Former Real Housewife Bethenny Frankel lands the cover of Forbes Magainze!
My favorite part of the interview was finding out that Bethenny was once Paris Hilton’s nanny. HA!
Click after the jump for the full cover story, via Forbes.com!
It’s 7 a.m. and Bethenny Frankel is hard at work. The reality TV star is talking to Don Imus about her new book, her new daughter and the time when, eight months pregnant and stitched into a wedding dress, she relieved herself into a champagne bucket on national television.
“My wife likes you,” Imus smirks, unimpressed by his guest.
Frankel smiles knowingly and leans in a few inches from his face. “You’ll like me soon.”
Ten minutes later he does. Sold by her mix of burning ambition, self-effacing humor and painful vulnerability, Imus calls her a “great interview” and invites her to come back soon. No surprise there. Since 2005 Frankel has become the most well-known entrepreneur on television by making her business everyone’s business. With millions of fans cheering she’s gotten married, given birth and built her Skinnygirl brand of consumer products on camera. Her show, Bravo’s Bethenny Ever After, is a skin-pore-close video diary that’s as much TMI as TMZ. Viewers have intimate knowledge of her daddy issues (ugly), her food struggles (on the mend) and her postbaby sex life (“kind of a rusty tricycle for a while”). Ever After, now shooting its third season, averages 1.6 million viewers each week. Her books–Naturally Thin, Skinnygirl Dish and A Place of Yes–are bestsellers. There are rumors of a development deal for a daytime talk show. A half-million people follow her on both Twitter and Facebook. Type her name into Google and you get 3.8 million hits.
All that’s very nice for someone who, half a dozen years ago, didn’t have a pot, much less a champagne bucket, to discharge into. But the real goal for Frankel, 40, is to turn Skinnygirl into a billion-dollar business. In March she jumped a few spaces ahead, selling her flagship product, the Skinnygirl Margarita, to Fortune Brands’ Beam Global for an eyebrow-singeing $100 million. That deal, which features a multi-year payout along with sales from her ever-expanding line of Skinnygirl products, bolstered Frankel’s bank account by an estimated $55 million in the past 12 months, according to sources close to Frankel (she won’t comment on the numbers); TV, we figure, earned her a mere $700,000.
She debuts at No. 42 on this year’s Celebrity 100 list, above veteran names like Sandra Bullock and Brad Pitt. Six years ago Frankel was filing losses on her 1040 form. “Seriously,” she tells me, “it wasn’t until two years ago that I made more than my assistant.”
It’s not just about earning more than a secretary. Frankel is one of a new cast of entrepreneurial celebrities who are rich and famous but have something most stars can only fantasize about: ownership. You have to go back many years–maybe to United Artists, which Charlie Chaplin, Douglas Fairbanks and Mary Pickford founded to control the production and distribution of their movies–to find celebs who are not gilded serfs depending on studio paychecks and endorsement deals. Oprah Winfrey (No. 2 on our list) is an exception who has spawned few entrepreneurial imitators. Of this year’s Celebrity 100, only 16 of them have made more money from their businesses and endorsements than from performing on sets or in the recording studio. Among them are David Beckham (No. 35), 80% of whose $40 million in earnings this year came from endorsements and partnerships (he’s hoping to launch his own underwear and grooming enterprises by year-end); Diddy (No. 52), who, FORBES estimates, rakes in more than half of his total take, $35 million, from Ciroc vodka; and tennis’ Maria Sharapova (No. 80), who makes ten times as much from partnership deals like Nike and Cole Haan (where her ballet flat is the top-selling shoe) than she earns on the court. Actress Gwyneth Paltrow is a comer: She pulls in 25% of her income away from the silver screen.
“I think people are going to look at Bethenny Frankel and the amount of money that she made and think, ‘Whoa, I should be building ownership in companies and brands, too,'” says Bob Darwell, a partner at law firm Sheppard Mullin, which represents Frankel.
“What’s the point of being on TV if you don’t have something to sell?” asks Frankel, disarmingly direct as always.
And sell she does, every chance she gets, hawking one brand of Skinnygirl or another on Ever After. “You’re seeing her go through the process of developing a product and doing appearances for that product at the same time as you’re seeing her go through her personal life,” says Andy Cohen, Bravo’s executive vice president of programming. “It allows a rooting interest in what happens to this person and this person’s success.”
Success brings fame–and lawsuits, as Lady Gaga can attest. Less than two months after she signed her deal with Beam Global, Frankel was hit by a complaint from former business manager Doug Wald of Raw Talent, claiming fraud and breach of oral contract. Wald is seeking $12 million in fees and $100 million in damages, alleging he is entitled to the fee for introducing Frankel to her talent agency, APA, which brokered the sale of Skinnygirl drinks to Fortune Brands, even though he was fired two months after she hired him in August 2008. “Mo’ money, mo’ problems,” says Frankel. “I guess it’s a sign of success. I won’t be bullied by a frivolous lawsuit.”
