Hip-hop’s powerhouse label deserves praise for executing on a tremendous opportunity.



The Top Dawg Entertainment roster (from left): Isaiah Rashad, SZA, Kendrick Lamar, SchoolBoy Q, Jay Rock, Ab Soul (via Dominique Nwoko)

Independent record label Top Dawg Entertainment (TDE) is hitting all cylinders. Its lead artists, Kendrick Lamar, SZA, and ScHoolboy Q top the charts. Rising stars like Jay Rock, Isaiah Rashad, and Ab-Soul have formed their own lanes. TDE, led by CEO Anthony “Top Dawg” Tiffith, has been widely celebrated in the media. Outlets have been on a quest to explain what sets the 14-year-old label apart from its peers. Unfortunately, these stories often do a disservice to TDE—and the culture—by not focusing on the important takeaways.

Here’s an example from Revolt in June 2018:

Not to throw any shade, but unlike [Maybach Music Group] who have consistently been thriving on a mid-major level, Dreamville who have been patiently waiting for their artists to pop, or even OVO which rides on the coattails of R&B, TDE has prospered past all thoughts of potential and competition. They have become 2018’s Golden State Warriors in the sense that the entire label’s talent is seamlessly in every conversation as to who, and which label, owns the throne. It’s almost unfair.

Top Dawg and his team deserve credit, but discounting MMG, Dreamville, and OVO because of current success does not pinpoint the factors that make TDE different. Here’s a similar take from DJBooth in June 2017:

I hope labels on the rise are taking note of this slow and steady approach, realizing that TDE’s success comes not from isolated creation but through building a family unit that grows together. … [Top Dawg] didn’t get lucky with Kendrick Lamar or any of his artists, he just believed they could be great and gave them the best opportunity to become what he envisioned.

Sure, labels should take note, but following TDE’s methods to a tee will not ensure the same success. The likelihood of TDE or any other label’s artists breaking out and having concurrent success is more chance than the industry wants to admit. The better story, and where TDE truly shines, is how well it has executed on opportunities once its artists are successful.

TDE is following in the footsteps of Roc Nation—a lasting company that can make moves after its current artists stop making music.

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Survivorship bias in hip-hop

In 2006, Brooklyn rapper Papoose was getting all the mixtape hype. Hip-hop fans—especially from the tri-state area—claimed he was the next “king of New York”. Flipmode Entertainment, home to Busta Rhymes, won the prize and secured Papoose to a $1.5 million deal under the label’s parent company, Jive Records. The deal was seen as a breath of fresh air for Flipmode, which despite its handful of artists, had only seen Busta Rhymes achieve sustained success.

Despite the hard work put in by Papoose and his hype man DJ Kay Slay, things didn’t pan out. Jive and Papoose ended their deal in 2007 because of “creative differences”. By 2011, Jive Records had folded into RCA, and Flipmode had reincarnated to Conglomerate, a smaller independent label currently run by Busta. And today, Papoose is most well-known because of his wife, fellow New York rapper, Remy Ma.

In hip-hop, there have been many more failures than successes. But we are more likely to hear about Kendrick and TDE than Papoose and Flipmode. And because we often don’t hear about those that fail, it’s harder to compare the level of effort and strategic moves made. This survivorship bias creates a tendency to look at successes more than failures, and make false conclusions about how a record label like TDE became successful.

Because there’s only been a handful of noteworthy hip-hop record labels, this bias also leads to lazy comparisons and false equivalencies. In 2013, GQ wrote a controversial feature on Kendrick Lamar and TDE, comparing the label and Top Dawg to the infamous Death Row Records and its CEO Suge Knight. Here’s an excerpt:

“Twenty minutes later, Anthony ‘Top Dawg’ Tiffith, basically TDE’s Suge Knight, asked if I had had a fun day. I said that I had and that I was surprised by their discipline. ‘You guys seem so calm,’ I said.”

The only things that Suge Knight has in common with Top Dawg are that both labels were based in the Los Angeles area and feature high profile rappers of their time. A better comparison is a CEO that has management or A&R (artists & repertoire: talent scouting and artist development) principles aligned with TDE’s current strategy. Instead, Top Dawg still gets compared to a label-head who once made an employee drink urine.

It’s easy to make loose comparisons and highlight hard work alone as the reason for success. It’s harder to dig deeper and identify the true reasons behind that success.

