For the store's app, Hussle met Iddris Sandu, a 20 year-old engineer, at Starbucks. “My daughter tells me to pull into Starbucks on the way to the movie," he relates. “I'm thinking they got snacks at the movie theater, but she's telling me she wants a Unicorn Frap, so I'm like, 'OK, fine.' [There] we met Iddris.”
Hussle and Sandu randomly struck up conversation about the store and the idea to fuse technology into the fabric of the shop, and three weeks later, he built the app. "It was crazy and by chance, but I don't think it was on accident," notes Hussle, who later named Sandu chief technology officer.
On Friday (June 16), Billboard got a sneak peek of the store, and talked to Hussle more about the smart store concept as well as his plans as an entrepreneur. Check it out below.
How did you come up with the concept of a smart store?
The concept of the store was something that was a long time coming. Last time I spoke to Billboard was for Proud 2 Pay. I was talking about that being a part of the bigger picture of being vertically integrated and be able to deliver products to a retail network that we own and control the experience of, and curate an experience in. So that was the initial seed for the idea.
We had a ton of different takes of how we wanted to execute it. We wanted to use a model like Starbucks where there's an experience in it. It's free WiFi, you can come and get some work done. It's jazz in the background. While you're sitting down, there's a ton of products around you that cater to the most likely patron that's going to walk into a Starbucks -- a college student, a professional who just got off work. The model for this is having that curated experience.
The idea will continue to evolve and revolve around content in a physical space as opposed to being delivered to a digital space. And that's the two main innovations: I believe that the value proposition is that there's no compromise to the content and it's also a curated experience.
How does a concept like this help your bottom line as an artist?
I wanted to open up a brick and mortar [with] physical retail in this area, and thought, "What's the trajectory and likelihood of being successful as e-commerce grows?" And it brought me to understanding retail. And when I focus on retail, anything that's not experiential driven, I think you're seeing it crumble right now. I think you're seeing Blockbuster getting shut down by Netflix. You see Tower Records get shut down because of iTunes. Because the digital versions offer the same thing the physical versions offer, except a line or a parking ticket. All the conveniences of being in the real world.
So in order for me to keep the value of the retail brick and mortar, it has to be a unique experience. So the whole team sat with that for a couple years ,and we were just trying to think, "How can we create the organic experience?" I look at Supreme and it's a skate brand. They have a half-pipe in the middle of their store, and while you're shopping, you might hear some trucks scraping the rail, because they're back there skating. "So I'm just thinking, 'What's the essence of the brand? What's the core of the brand?'"
And that led us to a few different options of what we wanted to do. We plan on scaling this and doing this in the top 10 markets of the United States. Each one will have a different experiential driven strategy. So this one is the smartstore -- the world's first smartstore. The one we are doing in other markets will still be branded as a smartstore but the reason will be different. They'll be a different reason in the San Francisco store. The philosophy of this retail space is to be an experience, and while you're in the process of the experience, you're surrounded by branded products.
The goal is to be an urban Sanrio -- Sanrio is a five billion dollar company. These are content characters that exist in the screen first and real world products were created around it. Disney is the same example. All of these cartoon characters existed first as content. Disneyland is the world and it's surrounded by products. We haven't seen brands that have been created through content. Just like Sanrio, just like Disney, just like Knotts, whichever amusement parks that owns the characters to Snoopy. We haven't seen that in hip-hop. We haven't seen someone create a real world place where the brand lives, and there's products.
?We feel like what's happening with music is that the cash register is at the wrong part of the process. It's still on music. Music is abundant. Once things are abundant, they're free. There's no tangible way to control it. Scarcity is what the value is from. If it's abundant, then there's no scarcity model and you can't charge for it. Music is free -- it's in the cloud. Services are there to curate all of the music, that's what we are paying for -- but the music is intangible.
So we move the cash register to products. Tangible products that can't be a victim to the digital revolution. That's the whole basis of what we're doing. You can't bootleg a hat yet. Might have digital clothes coming soon, but not right now. You can't bootleg a Proud 2 Pay version of the CD. You can't bootleg an authentic signed picture. You can't bootleg a sweater, jumpsuit, lighter, ash tray. And we are going to evolve the product line. We are going to keep the focus narrow but be consistent in products.
