#1255 Emma Hinchliffe on Kim Kardashian’s Secret Plan To Dominate Wall Street

Emma Hinchliffe is a senior writer at Fortune, where she covers women in business. She also is the author of the 5-time a week newsletter called "Broadsheet." Emma recently wrote an article "Kim Kardashian turned Skims into a $4 billion company. She wants to build the next generation of unicorns with SKKY Partners, her new private equity firm." In this conversation, Emma breaks down why Kim Kardashian is going into the private equity sector, advantages & disadvantages, biggest risks, and how Kim & Jay Sammons got partnered up. ======================= Trust and Will has simplified the process of creating and managing your will or trust online. They leverage a data-driven, design-first approach and amazing customer support to help you protect your legacy from the comfort of your home starting at just $159. Sign up today for 10% off using ⁠⁠⁠⁠⁠⁠⁠https://trustandwill.com/pomp⁠⁠⁠⁠⁠⁠ ======================= Get Better Crypto Data: Do you want faster, easier crypto data? Sign up for Velo Data, a new product that we have been working on to solve this problem: ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠velowaitlist.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ======================= Pomp writes a daily letter to over 250,000+ investors about business, technology, and finance. He breaks down complex topics into easy-to-understand language while sharing opinions on various aspects of each industry. You can subscribe at https://pomp.substack.com/

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:02Anthony Pompliano?

  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 Hinchliffe. 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 about Kim Kardashian's foray into private equity.

• 0:45Anthony Pompliano?

  The article is titled, "Kim Kardashian Turns 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 Carlyle, 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.

• 1:20Speaker 01

  Anthony Pompliano runs Pomp Investments. All views of him and the guests on his podcast are solely their opinions and do not reflect the opinions of Pomp Investments. You should not treat any opinion expressed by Pomp or his guests 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.

• 1:44Anthony Pompliano?

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• 3:12Anthony Pompliano?

  Before we get into this episode, I also want to tell you about a brand new product called Velo. Velo is faster, easier crypto data. Everyone in the industry is always looking for, what's the price? What's going on on the exchanges? Where are assets flowing or not flowing? How is things like open interest and derivatives actually playing out in the market? Well, that's where Velo comes in. It's faster and easier crypto data. You can go to velowaitlist.com today. Myself and a couple of friends, we invested in the business, we're advising the founder, 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.

• 3:56Anthony Pompliano?

  Emma, I thought a great place to start this conversation is Kim Kardashian is worth estimated 1.5, 1.7 billion dollars. I think most people remember her as an influencer, the reality TV star. 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 in Jay Sammons to join her. How did she do that?

• 4:25Speaker 02

  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, you know, 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. If we combine those, we could really do something big. And so he pitched Kim and her mother and manager, Kris Jenner, on starting a private equity firm. And over several conversations, they decided to actually do it and get it off the ground.

• 4:56Anthony Pompliano?

  Where's the name Sky come from?

• 4:59Speaker 02

  Well, it does have the two K's in the middle. So I believe that is, you know, a Kim Kardashian pun. Her skincare brand is now called Skin by Kim. So it's S K K N. So kind of the same thing.

• 5:09Anthony Pompliano?

  Got it. Now you've written the first long form profile on Sky Partners. 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?

• 5:23Speaker 02

  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.

• 6:05Speaker 02

  And so when you look back at her career, she's had so many business deals, you know, every type licensing deals, royalty deals, repping brands, repping brands that are really elite and, you know, in luxury fashion. And that earlier in her career, her first deals were with Skechers and the liquor brand Midori Sour. So she's seen it all and that is really influencing how she is approaching, what kind of investor she wants to be.

• 6:28Anthony Pompliano?

  So she built a $4 billion company herself, but a lot of that was built off of her influence, her distribution. These companies, like, what is the strategy? Is it companies that are aligned with her, you know, 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?

• 6:56Speaker 02

  This is, you know, pieces of that traditional 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, you know, 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. And 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 range than people might

• 7:40Speaker 02

  think off the bat when they hear about this.

• 7:43Anthony Pompliano?

  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, you know, 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 CEOs, COOs, and other executives?

• 8:11Speaker 02

  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.

