Category Archives: Pop Culture

Adidas vs. Nike: The Real World Cup Battle

As the world convened on the country of Brazil to passionately watch thirty-two countries compete for immortality on the FIFA World Cup stage, another epic battle unfolded between the sportswear giants, Nike and Adidas.

Much of how consumers interact with businesses is based on perception and taste, which is why so many resources are devoted to marketing and advertising.  Through sponsoring the countries’ football teams and famous players and countless commercials and marketing ploys, the two brands geared up for a month long sporting festival that was sure to entice the consumers and bring in large chunks of revenue.  Let’s take a look and see which industry leader came away with the upper hand.

Adidas

Overall, you probably saw the Adidas logo more prevalent in the World Cup competition because of the official partnership the company has with FIFA.  At around $70 million per four year cycle, Adidas has the rights to manufacture and sell the World Cup Brazuca game balls as well as the referee kit.   Such a deal aligns Adidas with the FIFA logo on pretty much any advertisement, as we saw on ESPN’s virtual scoreboard.  Needless to say, this deal, for any sportswear brand, is extremely lucrative since the brand was quite visible.  Expenditures for the German company did not stop there, though.  According to reports, Adidas spent $2.3 billion in advertising and marketing for the World Cup.  High numbers, yes, but the ratio between the marketing budget and revenues in 2014 has held steady with the ratio during 2010’s World Cup in South Africa (10.1% and 10.7% respectively).  The target revenue with this year’s World Cup was $21.2 billion.

Screen Shot 2014-07-15 at 10.29.59 PM

Another indicator of Adidas’ exposure at the World Cup was their share price throughout the entire tournament.  Starting on June 12th, Adidas was selling at $52.99 per share and ended the tournament at $50.22 per share.  Initially, I had thought both corporations would see increased stock prices during the tournament, seeing as they would have extreme visibility and favorable marketing, but this $2.77 decline may actually be completely unrelated to the Cup.  Just yesterday, Adidas agreed to a ten year, $1.3 billion kit deal with English football club, Manchester United.  Despite the fact that this deal severs the thirteen year partnership Nike had with the football club, concerns were raised (and consequently stock prices lowered) due to the staggering price of such a deal.  Thus, it is not certain whether the World Cup had a positive affect on Adidas’ share prices.

Lastly, and maybe foremost, Adidas’ triumph at the World Cup could’ve been cemented on the final day.  Out of the thirty-two teams, Adidas sponsored nine with two of those nine making it to the World Cup Final (Brazil and Argentina).  Furthermore, out of the 166 World Cup goals, 78 were scored with Adidas soccer cleats, which belonged to some of the tournament’s top performers including Lionel Messi (Golden Ball winner), James Rodriguez (Golden Boot winner), Thomas Mueller and Andre Schuerrle of Germany.

Nike

Although Nike did not have the official FIFA World Cup sponsorship, the Oregon-based company played as big of a role as its counterpart.  As usual, Nike had the most aggressive, yet artistic marketing campaign for the event.  You probably noticed their ‘Risk Everything’ campaign, which featured the cartoon versions of Brazil’s Neymar Jr., USA’s Tim Howard and Portugal’s Cristiano Ronaldo–all Nike sponsored athletes.  Prior to the World Cup, Nike introduced their first ever football-only store in Rio de Janeiro which boasted Brazil’s World Cup kits and the boots Nike athletes would wear during the games.  With such an extensive advertising scheme, its no wonder the company’s marketing expenses jumped 36% to $876 million in the quarter to end May.

Contrastingly, Nike saw share prices increase for the month of the World Cup, opening at $74.77 and closing at $77.95.   This could have occurred for several reasons:  Nike’s forecasted 21% growth in the global football business, its share of 80% of a $5 billion industry with Adidas or because of the potential the game of soccer has in the United States.

On field success for Nike was expected, as it out-kit Adidas with 10 sponsored countries including host nation, Brazil.  Furthermore, 53% more players wore Nike boots than any other brand.  However, a series of unfortunate events on the pitch, like Neymar’s back injury, Ronaldo and Portugal’s lackluster performance and Brazil failing to make it to the final hampered Nike’s exposure as the World Cup waned.

