The Rapper Who Made $400K Reading the Market

22:56had a friend who needed a place to stay and some money and now I just bring him to every recording session because he's talented so I think that's a good way to handle a friend who needs money is find a way that you can both benefit I agree I've actually done that and

23:13Nicole Lapin:it actually creates I feel like some more integrity or dignity on the other person's side because it's a very vulnerable position when you have to ask for money or to borrow if you're in a bad spot. Yeah, I love helping out my friends. If it's a close friend of mine, I'll make sure they're good. Okay, so pretend like I am from another planet. Explain the music industry to me. Basically the best thing we have on our planet Earth is music. Everybody uses it. Everybody likes it. And we have a full array of options for you. You know, any kind you want. and it's been around forever. We, I'm going a little bit too alien for you right now.

23:58So, a lot of processes here, you know, music gets made, there's writers, there's producers, there's mixers, masterers, there's a lot of people that go into the process of making it. Then there's all these different things that come out of it. There's the master, the publishing, multiple different kinds of IPs, which are all, assets in themselves. So, you know, when you write and record a song, you create the IP of the publishing, which is like the actual chords and lyrics and everything. Then there's the master, which is the actual recording itself. So if someone uses anything from your actual song, that's one clearance, and then the writing is another one.

24:47Outside of that, once you put out the music. There's a ton of other things that come along with it. Touring, for example, which is my favorite way to make money. Touring, you invest a portion of money in a tour bus and a team and a full production setup. Go on the road, 12 guys in a bus all sleeping together. and you go to like 30 to 60 cities. And every show, you kind of guess how much you're going to sell ticket-wise. If you get over that, it's even more of a benefit. If you're under it, you don't profit. And then you sell your meet and greets and your merch, which are another big bag on top of that.

25:38So there's a lot of different things. Oh, and when you do taxes on your tour, you have to pay taxes in every state that you went to, which is kind of fun to sign all those off. It's very nice to have a business manager if you're in music. Then if you sell out your tour, you do really well.

25:54Nicole Lapin:Now the business model, it sounds like, is touring and licensing. That's where the money really is because you're not really making money from people downloading your song. You can. All of my independent catalog that I put out before I was signed is released through TuneCore or STEM, which are, you know, like independent distributors. They take a little percentage, but all that money just comes straight to me for streams. I think it's around, I don't know if it's different now, but around like$5 ,000 per million streams. So that can be a lot if you've got a big song. But if you're signed to a label, they take that money and you get a percentage.

26:34But they also have distribution deals at labels, which I have, where a label supports my music, puts it out, It gives me a few tools to work with, and then they take 10%. That's how I prefer doing it, but for certain genres, I'm still kind of talking to you like an alien. For certain genres, like pop, it might be better to have a full label pushing it everywhere if you don't have your own brand and social media support.

26:58Nicole Lapin:So give me a range of what you're getting from the streams, what you're getting from touring. How do I think about that? I'm trying to remember a good year. We go with 2022. It's probably my biggest year. This is not the average year in music, but I think I went on two tours, almost three, which ended up being 108 shows in one year. And those, let's say, I guess a good example is a college show where it's just a straight up straight up like flat payment and you just go and do it and keep it pushing. Those, especially during that year, I'd say were like anywhere from$80 ,000 to$100 ,000 a pop. And a normal tour show, if it's sold out, everything goes well.

27:52It's probably like$50 ,000 to$60 ,000. And then you do a bunch in a row. So it adds up. Obviously you subtract the costs of the tour bus. everyone that's on tour with you and all their expenses I think that year I netted around 7 million on touring and then I did a few brand deals and the streaming income from my other catalogs probably ended up being around 4 million on top of that let's say maybe 1 million from investing. Because I remember the total was like around 12. And then you got your taxes and your management commissions. So touring.