• 8:38Anthony Pompliano?

  Got it. And now Jay's background, you mentioned that he was part of or led the deal to do the Supreme deal at Carlisle. He also was involved in the Beats by Dre transaction. I mean, he has been doing a ton of stuff in and around culture, sports, 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?

• 9:09Speaker 02

  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, you know, he had a really unique insight and they're, they're able to really take advantage of the unique relationship that Kim and Jay have. And, you know, Sky has so far hired eight people. It's hired from Blackstone and El Catterton and Primera. It's brought on Angela Aron's, the former Apple SVP and Burberry CEO, who's super well respected in retail and business. So besides

• 9:49Speaker 02

  Jay, other really successful business folks from private equity and beyond are agreeing to work on this idea as well.

• 9:58Anthony Pompliano?

  Now, the check sizes are like 100 to 500 million dollars. 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 eight to 12 investments over the next four or five years, are there enough consumer companies that are multi-billion dollars in valuation to actually go and potentially look at for investment?

• 10:28Speaker 02

  Yeah, I mean, hopefully, they say they've been getting a lot of inbound interest since 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 are have come up at the same time and are, you know, 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. So I think they will be able to get to that number over the next few years.

• 11:12Anthony Pompliano?

  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?

• 11:38Speaker 02

  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 them. Folks who I talk to in the industry say that, you know, in this kind of market fundraising for emerging managers, which Sky would be considered as a first time fund, is difficult, but that kind of the cream of the crop, the elite are 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

• 12:22Speaker 02

  years of fame. So, you know, she does a pretty good job managing it. So hopefully that would

• 12:29Anthony Pompliano?

  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 but not actually involved in the firm itself?

• 12:41Speaker 02

  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.

• 13:11Anthony Pompliano?

  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, 20 years ago, no one knew who they were?

• 13:22Speaker 02

  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.

• 13:30Anthony Pompliano?

  Yeah. Is this part of a bigger trend where, you know, we saw, let's call it 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 and 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?

• 14:03Speaker 02

  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. 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 Um, most likely a billion dollar fund. Um, private equity requires a years long commitment. It's not just, you know, writing a check and kind of keeping an eye out and hoping for the best.

• 14:48Speaker 02

  A couple of years down the line. It's really being in the weeds, in the nitty gritty, um, 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. 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, giving, 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.

• 15:18Anthony Pompliano?

  Yeah, that, that makes a ton of sense. Um, were you able to talk to any investors in the fund other than kind of the principals and advisors? Or, or get any sense from the institutional world, whether people were attracted to this? Or, you know, some of the, the, um, things that are nuanced about it could be a turn off?

• 15:36Speaker 02

  Yeah, you know, I spoke to not investors in the fund, not LPs, but, um, two experts quoted in the story. And, you know, both of them really, um, saw the potential of this idea and, you know, gave some insight into the, um, position it has in the industry in general. So, um, investors in the space are, you know, really kind of, um, understanding that, you know, this idea is not just kind of a celebrity vanity play. It has some real potential.

• 16:02Anthony Pompliano?

  Yeah. And when you look at, um, 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, or kind of doing things differently when it comes to, uh, you know, the business practices and, and kind of taking a lesson from Kim and just saying, hey, let's port this over and, and maybe it even has an impact on the asset management space where people start to replicate some of the things that they do?

• 16:47Speaker 02

  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 equity's reputation as kind of a corporate raider that comes in and buys businesses that are in trouble, lays people off, and does a total overhaul. They want to avoid that. And you know, that kind of may sound like a little bit too good to be true. Like, can you really, truly, totally avoid that? The thing that's in their favor is that, you know, 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, you know, if they come up with a better way of doing private equity, Kim told me, you know, that you don't 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?

• 17:33Speaker 02

  Practices are pretty entrenched, but anything's possible.

• 17:36Anthony Pompliano?

  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?

• 17:42Speaker 02

  Yes, please read the story on fortune.com. My full name is Emma Hinchliffe, 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 Hinchliffe and Twitter at underscore Emma Hinchliffe.

• 17:57Anthony Pompliano?

  Awesome. 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.

• 18:08Speaker 02

  Thank you so much, Anthony.