Conclusion

Adidas was the much more visible brand during the 2014 World Cup. In competition, their teams triumphed and it seemed like all the individual awards were also given to Adidas athletes.  Beyond this, Adidas’ YouTube viewership during the World Cup eclipsed Nike’s by six million.

The future is bright for Nike, though.  The buzz around the World Cup and for the Men’s National Team in the United States was created because of Nike’s marketing.  The brand understands that while Adidas may hold a stronger foothold around the globe, it is in control of the largest consumer market in the world.  With Major League Soccer growing in popularity, Nike is primed to capitalize on soccer equipment, apparel and footwear in the US.  As far as I am concerned, Nike is well positioned to make a run at Adidas again in 2018.

Maxwell

Sneaker Pawn Shop

“Young kids don’t have jewelry.  They don’t have cars, but what they do have is the thousands of dollars worth of sneakers in their house,” says Troy Reed, father of young entrepreneur and founder of Sneaker Pawn, Chase Reed.

Sneaker Pawn, located in Harlem, New York, is the latest venture to capitalize on the budding sneaker culture that is prevalent within today’s younger generation.  The shop, manned by Chase and his father, offers secured loans to people with limited edition or dead-stock sneakers, which are used as collateral.  The two place a value on the sneakers by checking for odors and wear around the toe box and heel counter.  Just like any other pawn shop, if the pawner wants to retrieve their sneakers he/she must pay the original loan back plus a storing fee, almost like interest.  In the case that someone else makes an offer on the pawned shoe, the pawner is notified and has the right of first refusal, so long as they can provide the cash.  When the sneakers sell for more, the pawner keeps 80% of the profit and the rest goes to the store.  Besides lending money in exchange for kicks, Sneaker Pawn also customizes and refurbishes sneakers.

Chase and his father used to be the obsessed sneakerheads who would stand in line for hours and sometimes days for the newly minted Air Jordan and Nike limited releases.  Like all entrepreneurs though, the two saw an opportunity to capitalize on this hobby.  Chase, 16, sold his own collection of shoes (around 200 pairs) to gather the $30,000 of seed money for Sneaker Pawn.

The store is the current holder of some pretty exclusive kicks, such as the Kobe 9 Masterpiece, the Air Jordan 6 Infrared, and the Lebron X Crown Jewels, which are valued at $1,400–more than five times their retail price.  The shop has seen immediate success amongst consumers as collectors have pawned their kicks to pay for funerals, prom dresses, and even a move from the Bronx to Brooklyn.

Lebron X Crown Jewels
Lebron X Crown Jewels

Sneaker Pawn is effective because it enables young people to have access to fast cash.  Like Chase’s father said, kids do not always have jewelry or the expensive items that are normally used to borrow money against, but with so many investing in shoes that appreciate over time, their assets are much more liquidable.

Check out the New York Post’s article on Sneaker Pawn and check out some of the shoes the shop has to offer on their website.

Maxwell

 

Why Lululemon is The Perfect Buy For Nike

Lululemon is an athletic-wear brand with a primary focus on yoga apparel.  Having captured the attention of young women, Lulu has become quite popular across the globe.  Lulu has been apparent in my own life because of my active mother and because of the [unfortunate] leggings trend that has nestled its way into the hearts of seemingly every woman.  Lulu has been so successful because of the balance it has struck, making it’s clothing sensible and stylish while still maintaining it’s athletic roots.

Over the past year, however, Lulu has seen a slight fall from grace.  In 2013, the company was under fire due to a recall for a line of yoga pants that were too sheer.  In response, the founder of Lululemon Athletica, Chip Wilson, stated that customer’s fat thighs were to blame for the yoga pants being see-through.  As a result, Wilson relinquished his chairman’s seat and Lulu’s CEO, Christine Day, stepped down.  The company has since wilted.  Considering Lululemon’s status in pop-culture and their current lack of direction, it is primed for acquisition by none other than the world’s leading athletic-wear brand, Nike.

Nike is no stranger to acquiring other brands, as it owns Converse and skateboarding company, Hurley (Nike also purchased Cole Haan in 1998 for $95 million and sold it in 2012 for $570 million).  Right now, Lulu lacks a sense of direction.  New CEO, Laurent Potdevin, has filled the holes with empty remarks on reclaiming the company’s creative destruction in the market, but the truth is Lulu is floundering.  Through Nike’s experience in operations and marketing, it would be able to right this ship.  Lulu would gain access to some of the best manufacturing plants and Nike’s rebranding of the company would bring back the positive image it lost hold of.

