Posted by Superstar singer and fashion brand mogul Rihanna just stepped down as CEO of Savage X Fenty, where a white businesswoman was named as her replacement. Should she have hired a well qualified sista instead?
First of all, congrats to Rihanna for being in a position to have co founded a joint venture, that would later get a slight majority investment from the biggest luxury brand conglomerate in the world, LVMH. And of course, Jay Z, who helped bring her into the music biz, co founded Marcy Venture Partners with veteran venture capital businessman Larry Marcus. Together, they invested in this company.
So why step down as CEO? Several sources say she’s pregnant again, which would be a good reason to focus on family. That’s not the focus of this video, however. What is of interest are the heated comments on the @BlackMillionaires_ Instagram page where our people, especially sistas, were torn between congratulating Rihanna outright, vs wondering why she didn’t hire a sista as CEO.
Fair question. The comments eventually led to who actually owns Savage X Fenty and does Rihanna really have any say as to who the CEO is? Let’s unpack that.
I read somewhere that Rihanna owns about 30% of the company, not all of that cash. Part of it is her celebrity status and what’s generally known as sweat equity where her physical effort is part of her ownership share. Since the company is still privately held, it’s not that easy to determine who has a controlling interest. The other 70 percent is held by several investment organizations, the biggest one being LVMH.
Much of the value behind Savage X Fenty arguably is based on Rihanna’s star power rather than her business savvy, according to a consumer products expert quoted in Forbes magazine:
“Shannon Coyne, cofounder of consumer products consulting firm Bluestock Advisors, says the premium valuation likely stems more from Rihanna’s star power than a proven track record of sales. She points to the fact that the Savage X Fenty brand is less than five years old and has just a handful of brick-and-mortar stores in operation. “At this time, $3 billion seems rich because her items are not expensive, so she would have to do a lot of volume in lingerie, or around $140 million in Ebitda,” says Coyne.” Similar could be said of Kim Kardashian’s Skims, by the way.
Now of course, there are gonna be some hardcore Rihanna fans who will blast this expert as a hater. But keep in mind that all the celebrities who have similar businesses are not the savvy business minds you think. Are they entrepreneurs with ideas? Yes, just like many of you are. But not all entrepreneurs are seasoned business experts. Otherwise, most of our street hustler entrepreneurs would be business experts lol.
Having a business idea is one thing. Converting that idea into a lasting, healthy business is quite another. Well-known celebrities in sports and entertainment are often approached with many business pitches by friends of their agents and managers. Michael Jordan, Magic Johnson, Jessica Simpson, Martha Stewart, Jessica Alba: They may have had an idea in their mind for a business, but the business details were pitched to them. Their celebrity is a strong foundation to build a marketing brand around. If you watched my previous videos, I talk about branding quite a bit.
I bring all this up to say that the decision to hire a CEO with more industry experience may not have been entirely Rihanna’s idea. Recall that LVMH, along with Rihanna, decided to “suspend” operations during the health crisis a couple of years ago. Rihanna was the face of that decision, but it was likely financial forecasters in LVMH who framed the decision to suspend operations. Of course, others have alleged that it was due to poor sales in certain markets. I’m not focused on that speculation.
There are reports that Savage X Fenty might be in an early pre IPO phase. For those who don’t know, an IPO is an initial public offering, a process that converts a private company into a publicly traded company on the Dow Jones or Nasdaq, for example. Companies undergo this process with the hope of striking it big on Wall Street. Rumors have it that Savage X Fenty could fetch a few billion dollars. The kinds of investors behind this company, including Jay Z’s, are the kind who look for big pay days. So hiring a seasoned business mind as a CEO is a good step in the right direction as the world of smart investors need more than just a celebrity to feel good about breaking that much bread. Most likely, the investors behind Rihanna already had this in mind, and briefed Rihanna on this move. Of course, no one in their right mind would turn down the chance at possibly $3 billion once it goes public, so Rihanna would agree.
But surely, there are highly qualified black businesswomen who could have performed well here. Many sistas were somewhat disappointed that Rihanna, being a black Caribbean, didn’t appoint a sista. An American sista would have been ideal as this company is based in the U.S. Others argue, however, that race shouldn’t matter, that Rihanna is still in the mix with her 30% share, so she’s just delegating to the best qualified person. I doubt that those who say this know that this particular lady is more qualified. They are simply assuming that she is. But remember what I just said earlier. I doubt that this was entirely Rihanna’s idea. I think the decision was made for her, and she just rubber stamped it. Savage X Fenty is still, from what I can tell, a mostly non black company with a black face. So the struggle for more black CEOs in high level companies continues.
Affluent Blacks of Dallas 