Forbes Senior Editor Zack O’Malley Greenburg | A-List Angels – How a Band of Actors, Artists and Athletes Hacked Silicon Valley

Audio Transcription

Speaker 1:
Forbes Senior Editor with one of the coolest names ever, Zack O’Malley Greenburg, is here. I love that name.

Intro Song:
(singing)

Clay:
Yes, yes, yes and yes. Doctor Z, it is always ecstasy when you are here next to me, but on today’s show the listeners are going to enter into the dojo of mojo, because we are entering into a special time here on the Thrivetime Show.

Doctor Z:
You know, I’m excited because you get real excited when you have a Z next to you, and now we’re interviewing a Zack, which is another Z, so we just have the dream Z team.

Clay:
We’ve got the best selling author, the Forbes Senior Editor, the Z team, Zack O’Malley Greenburg on the Thrivetime Show. How are you, sir?

Zack O’Malley Greenburg
Not too bad, thanks for having me on.

Clay:
Brother, you are an epic writer, and since I’ve talked to you last you’ve written another book here, this new book’s called A-List Angels: How a Band of Actors, Artists and Athletes Hacked Silicon Valley. What inspired you to write this new book?

Zack O’Malley Greenburg
Well, you know, I’ve spent about a decade at Forbes covering a number of things, and one of the things I realized was a thread going through all of the stories really I’d written, a lot of the biggest ones from a cover on Justin Bieber in 2012 …

Zack O’Malley Greenburg
Tell me how you got involved in start-ups and why.

Justin Bieber:
Well, everything that I do I try to have a charitable component. (singing). There you go, there’s the line.

Zack O’Malley Greenburg
To a cover on Ashton Kutcher, 2016, all the way through my daily coverage of how all these entertainers were investing in start-ups, early, very early, pre-IPO. And the more I dug into it, the more that I realized it went even deeper than I thought, and the story was even more fascinating than I thought. So, even going back to Shaquille O’Neal getting into Google before it went public because he met an early backer’s kid at a restaurant and started talking, and [inaudible 00:03:25] with some pre-IPO shares. All the way through to somebody like Ashton Kutcher starting his own VC firm to invest in Uber and Airbnb, and companies like that.

Clay:
Who is somebody in your new book, A-List Angels, that maybe our listeners would be surprised by. Who’s somebody that’s in the book that bought stocks in something and they’re now worth an insane amount of money that would surprise, maybe shock some of our listeners.

Zack O’Malley Greenburg
The first thing is that it’s even before they can buy a stock in it. These are pre-IPO shares we’re talking, so it is like cutting the line almost, and leveraging their fame to get this kind of advantage that previously only these gigantic institutional investors could get. But I think one person who is particularly fascinating to me in that regard is Nas. Nas is one of the best rappers of all time, really.

Nas:
(singing)

Zack O’Malley Greenburg
Nas is known as one of the best rappers of all time, really, but he always trailed Jay-Z, Diddy and Doctor Dre on the business front. And then, very quietly, through this young manager of his he was able to start investing really early in companies like Dropbox and Casper and Lyft, and it actually got to the point where, just this past year, he earned, I think it was, close to $40 million, which was the best year of his career.

Clay:
What?

Zack O’Malley Greenburg
And he’s been in the game for decades. This was thanks to a couple of big exits. He was in on Ring early along with Shaq, that was a big one, it sold for about $1 billion to Amazon, and then there were a few others. So, again, when these companies go public or get bought out by bigger companies, these stars who bought these stakes for discounted rates maybe five, 10 years ago, are realizing incredible gains. Of course, it’s not necessarily so much that they can retire immediately, they’re not all Beats By Dre getting bought out by Apple kind of scenarios for a few billion dollars but, for the most part, these are smaller investments.

Zack O’Malley Greenburg
Somebody like Nas is putting $50,000, maybe $100,000 into a company, but then having the company grow five or tenfold in a matter of years and walking away with these checks for millions and millions of dollars without having to really do very much at all.

Clay:
Zack, I have three rapid-fire questions for you, here we go, rapid-fire, here we go. An IPO, you know what that is, some of our listeners know what that is, but any time we have an abbreviation I like to break it down because I know someone’s going, “What’s that?” Can you explain what an IPO is?

Zack O’Malley Greenburg
Sure. Initial public offering, that is when a company that is privately held decides that, in order to expand, it is going to go to the public markets, the NASDAQ for tech stocks, or to the New York Stock Exchange for more traditional companies, and allow people to buy into the company on the outside, which then generates more cash that they can then use to expand further.

Zack O’Malley Greenburg
So, traditionally, the IPO would be a goal for a company to get to pretty early, so that they could start to expand and do that kind of thing. But in recent years, especially with tech companies, they’ve found that there’s such a massive amount of venture capital funding available from firms in the San Francisco area, from sovereign wealth funds from all over the world, and so they’re going public later and later, they’re having their IPOs later and later, and it’s making it harder for a lot of normal investors to get in and actually buy shares in these companies.

Zack O’Malley Greenburg
So, as that’s been happening, one of the things that these companies have realized is, “Well, hey, if we’re letting people invest early, why not get somebody who’s already famous? Maybe they can help increase the awareness around the company, they can make calls that’ll get picked up maybe that wouldn’t get picked up by other people, and become assets to the company that just a regular old investor couldn’t.”

Clay:
And what kind of NET worth requirements does the average person have to have to qualify to invest in an initial public offering.

Zack O’Malley Greenburg
Well, if you are just buying stock, you could go on Fidelity or something and you could buy one share of a company and it doesn’t matter how much you’re worth. So, if it’s publicly traded there are no requirements, except that you just have to get an online brokerage account.

