I was rewatching Steve Stoute’s interview on Rap Radar and he was mentioned how foolish Nike was to let Kanye go to Adidas for a sneaker deal. His premise was that Kanye’s starpower singlehandedly elevated the Adidas brand and challenged everyone to look at Adidas’ stock price since the Yeezy deal as proof of this.
So I did.
Kanye and Adidas’ partnership started in early 2014, and since then it’s been a clear win for them. Now, we can’t attribute all of this to Kanye, but there’s no question that his cultural cache has contributed a lot to the brand’s resurgence.
All of this brought me back to one of my core tenets: Invest in what you know. This simple statement has driven Warren Buffett’s investment philosophy for years (Coca-Cola, Dairy Queen, etc), but I feel that for many of us who grew up in the hip-hop/creator/media era, we get stuck believing that we don’t know enough to invest properly.
This is false.
Start with the products you love while also observing what’s going on around you. I remember being 14 and skipping class to take a Chinatown bus to NYC just to buy box logo caps from Supreme. This is in 2002, when Supreme appealed mostly to skateboarders and early hypebeasts, but clearly this type of behavior suggests that there might be something special about the brand. As an avid skateboarder at that time, I would always notice the chatter around the brand and could tell that it was making an impact in the larger consciousness of the community. Today, Supreme is a billion dollar company.
Investing in what you know requires you to be emotional and detached at the same time. Start with your emotional connection with a product or space and perform an objective due diligence to confirm if there’s really something there. Over time, you will get better at seeing the signs and triggers than point to a company or industry being on the cusp of exploding. Is it starting to draw more mainstream users? Are larger, institutional investors starting to put their money in it? Are all your friends talking about it all of a sudden? The other important aspect is avoiding getting caught up in the hype. Just because everyone is talking about cryptocurrency, it doesn’t necessarily mean that it makes sense for you. “Sexy” investments will grab the headlines and produce a few winners here and there, but unless you’re an expert in that space, you’re going to be playing catch up. Gravitate to what you know and find the winners.
The next step is to identify your niche. As example, let’s look at the success of Fenty Beauty. We all know about the explosion of the makeup/glam industry recently due to Instagram, but what specifically within this space would make a good investment? For the millions of people of color who struggled to find appropriate products to match their skin tone, they knew that the bigger brands were neglecting this space. By addressing it directly, Fenty (and their publicly traded parent company, LVMH) was able to create both a cultural moment and a massive business success. For the users and the everyday experts of this space, that was an easily identifiable investment opportunity. Even though you might’ve missed the opportunity to catch the Fenty wave from an investment standpoint, you now know the value of playing to a niche. You can use this knowledge to support passionate founders and people in your circle who are launching ideas of how to improve segments of their own lives/communities.
Lastly, trust your instincts. Don’t let fear get in the way of a great investment. At some point, you have to commit your money and time in order to see something grow.
I’d be remiss if I didn’t share some of my recent investment experiences, so here goes:
- Real Estate (👍🏾) — Specifically, multi-family residential properties within a 60 minute commute to major metropolitan areas. All the data and trends show that homeownership is dwindling and that renting will become more common for decades to come. Why not control the supply?
- Social Media (👍🏾) — Cable news will always be around, but social media has transformed how the world shares and disseminates information. We all engage in this daily, so it made sense to take a long term approach with investments in this area.
- Bitcoin (👎🏾) — I jumped in late to an overhyped space I didn’t truly understand. I listened to the advice of others instead of learning it front to back myself. A set of significant losses later, I learned my lesson.
I hope this inspired a few ideas of your own. Your next investment is probably already right in front of you.
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Questions about sneakers, investing or anything in between? Feel free to reach out to me on Instagram.