Financially, this purchase would make sense as well.  Lululemon is a direct competitor of Nike.  Buying the company would give The Swoosh increased market control and better pricing power.  Moreover, Lulu is trading at a relatively inexpensive share price.  In 2013, before the company ran into turmoil, Lulu was trading as high as $82 per share.  If Nike attempted to buy the brand at this time, it would not have been feasible, as Lulu’s valuation would have been way too high.  Since the debacle, though, Lulu is trading around $44 per share, making their valuation much more affordable.

As bad as Lululemon’s situation may seem, their immediate value to Nike would be tremendous.  In terms of revenue, Lulu has gone from annual sales of about $453 million in 2010 to $1.6 billion for 2014.  This indicates that Lulu is still growing and that it is still relatively popular.  Lastly, while Nike does a fantastic job of marketing their clothes for both athletic an street-wear use, there are just certain styles that other clothing company’s manufacture or market more effectively.  For example, on campus I never see girls wearing Nike leggings, but I always see them rocking Lululemon’s, recall or not.  Its not that Nike’s yoga pants are poor quality, its that Lulu’s ability to be trendy and different has made their yoga pants more attractive.  Adding their product to Nike’s line would only make Nike that much more profitable.

Maxwell

Apple to Remove Headphone Jack…For What?

Rumors have surfaced that Apple plans to abandon the ubiquitous 3.5mm headphone jack.  This story developed when Apple blog, 9to5mac, discovered that Apple submitted a design specification to its licensing program which would connect headphones using the Lightning port.

For Apple, this is a smart move.  By removing the classic headphone port, Apple makes all previously designed headphones obsolete.  This wipes out products of competitors, and maybe most importantly, it sheds more light on the significance of the $3 billion Beats Electronics acquisition.  Rather than collaborating with Beats Electronics to create headphones with Lightning port accessibility, Apple now has the ability to earn exponentially more money from license fees and adaptor sales.  The fact that such headphones would probably retain the iconic Beats logo only adds to Apple’s gain, as both brands are synonymous with current popular culture.

Moreover, this innovation, or business ploy, should instigate new technology developments from other competitors, only making Apple diverse and exclusive.  Without a headphone jack, Apple perpetuates its own longevity by locking consumers in to purchasing more Apple products.

Sometimes the wellbeing of the customer is not considered at all.  With this move, we stand to lose big time.  Now that our beloved headphones are obsolete, we must either purchase bulky adaptors or new headphones all together.  Those Beats Studio headphones you just bought? Yea, those are no longer functional, which means shelling out another $200+ to listen to music.

Its funny how the simplest changes result in huge revenues for a company.  I can’t say I’m upset with the Beats acquisition or this news because its kind of ingenious.  For a full read on this recent development, check out the article on Forbes.

Maxwell

Los Angeles Clippers Sold to Former Microsoft CEO

Donald Sterling, and the Sterling Family in general, has been the topic of discussion across all media outlets over this past month.  Hopefully, we are nearing the end of this freight train, as the sale of the Los Angeles Clippers by Donald and Rochelle Sterling to former Microsoft CEO, Steve Ballmer, was approved by the NBA last Friday.  The deal, which will oust the most infamous man in the NBA is worth a whopping $2 billion, making this sale the largest for any NBA franchise.  While many are pleased to see Sterling officially out of the league, the price tag for such a removal has caused much conversation.

Prior to the sale of the Clippers, the acquisition of the Milwaukee Bucks by New York investors, Marc Lasry and Wesley Edens, was the largest in the history of the NBA at $550 million.  For those non-sports fans, the Milwaukee Bucks have been notoriously irrelevant.  Why? Well, Milwaukee is a very small NBA market (Quiz Question: What state is Milwaukee in? bet you thought about it for longer than you should have), they lack superstar athletes and for the last four seasons they have failed to achieve a winning record.  Now, take a Clippers team that has been the annoying little brother to the Los Angeles Lakers and laughing stock of the entire NBA for the past thirty years and you can understand why a bid almost four times that of an acquisition that took place just a couple of weeks ago seems a bit excessive.