Zack O’Malley Greenburg
If you are investing before an IPO, you have to be what’s called an accredited investor, which means you have to have household income, I think individual income of $200,000 a year, or a NET worth of I think it’s a million, in order to invest in what’s thought to be more risky security, which is a company that is not yet publicly traded, so if it all goes south you wouldn’t lose all your money and they want to protect you from that happening to you.

Zack O’Malley Greenburg
And of course, a lot of these entertainers are making way more than $200,000 a year, they’re worth way more than a million dollars and they can get it on it. The thing that has happened here is like a revolutionary change in the way that creatives and athletes are growing their wealth, and it’s going from cash deals, cash endorsement deals, to something more longterm, generational wealth: you’re getting a piece of these companies that you’re helping to build as opposed to the old stories that we hear all the time of record label executives giving somebody the bottle of wine and taking all their publishing for the rest of their life.

Doctor Z:
Zack, are there any federal regulations in how much of the percentage of stock they can offer initially or before the offering, are companies regulated by that at all? Or they could sell all the stock before they go public?

Zack O’Malley Greenburg
Well, it’s tricky because I think the longer that you remain private the less oversight you have to have. And so, once you’re publicly traded it comes with all sorts of regulations, and tiering into your finances and your books. And a lot of times these young companies haven’t quite figured it out yet, and they would not like to have the additional scrutiny. So, there’s certainly a benefit to delaying the IPO, and having investors, like some of these celebrities, is one of the many factors that makes it a little more cushy for them to be able to do that.

Zack O’Malley Greenburg
Of course, it’s the big venture capital firms and the sovereign wealth funds, and stuff like that, that are providing the bulk of the money that is allowing these companies to go public later but these entertainers get to come along for the ride and usually turn a pretty nice profit.

Clay:
Zack, how I first heard about you was you started this thing called the Hip Hip Cash Kings list, and can you talk to the listeners out there? How did you get started at Forbes? And then when did you have the idea to make this Hip Hop Cash Kings list?

Zack O’Malley Greenburg
Yeah. I started out in 2007 full-time, and the Editor walks into my cubicle and she said, “Hey, you’re under 30, do you like hip hop?” I said, “I love hip hop.” She said, “Great, you’re going to help me put together the first ever list of hip hop’s top earnings.” So, I did a story that year about how Tupac Shakur was making more money than all but five living rappers, and the top guys on the list were Jay-Z, Diddy, 50 Cent. And we put out the list, and shortly thereafter those three guys made a song called the Forbes Billionaire Remix, or Billion Dollar Remix, because I think together they were worth a billion dollars, or they had maybe earned a billion dollars.

Speaker 8:
(singing)

Zack O’Malley Greenburg
In any case, it got some radio play, and this was like the first inspiration that we had to keep covering this emerging business on a regular and serious and dignified scale. And as it turned out, nobody had really been a neutral [inaudible 00:12:40], but here we were selling, we dug into it and this is [inaudible 00:12:45].

Zack O’Malley Greenburg
So, kind of expanded from there into covering music more generally and writing books on the side, like my biography of Jay-Z, Empire State of Mind, and then my last one before A-List Angels, which is called Three Kings, where I dig in to Jay-Z, Diddy and Doctor Dre and how they became actually the three wealthiest musicians in America, and it was really by this idea of ownership. And a lot of times it was the only option because people wouldn’t sign them to record deals, or they wouldn’t do a clothing line with them, and they had to go start their own. And it fostered this sense of entrepreneurship, and especially around the business of hip hop that I think persists to this day.

Clay:
What’s it like? I mean, you now sit down with the who’s who of hip hop on a fairly consistent basis, what was it like sitting down with Kanye West and interviewing him recently? Your article, which is a great article, it’s called Kanye’s Second Coming: Inside the Billion Dollar Yeezy Empire, what was it like being in the presence of Kanye West? What’s he like?

Zack O’Malley Greenburg
Again, this is an ownership story, right? It’s about how he came to own sneaker brand, which is now challenging Air Jordan for the throne, really, for this generation. And yeah, we put him on the cover of Forbes over the summer because of this billion dollar business he’s built, and he is kind of, in many ways, everything you might thing he is. He is super brilliant, he’s unpredictable, and he really has the vision for everything in his life. And when he gets stuck on something that needs to be a certain way, whether it’s the curve of the shoe, or a font in a pitch deck that somebody’s making for him, he just zeros in on it and he applies a creative energy to it until it’s wherever it is that he thinks it should be. And then maybe he keeps after that.

Zack O’Malley Greenburg
So, I think the great example of that was we did our interview, it was a Sunday night, we wrapped up, and it was probably around 9PM or 10PM at this point, and he said, “Hey, I want to show you something.” And I said, “Okay.” He leads me outside, I assume he’s got a workshop out back behind his house or something, but instead he ushers me into this Lamborghini SUV and he says, “Come on, let’s go” and drives off into the night.

Zack O’Malley Greenburg
So, we’re going down the hill, blasting JS Bach on the radio and …

Clay:
Bach?

Zack O’Malley Greenburg
… drives deep into the wood in California. Bach, yeah. Into Calabasas. And we come to this bungalow in the woods, and inside are these three guys jamming on laptops for a presentation he’s giving the next night about this concept that he’s working on, it’s the housing design concept. And he’s going in and working the place, like the presentation he’s saying, “Change that font. Change the color of those letters.” For about a half an hour. And then he says, “Come on, let’s go. Come on, I want to show you something else.”

