Expand into new markets after your base is solidified
By the time of his first retirement in 2003, Jay-Z’s place as a hip-hop legend was solidly in place. With nothing else left to accomplish in the rap game, it was time for Jay to expand his base. Relying on one segment of the population for all of your income can cause problems over time. If your base decides to purchase your products less often in the future, then you are left with less income and no other customer base to grow your revenue stream.
A good example of expanding one’s base is Jay-Z’s collaborative project with rock group Linkin Park. Through this album, he was successful in creating new fans, which is something that is hard to do as a brand becomes saturated in the market. Their single, “Numb/Encore” won a Grammy and helped Jay-Z transition to the next phase of his career.
Reinvent your brand as trends in the market change
It is no surprise that Jay-Z sold his stake in Rocawear at around the same time that he came out of retirement to release his 2006 album, Kingdom Come. Jay-Z was getting older and realized that he could not continue to rap about the same things that made him famous. He decided to move into a more professional sphere, which he highlighted in his song, “30 Something.”
There comes a point when all lasting brands need to change how they sell their products.
In the corporate world, IBM’s story of reinvention is legendary. For decades, IBM was the monopoly player in mainframe computers and the de facto choice for corporate IT buyers at companies around the world. With the invention of the personal computer, their consumers’ needs changed and IBM almost went bankrupt because they were not able to predict this change in the marketplace. Through the leadership of Lou Gerstner, IBM was able to successfully reinvent itself as an IT services consulting firm.
People and businesses change over time, as do market preferences. When this happens, reinvention is necessary. Jay-Z is a master at it.
Make strategic investments to maximize your opportunities for indirect revenue
One of Jay-Z’s best decisions was to invest $1 million dollars in the Brooklyn (formerly New Jersey) Nets back in 2003. Again, Jay-Z realized that he wasn’t just a rapper, but a brand that many people wanted to associate with. He only owns 1/15th of one percent of the brand, but has created a partnership with management that allows him to be the face of the franchise. This is a win-win for both the Nets and Jay. The Nets gets to attach themselves to an urban icon that was homegrown in Brooklyn who will raise the team’s level of “coolness.” This is important, because the Nets have historically been viewed as the Knicks’ ugly, red-headed step-child. Furthermore, through association with Jay-Z, the Nets gain additional influence over Brooklyn neighborhoods that are largely African-American.
Jay-Z also benefits immensely from owning a tiny part of the Nets in two major ways. First, he can now complete his transition from rapper to business mogul because he can brag in his songs about “owning” an NBA franchise. Secondly, Jay-Z is set to make millions more through indirect income from the Nets. Examples include his use of the arena to sell out several concerts and house a store selling apparel produced by his manufacturing company, plus the placement of a 40/40 club in the Barclays Center. Even Jay’s advertising agency has gained the Nets as a consulting client.
That is a lot to gain for such a small sliver of equity ownership in the team.
Jay-Z’s career has many valuable lessons as it pertains to entrepreneurship. In many ways, his growth as a businessman makes him a perfect role model for today’s urban youth. However, a person’s ethically questionable decisions often get whitewashed when an icon reaches higher levels of success.
Jay-Z made his initial nest egg as a drug dealer, rapped misogynistic rhymes about women for years, and displaced many African-Americans from their homes with the building of the Brooklyn Nets arena.
Despite the darker aspects of Jay-Z’s path, let’s take the positive lessons learned and apply them to our personal development. Hopefully, the good reaped by Jay-Z’s business decisions will outweigh the bad.
Lawrence Watkins is the founder of Great Black Speakers, Great Pro Speakers, and co-founder ofUjamaa Deals, which is a daily deal site that promotes black-owned businesses. He graduated in 2006 from The University of Louisville with a B.S. in electrical engineering and earned his MBA from Cornell University in 2010. Lawrence currently resides in Atlanta. You can follow him on Twitter @lawrencewatkins.