Rihanna: Turning beauty into billions

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0:30Don't say. SAP Concur helps your business move forward faster. Learn more at concur.com. America is changing. And so is the world. But what's happening in America isn't just a cause of global upheaval. It's also a symptom of disruption that's happening everywhere. I'm Asma Khalid in Washington, D.C. I'm Tristan Redman in London. And this is The Global Story. Every weekday, we'll bring you a story from this intersection, where the world and America meet. Listen on BBC.com or wherever you get your podcasts.

1:20Welcome to Good Bad Billionaire. Every episode of this podcast we pick a billionaire and we find out how they made their money. And then we judge them. Are they good, bad or just another billionaire? I'm Simon Jack, the BBC's business editor. And I'm Zing Zing and I'm a journalist, podcaster and author. And I am most definitely not a billionaire, but I am interested in them. The concept of being a billionaire is just mind boggling to me. I just cannot conceive of how any one person in this world can be that rich. OK, a million, I'm kind of like, well, yeah, you know, if I won Euro millions one year, I might be a millionaire.

1:55I can imagine that. But a billion, I mean, come on. It is incredibly big number. If I went back to 1066, the Battle of Hastings, and gave you a million pounds a year, pretty good money, right? A million pounds a year, every year from then until now, you still wouldn't be a billionaire. That's how much it is. I mean, thinking of that much money makes me feel a bit sick. Well, that's the question. Is it offensive? Some people think it is. Bernie Sanders, the left wing politician in America, he said that billionaires should not exist. It's an affront to decency. And some people just think of them as aspirational hustlers who work their way to the top.

2:29And, you know, I think when you talk about aspirational hustling, there's probably no one that comes to mind more than the person we're talking about in this episode. The richest woman in music? By a long shot. And it's not Beyonce, by the way, which I was surprised by. I was stunned by that bit of information. Richest person to come out of Barbados ever? In all of history, yeah. Yeah, and one of the youngest self-made billionaires, perhaps the youngest female self-made billionaire in the US. It is none other than? Bad girl RiRi herself. Rihanna. Robin Rihanna Fenty. Remember that last name? That's going to be important to how she got these billions.

3:05So this is how it's going to work. We are going to trace the story of Rihanna from her roots in Barbados all the way to her first million. And then we'll catapult forward to tell you how she got her first billion. Are you a Rihanna stan, Simon? Oh, Stan. That's a modern word for super fan, right? Yes. I mean, listen, I remember Umbrella, Ella, Ella. You'd have to be living under a rock not to remember that. Well, I am not a Stan and I'm not a member of the Navy, which is what her fan base is called. But, you know, I definitely make a run for the dance floor if I hear Umbrella. Yeah, for sure. But luckily for me, I don't think this is going to be a traipse through her discography.

3:40This is about Rihanna the business, Rihanna the brand, Rihanna the billionaire. We're going to talk about how a teenager left Barbados to become the richest woman in all of music. She went from being a pop star to a business mogul and turned beauty into billions. Let's do Rihanna in numbers. Give me some crazy stats. So Rihanna reportedly spends a million dollars a year on her hair alone. That's$20 ,000 a week. And to be fair, you know, her hair does look absolutely fantastic. So it should for that kind of money. She spends$1 ,500 a day on a celebrity trainer. That's pretty much par for the course for a pop star, maybe?

4:19Yeah, I would think so. $800 a day on a private chef. OK, I feel like that's also quite par for the course. But my favourite one is that she spent$7 ,600 flying her nail technician from London to Italy while she was on holiday. Now, this is the interesting thing, isn't it? Because for some people, that kind of conspicuous consumption, you might think was revolting. You know, people would say, what the hell is this about? But in many ways, people who are a brand like her, it's part of the whole story. It's part of what brand Rihanna is, right? She's also enormously rich. Despite all the spending, she is worth$1.4 billion.

4:58So very firmly in the billionaire camp. And that's what we're going to have a look at. Let's have a listen to Rihanna. This is her talking to Trevor Nelson on One Extra. You know, my mom raised me in a very content way. And, you know, I never knew I was poor. I grew up just loving life and feeling very satisfied. Now you look back at it like, wow, I was really in that class. And you never know. I never felt less than anyone else. And it's an island thing too, though. People are very, very content with what they have. It doesn't really prepare you for superstardom, really, does it, in a sense? It does.

