Influencers beware: Converting YouTube fame to an IPO is not easy

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One of the most popular YouTubers in the world is a tall, rather awkward 25-year-old from North Carolina called Jimmy Donaldson, better known to his fans as MrBeast. He has more online followers than Elon Musk, makes millions of dollars in ad revenue and wants to turn his devoted subscriber base into a business. But swapping virtual fame for the real world is tricky. 

If you didn’t spend your teenage years glued to YouTube, Donaldson’s success may come as a surprise. The videos he makes are reminiscent of MTV’s Jackass: there is a lot of shouting and elaborate stunts. Escapades include squashing a sports car in a hydraulic press and running a train into a brick wall. Recently, more of his work has had a philanthropic bent. Video titles trade in big, eye-catching numbers: “1,000 Deaf People Hear For The First Time”, for example.

Donaldson does not have the attributes you might associate with superstardom. He has grown in confidence but can still look uncomfortable on camera. While his videos follow the faux-casual YouTube style of fast cuts and shots of friends laughing, he rarely looks relaxed. Yet his comment section glows with respect. Under a video of him sitting in a chair and counting to 10,000, one viewer wrote “This is handwork and dedication at its finest! his patience and mental fortitude is beyond, dont know how or where he gets the motivation.” 

The question for Donaldson and the other online stars like him is what comes next. Even the most successful content creator lives at the mercy of social media company algorithms, moderators and the vicissitudes of digital advertising. Whoever owns the platform sets the rules. YouTube, owned by Google’s parent company Alphabet, is currently trying to persuade more creators to upload short videos to compete with TikTok. TikTok has been threatened with bans in the US. As creators gain more followers, lack of control can start to chafe. Autonomy becomes a prized possession.

Content creation is gruelling work too, since audiences demand a constant stream of new videos — another incentive to build up offline businesses. He may be young, but it has taken Donaldson a while to reach his 178mn subscribers. He started posting on YouTube when he was 11. Speaking to podcaster Joe Rogan a year ago he described himself as “hyper obsessed” with the platform. He studied ways to make videos go viral, looking at how bright thumbnail images for videos were, for example. His own are cartoony and hyper-real.

MrBeast videos are a model of the genre: not too long and opened with explainers that are useful for viewers with wavering attention spans. He likes to get other famous YouTubers involved too. Recently, Felix Kjellberg — aka PewDiePie (111mn YouTube subscribers) — joined him on a rollercoaster in Japan.

As his audience grows, so do the number of businesses. As well as the 55 per cent of video ad revenue he gets through YouTube’s partner programme, his business endeavours include a ghost kitchen called MrBeast Burger and a chocolate bar company called Feastables plus investments in other creators via a fintech called Creative Juice.

Earlier this year, Donaldson tweeted out an idea to sell parts of his businesses “for billions of dollars”. He had previously mentioned the idea of an initial public offering. Last year, news website Axios reported that he was considering external funding that would value his business empire at around $1.5bn. In tech parlance, this would make him a unicorn. 

Celebrity-run businesses are not new. In the late 90s, David Bowie issued asset-backed securities based on revenues from his albums. George Clooney used to sell tequila. Rihanna has a make-up line.

For online stars who trade in views, however, valuations are still a work in progress. Even YouTube megastars can find that their names mean little to older audiences, hampering their chances of building a brand outside social media.

In 2022, an online media company made up of 93 content creators and esports competitors joined markets via a merger with a special purpose acquisition company. The FaZe Clan, as they call themselves, claimed a combined following of more than 500mn across multiple platforms such as YouTube, TikTok and Twitch. Revenue comes from sources including ads on videos and brand deals that include the gruesome sounding Orange Chicken Pizza Roll. But market interest in FaZe Holdings does not bode well for Donaldson. Spacs tend to open at $10 a share. FaZe Holdings now trades at less than 30 cents a share. 

Donaldson’s enthusiasm for an IPO appears to have waned. He sued Virtual Dining Concepts, the company behind Beast Burger, following customer complaints, and was counter-sued in response. All the while, the videos keep coming. Escaping the confines of YouTube is going to be difficult.

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