Mind you, Mr. Ballmer has been trying to purchase an NBA team for some time and, according to Forbes, he has an estimated net worth of $21 billion, so to him this deal neither hurts his pocket nor loses its luster.  Here’s why:  Ownership of any major sports team is a very exclusive club.  Out of the 92 franchises (comprised of the NFL, MLB, and NBA), only a spoonful have gone up for sale over the last decade.  A sports team is analogous to that of a bluechip stock; you usually hang on to them for an extended period of time, which is why we have these legendary families, like the Rooney’s and Buss’, who have owned franchises for decades.  Therefore, when a team is on the market, much attention and interest is drawn from the richest in the world.  I believe this situation with the Clippers drew much more appeal because of the given circumstances.  The Clippers are located in the massive, star-studded LA market, which brings tremendous upside.  Furthermore, the new owner (Ballmer) would be replacing not only the most hated man in the country but also an absolutely terrible owner.  Steve Ballmer immediately becomes the savior of a headless organization and his business acumen from running Microsoft is sure to point the Clippers in a more progressive direction.

Many people have criticized this acquisition because of how poorly structured some of the contracts within the Clippers organization are.  For example, the Clippers are merely tenants in the Staples Center, meaning they receive $0 for non-basketball revenue.  I, however, still perceive this as a smart move.  First and foremost, the Clippers were worth as much as anyone was willing to pay for them–more power to ya, Steve.  No one complained when Magic Johnson and company purchased a struggling Dodgers team for $2.3 billion, now look where they are.  Moreover, the Clippers local TV deal is set to expire after the 2015-2016 season.  Given the market and recent success the team has seen, I would expect this new deal to be more than double the previous, only adding more cash to Ballmer’s pocket.  Lastly, the real estate that the Clippers own could be redeveloped for better, more profitable commercial spaces.

I see this venture as a long-term one.  Of course Ballmer will have to break even, but think about the future valuation of the Clippers in thirty years.  If some of the more high profile sports property is sold in the mean time, such as the Lakers, Ballmer would definitely see an appreciation in his team’s value.  Besides, when do you really see the value of a team decline?

Maxwell

Apple To Acquire Beats Electronics

For those living under a rock, Apple has once again made headlines as it plans to acquire current pop culture staple, Beats Electronics.  According to Apple and multiple news outlets, the deal is set to be worth $3.2 billion.  Apple isn’t the first popular brand to make such a lofty acquisition recently, as Facebook purchased messaging app, WhatsApp, for $19 billion and Oculus VR for $2 billion.  Google has also pulled out the wallet and bought Nest for $3.2 billion– certainly, none of these deals have broken the backs of either company.

Many different conjectures have been published as to why Apple has selected Beats Electronics to be aligned with the brand.  Some believe its because of Apple’s desire to hire Beats’ co-founder Jimmy Iovine, who is apparently a leading innovator within the music industry; others think its for the newly released Beats streaming service, which has utterly failed to compete against Spotify; and then there are those who simply believe Apple is floundering, running out of the creative ideas consumers have come to expect from the powerhouse tech corporation.  This final theory may hold some weight considering the fact that Apple has followed the pattern of the other aforementioned corporations’ acquisitions.

Personally, I believe Apple made this move because (A) it places another product that has huge profit margins in Apple’s current lineup, and (B) perhaps for revitalizing/merging iTunes Radio with Beats’ streaming service.  Whatever theory you believe, its definitely not the groundbreaking move that will recover some of Apple’s lost market-share to other technology companies.  Maybe Apple has some ‘holy-shit’ idea up their sleeve that we don’t know about, but until then let’s just think of this as two iconic brands getting in bed together– a la Jay Z and Beyoncé.

As for producer/rapper, Dr. Dre, he can now be regarded as hip hop’s wealthiest mogul, surpassing Jay Z and P Diddy.  Although people speculated that he would be the first billionaire out of the triumvirate, Forbes estimates that this deal will bring in about $480 million after taxes– leaving Dre $200 million shy of the illustrious billion dollar mark.  Regardless, I can’t imagine seeing a Dr. Dre album releasing any time soon, especially after this huge pay-day.

