Everything I Need to Know About Business I Learned from Hip-Hop: A Millennial's Guide to Making Bank

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HIP-HOP GENESIS:

STARTUP CONSIDERATIONS

HIP-HOP’S GARISH DISPLAYS of wealth, brassy characters, and rags-to-riches folklore get people juiced. The platinum grills, blinged-out jewelry, candy-colored supercars, designer clothes, and tricked-out homes are exciting and eye catching. The lively and raw personalities of its most prominent figures have appealed to youth culture for generations because of the strength, independence, and possibility they represent. The music itself ranged from deep and tragic with artists like Tupac and Biggie Smalls, to the easy and lightweight like Lil Jon and Ludacris. For all of these reasons and more, Hip-Hop is entertaining showbiz.

However, the business world did not appreciate Hip-Hop for the value it offered. It was too self-absorbed to see past visible differences to the qualities beneath the surface. In fact, other than the unreformed, grinning hippies, Ben Cohen and Jerry Greenfield of Ben and Jerry’s Ice Cream, there wasn’t much diversity in business, and even that wasn’t much. Few successful institutions defied the conservative, buttoned-down image of the mainstream business world. As a result, few people outside of the music industry looked at Hip-Hop as something that had economic lessons to teach. Boy, were those people wrong.

There was professional wisdom sewn into the lyrics, lives, and life lessons of Hip-Hop from its very beginning. If business books bore you, you have an opportunity to learn startup considerations from The Source founders Jonathan Shecter and David Mays, sales and marketing from P Diddy, management fundamentals from 50 Cent, human resources from Macklemore, project management from Ice-T, business finance from Queen Latifah, and major changes in business from Dr. Dre.

Hip-Hop will teach you everything you need to know about business. And you thought Hip-Hop was just good music . . .

Hustle Hard: Picking a Business and Staking a Claim

Aubrey Drake Graham had it all. He sold millions of albums, captured the attention of tens of millions of fans, and had the love of Hip-Hop’s most adorable sandwich-making stagemom. In his song Unforgettable, Drake introduced us to the one who stole his heart, The Game, also known as business. It’s easy to see how profit-seeking enterprises attracted him. There was something about economic activity that made the Grammy Award winner call business the love of his life. The challenge, excitement, and rewards were enough to convince Drake to start a record label, OVO Sound, and launch his own clothing line. It was intensely creative work for him. It had some of the deep self-expression of art and the intense competitive atmosphere of professional sports. Oh, and there is the opportunity to make piles of cash . . . that probably helps, too.

From commercial fishing to space communication support services, 600,000 businesses start in the U.S. every year. With millions of ways to make a buck, it is hard to see what one new company could possibly have in common with another. The answer is to step back and look again; the similarities start to show up. There are four pillars to starting a successful business: passion, value creation, technical ability, and financing. The presence of each one reinforces the others. Without any one of them, the business is less stable.

An entrepreneur has to want to be on the job, putting in the hours, in good times and bad. A leader’s passion can add energy to the workforce and inspire the clientele. It is visible in the devotion to customer service, eagerness for new opportunities, and even the desire to do better when things go wrong. A lack of passion in the leader invites the temptation to quit at the first signs of difficulty. Business is hard, so a leader has to want to be there doing the work and meeting the inevitable challenges. Passion fuels the enterprise at the outset and provides a cushion of resilience to bounce back during the tough times.

Lauryn Hill grew up in the middle-class city of East Orange, New Jersey, about 13 miles west of New York City. Born to a musically inclined family, Lauryn was immersed in entertainment from the beginning, with her mother playing piano and her father singing in nightclubs. With her own natural talent and training, it was no surprise that she would develop a lifelong love for music. After just a few successes performing in public, singing at school basketball games, in choir recitals, and even the late-night classic, It’s Showtime at the Apollo, Lauryn realized that she could do more with her musical interest than just amateur performances.

Backed by her high school friends, Prakazrel Pras Michel and Wyclef Jean, Lauryn formed The Fugees. The three friends spent hours on end together, and in time they mixed musical styles like Reggae, Soul, and Hip-Hop to create their own unique sound. There were few groups of similar quality and drive like The Fugees at the time, which helped the group land a record contract with Columbia and Ruffhouse Records in 1993. The three practiced relentlessly to produce their first album, Blunted on Reality. The album flopped commercially, but, despite the setback, Wyclef, Pras, and Lauryn rededicated themselves to create their second album, The Score. That album would dominate the charts throughout 1996, earn them a Grammy Award for Best R&B Performance, and sell 6 million albums. However, it wouldn’t have happened without their shared loved of the music, desire for success even in the dark times, and commitment to each other. That is passion.

