In Sway’s interview yesterday with Kanye West things got a little heated. But once they were able to settle down Kanye gave a quick hard lesson in entrepreneurship.
Kanye began to “turn up,” as Sway called it, when he was asked why he could not make is mark on the fashion game independent of assistance from well-established brands in the space. Many would assume that a person like Kanye could sell anything just based on his name. But according to Kanye, to reach his goal of being mentioned among prestigious designers like Margiela, Balenciaga, and Yves Saint Laurent, it’s not that simple.
Start-up Costs- (1) Costs, excluding acquisition costs, incurred to bring a new unit into production. (2) Costs incurred to begin a business. ~StartHereGoPlaces.com
Kanye mentioned several times in the interview how he’s short about $13 million as a result of pursuing his interest in fashion. This is consistent with most startup businesses. For many, even in high-growth industries, losses are incurred for several years until revenues can surpass the rate of investment needed to grow. For instance, Twitter, which just went public on the New York Stock Exchange and is valued at billions of dollars, is technically not a profitable company.
So although Kanye has sold thousands of Air Yeezys and had successful clothing projects, he still is in the red. Opportunity Costs-(1) The cost of an alternative that must be forgone in order to pursue a certain action. Put another way, the benefits you could have received by taking an alternative action. ~Investopedia.com
Kanye goes on to speak about how investing time versus earning money makes him feeling compressed, stating:
“As I work on clothing more, I’m not rapping as much. So I’m not in the middle of that Future mix cuz I didn’t do that feature. I’m not rapping as much; I’m not having as much finances. I’m losing relevancy. The relevancy is part of my power that allows my brand to be big… You juggle so crazy.”
As a new entrepreneur your side business always competes with what is financing your business, also referred to as YOUR JOB. Even Kanye can’t afford to take extensive bouts of time away from his bread and butter without risking the entire foundation that holds up his dream to be a fashion designer.
As your company grows and you seek out investors, understanding the control you give up is important. The primary grudge Kanye has with the Who’s Who of the fashion industry is that they want to control him. Not allowing himself to be controlled is making his whole plan to become a fashion king a whole lot harder to execute. However, unlike Kanye, you might be content with growing at a slower pace, in exchange for having full control over your baby (your business).
Entrepreneurship isn’t easy. Even for someone like Kanye West who has the brand, the capital and the contacts to support his endeavors. He still finds it daunting to grow his business from an idea to an empire. Kanye’s rant was based fully on his frustration and his longing desire to achieve his goals.
Just like Sway, I don’t have the answers, but what I do know is Kanye paid $13 million to learn a lesson about the fashion business. As a new entrepreneur you don’t know what you don’t know until it smacks you in the pocket. But hopefully you have enough cash reserve and passion to keep you going until you learn.