Maxwell

J. Crew Going Public Once Again?

J. Crew, a brand that is one of Michelle Obama’s favorites, a brand that is defined by utility; contemporary style and an essence of preppiness has been rumored to be in talks with financial giants, such as Bank of America and Goldman Sachs, to refinance their debt and possibly become a publicly traded company, once again.  Just several years ago, J. Crew went private in a $3 billion deal with investment partners, TPG Capital and Leonard Green & Partners.  The reason being for such a departure from the trading floor was a decrease in sales.  During that year’s third quarter, net income had fallen by 14% due to weaker women’s clothing sales (J. Crew must certainly be grateful for our First Lady’s endorsement).  Moreover, stores that were open for at least one year saw their revenue fall by 1%.  In terms of the financial sector of the retail industry, J. Crew has been inconsistent; perhaps this is due to the constant shuffling of chairs in the New York based offices.

However, with the revitalization of J. Crew by CEO Millard Drexler and President Jenna Lyons, we are seeing an increase in sales and popularity.  Sales last year rose 9%, which was more than publicly traded brands, like Gap and Ralph Lauren.  I believe more time is necessary to see the true growth of J. Crew, but if it were to go public, the company would look to mirror the successes of similar brands that are ruling pop culture, such as Michael Kors (trading at $98) and Vince, a newcomer to the public market in 2013 seeing its stock rise 43% in its debut.

Further indicators of a public offering shall be debated with news surfacing about Japan based Fast Retailing Company’s Tadashi Yanai (chairman, president and CEO) wanting to acquire the J. Crew brand.  This would align Uniqlo, one of Japan’s largest clothing purveyors and one of my personal favorite shops, and J. Crew under one umbrella, making it an immediate giant in the fashion industry.  The $5 billion deal would enable the ambitious Yanai to attract more customers in the U.S. market to the rapidly expanding Uniqlo stores.  As J. Crew weighs the option of an IPO, stay tuned for more news on this potential acquisition.

As a prospective investor, pay attention to companies such as these, as their audience is global and quickly growing.  I’m certainly a novice when it comes to the financial sector, but I would suggest to invest in what you know.  Why would you financially concern yourself with corporations that you yourself are not personally involved with?  I love clothing.  J. Crew is a staple in my wardrobe and when I walk around my campus I can see its increased popularity.  If I were to invest in such a company, I wouldn’t just monitor its daily position in the market.  Since J. Crew is a part of my wardrobe, because I like to shop there and because the college style is very much catered to the J. Crew look, I would be able to observe my investment in a much more profound way.  Much like the clothing brands I mentioned above, J. Crew is a chic, urban brand while remaining relatively affordable for their followers.  I find this especially important for the college crowd, which is why J. Crew’s audience has room to expand.  Whether J. Crew is actually seeking to release an initial public offering remains to be seen.  The company may not even be a suitable long-term investment option, but for new, young investors and short-term stock options, J. Crew may be viable.

Maxwell

Lammily: Challenging the Perception of Beauty

Societies’ perception of beauty is completely based on a false reality that is perpetuated by television, the fashion industry, and even the dolls our children play with today.  The debate over this issue, this craze, has long been discussed; however, little has changed.  Each year we can count on watching “Angels” seductively walk down a runway which promotes borderline unhealthy physiques that women all across the world painstakingly try to achieve.  Every time we walk into a toy store we can count on seeing the iconic Barbie doll, an idealized, yet implausibly, shaped blonde figurine which millions of girls and boys have grown up with. Nickolay Lamm, creator of Lammily , has finally challenged these surreal desires.

Lamm, a Pittsburgh based artist and researcher, has begged the question: What if fashion dolls were made using standard human body proportions?  Provided by the CDC, Lamm has used the average body measurements of a nineteen year old women to generate a 3D digital prototype of a doll he hopes to produce.

Just two days ago, Lamm used Crowdtilt to garner crowd-sourced funding for his venture.  His target amount to cover the costs of manufacturing was $95,000.  Today, he has succeeded this goal by over $100,000 with twenty-nine days left in the first round of financing.

