Making Billions Can Be Simple

Hello! Welcome to the fourth edition of Deep Pockets! Thank you for being here!

Making a multi-billion dollar fortune doesn’t have to be complicated. You don’t need to invent some new gizmo that revolutionizes the world. You don’t need to be the first employee at a cutting-edge technology startup.

Making a massive fortune can be as simple as taking an existing popular product… and making it just a little bit bigger…

DEEP DIVE: Twice the size, same price… huge fortune

In 1998, 28-year-old Russell Weiner took a low-level job at the company that owned Skyy Vodka.

Russell was a bit lost in life when he took the job. After graduating from San Diego State, he spent about a decade in the student travel industry… which is a nice way of saying he sold college kids Spring Break trips to Cancun. Actually, just before taking the job at Skyy, he attempted to pivot away from the student travel business by running for a seat in California’s State Assembly. He won the Republican primary but was blown out in the general election. So one day, he found himself sitting at a desk at the San Francisco headquarters of Skyy Vodka.

Skyy Vodka was started by a serial entrepreneur named Maurice Kanbar. A mechanical engineer with over 50 patents to his name, Maurice made his first small fortune as the inventor of the D-Fuzz-It sweater comb. Maurice was inspired to create Skyy Vodka after suffering from a horrible hangover caused by martinis made with mediocre vodka at a NYC bar.

To create Skyy Vodka, Maurice consulted physicians, chemists, and master mixologists to create a super-premium, highly distilled, clean vodka that removed all the toxins that cause hangovers.

Skyy first appeared in American liquor stores in 1993. In 1994, the company sold 190,000 cases. By the time Russell Weiner first sat down at his desk in 1998, Skyy was selling around 700,000 cases a year. The company’s recent surge in growth was driven by four magic words:

“Red Bull and vodka”

Red Bull was introduced in America in 1996. By 1998, the “Red Bull and vodka” was nothing short of an international phenomenon.

Red Bull’s cans were (and still are) 8 ounces. A single can at a convenience store cost $3. For perspective, in 1998, a 12-ounce can of Coca-Cola cost around seventy cents.

Red Bull’s stratospheric success gave Russell Weiner a simple yet brilliant revelation. He even thought of a brand name. He pitched his idea to Maurice Kanbar.

Russell wanted Skyy to produce an energy drink that was twice the size of a Red Bull… but the same price.

Maurice was unimpressed. He was especially unimpressed with the hypothetical brand name:

Rockstar

Russell was so convinced he was onto something that he quit his job at Skyy. In 2001, he launched Rockstar on his own. Well, not totally on his own.

To get Rockstar off the ground, Russell took out a $50,000 mortgage on his condo and convinced his mother to make an angel investment. From that point on, Russell owned 85% of Rockstar, and his mother, Janet, owned 15%. Russell was CEO. Janet was CFO. Janet has a degree in Botany from the University of Hawaii and in 1994 wrote a book called “Herbs that Heal.” At the time Rockstar was founded, she was managing an herb store in Marin County, California. These facts will be important in a moment.

Russell designed a logo using a rented computer at his local Kinko’s. He hired FIVE flavor companies to develop potential recipes. The final recipe was slightly sweeter than Red Bull but contained the same amount of caffeine per ounce. Red Bull had 80mg of caffeine in an 8oz can. Rockstar had 160mg in a 16oz can.

Perhaps inspired by his mother’s work at the herb store, the original recipe contained a variety of herbs: ginseng, ginkgo biloba, milk thistle, and guarana seed extract.

Rockstar’s extremely simple marketing message was:

"Twice the size of Red Bull for the same price!".

Russell bought a black limo, plastered his logo on the side, and began driving all over the Bay Area to promote the drink.

In its first year, Rockstar generated $2.8 million in revenue.

Here’s a photo of Russell in 2001 with the original Rockstar limousine and two friends from San Diego State who joined as his early employees:

Branding

In the early 2000s, Red Bull was sponsoring high-profile professional athletes and major events like the X-Games. Rockstar took a different promotional path.