What you're doing seems to be completely a standalone brand aside from your music?
I want go on record to say I want to be the first artist in hip-hop to be vertically integrated. This is a part of that long-term vision. We want to be able to deliver our products that we own 100 percent to a retail experience we curate and control in an environment that is strategically designed to create an experience that's engineered. This is the first step in that.
With that in mind, part of that strategy is having a Proud 2 Pay subsection of my fanbase. The goal is to super serve the most loyal parts of that fanbase and cater a campaign to them because I believe it's about them. I believe it's about having really passionate fans that go spread the message, as opposed to having a ton of generic fans with no emotional connection that's just all here for a second, and you see a ton of people come and go.
With my core group that's Proud 2 Pay, imagine I got new music coming out. I got 10 retail stores open in 10 major markets in the country. I got a Proud 2 Pay section of my fanbase that's going to buy direct every time. Some people are so programmed to iTunes they don't care about Proud 2 Pay, they're going to buy on iTunes -- that's cool. They going to buy from Best Buy because it's around the corner from their house, and they been going there for the last 6 years to buy their music, they're not going to stop. We're not going to pull it from there.
I'm talking about the fans who are going to listen to my word and want to go direct. If I drop 1,000 units to my L.A. store at $100 each, I'd make $100,000 here. Drop 1,000 units to my New York Soho Store, 1,000 units to my Georgetown, DC Store, 1000 units to my San Francisco store, and we alert everybody in the fan base that the 10 stores is stocked with only 1,000 copies in each of them at $100 each, we'll make a million dollars off the grid just through fans. We did last time with less of a movement and exposure. We sold 1,000 units in one day and it was an uncurated experience, a pop-up shop.
How does the app factor in?
This is where [engineer] Iddris' app came into place. Imagine we drop a shirt. I'm a content creator, but the platform I release content to is changing. It was YouTube, Twitter, it's Snapchat now. I got to promote content on all these different platforms, but I don't own those platforms. My content also becomes compromised because it enters into the cloud. So imagine I could deliver content to my store where I say the new documentary is available with the "Run a lap" shirt. It's $60. Download the app and buy the shirt.
It's streaming from the image and the music isn't on the cloud, it's on the actual image so you can't take the music with you, it's just streaming from the location. You can figure out how to excite the fans with available content.
To have one million views online, how many of them will mobilize in real life? Everybody ain't here in L.A. But to have a piece of content that gets one million views, it's a measurement of interest. The higher the views, the more interest we [have]. So more compelling the content, the more you can get somebody to come experience it. So when you got videos, movies, look at the model for exclusivity. They're paying millions and millions of dollars for exclusivity. That shows you the value of first. So we are going to mobilize all the value to our location.
[Walks over to a shirt to use the app on] For example, this is a song with French Montana and Ty Dolla Sign that's not out. It's not available anywhere but here, so I can promote that. We're going to do a video and it will only be available here. So we will get the benefit of the production. All of the money that goes into filming the video, recording the sessions, paying for production, there's retail benefiting from that. They're not invested at all but they get a percentage of the transaction just by being a middle man, for lack of an independent retail infrastructure.
We're getting taxed. iTunes take 33 percent off every 99 cents. Because you're telling your fans to buy it on iTunes, and you're giving them a third of a sale. Don't you know to be one third of a partner with a label, how much work you got to do to go in there and say I want to split profit with you -- one third? You can't just ask for that. So you're giving one third to retail, which I think is an unfair model that's leveraged off a position that they don't hold to me anymore.
This is us trying to disrupt retail, create a theme park for the brand. This is us trying to create a retail network to become vertically integrated. This is us trying to super serve the core with an upgraded experience. This is us trying to fuse hip-hop, fashion, and tech... We believe that's what the Marathon store is. It's an immature concept. It hasn't evolved to its fullest form yet. But I think we're in the process of seeing technology integrated with everything, become apart of the world. So I think that we're just putting our chips on experience. We think this is where retail is going. So we want to be one of the leaders.