Lamm has been lauded for his previous work by Buzzfeed, Business Insider, Huffington Post, and many more news outlets.  The USA Today featured Lammily just yesterday.  Lamm’s ability to ask the unthought of questions and then visualize the answers in artistic renderings is the reason why Lammily is so innovative.  In our terms, Lamm is an entrepreneur.  A clear void in the fashion doll market was apparent and he has created a way to effectively exploit it.

I would also like to comment on his use of crowd-funding, a brilliant idea in my opinion.  Rather than trying to meet with investors to back his project, which we know can often lead to failure, he opened Lammily up to the public for support.  This suggests (A) his confidence and the market potential for the fashion doll, and (B) his understanding of the intended retail audience.  I do not think crowd-sourcing works for every entrepreneur, as it is necessary that your product receives the proper amount of attention for such a decision to pay off.  With that being said though, I believe this way of financing is an under-utilized option within the entrepreneurial community.

Nickolay Lamm and Lammily are prime examples of why entrepreneurs and innovation are integral parts of our society.  Lammily challenges a convention that, frankly, is unattainable while creating a new socially progressive alternative.  This is what pushes boundaries.  This is how new paradigms are created.  Congratulations on a wonderfully thought out product.

Maxwell

Jay Z: Maturity

Albeit a somewhat disappointing evening for the fans of Roc Nation and Jay Z, as Hova came away with one Grammy, we did get to see the music industry’s most powerful couple show us how to truly rock a stage…so I guess it wasn’t all that bad.

Congratulations to Macklemore and Ryan Lewis for their album, The Heist, winning Rap Album of the Year.  Jay Z still has the most platinum albums out of any solo artist to ever perform, yes, more than Elvis, so stick that in your pipe and smoke it, Ben Haggerty (AKA Macklemore).

I digress, without further adieu, I present to you the final part of my research behind hip hop’s biggest brand: the maturation of Shawn Carter.

At the point of maturity, a veteran firm has achieved a certain amount of name recognition, their sales require less effort, the business produces a reliable stream of cash, and intensive marketing or redevelopment may be needed to increase or maintain market position.  Picture Jay Z as a mature firm.  He is no longer an artist trying to find his place in the industry, but rather a mogul who runs his own record label (Roc Nation) and has the most albums to go platinum as a solo artist.  It is safe to say that he has attained such a position where not much he does is considered a failure.  With that being said though, how does he maintain his level of success as his career progresses?  Enter, Beyoncé.

“In terms of the entertainment industry, it’s the biggest merger you could possibly imagine,” (Bloomberg, 188).  In 2008, Jay Z and mega-star in her own right, Beyoncé Knowles, were married.  On a strictly financial basis, this could be considered a business transaction, a merger, where two brands came together to form a joint venture to achieve profits greater than they could have dreamed of on their own (according to Forbes, the Carter Family is the highest earning celebrity couple).  When thinking about Jay Z’s upside, the marriage provides different financial opportunities.  For example, in 2004, while Beyoncé and Jay Z were dating, Carter invested $10 million into beauty company, Carol’s Daughter (“Carol’s Daughter Poised for Growth,” Julie Naughton).  Would former drug dealer turned rapper have invested in such a company if it were not for Beyoncé?  Beyoncé offers Jay Z a new fan base, “We exchange audiences,” Jay Z says (Bloomberg, 198), but more than that a female perspective of investment opportunities.  It is understandable that Jay Z wouldn’t be interested in investing in a company that is geared toward African American women, but with his relationship with Beyoncé, who’s a global icon in her own right, those doors are now open to the rapper.  Beyoncé is an asset to Jay Z, and like a mature company, she can be used to rebrand and recreate the image of Jay Z.  Moreover, with the birth of their daughter, Blue Ivy, Jay Z is now perceived as more than just an entertainer, but a father and a family man; I hear the sound of doors being opened and lots of money coming in.  A merger/marriage benefits both joining entities because it creates new avenues for their global brands to travel and reach the millions of people who’ve yet to be touched by their business savvy.

