Category Archives: Wealth Building

Harlem Haberdashery and 5001 FLAVORS

Hip-hop’s impact on black businesses

The 50th anniversary of hip-hop coincides with the national Black business month in August, and the former has been a driver of growth and empowerment for the latter, according to leaders in the music genre’s industry.

Hip-hop is an industry with an economic impact of $16 billion and has launched Black-owned businesses in music, film, fashion, and advertising for creatives that curated the culture.

Rappers have turned into entrepreneurs, spurring growth for other Black-owned businesses, building generational wealth, and investing in the communities that nurtured them.

“Hip-hop went from being a fad to commercialized and monetized in technology, fashion, sports and business,” Detavio Samuels, CEO of REVOLT, told Yahoo Finance. “In the beginning, we weren’t owners, just brand ambassadors, not accumulating wealth from a genre and culture that we created. We’ve gone from making others rich to wealth accumulators.”

Overall, there are around 3 million Black-owned businesses in America now, generating about $206 billion in annual revenue with 36% of those led by Black women. But the road to these successes was far from easy.

The history of Black businesses in the US is rife with violence and racism.

In what was known as the Red Summers of 1917-1919, many Black-owned businesses in Washington, D.C., Chicago, St. Louis, Houston, Tulsa, and Omaha were decimated during mob violence and racial terrorism.

In the decades that followed, many Black-owned businesses closed due to racially biased eminent domain proceedings, with the government taking land in Black business districts like Bruce’s Beach in Los Angeles and Beale Street in Memphis.

Hip-hop itself was its own economic battleground. When the genre was born, recording studios — more often owned by white executives — controlled the process from radio air time, marketing, ownership interests, and rights.

But they did not control the culture, which spawned more and more businesses.

For instance, Dapper Dan and 5001 FLAVORS were favorite designers for hip-hop artists that disrupted the fashion industry. Some of 5001 FLAVORS clients include Salt-n-Pepa, Heavy D, Sean P. Diddy Combs, Dr. Dre, DMX, Tupac, The Notorious BIG, Jay-Z, Beyonce, and Blue Ivy.

“Hip-hop allowed Black creatives and artists to create brands that wouldn’t have existed without hip-hop and allowed us to engage in collective economics, supporting other Black businesses,” Sharene Wood, president and CEO of 5001 FLAVORS and Harlem Haberdashery, told Yahoo Finance. “Hip-hop opened the door to a lot of Black brands, like 5001 FLAVORS.”

What started with $600 in Wood’s college dorm room has expanded 30 years later into a family business with a retail store (Harlem Haberdashery), a bespoke spirits line (HH Bespoke Spirits), and a 501(c)(3) that gives back to the community that raised them — #TakeCareofHarlem.

Designs by 5001 FLAVORS are archived at the Smithsonian, Grammy museum, and the Rock-n-Roll Hall of Fame museum honoring hip-hop.

“People wanted to build their own economy, and Biggie said it best: ‘Never thought hip-hop would take us this far,'” Wood said. “Hip-hop creatives and the businesses that sprung from them didn’t have corporate grooming or business degrees when we started, but now Queen Latifah, LL COOL J, and Diddy are multi-hyphenates — rappers, actors, and entrepreneurs.”

Sean “Diddy” Combs went from rapper-producer to CEO of Bad Boy Entertainment, owning a fashion line, and founder and chairman of REVOLT. This year is Bad Boy Entertainment’s 35th anniversary and the 10th anniversary of REVOLT.

REVOLT originally started as music video television in response to MTV’s embrace of reality television over music videos. However, when none of the genres outside of hip-hop showed up for the platform, REVOLT decided to embrace hip-hop culture as the storytelling agent.

“The narrative others tell about hip-hop is sex, love, drugs, and materialism,” Samuels said. “REVOLT isn’t a media company, but an engine for transformative change for Black people to build generational wealth with culturally relevant information to turn financial whispers into shouts as to how Black billionaires have done it.”

This resonates with the Black community. A Pew Research study found that 58% of Black adults say supporting Black businesses, or “buying Black” is an effective strategy for moving Black people toward equality in the United States.