Rockstar focused its marketing dollars on high-adrenaline sports that were slightly less mainstream. Motocross. Drag races. Professional Bull Riding. Off-road events. Etc.

And unlike Red Bull, which only had one flavor, Rockstar introduced several flavors. All in 16 ounce cans and all for the same retail price as an 8oz can of Red Bull.

Most importantly, the brand leaned into the “rock star” lifestyle image of being always surrounded by attractive bikini-clad models. These models became ubiquitous at high-adrenaline sports events, handing out free samples and smiles.

Liquid Assets

In 2004, just three years after launching, Rockstar’s revenues were $50 million.

In 2005, thanks largely to a new distribution deal with Coca-Cola, Rockstar generated $215 million.

In 2007, revenue topped $400 million.

In 2009, Rockstar switched from Coke to Pepsi for distribution after Coca-Cola executives grew tired of Rockstar’s relentless bikini model marketing.

In 2014, revenue topped $800 million.

There was some bad news in 2014. In December 2014, Russell’s 161-foot superyacht (named “Rockstar,” obviously) was being towed under a bridge in Miami right when the drawbridge accidentally came crashing down on the yacht’s top deck. Right onto the hot tub, in fact. The aftermath and exact moment of the crash were both captured on video:

There was some positive news on the horizon. Switching from Coca-Cola to Pepsi for distribution proved to be a perfect partnership. Sales continued to grow, and in March 2020, Pepsi acquired 100% of Rockstar for $3.85 billion in cash.

Russell’s 85% stake translated into a $3.272 billion windfall. With the cash he earned along the way + his other investments, today, Russell Weiner has a net worth of $5 billion.

Oh, and let’s not forget Russell’s mother, Janet! The former herb store manager turned CFO received $577 million thanks to her 15% stake 💰️ 💰️ 💰️ 

A lifelong animal activist, after the sale Janet declared her intention to “devote her life to helping animals through rescue services and protecting wildlife.” Russell has shifted his focus to extremely high end real estate flipping and generally living the life of a billionaire rockstar.

Go Deeper: What Happened To Maurice Kanbar?

You may be wondering what happened to Maurice Kanbar, the owner of Skyy Vodka. Did he regret pouring a multi-billion-dollar idea down the drain? I’m sure he did, but he and Russell actually remained friends. And I wouldn’t feel too bad for him.

Maurice sold Skyy Vodka to Campari in three transactions for hundreds of millions of dollars. The second transaction, in 2001, was the only one that was publicly reported. In that transaction, Campari paid Maurice $207.5 million for 50% of Skyy. That’s the same as around $370 million in today’s dollars and valued the brand overall at $415 million ($736m in today’s dollars).

Maurice was so rich when he died in 2022 that at least three major university institutions were named in his honor, thanks to his donations. For example, New York University’s Kanbar Institute of Film and Television.

At the time of his death, Maurice lived in an 8-story apartment building in San Francisco’s most expensive neighborhood. And when I say he “lived in an 8-story apartment building,” I don’t mean he lived in one of the units. The entire apartment building was his private home.

Located at 2100 Jackson Street in San Francisco, prior to Maurice, each floor of the building had been a separate 3,400-square-foot rental unit.

Soon after buying the building, Maurice evicted the penthouse tenant to make that unit his own apartment. He then evicted all the remaining tenants to make the entire building his private home.

He evicted the tenants using a somewhat controversial California state law called the Ellis Act. The Ellis Act allows landlords to evict rent-controlled tenants as long as the owner makes the rental unit their primary residence. The vast, vast, vast majority of Ellis Act evictions involve a two-unit townhouse where the owner kicks out their sole renter to make the townhouse a contiguous home. It was (and still is) unheard of to use the Ellis Act to evict dozens of tenants from an 8-story apartment complex to convert the entire building into a private home:

FINAL WORD

On the next edition of “Deep Pockets,” you’ll learn why you should always answer a knock on the door. For one man, it created generational wealth beyond all reasonable measure.

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