Jay-Z is a cool guy. He went from the projects, to the street corners, to the top of the music charts, to the board room. He’s launched a dozen business ventures that all seem to turn to gold. Along the way, Jay has earned a $2 billion net worth.
“Cool” is not a word I would use to describe Jack Dorsey. Frankly, he’s a nerd.
As a kid Jack spent endless hours listening to police scanners and studying train maps. Just for fun, when he was 15 Jack wrote dispatch software for taxi companies. He’s apparently obsessed with Satoshi Nakamoto, the blockchain and bitcoin.
While that nerdiness probably didn’t translate into girlfriends in high school, it would eventually allow Jack to co-create not one but TWO highly-successful public tech companies.
You might assume most of Jack’s fortune came from Twitter. It did not. When Elon Musk acquired Twitter in October 2022 for $44 billion, Jack only owned around 2% of the company’s outstanding equity, roughly 18 million shares. Jack’s pre-tax haul from the Twitter sale was $972 million.
Jack owes the majority of his fortune to Block Inc. Jack co-founded the payments company, which was originally known as Square. Jack owns 43 million shares of Block. At today’s price per share of $57, Jack’s stake is worth around $2.5 billion.
Jack’s current net worth is $4 billion. And like many nerds who become billionaires, one could say that Jack uses his wealth to be “cool.” Or as as some business analysts and angry Block shareholders would put it, when Jack agreed to buy Tidal two months ago, it was nothing more than a “$300 million bar tab to hang out with Jay-Z.”
A Terrible Business Decision
On March 4, at 5:04 AM, the world learned that Block had agreed to acquire Jay-Z’s music streaming service for $306 million. The world learned this news through this totally awesome Tweet:
I’m grateful for Jay’s vision, wisdom, and leadership. I knew TIDAL was something special as soon as I experienced it, and I’m inspired to work with him. He’ll now help lead our entire company, including Seller and the Cash App, as soon as the deal closes. https://t.co/YRfYjcWJQx pic.twitter.com/xBtq2xfwue
— jack (@jack) March 4, 2021
You know… just a casual, in-the-moment photo of two equally cool dudes sitting in front of a fire in a Hamptons mansion at 5 in the morning, drinking red wine and gazing DIRECTLY into each other’s eyes while sharing ideas on vision, wisdom and leadership in front of a white board that has the word “Artists” circled in the center. Like totally normal cool business dudes do!
As it would later be alleged in a lawsuit brought by Block shareholders, the idea for Block’s acquisition of Tidal came while Jack was “summering” with Jay-Z in the Hamptons. Out of the blue one day, Jack joined a Block board meeting via Zoom from the Hamptons and said he wanted to buy Tidal for what was eventually calculated to be $306 million. A price Jack and Jay presumably negotiated together. Over wine. While gazing DIRECTLY into each other’s eyes.
Jack’s proposal was somewhat unexpected for a number of reasons.
First off, Block is a payments company that had nothing to do with streaming music up to that point.
Perhaps more importantly, the acquisition committee would soon learn that Tidal was in horrible shape. The business was “failing financially” to the point where Jay had to personally loan Tidal $50 million to keep it afloat. Artists were fleeing and, worst of all, the artists that remained were under ZERO contractual obligation to remain on the platform.
What is the value of a music streaming service that is “financially failing,” has just borrowed borrowing $50m from its founder and might not exist tomorrow if all of its artists drop? One could argue ZERO.
Yet Jack and Jay somehow decided it was worth $306 million.
Unfortunately for Block’s angry shareholders, a Delaware judge overseeing their case recently found in Block/Jack’s favor. The judge ruled against the shareholders because, technically speaking it’s not against any law to do a bad business deal. Even one that would later be described as “a $300 million bar tab to hang out with Jay-Z.”
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