28:42Nicole Lapin:So half of that. Yeah, about half of that. So if you go hard on touring, I think that's the best income stream. But brands, if you work with big brands that have money to throw around, you can really make some bread that way. So when you net 6 million, are you taking 20 % and putting it into investing? Is there a formula or is it an automatic transfer? I put the majority in investments usually. I also bought a house the next year, other things, other investments. But I try to not have any money sitting in the bank, always invested in something. If it's not like my own personal investment, it's with one of those two money managers and one guy does it pretty safe.

29:29So like if I have extra money, I just throw it to him.

29:31Nicole Lapin:Smart. How'd you learn that? Learn like where I wanted to put the money. Or just like to not have it sitting in a checking account. Cause I think that's what a lot of people. I think that was like the first thing I gathered when I was taking, like learning anything about finance was like, oh, any money you have can be gaining. Can be working for you. Can be literally gaining capital anytime. Even if it's something really safe, you know, S and P. you're still gonna make something small. So like my girlfriend, for example, when we started dating, she had a bunch of money sitting in the bank. Instantly was like, all right, let's figure this out.

30:05Connected her with good managers and they got it all invested. So I think anyone, if you have money sitting around, you should put it somewhere.

30:12Nicole Lapin:I could not agree more. You started in college with business and marketing. How did music come into that? I was always a big fan of rap music, always a big fan of soul music. Like dream job of mine probably would have been being a rapper or some type of musician, but I just, it didn't really cross my mind as being possible coming from Minnesota. Like two years into college, maybe one and a half, I was working at a startup accelerator, helping them brand these small businesses and was doing pretty well at that. And started like really getting into my bag with the brand stuff. So I thought, why can't I just do this for myself?

30:52and I saw artists on SoundCloud using that platform to pop off just because they're very unique and I just thought to myself I'm gonna do this I'm gonna keep it I'm a low so I didn't show my face or anything in my first like year and a half of music I wanted it so bad that I just used all my free time to make music release music promote music and then within like a year and a just because of SoundCloud, YouTube, maybe a little bit of like Instagram too, but we didn't have TikTok or Reels or anything. You just had to use those sources and within a year and a half, I took off. And then I was like, okay, this is what I wanna do.

31:34I can make this work well. I didn't think it would come this far, but it was basically just my dream and made it happen.

31:41Nicole Lapin:Is there more pressure now to make music that could be used in TikTok videos? Yeah. I think every artist pretty much when they're making music now keeps that in mind. I've been in sessions where people literally are making a song. The first thing they do is try to make it for TikTok. What I do is usually, I haven't actually, the album I'm making right now, I haven't really thought about it, but in the past, I would add a little something into a song that I think could go well on TikTok. For example, on the song Oops, I did like a talking little moment before the beat dropped where I said, are you talking about Tracy?

32:21Tracy with the ass? Tracy with the Honda? Something like that. And that really took off. When you think it's gonna pop or resonate on TikTok,

32:31Nicole Lapin:does it? And when you don't think it will? Well, the second one. When you don't think it's gonna pop, it's gonna pop. At that time. Ended up popping. There's too much popping. Yeah, yeah. So let me clarify. So earlier on, you could just kind of, you could guess that it was going to pop and do the right thing and make it work, but then everyone started doing it. Everyone started paying people to make videos with their music. That's a big thing. So that was how they got popular. People just paid creators to use it? I think, let me think, that was probably 2020, and I'd had a few songs blow up on there just for no reason, just because someone used it.

33:09Nicole Lapin:Like you didn't pay people to. I have since then. And everybody seems to do that now. But up until 2024 maybe, you could just, it was just natural. And I think still it is just that you can't really pay for it to work. You can pay for people to make it, and it might become a little trend, but if it really blow up, it always ends up being something random that people just like. Because they can kind of tell, I think anywhere people can kind of tell if something's in genuine. So has something hit that you like had no idea would become a TikTok thing? Yeah. I mean, the first few songs I have blow up on there, I made before TikTok existed.

