a bet on influence

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Hey! Looks like Yeezy season approachin'. Last night, Kanye West hosted an album listening party in Las Vegas and gave Kevin Durant and Justin Laboy a private listen. On Thursday, he's reportedly hosting an event at Mercedez-Benz Stadium in Atlanta. Kanye has had plenty of release dates come and go, so we won't know for sure until it's New Music Friday.

If the album drops, Ye will have both his album and the Yeezy Gap clothing line releasing soon. If I'm a Gap exec, I'm pushing to get this Yeezy Gap jacket involved in this in some way. Gap's stock soared when the collab was announced. The timing may not line up but hey, it's worth a shot.

Today's memo covers my Trapital Podcast interview with SpringHill Company's Jamal Henderson, the potential for Songfinch, and doing things that don't scale.

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new podcast: Jamal Henderson, SpringHill Co

Jamal is Chief Content Officer of SpringHill, the entertainment company started by LeBron James and Maverick Carter. We talked about Space Jam: A New Legacy and the marketing push behind the movie. He also spoke about SpringHill's mission for empowerment, LeBron's role in the creator economy, and SpringHill's potential in audio.

If you enjoyed my breakdown on Will and Jada Pinkett Smith, you'll love this talk with Jamal.

Tap in on Apple Podcasts, Spotify, or watch on YouTube.

On the Trapital Podcast, hip-hop's heavy hitters explore their best ideas so you can level up your game. Learn more here.​

SpringHill's $750M valuation: a bet on influence

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Last week, The Information broke the news that SpringHill Company is exploring a sale at a $750 million valuation. Interested parties include Nike and big tech companies.

The Amazon impact. In May, the tech giant set the market for studio valuations with its $8.45 billion acquisition of MGM. Amazon now owns franchises like James Bond, Rocky / Creed, and The Handmaid's Tale. Since then, film studio A24 has explored a $3 billion sale and Reese Witherspoon's production company Hello Sunshine wants $1 billion.

A24 has a strong brand backed by quality original content. In a Hollywood dominated by comic book movies and proven stories, A24 has its own lane. It doesn't have franchises, but it reaches a valuable audience that skews toward high net worth individuals.

The creator economy at the highest level. Meanwhile, SpringHill and Hello Sunshine are more like creator acquisitions. Here's a quote from Bloomberg's Lucas Shaw in his most recent newsletter:

Hello Sunshine is a bet on Reese Witherspoon. Reese's Book Club's monthly picks are prime targets to be optioned into future projects like Little Fires Everywhere and Big Little Lies. It's also a bet on Reese's ability to attract big-name friends for big projects. The Monterey Five won't be out of work anytime soon!

SpringHill is a bet on LeBron's influence. When LeBron's NBA career ends, he'll devote more time to the company's content and commerce. LeBron can use his platform to sell movies the same way that Will Smith and The Rock got paid to promote their movies through social media.

If Nike buys SpringHill, it strengthens its partnership with LeBron, his ability to bring celebrities and athletes together, and any projects that come from SpringHill itself. Plus, Space Jam: A New Legacy just beat its box office predictions by 50%. It's not a bad time to get started.

To read more about SpringHill, read my guest post in Joe Pompliano's Huddle Up where I break down the marketing behind Space Jam: A New Legacy.

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Will Songfinch become "Cameo for songs"?

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​Songfinch, the music tech startup focused on personalized songs just had a $2 million seed round. Investors include The Weeknd, XO Records CEO Sal Slaiby, and Atlantic Records CEO Craig Kallman.

On Songfinch, fans order personalized songs for $199. Users select the style of their song and share stories to shape the lyrics. Songfinch then matches users with an artist who writes and records the song for the user. Customers get a personal use license in perpetuity, but they can't monetize the song.

The platform has constraints: Songfinch users can't choose specific artists and prices are fixed at $199. Constraints can be good in the early startup days though. Internally, they help startups focus less on features and more on customers. Externally, they heighten user creativity and set the tone with early adopters. Today's biggest social platforms have benefitted from early constraints.

Cameo for songs. As Songfinch grows though, there's an opportunity to build a marketplace where fans choose artists and artists set their own rates. This will attract fans who want personalized songs from specific artists and attract artists who are willing to make songs for more money. Given the major record label execs now backing Songfinch, this expansion seems inevitable.

This would be a similar model to Cameo, the personalized video message platform that blew up in 2020. It generated over $100 million in gross merchandise value and earned 30% from each transaction.

The risk for Songfinch is if Cameo moves first. In my Trapital Podcast chat with CEO Steven Galanis, he said that audio is on the roadmap. It already has artists on its platform, which is the hard part. If Cameo wants to accelerate its timeline, it could acquire Songfinch.

The disintermediation of music. The personalized music marketplace—whether it's Songfinch, Cameo, or Downrite — is another example of disintermediation in the music industry. Fans paying artists directly to make songs looks like a toy now, but watch! There's potential here.

Artists can use these services to collaborate on mixtapes with a select group of diehard fans with a high willingness to pay. If the money is right, it can be a meaningful revenue stream. Remember, Beyonce got paid a rumored eight figures to perform at a private wedding in India and earned $6 million in Uber equity after a private performance in 2015.

If fans will pay artists big money for private gigs, they will pay directly for exclusive music too.

Read more about Songfinch in Rolling Stone.​

P.S. - notice how startups funding announcements look like music festival posters? Startups are gonna buy songs to announce funding rounds. I know. It sounds ridiculous. But hey my job is to give you a heads up on these things!

"Do Things That Don't Scale" in Hip-Hop

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Y-Combinator co-founder Paul Graham's 2013 essay Do Things that Don't Scale is etched into the minds of startup founders. His stories about Stripe and Airbnb recruiting customers manually are reminders of the importance of understanding customers in the early stages. But like many things, there are countless examples of hip-hop doing this before Hacker News was even a thing.

Necessity or strategy? In my recent Twitter thread, I cited examples like Megan Thee Stallion's Hottie house parties, Donald Albright's podcast street team, Loud Records and Bad Boy's actual street teams, the Ciroc Boys, and J. Cole's Dollar & A Dream Tour.

Most of those tactics were done out of necessity. They didn't have massive audiences or unlimited budgets. They rolled their sleeves up because it was the only way.

Meanwhile, venture-backed tech founders have access to funding. But great brands aren't built from Facebook and Google ads. Those ads can boost brands that are already great, but the brand is built by the customer focus established in the early days.

This goes back to the constraints I mentioned earlier with Songfinch. Limited financial resources can breed creativity. Startups that rely too heavily on targeted social media advertising may lose out on the creativity and personality that comes with brands.

This is why leaders and companies with loyal audiences are well-positioned. Today's hip-hop artists have some of the strongest followings. Young media companies with passionate newsletters, podcasts, and YouTube channels have an advantage too. In both cases, they've taken the time to understand what their audiences want.

For more on audience-first products, read ConvertKit CEO Nathan Barry's essay The Billion Dollar Creator.

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Coming soon from Trapital

Trapital Podcast: interview with Steve Rifkind, founder of Loud Records, SRC, and Spring Sound. We talked about 90s hip-hop, his family business, Wu-Tang Clan, and more. Drops Friday!