5:35With the down-to-earthness, the responsibility of raising your brothers and cooking and cleaning from a young age. But don't you kick doors down? Don't you shout at people? Don't you diva it anymore? Don't you do that? I don't kick doors down. No? And I don't like to shout at people. I don't raise my voice, but I get very stern when I have to. Brilliant. Gets very stern when she has to. We'll talk about that when we come to judge her at the end of this program.

6:09We go back to Barbados. And, you know, not all billionaires are rags to riches stories. Some were born with the proverbial silver spoon in their mouth. But Rihanna is not one of those. No, she really, really isn't. And you can actually look up her childhood home on Google. It's a very modest one-story bungalow. She was born in 1988 in Barbados. Her mother is an accountant. Her dad is a warehouse supervisor. but she actually grows up with a single mum because her dad is unfortunately addicted to drugs and abusive so he gets kicked out of the picture very early on and she was kind of like a second mum to her siblings she was also in the navy cadets which is a lot of where she sometimes gets her discipline from this is one thing i would i keep coming back to with rihanna it's kind of being tough and being disciplined yes exactly and she is determined to pull herself up by her bootstraps you know she's a bit of a nerd when she starts out she's called herself a book lover.

7:02She sells clothes at a family clothes store. But, you know, I think there's a real kind of inner core of discipline that really pushes her to get scouted in the music industry. And she gets scouted enormously young. And she was just, I think, 15 or in her mid-teens. Now, everyone who makes it needs a break. Where did Rihanna's big break come from or first big break? So enter this guy called Evan Rogers, who's a successful American songwriter. He's produced for the likes of NSYNC and Christina Aguilera and Boyzone. And Rihanna, at the time, in 2003, just so happens to be in a girl group. And she nabs an audition with Evan purely through chance because a school friend's mum knows Evan and his wife and they come over to holiday in Barbados.

7:46That is one hell of a coincidence. You might just think, if that hadn't happened, because that's quite a tenuous connection, right? And in that thing. And so what happened? Did she ace the audition? So she aced the audition. Evan says, the minute Rihanna walked into the room, it was like the other two girls didn't exist. So he basically canned the other two girls and just pursued Rihanna. I feel a little bit of sympathy, like, for example, the other two in Destiny's Child. Does anyone remember them? Oh, I mean, I'm a fan of Kelly Rowland. But, you know, I do have to admit Beyonce did do a lot better than the rest of them.

8:19So Rihanna stands out. What happens next? Well, within three months, she's recording a demo. And she even relocates to the US to move in with Evan and his wife. She finishes school abroad with a tutor and she is well on her path to stardom. Right. And her mum, what did she make of all this? Interestingly, her mum did not seem that fussed about it. So she basically says, I don't really get that you have anything special, but if you see something, I just want her schoolwork to be done. Education is very important. And that's the message she gives to Evan. OK. And so Evan obviously thinks he's onto something here.

8:51She's hot property. then another billionaire comes into the scene someone we might cover in the future Mr Jay Z yes and I have to confess I am a big fan of Jay Z and I'm very pleased that he gave Rihanna a leg up in her pursuit of stardom because he enters the scene and auditions her she auditions for him with a song called Ponder Replay which have you heard of it like you know what I know I should but I'm sadly I have not do you want to give me a few bars oh I don't I don't think anybody needs to hear that but you should look it up on youtube later because it is great and jay-z at the time thinks this is a big song for quite a you know a teenage girl so he's not she's 16 at this time she's 16 it's not you know she comes all the way from barbados nobody knows who she is but the second she sings for jay-z jay-z completely flips the script and he says the moment i saw her she was fierce like colby bryant the basketball player i knew she was a star and so he was not going to letter out of his sights until he'd managed to sign her?

9:51Yes, literally so. So he basically, and I don't know what, you know, the ethics of this is, but the story goes is that he locks her in a room to stop her from signing to another label and says, there's only two ways out, it's through the door or out the window. And she's in that room with her team until 3am for 10 hours while the lawyers draft up a contract and she is signed. Locking up teenagers until three in the morning is not generally advised. But in this case, It was the pathway to superstardom. Well, Ponderuple makes it out and Def Jam, which is Jay-Z's label, actually fast tracks it. So within three months of being signed, she's got an album out and a single.

10:28And it makes it to number two on the US and UK charts. And the album hits number 10 in the US album chart. So that is pretty remarkable for a breakout artist who isn't even American. Yeah. And they realise they're onto something. When you have something who's got a bit of traction in the music business, You want to capitalise on that, so she gets her next album out pretty quick. Yeah, eight months after her first album, she comes out with a second. And that does even better. It sells one million copies. Now, at this point, somewhere along this, we were all trying to track when she makes her first million.

