Narratives are the most powerful tools of our age. Each week, I deconstruct the dominant ones behind the success or failure of businesses, leaders and governments
Good Morning Dear Reader,
Earlier this week, Arundhati, my colleague and co-author of Ka-ching! (yes, I know we picked quirky names for our newsletters), said that the time had come to get some overall feedback. We have been writing this new line-up of newsletters for over a month now, so it was about time. I agreed.
The most elaborate response to this came from Praveen, author of The Nutgraf—the first newsletter The Ken launched over two years ago. Distilled down, what he had to say was this: more than feedback, what matters is that we show up. Every week. Week after week. Even when we don’t feel particularly inspired to. We just write.
In short—we show up, and keep on showing up.
This is probably the most crucial, and often forgotten, lesson that any storyteller needs to learn. The storyteller has to tell the story. On bad days and on good days. We need to research, plot, plan, drink a lot of coffee; but at the most basic level, we just write the story.
Franz Kafka, one of the legends of 20th-century literature, put it best:
“You do not need to leave your room. Remain sitting at your table and listen. Do not even listen, simply wait, be quiet, still and solitary. The world will freely offer itself to you to be unmasked, it has no choice, it will roll in ecstasy at your feet.”
But telling a story, however hard, is still only half the job done. You also need someone to listen to it. And if a story is to grab attention, the storytelling needs some drama and theatre—elements that make a narrative memorable.
They have their place too. And that’s what this week’s issue of Inciting Incident is about.
Nykaa's celebrity moment
On Wednesday, beauty and fashion retailer Nykaa's parent company—FSN e-Commerce Ventures—floated a Rs 5,352-crore (~US$720 million) initial public offering (IPO) and hit a valuation of Rs 1 lakh crore (US$13.5 billion). Several news outlets celebrated Nykaa’s market debut, which has tripled its founder Falguni Nayar's net worth and turned her into India’s newest billionaire. However, at least three publications focussed on an entirelydifferentfacet of the same event—model-turned-actor Katrina Kaif’s presence at Nykaa’s stock market listing.
All the news reports carried Kaif’s photographs, mentioning that she had launched a product line with Nykaa and invested an undisclosed amount in the company last year.
For celebrities to not just endorse startup brands, but invest in and/or partner with them, is not a new trend for the US’ Silicon Valley scene. But India has been catching up, especially over the last year.
On the face of it, roping in celebrities introduces a useful character to the plot that the company is building—a familiar persona that potential consumers aspire to be like, or can at least relate with. They are expected to increase the brand value of the associated company. However, the utility of celebrity endorsements and investments is not all that clear.
In October, Forbes Indiawrote that although celebrities can provide funding and push up the overall valuation of the brand, there's a problem.
The downside of having a famous personality, always in the public eye, is that their fame can also adversely impact the company's fortune. We've seen that several times over the past couple of decades, with celebrity brand endorsers and boycott trends—where something a celebrity said or did came back to bite the brand they endorsed. In some cases, where the backlash was too extreme, brands have had to drop the celebrity from their roster.
Nykaa recognises this risk in its draft red herring prospectus (DHRP).
Social media influencers and celebrities who we may, or may not be, directly associated with can shape public perception of us and our products, or they themselves may face adverse impacts to their personal reputation and public standing for any number of reasons, all of which could hurt our reputation and brand name.
Nykaa parent firm FSN e-Commerce Ventures
This is a big risk. As of 31 March, 2021, Nykaa had a network of 1,363 influencers, including Gen-Z trend setters, beauty, fashion and lifestyle bloggers, makeup artists, and celebrities. And any falling-out that Nykaa has with these influencers may also “adversely affect” the company's business.
The Harvard Business Reviewexplored this phenomenon back in 2019 and even quantified the risk of adding a celebrity character to promote the narrative. For instance, the paper says that in 2009, after tabloids reported on Tiger Woods’ infidelity and an alleged altercation with his wife that ended in a car crash, firms that used Woods in advertisements lost US$12 billion as share prices fell. And such incidents aren’t uncommon:
The researchers began by examining news databases for examples of publicly traded U.S. companies whose celebrity endorsers generated negative publicity from 1988 to 2016 while under contract. This yielded 128 incidents involving 230 companies.
Not only are there risks in associating with celebrities, the benefits aren’t always evident either. For instance, The Ken had analysed one such celebrity brand in the apparels segment—Bollywood actor Hrithik Roshan’s HRX.
