The Mastermind of Adrenaline Marketing

5/27/2018 The Mastermind of Adrenaline Marketing

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Thetermindof

AdrenalineTh e visionary behind Red Bullhas built a 5 billion-a-yearsoft-drink em pire. Now, Dietrich Mateschitzismakinga bold move into TV,movies, and m agazines.What's abeverage magnatedoingin the med ia business?Just wha the salwaysdone:Having a blast

By Duff M cDonald


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Little known outside of his native Aus-tria, Dietrich Mateschitz is one of themost successful entrepreneurs of ourage,aman who single handedly changedthe landscape of the beverage industryby creating not just a new brand but awhole new category: the energy drink.Asthe visionary who brought the worldRed Bull, affectionately knownas speedin a can or even liquid coca ine,Mateschitz, 67, has been a patron saintfor more than two decades to late-nightpartiers, exam-week undergrads, long-haul truckers, and, above all, extreme-sports athletes everywhere.In return for his sickly sweet inno-vation, the world has made him very,very rich. Last year the privately heldcompany, also named Red Bull, says itsold 4.2 billion cans ofitsdrink, includ-ing more thanabillion in theU.S.alone.That represents a 7.9 percent increaseover the year before, and revenuesjumped 15.8 percent to $5.175 billion.Mateschitz runs an efficient enterprisethat has yet to trip on its rapid growth:At the end of 2004, he had just 2,605employees; in 2010, Red Bull employed7 758people-which works out to more

driver Sebas tian Vet tel, a Red Bullambassador, gives Mates chitz a victory hug

than $667,000 in revenue per person.Now he's set his sights on m edia. OnMay 15, subscrib ers to th eLos AngelesTimes,Chicago Tribune,MiamiHeraldHouston Chronicle, an dNew York DailyNewsfound a magazine calledRedBulle-tin inserted in their Sunday p apers. The98-page glossy features a cover story onSan Francisco G iants ace Tim Lincecum,as well as pieces on Bob Dylan, graffi-ti art, and RussianBASEjumper ValryRozov. Billed as an almost inde penden tmonthly, the magazine is a productof Red Bull Media House, a subsidiarymedia comp any launched in Austria in2007 that expand ed with a Los AngelesoutpostthisJanuary.Red Bull knows what it's gettinginto. Over the years, it has producedTV programs(NoLimits on ESPN), films(That sIt ThafsAll),magazines,awebsite,and a steady diet ofWebvideos featuringsnowboarders, rally cars, surfers, cliffdivers, and concerts. Even so, its currentambitions reflectaserious rampingup,aswell as the realization ofabusiness planthat eschews conventional advertising infavor of marketing throughitsown events,shows, and p ublications. The companyshipped more than 1.2 million copies ofthe firstRed Bulletinin theU.S.(equal toSports Illustrated spaid circulation). Thisfall its first feature-length docum entary,a look at snowboarding calledThe Art ofFlight will be released inU.S.theaters.Earlierthisyear the company announceda pa rtnershipwithBunim/Murray Produc-tions, best known for creating theRealWorldreality-show franchise on MTV. Thetwo are working onrealityTVconcepts forRedBullathletes.Mateschitz calls the multimedia as-sault our most important line extensionso far. As a major content provider, it isour goal to comm unicate and distributethe 'World of Red Bull' in all major m ediasegm ents, fromTVto print to new m ediato our music record label. He hopes RedBull Media House will turn a profit, but,as with his sports teams, he's willing towait. In literalfinancialerm s, our sportsteams are not yet profitable, but in valueterms,they are, hesays. The total edi-torial media value plus the m edia assetscreated around the teams are superior topure advertising expend itures.Red Bull has em plo yee s in 6 coun-tries, but most of the major decisions

quarters in Fuschl, an Austrian villof 1 500 or at Hangar-7, Mateschiprivate airplane com plex a few minuoutside Salzburg.Though he rarely gives intervieMateschitz's Hangar-7 provides amevidence that h e is not shy about his scess.Each of his buildings features artecturalflourisheshat seem better suto a design mecca like Berlin than tbucolic Austrian suburb . The architalmost killedmewhenItold himIwato add that, says Mateschitz, standinga balcony and po inting straight up atThreesixty B ar-a circular all-glass rothat appears to be suspended in mid-It's extravagant, unnecessary perhaand that's precisely thepoint. Itwoulbe Red Bull ifitdidn't start harm less end upas acatastrophe , MateschitzAnd architects are really only paid cussion partn ers anyway.

