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The $2.5 Billion Empire of Jay-Z
His Incredible Rise from Poverty to Becoming Hip Hop's First Billionaire
Justin Gordon
September 10, 2023
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Jay-Z
Jay-Z became hip-hop’s first billionaire in 2019, growing his personal fortune to $2.5 billion by the time of this writing.
His rise, from selling drugs on the streets to becoming one of hip-hop’s top artists of all time with a business and investing empire as well, is nothing short of remarkable.
He seems to have done it all and yet he’s not slowing down.
Anyone in business can learn a lot from Jay-Z’s ambitious climb, but especially entrepreneurs.
While there’s no possible way I can cover everything about his story, I’ll take you through the essentials of his story and insights from Jay-Z himself.
If you want more, I highly suggest reading two books I found particularly helpful for this piece:
Decoded by Jay-Z
Empire State of Mind by Zack O'Malley Greenburg
Let’s get to it.
Early Days
Shawn Corey Carter (Jay-Z) was born on December 4, 1969, the last of 4 children to Gloria Carter and Adnis Reeves, and he grew up in the Marcy Projects in Brooklyn.
At only 4 years old, Jay-Z already was showcasing signs of his independence, teaching himself to ride a bicycle.
And his interest in music?
That came originally from his parents, who had a huge record collection that Jay-Z would listen to when he could.
One of his teachers was an early influence on him too:
I grew up in the Marcy Projects in Brooklyn. Our classrooms were flooded. It was very difficult for teachers to give you one-on-one attention. And there was this one sixth-grade teacher named Miss Lowden. She must have seen something in me, and she gave me this attention and this love for words. It's funny how it works, just a little bit of attention.
She also took us on a field trip to her house, which opened me up to the world. My neighborhood had been my world. It's the only thing I had seen.
I saw a whole different world that day, and my imagination grew from there. I wanted that. I aspired to have that. The small things. She had an ice thing on her refrigerator. You know, you push it and the ice and the water comes down. I was really amazed by that. I was like, I want one of those.
But in 1980, when Jay-Z was only 10 or 11 years old, his dad left his family.
At first, his intention was to track down the man who had fatally stabbed his brother, but he soon became addicted to drugs and alcohol and never came back.
Jay-Z would later talk about the impact his dad leaving had on him and the issues he had trusting people because of it.
Not long after, at 12 years old, Jay-Z shot his drug-addicted brother in the shoulder for stealing a ring of his.
I thought my life was over. I thought I'd go to jail for ever.
Miraculously, Jay-Z didn’t go to jail for this, his brother survived, and he didn’t press any charges. Jay-Z even visited him in the hospital.
Two years later, in 1984, Jay-Z met Jonathan “Jaz-O” Burks, an important person in Jay-Z’s trajectory and one who taught him a lot:
I taught him basic poetic license, metaphor, simile, onomatopoeia - things that most rap artists would say to you, ‘What is that?’ I taught him that in order to be the best, you don’t have to outwardly hone your craft. But in privacy, hone your craft. People don’t have to know how hard you work to get something.
And from the time Jay-Z first started writing rhymes, he was obsessed, as he described in his book, Decoded:
That night, I started writing rhymes in my spiral notebook. From the beginning it was easy, a constant flow. For days I filled page after page. Then I’d bang a beat out on the table, my bedroom window, whatever had a flat surface, and practice from the time I woke in the morning until I went to sleep.
He didn’t stop when he left his home either:
Everywhere I went I’d write. If I was crossing a street with my friends and a rhyme came to me, I’d break out my binder, spread it on a mailbox or lamppost and write the rhyme before I crossed the street. I didn’t care if my friends left me at the light, I had to get it out. Even back then, I thought I was the best.
Though he’d drop out of high school and basically live on his own after the age of 15 or 16, when he was at school he was always in the same spot at the cafeteria, freestyling to beats pounded on the table.
But why’d he drop out?
To sell drugs, crack cocaine specifically.
DeHaven Irby helped get Jay-Z into drug dealing, but Jay-Z was also fueled by the desire to actually make some money:
You could get killed just for riding in the wrong train at the wrong time. I started to think that since I was risking my life anyway, I might as well get paid for it. It was that simple.
And his hustle selling crack cocaine was bringing him real money, already making a couple of thousand dollars a day at times while he was only 16 years old.
Of course, he wasn’t the only one who saw the appeal:
Guys my age, fed up with watching their moms struggle on a single income, were paying utility bills with money from hustling. So how could those same mothers sit them down about a truant report?
Thankfully, a couple of things happened that led Jay-Z to dish out records instead of drugs.
