The Pomp Podcast - #1255 Emma Hinchliffe on Kim Kardashian’s Secret Plan To Dominate Wall Street

Starting point is 00:00:00 What's up, everyone? This is Anthony Pompliano. Many of you know me as Pomp. You're listening to the Pomp Podcast, which is my effort to find the most interesting people in the world and sit with them for hours while I ask questions in an effort to learn. So it would mean the world to me if you would subscribe to the show on your favorite audio platform, watch episodes on YouTube, and tell your friends and family about the podcast. My goal is to help millions learn from the world's most interesting people. So let's get into today's episode. Today's conversation is with Emma Hinchcliffe. She's a senior writer at Fortune, where she covers women in business. She also is the author of the five-time-a-week newsletter called Broadsheet. Emma recently wrote an article

Starting point is 00:00:42 about Kim Kardashian's foray into private equity. The article is titled, Kim Kardashian Turned Skims Into a $4 Billion Company. She Wants to Build the Next Generation of Unicorns with Sky Partners, her new private equity firm. In this conversation, Emma and I break down why Kim Kardashian's going into the private equity sector. Will it work? What are the advantages and disadvantages? What are the biggest risks? And how did Kim and Jay Sammons, a legend from Carlisle, get partnered up? This is a great episode. I learned a lot. And Kim Kardashian is not someone that I would bet against. Here is my conversation with Emma Hinchcliffe. Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the

Starting point is 00:01:28 opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guest as a specific inducement to make a particular investment or follow a particular strategy, but only as an expression of his personal opinion. This podcast is for informational purposes only. Today's episode is brought to you by Trust and Will. I've gone through a number of different changes in my life over the last few years. I got married, I had a kid, and I had to start thinking about how could I ensure that my wife and my child would be okay if anything ever happened to me. That's where trust, wills, and estate planning come into play. Now, most people, what they do is they get introduced to a friend, an uncle, or someone in their local community. It tends to be someone

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Starting point is 00:03:43 and we think it's pretty cool. This one is something that keeps me informed on a daily basis, so you should check them out at VeloWaitlist.com. That's V-E-L-O Waitlist.com. All right, guys, I'm here with Emma. Emma, I thought a great place to start this conversation is Kim Kardashian is worth estimated $1.5, $1.7 billion. I think most people remember her as an influencer, the reality TV star.

Starting point is 00:04:09 They know that she's built companies, but now she's starting a private equity firm. To me, the most interesting part about the private equity firm is that she convinced somebody who is very, very serious, very experienced when it comes to private equity and Jay Sammons to join her. How did she do that? Well, what's interesting is actually he convinced her. Jay and Kim have known each other for a decade, and he has been following her career, and they've turned to each other for business advice. And he had this insight, which is Kim has this huge platform. She's built these businesses. I'm a great investor in the consumer space.

Starting point is 00:04:43 If we combine those, we could really do something big. And so he pitched Kim and her mother and manager, Chris Jenner, on starting a private equity firm. And over several conversations, they decided to actually do it and get it off the ground. Where's the name Sky come from? Well, it does have the two Ks in the middle. So I believe that is, you know, Kim Kardashian, her skincare brand is now called Skin by Kim. So it's S-K-K-N. So kind of the same thing. Got it. Now, you've written the first long form profile on Sky Partners.

Starting point is 00:05:15 What are some of the takeaways that maybe people who haven't yet read the profile or haven't really looked into this so much that caught you by surprise? Yeah, something that really resonated with me is I think when Kim announced that she was starting a private equity firm about a year ago, I think a lot of people kind of perked up and were interested or maybe surprised to hear that. But when you take a look back at Kim's career, you can really start to understand how all of what she's done really does give her the expertise and skill set and experience to be able to do something like this. You know, Kim is just really skilled at understanding the modern consumer. And so whether that's building a consumer business like she has with Skims or just understanding how consumers interact with brands and with influencers and with companies today on all the various social platforms we have, she understands how to reach people and how to understand what they want. And so when you look back at her career, she's had so many business deals, every type of licensing deals, royalty deals, repping brands, repping brands that are really elite and in luxury fashion. and that earlier in her career, her first deals were with Skechers and the liquor brand Midori

Starting point is 00:06:21 Sour. So she's seen it all and that is really influencing how she is approaching what kind of investor she wants to be. So she built a $4 billion company herself, but a lot of that was built off of her influence, her distribution. These companies, what is the strategy? Is it companies that are aligned with her audience and her platform and she's going to go and she's going to buy them and then she'll put them through her distribution? Or is this more of a traditional private equity play where they're just going to go buy good companies, regardless of whether they fit, you know, Kim's distribution or not, and then they'll scale them up and then sell them to another private equity firm in three to five years? This is, you know, pieces of that traditional