Beyond the Flying BuUs-a perfoing fleetof vintage aircraft-th e most cinating parts of Hangar7 are the taurants, including the Threesixty Bthe Mayday Bar, and Restaurant IkaDirectly below us sit a half dozen craft, all tattooed with Red Bull's loincludingaChance VoughtF4U-4Cofighter from 1945, a Pitts S2B aero bbiplane, two Alpha jets once usedEuropean militaries for training, ancouple of helicopters.Mateschitz owns four soccer teaNew York'sRedBulls(and their stadiRed Bull Salzburg, Red Bull Brasil, RB Leipzig. He also has a Nascar teand two Formula 1 racing teams. Formula1team has on occasion beenficient to cripple a billionaire's finanbu tlikeeverythingatRed Bull, he fies the annua l $200 million cost ofhteams out of the com pany's healthyerating incom e.Mateschi tz i s Austr ia ' s r ichman, and Red Bull is the biggest thto come out of the place since, wArnold Schwarzenegger. Californformer governor has an idea why Mschitz is so successful: He's a darbusinessman, but he's also quite sionary for an Austrian, becausethinks in terms of the whole world.one thing to think that way in Amca, but it's much more rare when come from a small coun try like AustMateschitz's private office is caLucky 7-Private Heaven. It's so pri


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to get the digital fingerprint reader togrant him access. It's the one timealldaythat he shows even an inkling of uncer-tainty. I'm not reallythis JamesBond,he says as he places his finger on thereader for the third time . It was for myson when he was younger. But he wasa little surprised when I told him thatit only worked with my fingerprint andnot his as well.Once inside, Mateschitz takes hisplace behind a modern wooden deskthat holds not a computer but rather amodel plane, a bronze sculpture of twobulls flying on an eagle's wings, and afew coffee-table books-on the Belgianartist Panamarenko and the Germanaeronautical engineer Claude Dornier-and launches into a spiel he's been de-livering for the past 25 years. In near-perfect English, he explains that RedBull is not just a drink. Instead, it is a philosophy -one seemingly derivedfrom his own outlook on life-and a functional prod uct, used to improvestrength and performance and to revital-ize the body and mind.Anamiable man,Mateschitzisalso quite serious , prone tobeginning sentences with the phrase Itis a must. As in: It is a must to believe

in one's p rodu ct. Ifthis werejust a mar-keting gimmick, it would never work.He says it with such certainty thatit's easy to forget that Red Bull is justa carbonated drink in an artfully de-signed eight-ounce can, the main ingre-dients of which are caffeine, an aminoacid called taurine, and a carbohydratecalled glucuronolactone.

Mateschitzw s born onMay 20,1944under the sign of Taurus, naturally-in the village ofSt Marein, in A ustria'ssouthern region of Styria. His family waspredominantly conservative, full of offi-cers, priests, and teachers-the profes-sion of both his parents.From an early age, Mateschitz showedan aptitude for selling an idea, like the

Red Bull's Hangar-7, outside Salzburg, houses a restau rant,two bars, and the Flying Bulls squadron of vintage aircraft

time he persuaded his mother to let himattend university in Vienna rather than innearby Graz. I chose the university forthe city, not for the university, he says. But I could only find one course whichwasn 't available in Graz, which was shipconstruction. So I convinced her that Ihad only one desire in life, and that wasto become a ship engineer.It took him 10 years to get a deg reein commerce from the Vienna Univer-sity of Economics and Business, andhe spent part of that time working asa ski instructor to pay the bills. Aftergraduating, at 28, he spent 10 years asthe international marketing director ofa German consumer products compa-ny called Blendax. He was little morethan a glorified toothpaste salesman,and by 38 he'd hit a wall. All couldsee was the same gray airplanes, thesame gray suits, the same gray faces. Allthe hotel bars looked the same, and sodid the women in them. I asked myselfwhether I wanted to spend the nextdecade as I'd spent the previous one.

