Damon Dash, Kanye West Announce Intent to Purchase Karmaloop
Hip-hop moguls Damon Dash and Kanye West continue to put the fashion world on notice with an announcement via Instagram that the pair is engaged in purchasing struggling online streetwear retailer Karmaloop.
“Honorable people stick together, so this how the generations do,” Dash said in a video posted yesterday. “He’s super famous [gestures to West] and we linking up and we decided to go buy Karmaloop—we just talked about it, it’s gonna happen.”
Despite the duo’s determination, a purchase might prove to be a difficult endeavor. Karmaloop founder and CEO Greg Selkoe borrowed heavily to launch a handful of ill-fated ventures leaving the company mired in debt, despite the site’s still-strong sales. Monark Box, Miss KL, Boylston Trading and Brick Harbor are among the startups that never truly took off, draining the company’s finances.
“We tried to do too many things. We launched too many different sites in too short of a period of time,” Selkoe told the Boston Globe.
According to recent reports, Karmaloop filed for Chapter 11 bankruptcy protection and is more than $40 million in debt. The company has up to 25,000 creditors with estimated assets between $10 million and $50 million, while liabilities range from $100 million to $500 million, according to its bankruptcy filing.
“After racking up nearly $120 million in revenue in 2013, Karmaloop’s business plunged below $100 million last year as debt obligations crippled the company,” sources told the New York Post.
Selkoe confirmed he was talking with Dash and West, but reiterated that he hadn’t sold the company.
“As we confirmed earlier this week, Kanye and Dame are among several people we’ve spoken with about Karmaloop,” Selkoe said in a statement. “We’re having a lot of conversations and seeing intense interest in our brand.”
Despite Karmaloop’s recent struggles, there’s no doubt its impact on the streetwear community has been significant. For many people not located in a major city, the e-tailer served as a gateway for the purchase of many hip and fashionable brands that couldn’t be found in brick-and-mortars. The site features more than 500 brands and averages 4 million monthly unique visitors, said Selkoe, who founded the company in 2000 out of his parent’s basement in Boston.
While Karmaloop’s financial woes have spilled out into the customer service side of the business with angered customers taking to social media to complain about undelivered purchases, the site will not be shutting down while it restructures and Selkoe promises all customers will receive what they ordered.
“To me, that’s the worst part of it, because I love this culture and it sucks that we’ve let some customers down,” Selkoe told GearBottle.com. “But I would hope that people judge us on our 15 years and not a month and a half where we had some problems. We’ve been super open and transparent about our problems and we’re going to fix them.”
As for the rumored bold-name purchasers, this wouldn’t be the first time Dash or West turned the streetwear industry on its head. Dash famously co-founded Rocawear with Jay-Z in 1999 before he was bought out in 2005, but not before turning it into a mega-popular and profitable internationally-recognized brand. Of course, it also was Dash who managed Jay-Z and who served as his partner in Roc-a-Fella Records.
In addition to being hip-hop’s biggest tastemaker, West has contributed his fair share to the fashion world. In 2009 and 2012 he collaborated with Nike to release his own sneaker, the Air Yeezys. West has demonstrated his strong affinity for the shoe game by designing footwear for Louis Vuitton, BAPE and Giuseppe Zanotti. Last month West released the Adidas Yeezy Boosts, which sold out in minutes. And more recently, he released the lookbook for his Autumn/Winter 2015 collection with Adidas.
Despite the obvious challenges of getting his company back on solid footing, Selkoe remains upbeat, claiming on Twitter that he’s “still gonna be owner no matter what we do….I am Karmaloop!”