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| Playing to Win |
Horizontal Money
Samantha Marshall
08/01/2005
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Kevin Liles was 17 when he received his first royalty check—$90,000—for Milli
Vanilli’s hit song, “Girl You Know It’s True.” He says he could not wait to blow
it.
“I stayed at luxury hotels just three blocks from my mom’s house because
I could,” says Liles, now a 37-year-old executive vice president of Warner Music
Group.
 | | KEVIN LILES (left) with Roy Williams. |
The budding hip-hop music mogul epitomized the free-spending ways of
many young athletes and artists who find sudden wealth. But after a spree on
cars, clothes and women lasted through his early 20s, Liles got wise with his
wealth, realizing that the rush of buying new toys—such as an early mobile phone
the size of a shoe box—was not a lasting pleasure. Instead, he discovered that
the house he bought for his parents with his first $1 million was both a source
of personal satisfaction and an appreciating asset.
“That was my first
glimpse into the world of horizontal money,” Liles says. “Letting your cash earn
more cash for you while you’re lying on your back.”
Today Liles evangelizes
about wealth management to young rap stars and schoolchildren. Determined to
help other urban entrepreneurs build their wealth for future generations, Liles
has included a chapter on financial management in his book, Make It Happen: The
Hip-Hop Generation Guide to Success, to be published in September.
During his
19-year career, Liles has met scores of hip-hop artists whose spending was
outrageous. Their success in this volatile business was fleeting, leaving them
with nothing but debt and empty Louis Vuitton bags. Instead of buying Cadillac
Escalades, Liles tells them to invest.
“I beg them not to buy that Bentley,”
Liles says. “I tell them they can’t wear real wealth around their necks; it has
to be invested somewhere sight unseen.”
Too often, Liles’ charges fail to
heed his advice. Many artists from poor urban backgrounds who grew up in
families without bank accounts do not grasp the intricacies of investments.
Exploited by their managers and record companies, many reckless young stars end
up with nothing.
Liles grew up in a poor Baltimore neighborhood with his
mother and brother. His birth father abandoned the family soon after he was
born. Today he credits his mother and stepfather with teaching him the lessons
he is trying to pass on. Watching his profligate spending habits from the
sidelines, they pleaded with their son to set some money aside.
“My
[stepfather] told me that if I don’t see the money, I won’t miss it, so I had
them take it out of my paycheck,” Liles recalls. “Before I knew it I had $40,000
saved up.”
Liles’ long-term goal is to create a $100 million trust for his
family. “Pursuing wealth is all well and good, but you have to know what your
end game is,” he explains.
 Back to Main Article: Playing to Win
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