How Dan Gilbert Helped Tame the Incorrigible Rap Genius

7/16/14Follow @XconomyDET

You may have missed the story Business Insider published Friday detailing Rap Genius’s turmoil on the way to raising $40 million.

Rap Genius is a New York City startup that started as a website where people on the Internet could analyze the lyrics of rap songs. Now, rebranded as Genius, the company wants to annotate everything on the Internet—according to the company’s website, its mission is to crowdsource “annotation of music, news, literature, history, and just about any other text you could imagine.”

Last Thanksgiving, Rap Genius co-founder Ilan Zechory came back to the Detroit area, where he grew up, for the holiday. He went to a Detroit Lions football game and met Quicken Loans chairman Dan Gilbert’s teenage sons. The article reads: “At halftime they went over to say hi. Both of Gilbert’s sons knew what Rap Genius was. Gilbert and Zechory started comparing notes about communicating with employees in a rapidly growing company. … Gilbert invited Zechory to come to his office the following Monday to learn about some of the investments he’d been making in downtown Detroit. That Monday, Ilan showed up with his grandfather. Gilbert showed up with a team of executives. It seemed Gilbert had an ulterior motive: to kick the tires on Rap Genius.”

Rap Genius isn’t Gilbert’s only foray with rap-themed startups. He’s also an investor in Rapt.fm, a split-screen website that allows users to engage in freestyle rap battles as Internet audiences watch, chat, and vote for who they like best.

Zechory showed Gilbert an annotated article about beloved Detroit activist Grace Lee Boggs, and Gilbert was apparently impressed enough to initiate the beginning stages of making a deal. Jake Cohen, who runs Detroit Venture Partners, flew to New York and attended the Rap Genius Christmas party. A preliminary term sheet soon followed, but the deal was not without hiccups, which the article lays out in detail.

The story is interesting not only because Dan Gilbert and Detroit figure prominently, but because it also serves as a cautionary tale to young startup founders on the perils of self-aggrandizement and courting controversy just to get publicity. Mahbod Moghadam, the Rap Genius co-founder who was often in the news for various poorly conceived stunts and quotes—the Google and Elliot Rodger debacles are perhaps the most famous—was fired from the company, the article suggests, as a condition of Gilbert’s $40 million investment.

But the article is also notable because it seems to serve as an announcement of the new Genius platform itself. The article is annotated throughout with extra bits of insight—including a few paragraphs from Cohen—from the key players mentioned in the text. (Don’t miss the annotation about Kanye West’s unsolicited redesign of the Rap Genius site.) As the article discloses, Business Insider is partially funded by an investment from Marc Andreessen, co-founder of Andreessen Horowitz. Andreessen Horowitz has also invested in Rap Genius.

Sarah Schmid is the editor of Xconomy Detroit. You can reach her at 313-570-9823 or sschmid@xconomy.com. Follow @XconomyDET

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