Playboy CEO on company's transformation: 'We've turned the company to be a lifestyle brand'

Playboy CEO Ben Kohn joins the Yahoo Finance Live panel to discuss the company's latest outlook as Playboy goes public after nine years as a private business.

Video Transcript

AKIKO FUJITA: Playboy is returning to the public market after a decade-long absence. The media and now lifestyle company listing today through a reverse merger with Mountain Crest Acquisition Corp. Let's bring in the CEO of Playboy, Ben Kohn, along with Yahoo Finance's Brian Sozzi.

Ben, it's good to talk to you today. You know, the company has gone through quite a bit of a transformation since you went private back in 2011. Why come to the market again now, and why through a SPAC?

BEK KOHN: Yeah, for a few reasons. And thank you again for having me. The capital that we raised, over $100 million, provides over $100 million of unrestricted cash to really accelerate our growth. We've had a massive transformation of the business over the past three years. In 2020, our revenues were up over 75%, even up over 100%.

But we did that in a cash-strapped environment. The capital that we raised will allow us to accelerate both our organic as well as our inorganic growth moving forward.

BRIAN SOZZI: Ben, we've talked a few times in the lead up to your debut today about the sales momentum you do, in fact, have in your business, that you had last year too. Has that continued into this year?

BEK KOHN: Brian, nice to see you again. Look, we are continuing to see growth across all facets of the business. We have a ton of white space that we have created moving forward both by cleaning up old licensing deals as well as entering new categories. And so, again, this capital moving forward will allow us to continue to accelerate the growth. But so far, right now, I feel very confident where we sit only six weeks into the year.

BRIAN SOZZI: What new categories have you gotten into? I still think a lot of people, they see Playboy, they think you're making magazines. I know that is not the case. You know that is not the case. What products have you gotten into lately?

BEK KOHN: Yeah, Brian, we've turned the company to be a lifestyle brand, which is really, I think, the core to the DNA in how the brand was founded. So we're organized around four key categories that are multibillion, fast-growing categories. Sexual wellness, style and apparel, gaming, and lifestyle, beauty, and grooming. We've launched Playboy Labs, which is off to a great start, which is our streetwear brand.

We have great things planned for color cosmetics and ancillary products around that. We've cleaned up our gaming business. So we have the ability now to enter iGaming in the United States, sports gambling moving forward. And so when you look at it, the growth has come across all facets.

Sexual wellness is obviously growing. We launched our CBD products at the end of last year, three of them. We have more coming this year. When cannabis is legal in the United States, we do plan on entering the cannabis space as well. This brand has been around cannabis for 40 years.

But again, the growth has come from all facets of the business. We do believe the sexual wellness industry, it's a $240 billion industry today, projected to be 400 billion in 2024. It's highly fragmented, we believe it's right down the middle of the fairway for us as a brand. And that's something that we're focused on becoming a market leader in.

ZACK GUZMAN: Yeah, Ben, that was a lot of stuff. That's quite a bit that Playboy's working on here. It's come a long way, obviously, from kind of, you know, the adult background that people might have remembered it in the Hugh Hefner days. But what about-- you know, which one of those looks most promising when you point to that growth? Because you say you're seeing 100% growth in terms of where you guys were.

Profit, of course, what was it, you know, it was under 300,000 not too long ago for, you know, the year. So what is going to be most substantial when you think about branding Playboy into some of these areas? Because that seems like quite a bit of other entities to get into when you're talking about CBD, cannabis, and all-- in sports gambling. Which one's most important?

BEK KOHN: Look, they're all important. I think what's most unique about this company and why I took this job and I thought it was the biggest opportunity I had seen in my career is the value of the brand. This brand today generates over $3 billion in consumer spend, products are sold in over 180 countries.

And when you looked at this cluttered consumer environment that we all live in today, it's the brand that's truly differentiated. You know, you think about other companies that are trying to launch products, people that are entering the telemedicine space, they're spending tens of millions of dollars trying to build a brand. We have a brand that reaches over 50 million people every day that generates over $3 billion of spend.

So when we look at these categories, although it's not easy, the amount of categories that this brand has historically played in 68 years is amazing. And so that gives us really unlimited runway moving forward. I will say that the first area that we're very focused on is the sexual wellness space. There is no market leader, it's highly fragmented. And we believe globally we can become a market leader.

AKIKO FUJITA: I mean, if you think about the Playboy brand, sexual wellness, certainly, I think people can see the direct tie there. But what's the play on sports gambling? A little surprising to hear you raise that. What specifically do you have in the works?

BEK KOHN: Look, I can't comment on anything that we have in the works today. What I will say is this brand has been in the gambling business for 40 years. We have a casino in London in partnership with Caesars, what is now Eldorado. We have great partnerships internationally with Microgaming, with Scientific Games domestically.

We've had, in the past, some of the best Super Bowl parties, Kentucky Derby parties, and others. And I believe because of the fan base we have, we can activate that fan base around other gaming assets. And so it's something that's been core to our business for 40 years. It's something that we are focused on moving forward. And wait and see.

BRIAN SOZZI: Ben, how do you think the pandemic has changed your business?

BEK KOHN: Look, there's no doubt there was a benefit in 2020 on our direct-to-consumer business. But we also lost revenue in other areas. I believe that the strategy that we set upon three years ago to move the domestic business to D-to-C and potentially follow that internationally down the road was the right strategy. We saw those trends internationally before the US had caught up.

And so I believe that that will continue to benefit us moving forward. We have over 3 million people that we're advertising or marketing to today. If you look at the business in 2020, over 50% of our revenues came from the D-to-C environment domestically. And when I think about long term internationally, I believe that we can drive superior average order size and lifetime value of the customers by controlling our e-commerce on a global basis.

Now, that's not to mean it's going to happen overnight. But long term, should we be able to execute on that, we can capture more and more of that $3 billion of spend around the world.