 years old, he earned USD $97 Million USD.

Remember when Oprah gave away a car to everyone in her audience? MrBeast regularly goes viral on Youtube for doing giveaways like this — except on a much larger scale.

Jimmy gives away millions in cash, Lamborghinis, diamonds, houses, and even an island.

All together now… HOW IS THIS POSSIBLE?!

The MrBeast Business Model Explained

The Revenue

According to Noah Kagan’s revenue analysis, MrBeast made $97 million from the following categories:

1. YouTube Adsense — $14 million
2. Brand sponsors — $11 million
3. MrBeast Merchandise — $72 million

I love you Noah, but I don’t agree with your calculation of merchandise sales. ($72 million = 1 million monthly visitors x 20% conversion rate x $30 average order value x 12 months)

Using a more conservative conversion rate, I estimate the number is closer to $19 million — still very healthy.
($19 million = 1 million monthly visitors x 4% conversion rate x $40 average order value x 12 months)

Does this mean he’s not making more than LeBron? Not so fast, there’s more to unpack.

How it Works

In a nutshell, MrBeast leverages sponsorship dollars to go viral, which he then converts into fans who buy his products.

Here’s an example:

Let’s pretend that Honey pays MrBeast $100k for a sponsored video.

MrBeast knows large prize giveaways, similar to Oprah giving away cars to everyone in her studio-audience, will go viral on YouTube.

So Jimmy gives away $100k in cash and goes viral — generating millions of views in turn.

At the end of the day, Jimmy doesn’t make any money on the $100k, because he gives it all away in prizes, but he does get paid by Youtube for each view, and in turn acquires new subscribers, which ultimately leads to people buying merchandise from his website.

Again, the magic is that he used another brand’s advertising budget to grow his own brand.

While he may not have taken home what LeBron did this year, Jimmy, aka MrBeast, is building what could be a billion dollar business. Mr Beast Burger — a digital food brand in 300 locations, Finger on the App — a social gaming app, and MrBeast Merchandise are a few examples of how the brand monetized in 2020 — and it’s clear to anyone watching from the sidelines that this is just the beginning.

According to Reed Duchscher, Jimmy’s manager and business partner, MrBeast Burger has ambitions to be in 2500 locations (currently in 300 locations in the US) and to compete with the likes of Five Guys.

How else can MrBeast grow revenue?

• High margin Direct to Consumer— think Kylie Cosmetics
• Gated Content — think Logan Paul’s Maverick Club
• Esports — think 100 Thieves

You have seen this model time and time again. A celebrity or established brand will add new lines of revenue to their business because they have attention, distribution, and a very low cost of acquiring new customers because of their loyal following.

Here are some examples you may recognize:

• George Clooney — Casamigos Tequila
• The Fat Jewish — Babe Rosé
• Emma Chamberlain — Chamberlain Coffee
• Spittin Chiclets/Barstool Sports — Pink Whitney
• Michelle Fong — Ipsy

Is MrBeast capable to building a nine or ten figure product himself?

With a staggering 50 Million followers on Youtube (as of January, 2021) and growing, it’s not unreasonable to think that it’s within reach.

If you’ve built a great product, you’ll need an audience. And if you’ve built a captive audience, you’ll need a great product. — 2PML

In the graphic above, we commonly see Version 1 and 2 in the market, where a company will develop a product then launch an ad campaign to acquire customers. Online creators are now starting at the opposite end (Version 5) where they first build a massive audience, often over a period of multiple years, then find a product that appeals to that base.

Once again, what MrBeast has done is leveraged other company’s advertising budgets to get his brand to Version 5 — a place where he has a large customer base that he can sell multiple products into for next to no incremental cost.

It’s worth repeating because it’s a strategy that a lot of creators and businesses can apply themselves to grow their own following.

What’s possibly most compelling about Jimmy is that he’s building his business to give it all away to people in need. His long term ambition is to open hundreds of food banks/homeless shelters around the world and give away all of his money.

Even if MrBeast becomes a billion dollar brand, and out earns LeBron, it seems that he will follow in the footsteps of Bill & Melinda Gates by giving away most of his fortune.

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