News broke today that rapper Nas, (and it’s no secret) one of my all-time favorite rappers made $40 million dollars as his investment in the doorbell company Ring paid off after it was acquired by Amazon. The sale is not particularly shocking. Ring was acquired for $1.1 Billion dollars, pocket change for a company like Amazon. The sale is the culmination of years of hard work and sound business decisions. Ring was one of the first to realize that video and the internet are going to impact the home security market. They moved first and efficiently to capture over 90% of the video doorbell market. Nas and his VC firm Queensbridge Venture Partners made an early investment in Ring. The same way rapper, 50 Cent, and his VC firm did in Vitamin water and many other celebrities have done with other upstart companies in the past. So let’s analyze why and how Nas was able to create this $40 million dollar payday and allude to some future paydays to come and how you can also do the same.
If you ever listened to Nas it’s not hard to see the intelligence and mastery of alliteration in his music. But if you analyze his business moves over the past 2 years you will see a change in his investment mindset. He has invested soundly and made small bets on startups that will either change the world or “die trying”. We all can learn from that strategy if you have the money to invest and are willing to invest. His strategy is turning out to be the “blueprint” (I know KRS already made an album called the blueprint-Nas) on how to invest to create generational wealth. Nas has been investing in young tech startups such as Genius, DropBox, and Lyft so future paydays are on the horizon. When most people think of investing they think stock market. They think 401k. That thinking is problematic if you are looking to create generational wealth. Your 401k or your mutual funds will not create generational wealth for you. They may for the hedge fund manager or the founder but not the retail investor. If you want to create generational wealth you have to invest in things that you can (A). Either control the outcome of the investment like real estate or (B) if you don’t control the outcome you are sure to win big in a significant way if the investment pays off like being an Angel Investor. Many people think Angel Investors are only Billionaires the question you need to ask yourself is would you rather have $100,000 in a 401k or would you rather invest $100k in a startup that has a chance to change the world?
If you are more of the later you have the mindset of an Angel Investor. Angel investors invest in companies that sometimes don’t even have revenue yet. They may only invest a small amount. That amount could be $100k or much less and in return, they get an equity position of the company. The bottom line is many people I know have $401k of greater than $100k that will not be worth one million dollars after 20 years of investing. Let Nas be your proof that a small 5% equity position can be worth millions of dollars if you spot a company with a solid business model and a founder with vision and execution. Look for companies you believe will change the world or impact it in a major way. It’s only the beginning. What’s next? There will be (AI) Artificial Intelligence, (VR) Virtual Reality, voice and many other technologies that have already started shaping our future.
The photograph in this article is a live original shot of Nas and was taken by the super talented photographer A. Retina Stewart. It was published with her permission.
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The article was created by A. Donahue Baker, a CPA, an entrepreneur and Real Estate Developer.