Trapital Podcast Summary: The Hip-Hop Partnership Flywheel

Host: Dan Runcie
Date: July 23, 2019
Episode Theme:
This episode explores the pivotal role of distribution in hip-hop’s evolution from grassroots entrepreneurship to high-powered global partnerships. Dan Runcie examines how today's biggest hip-hop artists leverage collaborations with established corporations to broaden their influence, build wealth, and sustain a “partnership flywheel”—contrasting this with the DIY brand-building ethos of earlier eras.

Main Theme & Purpose

Dan Runcie delves into how distribution is the critical factor driving the modern hip-hop business landscape. He illustrates a fundamental shift from the independent creation of brands by hip-hop entrepreneurs in the late 1990s and early 2000s, to today's model where artists partner with global firms, achieve mass reach, and then spin off new ventures.

Key Discussion Points & Insights

1. The Shift from Grassroots Brands to Corporate Partnerships

Then vs. Now:
- In 1999, artists launched their own streetwear brands (e.g. FUBU, Mecca, Ecko), building from the ground up.
- Today, artists like Kanye West, Drake, Jay Z, and Beyoncé collaborate with huge corporations (e.g. Adidas, Live Nation, LVMH) for greater reach.
Quote [01:05]:

“This is a pretty big shift from where hip hop was just 20 years ago... The difference between these two approaches can stir up some strong opinions either way for obvious reasons.” – Dan Runcie

2. The Modern Partnership Flywheel

Jay Z’s Live Nation Deal [03:01]:
- Jay Z’s $25 million joint venture with Live Nation became a template.
- The “flywheel” cycle:
  1. Partner with a global firm (Jay Z & Live Nation)
  2. Gain mass distribution (Roc Nation, world tours)
  3. Monetize and build influence
  4. Launch further ventures and support others
Quote [04:18]:

“It’s essentially a four part process which is a flywheel that continues to grow.” – Dan Runcie

3. Distribution: The Critical Factor

Dapper Dan’s Perspective [05:05]:
- At an Andreessen Horowitz event, Dapper Dan emphasized global distribution over focusing solely on the black dollar.
- Encouraged working with established global organizations before attempting to launch independently.
Quote [07:16]:

“He wants to focus on that global culture and encourage the audience to work and partner with long standing established organizations... that have that distribution before you even think about trying to launch something yourself.” – Dan Runcie summarizing Dapper Dan

4. The Entrepreneurial Gap

Supply Chain and Scale Challenges:
- Building independently (like Dapper Dan did in 1980s Harlem) has inherent supply chain and distribution barriers.
- Partnerships can offer a “sizable gap” in potential achievements and access.
Case Study: Rihanna & LVMH [08:12]:
- Rihanna’s Fenty partnership with LVMH demonstrates the advantages of leveraging a distribution network.
Nuance & Exceptions:
- Master P built multiple businesses alone and has significant wealth, though smaller in scale than major partnerships.

5. Ownership vs. Scale Dilemma

Master P’s Viewpoint:
- Master P critiques that big pop culture moments like "Black Panther" didn’t maximize black community benefit due to lack of ownership.
Dan’s Analysis:
- Full ownership (Master P's route) means more control and profit per dollar, but the total scale may be smaller.
- Major partnerships can drive bigger swings and cultural shifts.
Moral/Strategic Framework [10:22]:
- Dan poses a hypothetical:
  
  “Would you rather come in first place and win $2 million or would you rather come in second place, win $5 million, knowing that your efforts helped first place win $10 million? ... I’m taking that $5 million.” – Dan Runcie

Notable Quotes & Memorable Moments

[00:41] “There’s something to be said for that entrepreneurial spirit, right? A lot of these were black owned businesses... leveraging the brand that they’ve built through hip hop and extending that elsewhere.” – Dan Runcie
[04:52] “His moves have carried weight. And this is why this is the dominant cycle we see today.”
[06:50] “Have you ever just heard somebody talk and you realize they could just go on off of one question they have?”
[07:56] “The difference between what a self-starting entrepreneur can potentially achieve versus what someone that has a strong partnership can do is a pretty sizable gap.”
[09:42] “Remember, Master P is still one of the richest people in hip hop... because Master P is the person that is owning everything, he gets to take home much more of that top line revenue...”