11:00So it's sometime between here and, obviously, there was the global smash hit of her third album, Umbrella, Ella, Ella. Yes, I mean, like you say, it was unavoidable when it came out. It was literally blasting on every single dance floor, in every single shop, on every single radio station. That's a worldwide hit. And she's at the top of the charts for weeks, months, in fact, in some places. It really is. And the thing I find really interesting about Umbrella, and you can still listen to the demo track, which was recorded by its producer, The Dream. If you go and look it up on YouTube and you hear The Dream sing it, it is nowhere near as good as when Rihanna sings it.

11:37And when you listen to the full product, that's when you know, oh, yeah, I see what Jay-Z saw on her. Right. She's got real star quality. So Umbrella, smash hit globally. You can't turn on the radio without hearing that. And, you know, she's made it. She surely must be a millionaire. She's got to her first million by now. I mean, this is the thing, right? I tried to look it up. You know, when did Rihanna make her first milli? But it's actually frustratingly opaque. And I think that kind of reflects the way the music industry works, right? Because you might be an enormously successful pop star, but you've also got a huge team of people raking it in off your back.

12:11You've got agents, managers, accountants, lawyers. You're providing a livelihood for all these people. In fact, if you think about, cast your mind back to 2008-9 when Umbrella came out, at that point the music industry was in a real state of flux. There was illegal streaming, people were watching stuff online, people were not buying CDs in the way they used to for£15 each. The new models, the things like Spotify, were just beginning to sort of take shape at that time. so actually selling records was not a path to a billion dollars in any way she was making money for sure she was a millionaire by this stage but nowhere near being a billionaire because the actual the money in just being a musician is not like the money you get from being in business it is almost unheard of for a musician in fact i don't think any musician even michael jackson ever made a billion out of music alone no it always depends on diversifying your portfolio to use a business phrase.

13:07You sound like a proper stockbroker when you say something like that. So how much control would you say Rihanna has at this point in time over her career? Is she just kind of a record label puppet? I think right now she's in a pretty stereotypical pop star kind of mode. She's been signed to a multi-album deal. She's got accountants, she's got agents, she's got a manager. She obviously likes Jay-Z and that relationship survives so she obviously doesn't feel bad about that but we know she had a massive falling out with her accountants. So it's at this point in 2009 that she actually admits that she's close to bankruptcy.

13:40So she blames her accountants, Bird and LLP, who by the way still deny wrongdoing, for charging unusually exorbitant commissions. So she says they were hiding the true nature of her finances to take advantage of her. She was losing money on the tour, which she didn't know, while they were still charging her commission. They were advising her to buy this mansion, which turned out to be completely struck through with rotten mode, which she then saw that a$2 million loss. Burden, on their part, claims that she was spending way beyond her means, but they eventually set her out of court and give her$10 million.

14:16Yeah. And in fact, later on in her career, she has a song called Bitch Better Have My Money. Yes. That's what the song's called. And to my mind, this is a kind of really important moment for brand Rihanna. It's sort of like, you're not going to mess around with me. You're not going to take me for granted. And you're not going to exploit me. She gets her money. And I think in the video, there's a picture of her later on in her career, with her sort of sitting in a big pile of money smoking. Looking very pleased with herself. And in a way, do you know what I mean? I think that's part of brand Rihanna.

14:47Oh, yeah. I think she's always embodied this kind of real take no prisoners attitude. And I think it's also important to mention that it's around this time in 2009 that she's assaulted by her ex-boyfriend Chris Brown in a car and the images of her injuries are being leaked to the press and she says this is a real kind of turning point for her where she kind of dusts herself off and says actually you know what I'm going to take charge of my life. So highs and lows at this period you know obviously she had that assault with Chris Brown her ex-boyfriend she's lost some money or whatever but we know because it's in black and white then in 2009 she's got two million dollars she's had a bit more but anyway we know she's a millionaire in the next phase we figure out how a millionaire becomes a billionaire

15:35we know now she's a millionaire but she's just another pop star millionaire right now and very few ever make it into the billionaire stakes two million to a billion that takes a lot of effort and she doesn't do it completely through the pop star route. In fact that's the whole thing isn't it it's pretty hard to have no matter how many records you sell a billion is a lot of money you need other interests. So she signs to Jay-Z's Rock Nation so she's got new management with a guy who's been her mentor through all these years she's also launched a new company called Rihanna Entertainment and that helps to consolidate all her businesses including film, music, fragrance etc etc but I feel like you will understand better than I do why is it important that something like this is good for Rihanna consolidating all those businesses is it just so she can make sure nobody's skimming off the top I think it's all about control and I think that's you know once you've got it under one group you're not doing kind of ad hoc deals over here and with over there it's a much more strategic approach and this taking control thing you see this in the fact that she She leaves Def Jam, as you say, to sign with Jay-Z's Rock Nation.