Value creation is about solving problems. The nearly unlimited spectrum of goods and services that business provides to the world gives consumers something they need—from the simple to the complex, from the legal to the super-criminal, and from the highly profitable to the ruinous. All products try to create value. The company has to make or do something that satisfies a customer need at a return greater than the costs to supply it. It is the reason people are willing to part with their cash. Without value creation, an enterprise cannot last.

In entertainment, there are few demographics more attractive than the 12- to 24-year-olds. They are the center cut of the steak, and in the 1980s and ’90s, record companies pursued the demographic like horny adolescent males after a Victoria’s Secret Angel. The results for the music industry were about as predictably disappointing. Despite their institutional experience selling traditionally Black music like Soul and R&B music, record labels seemed to be at a loss for how to deal with the polyglot Hip-Hop fan base. Internal marketing efforts were hit-and-miss, and even when a Rap album sold well, companies had a hard time understanding what made them successful. Hip-Hop was outside of their experience, and the marketing teams of the major record labels of the time were simply unable to understand how to reach the young fan of the new genre. That was the value proposition that Steve Rifkind stepped in to provide.

His company, SRC, could relieve ham-fisted record labels of the frustrations of marketing the fastest-growing musical genre in entertainment at the time. Rifkind blanketed the means of distribution. He got his songs on the radio stations that played Hip-Hop. He had an in at MTV for video promotion. In retail, SRC knew the stores that were selling the most music and were likely to be a sales hub for any hit record. But to be honest, the record labels could and did do a lot of that marketing.

What Rifkind and his team had that the labels didn’t was a grassroots, word-of-mouth, tastemaking process using a crew of kids who could influence their friends and others. The street team had a map of locations up and down the West Coast that was sure to get the word out about the products that they were pushing. They would call on record stores, Black radio stations, barbershops, gang hangouts, bars, and nightclubs to push the product that labels hired them to promote.¹ And they did it in a way that seemed genuine and authentic to their customers, who enjoyed hearing hot new sounds before anyone else. That was something that the stuffed shirts at the in-house marketing departments of the record labels couldn’t do, and SRC profited by solving their problem and providing that value.

Technical ability is the competence and talent to deliver the value element of the business. It is the ingenious programming of the software designer, the fine craftsmanship of the tradesman, the slick marketing of a social media service, or the indispensability of a lifeguard at an Olympic swimming event. The better a person is at the core tasks of the business, the higher the chances are that customers will appreciate its quality and usefulness. Conversely, failure in technical ability is about the quickest way out of business, since no one wants to pay for shoddy work.

To get out of the Detroit slums, Marshall Eminem Mathers worked his ass off to be the best rapper he could be. Eminem and his friends practiced whenever they could get together. They wrote songs, performed for friends, and battled in underground clubs where competition was brutal. Contenders stepped up to hurl insults as quickly and creatively as they could, and the crowd determined the winners by acclamation. The losers were chased off the stage under a hail of insults and laughter. The scenes of these showdowns were captured in his semi-autobiographical movie, 8 Mile. When Eminem was able to dominate the club scene with his tight rhymes and raw presentation, he had proved that he had the skills to move up to the big leagues with Dr. Dre at Aftermath Entertainment.

Once at Aftermath, Eminem continued to own the Rap game. He released eight studio albums with one double platinum, one triple platinum, three quadruple platinum, and two diamond albums. He won 15 Grammy Awards, and he was the only Hip-Hop artist to win an Academy Award, which he earned for Best Original Song, Lose Yourself. While success sometimes has a compounding effect, which could account for some of his later sales figures, Eminem would not have gotten anywhere near the stratosphere of success he achieved if he had not worked to become an incredibly good rapper in the first place.

The Wu-Tang Clan was correct when saying that Cash Rules Everything Around Me in their hit C.R.E.A.M. because money is the lifeblood of a business. Without it, there won’t be much activity for very long. Every company requires some kind of cash at startup and during continuing operations whether it is for a store’s rent, stocking inventory, buying equipment, paying wages, or entertaining your entourage. Leaders have to know how much money the business needs and how to get it on time. Too many companies that had people with the requisite passion for the work, value-creating products, and the technical abilities to develop a loyal following failed without sufficient funds.

