The Game with Alex Hormozi
Breaking Down Rihanna's $1B Brand: Savage X Fenty | Ep 825
Tue, 14 Jan 2025
Welcome to The Game w/ Alex Hormozi, hosted by entrepreneur, founder, investor, author, public speaker, and content creator Alex Hormozi. On this podcast you’ll hear how to get more customers, make more profit per customer, how to keep them longer, and the many failures and lessons Alex has learned and will learn on his path from $100M to $1B in net worth.Wanna scale your business? Click here.Follow Alex Hormozi’s Socials:LinkedIn | Instagram | Facebook | YouTube | Twitter | Acquisition Mentioned in this episode:Get access to the free $100M Scaling Roadmap at www.acquisition.com/roadmap
Chapter 1: What is the main focus of today's podcast?
Welcome back to the game. Today, I'm going to do something brand new that I'm really excited about. And this is a podcast first episode, which is a business critique. Something that I don't share as often as I probably should is that I spend a lot of my time looking at what significantly larger companies are doing and trying to think like, what can I do that they're doing to make money?
Chapter 2: How did Rihanna build her $1B brand?
What I want to do is break down Rihanna's Savage X Fenty. The big thing here is what is she doing that has created this massive wealth? So if you didn't know this, Rihanna's now worth $1.7 billion. And the vast majority of that is not from her music. It's actually from her companies. And so she has a skincare slash makeup line.
And she has a lingerie slash activewear slash loungewear line, which she started. She's done a lot of really clever moves recently. that I think are worth breaking down. Notwithstanding, I think the most impressive one is actually her membership offer altogether. So let's dive in.
Chapter 3: What are the key strategies behind Savage X Fenty?
I think there's five things that I kind of identified that I thought are worthwhile for us as business owners to kind of examine. The first one is she partnered with somebody who basically managed all of her deficits. And I think this is something that took me way too long as a business owner to kind of like wrap my head around. I always wanted to do everything. I wanted 100% of the pie.
But when I look at the wealthiest people in the world, none of them, like Mark Maron, none of them have 100% of their business. And so that's such an interesting lesson, like literally none of them have that.
And so that means that if I have a business that I have 100% of, that it means that I'm fundamentally don't, I'm not capturing as many stallions as I otherwise could, helping achieve this big goal. Because I have this kind of working thesis on the, hypothetical maximum size of a business.
It's limited by the collective intelligence and experience and knowledge set of the people contained within it. Now, that means that in the beginning, if you're a smart entrepreneur, then you can bring a lot of things to the table. But over time, you can only really live one lifetime. You can only learn so many things.
Chapter 4: Why is partnering important for business success?
Being able to attract people who can help you and sometimes partner, because sometimes the people who bring a lot to the table want a piece of the pie, and the best people often do, you need to be comfortable with that. And I think it's something that's going to be a really long time to make. And this is just like a great reminder. And so if you don't know, she partnered with LVMH.
And so LVMH is a conglomerate owned by Bernard Arnault, one of the richest men in the world, a sense of billionaire. And he's also, and I think this is unique, he's a sense of billionaire in a non-tech, non-technology sense of billionaire. And so he owns many brands,
that you have heard of, so Louis Vuitton, Christian Dior, Givenchy, I think I always pronounce it wrong, Hennessy, Tiffany, and like a hundred other ones that you've heard of, right? Birkenstock, they actually bought. Moet, which is a champagne company. I think they have Dom Perignon. They have a bunch, right? They have a lot of stuff.
The thing that they brought to the table, which basically enabled this from even being a thing, is that they brought brick and mortar distribution, number one. Number two, they brought retail and online sales experience. And then third, they brought manufacturing expertise globally. So they have 118 factories, they have 6,000 retail locations in aggregate.
And so they know how to move product and they know how to create product. So basically click to close from thread to someone's hands, they're vertically integrated. They know how to do the whole thing. Rihanna trying to relearn that from day one was really unlikely.
But the fact that she was able to go from basically zero to a, right now I think it's valued at around $2.8 billion in two, three years, is just, gives testament to how much the value of having a good partner that manages your deficiencies is. I want to be clear. Somebody's either got to have money you don't have. They got to have time you don't have or some sort of experience that you don't have.