Zack O’Malley Greenburg
So, by this time it’s midnight, we go outside, it’s pitch dark, by the light of our iPhones we’re walking up the hill, deeper and deeper into the woods, and I’m like, “I’m going to get eaten by a mountain lion [crosstalk 00:16:34] Kanye West, and I’m going to be a footnote in the obituary.” And we get to the top of the hill and he stops, wordless, and there in front of us are these three giant structures, maybe 30 feet tall, 20 feet wide, kind of oval, and it’s hard to see in the moonless night but they’re just these hulking structures. And he takes me inside to take a look at them and go back out and consider them.

Zack O’Malley Greenburg
And I said, “Hey, can I turn on my recorder and have you explain what these are?” And he goes, “No, I want you to paint a picture with your words.” And so, I’m like, “All right, well, I’m going to have to scribble in my notebook here [inaudible 00:17:19].” So, I scribble in my notebook for five minutes, he’s like, “You good?” I’m like, “Yeah, I’m good.” We walk back down the hill, he drives me back down [inaudible 00:17:24], and that’s that. But it’s that focus on whatever the thing is that’s creatively driving him at any moment, whether it’s a song, or a shoe, or a housing concept, he makes no time for geography or any other kind of bounds, and he just does his thing, and it’s super fascinating to watch.

Clay:
Every time I’ve interviewed somebody who’s super successful, I have noticed that they are the most detailed people. And I’ve noticed the people that tend to crumble once they start to grow are the people that are like, “Yeah, whatever.” You know what I mean? The myopically obsessive person, that person who’s just obsessed on the details, tends to be the person who wins. Have you had a chance to sit down with Doctor …

Doctor Z:
One sec, Clay. Did I miss it? What were those buildings? What was the purpose of those three buildings? Did I miss that? Did you say what they were? I missed it maybe.

Zack O’Malley Greenburg
They were in fact a housing concept that he had. And the idea was that you would sink them into the ground, and they would be cheap, modular housing that could help solve the homelessness crisis in LA, and they were inspired by Luke Skywalker’s childhood home in Star Wars. But unfortunately after my story went out and there were a couple of paragraphs on that, I think his neighbors found out that he was doing this and it didn’t have a permit.

Doctor Z:
Oh yeah, that’s a permit [inaudible 00:18:57].

Clay:
I have yo ask you this: you’ve covered Kanye so much, how much do you believe Kanye West is worth right now based upon your research? Do you believe he is a billionaire?

Zack O’Malley Greenburg
I think in that story we said that he’s worth hundreds of millions of dollars, and because the story focused on his annual earnings, which we had tagged at $150 million, and not hours, because we had actually just done NET worth, which I think we had him at $250 million, or something like that, in early 2019, we didn’t update it and we decided to focus just on the earnings side of things. But we’re coming out with our billionaires issue in not too long, so I would say TBD.

Clay:
Well, I would say this: Jordan, his shoe line did $3 billion of shoe sales last year, I believe, and I think Kanye’s did $1.5 billion, is that correct?

Zack O’Malley Greenburg
Yeah. I mean, I can’t remember off the top of my head if the $1.5 billion is just for the shoes or if it includes some of his other apparel, and stuff like that. But in any case, the shoes are a $1 billion in revenues, and [inaudible 00:20:23] it may be considerably more when we look at the full 2020 numbers or 2019 numbers.

Clay:
Your writing is just so fascinating, and with this new book, A-List Angels: How a Band of Actors, Artists and Athletes Hacked Silicon Valley, in that book you’re getting praise from huge people, like DJ Khaled describes your book, he says, “Zack’s latest book has the keys to securing the bag on this highest level. It’s not about cash, it’s about getting that equity.” What motivated you to just dive into this story like this? Because this book is filled with so many awesome, fascinating stories, what is your deal? Do you have a little Kanye West in you? Do you get just obsessed about something and you can’t get off it? Or what’s the deal?

Zack O’Malley Greenburg
Yeah, I think you nailed it” it’s the stories. It’s that story of Shaq with the kid in the restaurant and it leading to him being an early investor in Google. It’s the story of Sophia Bush investing in Uber pre-IPO. It’s the story of, let’s say, Joe Montana finding out that one of the things that a start-up he invested in would really like is an introduction to Snoop Dogg and making that introduction because their kids play football together. It’s this coming together of very different realms of the world.

Zack O’Malley Greenburg
And I wanted to study that because I think it’s not just, let’s say, useful reading for people who are coming up as athletes, or creatives, or entrepreneurs more generally, but I think it’s a rollicking good time, and I seek to inform and enlighten, but also to entertain. It shouldn’t be a textbook, right? It should be something that’s fun to read, and hopefully it’s a little bit of both.

Clay:
I love your writing style, and I feel like I know you very well because I’ve read all your stuff, and it’s just awesome. Your book about Michael Jackson Inc. was just awesome. But now that I’ve complimented you, it’s now time for me to personally attack you, so here we go. Here we go. This is my personal attack. What is it going to take to get Doctor Z, A, on the Hip Hop Cash Kings list, and two, how do you get him on the cover? Because he does own a bank, he does own the largest optometry clinic in Oklahoma, he does own the largest auto auction in Oklahoma, what kind of criteria does my man have to go through to get on the cover of Forbes and to get onto the Hip Hop Cash Kings list? Do I have to do a remix? If I do a remix for you, if I do the remix of the remix, if I do a song like that for you will you at least retweet it and consider him to be on the list for now?

Zack O’Malley Greenburg
I want to hear the EP, not just the single, I want the entire EP.

Doctor Z:
That’s fair. That’s just fair, okay.

Zack O’Malley Greenburg
I want to check it out. We do have this billionaires issue, and you and Kanye, I think, are both trying to figure out what does it take. Well, it takes a billion dollars to get onto the cover.