Fans love Frankel not just because she tells it like it is and swears like a pirate but also because she’s an ambitious woman struggling to balance her business, her family and her past on 5-inch Brian Atwood pumps. Watching her stumble and recover is part of the fun. In the most recent season of Ever After, which wrapped in early May, Frankel struggled through professional stress (Skinnygirl Cocktails hit big manufacturing and distribution problems) and personal angst (Frankel nearly snapped after deciding at the last minute to join the cast of Skating With the Stars). In one episode she exploded when her in-laws suggested the whole family get together for the holidays (husband Jason Hoppy was mortified; his mom started crying). “I don’t draw a line between what I keep private and what I don’t,” Frankel says. “Sometimes it’s just a big mess.” As her 40th birthday approached, her therapist encouraged her to delve into her highly charged family history–on camera. She happily agreed.
Her bio, if you’re not already a fan, reads like a social worker’s case file: a home life punctuated by multiple divorces, allegations of childhood neglect, 13 different schools, two cross-country moves. Frankel grew up on New York’s Long Island, the child of a top-ranked horse trainer (his Empire Maker won the Belmont Stakes in 2003) and a racetrack groupie. “I had my first drink when I was 7 years old; I was betting at the track by 8,” Frankel recalls. “My father never called me on my birthday. He never congratulated me or told me he was proud,” she says, tearing up. (Frankel and her producers jokingly rate each episode of Ever After on a “T.P.E.” basis. “That’s tears per episode,” she says.) Somehow she made it through NYU, where she graduated with a degree in communications and psychology.
Instability bred ambition. Frankel ran to L.A. in 1992 with aspirations of becoming an actress. Instead, she landed gigs playing nanny to a teenage Paris Hilton (when Paris wasn’t playing with her ferrets, they went to the mall) and personal assistant to power couple Jerry and Linda Bruckheimer. The connections helped boot up Frankel’s first entrepreneurial outburst–In Any Event, a party planning company operated out of a $750-a-month rental in Beverly Hills. “I didn’t know what I was doing; I was broke. I was eating cartons of takeout rice two meals a day,” she recalls. The business fizzled.
One day she fell in love with a $585 scarf in Barneys. Instead of buying it, she scraped up $3,000 and placed a wholesale order for 50 with the Bombay manufacturer. She unloaded them on her growing network of Hollywood friends. Princess Pashmina was born, and orders came pouring in. “Pashminas were like crack,” she says. “Everybody wanted them, and I had them.” By 2003 Frankel was in the business of baking cookies for the health-conscious in New York City when she first heard about NBC’s The Apprentice. Denied once (“devastating”), she and her cookies were cast two years later on the series’ first spinoff, The Apprentice: Martha Stewart. Even then Frankel knew the value of camera time and used it to pump her brand of baked goods, BethennyBakes. (The company went bust in 2006, but Frankel salvaged an endorsement deal with Pepperidge Farm as spokesman for its then new low-calorie line.)
In 2007 Frankel’s friend Jill Zarin approached her about a TV series being produced for Bravo about Manhattan women. Frankel was less excited about the opportunity than she had been for The Apprentice. “Everyone around me said, ‘If it’s a train wreck, which it will be, you will be a part of that train wreck.’ I had already been paid by Pepperidge Farm. I had a column in Health magazine. I was doing segments on the Today show. If the show blew up I would have lost all of that.” Ultimately Frankel agreed to join the cast for a simple reason: “It’s really not that easy to get on TV. I decided just to make it what I wanted it to be. To keep the focus on my brand and to just be me. It was the best decision I’d ever made.”
And so began The Real Housewives of New York. Frankel made the most of it. Cameras followed her to catering events and supermarket giveaways, peddling her baked goods, selling Bethenny herself, a frazzled go-getter, a natural-foods chef who also drank tequila. She’d begun to develop the Skinnygirl Margarita, and it increasingly found its way in front of Bravo’s lens. As her personal relationship with her cast members, particularly former friend Zarin, began to deteriorate, ratings soared. Before the second season ended Bravo paid Frankel the ultimate compliment in reality television: her own series.
Bethenny Ever After has been a big hit. Frankel’s engagement and wedding to salesman Hoppy was aired in a special episode to an audience of 2.7 million. The birth of daughter Bryn brought in 2.4 million viewers in July 2010.
Those numbers are impossible to maintain. “The celebrity of reality [TV] may be an excellent way to start act one of a career,” says Robert Thompson of Syracuse University’s S.I. Newhouse School of Communications. “But acts two and three depend on whether you can continue to keep people interested in the story that you’re telling and, in Frankel’s case, the products that she’s peddling.”
