Kanye West was recently named a billionaire by Forbes.

But did you know he was in $53M of debt just four years ago?

This is the story of how one negotiation changed his life forever and why betting on yourself is always the right move.

Time for a thread

1) In 2007, Kanye West found himself on a flight with Nike CEO Mark Parker.

Sensing an opportunity, Kanye took out a sketchpad and started drawing shoe designs for Parker to review.

By the time they landed, Kanye had Parker's word the two would design a shoe together.

2) Nike CEO Mark Parker put Kanye West and the legendary Tinker Hatfield, the original designer of the Air Jordan, in a room to collaborate.

By mid 2008, Kanye was wearing prototypes of his Nike Air Yeezy in public.

The official release of the Air Yeezy came in April 2009.

3) Along with the initial Nike Air Yeezy release in 2009, Kanye and Nike also released different variations of the shoe in 2012 and 2014.

From Nike's perspective, everything seemed to be running smoothly.

Kanye, on the other hand, felt differently…

4) Kanye grew frustrated with Nike, claiming they treated him like "just another celebrity dabbler.”

Similar to Michael Jordan's deal, Kanye felt he deserved a royalty on sales.

Kanye's argument?

“It was the first shoe to have the same level of impact as an Air Jordan”

5) Nike was unwilling to guarantee Kanye a royalty on Yeezy sales.

Instead, Nike offered to put a small percentage toward charity.

Kanye said no, standing firm that he should treated like an athlete:

"I go to the Garden and play one-on-NO-ONE. I’m a performance athlete”.

6) Even with sales going well, Kanye decided the royalty disagreement was enough to split from Nike in 2013.

Within weeks, he had contacted their competitor Adidas and was on a flight to meet with company executives in Germany.

Here's where it gets interesting…

7) Adidas and Kanye eventually agreed to a historic deal, making Adidas the exclusive distributor of Yeezy.

Details:
- Kanye retains 100% of Yeezy brand
- 15% wholesale royalties
- Yearly marketing fee

For context, Michael Jordan supposedly receives a 5% royalty from Nike.

8) After signing their historic deal, Kanye and Adidas deployed a strategic playbook to increase sales & overall brand value.

Their model relied on a combination of exclusivity & scarcity.

For example - they held limited "drops", routinely selling 40,000 pairs within minutes.

9) Adidas and Kanye used exclusivity to drive consumer interest for years, but have recently increased supply to drive sales.

In 2019, Yeezy did an estimated $1.5 billion in sales - up 50% from 2018.

For context, the Jordan line does roughly $3 billion in yearly sales for Nike.

10) When it comes to personal income from their shoe deals, Kanye West has Michael Jordan's number.

Jordan took home an estimated $130M from Nike last year, which is 4x as much as LeBron James.

Kanye was paid out an estimated $140M from Adidas last year - or $10M more than MJ.

11) The greatest entrepreneurs in the world have consistently taught us two things are required to be successful.

1. Take a risk
2. Bet on yourself

Kanye followed both principles, turning his $53M personal debt into a $1.3 billion empire.

12) Regardless of your feelings about Kanye West's public persona and political aspirations, he is undoubtedly an unbelievable businessman.

As Aristotle famously said, “no great mind has ever existed without a touch of madness.”

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Sources:

https://www.forbes.com/sites/zackomalleygreenburg/2019/07/09/kanyes-second-coming-inside-the-billion-dollar-yeezy-empire/#7188d75c5ec3

https://www.cnbc.com/2019/07/10/kanye-west-from-53-million-in-debt-to-making-millions.html

https://www.forbes.com/sites/zackomalleygreenburg/2020/04/24/kanye-west-is-now-officially-a-billionaireand-he-really-wants-the-world-to-know/#361be5ed7b9e