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Rappers Make the Best Capitalists

Written By Jeff Siegel

Posted September 25, 2014

bigpaybackFew investors are unaware of the Forbes list of the world’s richest people. After all, nothing gets those creative juices flowing faster than the illusion that if you work hard enough, you can be the next Warren Buffett or Carlos Slim Helú.

I know better.

While I certainly chase the almighty (and rapidly disintegrating dollar) as much as the next guy, I know my bar is set much lower. After all, while guys like Elon Musk and Bill Gates can take their first $100 million and work diligently to turn that into a couple billion, if I managed to squeeze $100 million out of a stone, I’d be spending my days, not in front of computer screens and in board meetings, but in a hammock, sipping Mai Tais in Kauai.

And that’s the difference, dear reader, between billionaires and the rest of us.

In any event, while I do enjoy seeing just how much cash the strikingly gorgeous Tory Burch pulled in last year, I’ve found my favorite Forbes list to be the The World’s Highest-Paid Hip-Hop Acts.

The Big Payback

During my teenage years I fed my earholes a steady diet of hardcore punk, metal and rap. I suppose I was always drawn to these genres because they represented what I loved: rebellion, angst and biting sarcasm.

As far as rap was concerned, it really was my first time seeing black folks, not on the news getting arrested, but selling out stadiums and making a ton of money. Or at least what I though was a “ton of money” at the age of 16.

A couple of years ago, I read a book called The Big Payback: They History of the Business of Hip-Hop.

I found it fascinating because it not only traced the “behind-the-scenes” origins of hip hop, but really illustrated just how brilliant some of these artists and promoters were. Quite frankly, I don’t think you’ll find a smarter group of free-market thinkers in any other genre of popular music. And while I fully admit that I don’t appreciate much of the music that comes from today’s modern hip hop arena – as it lacks the rebellious spirit I require – the level of marketing and entrepreneurial wisdom should be taught in every business school across the country.

$3 Billion for a Headphone Company?

In this year’s list of the world’s highest-paid hip hop acts, Andre Young, better known as Dr. Dre, topped the list with pre-tax earnings of $620 million.

Of course, Dre has evolved far beyond his days as one of the master minds behind one of the most influential rap groups in history, NWA. While Dre certainly laid the foundation of his empire with his ability to create groundbreaking music, his biggest score came earlier this year when Apple (NASDAQ:AAPL) forked over $3 billion to buy a headphone company he created called Beats. Yeah, that’s right. $3 billion.

I must admit, it gives me a great deal of satisfaction to know that the guy who wrote the song, “Shittin’ on the World,” just sold a headphone company to Apple for $3 billion.

A Respectable $30 Million

Another worthy mention in this year’s list is Macklemore & Ryan Lewis, who scored $32 million.

I really love this story as this is a duo that created its fortune by employing the DIY (Do-It-Yourself) mantra. Without the help of some massive record label with deep pockets, these guys built their empire independently.

If you’re unfamiliar with the world of music and record companies, this is basically the equivalent of starting a business (that everyone is betting will fail) without having to get a bank loan with crappy terms. And when I say crappy terms, that’s being generous.

Kanye West pulled in a respectable $30 million, according to the Forbes list. Although I suspect his ability to create that much lucre came not from his ability to create mediocre lyrics and act like a spoiled child, but instead by marrying reality television star Kim Kardashian. Of course, that doesn’t discount West’s ability to hustle his way up to $30 million. And quite frankly, it’s the hustle that really allows most hip hop artists to actually make a good living in the music business – and make most of wish we spent our four years of college learning how to rap instead of wasting tens of thousands of dollars on a communications degree.

You can see Forbes entire list here.