Kim K. made $4 billion with her Skims business. With the help of her new private equity business, SKYY Partners, she intends to create the next generation of unicorn companies.
Thank you for reading this post, don't forget to subscribe!Both Kim Kardashian, the entrepreneur, influencer, and now private equity investor, and Jay Sammons, a 16-year veteran of top private equity firm Carlyle, were highly anticipated speakers at the conference.
Typically, the private equity conference that SuperReturn hosts is a low-key affair. At this gathering, business professionals in dark suits gather in intimate conversation to broker deals and solicit funding. This year, though, hundreds of people fought over limited seating for a 30-minute discussion at the Berlin conference in June. The seminar, themed “The Next Generation of Consumer Brands,” was soon oversubscribed far in advance of its planned start time. A few potential investors pounded on the doors of the hotel meeting room. A violent altercation broke out between one individual who had been shut out and a security officer.
A year ago, Kardashian and Sammons announced that they would be launching SKKY Partners, a private equity company that will focus on investing in consumer industries and is expected to raise a $1 billion fund. Sammons’ choice to quit a respectable job to collaborate with a member of reality TV’s most famous family (and Kardashian’s interest in this traditionally staid corner of the financial world) piqued the curiosity of the industry, and the duo refused to confirm that amount.
The California-born Kardashian, now 42, and her famous family (which included acquaintances like the Hiltons and Kathie Lee Gifford) were signed to an E! reality show in 2007. A TV show that follows the Kardashian family During her mid-twenties, Kardashian worked hard with the support of her mother and manager, Kris Jenner, to establish herself as a media and red-carpet fixture. In those days, the Kardashians’ main claim to fame was being their own celebrity. Yet at its height, 10.5 million people watched as Kim worked shifts at her family’s clothing business, Dash, while pursuing her childhood ambition of reality TV fame.
After 17 years in the spotlight, Kardashian has cemented her place as one of the world’s most recognizable female celebrities. Her 364 million Instagram followers devour her advice on fashion, beauty, and even business. At first, Kardashian experimented with business by licensing her name and likeness to other corporations; later, she started her own company from scratch. Skims, a clothing firm she co-founded, is her most successful venture to date. It’s a quadruple unicorn, and it’s going public.
Sammons claims that Kardashian has “capabilities that universally no other human being on Earth has,” referring to her extensive skill set, high public profile, extensive network, and vast fortune. Why, then, do we even bother with private equity? “I don’t make a decision like this lightly,” Kardashian says of launching SKKY.
The obvious reason is that she has faith in Sammons and recognizes his expertise in PE. (Another obvious reason Kardashian doesn’t mention is that it’s a chance to add to her fortune, which Forbes estimates to be $1.7 billion as of July.) The more nuanced explanation is that until now, Kardashian’s success in building businesses has largely been confined to the Kardashian-Jenner ecosystem, a universe of apparel, beauty, beverage, and wellness brands started by her siblings.
Kardashian travels from Calabasas to New York on a Monday in the middle of September for a charity dinner with French luxury company Kering, investor meetings, and two photo sessions. In a hotel room in Midtown Manhattan, her photo shoot team is all around her.
There are two Hulu cameramen, a publicist, an assistant, a seamstress, and a stylist. Skims, Louis Vuitton, and Balenciaga are all shown here, and the seamstress is decked out in Balenciaga workout gear. Despite all the commotion, Kardashian seems surprisingly chill and low-key. When she is in business mode, her voice is calm and measured. Her friends and coworkers attest to her listening skills, describing her as someone who takes in all the facts at hand before asking, “What can I do?” and What number do I use?”
She claims she’s acquired this stance after years of being on the receiving end of the power dynamic and coming away feeling ignored. She has made a wide variety of professional connections throughout the years. The first ones were with her late businessman and attorney father, Robert Kardashian, who is most known for representing O.J. Simpson. Simpson, who had his daughter sign agreements in which she promised to do things like pay him back for the cost of repairing their destroyed automobile.
While still in her early 20s, Kardashian manufactured and sold headbands to the most cutting-edge department store in the country, Fred Segal. Following the success of her family’s TV program, she began endorsing products in 2011. Her initial partnerships were with the shoe company Skechers and the alcoholic beverage company Midori.
Kardashian took advantage of the opportunities afforded to her by her celebrity status, whereas many other celebrities wasted their fame. She has been able to turn a profit off of her own brand at every level of its development, from B-list celebrity to superstar influencer, because of her innate wisdom, impeccable taste, and natural ability to connect with her audience. The launch of Kardashian’s private equity business will be a test of her ability to replicate her own success for the benefit of others. She plans to build an investment portfolio of businesses that don’t benefit from her fame or that of her family.
