Hip-Hop’s Most Revolutionary Business Deals (No. 7 and No. 6)
Hip-Hop’s Most Revolutionary Business Deals (No. 7 and No. 6)
Nas and Run-D.M.C. are on the genre’s musical Mount Rushmore. They’re also the names behind a pair of its most significant financial moves.
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Below is the latest installment of my collaboration with Trapital founder Dan Runcie to determine the ten most revolutionary business deals in hip-hop history (read his take on No. 8-10 here). To form our list, we solicited recommendations from our readers and ranked the top deals by three metrics: originality of idea, level of cultural impact, and size of payout. Stay tuned to both our newsletters as we count down to No. 1 over the coming week.
7. My Adidas
Sauntering into Madison Square Garden fresh off the triple-platinum success of Raising Hell in 1986, the members of Run-D.M.C. found themselves in a position to take hip-hop to the next level—not only musically, but commercially.
The group’s manager, Russell Simmons, invited a team of executives from German sneaker giant Adidas to see the performance in a skybox: a perfect vantage point to watch Run-D.M.C. tear through “My Adidas.” When the rappers asked the nearly 20,000 fans packed into the arena to hoist their own shoes in the air, they eagerly obliged.
The display delighted the visiting executives and showed the true power of hip-hop as a marketing force. It also helped Run-D.M.C. land a $1 million endorsement deal, No. 7 on the list of the most revolutionary hip-hop business deals of all time.
“It was easier to sell Adidas by loving them” back then, Simmons told me years ago in an interview for my book 3 Kings, “than by making your own.”
That was just one of the now-embattled mogul’s influential moves, from the founding and eventual centimillion-dollar sale of Def Jam to the trailblazing debut of Phat Farm. But despite its relatively modest size, the Adidas pact stood out because of the doors it opened.
Run-D.M.C.’s agreement marked the first of its kind Adidas had done with a non-athlete, inspiring marketing gurus like Steve Stoute and paving the way for shoes by Jay-Z, 50 Cent, Pharrell, Travis Scott and so many more—not to mention Kanye West, who did get to make his own (more on that later).
The move reverberated throughout popular culture, revealing that apparel need not be limited to merch. And it showed that hip-hop was a safe place for Corporate America to reach the next generation of consumers. Obvious now—but revolutionary then.
6. QB’s Finest
“This is Nasdaq dough, in my Nascar, with this Nas flow,” proclaimed Nas, arguably the greatest rapper of all time, in his 2001 classic “Got Ur Self A Gun.”
But by the turn of the new Millennium, his business chops lagged his lyrical prowess by a considerable margin. Meanwhile, peers like Jay-Z and Diddy—and relative newcomers like 50 Cent—ascended to centimillionaire territory with a bevy of deals spanning clothing, sneakers and record labels, moving into spirits and more as the decade wore on.
It seemed Nas would never catch up—until he linked up with a young manager named Anthony Saleh, who’d been working with startup maven Troy Carter at his Atom Factory firm. Between that and a friendship with venture capitalist and hip-hop head Ben Horowitz (sparked by a meeting arranged by the aforementioned Stoute), Nas suddenly had deal flow to match his lyrical flow. And he saw an opportunity.
“When I woke up to start being an investor, it was because I didn’t see anyone else doing it, it felt fresh,” he told me in an interview for my book A-List Angels. “I wanted to do something brand-new.”
In 2012, the rapper teamed up with Saleh to launch QueensBridge Venture Partners, a $10 million fund whose name paid homage to the New York housing project where Nas grew up. The following year they were able to secure stakes in promising early-stage companies including Coinbase and Robinhood; the next, they added Lyft and Dropbox. Soon Nas had a portfolio packed with dozens of white-hot startups.
Nas used his stardom to cut the line on companies that Silicon Valley’s top VCs were falling all over themselves to fund. He brought his own brand of savvy to startups like Rap Genius and helped Horowitz court others, once again showing the power of hip-hop.
“These companies . . . they don’t need another MBA, they have a ton of those,” Saleh once told me. “They need culture, they need perspective, they need a consumer’s eye.”
Not all these startups made it, of course, and some didn’t fare so well after their IPOs. But that didn’t stop Nas from scoring returns many times his initial outlay. As he started to see big exits—Amazon bought mobile pharmacy PillPack and virtual doorbell maker Ring for $1 billion apiece—Nas earned a career-best $35 million in 2018 at age 44.
Most important of all, he carved a path from America’s largest public housing complex all the way to Silicon Valley, showing that hip-hop stars who’d come from nothing could not only invest, but start their own funds. His erstwhile foe Jay-Z even winked at this by subsequently naming his own fund Marcy Venture Partners, a reference to his childhood home as well.
And now, as the next generation of hip-hop stars begins to build generational wealth by following that blueprint, it’s clear Nas founding QBVP belongs among hip-hop’s most revolutionary deals.
Tune in again later this week as we crack the top five and continue the countdown.
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WHAT I’M READING NOW: BEATS, RHYMES & LISTS
If my latest post has you yearning for some more hip-hop rankings, look no further than Beats, Rhymes & Lists. It's a vast repository that covers both the lyrical side (ticking down the top rappers alive in any particular year) and the business end (check out the Sales Section). I know you'll enjoy it as much as I do.
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