33:53I just, you know, I didn't expect those specific ones to blow up. Magic, Forget Me Thoughts, Cheryl are three of my songs that just were up. And they actually were so popping that TikTok hit me up to like, please make an account. And I at the time I thought it was corny. I don't anymore, but I Got them to agree to like pay me a little bit of money so I could post and say well I'm just doing this because they paid me that was like a little ego thing I had going on and Then since then I things completely changed, but my first post on tic-toc was I'm just doing this cuz they paid me And then it blew up 2020 probably 20 No, it was 2020 I think

34:33Nicole Lapin:Like what was the minimum guarantee That they were giving Back then TikTok Yeah I don't think they paid anybody I just convinced them to do it once It was like 200 bucks But I just wanted to say That they did that Because I thought it looked cool I was a little bit more particular About my brand at the time And I don't think they did it For anybody else But I just They liked me a lot Since then In the recent years Everybody's Trying to get a popping song On TikTok So like People have no Reason to really use a sound unless they're getting paid or it's already popular. So I think it's, there's not really that market anymore to like just make a sound that's gonna blow up.

35:10It's kind of random.

35:11Nicole Lapin:Yeah. I mean like Fleetwood Mac popped right? Out of the blue so. Yeah. Classic songs that are just inherently good. I think they always pop off on there. What I do like about TikTok is there's been like three songs that I had found deep in the internet somewhere that I never thought people would hear, but I just really liked them. Years later they blow up on TikTok. Like Young Lean has a song Ginseng Strip. That was like my alarm, it was like my favorite song in college. I mean, it was popular among deep internet people, but it wasn't popping. Blew up on TikTok way later. If it pops on TikTok, are you seeing money from that?

35:49Yeah.

35:50Nicole Lapin:How? Your streams will go up a lot on that particular song. And if one of your songs starts going up, then their algorithm on Spotify is going to recommend more of your music. I randomly had my song Betty. It blew up in 2023 on Tik TOK. Like not long after I dropped it has become my biggest song of all time. And there was a trend less than a year ago that kind of brought it back where it was like this guy, I think it's an Australian dude doing a quiz on like what flag something was. And he said the wrong one. He's like, he's a guessing. He says China and the song drops for some reason that blew up and I watched the streams on the song like Go up for a couple months and everything went up following it.

36:37It's because the trend was so big you could wave

36:39Nicole Lapin:Magic wand and change something about the music industry. What would it be? Probably tech talk can like basically controlling whether a song succeeds or not. I liked it more when I was SoundCloud YouTube and just people valued something being unique and interesting and and you know they're gonna go listen to a full album and not just a single. Is that dying or still going strong? Like what's the next TikTok arbiter of what's gonna pop? I don't know. I try not to look at social media that much. It kind of stresses me out. But it seems like a lot of older songs blow up on there now, which is cool, you know?

37:21Songs that I, like I mentioned, songs that I liked before are blowing up and maybe another catalog song of mine will go up. But I think there'll be another new app soon, or a new music streaming platform.

37:38Nicole Lapin:Do you ration your, or put boundaries around your social media time? I actually, it's kind of the opposite. I never like looking at social media because it kind of stresses me out. I don't want to scroll or look at anything. So I make myself go on it every day at some point, and like check messages and like not take talk. I don't go on it more than like once a week. But you give yourself a time limit. Well, I give like the opposite. Like I'll force myself to go on for 20 minutes because I just don't like doing it. So 20 minutes, I guess on Instagram to like do whatever. Do you feel like it's bad for mental health?

38:16It probably, I'm not a good example because I have, it's been so much of my career and business has been around, has revolved around using social media. And now I'm just sick of it. So I don't like scrolling. And I think I have the opposite of a lot of people that get addicted to scrolling. And it seems like that is bad. I've seen people just on their phone for hours, but I shouldn't really be the authority on that because I'm the opposite.