A chance trip to Thailand in 1982would prove to be the turning point inMateschitz's life. Curious to know whatattracted the locals to an uncarbo nated tonic called Krating Daeng (Thai for water buffalo ), he tried some himselfand found that it instantly cured his jetlag. Not long after, while sitting in thebar at the Mandarin Oriental in Hong

Itwouldn'tbeRedBull,Mateschitz, if it didn'ttart out harmlessand

Kong, he read in a magazine tha t the corporate taxpayer in Japan that yewas a maker of such tonics. Suddenthe idea hit him: he would sell the stin the W est.In 1984, Mateschitz approachone of his Blendax contacts, ChalYoovidhya, a Thai businessman wwas selling the tonic in Southeast Asand suggested that the two introduthe drink to the rest of the world, wone crucial change: It would be carboated . Yoovidhya liked the idea, and thagreed to invest $50 0,00 0 apiece to tablish a 49/49 partnership, with tremaining 2 percen t going to Yooviya's son. (Yoovidhya remains a silepartner in the company.) Mateschthen returned to Austria to plan the aimportant packaging and slogan. Fhelp, he turned to his university frieJohannes Kastner, who owned his owad agency in Frankfurt.

He said he had no money, so agreed that he w ould do freelance wofor me to pay me for it, says KastnOver the next year and ahalf Kastnand his team put together about 50 dferent designs for Red Bull, with Maschitzfinallydeciding on the distinctiblue-and-silver can emblazoned withe logo oftwomuscular bulls aboutsmash heads in front ofayellow sunslogan was harder to come by. Nothisatisfied him, and I was finally so upsthat I told him to find another agencsays Kastner. He asked me to thiabout it for one more night. And 3 a.m. it cam e to m e-'G ives You WinI called him right then and told himwas the last one I'dgivehim, but he sa'That's it.'It was just what Mateschitz neeed-something to convey that Red Bhad tangible effects. That, in tu rn,


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RedBull'sWildWorld ofSports RedBull-sponsored athletes frequ entlyhurlthemselves offcliffswearwingsuits,and wind up going viral onYouTubewhethertheylive or

dingTohelpShaun White win gold in thehalf pipe at the 20 10 Winter OlympRed ull built him asecrettrainingfacility inSilverton, Colo.

Forrr F lracingIsaproven fast-track to financialruin,but not

for RedBull,whichboasts twowinning teams anddefendingworld champion SebastianVettel

ing master stroke:Hewould sellRedBullas anultra-premium drinkin a cat-egoryall its own. Atabout$2 a can, itwas far-and-away the most expensivecarbonated drinkon the shelves. Ifwe'd onlyhad a15percent price premi-um,we'dmerelybe apremium brandamong soft drinks,and not a differentcategory altogether, says Mateschitz.In1987he introducedthedrinkinAustria.Next came Hungary,the U.K., and Ger-many, and beforelong saleswere spikingall over Europ e.At this point most historiesof RedBull ten dtodep art from Mateschitzandfocuson RedBullitself,whichisexact-lyhow hewantsit.Acurious hybridofa mogul, Mateschitzhas azestfor lifethat rivals Richard Branson's,but hisobsession with controlling informationputshimclosertoSteve Jobs. LiketheApplechief,Mateschitz pullsthestringsbehindaconsumer cult.Andcults relyon message control.

Whilehe'sengaging in person, Mate-schitz is notoriously secretive.(Hiselusiveness hasprompted his staff tonicknamehim TheYeti.)He has along-

his private life, and until recentlyhewouldn't even consider answering ques-tions abouthisonly child. Marc, whosemother is a schoolteacher Mateschitzdatedfortwo years.He's closetosomeofAustria's mostprominent people, though Mateschitzsayshedoesn't placeapremiumon col-lecting friendsorsocializing: I don 't be-lievein 50friends.Ibelievein asmall-er number.Nor do Icare abo ut societyevents.It'sthe m ost senselessuseof time.WhenIdo go out, from timetotime,it'sjusttoconvince myself again thatI'm notmissinga lot. Onthose ra re occasions,however, he invariably arrives with an at-tractive womanonhisarm. It's just thatI'mnot old andwise enoughto be mar-riedyet, he says. Butis itnecessary thatyou write about this?The successof RedBull defies logicin one important regard:Itdoesn't tastevery good.Theamber-colored elixir'stastehasbeen likenedto liquid SweetTarts or cough medicine in acan. (Al-thoughitdoes growon you.) Oneearlymarket research reportin theU.K.put it

failed this convincingly. Matesch itz she didn't care about the taste issue than dhedoesn't care about it now. not just ano therflavoredsugar waterferentiatedbycolor or tasteorflavorsays. It's an efficiency produ ct.I'mingabout improving endurance , contration, reaction time, speed, vigilaand emotional status. Tasteis ofnoportance whatsoever.Butif Red Bull doesn't pleasepalate, what exactly doesit do fory