First, DJ Clark Kent, who first heard Jay-Z rap when he was 15 years old and thought he was incredible, constantly pushed him to get him to make music and sell records instead of selling drugs.
Second, in 1988 when Jaz-O got a $500,000 advance and a deal with EMI, Jay-Z was able to come with him to London for two months while Jaz-O was recording his album. That $500,000 was real money and Jay-Z respected that.
The next year, after coming back to the U.S., Jay-Z was able to go on tour with Big Daddy Kane and hang out with him for 4 months.
Even though Jay-Z’s own music career hadn’t yet taken off, it showed him a bit more of what was possible through music.
At the time though, he went back to selling drugs, but, eventually, Jay-Z started to question his life choices:
And in that bitter cold, folded into the crevices of a project wall, hundreds of miles from home, I sold crack to addicts who were killing themselves, collecting the wrinkled bills they got from God knows where, and making sure they go their rocks to smoke.
I stood there thinking, “What the fuck am I doing?”
In 1992, Atlantic Records hired DJ Clark Kent who then continued calling Jay-Z constantly to try and get him to do music.
Eventually, Jay-Z relented.
Roc-A-Fella Records
When Jay-Z finally decided to make a record, he was rejected by all the major record labels. Every. Single. One.
Instead, he teamed up with Damon “Dame” Dash and Kareem “Biggs” Burke and started Roc-A-Fella Records.
Jay-Z would end up being the label’s first artist, releasing his first studio album, Reasonable Doubt, in 1996, 8 years after his London trip with Jaz-O. Crazy how far he’d come in that time, yet it was still so early.
And in those early days, the Roc-A-Fella crew was using a different kind of hustle to get their music out:
We pressed up our own vinyl. B-High made champagne baskets and sent them to DJs. We made sure that the mix-tape DJs - like Rob G, S&S, and Kid Capri - had it.
We sent the record to mainstream stations, too, although getting it played on the big stations was a long shot.
We didn’t know the business yet, but we knew how to hustle. Like a lot of underground crews on a mission, we were on some real trunk-of-the-car shit. The difference with us was that we didn’t want to get stalled at low-level hustling. We had a plan. We did more than talk about it, we wrote it down.
Coming up with a business plan was the first thing the three of us did. We made short and long-term projections, we kept it realistic, but the key thing is that we wrote it down, which is as important as visualization in realizing success.
They were going all over the five boroughs of New York to get their music out there, from clubs to street corners to barbershops. Jay-Z was even rapping at open mic nights to grow his listenership.
Reminds me of Sara Blakely traveling all over to sell Spanx in the early days and Patrick Collison signing up people one by one for Stripe early on - doing things that don’t scale as Paul Graham would say.
After also signing a distribution deal with Priority Records, Reasonable Doubt would sell 420,000 copies in the first year, receiving critical acclaim.
Getting rejected from all the other labels turned out to be a blessing:
I’m also lucky never to have needed the approval of the gatekeepers in the industry because from the start we came into the game as entrepreneurs.
That gave me the freedom to just be myself, which is the secret to any long-term success, but that’s hard to see when you’re young and desperate just to get put on.
In 1997, Def Jam would buy a 50% stake in Roc-A-Fella Records for $1.5 million and Jay-Z would release his second album, In My Lifetime Vol. 1 which was produced by Sean “Diddy” Combs.
The next year would come his breakout album, Vol. 2… Hard Knock Life.
This album would become the foundation for Jay-Z’s empire.
Vol. 2… Hard Knock Life won a Grammy for Best Rap Album and would go on to sell more than 5 million copies.
Importantly, because Jay-Z had negotiated to get a higher split of the profits, he was making $3 or $4 per sale of the album instead of $1 or $2 which would have normally been the split at the time. In other words, he made $15-$20 million off the album. REAL MONEY.
As Roc-A-Fella grew, they discovered and developed other artists, with Jay-Z appearing in at least one song on each artist’s album.
It makes perfect sense. Why not leverage Jay-Z’s talent and growing audience to develop other artists who could be an asset to the label?
And, while most labels had a promo van for artists, Roc-A-Fella had a white Mercedes E-Class 320 with their logo on the hood.
They wanted to be different and also set the standard for their brand, which by 1999 would begin to expand rapidly behind their growing ambitions.
As Damon Dash would say:
We shouldn’t let other people make money off us, and we shouldn’t give free advertising with our lifestyle.
That guiding principle would go on to make Jay-Z a billionaire.
First, they started with Rocawear.
Launching Rocawear
Jay-Z’s fourth album came out in 1999.