38:44Nicole Lapin:Has that come up in your relationship? You mentioned helping your girlfriend with her finances. Is she like that with? She, no, she's similar to me where she doesn't like it. She makes herself do it every day. And she's very helpful and makes it better for me because she'll just help me make videos for her socials and, you know, promoting my songs. So, like, every day she's going, we'll wake up, she'll go home. She always does everything early. She'll go make, like, three videos for her socials every day. and then you know if I have time we'll link up and she'll help me make a couple that's like once a week so it's pretty helpful and not stressful and she I think anyone who's been an influencer is probably not addicted to scrolling because they're sick of it yeah that makes sense but it sounds like you guys have come up with a good system some co-creation happening love that for you yeah it's really nice we just make videos together because she's a following when you started talking about like oh damn all of your money is in your checking account is that weird to talk about finances in a relationship no because we're pretty another this is another case where it's probably different for other people but her and i are pretty much on the same page with everything um and very very strong trust and pretty it's just it's just fully agreed upon we're gonna get married we're gonna have a you know everything together so me helping her with money her helping with social media it's all like we just do everything together it's one unit i love that had finance has ever been a cause or an issue cause of fights in relationships and now it feels healthier and better?

40:40I think my other serious relationships, the girls didn't have any money. And I think it didn't cause problems because anyone in that position is not going to really ask for too much, at least in my experience. And I would give them nice gifts and it was fine.

41:01Nicole Lapin:So this feels more equal? This feels, yeah. It's actually much better, less arguments. Some people say don't date in the same industry as you. And we're not in the same exact one, but like both have a following and it's working very well. So you're going to get married. Congrats. Are you going to get a prenup? I don't think so. No, why not? I don't know enough about prenups. I know that there's a way, isn't there a way to get a prenup where it kind of just is all good stuff and it's not like you know like agreed upon things or is it always a bad but actually i had an argument with an ex where her dad was a divorce lawyer divorce lawyer and she was telling me that this is a better uh conversation topic here she was we talked about getting married she told me that her dad swears by not getting a prenup and i was like he's a divorce lawyer, he makes prenups for people.

42:02Why would he not want us to get a prenup? I never really got an answer on that.

42:07Nicole Lapin:That's so interesting because we just had a really big divorce attorney on the show who said anecdotally that if you had a prenup in place, you were less likely to get divorced. And the reason for that is that you're more willing to have open and honest financial conversations and get on the same page when things are good. Got it. Okay, so then am I right in thinking that you can make a prenup that has a lot of good things and it's not just a like, oh, we're going to split off and take half and half? I think it's all good things. You get to decide what. Where there isn't any inclination of divorce coming and being selfish.

42:49I think there's a way to do that. Then I would for sure do it.

42:51Nicole Lapin:Everybody has a prenup, first of all. It's what the state decides. And so if you want to make the roles different for you, then it's just about having that open, honest conversation, especially if you're coming in with assets of your own, which it sounds like your girlfriend has. You just want to understand what that looks like in case something happens. And it's not divorce planning. It's not a way that you're living. but it's having that, you know, adult conversation before you have to get to and lawyers and you don't want to judge to decide what ends up happening to not only your assets, but how you think about kids and if somebody stops working and what that all looks like.

43:34Nicole Lapin:I think it's just healthy to. It hadn't, you know, crossed my mind cause I don't see it ever, a divorce ever happening but yeah it sounds pretty I don't think it would be her it wouldn't be a problem at all to put that together with the ex I still wonder why she promised that her dad didn't like prenups that's why she's as a divorce lawyer yeah I think I have a little more clarity now that you said that I'm glad and I'll get a prenup okay I love that it's a conversation um that you should have going in with everybody's expectations and like getting on the same page. Finances, we do this because it's the last taboo I think we have in society.

44:18Nicole Lapin:You know, we'll talk about a lot before we end up talking openly and honestly about money. Yeah, I think in most cases that's exactly the case. But it's true. And a lot of relationships end in divorce because of money, because of money stress and financial infidelity. You know, if somebody's hiding something, I'm not saying that this is the case, right? You just want to say like, here's what it is. Here's what I have. Here's the ownership. And also a lot of people that run companies or have equity stakes, sometimes their board requires them to have it. So that position in the company is protected or whatever that is.