Clay:
That’s a lot of counting.

Zack O’Malley Greenburg
If you’re a billionaire, you’re under consideration.

Doctor Z:
Well, I’m not a hip hop artist yet.

Clay:
Not yet.

Doctor Z:
Not yet.

Clay:
He’s on the verge.

Doctor Z:
I’m 55, I’m just getting started.

Clay:
He’s got a cowbell, he’s doing rhythm therapy classes …

Doctor Z:
I’ve got a plan.

Clay:
… the whole thing.

Doctor Z:
I’ve got it mapped out, so that’s probably coming soon, I would imagine, all the hip hop-ness.

Clay:
And by the way, Zack, I sincerely am working on a remix for you, and I’m going to send it to you as soon as it’s done. But now we get into the serious stuff. We have Paul Hood, Paul Hood is a great show sponsor, he’s also a CPA, one of the largest CPAs here in Oklahoma, Paul, what question do you have for Mister Zack O’Malley Greenburg? The man who refuses to put Doctor Zellner on the cover of Forbes.

Paul Hood:
The main question is why? Why not? No, so Zack, and I’m also a registered investment advisor, and Clay, I don’t know if you even know this, but seven years straight I’m number one in the nation with the companies we work with, so we do quite a bit of business.

Clay:
In my face.

Paul Hood:
Here’s the question I have, Zack O’Malley Greenburg so, just like Warren Buffett, if somebody hears he’s investing in a stock there’s a frenzy or, say, something near to my heart, football, if Alabama is recruiting a football player and they’re a 3A, the minute somebody finds out that Alabama’s interested in him they go to a 5A. So, these artists that are investing in these companies, are they bringing more to the table sometimes than just their name and the excitement to be in business, if you will, or invest in the same thing as Shaw, or somebody like that? Or is it just that because they put their stamp on it then that’s part of the selling point, like you say, instead of just doing endorsements their name’s being used to generate other investors?

Zack O’Malley Greenburg
Yeah, I think it’s a combination of those things. If you have a start-up that doesn’t really have a big name investor, whether it’s a big name firm, or a big name individual investor, it’s hard to differentiate yourself, right? Whereas, if you say, “Oh well, I have Sequoia and Joe Montana” people are going to pick up the phone. And even if they’re not, let’s say, even if Joe Montana isn’t going out and endorsing the thing in a commercial, if you hear that he’s involved and given a stamp of approval, you’re probably at least going to do due diligence and check it out.

Zack O’Malley Greenburg
I think, though, that one thing a lot of these stars have to be careful of is running afoul of some of the regulatory bodies. So, there was a moment where Ashton Kutcher had on his TV show, I think it was when he was on Two And a Half Men, his character had a laptop and on the laptop were the decals of all these different start-ups that Ashton Kutcher himself had invested in. And actually, from a regulatory perspective, that is kind of a no no if you don’t disclose that you have shares in these companies, even if it’s not publicly traded. So, he got a little bit of a scolding over that and hasn’t done it since. But there are still some rules that you have to be careful about when you’re actively promoting.

Zack O’Malley Greenburg
But it’s different with something like that, where that’s different from if you have on your website, “Blah, blah, blah start-up, investors include: Ashton Kutcher and so-and-so.” That is a different animal. So, yeah, there are pitfalls, but generally it’s a good thing for these characters and it’s a good thing for the companies because what are they really going to lose? I mean, if a star’s putting in $50,000 to invest at whatever the valuation was in that round, all it means is that it’s just $50,000 less that some other big investor isn’t going to be putting in, and it’s not like the entrepreneur has to sell any more of the company, or make any compromises necessarily if the deal is structured correctly, so I think it’s something that can really be a win-win.

Doctor Z:
Zack, do you think, in your lifetime, you’ll ever see a trillionaire? And do you think it’s even possible?

Zack O’Malley Greenburg
Well, you know, what is it? Rockefeller was the first billionaire and that was about 100 years ago.

Doctor Z:
Right. Now we have what? 600 in the country or something.

Zack O’Malley Greenburg
Yeah. It’s up around 100. So, if we’re talking about two order of magnitude over 100 years, a trillionaire … I think it depends on the scale, or is it algorithmic, logarithmic? Am I using the right term? In any case, I think it’s not … I guess it depends on inflation, really, when it comes down to it. But I think there are other forces at play. I think especially over the past few years I’ve noticed really questioning, “Is the idea of a billionaire existing, should there be billionaires at all? Are we doing something wrong as a society if we have that kind of disparity of wealth?” I think it’s an interesting question.

Zack O’Malley Greenburg
And at the end of the book, at the end of A-List Angels, I get in to this notion of where does this investing, these stars investing in start-ups kind of thing, where can that go in a way that’s actually good for the world? That can help people instead of just making people who are already rich really rich, right? And that gets in to some of the stuff that Bono was doing with the Rise Fund, with RED, social entrepreneurship, investing in companies in Africa that are making micro loans, stuff like that, that I think is a pretty fascinating application of all this, and gives a little more justification as to why we should care about this kind of thing.

Clay:
You are such a prolific writer and your hip hop rich list is something that these hip hop artists really do want to get on, what was it like to hear the list you made referenced on a remix? What was it like to hear 50 Cent …

Paul Hood:
Yeah, that’s pretty cool.

Clay:
… Diddy and Jay-Z rapping about something that you started?