16:44She creates her own kind of sub-label called Westbury Road Entertainment. And she acquires the master tapes of all her own previous albums because often they're the property of the record company and they're making money off it. She gets that control back. And that's actually quite unusual when you think about it because Rihanna doesn't write a lot of her own music. And it's something we associate nowadays with Taylor Swift buying back the masters of all her old albums. She actually re-recorded them even, didn't she? So she actually had the performance rights to those as well. Exactly. And it's a very canny move.

17:16But, you know, all the way back in the 2010s, this isn't the done thing for pop stars, especially if you don't write your own songs. So Rihanna is really clever about trying to maximise all these different income streams. Yeah. And she's signing to a lot. You know, they call them partners, don't they? You're my perfume partner, my makeup partner, my airline partner. She's got a lot of these things going on already. She has her first fragrance in 2011, Rebel Fleur. That makes$80 million in retail by the end of the year. And she launches four more perfumes. You know, she does a huge 98-date world tour that brings in$90 million in total.

17:53So, you know, she's working really hard. And I think in 2012, Forbes ranked her the third top-earning woman in music with$53 million that year. So she's doing very nicely. but there's more to come. When the money machine really goes into overdrive is when she meets another very important partner. In fact, if you're going to be mega rich, who better to hitch a wagon to than Bernard Arnault, who became the richest man in the world in 2022, and he's been trading that title with Elon Musk back and forth since then. In 2017, he's not the richest, but he's well on the way. He's the head of LVMH, Louis Vuitton Moet...

18:34Hennessy. Hennessy, yes, that's it. And it's a conglomerate. But, you know, I'm going to confess to you, I don't actually understand what a conglomerate is. Is it just loads of different brands that are all owned together? LVMH, if you like, is like a house of brands. You've got Louis Vuitton, you've got Moet Hennessy, you've got a bunch of others. And LVMH has made tons of money over the last 20 years. The emerging wealth of some countries, in particular China, they really capitalised on that. There was a real cachet to have these luxury goods. So he made a ton of money. And we will be coming back to Mr Arnaud at some point in the future.

19:06But he basically, with his network of outlets, she could really distribute this, you know, game-changing brand that she came up with, Fenty. So she launches in 2017 Fenty Beauty. You may have seen it. You may have heard of it. It's pretty much inescapable these days. Walk into her boots and you'll find Fenty. This is a big deal for Rihanna because up until now, you know, dropping perfumes, you know, signing deals, getting sponsorship, that's very much standard pop star business. But launching your own beauty range at the time, that was pretty revolutionary stuff. And it was an instant smash hit in its first 40 days.

19:45It made$100 million. It made half a billion dollars in its first full year. And she has got a whole 50 % stake. Now, that in itself is kind of a very unusual deal to have that much of a joint venture with a company so big. This really unlocks the real fortune. And when you say a 50 % joint venture, does that mean 50 % of all the profits go to her? Well, exactly so. She will own a 50 % what they call equity stake, which means that all the profits, when you've taken out all the expenses, whatever's left in the business at the end, she'll get 50 % of those profits. But also the thing is that a business is worth not just its profits.

20:23Sometimes if a business makes, you know,$100 ,000 a year, it's not worth$100 ,000. It's worth that stream of income way into the future. So a business that makes$100 ,000 a year might be worth$2 million. So she's got 50 % of the value of the company because it's not just this year's profits. You can see profits going up to many years. And that's why she's, you know, this stake is very valuable indeed. and how unusual is that because in my understanding if you're a pop star you want to do a beauty product most of the time it just involves licensing your image and putting your name on the product and washing your hands of the rest of it that's right you think about people like johnny depp kate blanchett liz hurley for example was the face of estee lauder you license your face you get paid a few million dollars a year and and that's it your image is hired by the company and they pay you for it this is different she actually owns the company or 50 of the company that's a very different arrangement and presumably when you're just the hired face of a perfume brand you don't actually get very much say in what the perfume brand actually does right they pay lip service to consulting you but they pretty much do what they want they would say to someone like johnny depp we want you to be comfortable with what we're doing with the range johnny but but i think that that would probably be lip service here she's got real control she's helping design mine.