44:54Nicole Lapin:You get to decide what the goals are. Otherwise, California decides. if my partner was someone who was really financially literate and like did her own investments and stuff I could see that why that would be you know there'd be some butting of heads but in her case you know she's pretty hands-off and I just came in and helped her put it all together but you know if someone was you know there's not ever really a right way to invest there's like so many options and i think your own risk tolerance your own goals but it sounds like you guys coming together you want to have joint accounts like my yours mine and ours we have our own separate ones but whenever we like you know buy something go on a trip we just both evenly split everything don't really worry about it and we have the same business same business managers so that kind of makes it easy to just be like all right yo for your japan trip how do you guys want to do this i'll just be like i'll just split it and then they'll kind of do that in the back end do you make similar amounts yeah it's surprisingly close um we both do like brand deals around the same size i'd say looking back at least the years that i remember seeing there was like three years where I made more and one year where she made more, but it's always very close.

46:20Yeah.

46:20Nicole Lapin:I mean, sometimes I just talk to couples about the idea of waiting what they contribute. So like if you're the same, then splitting makes sense. Yeah. It's potentially, but like if one person makes a million dollars and one person makes a hundred grand, then you want to do something that's, or think about doing something that's weighted. So it feels fair to both people. It feels like the same amount. She owns two houses, both like around three or four million. One of them she just bought near my house in German Oaks. I was wondering, think about refinancing it and investing that money. Have you any, do you have any experience with that?

46:58Nicole Lapin:Refinancing now? Like what was her interest rate before? I don't know. Okay. Maybe check on that. Okay. So she has a sweet like 2%, 3 % interest rate right now. We're seven, 8%. Yeah. I don't know if it's that low, but I think it was a good one. I just didn't even know about it. It's a good one. You might want to keep it. But that's what ends up happening. Everybody, you know, is sort of locked in because they have these low interest rates. So the market's not moving as much. But model it out and see, you know, real estate's getting four to five percent over time. The market is going to yield you eight to 10 percent over time.

47:34Can you explain, like I'm five, how refinancing works? I think I understand it, but I figured most people might not.

47:40Nicole Lapin:Okay, refinancing a mortgage like your five. Basically, you're taking out a brand new loan to pay off your old loan because the new loan has better terms, usually a lower interest rate. And that's it. Like a home equity line of credit. Yeah, so she paid in cash, and we want to get that money back to invest it. Basically, mortgaging it after buying it, which I think is refinancing or a form of it. A form of it. But I would say like a HELOC, which is just a line of credit from your house. HELOC? That lets you borrow against the value of your home, the part that you've already paid off. It's kind of like a credit card, but your house is collateral.

48:21Nicole Lapin:So you get approved for a maximum full amount. You only, though, borrow what you need when you need it from that line of credit. And you only pay interest on the part that you actually use. But remember that your home, your literal home, is the collateral here. So if you can't pay back that line of credit, the bank can come for your house. All right. Cool. Or you're basically you're borrowing against the asset. Might do that. Thanks for the education. I got you. You know, it all is obviously asterisk, asterisk, you know, case dependent, location dependent and all of that stuff. But there's there's ways to take money out of something that's already purchased.

49:00Nicole Lapin:You just want to make sure that you know that you have to give that money back. It's interesting how many. Or you buy, borrow, die, which is another strategy that the rich use. What is that? So you buy like a piece of land. Oh, buy, borrow, die. Okay, I get it. Yeah. And it appreciates. So you buy it for 100 grand and it appreciates to a million bucks. If you sell it for a million bucks, you're going to pay capital gains on that 900 grand. but instead if you borrow against it and you use that for whatever you need the liquidity for you're paying off that loan and you're not paying capital gains taxes and when you die it goes to your heirs at a million bucks not a hundred grand so it steps up in basis so it resets so if you pass that on to your kids now they have a million dollar asset and they don't pay that capital gains appreciation so that's why it's like buy i borrow yeah borrow against it and then die and then pass it on and then they get that step up in basis i didn't know about that last part where it goes down where it gets passed on so could i do that with my house right now like borrow against it if it's a mortgage i guess i kind of am doing that that's cool yeah i mean or you can borrow against your portfolio which you probably already have some margin loans i do margin on there okay it's always i forget that because the numbers it shows are your actual cash in there and then I'll like randomly see the margin number pop up, pop up, which is double.