Zack O’Malley Greenburg
It was, and maybe this os obvious, but it was surprising. I was driving in a rental car in New Mexico researching the story about nanotechnology with a physics professor, and on the radio comes this song, and I’m like, “Oh, they’re talking about Forbes?” And I think it took me a minute to realize they were talking about this actual package. And I think I was certainly surprised, and then delighted, and then the light bulb went on. There was really a dearth of coverage, especially at that point in 2007, there was a dearth of serious business coverage of hip hop, there were a lot of certain novelty stories of, “Oh, here’s Master P and he’s doing this thing, isn’t that funny?” But I think that we were really the first to take hip hop seriously from a business perspective.

Clay:
How many songs are you referenced in? How many songs are you referenced in at this point?

Zack O’Malley Greenburg
There are hundred of songs now that reference Forbes.

Clay:
How about you?

Zack O’Malley Greenburg
Me personally?

Clay:
Yeah, you personally.

Zack O’Malley Greenburg
Zack O’Malley Greenburg doesn’t really rhyme with anything.

Clay:
Listen, and Doctor Z knows this to be true, I’m joking with you, I have been working on a Zack O’Malley Greenburg song for you.

Doctor Z:
It’s hot.

Clay:
It’s hot.

Doctor Z:
It’s hot.

Clay:
I cannot play it for you right now …

Doctor Z:
Hot sauce.

Clay:
… but I will unleash it with this package because you need a theme song. Every superhero needs a theme song.

Doctor Z:
That’s true.

Clay:
And in your book you talk about this. I mean, this book is …

Doctor Z:
Wait, Clay, I’ve got a question I’ve got to ask him right now.

Clay:
Do it, yeah.

Doctor Z:
Do you get a royalty check every month or is it quarterly from what the guys wrote about what you did? I mean, you are getting royalty checks, right?

Zack O’Malley Greenburg
That would be great.

Doctor Z:
Oh man, bummer.

Zack O’Malley Greenburg
Unfortunately. I get bi-annual royalty checks from my publisher, which I’m sure are considerably smaller than …

Doctor Z:
Those hip hop guys didn’t slide you a little …

Zack O’Malley Greenburg
… the royalty checks that these guys are getting from the songs.

Doctor Z:
Didn’t send you a fruit cake or anything? They didn’t do nothing, huh?

Clay:
Well, check this out, Z, Zack, they rapped about him. 50 Cent was rapping about him, this I Get Money remix, he’s rapping about him, that’s got to feel good. But in this book, the A-List Angels, you talk about how 50 Cent’s original deal with Vitamin Water kind of ushered in this whole idea of actors and artists and athletes investing in Silicon Valley, could you explain 50 Cent’s Vitamin Water deal at a third grade level so I’ll get it?

Zack O’Malley Greenburg
Yeah. So, it’s kind of funny because the book essentially opens with this, with Ashton Kutcher saying how he saw this Vitamin Water deal that 50 Cent did and he had been, Ashton Kutcher had been doing just a straight up cash deal for I think it was Night Calm, or something, and he saw what 50 did and he said, “Oh my gosh, I’m doing it wrong. I need to do what he did.”

Zack O’Malley Greenburg
And what 50 did was he was approached by Vitamin Water, I guess it was in the mid-’00s, 2005, something like that, 2004, with the idea of creating his own flavor, Formula 50. They said to him that they wanted to pay him but they didn’t have that much to pay him, and he said, “No problem, I’ll invest it myself. Give me some equity.” So, essentially, instead of taking … You can guess what 50 Cent might have been worth for an endorsement deal of that nature at that time, probably $5 million or so, depending on how long, $5 million for a couple of years worth of effort, depending on how much effort you put in. And so, essentially, he took the amount that he would have gotten for a cash deal and just got the equity in the company.

Zack O’Malley Greenburg
And a few years later, after 50 Cent had helped grow Vitamin Water by pushing this Formula 50 brand, doing commercials, and really pounding the pavement to get the word out, Coca Cola came in and bought the parent company of Vitamin Water for $4.1 billion …

Clay:
Shut up.

Zack O’Malley Greenburg
… and 50 walked away with about $100 million. So, he was doing quite well for himself.

Zack O’Malley Greenburg
And this was basically unheard of because, when you think about it, entertainers in general, they work their entire careers to get from the place where they’re doing stuff on spec to the place where they’re getting guaranteed money. And it’s really hard for them to reconcile the notion, the difference between Hollywood and Silicon Valley because in Silicon Valley, everybody takes equity instead of the upfront payment, that’s the whole point. You put in the work, you grow the thing, and then there’s a big pay off down the line.

Zack O’Malley Greenburg
So, generally, musicians especially, actors, backend is sort of like, “I don’t know, who wants backend?” Historically, you want the guarantee. And 50 said, “No. I believe in myself, I believe in this product, and this seems to be the better way of building wealth than just taking the cash.” And sure enough, he was right. And so, I think that has split a lot of things now to the point where getting backend on stuff, and particularly getting ownership of companies, is something that is just super appealing to these artists.

Zack O’Malley Greenburg
It’s funny actually, because Guy Oseary, who works with Ashton Kutcher on a lot of this stuff, he manages Bono and Madonna, and he was the main character I talked to a lot for the book, but he had actually turned down an opportunity to invest in Vitamin Water. And one of the anecdotes in the book is how he was kicking himself over this and Ashton is consoling him.

Zack O’Malley Greenburg
But I think that was really how this phenomenon really began in earnest. Not that there weren’t other people who did it before, but the 50 Cent one was really the wake up call to everybody.

Clay:
Zack, in your book you talk about Ashton Kutcher, Beyonce, Shaq, who is the person who is en route to becoming a billionaire? Who’s the one where you look at and go, “This one will be the billionaire first.” Is it going to be Beyonce? Is it Ashton Kutcher? Is it Shaq? Who’s going to be the next billionaire.

