Fame & (More) Fortune

Stars Turning into Captains of Industry

As more celebrities become entrepreneurs, their efforts offer business lessons for the rest of us.

By Mike Drummond

Anson Williams was directing an episode of Melrose Place when he heard the buzz.

It wasn’t coming from rabid fans of the ’90s soap opera, the must-see, prime-time show of its day. The excitement was humming from the

makeup trailer. The cast, which included Heather Locklear, Marcia Cross and Andrew Shue, was raving about the handmade cosmetics that makeup artist JoAnna Connell had concocted.

Williams, who cut his TV chops as Warren “Potsie” Weber on the ’70s hit Happy Days, experienced an entrepreneurial epiphany – produce and market StarMaker, a line of Hollywood beauty and health products for the masses.

“You should always look for opportunities,” Williams says. “I don’t care if you’re a dishwasher. And if you are, there’s opportunity to develop unique soap.”

Living his credo, Williams and Connell are expanding product lines for health-conscious boomers. These include aids to keep sweaty palms dry without the type of aluminum used in deodorants, and an eco-friendly spray to reduce shoe-borne germs.

“At a time when healthcare expenses are rising, it’s great to have products that you don’t need prescriptions, FDA approval and a lot of money for,” he says. “There are other options.”

Williams is among current and former celebrities who have parlayed their public cachet to reinvent themselves as entrepreneurs.

Paul Newman founded his all-natural line of Newman’s Own foods. Sean “Diddy” Combs has built a mini-empire with his Sean John clothing and new fragrance lines. And, of course, the queen of entrepreneurs, Oprah Winfrey, has morphed from mere talk show host to founder of Harpo Inc., which encompasses television and film production, magazine publishing and online media.

Stars possess key advantages over less famous entrepreneurs. Most have tons of start-up capital to begin with – and can afford to prop up struggling ventures until they become profitable. They typically already have ties to upper rungs of the entertainment world. And their celebrity status imbues their businesses with built-in sizzle.

Celebrities also can be glorious train wrecks – who would buy hair products from, say, Nick Nolte or children’s books from the likes of Lindsay Lohan? Then again, you can’t help but watch train wrecks. That’s why AT&T employed profane, verbally challenged rocker Ozzy Osbourne to shill text-messaging phones.

Clearly, when it comes to launching a start-up, celebrities have a leg up. Yet setting aside the octane of fame, celebrity entrepreneurs offer a variety of accessible, universal business lessons for the rest of us. These include the value of networking, the importance of brand management, the need to maintain customer satisfaction and the power of marketing.

Stars are masters of networking, which typically takes the form of club and party hopping. But you don’t need VIP lounge access to conduct business outreach. Consider joining a service club such as Rotary or take part in community mixers. Checking with your local chamber of commerce is a good place to start.

Astute celebrities know how to manage their image. Oprah has maintained strict control of her brand, spurning requests for her to lend her name to a wide variety of products. Everything with her name on it is put out by her company under her direct supervision. Moreover, her magazine (not to mention her personal/professional on-camera demeanor) allows her to dictate largely how she’s portrayed, rather than letting the tabloids hijack her narrative.

Paul Newman, meanwhile, was a great example of a famous philanthropist who knew how to treat customers. He left us last year, but his company is going strong. Not only are Newman’s Own products competitively priced, they maintain high quality across the board. His customers demand nothing less, and the company consistently meets and exceeds those demands.

And then there’s marketing.

Aaron Walton, co-founder of branding firm Walton | Isaacson, has created some of the most successful celebrity/business partnerships in the industry. When you think of Britney Spears and Pepsi, Reba McIntire and Whirlpool, and Led Zeppelin and Cadillac, think of Walton.

“Sometimes,” says Walton, “the best entrepreneurs are not the best marketers. Yes, they’re passionate about their service or product, but they may not have the necessary skill set to really market it to an audience.

“What celebrities understand in ways maybe other entrepreneurs don’t is how to market themselves and how to sell themselves,” Walton adds. “For most celebrities, marketing is part of their DNA. They have a sense of wanting to be out in the public on certain things. I don’t think that’s bad, by the way.”

Smart entrepreneurs will recognize their own marketing weaknesses, Walton says, and seek to align themselves with those who know “how to fill in the voids.”

