Why Kanye West might be better off if his $53 million debt was even higher

Information verified correct on January 20th, 2017

Kanye’s debt isn’t a crisis — it’s an opportunity.

Kanye West’s tweet announcing that he had $53 million in personal debt caused a major stir. Freakouts over how Yeezus ended up with so much debt aside, is this really such a bad thing?

Kanye’s debt is from investments into his businesses (particularly his fashion lines), rather than the result of reckless extravagance in his personal life. Kanye reportedly personally invested $40 million in his Yeezy sneakers alone, despite the development being backed by Nike as well. Kanye has invested much of his own personal finances into his endeavours, and like many entrepreneurs before him, he’s apparently found himself in debt. But that doesn’t necessarily represent a business mistake. After all, how can you expect external investors to invest in your brand if you don’t believe in it enough to invest in it yourself?

While there’s an inherent tension in Kanye on the one hand proclaiming himself as a uniquely gifted genius and on the other seeking out funds, there’s always an element of risk in building a business. Entrepreneurs can’t be risk-averse. Debt is often part of the journey.

Contradiction also fuels publicity and discussion, which is an area Kanye is clearly skilled in. From interrupting Taylor Swift during her acceptance speech at the VMAs to self-proclaiming his own importance/genius during interviews and even announcing his intent to run for President, Kanye certainly makes his presence known and has a massive online following. And that’s measurable in all the positive numbers associated with his career: He’s had seven (soon to be eight) bestselling albums selling over 21 million copies in an environment where artists are finding it difficult to get people to pay for recorded music. He’s won 21 Grammy awards. And in an age where social media is a direct measure of influence, he has 21 million Twitter followers.

That huge audience means that he can make a virtue even of being in debt. Take for example Kanye’s part-ownership of music streaming service Tidal. Tidal has struggled to compete in a market dominated by streaming giants such as Spotify and Apple (who offer a similar service at a lower price or for free). Not only that, since Tidal’s launch, the application has been plagued with technical bugs.

However, despite this being common knowledge, Kanye’s debt-related Twitter rant (which pleaded for subscribers) saw interest increase so substantially that Tidal has reached the top spot on the Apple free apps chart. Which major brand would not want to collaborate with an individual that has the ability to generate such a public response?

Kanye’s approach to finance has always been unconventional. He’s guilty of some of the most common money mistakes Americans make, such as not finishing his college education and excessive gambling. That said, he can’t be accused of leaving the money management to his partner, which is another common regret; Kim Kardashian has reputedly made $100 million from her highly successful app.

Either way, it’s a knee-jerk reaction to simply assume that the $53 million debt is a bad move that will permanently blight him. It’s part of a business-building strategy. Who knows what he might have achieved in the long run if his debt right now was $530 million?

Picture: David Shankbone, licensed under Creative Commons Attribution-NonCommercial-ShareAlike 2.0 Generic (image cropped)

Was this content helpful to you? No  Yes