Small Business

Houston Hip-Hoppers Are Living Large


"Chamillionaire" and other Texas-based rappers are making it big both inside and outside the music biz

His single Ridin' just received two nominations for the 2007 Grammy Awards, has sold over 3 million ringtones, and merited a parody by Weird Al Yankovic. His latest album The Sound of Revenge went platinum-plus. But is Hakeem "Chamillionaire" Seriki focusing solely on music? No. Like Russell Simmons (see BusinessWeek.com, 10/3/03, "The CEO of Hip-Hop"), Master P, and Jay-Z, Chamillionaire has the mindset and the business acumen of a serial entrepreneur.

At 27, he has his own record label (Chamillitary Entertainment), co-owns a car-customizing business dubbed Fly Rides, is building a real estate portfolio, and will soon open the doors of his own talent agency, Masterpiece Mind Frame.

Growing up in Houston, Texas Chamillionaire recalls: "There was no Sony or Def Jam, so everybody was forced to learn how to be independent. When you start off selling CDs out of your trunk and to mom-and-pop stores, you breed yourself into being an entrepreneur."

Growing Breed

The Houston of Chamillionaire's youth in the 1990s calls to mind the Bronx of the early 1980s, where pioneers of hip-hop laid the groundwork for a cultural phenomenon. From rhymes by rappers like Run DMC and beats spun by DJs such as Kool Herc, hip-hop emerged into a lifestyle. And for those with a mind for business, it was a way of life with opportunity for serious financial gain.

Chamillionaire is part of a growing breed of Houston hip-hop artists who are using their celebrity to sell more than just music. In recent years Houston has become a wellspring of commercially successful and critically acclaimed hip-hop artists, fostered mainly by independent labels rather than corporate studios. Their independence is manifesting itself not just in their music but in their desire to be entrepreneurs.

"The way the old school guys define hip-hop wasn't just about the music, it was about graffiti and break-dancing, and it came out of the parties people were throwing," says Tim Leffel, who co-authored a book about the business of hip-hop in 2006 titled Hip-Hop Inc. (Thunder's Mouth Press). "People who are into it live it and breathe it. It affects fashion, TV, movies … even sports drinks."

Cross-Town Rival

For Chamillionaire, leveraging his name in a variety of industries is, in his mind, crucial to his long-term success. "It's all about diversifying—having a little bit of money coming in from everywhere—to make a lot. In this rap world, once you step through the doors you want to get as much as you can and grow your finances. Some people are only thinking for the minute. I'm thinking about building an empire."

Across town, Chamillionaire's former group member, Paul Wall, now a successful solo artist with Swishahouse Records, is building an empire of his own. In 1998 he began a dental jewelry business—Grills by Paul Wall—which crafts and retails mouthpieces made from 24K gold and inlaid with diamonds. This year he plans to launch a clothing line called Extravagant Taste and open a Wahoo's Fish Taco franchise restaurant.

Like Chamillionaire, Wall says he learned to be an entrepreneur in part by climbing the ladder of Houston's independent music scene. "We understand the concept of [selling] our records ourselves or else we're not going to get paid," he says. "We got the strong hustle, the strong grind embedded in us since Day One."

Corporate Tie-Ins Are O.K.

While the name Paul Wall is selling thousands of custom dental grills a year—through his online store, two retail locations, and wholesalers—the artist owes some of his notoriety to his ability to market his idiosyncratic choice of jewelry, which he proudly flashes as he smiles on album covers, in music videos, on award shows, and which he frequently rhymes about on tracks.

"The music I believe is the most important," Wall says when asked whether he now considers himself to be more of a musician or an entrepreneur. "Because that generates a large majority of the income and also it's an avenue for me to promote whatever I got goin' on—whether it's the grills or the restaurant."

Though Grills is an independent operation and Wall's music is still independently produced, he says that he would in no way be opposed to a contract with a major diamond seller like De Beers, for instance—given the right deal.

Money Creates Credibility

Such is the attitude of most hip-hop artists-turned-entrepreneurs. Whereas rock musicians might concern themselves with potentially alienating their fan base by joining hands with Corporate America, a rapper's image is usually strengthened by gobs of wealth, regardless of its source. The omnipresent example is Shawn "Jay-Z" Carter, who has become chief executive officer of Def Jam and Roc-A Fella Records (both owned by Universal Music Group) as well as co-owner of the upscale sports bar chain 40/40 and the Rocawear fashion label, and a minority owner of the New Jersey Nets.

Far from being considered a sell-out, the five-time Grammy Award-winning rapper's music career is hotter than ever. Even Chamillionaire—like so many hip-hop fans—says Jay-Z is his favorite rapper.

"In hip-hop it adds to your credibility to say you have a lot of money," says Clyde Smith, who writes ProHipHop.com, a blog covering hip-hop marketing. Once it was validated by record sales, Smith posits, rapping became a way to transcend class—and becoming a diversified entrepreneur was an essential tool for achieving that goal. "Somehow rap became symbolic of a way to move up in the world. Aspirations of all kinds besides just artistic ones got tied together early on," says Smith.

To see profiles on 10 hip hop-artists-turned-entrepreneurs to watch, click here for the slide show.

Douglas MacMillan is a staff writer for BusinessWeek in New York.

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