Zack O’Malley Greenburg
Well, Jay-Z’s the first hip hop billionaire, and I wrote that story for Forbes last year. Who’s next? Man, it’s tough to say because a lot of these companies, even when they make, Ashton Kutcher, somebody like that, makes a great investment, we’re talking maybe a six-figure investment, maybe these days it’s high six-figures, it’s something like that, but even if you’re 10-X’ing that, we’re talking maybe you put in a million dollars, you do really well, you’re turning in $10 million, that’s not going to get you to billionaire status.

Zack O’Malley Greenburg
It would be somebody, I think, who has founded a company, who owns more than half of it that just zooms up and goes crazy. Somebody like Kanye where they’re really investing in themselves and taking a big risk, and building that longterm plan.

Clay:
Do you believe that Kanye will be worth more than Jay-Z soon?

Zack O’Malley Greenburg
It’s hard to bet against Jay-Z. He’s got his hands in so many different things, and he has significant ownership in a lot of different things. A lot of people don’t really realize, everything from Tidal to a champagne brand, to his cognac, there’s really a lot going on there and it’s all brewing.

Zack O’Malley Greenburg
So, on the Kanye side of things, yeah, I think he’s coming from behind, Jay-Z got a headstart. And I think the other constraint on Kanye is that part of the appeal of the Yeezys is that there’s such demand around them, but part of the demand is that it’s the lack of supply and they really tightly control all the releases in order to maintain this kind of buzz around the product. So, if all Kanye cared about was becoming the wealthiest person ever as soon as possible, I think the move would be to just open the floodgates and make these shoes available more widely. And that might just up the price of the value of Yeezy for the interim, but the longterm consequence might be that you lose that luster.

Zack O’Malley Greenburg
So, I think they’re trying to very carefully control it and to keep it sexy while still growing it. So, I think that would be the main thing that would [crosstalk 00:39:37]

Clay:
Speaking of sexy while still growing it, you’re growing your book sales while still looking sexy. And your book, the Empire State of Mind, is about Jay-Z. I love that book. And after reading that book where you explain how Jay-Z’s built his NET worth, and how he … Does Jay-Z like that book? Does he like the book? And how did you get rights to use his face on the book cover?

Zack O’Malley Greenburg
Well, I did meet him one time at a show, and I walked up and I said, “Hey, Jay, I’m the guy who wrote the book about you.” And he said, “That book was horrible.” And he sauntered off. But I was told later that he was joking. I mean, I don’t think that he has any animosity. I’d say that his team is definitely conversant and friendly with the Forbes side of things. There’s no ill will, as far as I can tell. But he’s got his mind on other things, as far as I can tell.

Clay:
How did you get the release to use his image? How does that work? How did you get the release to use his headshot?

Zack O’Malley Greenburg
Well, the way it works with photo shoots is that the rights belong to the photographer unless otherwise specified. So, I didn’t acquire the cover image, I think that was somebody at my publisher …

Clay:
Got it.

Zack O’Malley Greenburg
… just doing their due diligence. The book came out in 2011, got the deal in 2010, or 2009 maybe, and the photo was probably taken two years before that, so we’re talking 10, 15 years ago, back when he was a different … it was a different story. He was not a billionaire, he was not even probably halfway there. He wasn’t this mainstream superstar that he is today, and I think he was still in the process of crossing over from a big name in hip hop to a big name more broadly, and I think this was just one of the things that once you become an A-plus list star, you start controlling your photo shoots more, that kind of thing, and you only do things where you own the rights to the photos or you tightly control it.

Zack O’Malley Greenburg
I think we tried to update the picture for a recent edition but there weren’t any new ones. I think he clamped down on that. Glad we got him when we did.

Clay:
Now, I want to ask you this: you write these great biographies and, for people out there, we have a lot of aspiring authors that listen to this show, do you have to get rights from Michael Jackson’s family to write the book Michael Jackson Inc.? Do you have to get permission from Doctor Dre, Diddy and Jay-Z to write Three Kings? What are the rules when you’re writing a biography?

Zack O’Malley Greenburg
No. They’re all public figures, so as long as you steer clear of anything libelous you’re good to go. Libelous, it has to both be both demonstrably false and malicious. So, given that I try to be neither, I find that I’m in the clear. Yeah, pretty simple. The hard part is getting the deal.

Clay:
I love your life. I love what you do, I love what you write. It’s so exciting to me. I want to know …

Zack O’Malley Greenburg
Oh, thank you.

Clay:
… what does Steve Forbes think about you? Do you hang out with Steve a lot? Do you go up to Steve’s office and mess with him a little bit? Do you knock on his office and mess with him? Is it a fun relationship? Is it a fatherly kind of thing? What’s the relationship like?

Zack O’Malley Greenburg
We say hey in the elevator, and he gives me book quotes, book blurbs, and I go on his on his podcast. I’ve got to say, he really is super supportive, and I think every book I’ve ever written he’s given me a blurb and it’s always the best blurb that anybody has ever given. I mean, I think he compared my Michael Jackson book to Citizen Kane. If I made that up …

Clay:
That’s great.

Zack O’Malley Greenburg
… I feel like I’m overdoing it. So yeah, I’ve got nothing but appreciation.

Clay:
I’m going to make a hostage negotiation with you before I let Charles Colaw and Z interrogate you with more questions. Here’s my hostage negotiation: I’m going to give you the Zack O’Malley remix that I know you’ve never told me you wanted, you probably don’t even want it but I’m going to give you your own rap song and all I want is a little Steve Forbes on the podcast in exchange for it. You don’t have to make a decision now, I’m just telling you, it’s a hostage negotiation here, a little Steve Forbes on our podcast for a little bit of a Zack O’Malley theme song. But Z, I’ll let him think about that.

