How Hugh Hefner built Playboy into the multimillion-dollar business it is today

9th Apr 2017
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“Life is too short to be living someone else’s dream.”

His life may be riddled with scandal and conflict, but no one can deny the fact that Playboy’s Hugh Hefner knows how to run a successful business. The 90-year-old millionaire not only built his company from scratch, but he built it on a base that went against societal norms. Hefner’s bid to allow an avenue of ‘sexual freedom and liberation’ through the basis of his magazine and enterprise was met with mixed responses from an audience which was still freshly recovering from the throes of the World Wars.

Image credit: Shutterstock

In 2011, this enterprise was wrapped in a deal to go private at $207 million, with $6.15 per share.

Hefner became an entrepreneur at a time when the term was a distant reality to the American markets. Born into a strictly Methodist family, Hefner, with an IQ of 152, may have been severely disinterested in school, but he always harboured an affinity for writing. Hefner rallied to become the president of the student council, and upon winning the position, he started and ran the school’s first newspaper. This marked the beginning of his journalistic aspirations that would eventually turn him into the owner of a million-dollar company.

After school, Hefner was enlisted in the army as a non-combatant towards the end of World War II, and was discharged in 1946. Following this, he went on to study psychology at Urbana Champagne, Illinois, although his eye was still set on journalism.

Post graduation, Hefner scored a job at Esquire, an elite magazine which featured some of the top notch celebrities and models of the period. While he built up his contacts during this stint, a row of disagreements and a final fall-out over salary negotiations emboldened him to leave the company and begin something of his own.

Hefner realised that while Esquire certainly had a large audience of men and women alike, there was no exclusive magazine for men which offered the same kind of sensual content as the former. To this end, he decided to launch precisely this, planting the seeds for what eventually became Playboy.

“The interesting thing is how one guy, through living out his own fantasies, is living out the fantasies of so many other people,” he had once famously said.

The early years

Like any other entrepreneur, Hefner struggled to find sufficient funds to begin his journey. After a lot of pitching and convincing, he managed to raise $8,000, a significant amount at the time, from eight different investors. Out of this, $2,000 were contributions from his mother and brother. The name Playboy was modelled on a defunct automobile company, which Hefner took very warmly to as he believed it reflected high living and sophistication.

To help the launch of the company’s first edition, Hefner procured a coloured photograph of a nude Marilyn Monroe and placed it in the centre-fold of the magazine. In a short span of time, the issue sold more than 50,000 copies and became an instant sensation. The logo of the magazine, the stylised profile of a rabbit wearing a tuxedo bow tie, appeared in its second issue and has remained the face the brand since. To Hefner, the rabbit seemed perfect to denote a humorous sexual connotation, depicting the magazine’s theme of being both frisky and playful.

Aiming to target the more cosmopolitan and intellectual male demographic, Hefner spent the next couple of years developing and promoting the Playboy philosophy, a manifesto on his ideas on politics, and governance as well as free enterprise and the nature of man and woman. By the late 1950s, the company had begun to thrive and the circulation of its magazines had surpassed that of its rival competitor, Esquire.

Golden period

Hefner spent the ‘60s networking with all the right people and building up the sensual brand image of Playboy. He began to advertise both the magazine and himself as the spokesperson symbol for the sexual revolution of the ‘60s. Eventually, he began to invest in a series of ‘private key’ clubs. The highlight in the opening of these was the fact that it was openly racially inclusive at a period when segregation was still largely prevalent.

The introduction of Playboy Bunnies in their scant uniforms and bunny ears to host these high-end enterprises definitely helped attract a significant number of subscribers and customers to the company’s services. This in turn led Hefner to double his resources and invest more heavily in real-estate and other branched out businesses, this time in the form of hotel resorts, modelling agencies, and several media ventures.

Hefner even produced a series of weekly talk-shows like Playboy's Penthouse (1959–60), which featured the likes of Ella Fitzgerald, Nina Simone, and Tony Bennett, and Playboy After Dark (1969–70), with guests like Milton Berle and James Brown. In 1964, Hefner opened up a Playboy Foundation to support endeavours related to fighting censorship and researching human sexuality.

“In my own words, I played some significant part in changing the social-sexual values of our time. I had a lot of fun in the process,” he said.

Later years

By 1972, the company had become a full-fledged major corporation and the magazine's circulation hit seven million copies a month, earning a $12 million profit. However, by the mid-1970s, circulation rates began to fall. Recession had hit the American markets and the magazine began to face competition from the likes of new players like Penthouse. Hefner’s idea of putting out more explicit images to help satisfy what he deemed as ‘men’s eternal desires’ incited an upsurge of hostility against him from polite society. Even advertisers protested and withdrew from their contracts with the company.

Hefner thus decided to focus all his attention of the magazine’s publication again and began to reach out to Hollywood’s leading celebrities for support in an attempt to win popular favour. In 1978, he even started the Playboy Jazz Festival, an annual event featuring some of the best jazz musicians in the world.

Ten years later, he publicly announced that he would be turning over the control of Playboy Enterprises to his daughter Christie, naming her Chair and Chief Executive Officer, citing personal reasons. She carried out this role till 2009, during which time she played a key role in directing Playboy's ventures in cable television, video production, and online programming, with her father continuing to serve as the magazine's Editor-in-Chief.

He also began to turn his active attention to retail, and soon enough, the company witnessed a $1.5bn in annual retail sales worldwide in 2013, out of which more than $500m came from China. To this, CEO Scott Flanders called the figures “testament to the tremendous power of our brand”.

Hugh Hefner may be turning 91 today, but his shrewd sense of purpose and business acumen remain as sharp as they were when he first launched Playboy 64 years ago. As for his future plans, we quote the man himself when he says:

“I have no plans to retire. It's the perfect combination of work and play that keeps you young. If I quit work it would be the beginning of the end for me.”

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