Financing normally comes from business loans from banks or personal loans from friends, family, or investors. The terms of these agreements vary based on the strength of the business plan, the assets and talent it has, the capital required, and the risks or likelihood of success. The better and more manageable they are, the better the financing terms. The worse they are, the more likely it is that the company will have to accept some ugly rates, surrender substantial collateral, or look for a different source of funding.

In the 1980s, most of the action in Hip-Hop was taking place in the East Coast’s gritty club scene or the hot, high-octane streets of the West Coast. It was easy to overlook activities in other parts of the country, but the most important empire of the Dirty South got its start in New Orleans at that time. The brothers, Ronald Slim and Brian Birdman Williams, were sons of local businessman and entrepreneur Johnny Williams. They learned the value of independence and hard work at their father’s grocery stores, bars, and laundromat; and, with their love of increasingly popular Rap music, the two decided to start their own label, Cash Money Records.²

Initially, Birdman and Slim had a true startup operation. They picked up little-known artists where they could find them locally in bars, clubs, and other hangouts. With no money to throw around, they were recording albums in the kitchen with borrowed equipment.³ They figured out how to manage their talent, sell their products, and turn a profit—all on a shoestring. While the major record labels fought tooth and nail over what they considered to be the prize of Hip-Hop, dominance of East and West Coast music, the Williams brothers established a significant regional presence throughout the South, which they then looked to expand.

Of course, once the major record labels heard about these two brothers moving thousands of units in the Big Easy, they all wanted to sign them.⁴ Birdman and Slim saw the majors’ desire for a deal as a way to get the formal financing that had been so elusive in the past. They insisted that the record company loan them millions on favorable terms as a condition of any deal. That money would then be reinvested to expand Cash Money, allowing it to grow even further. This financing piece was very lucrative for Birdman and Slim. But the fact that Universal Music Group ultimately agreed to leave Cash Money with rights to the master tapes—and charging a pittance for album distribution—ensured that there would be plenty of future-royalty revenue.⁵ Holding on to those would be their own form of financing.

Baby and Slim had grown from a small enterprise with no capital into a serious record label with the serious financial backing of an industry heavyweight. The Williams brothers’ savvy management, the incredible talent of Cash Money’s artists, and the Universal loan all wove together to build the Dirty South’s music-industry powerhouse. However, none of it would have been possible without access to cash to keep the company going.

Pursuit of Happiness: Learning the Rules of the Game

Every industry has its own rules. Managers need to understand them to run their businesses. Analyzing the products, customers, sales methods, financing, and competition provides entrepreneurs vital data points to understand on the road to success. The traditional routes to business enlightenment pass through only a few information channels: publications, trade associations, and mentors and social networks. Each has its advantages.

Print media isn’t the be-all and end-all information clearinghouse it once was, but it’s not dead. Highly specialized publications and general industry periodicals adapted to online and social media environments provide convenient and inexpensive access to information. They offer interesting articles on market trends, supplier advertisements, and intelligence on competitor activities. A Google search will connect you to a cornucopia of audio, video, and text content in fractions of a second, no matter how compartmentalized or obscure. You are limited only by your choice of media in consuming publications relevant to your profession.

The Source, Vibe, XXL, and The Hype are Hip-Hop’s top magazines. Their pages cover the full spectrum of the Hip-Hop experience: music, fashion, personalities, industry events, politics, business, and beefs. Just like mainstream industry press, these publications host articles from experts, interviews with celebrities, glossy imagery, informative and inane reader feedback, and the inescapable advertising that makes it all possible. The light subject matter of The Source will make more entertaining, but no less informative, reading than the New England Journal of Medicine—assuming that you’re studying Hip-Hop, of course . . .

Trade associations were usually founded and funded by companies within a particular slice of the commercial universe. Trade groups advocate for, connect within, and educate on their industry. They tend to be more collegial than competitive, an atmosphere which supports the varied activities of potential and actual competitors in a shared space. The National Association of Manufacturers, the American Medical Association, American Banking Association, the American Farm Bureau, and even the Cremation Association of America all offer some networking and advocacy for professionals doing the job no matter how well-known or obscure it may be.

