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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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r^^-
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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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M ay 2 3 - M a y 2 9 2Bloomberg BusinessW
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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May 2 3 -M a y 29 ,2011Bloomberg BusinessWeek
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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