And I would say I would put this kind of basis, some sort of experience or asset rather. Maybe I should alter that because I've always said money, time, experience. I might have to add asset to that list. I think I might have to add asset. Huh.
there you go we discovered that live they they have one of those four things uh that they can bring and also lvmh brings a nice uh brand boost to because it's largely luxury goods and so that's a really good association for rihanna now the second big thing that i think that she did really well i thought this was really clever was that she serves a really good market so she picked a growing market in a number of different kind of categories
So if we measure growing market by CAGR, so compounded annual growth rate, Loungewear is a 23% plus annual growth rate. So just to put that in context, if she just keeps the same market share, it would double in between four and five years. So like pretty impressive. So much faster than GDP growth at a nationwide level.
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Chapter 5: What market opportunities did Rihanna capitalize on?
The next piece is easy to find, so this is the asset she brought to the table in her deal with LVMH, is that she has this massive audience globally, and so she could bring that distribution to the table so they were easy to find for that target avatar.
And then finally, the growing, which I kind of covered first, she went after a marketplace that overall the demand for these types of products is going up year over year. So that's the second thing that I think she did really well. Now, the third thing is that she has a brand.
Now, rather than just say, yeah, she has a brand, I think it's probably more relevant to talk about what she did differently to build her brand. So Rihanna has a gazillion followers across her channels, but I think SavageXFenty, what she did that was brilliant about it, she did a WhisperTea Shout launch, which is the same framework that I have in the $100 Million Leads book.
And so she whispered it with just having one company that she was following, which she hadn't posted anything. So it was all this curiosity. And then when she teased it, she gave kind of an idea of what the product line was going to be about. And then obviously she made her shout component when she kind of officially released, you know, the first line.
She's been platform specific with her content. She's made native content for each platform. So IG, she does way more aesthetic, hi-fi, high production. And the only BTS stuff, so behind the scenes stuff, is on Stories. YouTube stuff, she does more like try-ons and fashion shows, and so people kind of get to see it being used.
And TikTok, she talks more about the product, more UGC stuff, more casual, right? And so she's very platform-specific with the types of content she's making on SavageXFenty for those platforms, which I think was wise. But I think it's also worth highlighting here that the corporate brand's significantly smaller than her personal brand, but it's catching up.
And the reason it's catching up is that she's leveraged affiliates in a really big way, which is the fourth big thing that she did. So obviously leverage is a huge talking point for me at Acquisition.com. I think supply and demand and leverage are the two greatest forces in business. And so from a leverage perspective, leverage, big lever number one she did was she did the partnership, right?
She got to tap into existing distribution, existing branding, existing manufacturing prowess, and existing retail and online sales knowledge. All of that she got to tap into day one, right? Now, what she brought to the table was obviously her initial boost of distribution. But what I think was really clever is that she didn't stop there.
Thank you.
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Chapter 6: How did Rihanna's brand approach differ from others?
If you're just like, man, I'm an influencer and I have my own shorts, but I can't get them to grow. It's like, yeah, because it's just about you. And there's only going to be a certain amount of audience that's going to mess with you. Now, obviously, that can grow over time, but But what she did is like, she's got the Hadid sisters. So she's got Gigi and Bella Hadid.
So she's got supermodels, right? And they have a very specific look. She's got Demi Moore, an older, right? She's much older. Demi is like 60 plus, right? And she has a different look. And then you've got like Izzo, who's younger and has a different body shape, right? And then you've got Normani, who's also a different skin tone and look and feel.
And so I could keep going on the list, but she has a lot of A-list celebrities that she was able to. Cindy Crawford, right? She brought in so many different age groups, different skin types, different beauty ideals. But I think the through line for all of them is that many of them are considered beautiful.
And so whether or not you agree or not, one of the people on the list you might consider beautiful. And then that would be the brand's entry point to you. Her message around inclusion and body positivity, because she's obviously gone through her weight loss and gain with pregnancy, et cetera, was a relevant factor in both the product line and also the affiliates that she chose to associate with.
And so what happens is there's this brand affiliate loop that gets created where the brand attracts certain influencers and affiliates who want to make that association. And then the affiliates then represent the brand and then reinforce, or obviously if you do it poorly, detract from the brand.
And so there's this loop of the brand gets reinforced, it brings in more affiliates and influencers, which if you create correctly, get the right influencers in, and then that then reinforces the brand, and then the virtuous cycle continues.
Some of the things that she did, and I think this is a highlightable thing before I get to the final portion, which is going to be about the offer itself, which I think was really brilliant, is that she tried to make it brand accretive, meaning she wanted all brands to benefit from the association. So what does that mean?
So one, everyone benefits from the LVMH Association, which is probably one of the highest tiered brands out there in terms of luxury, right? It's super ultra premium. And so everyone benefits from that association. So that's number one.