As previously mentioned, at the pinnacle of a business career name recognition, effortless sales, and a steady stream of revenue have been acquired.  However, another aspect of such a point is that business leaders or firms attempt to give back or, teach those who have not been as fortunate, the tools to attain such success.  Many corporations and companies, like Starbucks and Nike, have established foundations to improve the quality of life for a specific demographic of people or to address issues that pertain to the scope of their industry.  Jay Z, too, has a foundation.  Carter and his mother, Gloria Carter, founded the Shawn Carter Foundation in 2002.  It was established because, according to Jay Z in the interview with Steven Forbes and Warren Buffet, “such a small thing changed my life, right? A sixth-grade teacher said, ‘You know what, you’re kind of smart.’ And I believed her.”  Carter understands that not everyone can be as lucky as he has been thus far in life.  Not everyone can “bet it all” on the music industry and try to be successful without any formal education.  The Foundation stresses the need for higher education in order to explore and develop one’s mind.  Such efforts cannot be attempted if the resources and finances are not available, though.  The Shawn Carter Foundation has grown with Carter as he has succeeded financially during his music career.  According to the foundation’s website, they have awarded over $1.3 million to students so they could pursue higher learning.  Jay Z’s tool to success is intellect and a different understanding of the world around him; he recognizes that education is needed to reach such points.

Another philanthropic way, in which Jay Z gives back, is through his current lifestyle company, Roc Nation.  Roc Nation is primarily a record label, but it recently began representing professional athletes.  It is different from other representation companies because it focuses on the development, cultivation and continued support of its clients.  In an interview with BBC Radio’s Zane Lowe, Jay Z talks about how his new sports management division of the company alters the current industry.  It is no secret that the sports industry dwarfs the music industry in terms of revenue.  Players are being paid millions upon millions of dollars, but they aren’t receiving the support they need to maintain their wealth for the years to come after their playing days.  The average playing career in the NFL is three to four years, and shortly after that players end up broke.  Carter says, “Now they (current sports agents) have to wake up and go to work.  They’ve spent fifteen, twenty years just sitting back and collecting the check, now they have to see how their [client’s] mama doing and if his mental situation is where it needs to be.”  Jay Z understands that he stands less to gain from his clients than they stand to gain from him.  For Jay Z it is more than the profits.  With Roc Nation and Roc Nation sports, he wants to promote financial literacy, so that young and highly successful people can be secure in the future when they no longer have the ability to produce at profitable levels.  Despite the company being a business, its principle is purely philanthropic, and socially conscious.

Jay Z had to lay the groundwork himself as a young and unproven artist.  It was he who sold his tracks out of his car, along with business partner Damon Dash, and it was he who founded his own label, Roc-A-Fella Records, in order to distribute his music on a larger scale.  Jay Z the entrepreneur invested the money, time, and energy to promote himself as a brand, and when that wasn’t enough he sought out bigger record labels to help with his production.  Through consistent output of music and innovation in the way Jay Z could profit from his brand, he has achieved a respected and revered status in the industry.  He has the attention and command of his listeners, and when his name is attached to some new product or some new album they respond.  This suggests that there is a pattern to success no matter what the industry or profession.  Jay Z’s physical journey to fame and wealth was quite different than that of others who have attained the same position, but the characteristics and genius behind them are very much the same.

Shawn Carter is needed, not just for pop-culture, but also for Black America.  We need a beacon of hope and of prominence where we can look to as a rubric for success.  In Jay Z’s own words, “We want to be looked at as a real solid company.  Not a good black company, but a good company ‘cause there’s a difference,” (“Jigga Man Jay Z Gets Down With Vibe”).  Jay Z is driven and determined to attain a spot in society that black Americans do not see everyday, and he’s doing it for us.  I, too, used to be a part of the group that thought rappers were selfish, stupid and materialistic ignoramuses.  Before I knew anything about Jay Z, he was grouped with such artists.  I don’t know if the hip-hop genre will ever distance itself from that notion, but I believe Jay Z has made a distinct decision to be a different example of African American identity.  Rap is poetry.  The rhymes and subliminal messages are beautiful, and when artists are straightforward with their messages the art form loses a bit of its appeal.  If you look deep enough at all aspects of Jay Z’s career, his message and desire of becoming an influential figure which the African American people can look towards is evident.

Thanks for listening.