Doctor Z:
I think that’s fair.

Clay:
It’s a fair deal.

Doctor Z:
Yeah, I mean, it’s a good trade.

Clay:
Every great writer needs their own theme song. But Z, you had a tough question for Zach here. A tough one.

Doctor Z:
Your Michael Jackson book, what inspired you to write that? And did you meet him in real life? Or did you get to see him in concert at any time before he obviously passed?

Zack O’Malley Greenburg
No. Unfortunately, I never got to interview him before he passed away. I didn’t even really start thinking about writing the book until a few years after that. My inspiration there really was just I was covering the business of his estate after his death, and just the numbers were insane. He was out earning every living musician. I think he’s earned, I think at this point it’s over $3 billion in his career, and half of it since he died. And I think I’m understating it, I’d have to go back and look at the exact numbers, but it’s nuts. And in fact, over the past decade he earned more than any living musician.

Clay:
Crazy.

Zack O’Malley Greenburg
It’s over $1 billion, it’s bonkers. And it got me thinking, to have that kind of financial success in death you must have done something right in life. And it was this counter-intuitive business narrative about MJ that really got me going and digging into it. I talked to Barry Gordy, and I talked to members of his family and everybody in-between, and I think one of the things that gets lost in all of the controversy surrounding MJ is that he really had this innate business sense which caused him to do things like buying the Beatles publishing catalog for $47.5 million in 1985, which his estate a couple of years ago cashed out $750 million, I think it was on that one.

Doctor Z:
Nice move there, yeah.

Zack O’Malley Greenburg
Yeah. So, he understood the benefits of ownership, the kind of stuff I’m talking about in A-List Angels now, he got that decades ago and really set himself up for future success. So, digging in and hearing how he developed his business acumen and explaining some of these stories I thought was just really surprising. And hearing anything about the ’80s music business is always pretty fun, record label guys like Walter Yetnikoff, and rockers like Jon Bon Jovi telling these stories of the wretched excess of it all, it was a really fascinating one to report.

Clay:
What’s your …

Doctor Z:
Well, just a second. While writing the book, did you ever feel the need, the urge to learn how to moonwalk? Or did you already know before you started this book?

Zack O’Malley Greenburg
I did. And I can’t do it. I’ve got very little rhythm.

Doctor Z:
Well, this is just the thing, if we ever cross paths, and if we have time, I will personally teach you the moonwalk.

Clay:
I think it’s worth you flying out there to Forbes to teach him.

Doctor Z:
I’ve taught many white dudes how to do it, so I know [crosstalk 00:48:14]. There’s a trick to it. You’ll be in good hands.

Clay:
Now Zack, I want to ask, when you’re sitting down to write a book like Michael Jackson Inc., what’s your process like? Blank sheet of paper, you’re sitting down, where are you sitting down? Are you sitting down? Maybe you’re standing up.

Doctor Z:
Maybe he’s trying to moonwalk, we don’t know.

Clay:
You have the idea, do you come up with the title and then the tables of contents? Do you write a paragraph a day? A chapter a day? What is your process? Because your books are magical, my man.

Zack O’Malley Greenburg
Oh, thank you. Yeah, I would say that it starts with an outline, and I’ve learned that shorter outlines are better because it changes a lot over time. And really, to me, it’s like you tell 10 or 15 stories, and within those stories are embedded other stories. The big stories are the chapters, and then it’s like Russian nesting dolls of other stories inside them. And if you think about it that way, it’s a lot less intimidating than thinking, “I have to write 75,000 words.”

Zack O’Malley Greenburg
And especially coming from the magazine world, the idea of writing a magazine feature isn’t so intimidating. Just doing it 15 times, it can be a little bit of a grind. But as long as you’ve got proper support and take care of yourself, it’s not too arduous.

Clay:
Where are you writing the book? Are you in your …

Zack O’Malley Greenburg
It can be kind of arduous, what am I talking about? It can take over your life and your mind.

Clay:
Are you writing this in your house?

Zack O’Malley Greenburg
Right now I feel good about it.

Clay:
Do you do travel? Do you travel when you write? Do you write in your house? Do you have an apartment? Where are you when you’re writing?

Zack O’Malley Greenburg
My wife and I live in upper Manhattan and we have a little office, so I sit there and I like to look out the window and write. I tend to write best late at night. I write on the road, I wrote on planes, I write on the beach, wherever we are.

Clay:
Do you write with a pen?

Zack O’Malley Greenburg
With a what?

Clay:
Do you write with a pen or with a computer?

Zack O’Malley Greenburg
A computer, yeah. If I can possibly avoid the physical implements of writing, I tend to. Nobody can read my handwriting.

Clay:
Do you like to type using Google Sheets or a Google Doc? Or do you like to use Word? Or do you have a certain program you like yo use?

Zack O’Malley Greenburg
I tend to use Word, and then I keep my doc in a Dropbox, just to make sure nothing happens to it. But keep it simple, no elaborate book writing software here.

Clay:
How do you know when you’re done? When you’ve been working on this thing for a year, how do you know, “Okay, I’ve just got to change this, change that.” When do you call off the change police and you say, “Change police, go away, we’re doing changing here.” When do you say it’s done?

Zack O’Malley Greenburg
Well, I think oftentimes it’s more of a matter of when my editor says it’s due, and then I stop tinkering with it.

Clay:
I just want you to know, I’m not just saying this, you are my favorite living author. Napoleon Hill was my favorite …

Zack O’Malley Greenburg
Oh, thank you.