Then there was the well-liked Kimoji emoji app from the same platform, which featured Kardashian’s image. After their business cooperation ended, App Social sued Kardashian for $300 million, claiming that Kardashian stole money from the company. In 2020, she won the lawsuit.
Instead of deferring to the opinions of others, Kardashian prioritized her own in 2017. She graduated from running businesses with other people when she introduced her KKW Beauty brand (later called SKKN by Kim). KKW Beauty was so successful that in 2021 she sold a 20% share to cosmetics giant Coty Inc. for $200 million (and is now said to be attempting to purchase back that stake; she refused to comment).
Kim Kardashian: Hollywood, starring the reality star’s image and guiding players down the path to stardom, was proposed to Kardashian in 2013. More than 60 million copies of the game were downloaded, and it quickly made $83 million in sales. As of 2021, Electronic Arts has acquired Glu.
She and her team have recently closed transactions with Thrive Capital, Lone Pine Capital, and Wellington Capital Management, three of Skims’ venture capital partners.
She has lived through it all, so she knows what does and does not work. Potential business partners who wanted to cash in on her fame but didn’t respect her ideas were the worst. “I’ve always found that the most successful ones are where I don’t have a lot of middlemen, where I’m really close to the partners,” she adds of her most fruitful business relationships. She realized the importance of only doing business with someone who was willing to communicate and work together.
Sammons has been a listening ear for Kardashian for a long time. A decade ago, the inventor of the Anastasia Beverly Hills makeup line, Anastasia Soare, introduced the two.
Sammons, like him or not, can predict what will be popular in the future. The 47-year-old, who now resides with his family in Boston, was the lead person on Carlyle acquisitions that acquired shares of Supreme and Beats by Dre. In 2017, he spearheaded Carlyle’s investment in music manager Scooter Braun’s firm, Ithaca Holdings, and subsequently helped Ithaca acquire Big Machine Records, the label that holds the master recordings for Taylor Swift’s albums. (As part of the agreement, the famous singer started releasing new versions of her previous six albums.)
They became close through their mutual love of popular culture and its associated consumer products. As an early user of Twitter, Kardashian had her millions of fans serve as a constant focus group, answering the question, “What should she wear?” What color should she make her nail polish? She learned about consumer habits through the comments of other users. Kardashian, her mother, and her four sisters all made use of this information to set fashion trends, such as the usage of heavily lined lips and shapewear as outerwear.
The two continued to communicate with each other. As Kardashian’s career developed, he sometimes reached out to Sammons for counsel.
After spending time with Kardashian, Sammons saw that the celebrity facade hid a savvy businesswoman who trusts her instincts and isn’t afraid to get her hands dirty with the nitty-gritty details of running her company.
While Kardashian defers to others in areas where she lacks expertise, such as finance, she takes the helm in areas like marketing, product development, and the entertainment industry. Her executive team doubted the popularity of shapewear that matched the proportions of skirts with high slits—one leg cut as a short and the other as a brief—when she was making the decisions on the first Skims goods. The design director at Skims, Kim Kardashian, trusted her gut, and the product has been available for years.
“Continuation of dialogue over the years,” as Sammons puts it, rather than a single “bright idea” moment. Kardashian agreed with Sammons that her background in consumer brands and his investment would be a good fit. As Kardashian puts it, Sammons’ offer was “intimidating—but not overwhelming.”
Sammons thought she would be a good match for consumer private equity, a $71.7 billion industry in 2017 that requires an understanding of what’s happening and why, as well as how to grow that trend even further. So he did the unthinkable and advised that Kardashian and Jenner (now a senior adviser at SKKY) start a private equity business together.
What the SKKY founders had to say captivated the Berlin audience. Everyone in the business world is curious to see the results of this unlikely partnership.
The majority of these famous people’s investments have been in start-up companies. There is a widespread expectation that famous people will invest in a startup, put their money on the line, and wait years for a return. However, Kardashian wasn’t content to just put her money where her hope was. She insists that she must have complete control over every activity in which she participates. The alternative is impossible.
“When she sees something she really believes in, she sinks her teeth into it and goes all in,” says producer Scott Budnick, who has collaborated with Kardashian on one of her pet projects, jail reform.
She was drawn to private equity in part because of the active role investors play in their portfolios. However, private equity (PE) is more stable and frequently more harsh than venture capital. It’s more like a game of chess than a game of chance. When looking for consumer companies to invest in, private equity firms consider those that have established product-market fit and have the potential to go from, say, $100 million in sales to more than $1 billion with the appropriate support.