Maxwell

Jay Z: Growth

Picture a start-up company that is stable with an increasing market and the ability to use its own resources to function rather than seeking out investor support.  This stage, which many entrepreneurs attempt to achieve, and more often than not fail at, is the growth period.  Personally, I would stress this stage most emphatically within the business’ development because the end result can either be rich with financial success and recognition, or, contently chugging along with little progress.  I would argue that factors such as innovation, foresight, and perseverance are just as important during this phase as it is during the start-up period.  How else do you take your company from ‘mom-and-pop’ to global icon?  You have to push the envelope.  Jay Z did just this, as he was quickly becoming one of the most popular hip-hop artists in America during the early 2000s.  His vehicle?  Roc A Fella Records.

As in any business, there are seminal moments in which opportunities are taken to exploit an existing model or to fill a void.  Starbucks capitalized on the coffee boom before it surged across America and Apple created the iPod.  Innovation is what propels companies and business leaders into visionary statuses.  The creation of Roc-A-Fella Records was just the type of establishment to shift the music industry.  According to Shawn Carter, “A key part of business is recognizing change,” (Jay Z and Warren Buffet, Forbes Magazine Interview).  Dash and Carter’s principles were simple, do not let other people make money off of Roc-A-Fella music and compensation should be made for the endorsements their rappers plugged into their lyrics (“Always win, and other lessons from the life of rapper Jay Z”, Potter).  These were ideas that were unheard of in the music industry, yet completely ingenious.  It is not uncommon to hear artists name-plug their favorite clothing brands, cars and watches into verses, as Migos raps “Versace, Versace, Medusa head on me like I’m ‘luminati,” in his song “Versace.”  Luxurious brands that were synonymous with the rap lifestyle were given free product placement in songs, which increased the company’s sales, while the artists did not benefit at all.  With the principles of Roc-A-Fella records, Jay Z has garnered endorsement deals with the New York Yankees, Adidas, and watchmaker Hublot (“Jay Z’s 10 Best Endorsement Deals,” Melia Robinson).  This practice is no different from what major athletes like Lebron James and Derek Jeter do, for it increases revenue in areas outside the realm of their profession.  Jay Z and Dash had the foresight to understand the partnership music and retail could have and implement this model into their own business ventures, elevating the brand of Jay Z to a global icon.

In financial terms, increased security and longevity can be acquired through investments and diversified portfolios.  For an independent label, like Roc-A-Fella Records, it was not a priority to develop the lesser-known artists on a label.  The emphasis was more on marketing the headliner, which in this case was Jay Z.  Unlike smaller labels though, Jay Z and Dash’s company made a distinct decision to find and develop new artists from the New York and Philadelphia areas to expand their audience and increase their revenue (Greenburg 68).  Much like investment, the label secured its future by spending the time and money on artists whom had the potential to be widely popular, which in turn increased the chances of Roc-A-Fella records growing into a bigger, more powerful record label company.

Roc-A-Fella diversified its assets by exploring other areas of commerce that could be fruitful.  The label was merely a platform to catapult the business minds of Carter and Dash into uncharted territory for hip-hop artists.  “We gonna build a tree and let the limbs grow all kinds of different places,” says Jay Z in an interview with Business Wire.  Rocawear, a clothing brand established by Jay Z and Damon Dash in 1999, was possible because of Roc-A-Fella Records.  “Dash encouraged Jay Z to cross-promote their products whenever he had a chance,” Greenburg notes in his book (71), “why give free advertising to someone else when he could boost his own sales with a Rocawear shout-out?”  Rocawear’s success was immediate, selling over $80 million in clothing over its first two years (‘Jigga Man’ Jay Z Gets Down to Business, Business Wire).  Dash and Jay Z understood their audience and marketability enough that they were able to branch out and add a new asset to the ever growing Jay Z brand.  Jay Z’s name is everything to his empire, if he can correctly place it in as many avenues as possible he increases his chances of becoming more popular and increasing his wealth, much like what people do when investing money for the future.

Now that we have books like, Zack O’Malley Greenburg’s and Jay Z’s Decoded, fans and the public alike can comprehend how smart Shawn Carter truly is.  Back at the turn of the century, we didn’t have access to such information unless we heard about some of the mogul’s ventures through interviews and news reports.  Yes, Jay Z is an entertainer, but his brand, his tree with thousands of different limbs, is all encompassing; if there is some facet of consumption that is closely related with the music industry, Jay Z will find it, water it, and watch it grow.  Respect the man’s talents; he sees the potential in things that you and I may not see, he’s Hova.

Maxwell