Clay:
… author who’s not alive, and so if he were alive I would have to say you’re my second favorite, which is a lot like losing the Super Bowl, I know, but the same thing. You’re really good, I love your stuff. The Jay-Z book, such a page turner, Michael Jackson Inc., I mean, whenever my wife and I go on vacations I almost want to shoot you a text and say, “Hurry up and write another book because I’ve got to go on vacation, I want to read something.” It’s great stuff, dude. I’m telling you. I love it. It’s just so, so good.

Clay:
If you’re out there and you have a functional mind and access to 20 bucks, go buy A-List Angels: How a Band of Actors, Artists, Athletes Hacked Silicon Valley. If you’re into Silicon Valley, you’re into apps, you’re into huge companies, you’re into celebrities, you’re into actors, if you’re into just the planet Earth you’re going to love this book.

Clay:
And Zack, I know you’re going to love our guest we have, he’s going to interrogate you with one final question here, I believe. Charles Colaw, he and his wife started a gym called ColawFitness.com, and should you ever meander to the Mid-West, it’s like a Planet Fitness meets Chick-Fil-A, is how I would describe it, and they started in a $115,000 house in Bartlesville, Oklahoma, which I realize in Manhattan $115,000 would get you a closet. But they started their business in their home, and they’ve grown it into several big box gyms, and now he’s on the show, and he’s prepared to paint you into a corner with a gotcha question that only the good folks in the political media, that they would appreciate it. So here we go, Charles, what have you got?

Charles Colaw:
Hey there. I’m going to go ahead and connect with you on this. As far as a question for you, we are a company that’s growing into multiple states, and you talked about these A-List Angels, which are basically these actors that invest into these companies that are up-and-coming through, one, probably their money that they’re putting in and also, two, their notoriety in the community, or what clout they have. So, I guess my question for you is: with that type of take on it, somebody like me who would then … How does that come together with a company and meeting with somebody that’s a celebrity that does that? If that would possibly help our company? [crosstalk 00:53:41]

Clay:
So, how does a guy like you connect with celebrities like the people in his book, A-List Angels? How does that happen there, Zack?

Zack O’Malley Greenburg
It’s a great question. I think that’s one of the things, one of the pieces that remain to be built in this whole world is the connectors, the people who connect entertainers with entrepreneurs. And I think, in a lot of cases, it’s surprisingly easy to get in touch with a lot of the entertainers. I mean, obviously not if we’re talking Beyonce or something. But I think the main thing is figuring out what kind of an entertainer makes sense as far as teaming up with your business. Generally, somebody with a local connection, with a passion for the thing that you’re doing or making, they rely on logical options.

Zack O’Malley Greenburg
I think you’d be surprised, especially down in the mid-range of some of these characters how easy it is to contact them, and especially the ones who are in California who are already linked up with the Hollywood, Silicon Valley information, investment super highway. There really is an appetite for them to be investing and it’s just a matter of putting opportunities in front of them.

Zack O’Malley Greenburg
It’s amazing sometimes, I do this a lot as a reporter when I’m trying to track down artists, but how many of these acts will have on their Twitter page or on their website a direct email, or a direct email for their manager, or something like that to start the conversation and try to get something done.

Clay:
Chip and Joanna need to invest in your company. That’s who needs to invest in Colaw Fitness. It’s fitness meets Chick-Fil-A, I’m telling you, that’s …

Doctor Z:
No, Arnold Schwarzenegger. [crosstalk 00:55:32]. “I go to pump it up a little bit.”

Clay:
“Zack O’Malley’s gym, he pumps it up. Look like Zack O’Malley.”

Doctor Z:
“We pumped the other day.”

Clay:
Zack O’Malley, are you going to invest in a gym, is that what I hear here?

Doctor Z:
Yeah, there you go.

Clay:
I sensed that?

Zack O’Malley Greenburg
You’ll have to talk to my business manager.

Clay:
Nice.

Doctor Z:
IE. his wife.

Clay:
Final question, I’ll let you get back to what you’re doing there. You’ve got the mic, and before you drop the mic, my friend, you can say anything you want to say to the Thrive Nation. I’ve told them that they should buy the A-List Angels, obviously I haven’t gone as far as threatening them. [crosstalk 00:56:03] Some have suggested that we should threaten the Thrive Nation, all half a million of them, some people have said that.

Doctor Z:
We would not do that. Maybe a passive aggressive move, which is kind of your move.

Clay:
We would not attack your intelligence for not buying the A-List Angels book, we would not do that. But some would.

Doctor Z:
Not us.

Clay:
Zack, what was your final thing you’d like to say to the Thrive Nation?

Zack O’Malley Greenburg
I mean, I think one of the things, reading this book a lot of people become away with this, “Hey, I’m not Ashton Kutcher. How can I a leg up in some of these things?” And I think a lot of people have situations like that right in front of their noses and they don’t even really pay it enough attention. So many people I know, smart, upwardly mobile people, are not maxing out their 401K matches at work. If your employer does the standard thing of matching up to 3% contribution on your 401K, then you are throwing away money. You are throwing away ownership in a way that a lot of these entertainers and athletes were throwing away these opportunities before they started doing what I describe in A-List Angels.

Zack O’Malley Greenburg
So, go on your Fidelity thing and make sure that you’re getting the most out of that because there’s free money sitting around for you a lot of times in programs like that. And there are a whole bunch of different arenas, examples of stuff like that where people just don’t take the thing that’s right in front of them, and it could be really helpful, I think, for everybody’s financial future going forward.

Clay:
Zack, you are just a man who drops so many knowledge bombs per capita, your books are awesome, and we greatly appreciate you taking some time and investing it in our listeners.

Zack O’Malley Greenburg
All right. Well, thank you for having me on.

Clay:
You take care.

Clay:
And now, without any further ado … Three, two, one, boom!