Jimmy Donaldson: How MrBeast surpassed over 200 million subscribers

Imagine you are the most popular YouTuber. Your videos routinely smash the 200 million views mark. Yet paradoxically, you make losses. How is that even possible?

That’s the story of Jimmy Donaldson, the mastermind behind the MrBeast channel, boasting over 230 million subscribers. Donaldson has cracked the code on making viral videos, with his creations raking in upwards of $3 million solely from ad revenue. Add in the astronomical figures from sponsorship deals, and it’s clear his financial intake is off the charts. So, why does he lose money each year?

The MrBeast phenomena

Donaldson started making YouTube videos when he was just 13 years old. He was obsessive. He formed a brainstorming group of YouTubers who spent hours everyday dissecting successful YouTube videos and analysing what worked.

Slowly but surely, Donaldson started creating videos with an element of absurd in it that started building him an audience. And at the age of 19, he got a phone call that changed everything.

A sponsor wanted to pay him $5000 for a video. 

But Donaldson refuses. And counters for $10,000. His plan? Give it all away to a homeless person on video. Donaldson would give the money away to a homeless person and create a video. A $10,000 giveaway makes for a juicer viral hit than one giving away $5,000. It took 3 hours of negotiation to finally get the sponsor to agree.

The video indeed went viral. It generated a lot of ad revenue. So what does Donaldson do next? Pour every dime into another giveaway. This cycle of generosity became his trademark.

Parlaying Generosity into Virality

Donaldson’s strategy? Come up with crazier ideas to give away more money. 

  • He gave away new cars to Uber drivers.
  • He ran a contest where 50 participants placed their hands on a Lamborghini, and the last one remaining would win the car.
  • He bought out entire supermarkets and gave the goods to local food banks.
  • He bought and gave away an island!

Simply put, Donaldson finds crazier ways to give away all his money. If a video makes a million dollars, he plans and comes up with an idea of how to give away 1.1 million dollars in his next video. Continually escalate the stakes.

Donaldson has gone all-in with parlaying his revenue into the next video and the next video since the last 9 years! As a result, he has never had a profitable year. But he has grown to become the biggest individual YouTuber.

But isn’t going all-in dangerous?

Any economist would tell you that if you go all-in all the time, you will eventually lose. It’s like walking on a tightrope without a safety net. One wrong move and its game over. How does Donaldson avoid that fate?

Donaldson bets on asymmetry. Successful gamblers parlay when there is an asymmetrical edge. When the upside outweighs the downside. 

Donaldson found his asymmetrical edge when he realized that a video that gets 30x more views is not 30 times better. There is a power law at play here. You just need to perform a little better to win outsized gains.

The way to do that? Go all-in. But with original ideas that no one else has done before. 

The obsession over ideas

Donaldson would sit down everyday. And spend an hour each day just coming up with weird and absurd ideas for his videos. How to give large amounts of money by running absurd competitions. He did this everyday for 4 years straight!

He would use a random word generator. Say dogs. Then write down every idea he could come up with relating to dogs. How to adopt a 100 dogs. How to spend buttloads of money behind dog treats. And so on.

Intersection of generosity and originality

Donaldson found his flywheel at the intersection of generosity and originality. Flywheel is this mechanism where in each action creates incremental momentum – making the next action easier and more impactful. By being obsessive about originality, Donaldson created a system where in each video fed into the success of the next video. 

Originality and reinvestment made Donaldson the king of YouTubers.

Action Summary:

  • Parlay to grow bigger and bigger. Sacrifice immediate profits and reinvest more than you’re comfortable with – for long term growth.
  • But first find an asymmetrical edge. Somewhere where every additional unit of effort creates twice its returns. Because that’s what will allow you to create a flywheel – a self sustaining cycle of success.