The same year, after a failed attempt to partner with Iceberg, an Italian knitwear designer that Jay-Z grew to like in the late 1990s, Jay-Z and Damon Dash decided to launch their own brand.
They had no idea what they were doing, but they were determined to make it work:
In the beginning it was laughable, since we had no idea what we were doing.
We had sewing machines up in our office, but not professional ones that can do twelve kinds of stitches; we had the big black ones that old ladies use.
We had people sewing shirts that took three weeks each. We actually thought we were going to make the clothes ourselves in our own little sewing ship.
Eventually, we got some advice from Russell [Simmons] and did the necessary research, got some partners, and launched Rocawear properly.
Once we committed to the fashion industry, we were committed to doing it right. We didn’t want a vanity label. We wanted the top slot.
Russell Simmons founded Def Jam and Phat Farm clothing and put them in touch with Alex Bize and Norton Cher who helped them launch Rocawear the right way.
It was a smash hit.
In the first 18 months, Rocawear made $80 million in sales. They’d eventually peak at $700 million in annual sales.
Jay-Z kept up with the music side of things as well, with the Hard Knock Life tour taking place in 1999 and bringing in $18 million, making it, at the time, one of the most successful hip-hop tours.
Then in 2001, he released his sixth studio album, The Blueprint, recording the majority in only two days:
When I made Blueprint, I did nine songs in two days. It was pretty much the record like just done, it was done. I guess that's how I work, in spurts, like I just get spurts, real creative, and I just go.
The same year, he started dating the one and only Beyoncé.
In the spring of 2002, continuing the quest to monetize every aspect of their lifestyle, Roc-A-Fella Records bought the U.S. rights to Armadale vodka.
While this particular venture didn’t end up turning out how they’d hoped, it was the starting point for Jay-Z’s future beverage ventures, which would pay off in a monumental way years later.
But first?
Jay-Z had a number of other moves to make.
Sneakers, Clubs, an NBA Team, and a Roc-A-Fella Breakup
2003 and 2004 were ridiculously busy times for Jay-Z and Roc-A-Fella Records which included:
The launch of the S. Carter sneaker by Reebok in 2003 which sold 10,000 pairs in the first hour and sold out of 500,000 pairs
The Black Album release in the fall of 2003
Jay-Z opening the 40/40 Club in 2003
Kanye West’s debut studio album, The Collge Dropout, as part of Def Jam and Roc-A-Fella records in 2004
Jay-Z’s purchase of an ownership stake in the Nets in 2004
It’s worth noting, that from 1996-2003, when Jay-Z announced his retirement from music, he released a new album every year.
He was prolific, reminding me of Taylor Swift or Tyler Perry in that regard.
Perhaps the biggest thing that happened though during that time?
Roc-A-Fella sold their remaining stake to Def Jam for $10 million and Jay-Z split up from his business partner, Damon Dash, in 2004.
The two had grown apart prior to that, with conflicting operating styles - Dame more inclined to start businesses from scratch and prioritize full ownership, and Jay-Z leaning towards partnership deals.
The next year, when Jay-Z bought out Dame’s stake in Rocawear for $22 million, it severed their ties completely.
But in the world of Jay-Z, no surprise to those who know about him, he was on to the next one.
Def Jam President
After selling Roc-A-Fella to Def Jam, Jay-Z joined the company in the role of President.
Right away, he wanted to quit.
There were executives there who hadn’t signed a major act in decades, nothing was fresh, and there were no new ideas.
Jay-Z is all about progression, so this didn’t sit well with him.
He ended up taking the company to the Tribeca Grand Hotel for a two-day retreat to inspire the employees and help them remember why they got into the industry in the first place.
His boss at the time, Antonio “L.A.” Reid would say of Jay-Z:
Being around Jay is inspirational to people. I don’t care if you’re a forty-year-old executive or a twenty-year-old intern - having that kind of access to that kind of wisdom, stardom, experience, and level of charm could change your life.
As part of Jay-Z’s role at Def Jam, he was tasked with upgrading their musical lineup.
One of the first people he signed?
Rihanna.
He first met her at Def Jam’s New York office in 2005. She sang “Pon de Replay” and he signed her that night. He’d also later invest in her company, Savage x Fenty.
Rihanna’s debut album would sell 500,000 units in 6 months, just like another Def Jam artist, Rick Ross, would do a year later.
Kanye West and Young Jeezy, also Def Jam artists under Jay-Z, would have their albums go platinum, selling a million units each.
Moving past a well-document feud with his rival, Nas, Jay-Z also signed him in 2006.