Some celebs seem to “run” their businesses on autopilot or as a diversionary afterthought. This would be the kiss of death for mortal entrepreneurs, who need to keep their hands on the business throttle and their eyes focused on needs of customers.

Paris Hilton sells a line of jewelry, fragrances and clothes, among other things. She’s listed as president of three businesses, Paris Hilton Entertainment, Paris Hilton Enterprises and Heiress Records. Her Web site says, “Paris Hilton takes an active role by overseeing product development, design, marketing, and promotions for Paris Hilton Entertainment.”

Yet it’s hard to conceive she has the same aggressive oversight and command of her enterprises that Oprah has over her empire.

Hard for the Money

While converting fame into another career as an entrepreneur is seemingly a rote process by now, there are pitfalls. Namely, credibility.

Celebrities – and ordinary folks, for that matter – can ill afford to back bad, dangerous or poorly made products.

“You don’t want to become the Milli Vanilli of entrepreneurship,” says Walton.

When it comes to working with stars who are looking to pursue business interests, Walton prefers to deal with those who have “skin in the game,”

“There’s much more incentive for them to participate in all the things needed to do to sell the product,” he says, “like meet with customers, do interviews, meet with business partners.”

This isn’t even a choice for non-famous entrepreneurs. Tending to the demands of the business is mandatory for survival.

When Walton evokes the name of Earvin “Magic” Johnson, he speaks with a reverence for the former Los Angeles Lakers point guard. Not for the ex-NBA’s prowess on the court, but for the keen understanding of his market.

Magic Johnson Enterprises forges alliances with corporations to drive economic development in ethnic, urban areas. Walton recalls the time Johnson and Starbucks CEO Howard Schultz were talking about locating the high-end coffee stores in urban cores.

“I know scones make a lot of sense for some markets,” Johnson told Schultz, “but in urban settings those won’t sell. We need to replace them with sweet potato pies.”

Johnson also had noticed lines out the door at Starbucks stores in certain Hispanic markets. It’s because most were waiting for iced drinks, but the Starbucks template usually called for only two blenders. He recommended more blenders to improve traffic flow and boost customer satisfaction.

“Here’s a guy who understands his market,” Walton says. “Magic is someone who not only understands what his celebrity can do for enterprises, but what his celebrity can do for philanthropic causes. He helps provide jobs and a bigger tax base. I’ve been blown away by what he’s done.”

The subtext of Walton’s message is no matter where you stand in the velvet rope hierarchy, being an entrepreneur takes hard work.

Former Good Morning America host Joan Lunden discovered this when she set out to produce and market her KinderKord, a new wrist tether that keeps parents connected with their small children.

“I thought that knowing how other companies had used me to sell their products would be significant for getting me in the door,” she says. “But as I went through the process of making and designing the product, I came to realize if it didn’t meet the market need and quality and safety standards, then it wouldn’t fly. The (famous) name only goes so far.”

Dayna Steele, author of Rock to the Top: What I Learned about Success from the World’s Greatest Rock Stars,

is a former Texas radio jockey who now works the speaking circuit. She cites Sammy Hagar, ex-frontman for Van Halen, as an example of hard work and determination.

Hagar initially struggled to get consumers to take his Cabo Wabo tequila seriously. Yet he persevered and in 2007 he sold 80 percent of the business to Gruppo Campari for $80 million.

“You have to be sure it’s a quality product and you better be involved,” she says. “Sammy was very much a part of the development and marketing.

“Sammy was up at 6 doing morning radio, and then he’s on stage and then he’s on a bus or a plane for the next city,” Steele adds. “People would ask him, What’s your secret? He’d say, ‘Call me in my office at 10 o’clock at night and I’ll tell you.’ It’s about working. There is no magic pill.”

Anson Williams – TV star in the ’70s, TV director in the ’90s and an entrepreneur of beauty and health products today – can relate.

He says he didn’t realize how hard it would be to get their StarMaker products into mass production. But the hard work paid off.

“The first time we saw our product going down the production line,” he says, “I never felt so American.”

Williams notes that fame is a “nice marketing tool” to open doors and get initial meetings. “But after that, there’s so much more you have to go through to solidify everything. Fame helped, but it didn’t sell the product.

“You have to work the spark and push ahead,” he adds. “But in the end, there’s so much opportunity for inventors – big and small.”