Think I’m kidding? Even Hip-Hop has its own association: the unimaginatively named Hip-Hop Association. It looks only a little cooler in its abbreviated form: H2A. According to its website, its mission is to facilitate critical thinking, foster constructive social change and unity to instill tolerance, civic participation, social reform, and economic sustainability, while advancing Hip-Hop’s culture through innovative programming.⁶ The H2A is not as central to Hip-Hop events and activities as AARP is to senior citizens, but it has its place.

Mentors and social networks within an industry can give managers and entrepreneurs a window into the way things work. If you like your research with a personal touch, get some friends to help you out. It seems like someone always knows someone who gets what you need, the proverbial father’s brother’s nephew’s cousin’s former roommate. Leveraging personal networks to make connections with people who know what you need to learn can be as simple as ducking your head in an office down the way or as formal as a carefully brokered introduction with a hired consultant. The Internet can offer you ages of wisdom if used correctly. Social media connections are just a friend request away from knowledgeable business insiders and subject-matter experts. Which links you choose to use depends entirely on how much effort you want to apply to researching your business challenges.

Like a number of artists, Dwayne Michael Lil Wayne Carter Jr. decided that there was money in running a record label, so he started up Young Money Entertainment. And one of his crowning achievements with the label was his work mentoring one of Rap’s most colorful reigning queens, Nicki Minaj. Onika Tanya Nicki Minaj Maraj was born in the Caribbean nation of Trinidad and Tobago and grew up in Queens, New York. Always interested in entertainment, the Islander had a taste for acting and music from a young age. Never totally self-contained, Nicki let her wild side show in her performances. After she released a few singles and mixtapes in 2007 and 2008, Lil Wayne saw Nicki’s raw, flamboyant, and sexually suggestive talent as something that could be honed to a fine edge for even greater success in entertainment.

Lil Wayne signed Nicki to Young Money, where he could work with her directly. As the two artists got to know one another, Wayne did what all good mentors do. He helped Nicki refine her lyrical style, using methods he had perfected in his own career, combining word play, metaphors, and punchlines into her music.⁷ Lil Wayne did not want to submerge Nicki’s style in his own or create a clone. He wanted only to offer her techniques that had been successful for him while providing her the freedom to adapt them as she saw fit.

Not satisfied to simply provide production assistance for Nicki, Lil Wayne provided another great mentoring resource: leveraging a network. Although Nicki had already worked with other artists on her earlier works, he put her on 5 Star Bitch with Gucci Mane and Trina. The track went gold and ranked #11 on Billboard’s Hot Rap Songs chart. Success like that opened new doors for Nicki—and for Lil Wayne.

Lil Wayne’s mentorship was important but perhaps not essential. Nicki Minaj had talent and drive, qualities that propelled her to the top of the charts with six American Music Awards, ten BET Awards, seven BET Hip-Hop Awards, four Billboard Music Awards, three MTV Video Music Awards, and a number of other honors. However, the mentorship to improve her baseline skills and connect her with other talented and capable people was helpful.

Regardless of which method or combination of means you choose to employ to learn about your industry, you have Hip-Hop’s cases to remind you that business research doesn’t have to be lame. Hip-Hop doesn’t do lame.

I Have a Dream: Mission, Vision, Goals, and Priorities

Mission, vision, goals, and priorities should be the motivating foundations for all activity at work. They are cascading but interrelated concepts and milestones that serve as guideposts for the company’s operations. At a business-wide level, vision and mission statements describe what the organization will be and how it will achieve that. They can summarize the organization’s aims such as who its operations are supposed to benefit and with what quality levels team members should care for clients. Depending on the effort someone has put into writing the mission statement, values, or vision, the results can range from inspirational to embarrassing corporate plagiarism. For a leader directing people who would rather be doing something else, it is hard to overstate the value of being able to connect the utility of an employee’s job to the bigger picture. Mission, vision, and goals (and the tasks to achieve them) create the road map for a team from beginning to end.

I’d like to tell you that there is a lot of science and social engineering that goes into good vision and mission statements, but most are corporate pablum. One is practically indistinguishable from another. They are some sort of mishmash of the words value, stakeholders, first-class, customer-focused, quality, and world domination. In fact, before you and your team begin the agonizing process of sweating every syllable in search of a perfect mission and vision, I encourage you to visit any of the mission- and vision-statement generators that pop to the top of even a superficial