Supreme was already 23 years old when Carlyle made their investment, but by the time Carlyle sold out in 2020, the company was worth $2.1 billion. Jens Grede, creator of the denim company Frame and the brains behind e-commerce at Kardashian and Skims, envisioned the company as a Nike rather than just another direct-to-consumer fad.
This takes time since private equity companies usually plan to hold onto their assets for at least five years and raise several funds over the course of a decade. “You need to believe enough in the promise of this consumer product or service—that it’s in line with what consumers are going to want over the long term, not just today,” says Tricia Glynn, managing partner at the private equity firm Advent International, an investor in brands like the hair care product Olaplex and the fashion label Zimmermann. In addition to attracting hands-on operators rather than check writers, the procedure sometimes includes substantial adjustments.
Even if they aren’t in Hollywood, the majority of people with day jobs would find such a time commitment off-putting. But Kardashian has never been one to settle for the short term. I’m someone who likes to look eight to ten years ahead, and I believe it’s crucial to have a patient attitude, Kardashian adds. Business is a secondary job for most celebrities. It’s very important to Kardashian. If that’s the case, she can wait patiently.
The fact that Sammons was prepared to leave his comfortable position at Carlyle to join forces with Kardashian was the deciding factor for her. “I explained to him what kind of fund I would really want to be about,” Kardashian explains. “He got it completely and completely.”
It was mutual: “I would never have left that type of position to join forces with someone in whom I did not have the level of confidence I have in Kim,” says Sammons, “not only in her skills and capabilities but in her commitment to what we’re building and her drive to do so.”
Kardashian is accustomed to being underappreciated, despite having earned millions in her early business endeavors. Kardashian and Grede, co-founders of the department store-carried and soon-to-be brick-and-mortar Skims, spoke to a Harvard Business School seminar called Moving Beyond DTC (short for direct-to-consumer) earlier this year to discuss their experiences.
Grede remembers a student asking how long the Kardashians could remain popular during their discussion. Grede defended Kardashian. Telling the audience full of twenty-somethings, “All you can remember in your entire life is Kim Kardashian being famous,” he summed up their lives in one word. “So, how long can it go on? In the long run,
In 2019, Kardashian launched her clothing brand, which initially focused on shapewear. With new and stylish styles that fit Kardashian’s own monochromatic style, it has become a strong contender to the 20-year-old industry leader, Blackstone-backed Spanx, in only four years. She finds it fascinating to analyze daily sales statistics on the brand’s website. Skims’ IPO is on schedule. There is no rush or pressure to go public, says Grede, but “we do deserve to be a public company, and I’m excited about showing the strength of our business and brand to the rest of the world.”
Grede claims that Kardashian has been an instrumental co-founder as the company has grown from nothing to a $4 billion value in only four years. Grede claims, “We’ve gone through every stage, from incubating an idea to raising money from mutual funds and sovereign wealth funds.”
Based on her personal experiences altering shapewear with scissors and dye, Kardashian conceived of Skims and had the confidence to market more experimental goods like one-legged shapewear. Grede attributes to Kardashian the reunion of Victoria’s Secret Angels and the use of the Italian stars of The White Lotus in Skims’ advertising campaigns. With the help of Skims, he has seen Kardashian’s outlook evolve from “idealistic to pragmatic” as she has learned “what makes something commercially viable.”
Kim Kardashian’s Skims defense of her financial savvy is gradually converting skeptics. In 2023, three professors from Harvard Business School released a case study on the company, claiming that it was profitable and expected to surpass $750 million in revenues that year. After receiving $670 million, Skims is now worth $4 billion. The writers acknowledge the contributions of Skims’ management staff, but they give credit to Kardashian for the brand’s inspiration and design.
Sammons and Kardashian will operate SKKY from their respective residences in Boston and Los Angeles. Both Kardashian and Grede at Skims report that they defer to each other’s areas of competence as managing partners.
SKKY Partners’ mission is to aid other businesses in achieving the same quick growth as Skims. So far, SKKY has employed eight people, including many of Sammons’ former rivals at Blackstone and L. Catterton. Angela Ahrendts, once of Burberry and now of Apple, has been hired as a senior operations adviser. When asked about the foursome, Ahrendts replies, “We’re a brilliant complement to each other.” This refers to the Kardashians, Jenners, Sammons, and herself. Ahrendts was interested in Kardashian’s knowledge of content and culture during their initial meeting at her Calabasas office.