21:39She's got a real hands-on approach here. And one of the USPs of Fenty Beauty is that it is an enormously inclusive brand. So it starts out with 40 different foundation shades in a variety of skin tones. Actually, it's now 50. But I want to stress that this is actually pretty revolutionary stuff, especially at the time. Because if you went back to the beauty aisles of Boots of Sephora way back in the 2010s, it was literally impossible, especially if you're a darker-skinned woman, to find foundation that worked in your skin tone. And the genius of Fenty Beauty is to look at that problem and say, actually, what I'm going to do is cater for all these shade ranges.

22:15And it creates what's known as a Fenty effect, where all the traditional beauty brands are seeing what's happening and are struggling to catch up. They're pumping out new shade ranges to keep up with Fenty. And that is really game-changing. She was the trailblazer in that, and the rest of the industry had to follow that. And I was talking, I've got two girls, and I said, what does Rihanna mean to you? and they said it means inclusivity, it means empowerment. They talked about the cover of Vogue recently when her partner A$AP Rocky, quite a successful musician, got about$20 million. That's only a 150th of Rihanna's fortune.

22:50But he's there holding the child. She's striding out. She's the one in charge. Exactly. And off the success of Fenty Beauty, she launches another brand, Savage X Fenty, a lingerie line. It is enormously successful. Yeah. Again, it's sort of edgy, powerful. You know, it's got those kind of, I mean, you would know better than me, I'm guessing. I haven't done a lot of shopping for Savage X Fenty, but I know that my kids are very aware of it. And it's got that same kind of cluster of concepts. Yes. And I actually went to the first pop-up for Savage X Fenty in London. And let me tell you, the queue stretched around the block.

23:25And it was incredible seeing so many different kinds of women in all shapes and sizes, you know, basically trying to fight over this lingerie because that sense of inclusivity that she brought to Fenty Beauty, she also transferred to lingerie. So Savage X Fenty, you can get a variety of shades to match all skin tones, a variety of sizes. And again, you know, she's kind of continuing that Fenty effect in a very different section of the fashion and beauty industry. So in 2018, she launches Savage X Fenty. By 2021, we think that brand is valued at a billion dollars. So she's nearly there. So when a brand is valued at a billion dollars, does that necessarily mean that its owner is a billionaire?

24:06No, it doesn't. It means that if somebody else wanted to come along and buy that brand, that's what it would cost them. That doesn't mean that, and remember, she's got a 50 % stake. So if they sold that brand, it would be a billion dollars. Now she would get half of that. So she's, you know, she's nearly there. And it's weird thing about brands, because brands are very hard things to value. I mean, they're not, there's nothing, you know, it's not like it's made of gold it's not like it weighs anything it's a kind of concept it's an in it's what they call an intangible asset right hard to value but people know that when they see it when something has value so that was valued at a billion dollars in 2018 then she launches her clothing line Fenty Maison that brand failed so there's some failures along the way um and also she was also in another um music venture streaming venture which Jay-Z was involved in and a bunch of others Beyonce as well called Tidal.

24:57What happened there? Oh I mean well Tidal is widely regarded as a failure and even though it is still going I would say you know it's nowhere near as big as Spotify and it's also nowhere near as big as even something like Apple Music. So Rihanna's not immune to you know a failure but she is still plugging away. She is still completely all in on Savage X Fenty and Fenty Beauty and those two businesses are how she makes her first billion. Right and And in 2021, Forbes estimates she is now worth$1.7 billion. She's made it. She's there. She's a billionaire.

25:39Where are we now? Let's bring this up to date. So Rihanna's still hands-on running Fenty Beauty, but this year she stepped down as chief exec of Savage X Fenty, still, of course, has a significant stake in both companies, and they're still earning her a lot of money. Is Rihanna still a musician or is she a businesswoman? Well, this is a hot topic in the Navy, Rihanna's fan base. It's become a bit of an ongoing joke. You know, is Riri ever going to release music? When is the new music coming out? I mean, when you think about it, the bulk of her money doesn't actually come from being a musician.

26:13It now comes from being a businesswoman. And if you're a savvy, a businesswoman as Rihanna is, you might look at that and think, well I could probably make a lot more money in beauty and fashion and style. Do I really need to go back into the recording studio to record an album? I don't think so. Fans would love it wouldn't they? I mean that you know everyone wants her to do that and in fact we got a little hint she did the 2023 Super Bowl back in January did the halftime show and there was a little tease there? Well she's actually released a new song for the Black Panther album but there's still not really much movement on her next album.