Launched in 2014, HRX roped in an investment from e-commerce platform Myntra (along with a retail partnership) and didn’t take too long to become one of the most successful celebrity brands in the Indian market. There were reasons—it was a first mover; it had committed founders; and it had a retail partnership with a strong platform.
But about a dozen other celebrity brands have failed to replicate the same kind of success in India.
In 2013, serial entrepreneur John Greathouse wrote an article titled ‘Why Celebrity Investors (Usually) Are Worthless’ in Forbes magazine. Greathouse argues that if the story of the product or the company is not deeply aligned with that of the celebrity investing in it, the investment brings more risk than benefits for the startup.
A powerful narrative needs the plot and characters to work with each other. This is no different for a company working with a celebrity. A study based on primary research published last year reached the same conclusion.
I interviewed, in total, ten celebrities and entrepreneurs to explore what makes them collaborate in entrepreneurial ventures. Based on thematic analysis, I argue that celebrities and entrepreneurs have converging stories, which drives them to pursue mutual objectives by joining forces. The success is depending a lot on how well their relationship develops over time, and what kinds of roles celebrities have. Much of the value in celebrity involvement and ownership comes from the increased attention that media, social media audiences, and networks give to celebrities. Compared to traditional endorsements, celebrity involvement and ownership introduces longer-term consequences. In the best-case scenario, celebrities and entrepreneurs have matching values, similar ways of being, and bright ideas of how to contribute to companies in the long run.
And Kaif and Nykaa do look aligned at the moment, with both sides of the partnership seeming to celebrate body positivity and skin colour sensitivity.
Once upon a time, Big Tobacco poured millions of dollars into celebrity endorsements that played a major role in promoting cigarette brands and keeping them popular globally. The continued presence of on-screen smoking in Hollywood until as late as the early 2000s was rooted in these "studio era" deals of the 1930s and 1940s.
In 2008, a research paper published in the British Medical Journal unpacked the extent of this nexus. A release on the paper from the British Medical Association has this to say:
The studios with the most "cross over" deals were Paramount and Warner Bros, with the peak of activity occurring in the early and late 1930s, particularly for Lucky Strike (American Tobacco) and in the 1940s for Chesterfield (Ligget & Myers)...In all, almost 200 actors took part in the cigarette endorsements, including two thirds of the top 50 box office Hollywood stars from the late 1930s through to the 1940s. Among others, actors Clark Gable, Spencer Tracey, Joan Crawford, John Wayne, Bette Davis, Betty Grable and singer Al Jolson all appeared in endorsements for brands, such as Lucky Strike, Old Gold, Chesterfield, and Camel.
There is probably no other product that has benefitted from celebrity endorsement the way cigarettes have. But while cigarettes may be losing favour now, nicotine itself isn’t going anywhere. New nicotine products have started hitting the shelves, and as two pieces of news published over the past week show, these new brands are relying on a new category of celebrities for endorsements—social media influencers.
On Monday, The Guardianreported that in a letter to the chief executives of Facebook, Instagram, TikTok, and Twitter, a coalition of more than 100 health and anti-smoking groups have demanded an end to the promotion of addictive products on social media.
This new breed of nicotine influencer–one might call them nicotinfluencers–are soldiers at the UK front of a marketing war that London-based British American Tobacco has long been waging on foreign soil. Earlier this year, analysis by the Bureau of Investigative Journalism found that BAT had bet around £1 bn (US$1.3 billion) on harnessing the popularity of influencers on TikTok, Instagram and Facebook to reach young people in countries including Pakistan, Sweden and Spain.
Firms under fire for using UK influencers to push nicotine products, The Guardian
Almost as if in response to these "nicotinfluencers", Minnesota’s health department in the US has turned to social media celebrities in an effort to discourage teens from vaping. The department has enlisted the aid of TikTok influencer and physician Dr. Rose Marie Leslie for its campaign. Leslie has over a million followers on the platform.
Just like Nykaa, both nicotine products and the Minnesota government are choosing to add some drama to spice up their stories. And celebrities are their spice of choice.
Share this edition
That’s it for this week. Please let me know what you think about this edition. What did you like? What did I miss? What would you like to read about? Write to me at [email protected], and I’ll be back in your inbox at 7 am India time next Friday.
If you’d like to share today's issue, here’s a link. You can also just hit the easy-share buttons below.
Narratives are the most powerful tools of our age. Each week, I deconstruct the dominant ones behind the success or failure of businesses, leaders and governments
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