Back in March, SKKY launched its fundraising campaign. High-net-worth individuals, sovereign wealth platforms, and family offices are expected to be among its limited partners. (Sammons and Kardashian are also personal investors in the fund.) The fundraising climate is challenging, particularly for first-time funds, according to Kelley Morrell, a former senior managing director at Blackstone who worked on the firm’s Spanx purchase (and is now the chief financial officer of the meal delivery company Wonder).
PitchBook reports that between 2008 and 2021, emerging managers (those raising their first, second, or third funds) would have earned 26.8 percent of all private equity money. They got 13.9% of the company’s capital in 2022 and early 2023. However, SKKY’s founders’ prominence means that the guidelines may not apply to the company.
Sammons and Kardashian plan to invest $100 million to $500 million in eight to twelve companies over the next four to five years, with an initial concentration on the North American market. Although they have not yet made their first investment, they have identified many promising targets.
In a phone conversation from her Calabasas home in September, Kardashian described the ideal portfolio firm she would want to invest in. The company’s creators would be actively involved and put their “heart and soul” into the venture. I need to hear what they see. She asks, “Tell me about your dreams. She wants to find the “magic sauce” that will convince her a product is exceptional.
Another item high on her wish list is “authenticity,” meaning she doesn’t want to invest in a company that just copies her existing brands. “It’s not like they’re going to start working with my fund, and all of a sudden their whole brand is nude and beige, like a Kim-branded company,” she argues. She’d rather teach startups how to identify and capitalize on their unique areas of customer interest.
They are broadly defining who constitutes their “consumer” emphasis. They are thinking about industries including media, food and beverage, and hospitality in addition to Kardashian’s traditional ones like fashion and beauty. The company’s founders think there may be numerous winners in each area; therefore, the business may even choose to invest in a competitor of Skims. However, there is little chance that the fund will put money into any of the Kardashian-Jenner enterprises.
What Kardashian wants to avoid is the stigma that comes with private equity’s history of corporate raiding. At its worst, this sector is infamous for acquiring failing companies, eliminating jobs, and then selling off the remaining assets for scrap. Even Sammons acknowledges that strategy is unnecessary for SKKY. To put it another way, “there are a lot of great private equity firms that are excellent at fixing things that are broken” by purchasing “distressed” businesses and “financially engineering” in a manner that provides value for their investors. It’s value creation, but it’s completely different from how we do it,” he explains.
They claim to have had an overwhelming amount of interest in their fund, even from some established companies. “Today’s modern entrepreneurs who are building successful brands understand the special skills we bring to the table,” Sammons adds. Many of them are our contemporaries; they started their firms about the same time that Kim did.
Even though Kardashian built a $4 billion brand with Skims, her business credentials are still being questioned as she moves into the more conservative area of physical education (PE).
In an interview with Kardashian earlier this year at another financial conference, the CEO said, “I knew of you, as a lot of people in this room do, as a reality TV star,” and then acknowledged that his daughter had helped him prepare for the interview. The veteran of television has done well in these situations. Sammons is in charge of the company’s finances, while Kardashian is the business’s creator and chief marketing officer.
Despite the skepticism of others, Kardashian has learned to take herself seriously. For over two decades, she has been doubted, but when asked how she has handled it, her face brightens up, and she says, “Maybe that’s part of my drive, always feeling like people have underestimated me; maybe that’s what keeps me going.”
“The world often tries to invite her into dialogue about things that are either controversial or that she doesn’t really feel the need to weigh in on,” Sammons adds, praising Kardashian’s ability to tune off distractions. “She’s very self-disciplined in how she handles that situation.”
A private equity business is a method of giving back to the scion of a wealthy family. Sammons claims that the lady’s motivation is a desire to “help this next generation be as successful as they can be” by imparting the wisdom and insight she has gained from her own life and the experiences of others. According to Kardashian, “I think it’s super important to help other people grow and realize their dreams.” In turn, SKKY stands to gain from the success of the businesses that make up its portfolio.
However, Kardashian’s goal with this business isn’t to silence her critics once and for all. It’s about taking responsibility for her life and writing the next chapter, no matter how embarrassing it may be (such as endorsing a weight reduction product or grieving over a lost diamond earring). She adds, “Everything that I’ve done along the way is going to be beneficial to SKKY.”
If Kardashian achieves this level of success, she may be remembered as an innovator and savvy businesswoman whose influence extends well beyond her own sphere of influence. SKKY will keep a close eye on his first investment. “People will really understand that this is a serious fund,” Kardashian said of the fund’s potential investors. To some extent, SKKY may represent a zenith, bringing together the best and the worst, the serious and the ridiculous. According to Kardashian, “the type of business I’ve been involved in has evolved significantly over the years.” When asked about difficult situations, she said, “I’ve been through it all.”