The same year, after taking a few years off from his own music, Jay-Z’s comeback album, Kingdom Come, sold 2 million copies in 3 weeks.
He actually tried to sit down and write this album, but he couldn’t break his famous habit:
I developed that habit of holding rhymes in my head from working so hard on the streets.
When I was still a teenager I might be on the corner when a rhyme came to me. I would have to run to the corner store, buy something, then find a pen to write it on the back of the brown paper bag till I got home to put it in my notebook.
I couldn’t keep doing that because I had to concentrate on work, not on scheming to get my hands on brown paper bags. So I created little corners in my head where I stored rhymes.
Once I got good at it, I actually preferred it as a technique. I’m not sure it’s better than writing shit down, but it’s the only thing I know. When I was working on the Kingdom Come album, I tried to sit down and actually write my rhymes, but it just doesn’t work that way for me.
Jay-Z also featured a bottle of Armand de Brignac, known as Ace of Spades, in his video Show Me What You Got in 2006, prompting speculation that he was partnering with the brand.
Sure enough, as would come out later, he had a 50% ownership stake in the brand and was making millions of dollars from it.
This was a big deal, as partnering with a brand of champagne that sells for $300 per bottle, yet only costs $13 to produce leads to some insane profit margins.
The next year, Jay-Z sold Rocawear to Iconix for $204 million and he stayed on for a reported $5 million per year to help endorse and promote the company he just sold. Genius move.
By 2008, Jay-Z was ready to move on from Def Jam’s traditional label structure, as documented in the book, Empire State of Mind:
It’s really about trying to invest in the future, trying to invest in maybe coming up with a new model, because going in hard making records with artists and throwing those records into a system that’s flawed is not exciting for me… My whole thing is, how do we invest in the future? If everyone is committed to doing that, then I’m sure there’s a deal to be made.
Jay-Z would expand on why leaving Def Jam was the right move for him:
For a long time a hit record solved all your problems because there was no Internet, YouTube and so many other factors. It was just the music. That model still exists of just putting artists out and seeing what works.
As the machine started moving faster, a lot of things got lost in the process, like artist development. It got to a point where as a business we were releasing hundreds of albums every year, and the percentages were really low, like out of 56 albums four artists worked.
At Def Jam I wanted to bring the entire culture into it. I wanted a fund so I could do other things aside from signing artists, like buying a television station or a club where we can develop these artists, or putting out some headphones, all these different things. I don't think at that time they could really get their mind around that. It's not something they were willing to do.
I just felt like I would be a waste there. So I started my own thing, Roc Nation, and that's what we do. We pretty much have everything: music publishing, songwriters, recording, touring.
His move to start Roc Nation proved to be the right one.
Roc Nation
In April 2008, Jay-Z secured a 10-year deal worth $150 million with the concert promoter Live Nation.
Right before that, Jay-Z paid Def Jam $5 million to buy out his obligation to make one more album with them.
It was worth it:
I bought my last album back. What people don't know is the day before I flew from Hawaii, where I was doing some recording and put it on an iPod. I had on jogging pants, and my iPod, with all the music I recorded, was missing. It was on the plane somewhere. I had to walk into Doug's office the next day and buy an album back that might leak the next day. Every day I would wake up and check all the Internet places and everywhere. I was like that for three months.
But it was worth it, you know. I was heading in a different direction and needed that freedom. It was a great decision for the company. They got some money. And a great decision for me. I got a very successful album, Blueprint 3, which had "Empire State of Mind" on it. That sold about 4 million singles itself. And my first solo number-one single came off that. I believe in everything lining up.
Jay-Z bet on himself and it paid off big.
While he paid Def Jam $5 million to buy back the rights to an album, he’d turn around and get a $10 million advance from Live Nation to make it.
This was all part of what is called a 360-degree deal and one that took all of Jay-Z’s touring, recording, and management of other artists and combined them under Live Nation.
As part of the deal, Jay-Z got:
An upfront $25 million payment
Additional $20 million for publishing and licensing rights
$50 million for starting Roc Nation, Jay-Z’s new talent agency and record label
$25 million touring advance
After signing that deal, Jay-Z’s touring revenue per show had jumped from a $60,000 take-home amount per show in 1999 to $300,000 by 2003 and $1 million by 2008.
The deal with Live Nation was perfectly timed given the market, with Jay-Z getting an eight-figure annual salary for a decade starting in 2008.
And his first signing for Roc Nation?
J. Cole.
The next year, by the end of the 62-show Blueprint 3 tour, Jay-Z had done $60 million in ticket sales alone, not counting merch.
