Why Did Kim Kardashian Get Into Private Equity
On September 7, 2022, Kim Kardashian announced that she is launching SKKY Partners with Carlyle Group executive Jay Sammons. The company’s target sectors include consumer products, digital & e-commerce, consumer media, hospitality and luxury. It marks the largest collaboration between influencers and traditional private equity investors.
“Kim has started two businesses (Skims and her KKW Beauty brand) that sophisticated investors have valued over US$1 billion…..She’s an incredibly accomplished entrepreneur and investor.”
Jay Sammons , Co-Founder & Managing Director of SKKY (BNN Bloomberg)
Today we’ll cover
Why Private Equity? Why Now?
Kim Kardashian’s Venture Portfolios
Why Private Equity? Why Now?
There are simply three reasons why private equity makes sense for Kim Kardashian
Creators are exceptional producers and brand builders, but not technologists
Today we see variations of creator funds investing in ventures. However, it is important to realize that creators are not technologists, and most creator-led businesses are not quite venture-backable. Examples include consumer packaged goods (CPG), entertainment studios, hospitality and luxury stores etc.
Private equity is established and operational, resilient to market movements
Firstly, private equity investors acquire a majority stake or the entire business and become the new owner of the business, whereas venture capitalists would never take significant ownership of more than 20% (usually).
Secondly, after the acquisition, private equity investors will implement cost controls and strategize their operations to make the business more efficient. Kim Kardashian has lots of experience with Skims and KKW, which made it a great fit.
Blue Ocean Opportunity (low competitiveness and market timing)
There are two angles that validate how the market is very attractive.
Firstly, private equity companies are more entitled to “safer” business models, including infrastructure, manufacturing, enterprise services, cloud-based software, etc. Media and entertainment as well as retail brands are not a significant focus for these firms because (1) they are cyclical, (2) cash flows are relatively not predictable, (3) they require creative and marketing skillsets, which are distinct from other industries.
Secondly, most creator-led media companies and consumer brands that are built in the 2000s are approaching their 20-year mark, implying a succession opportunity for SKYY Partners. In a Colin & Samir podcast with the owner of the Good Mythical Morning, the co-founders Rhett and Link agreed that “they would rather pass it (their business) onto someone than let it die”. I believe many brands might run into a similar problem and SKYY Partners would be much better positioned than other traditional private equity to do so.
Kim Kardashian’s Venture Portfolios
The worst thing that could happen to a creator is when you are famous but broke.
Every creator evolves. They need to figure out a way to be financially sustainable. It is because the average creator lifecycle doesn’t last as an average career lifecycle - about 3-5 years. Kim Kardashian as a highly relevant cultural pop figure, well differentiated with her appearance and style - she leveraged their distribution to build businesses around cosmetics, apparel, accessories, etc (see the full list here). Her most successful venture Skims, is valued at $3.2 billion according to their last $240M raise led by Lone Capital Partners and D1 Capital Partners.
According to Forbes, Kim Kardashian’s estimated net worth is $1.8B, much of her wealth was accumulated through her businesses, which stemmed from her influence and cultural relevance.
Takeaway
Creators are entrepreneurs, but they are not technologists. Kim Kardashian is well positioned to compete in the private equity sector, where activities in consumer brands, media and entertainment are low. For any creator, the last thing you want to do is be famous and poor.
💡 This Week's News In the Creator Economy
Youtube’s New Chief Business Officer plans to double down on education
Reddit acquired AI-focused ad-tool startup Spiketrap
Instagram Scaling Back Shopping Features Amid Commerce Retreat
Adobe released “Future of Creativities” creator report
Jessie, the founder of Froyoverse shared her Web3 artist journey with Nansen
Mark Bergen published book “Inside YouTube's Chaotic Rise to Domination”
Nas Daily (Nuseir Yassin) launches a new community platform Nas.io
Charlie D’Amelio raised $6M to launch her own brands
✌️ That’s it until next time!
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