Relying on homerun hits

Top Dawg and Kendrick Lamar (via Billboard)

The coverage on TDE’s collective success picked up in June 2017 when SZA dropped Ctrl—which almost never happened. Just seven months before Ctrl, SZA nearly quit music, citing frustrations after nearly five years of working closely with TDE.

In reality, SZA’s decision to stay in music should not impact TDE’s ability to identify top talent, but it does in the public eye. Before her breakout, only Kendrick and ScHoolboy Q had experienced mainstream success. The label’s seven other artists—four of whom joined in the past two years—have generated buzz among hip-hop heads, but not with mainstream fans. The label was already getting praise before Ctrl, but SZA decision to stay cemented the perception of TDE’s legacy.

The label’s journey to glory is similar to a high-profile venture capital firm. When a firm makes one or two initial homerun investments, it creates a lasting perception of prosperity over its peers. But a recent study on venture capital from Harvard and Yale researchers concluded that the likelihood of “homerun hits” is more chance than skill. Here’s an excerpt from the study:

“Our results suggest that the early success of VC firms depends almost entirely on having been ‘in the right place at the right time.’”

The success metrics are similar in both fields. In venture capital, less than 10% of companies invested in become homeruns—even for later-stage funds. And according to Billboard, the ratio of commercial success to failure in the A&R business is 1 in 10 (but that’s being generous, frankly).

Kendrick has been a homerun-hitting, Pulitzer-prize winning, grand slam. SZA and Q are both Grammy-nominated homeruns that have had varying levels of success. The rest of the label’s artists are either comfortable chilling on second base, or waiting for their chance at bat.

The real achievement

It might have been a coincidence that SZA’s breakout happened just two months after Kendrick released DAMN. in April 2017. But it’s not a coincidence that TDE has made power moves since those albums dropped. Top Dawg wisely grasped a window of opportunity to set TDE up for the future to extend the company’s platform.

Similarly, successful venture capital firms get more opportunities once initial success is demonstrated. Here’s another takeaway from the same study:

“Although these early differences in performance appear to depend on being in the right place at the right time, they become self-reinforcing as entrepreneurs and others interpret them as evidence of differences in quality, giving successful VC firms preferential access to terms and in investments.”

For TDE, that “preferential access” is getting to produce the soundtrack for Black Panther, the ninth-highest grossing movie of all time. Since TDE has established “TDE Films” that soundtrack is just the first step. “We’re always working on new goals at TDE,” Top Dawg said to Billboard. “So teaming up with Disney, Marvel Studios and the Black Panther film makes perfect sense.” TDE has also hired more producers on its staff to extend the type of platforms that its artists can share their stories on.

TDE has also extended to sports as other hip-hop labels have. It signed top NFL draft picks to its new sports division. TDE is following in the footsteps of Roc Nation—a lasting company that can make moves after its current artists stop making music.

This summer, TDE completed a 30-city nationwide TDE Championship Tour with the entire label. In an era where most label-wide tours are reunions of older labels, its sends a strong message of how the label is positioning itself.

This is where the comparisons to other labels are most effective. Conversely, Drake’s OVO Sound had its brief moment in 2014 when the Toronto rapper told us that OVO “already had Spring 2015 poppin’.” That year, PartyNextDoor, Majiid Jordan, and ILoveMakonnen were all dropping new music. OVO already had its annual festival and clothing line. The label expanded to a radio show on Beats 1, but not much more. Most of the other business moves to date, such as Drake’s Virginia Black whiskey, have come from Drake himself.

Dreamville, J. Cole’s label, has worked as hard as anyone to develop a loyal fanbase. The label was ready to make a move two weeks ago with the inaugural Dreamville Festival, but it was postponed because of Hurricane Florence. Additionally, a lot of the label’s external work has focused on philanthropy through the Dreamville Foundation. Even the top labels have slightly different objectives with their platforms.

Don’t be surprised if TDE already has an undisclosed deal to produce the Black Panther 2 soundtrack. And don’t be surprised if they sign an upcoming deal to produce documentaries and other content with Netflix, Hulu, or another streaming companies. TDE shows no signs of slowing down.

Most labels don’t get this opportunity. Now that Top Dawg has claimed his stake in hip-hop, at least there’s another successful CEO for rising labels to be compared to instead of Suge Knight.

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Trapital is written by Dan Runcie: info [at] trapital.co