JAY-Z AND JACK’S BROMANCE

The soundtrack for Jay-Z over the last few months has got to go a little something like: “I love deals, deals, deals…deals I do adore! Jack, put your number on this paper cuz I would love to date you, holla at ya when I come off tour.”

Jay-Z and Jack Dorsey’s bromance is well documented, and has now culminated in Square taking a majority stake in Jay-Z’s streaming platform Tidal with a $297M investment, and with Jay-Z joining Square’s board of directors.

Perhaps more important than the deal, is the understanding of how these two entrepreneurs have been professionally courting one another, for the greater part of a year. Business Insider chronicles the timeline of their relationship, including Dorsey’s $10M donation to Jay-Z and Meek Mill’s nonprofit, Reform Alliance and a cozy yachting trip with the entire Carter family in the Hamptons. So behind the headlines, behind the deals, behind the money — is a strong foundation of trust, and that is how a $300m cake gets baked.

The actual nuts and bolts of the deal has however left some puzzled as to the business synergies between the payments platform and the streaming app.

On Twitter, Dorsey said the deal would help Square create new tools for artists, including by creating “new listening experiences to bring fans closer together,” as well as merchandising integrations and new revenue streams. For us at the Suites, we think things are a little more nuanced.

Last year in 2020, Cash-App drove approximately 43% of Square’s gross profits. And as reported by Trapital back in March of 2020, hip-hop has helped Cash App grow faster — with lower customer acquisition costs due to influencer rappers making mention of Cash App in songs. In fact, back in 2018, Square teamed up with artists Travis Scott, Lil’B and Snoop Dog, to use the app to give away money. So Square is no doubt excited to integrate more of this influencer marketing, leveraging Tidal’s approximately 3 million subscribers.

Furthermore, both Jay-Z and Dorsey are betting heavily on Bitcoin and as Square builds out its Bitcoin and crypto infrastructure, non-fungible tokens (NFTs) could be leveraged, as digital assets produced by Tidal artists are purchased by Cash App users. (I will certainly get into NFTs in a later post, but check this tweet for a laugh.)

Ultimately there are plenty of synergistic pathways, but any way you go, it is clear that hip-hop not only moves culture but now, hip hop moves money.

** Inside the Deal is a short and sweet analysis of recent high-profile business transactions concerning executives and entrepreneurs of color. Head over to the Suite’s website to get this note directly in your inbox so you don’t miss a beat!