The short answer is that no one sideofRedBullisentirely su re. Thethe caffeine content:80milligramscan, twice that of acanof Coca-Colaaboutthesam e as a cup of coffee. Tdrinking originalRedBulland notsugar-free ve rsion also receive a headose of carbohydrates. ButtherushBull deliversisdifferent from what yfeel after drinkingacoffeeor twocofCoke.Enterthe crucial ingredient:rine,anamino acid found in meat, e

and human breastmilk.Whilesome ies have shown small doses of taurinbe beneficial against problems rang


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Deeply committed to motocross.Red Bull also stagesraces through city For sevenyears.Red Bullhas stagedits ownairshows withraces throustreetsfor gravity-poweredvehicles,as it will on May 21 inL.A. towering,inflatedpylons.They vebeen suspendedfor2 11 toimprove s

S k vD?*'No one can say whatwill happen to FelixBaumgartner if andwhenthe

Stuntmanreachesthespeed ofsound whilefalling to earth from120,00 0 feoLAnd whowillpay for sucha suicidalmission? W ho else?

The launchofa1 2m illion-circulationglossyasmagazinesrush intoiPadappsmay be the company s most extreme stunt so far

Thierry Henryhas helpedlifttheNew York RedBulls,who playin abrand-new soccer-only stadium,intolrstplace

there's scant evidence of its impact onthe body, positive or negative.A "non-essential" amino acid, it's manufacturedfrom other amino acids in the liver, andscientists say it's therefore unnecessaryto a healthy diet. But Mateschitz scoffsat this. "We have meters and meters ofscientific evidence and support" show-ing its benefits, he says.The company has shared the resultsof these studies w ith health authoritieseach time it has sought to enter a newcountry, and most governments have ap-proved the drink forsale.It was banne d,foratime, in both D enmark and France,where authorities were focused not onRed Bull's benefits but on the potentialdanger posed by its unusually high levelsof taurin e, caffeine, and certain Bvita-mins.In1991tw o young Swedes died ona night when th ey'd drun k Red Bull withvodka, and in1999an Irish teen who hadconsumed three Red Bulls died whileplaying basketball. Although investiga-tors found no connection between thedeaths and Red Bull, the cases raisedalarms, as did a French study in whichrats that had been fed taurine were

cluding self-mutilation. Still, the data ontaurine remains inconclusive.Mateschitz proved his marketinggenius, especially in an era of "crisismanagement," with his early decisionto foster rumors about Red Bull's con-tent instead of trying to quash them. Inthe early 1990s, when the drink emergedas a hit in the infamous all-night partycircuit on the Spanish island of Ibiza,tales began to circulate that taurinewas derived from bull testicles or evenbull semen. The com pany let the gossiptravel uncheck ed, and even set upapagedevoted to the rumo rs on its website. "Inthe beginning, the high-school teacherswho were against the product were atleast as important as the students whowere for it," says Mateschitz. "Newspa-pers asked, 'Is it a drug? Is it harmless?Is it dangerous?' That ambivalence is soimportant. The most dangerous thingfor a branded product is low interest."

Was it all by design? Did he really an-ticipate that a combination of rumorand public outcry would play such a bigpa rt in driving early sales? Mateschitz isemphatic:"Yes.Weexpected it. It was a

We would make the brand interestinenough that people wanted to get thehands on it."Controversy aside, the central pillaof Red Bull's marketing campaign haalways been its claim that it can improvathletic performance. To prove it, thcompany took a page out of Gatoradebook and targeted athletes, except thain a timely twist, M ateschitz zeroed in othe extreme-sportscrowd Thefirstathlehe signed up to be an "ambassador" wafellow Austrian Gerhard Berger, winneof1 Formula1races. In short o rder. RBull wassponsoringeventsand athletesa variety of perilous en deavors.

Today, Red Bull underwrites morthan 500 athletes in 97 sports-10of them in the U.S. But in a departurfrom the traditional sponsorship arrangement. Red Bull doesn't offer itathletes contracts, just a verbal agreement to "support" them in achievintheir dreams. Some of those athletedon't need any "support" per se-ReBull counts soccer star Thierry Henrand snowboarder Shaun White as