Starting point is 00:06:59 private equity play. What Kim and Jay has said is they are not building a portfolio of businesses that look like Kim's businesses. You know, what Kim said to me is that a company isn't going to start working with her fund and all of a sudden they're branded all nude and beige like a Kim branded company, referring to Skims and the aesthetic of her apparel brand. So they're looking to invest in control and active minority investments in high growth consumer businesses, that they can really add fuel to the fire and help reach that next level of success. They're looking at media and food and beverage and hospitality, in addition to fashion and beauty, where people might expect Kim to play. So there's a lot they can do here. And it's kind of a broader

Starting point is 00:07:39 range than people might think off the bat when they hear about this. Now, when we think about her previous businesses, she's been very, very involved in them. If they go and they buy a majority stake in one of these companies, do we expect Kim Kardashian to be CEO, kind of heavily involved, or are they going to build out an entire team other than just Kim and Jay? And this will look very similarly mirrored to a traditional private equity firm where you may have people focus on specific verticals. you'll be dropping in kind of higher guns as CEO, COOs, and other executives?

Starting point is 00:08:11 Yeah, something that Kim says is really important to her is she really wants to invest in businesses that are pretty founder driven. She wants the founder to ideally still be involved or for the business at least to like really still have that DNA of the founder if they've recently left. And so I think, you know, it's private equity. It's definitely a hands-on approach to investing. But they do say that they want to keep that founder DNA and not totally just drop in new teams to scale got it and now jay's background uh you mentioned that he was part of or led the deal to do the supreme uh deal at carlisle he also was involved in the beats by dre um transaction i mean he has been doing a ton of stuff in and around culture uh sports

Starting point is 00:08:55 consumer is this something that is like crazy to his colleagues are they just like why are you going and doing this with Kim Kardashian? Or is it more of people being like, damn, that's a really good idea. I wish I had thought of that and had that relationship to go capitalize on it. That was one of the questions I had for him. And, you know, as he says, it's more of the latter. I think initially there are obviously probably some people who are like, whoa, what are you doing? Jay is very well respected in the field and people, you know, look at the kinds of deals he's done and are curious why this would be his next move. But I think people are also understand that he had a really unique insight

Starting point is 00:09:30 and they're able to really take advantage of the unique relationship that Kim and Jay have. And Sky has so far hired eight people. It's hired from Blackstone and Elk Hatterton and Premiera. It's brought on Angela Ahrens, the former Apple SVP and Burberry CEO who's super well-respected in retail and business. So besides Jay, other really successful business folks

Starting point is 00:09:52 from private equity and beyond are agreeing to work on this idea as well. Now, the check sizes are like $100 to $500 million. And so that suggests that these are not startups, right? And I think even at one point you talked to Kim about she could have done some venture capital stuff, but she wants to be much more involved, hands-on, more of the private equity style. How many of these companies are out there for them to look at? If they're going to make 8 to 12 investments over the next 4 or 5 years, are there enough consumer companies that are multi-billion dollars in valuation to actually go and potentially look at for investment? Yeah, I mean, hopefully they say they've been getting a lot of inbound interest since

Starting point is 00:10:32 announcing the fund and some from brands that are like more mature than you might expect, not just startups, but brands that are probably the same age as some of Kim's companies and have come up at the same time and are open to taking on this kind of capital because they see the value that Jay, Kim and Sky could bring to their businesses. So, I mean, we'll see what happens. But I mean, there are a lot of successful consumer brands out there. And when you're looking at the number of categories that they're looking at, they're defining consumer really broadly. You know, they're not in a rush. It's been a year and they haven't closed that first deal yet.

Starting point is 00:11:06 So I think they will be able to get to that number over the next few years. You've probably spent more time talking to them and looking into this than most people. Well, definitely most people, but maybe even more than almost anyone else. If it doesn't work, what do you think is like the biggest reason why? Is there a risk that stands out to you as to why something like this would not work, even though you've got capital, you've got Jay with, you know, a great kind of investing track record, you've got Kim, both operational and the influencer, like, what are the reasons why it couldn't work? Yeah, I mean, that's a really interesting question. I think first I would say, obviously, it's a tricky market environment. So they have that up against the folks who I talk to in the industry say that, you know, in this kind of market fundraising for emerging for emerging managers, which Sky would be considered as a first time fund is difficult.

Starting point is 00:11:55 But that kind of the cream of the crop, the elite are able to able to overcome that. And that seems to be what's happening with Sky. And then on the other side, there's also the factor of Kim is a celebrity who her day to day can be influenced by tabloid news and crazy events and all the attention on her good and bad. So, you know, there's always the chance that something could happen that could affect the way that Sky is perceived in the world. But, you know, Kim has survived a lot in her 15 plus years of fame. So, you know, she does a pretty good job managing it. So hopefully that would continue. Is her mom slash manager, Kris Jenner, is she involved at all? Or is she simply happy for Kim to go do this and kind of gave her blessing, but not actually involved in the firm itself?