“Social justice and empowerment has always been part of the DNA of hip-hop culture,” Samuels said.

Financial empowerment

In another effort to empower the Black community and businesses, REVOLT partnered with Rashad Bilal and Troy Millings, founders of the viral platform Earn Your Leisure (EYL) that turned into a TV network on financial literacy, to host Assets Over Liabilities, a television series that bridges the gap between the world of finance and the hip-hop community, making financial literacy a focal point.

This season’s premiere episode is a sit-down with producer Swizz Beatz discussing his investment in Black artwork, selling his company Verzuz for $28 million, and his investment strategy for building generational wealth.

“Partnering with REVOLT to integrate hip-hop into the conversation removes stigmas and increases accessibility to financial literacy,” Rashad Bilal and Troy Millings, co-hosts and co-founders of Earn Your Leisure, said. “We’re empowering the community to break down financial walls and master their money with knowledge.”

REVOLT is using its platform to highlight Black businesses and marketplace disruptors like Assets over Liabilities and Bet on Black.

Hip-hop’s influence on Black businesses and the idea of collective economics is rooted in empowering Black communities.

“Collective economics is not just about money, it’s a social responsibility to invest in the community because you can’t just consume from the community, you need to nurture it in order for business to thrive,” Wood said. “Companies like the Fearless Fund exist because we’ve been historically underrepresented, underfunded, and systematically shut out of opportunities.”

Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.


Nasdaq celebrates hip-hop’s 50th

LL COOL J rang in hip-hop’s 50th anniversary this month at the Nasdaq’s opening bell, underscoring how influential and profitable the genre has become.

The bell-ringing at Nasdaq was last week, but today, August 11, is the official anniversary.

An industry with an economic impact of some $16 billion, hip-hop accounts for a third of music streamed in the US, outpacing country and rock music. The genre pervades music, film, advertising, and fashion and encourages political awareness and social justice.

“Nasdaq is the home of world-changing ideas that go on to be world-changing companies — part of that is culture [and] part is the business innovation,” Sehr Thadhani, chief digital officer at Nasdaq, told attendees. “The intersection of the two can power more resilient economies, more equitable outcomes, and a more sustainable world. The bell represents both the opening of the markets and the opening of a new phase in hip-hop’s evolution.”

The celebration at Nasdaq also highlighted how LL COOL J’s global brand platform, Rock The Bells, has been at the forefront of honoring hip-hop culture through content, commerce, and live experiences, while also giving those who helped create the genre an ownership stake.

“Fifty years ago in the Bronx, hip-hop was born and it has since grown into a cultural force that shapes music, fashion, art, technology, politics and more,” LL COOL J, actor, rapper, CEO, and co-founder of Rock the Bells, said at the opening bell ceremony. “Nasdaq understands the power of hip-hop and its potential to create more equitable opportunities and, with their support, opening doors to endless economic possibilities for the culture.”

Founded in 2018 and named after the third single from LL COOL J’s debut album, Rock The Bells has launched a SiriusXM channel dedicated to classic hip-hop, entered into a partnership with Paramount Global (PARA) that gives it a first-look deal with the media company, and raised $15 million in a Series B funding round. It also is the founder of its namesake annual music festival.

“As a venture capitalist, I look for great entrepreneurs and am good at being the catalyst for taking someone like [LL COOL J’s] vision, [wrapping] a business model around it, [putting] a process together, [helping] hire a team and raise the money,” said Geoff Yang, co-founder and chairman of Rock The Bells as well as a world-renowned venture capitalist and founding partner of Redpoint Ventures.

“One of the best ways to make it a success is to make it a great business [with] great partners in the ecosystem. We’re lucky to have some of those partners here today — like Mars, Ford, and Walmart,” Yang said.

Walmart (WMT) Makers Studios, Procter & Gamble (PG), M&Ms, and the James Beard Foundation were strategic partners at the Rock The Bells festival, held last Saturday. These partners put a spotlight on the creative minds behind the cultural movement of hip-hop with curated modules.