Then he had dinner with another business titan, Warren Buffet, in a sit-down chat with Forbes in 2010.
Warren would rave about Jay-Z’s talent and say of his moat:
Well, he's building moats all the time. Obviously. That's why he's succeeding even though he's moved beyond the age that you normally associate his field with.
The best moat you can have is your own talent. They can't take it away from you; inflation and taxes can't take it from you.
I urge students when I talk to them to look at the people you admire and list what makes you admire them. Those are things that you should do. Just write them down.
In the following years, as Roc Nation continued to expand, launching a number of new divisions, most notably Roc Nation Sports, Jay-Z would continue his relentless streak of dealmaking and investing.
The First Billionaire in Hip-Hop
The sheer volume of Jay-Z’s business and investment empire is staggering.
By 2011, he had built a personal fortune of $450 million.
The next year, he gets involved with another alcohol brand, D’USSÉ, in a partnership with Bacardi.
One year later, he invested $2 million in the hottest startup at the time, Uber.
Then, in 2014, he bought the rest of Armand de Brignac, and not long after he paid $56 million to acquire Aspiro, the company behind the subscription streaming service Tidal, which Jay-Z relaunched in March 2015.
Building on the Uber investment in 2013, Jay-Z launched his own venture capital firm, Marcy Venture Partners, in 2018 with partners Jay Brown, who was the former CEO of Roc Nation, and Larry Marcus, who was formerly a general partner at Walden VC.
Finally, in 2019, Jay-Z became Hip-Hop’s first billionaire, with a Forbes article outlining the value of his investments at the time:
Armand de Brignac champagne: $310 million
Cash & investments, including a stake in Uber worth an estimated $70 million: $220 million
D’Ussé cognac: $100 million
Tidal streaming service: $100 million
Roc Nation: $75 million
Music catalog: $75 million
Art collection: $70 million
Real estate: $50 million
Of course, he was far from done making major moves.
In 2021, Square bought Tidal for $297 million.
Jay-Z would tweet at the time:
I said from the beginning that TIDAL was about more than just streaming music, and six years later, it has remained a platform that supports artists at every point in their careers. Artists deserve better tools to assist them in their creative journey.
— Mr. Carter (@sc)
Mar 4, 2021
He also sold 50% of his stake in Armand de Brignac to LVMH in 2021 for an estimated $315 million.
Then, in February 2023, Jay-Z sold his controlling stake in the D’USSÉ brand to Bacardi after a legal battle for $750 million.
This brings us to today.
Jay-Z Today
I couldn’t even mention all of the different business ventures Jay-Z has been involved in, there are simply too many, but his rise reminds me of the advice Felix Dennis, the founder of Maxim, gave in his book:
I am one of the richest self-made men in Britain for two reasons. I own my company outright, and I began to make more baskets the minute the first had a few eggs in it…
When I had the chance (i.e., when flush with cash), I should have bought more magazines. Even a newspaper, if I could have afforded it... I should have considered going into radio or television production earlier than I did... I should have invested in one or two Internet start-ups I knew were going to do well.
Jay-Z essentially did just that, taking one success, his music career, and turning it into a number of additional ventures from which he could profit.
He had the ambition and the work ethic and was able to leverage his own brand to monetize nearly every aspect of his lifestyle.
Sure, he had some failures along the way, but his successes have far outweighed them, and he’s built a $2.5 billion fortune in the process.
Jay-Z’s Wisdom
In each edition of the Just Go Grind newsletter, I like to include a few more quotes at the end from my research into the founder who is featured, sharing their wisdom.
On the value of competition:
Aside from the heartbreak of losing two great MCs - and one great friend - I’ve always felt robbed of my chance to compete with Tupac and Biggie, in the best sense, and not just over first-week sales numbers. Competition pushes you to become your best self, and in the end it tells you where you stand.
On what he learned from hustling:
You learn to compete hard, even when you lose, because you can’t settle for second-best as a hustler. It’s not worth it. There’s no pension and benefits for a scrambler. On the other hand, you might get killed. The only reason to do it is for the top slot, for the number one position.
On the lesson he brought to the “legitimate” world:
Boxing is a glorious sport to watch and boxers are incredible, heroic athletes, but it’s also, to be honest, a stupid game to play. Even the winners can end up with crippling brain damage.
In a lot of ways, hustling is the same. But you learn something special from playing the most difficult games, the games where winning is close to impossible and losing is catastrophic: You learn how to compete as if your life depended on it. That’s the lesson I brought with me to the so-called “legitimate” world.
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