50:29It's like, holy shit, there's 3 million.

50:31Nicole Lapin:I mean, to be clear, margin loans, super, super risky, you know, borrowing against assets. You want to make sure that the biggest trick is that the percent that you're going to gain is higher than the percent that you're borrowing at. Right. So you're capturing that arbitrage or the Delta of in between. So if you're borrowing, you know, at 5%, you want to make 10 % on the money that you're borrowing with, then you're going to, you know, capture that 5 % delta. I believe on Robinhood, if I'm not mistaken, for gold, which they have, which is like their margin system, I believe you just pay a monthly rate and they let you borrow double.

51:12Nicole Lapin:That's where it gets really risky because you can also get margin called, which is what happened during the 2008 crisis, of course. And so when you get margin called, then you have to sell your securities at whatever that price is. And it could be a crappy price and you could lose a lot. We just had Bill Ackman on the show last week. Great legendary hedge fund investor warning against margin loans and all that stuff. I'll just give my two cents that if you're really confident in something and you margin, you do make double. But you also lose double. You also lose double. Yes. That's right. I think overall, not a good idea unless you're pretty financially literate.

51:54Nicole Lapin:Agreed. Yeah. Maybe we should do some sort of collab. I feel like gravy, money, money, rehab, financial literacy, making it cool. Yeah. Getting it out in the world. What are we doing? A restaurant or a book? Definitely not a restaurant. Yeah. Not a restaurant. Maybe a theme song. Okay. We might need a new theme song. Have you talked about how books work already? Can you give me like a real quick? Yeah, totally. How the money works with books. Yeah. With a traditional publisher, you get an advance and then you have to make out that advance. Okay. So it's like how music works where you have to pay off the investment first.

52:33Yeah.

52:34Nicole Lapin:Totally. Before you earn anything additional. And after you pass that, what's like the average that the author would get? With a traditional publisher, a hardcover gets you roughly 10 to 15 % of the cover price. Paperbacks are lower. I think it's like 7 % to 8 % of the cover price. E-books are really, really, really cheap for the publisher to create. Almost nothing to make. You don't have to print anything. It's just a digital copy. So you'd make more there, usually about 25 % of what they net. So maybe a couple bucks per copy. Self-publishing really flips all of this on its head. You have to pay for everything.

53:10Nicole Lapin:So you have to pay for your own editing, your own cover, your own marketing, all of it. but you keep the lion's share of your sale. So on Amazon, you can make up to 70 % on an ebook and that's 70 % versus 25%. You know, the trade-off is that you're going to have to sell the books yourself. You're going to have to get the word out there without the publisher machine behind you, but you keep more money in your pocket if you do. So it's pretty similar to like a label. It's really hard to make back. I'll just say money from books, books, um, and, and to market it. most people put back all of the advance and then some to actually make it successful and to use it as a platform.

53:51So you're spending like two years making a really long, perfect song and then putting it out and hoping that those publishers do their thing right.

54:02Nicole Lapin:Yeah, they usually don't. That's what I figured. Yeah, they usually don't. Well, Matt, so great chatting with you. We end all of our episodes by asking our guests for one final tip that listeners can take straight to the bank. I don't think it's something applicable to everybody. Buy low, sell high. I'm trying to think of something more intricate. Fame and success are depreciating assets. Ownership is an appreciating asset. I'm going to take that to the bank. Got you. I love that. So you'd rather be rich than famous? While you're famous, the clock's ticking. So you got to invest in things and make things happen that will go up while you go down.

54:46Nicole Lapin:So it's like this. Yeah. Yes. Famous.