“We want to be wherever our consumers are and we know that hip-hop starts culture [and] influences everyone…from shoes to clothing to music,” Gabrielle Wesley, chief marketing officer of Mars Wrigley North America, told attendees. “Our purpose is around inspiring moments of happiness and the intersection of culture and music makes a lot of people happy. That’s why [Rock The Bells] is important for us.”

Yang sees that importance growing, with the opening bell ceremony symbolic of what could come.

“Many of the companies listed on this exchange have three things in common — a bold, exciting vision with a huge and relevant market, a passionate founder driven to success, coupled with a great team,” Yang said. “I see all these traits in Rock the Bells, and hopefully the next time we’re here on this stage, we’re ringing the bell for an IPO listing as a public company.”

Equity and ownership

Rock The Bells is also changing the old-school ownership structure by giving hip-hop icons equity in the company. When hip-hop was born, recording studios controlled the process from radio air time, marketing, ownership interests, and rights.

“I started Rock The Bells to lift up the culture and, at some point, there’ll be some sort of major liquidity event, whether we go public, and I want to make sure that people who really made a contribution have equity in the company — like DJ Kool Herc and Run DMC,” LL COOL J said. “Roxanne Shante, Big Daddy Kane, and Grandmaster Caz are owners of the company.”

Rapper Roxanne Shante, one of the first ladies in hip-hop, paved the way for women in the genre in 1978, but it wasn’t easy.

“It’s truly an honor for me to be a lady in hip-hop. It makes me proud to know everything that I went through from the beginning of hip-hop broke that ground,” Shante told Yahoo Finance. “Seeing my sisters take care of their business, in these boardrooms … understanding the business and how much control they have over their careers … I’m definitely honored by it.”

As hip-hop celebrates its golden 50th anniversary on August 11th, LL COOL J and Rock The Bells want to ensure its legacy for another fifty years.

“We’ve witnessed how artists’ tours stimulate economies, creating a ripple effect in various industries,” LL COOL J said. “As we honor the past, seize the moment, and embrace the future, let’s continue to uplift hip-hop and its impact on the world [with] Rock The Bells here to lead the charge, ensuring that the essence of this culture remains alive, not just today, but for generations to come.”

Ronda is a personal finance senior reporter for Yahoo Finance and attorney with experience in law, insurance, education, and government.


Women leaders improve profitability

As Women’s History Month comes to a close, Nasdaq had women leaders at Monday’s closing bell.

With only 10% of Fortune 500 companies led by women, the symbolism of having some of the most innovative women at the intersection of finance, funding, and founding at the ceremony was not lost on attendees.

“We all know that VCs are investing only 2% in female founders, and even less than that in women of color,” Shelley Zalis, CEO of the Female Quotient, said in a speech before ringing the closing bell. “But, we also know that women-led startups are outperforming their male counterparts, generating more than 63% more value and twice as much per dollar invested. Women drive wealth.”

Yahoo Finance interviewed three leaders at the event, asking their thoughts on women and women of color being called so-called “unicorns” as well as their thoughts on equality versus equity. Here’s what they said.

On being called unicorns

The unicorn moniker often bestowed on female leaders in the tech world is a disservice to women entrepreneurs and founders because it acts as an excuse to not hire or invest in women, Brenda Darden Wilkerson, president and CEO of, told Yahoo Finance.

“The unicorn narrative goes that ‘we can’t find them,’ ‘don’t really understand that particular demographic,’ or ‘it’s too risky to invest’ so come back when you’ve made your first 10 million,” Wilkerson said.

In 1985, women were 35% of tech and now it’s 12%, Wilkerson noted, but even at the height of women representation in tech, the narrative remained they were hard to find. Not only are women being overlooked for leadership roles, but also when it comes to funding companies to go public. Women-led startups receive only 2.3% of venture capital funds.

“If you Google how many female founders have taken their companies public you’ll see that the number is somewhere between 22-45 — it’s an alarming number,” Sehr Thadhani, chief digital officer at Nasdaq, told Yahoo Finance. “Female founders need more pathways to the public market — figuring that out will have a rippling impact on the entire business ecosystem because when women lead, they surround themselves with other powerful, innovative women who work collectively to increase opportunities for access to wealth building and more.”