Timeline of Key Segments

00:08 – Introduction and main theme (distribution in hip-hop culture)
01:05 – Contrast of 1990s entrepreneurial brands and modern partnerships
03:01 – Jay Z's Live Nation partnership and the four-part flywheel
05:05 – Dapper Dan and the importance of global distribution
06:50 – The storytelling style of Dapper Dan and context for his approach
08:12 – Rihanna, LVMH, and the advantages of corporate partnerships
09:42 – Examining Master P’s independent approach; pros and cons of full ownership
10:22 – The hypothetical about wealth, impact, and tradeoffs

Conclusion

Dan Runcie wraps up by stating his own preference for maximizing impact and wealth—even if it benefits partners more overall—and reiterates the power of partnerships as a means of leveling up in culture and business. He encourages listeners to consider these strategic choices as hip-hop’s influence continues to grow on the global stage.

For further insights, visit Trapital’s website or subscribe to stay updated on future discussions.

Transcript

A (0:08)

Hey, it's Dan Runcy. Last week's article has gotten quite a bit of traction, so let's get right into it. I wrote about distribution and why it is so critical in today's hip hop culture. Look at all of the big deals that we currently see. The moves that Kanye west has done with Adidas, what Drake has done, Jay Z, Beyonce, they are all partnering with big long standing corporations in order to make sure that their products and services can get to as many corners of the world as possible. This is a pretty big shift from where hip hop was just 20 years ago. Think back to 1999. Let's go back there for a second and think about all of the brands that you saw when you're walking around the street or that you probably had in your own closet and that some of you might still have in your own closet. There was the Mark, Echo, Mecca, Enichi Fubu. All of these brands were prevalent and that's because rappers were launching them themselves and building it from the ground up. And there's something to be said for that entrepreneurial spirit, right? A lot of these were black owned businesses and black entrepreneurs that were leveraging the brand that they've built through hip hop and extending that elsewhere. And the difference between these two approaches can stir up some strong opinions either way for obvious reasons, because if you follow the route that today's biggest hip hop artists have done, it creates a dependency cycle where you need the big long standing companies to provide artists with all the money that they need in order to fund the entrepreneurial endeavors that they do. The companies that are built from the ground up can never truly catch up with the larger organizations if they're dependent on them in order to happen. Eleven years ago, Jay Z signed a landmark deal with Live Nation. This was essentially a 360 deal, but this wasn't the type of 360 deals that often get hated on. Jay Z had a tremendous amount of leverage and can dictate the terms himself. As part of that, Live Nation helped Jay Z launch Roc Nation as a joint venture. He also got millions of dollars up front, including $25 million specifically allocated for Jay Z to go fund the other things that he's done. So when you think about Jay Z's investments in Uber or a lot of the companies that he's invested in, some of the social justice things that he's done, he's put his money towards apps that target and identify black owned businesses. It's clear that these are still causes that are important to him, but they Come from the large deal that he was able to do with the largest concert promoter in the world. And since Jay Z has a tremendous amount of influence in hip hop, his moves have carried weight. And this is why this is the dominant cycle we see today. It's essentially a four part process which is a flywheel that continues to grow. Number one, partner with a global firm. That's what Jay Z did with Live Nation. Number two, gain mass distribution as a benefit of partnering with that firm. As we know, Jay Z's deal with Live Nation led to Roc Nation, led to agreements for him to go on tour and get a certain amount of advances to tour across the world with each album that he had moving forward. Step number three is to make money from those deals and gain influence. Yes, Jay Z was influential in 2008, but think about all that he's accumulated since then. And step four, the last step of the flywheel, is to then launch new ventures and support others. This whole topic is very relevant to an event I went to just last week. Andreessen Horowitz, the venture capital firm hosted a talk with Dapper Dan, longtime fashion designer who grew his claim to fame in Harlem during the 80s Designing high end luxury products like Gucci and others for celebrities, entertainers and others that came through to his shop. And he recently wrote a memoir. So those of you that follow the Breakfast Club