Starting point is 00:12:41 Yeah, Kris Jenner is involved in Sky itself. She is a senior advisor for the fund and an investor as well as Kim and Jay are also personal investors in the fund. So she was in the mix right from the beginning when Jay had the idea he was pitching both Kim and Kris Jenner. So she is in the mix. And I think that's another thing the firm has going for it is Kris has a really unique expertise as a businesswoman today. You know, she's built her family into this pinnacle of American success. And so that will be another advantage for Sky. There are people who will hear you say that and roll their eyes, but it is true. I think that she now has, what, two or three kids who are billionaires and 20 years ago, no one knew who they were. I know. And, you know, whether you think it's good or bad for society, you know, it's hard to argue against the fact that they are ultimately extremely successful.

Starting point is 00:13:30 Yeah. Is this part of a bigger trend where, you know, we saw let's call reality television or kind of the influencer world. Then they started to say, hey, well, we can do brand deals and advertising. And then they started to say, hey, we could do our own products. And, you know, obviously, Kim Kardashian, some of her sisters are great examples of what could be built there with these like influencer led consumer companies. Is the next step for all of these people to then get into the finance game and actually try to manage very large pools of capital and ultimately think that's like the holy grail of using your influence to monetize? Yeah, that's a really interesting question. And I mean, I think over the past five, 10 years, we've certainly seen a huge increase in celebrity interest in investing in general. You know, a lot of that has been in venture capital. A lot of that has been, you know, angel investing or joining a startup with some sort of kind of vanity title as a representative for the brand.

Starting point is 00:14:22 But there are also, of course, celebrities who have gone all in, you know, Serena Williams and Serena Ventures. Ashton Kutcher is one of the first to this space. What Kim's doing with Sky is a little unique because it's private equity, not venture capital. And the kind of scale of the commitment is a little different. You know, Sky is raising most likely a billion dollar fund. Private equity requires a year's long commitment. It's not just, you know, writing a check and kind of keeping an eye out and hoping for the best a couple of years down the line. It's really being in the weeds, in the nitty gritty, in the years ahead. So, you know, I think it's hard for anyone with a day job to make that kind of commitment, whether that job is in Hollywood or not.

Starting point is 00:15:01 You know, you don't see a lot of folks who do something else also doing private equity. So Kim's in a bit of a unique situation, given her status in culture and the influence she has. But who knows? Maybe someone else comes along who sees the success of Sky if they are successful and decides to take a cue from their book. Yeah, that makes a ton of sense. Were you able to talk to any investors in the fund other than kind of the principals and advisors or get any sense from the institutional world, whether people were attracted to this or, you know, some of the things that are nuanced about it could be a turnoff? Yeah, you know, I spoke to not investors in the fund, not LPs, but to experts quoted in the story. And, you know, both of them really saw the potential of this idea and, you know, gave some insight into the position it has in the industry in general.

Starting point is 00:15:51 So investors in the space are, you know, really kind of understanding that, you know, this idea is not just kind of a celebrity vanity play. It has some real potential. Yeah. And when you look at the way that asset management firms today market themselves, position themselves, it's still pretty stuffy, right? I mean, yeah, there's a couple that maybe have broken through from a branding perspective. When Kim Kardashian does it, I'm assuming it's not going to be pretty stuffy. Like she's got a style, she's got an understanding of culture, she's got an ability to communicate using completely new tools. Like she doesn't need to go on television to get her message out. She can go right to her Instagram account or any of the other platforms. Do you see the firm innovating or kind of doing things differently when it comes to,

Starting point is 00:16:37 you know, the business practices and kind of taking a lesson from Kim and just saying, hey, let's port this over. And maybe it even has an impact on the asset management space where people start to replicate some of the things that they do. Yeah, it's interesting. I think they would definitely say they want to do things a little differently. One thing that stands out is that they say they do not want to be associated with private equities reputation as kind of a corporate raider that comes in and buys businesses that

Starting point is 00:17:00 are in trouble, lays people off, and does a total overhaul. They want to avoid that. And that kind of may sound like a little bit too good to be true. Can you really, truly, totally avoid that? The thing that's in their favor is that they do, through Kim, have access to really excellent deal flow. So there might be enough deals for them to pursue that don't fall into that category that they can avoid it. But if they come up with a better way of doing private equity, Kim told me that you don't

Starting point is 00:17:27 have to be that way and she doesn't want to be that way. So who knows if that could have any influence on the industry. Practices are pretty entrenched, but anything's possible. Yeah, that's awesome. Where can we send people to find you on the internet or read the story if they want to read the whole thing? Yes, please read the story on fortune.com. My full name is Emma Hinchcliffe, and you can subscribe to my newsletter, The Broadsheet, which covers women-led businesses five days a week via Fortune. And I'm on Instagram at Emma Hinchcliffe and Twitter at underscore Emma Hinchcliffe. Awesome.

Starting point is 00:17:57 Well, thank you so much for doing this. You did a fantastic job, and it's pretty cool to hear kind of the inner workings of what both Kim, Jay, and the rest of the people at Sky Partners are doing. So I appreciate you coming on, and we'll do it again in the future. Thank you so much, Anthony. Thanks for watching!

The Pomp Podcast - #1255 Emma Hinchliffe on Kim Kardashian’s Secret Plan To Dominate Wall Street

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