Hitha Palepu, author and CEO of Rhoshan Pharmaceuticals, talked about the need to redefine what it means to have potential and to be successful, so those definitions are more inclusive of those who often get overlooked.

“I think we need to take a look at how we have evaluated and calculated what makes a high- potential or worthy candidate. Because in the past and to date, it has all been based on how we have viewed success, which is strong, fierce, determined, tactical. And when a woman has any of these qualities, she’s called bossy, assertive, shrill, angry,” Palepu said. “So we need to take a second to actually figure out some new terms in which we use to define success, in which we use to define potential, and to actively start going into the places we haven’t recruited from.”

Equality and equity aren’t the same

The theme for Nasdaq’s event was The Equity Objective: Women in Wealth.

Equality and equity are sometimes used interchangeably, but they aren’t the same. We asked our leaders to explain what equity means and should look like in the workplace.

“Equity is about making sure that everyone who might be in a different situation has what they need in order to succeed,” Wilkerson said. “If I’m growing a garden with lettuce and tomatoes and give them the same water, they may not bloom equally. Do I say to the lettuce, you need too much water, because I equally poured? It may need different soil or sunlight.”

Equity doesn’t take away, but rather provides the necessary tools for everyone to succeed, Palepu said.

“It’s not pie, but a buffet and the food’s going to keep on coming. It’s more a matter of does everyone have what they need and what they want to eat at the time they need it,” Palepu said. “Equality is a benchmark that you can manipulate the numbers to make it look like you are equal, but equity requires an investment of time, resources, and money to actually say, ‘We are not content with how things are and we are investing in a better future.’”

Republished from Yahoo Finance


Tax policies show bias

Tax breaks and tax enforcement are not agnostic when it comes to race, according to a pair of recent studies.

White taxpayers disproportionately benefit from five studied tax breaks versus Black Americans, in many cases when adjusting for income, according to a Treasury study from the Office of Tax Analysis. And even when Black taxpayers benefit more than their white counterparts from one credit, they are then subject to more audits because of it, a second study from Stanford University found.

The findings, which confirm previous research on tax disparities, underscore how supposedly race-neutral tax systems and policies can actually magnify racial disadvantages and perpetuate bias.

“The recently released working paper from the Treasury Department and other research articles are consistent with previous research conducted by CFP Board and others,” Kevin R. Keller, CEO of the Certified Financial Planner Board of Standards (CFP Board), told Yahoo Finance. “While the findings are disappointing, they are not surprising.”

Where white taxpayers benefit more

The Treasury report examined eight tax expenditures: capital gains and dividends, charitable contribution deduction, pass-through income deduction, home mortgage interest deduction (HMID), exclusion for employer contributions to medical insurance, the child tax credit (CTC), premium tax credit (PTC), and earned income tax credit (EITC).

According to the study, 92% of the tax benefits from the capital gains preferential rate went to white taxpayers. Additionally, that percentage was 91% for the charitable donations deduction, 90% for pass-through income deduction, 84% for the mortgage interest deduction, and 82% for the employer medical exclusion.

The disproportionate tax benefit for whites narrowed some when it came to the child tax credit (CTC) and premium tax credit (PTC).

Capital gains

Many taxpayers’ income is based on salary or hourly wages and is taxed around 37% or less, depending on income. However, capital gains income and dividends are taxed at a preferential rate of no more than 20%.

This means that taxpayers with substantial stakes in stocks and other assets get a tax break on the income derived from the sale of those investments compared with someone whose only income is their regular paycheck.

White households are much more likely to own stocks and mutual funds, according to research from the Federal Reserve Bank of St. Louis. The study shows 24% of white households report owning stock or mutual funds, while less than 8% of Black households do. The disparity doesn’t shrink much as income rises, either.

“These results track my research results, particularly how high-income Black Americans do not receive income from stocks like their peers and are less likely to own stock and benefit from the preferential tax rate for capital gains,” Dorothy Brown, tax lawyer, author, and professor at Georgetown Law School, told Yahoo Finance.

Further, the preferential capital gains tax “may promote income growth for white families relative to Black families which would work towards increasing income inequality,” according to the study.