Bethenny knows the show won’t last forever, nor does she want it to. “Jason and I have talked about a privacy plan and what our endgame might look like,” she says. “I look at other people, and they’re talking about doing eighth, ninth, tenth seasons,” she says, shaking her head, eyes wide and finger wagging. “But there will be none of that happening in this family. Oh, no.”
That’s where Frankel the entrepreneur kicks in. “Bethenny’s hit on some megatrends with Skinnygirl that are incredibly attractive right now: premiumization, convenience, low calorie and the targeting of the female consumer,” says Beam’s North American president, Bill Newlands. Still in its first year, Skinnygirl Cocktails shipped 160,000 cases of her low-cal booze at $14.99 a bottle (“In just 14 states,” Frankel points out). While it’s too early for projected numbers as Beam still hammers out international details, Newlands is buoyant. “With our distribution and marketing muscle behind the brand, we are aiming to take a disproportionate share of market in this arena and more than double our volumes this year alone,” he says. Two separate Beam launches, single-serve margaritas and a new sangria flavor, will be featured on the upcoming season of Ever After. “This is my baby,” Frankel says. “I need to be the one taking care of it. Lucky for both of us, Beam got that.”
That’s all they got, though. Frankel shrewdly retained rights to use Skinny girl for anything other than booze and plots the day when the rest of her empire overtakes the cocktail side of the business. “It would be great for Beam to sell Skinnygirl shot glasses as a complement to the cocktail,” she jokes. “But they can’t. Only I can.” Already her new line of Skinnygirl nutritional supplements, with partner Matt Hesse, has seen wholesale orders topping $1 million in the first quarter of 2011. Her shapewear could bring in $5 million this year.
“It’s a formula,” Frankel says of the brands she launches with strategic partners. “They’re the expert, the formulator, manufacturer. I’m the marketer, the media person, the face–and we each know our roles.” Skinnygirl Cocktails is the stick by which she measures them all. An equity deal struck just 18 months ago with liquor industry veteran David Kanbar, known primarily for his unloading Skyy Vodka to Gruppo Campari in 2001, gave her long-term returns instead of the “easy money” a licensing deal would have netted. Skinnygirl Daily, the nutritional supplement arm, follows the same pattern: a partnership with Frankel and Hesse, brokered by her APA agent, Brian Dow.
Hesse says he didn’t know who Frankel was when Dow tapped him as a potential partner nine months ago. His four-year-old Denver firm, Corr- Jensen Labs, was working on multiple brands of its own in the supplement market and was looking for a high-profile partner to help spread his message: that fitness goals aren’t met with a miracle pill but by adopting a long-term, healthy lifestyle.
After Dow’s call Hesse read Frankel’s Naturally Thin and was sold. “She was saying what I’ve always wanted to say to people, but I never had the words or the voice. I immediately knew that this was the person I wanted to work with.” Less than six months later the contracts were signed. But Hesse says he was so sure of the partnership that before negotiations were finished he had already begun making the line.
In a departure from Frankel’s usual m.o., Skinnygirl Shapewear is a licensing deal with Dreamwear, the New York City lingerie producer that also holds licenses for the trademarks of Marilyn Monroe and Playboy. The agreement for her Lazy Lingerie line was inked last October and makes its QVC debut in August. “She’s taught us so much about who her consumer is,” says Ranu Mukherjee, the marketing manager at Dreamwear. Frankel’s involvement, Mukherjee says, is indispensable: choosing fabrics, approving designs, even handpicking the models on the line’s website.
Up next? An online personal-training service, a fourth book and a skin-care line called Skinnygirl Face & Body. “I was going to call it Honest by Bethenny, because that’s what it is, honest skin care,” says Frankel. “But it would be an outlier in the brand.” Skinnygirl Face & Body will be produced by another New York City manufacturer, Lotta Luv, which will package bath bubbles and pomegranate body scrub in containers that look like Frankel’s margarita bottles. It may sound silly, but it’s savvy cross-promoting. “I’m creating a line that will market and sell my alcohol brand,” she says.
Then it will be on to soft drinks, sauces and maybe a children’s clothing line. Frankel is also discussing an apparel deal with a major retailer to create a “store within a store” that can showcase all of what Skinnygirl has to offer. Which big chain? “Target is my target,” she says coyly. “It’s the perfect place for me.”
“Strategically, Frankel’s plan looks sound,” says Douglas Lane, an analyst covering consumer goods at Jefferies & Co. “Now it’s about execution. She’s created a marketable brand in a number of favorable sectors all seeing global growth. Even if she can capture just crumbs of each category she can create a very successful business.”
She’s way beyond crumbs, though. “I don’t really think in terms of money,” she says. “But considering what’s going on now, let’s put it this way: If I was offered a billion dollars for the whole Skinnygirl brand, it wouldn’t be a definite yes.”