or Rap Radar have likely seen clips of Dapper Dan coming through, talking and promoting his book. And he's lived a very interesting life. Have you ever just heard somebody talk and you realize that they could just go on with one question that they have? There's two people that have stuck out to me more than anyone with this. One is Michael Eric Dyson. I went to a talk that he did a couple years ago and I think the interviewer asked him maybe two and a half questions. And he talked for the entire 60 minutes that he had allotted. Daffer Dan was very similar. Towards the end of it, Ben Horowitz, who was interviewing him, had said, so my last question is, and I just cracked up to myself because I don't think that Ben actually asked a question. This just speaks to the storytelling style and dynamic that Daffer Dan had. He did bring up one very interesting point that was relevant to this. He focused on the importance of distribution several times during his conversation. He went as far as to say that he isn't just going to concentrate on getting the black dollar. He wants to focus on that global culture and encourage the audience to work and partner with long standing established organizations. That have that distribution before you even think about trying to launch something yourself. Part of me understood where Dan was coming from if I was trying to launch the type of operation that he did in 1980s Harlem. Yes, there are a lot of distribution and supply chain challenges that he experienced and that anyone would experience if they're trying to do this from the ground up. The difference between what a self starting entrepreneur entrepreneur can potentially achieve versus what someone that has a strong partnership can do is a pretty sizable gap. And to some extent there still is that gap today. There is a reason why Rihanna has her partnership with LVMH and why it's been celebrated as it has, because that's going to give her benefits that she may not have otherwise had. With that being said, though, it isn't quite as impossible as Dapper Dan's example might make it seem. Context is important and it all depends on what you are trying to do and build. Remember, Master P is still one of the richest people in hip hop and a majority of his wealth has been created from brands and companies and partnerships that he started himself. He's created his own sports agency, he now has his own movie production house. He has all these different businesses. The dollar amount that's associated with them are much smaller than, let's say, what a Kanye west might have with Adidas. But because Master P is the person that is owning everything, he gets to take home much more of that top line revenue that then someone that has a big partnership might have. The thing is, even with Master P's approach, there still are some limitations to his mentality as well. He was on the record recently saying that Black Panther didn't do as much for the black community as it could have because the black community did not produce it and therefore did not bring home a majority of the profits. To go as far as to say it didn't benefit black folks at all is a pretty big stretch considering the type of projects and the type of movement that we've now seen in Hollywood and will continue to see moving afterward. And being able to have the buy in from big production matters both for the small projects and for the big ones too. This ideology though, truly boils down to one question. Which of these two scenarios would you rather be in a Would you rather come in first place and win $2 million or would you rather come in second place win first $5 million knowing that your efforts helped first place win $10 million? I know what I would do. I'm taking that $5 million. I'm cool. Helping first place get their 10 million because I know the power that I could do. Because if Jay Z's Live Nation deal fell in my lap in 2008, I am taking that deal 10 times out of 10. I am not losing sleep about it because I know the power that it can have. I hope you all enjoyed this podcast. Did enjoy it. I have two asks for you. One Please tell a friend about it. That's how this continues to grow. And second, please subscribe and rate and review on itunes. Still the early stages and every little bit of support matters. And if you've enjoyed this content, go ahead and go to Trapital's website. Trapital started as a newsletter. It has now grown on to be a subscription media company. So if you enjoy hearing this podcast and want to support trapital's goal of elevating the discussion on hip hop and providing the tools that people need to level up, go ahead and become a Trapital member. Next week's podcast will be coming on Thursday, August 1st. You know what August means. That's been six months since I've been doing Trapital full time. It's been quite a journey. It's been fun and maybe I'll talk a little bit about that next month. Stay tuned. We'll Sam.