“Since the 1980s, the wealth gap has widened again as capital gains have predominantly benefited white households, and income convergence has stopped,” a NBER report found.

Itemized deductions

In order to deduct charitable contributions, taxpayers need to itemize their tax returns. Only 11% of taxpayers itemize their tax return because itemizations for most taxpayers are lower than the standard deduction.

The Treasury report found that “higher income households are more likely to itemize and the value of itemized deductions increases with income because the marginalized tax rates increase with income.”

But Black households are underrepresented among high-income households and less likely to itemize and deduct charitable contributions, even though previous research shows they are more likely to donate than whites.

Similarly, a taxpayer must itemize to get the mortgage interest deduction. Around 8% of taxpayers claim the mortgage interest deduction and around 77% of mortgage interest deductions went to homeowners with incomes higher than $100,000, who are also disproportionately white.

“One other interesting point the study makes is how high-income Black and Hispanic taxpayers are more likely to take higher mortgage interest deductions than their white peers,” Professor Brown said. “While the study cannot tell us why, my guess is those taxpayers have been unfairly targeted with subprime mortgages and a higher tax deduction for interest means that principal is not being reduced and those Black and Hispanic taxpayers are unable to build housing wealth like their white peers.”

“It is yet one more example of how homeownership in America is more beneficial for white homeowners than Black and Hispanic homeowners,” she added.

Pass-through income deduction and employer medical exclusion

Taxpayers that own a business can deduct up to 20% of qualified business income (QBI) through the pass-through income deduction.

Usually, higher-income families benefit from this tax deduction as do white households, the Treasury study found. For instance, in the top 5% of households, average benefits from the deduction are $11,100 for white families versus $9,100 for Black families.

Likewise, the employer medical exclusion (ESI) benefit increases with higher income. Among high-income households, Black families get the least out of the deduction, with an average benefit of $3,200, versus $3,800 for white families.

However, among middle-income families, Black and Hispanic families benefited slighter more than White families from ESI.

Benefits from EITC get eroded

White families in the lowest-income percentile benefit from Earned Income Tax Credit, or EITC, at a much higher rate than Black families with similar income, the study found. The credit requires a base level of income to qualify and whites in the lowest-earning percentile are more likely to have income compared with Black Americans, potentially a result of the higher unemployment rate among Blacks than whites.

However, middle-income Black families benefit more than white ones with middle-income from the EITC. Among lower-income families, the average EITC benefit is also higher Black families, the study found.

But benefiting more overall from the EITC comes with a major drawback for Black taxpayers: more audits, according to a second study.

The IRS audits Black taxpayers at 2.9 to 4.7 times the rate of non-Black taxpayers, according to a study by Stanford in conjunction with the Treasury, with the “main source of the disparity” stemming from claiming the EITC.

“The Treasury study found that Black Americans disproportionately benefited from the EITC, but it ignores the well-known increased audit rates of Black EITC claimants,” Professor Brown said. “An audit prevents the EITC taxpayer from receiving any EITC amount and to the extent that the EITC is never delivered, then Black EITC taxpayers cannot receive it disproportionately.”

The disparity in audit rates also existed among Black taxpayers who did not claim EITC benefits.

The Stanford report contributed this in part to the design of audit selection algorithms, noting that a “growing literature in algorithmic fairness warns that policies based upon such predictions may inadvertently reinforce disadvantages against historically marginalized groups.”

For instance, the Casualty Actuarial Society (CAS) this year released four research papers examining the potential discriminatory effects algorithmic bias may have when used by financial institutions determining credit-scoring, insurance (auto, life, home), and mortgage lending.

“The inequalities found in IRS audits for Black taxpayers can be found in all areas of life and continues because of hundreds of years of systemic discrimination that affect Black life in the United States,” Sonia Gipson Rankin, a professor with a focus on race, technology and the law at The University of New Mexico School of Law, told Yahoo Finance. “AI perpetuates bias through codifying existing bias embedded into data. We will continue to see disparities in current and future systems as long as historical biases are integrated into the data and deployed in AI systems.”

Republished from Yahoo Finance