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Canadian ice-climber Will Gadd surelywelcome the extra bucks.The spo rts Red Bull tends to focus onare definitely not for the faint of heart.In the last 20 years , three Red Bull ath-letes -w hom M ateschitz calls familymembers -have died in separate inci-dents: Shane McConkey and Ueli Gegen-shatz (BASE jumpers) and Eli Thomp-son (Red Bull Air Forc e). Th ere arealmost no sports within which mortalaccid ents are not a reality, Mateschitzsays. The sports they helped pioneercarry inherent risks which each wouldtake with or without our support. Andwhile we were hit hard by it and deeplyconcerned, they chose their journeylong before we met.Felix Baumgartner, the world's best-known BASE jumper, is in Mateschitz'sinner circle, and his association with thecompany dates back to 1996. (BASE isan acronym for the fixed objects fromwhich such athletes usually jump : Build-ing, Antenna, Span-or bridge-andEarth.) Red Bull sponso rs most of Baum-gartner's stunts, such as a 120-foot leapfrom the arm of the Christ the Redeem-er statue in Rio de Janeiro in 1999 thatset the record for the lowest parachutejump in history. Baumgartner later ad-mitted to Jay Leno that the idea so undedstupid. Leno replied, It doesn 't soundstupid. Itisstupid.

Like everything else at Red Bull, thenegotiations that lead to sponsorshipdeals are unorthodox as well.Windsurf-er Robby Naish recalls his first m eetingwith Mateschitz almost 20 years ago.We talked in the courtyard ofhis officein Fuschl, and pretty soon realized thatwe're b oth really into cars. That was theend of our business meeting, because hewanted to show me his Ferrari GTO. Wewent driving off into the m ountain s, and

The view from Lacala, Mateschitz's privateisland in the So uth P acific

Isi tadrug^lsl ih rmless Is it dangerous?That ambivalence isso important

after 15minutes he pulled over, got out,and told me to drive back. I didn't wantto-i t's a million-dollar e ar- bu t he said Iwas either going to drive the Ferrari orwalk back. I was so scared, I drove likemygrandmother.The lines betwee n Red Bull, Red Bullathletes, and Red Bull events are b lurryon pu rpos e. To Mateschitz,it'sjust onebig image campaign with many mani-festations. Americans might see 2005Heisman Trophy winner Reggie Bushon television wearing a Red Bull hat.Or they might stumble on a YouTubevideo of Shaun White secretly trainingon the private half pipe built by RedBull. Or they might actually a ttend oneof dozens of global Red Bull even ts, likethe May 21 Red Bull Soapbox Race inLos Angeles or a motocross spectacularin Brazil the week after. This is funstuffand it's a lot more interesting than w rit-ing a check to buy 30 seconds duringthe Super Bowl.Despite the fact that he s approach-ing 70, Mateschitz maintains quite aclip.He still moves like an athle te, ride shorses, pilots planes, and last year com-peted in an off-road motorcycle race.Hehas , however, installedaboard ofdi-rectors at Red Bull to work on br oade rstrategic issues. Red Bull now has hun-dreds of competitors (the latest en trant:Tiger Blood energy potion , an hom age to

Charlie Sheen). For a time, there rumors that Coca-Cola had offerebuy the company, but those have down. Mateschitz has long insistedhe has no plans to sell or take Red public. It's not a question of monhe says. It's a question of fun. Notthat, can you imagine me inashareers'meeting?

The bigger question is whetherjuggernau t he has bu ilt will survive factoringinthat RedBull isthe vehichis passions and ideals. Mateschitz thso.And he even hasasuccessor in mMy 19-year-old sonwilljoin the cony after finishin g his studies, ifhewto and ifthetime is right, he says.Meanwhile, Mateschitz has certcreated some enviable havens for self.LikeRichard B ranson, he hashprivate island, the 3,000-acre Lain Fiji. The flamboyant Malcolm Fobought the island for 1million in Mateschitz heard about it from his frGeorge Harrison, the ex-Beatle, whoplanned to buy the island himself bhis death. In2003,Mateschitz purcit for a reported $10 million.

Lacala was first sighted in 178Captain William Bligh of theHMS after he'd been relieved of his dutiesset adrift by his mutinous crew. Mschitz plans to use it mainly asagetfor his small circle of friends, buhas also built an exclusive res ort oisland. When I ask him what motivhim to buy a vacation home so far Salzburg, he resorts to quoting Fohimself: He gave a nice answer, wwas,'Doesn't everybody want theirSouth Pacific island?' Well, in my he was right.Idid. He also says thhas always been attracted to the idhaving his own independent statcountry of Red Bull, as it were-wwould have the shortest set of lawthe world. The rules would be simNobody tells you what you have tonly what you don 't have to do.


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The Mastermind of Adrenaline Marketing

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