Number two is that because of the price point that she chose, because of the inclusive messaging, there's a wide percentage of the audience that would resonate with that. And so it wasn't an ask for, as hard of an ask rather, for her affiliates or influencers to make the association.
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Chapter 7: What role do influencers play in brand marketing?
So rather than saying, oh, you're gonna get a box of stuff every month, it's you're gonna get a credit and then you can spend it on whatever you want, which is crazy, because basically this is just like a recurring subscription to buy stuff, right? Which is just like getting a gift card every month, functionally. But the question is, how is she getting so many people to take it?
And this is where all the other benefits she's including are making this a compelling offer. Number one is that it's a discount. All right, so every member gets a discount on all products. That's not that uncommon, but it's up to 25%, so it's relatively significant.
To put that in context, I think like, I was clicking on her site, so it was like $12 and some change for some underwear, which then if you're a member, it's like $9.95, so it's $13 to $10. And then if you're, so that's 25% off, or that's more than, I think, 25% off, so pretty significant. Now, back to the bonuses. So number one is she's got the discount. Okay, cool.
The next thing is that they have exclusive sales and offers only for people who are members. So they get even more discounts from that. Number three. they have free shipping on all orders over $59.95. And so if they use the entirety of the gift card or the credit that they got that month, it's free shipping. So that's another bonus.
On top of that, so to reduce risk, remember, let's think through the value equation, right? You've got dream outcome, you've got perceived likelihood of achievement, which is reduction of risk, like the likelihood that they get what they actually want. We've got time delay, and then we've got effort and sacrifice, ease, convenience. If we're thinking through this, right?
The free shipping is a dream outcome thing. It's actually... In some ways, I think people probably consider free shipping probably an ease thing more than anything. I don't know why, because free shipping is kind of like an amorphous, like it takes on, there's so much association with shipping costs, I won't get into it, but it definitely removes the negative.
The next one is for reduction of risk, it's a 90-day fit guarantee. So probably traditional people, I probably should look it up, but I'm guessing it's 30 days. For members, it's 90. So the likelihood that you get what you want is super high. You got three months to return it. So that feels good. Now, on top of that, now, I'm not even getting to the big, the kahuna.
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Chapter 8: How does Savage X Fenty ensure brand inclusivity?
The kahuna, I'm going to tell you in a second, all right? And it's the last one. The next one is they get a cross discount on her skincare line and her makeup line. So you get 15% off that as well.
So that's one of the benefits when you start having conglomerates is that you can start off in cross-company promotions, which then just cross-sells customers, which is a great way to just make more money, right? It's basically being affiliate of one another. The next thing is that she gives an annual gift to everyone on their birthday, which I think is super clever.
I talk about this, actually it hasn't come out in my emails yet, which if you're not subscribed to the email, you should be. It's a one minute read. They're literally just money making tactics. And so this one is, she's giving a gift at people's birthday month. And so what's really interesting about this is that People are in their peak emotional state.
They're thinking about their last year, they're thinking about themselves a lot, like their birth month, their birth week, their birthday. I have obviously contrarian views on people who celebrate this a lot, but people do. If you give a gift in that moment, it's almost like you're a friend. Who gives people gifts on their birthday? Their friends.
What more valuable position could you have in a prospect's mind than their friend? I think it's really, really clever. And of course, it's a reminder, and when are people going to spend money on themselves? On their birthdays. When is there a special occasion that someone might dress up in lingerie? On their birthdays. When do you think someone's going to start a new fitness routine?
On their birthday. I think it's a brilliant idea on many, many levels. And obviously, the nice thing with underwear or something like that, it costs almost nothing. Now, the next thing is they get early access. So I see this as a speed or time delay thing. So they get early access. It's exclusive for new products and new drops.
So some stuff that sells out fast because she has such a large audience, they get access to it as a member, which is great. Okay, now I'll give you one more and then I'll give you the kahuna. So the one more is they give a free gift after your fifth purchase. So they probably figured out, because they're smart people, that their churn was probably right after the fifth month.
They give a bonus right before or after the churn point. Now, research typically suggests that you add this additional value prior to the churn point. And I think part of that is because if that's the churn point, like if that's the average churn, then there's people who are doing it before that, right? And so you want to capture before the churn point.
In this instance, there's kind of this idea of trying to get someone to stay until after. I don't know, but I'll just say this. Wherever they gave the gift is likely right around the churn point, either right before or right after.
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