from underpaid to underrated

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Hey! I went to Outside Lands this past weekend. I had a great time, I really did, but I don't know how some of you can do three straight days of a music festival! I look at festivals the same way I look at Las Vegas. Two days? Easy, no problem. But three days? I can't anymore, but I give you credit if you still can.

Today's Trapital Memo covers four topics:

• my podcast interview with filmmaker Sacha Jenkins
• 300 Entertainment exploring a $400 million sale
• ​new study on creators from this week's sponsor
• most underrated hip-hop business moves of all time

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new Trapital podcast: Sacha Jenkins

Sacha is a documentarian, film producer, and creative partner at Mass Appeal. He can on the podcast to talk about his latest film, Bitchin: The Sound and Fury of Rick James. We talked about how he navigated telling the highs and lows of Rick's life, the rise of music documentaries, and Mass Appeal's Hip Hop 50 celebration.

Tap into the Trapital Podcast here.

300 Entertainment's Potential Sale

Last week, Bloomberg reported that 300 Entertainment is exploring a sale for $400 million, according to sources. This is a great opportunity to dive into the label, its initial vision, and its value to potential buyers.

A mindset ahead of its strategy. In 2012, 300 Entertainment was launched as the “modern content company.” The independent record label was started by three seasoned execs—Lyor Cohen, Kevin Liles, and Todd Moscowitz. It was funded by Google Ventures and had partnered with Twitter for data insights. By 2014, it had Young Thug, Migos, and Fetty Wap on its roster. 300 looked ready to run the 2010s, the same how Cohen and Liles had Def Jam on top back in the day.

But despite its momentum, the record label’s strategy had lagged behind.

300 wanted its artists to sign 360 deals, which led to inevitable tension between labels and artists. This was an era where SoundCloud rappers pushed artist independence, yet 300 wanted even more ownership. Both Rich the Kid and Migos had expressed frustration with past deals.

Lasting success. By 2016, both Cohen and Moscowitz had left the label, and Kevin Liles took over as CEO. Liles has been recognized by the industry for his accomplishments. He’s one of the few Black execs leading a label at this level. In 2016, the same year Cohen and Moscowitz left, the label grew 72%. 300 has moved away from 360s and has continued to attract top talent, like Young Thug’s protege Gunna, and Megan Thee Stallion. It has also expanded into other genres of music. 300 has signed over 100 artists to date.

The label has succeeded, but others like EMPIRE and Quality Control Music are more comparable to the “modern content company.” EMPIRE was an early advocate for artist flexibility with its short-term deal structure, while QC has done both multimedia content and startup investing. And for tech partnerships, UnitedMasters—which was just valued at $550 million— has led the way in recent years.

Will 300 get $400 million? 300’s potential sale will capture the hot market for music assets. Early investors like Google Ventures will likely cash out on their initial investments.

But 300 is more unique from most recent music asset sales. To date, most sales have been from legacy artists with older music that still gets a lot of radio play. Meanwhile, 300 is a relatively new label with newer artists who rely primarily on streaming revenue. 300’s biggest hit is Fetty Wap’s “Trap Queen.” It also has Fetty Wap’s other summer 2015 anthems like “679,” “My Way,” and “Again.”

Acquiring 300 is also a bet on the trajectory of its biggest stars—Thug, Meg, and Gunna— who each have their bull and bear cases.

Thug is talented, influential, and proven, but his recent Punk album sold under 100K units in its first week (and numbers matter if you’re buying a record label). Meg can get any high-profile partnership or media profile she wants. But when her debut album Good News barely sold over 100K, it was a reminder that Meg’s recorded music revenue might be the least valuable part of “Meg The Stallion, Inc.” And while Gunna can flow with the best of them (and inspire a billionaire to dress like him for Halloween), but he has yet to take the mainstream leap like his fellow Thug protege, Lil’ Baby.

The $400 million asking price is steep. But if 300 gets close to that number, that will be a strong signal for other hip-hop record labels and investors that want to cash in on this moment.

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It doesn't take millions or thousands of followers to succeed. The independent creators succeed by going niche, empowering their audiences to build with them, and focusing on serving their community. The independent creator can succeed with a much smaller audience than previously thought.

Learn more about how independent creators are redefining entrepreneurship. Download The Creator Manifesto for free.​

The most underrated hip-hop business moves

Last week I asked an open question on both Twitter and LinkedIn, “What’s the most underrated business move by a hip-hop artist?” The responses have been great. I have covered a number of great deals already in Trapital, but here are a few popular ones mentioned that I’ve never written about before:

LL Cool J advertised Fubu in a Gap commercial

In 1997, Gap paid for a Fubu commercial thanks to LL Cool J. The rapper wore a Fubu hat, and in his rap said “for us, by us, on the low.”

Fubu founder Daymond John said that after the commercial aired, he ran out of product. Customers were going to the Gap to try and buy Fubu! Gap found out what LL had done 3 weeks later, but Gap sales still grew 300% afterward. Everybody won.

Ice Cube started the BIG3 basketball league

Cube knew that recently retired NBA athletes still had big fanbases and could still play the game despite no longer making a 15-player NBA roster. And he knew the 3x3 concept was great for the age demo.

The BIG 3 was launched in 2017 and has stayed on ever since. Starting a sports league is hard as hell. Most leagues fail, and BIG 3 has had its questionable moments, but it's continued to stay on top. I can't speak to its profitability or run rate, but the lights are still on, and that says something.

Queen Latifah's expansion into multimedia

Everything in Queen Latifah’s career can be labeled as “ahead of its time.” She was one of the first hip-hop artists to push for women’s rights and empowerment. She launched Living Single—the original sitcom about twenty-somethings in New York navigate adulthood! She was the first rapper to perform at the Super Bowl. The list goes on.

Her presence in TV and film paved the way for folks like Cube, LL Cool J, Ice-T, and other hip-hop figures who have become a presence in multimedia.

Chamillionaire's career as an investor

I haven’t covered Chamillionaire much in Trapital, which is crazy. He was a former Entrepreneur-In-Residence at Upfront Ventures and made early ties with founding partner Mark Suster. As an investor, he has had several notable exits, including Maker’s Studio (acquired by Disney), Ring (Amazon), Cruise (GM), and Lyft (IPO).

Chamilionaire has also gotten E-40, Big Boi, and Trey Songz to invest in more startups.

E-40's wine business

Earl Stephens Wine Selections launched in 2013 and has shown no signs of slowing down. In 2021, April 2021, he signed a nationwide distribution deal to get his product in 41 different states. E-40 is also an active investor who has backed Clubhouse and other tech companies.

People shared a bunch of great ones, so you if you have time, check out the threads on LinkedIn and Twitter. Other ones mentioned that I didn’t include were because I’ve covered before:

• ​Frank Ocean's Endless-Blonde release​
• ​Nipsey Hussle's $100 mixtape​
• ​Nas's investments at QueensBridge Venture Partners​
• ​50 Cent - Vitamin Water​

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Coming soon

Podcast: interview with Dave Mays, founder of The Source and co-founder of Breakbeat, a new podcast network. Drops on Friday!