To maximize marketing opportunities, Jay-Z decided to create a documentary about his ride into the sunset, focusing on the basketball tournament. Though Dash fancied himself a movie maven—producing Roc-A-Fella’s bizarre, quasi-pornographic, straight-to-video flick Streets Is Watching in 1998—Jay-Z went in a different direction, bringing on Fab 5 Freddy to direct his film. The hip-hop pioneer would meet Jay-Z and his team at the 40/40 Club on game days, and they’d all hop on a bus emblazoned with the S. Carter sneaker logo and head up to Harlem as cameras rolled. Guests on the bus ranged from Diddy to The Fader’s Rob Stone to Jay-Z’s new girlfriend, a young singer named Beyoncé Knowles.
After Team S. Carter lost the first game, it became clear that too many of these visitors were trying to backseat coach. “You got nine guys on the team and there’s nine coaches,” Stone remembers telling Jay-Z’s colleague Mike Kyser. “Get one fucking coach.” Later that night, back at the 40/40 Club, Jay-Z sidled up to Stone. “I got to get rid of eight coaches, huh?” he said. Stone was amazed. “The guy pays attention,” he says.37 Jay-Z consolidated coaching power in Juan Perez—who, along with his wife, Desiree, had partnered with him on the 40/40 Club—and would continue to be a key part of the rapper’s inner circle.38 Jay-Z also began to take a more proactive role himself, personally calling and emailing players to make sure they’d be there for games.39
Team S. Carter cruised through the Rucker Park season, setting up a championship matchup against rapper Fat Joe’s Terror Squad team, which boasted NBA stars including Stephon Marbury and Ron Artest (who, despite his famously cantankerous attitude, later changed his legal name to Metta World Peace). On the day of the final game, Jay-Z met Fab in a downtown recording studio and prepared to head up to Harlem. Just as they were about to leave, though, the lights went out—and didn’t come back on for another twenty-four hours or so. It was the blackout of 2003, which left some fifty-five million people without power across the northeastern United States and Canada, rendering a nighttime basketball game impossible.
Jay-Z immediately faced a dilemma. A private jet waited to take him and Beyoncé to Europe for their first major vacation as a couple; they had to be back in the States by the end of August for the MTV Video Music Awards, where many of their songs, including their new duet, “Crazy in Love,” were up for awards. He could cut the trip short and come back for the rescheduled final game or relax with his new girlfriend. He did the latter.
It wasn’t easy for Jay-Z to throw himself so fully into a relationship—by his own admission, he’d found it hard to trust people ever since his father abandoned him; in his business dealings and his romantic relationships, Jay-Z was “always suspicious.” But in 2003, he found some personal closure when his mother helped arrange a meeting with his estranged dad, who was terminally ill (and passed away several months later). “That was very defining,” Jay-Z told Rolling Stone two years later. “I got to let it go. I got to tell him everything I wanted to say.”40
While Jay-Z worked on overcoming his hang-ups and winning the hand of pop’s top superstar, his Rucker team wound up forfeiting the last game. (“My niggas didn’t have to play to win the championship,” Fat Joe bragged on “Lean Back” the following year.) Fab hoped to release the documentary anyway, but Jay-Z pulled the plug, not wanting to be seen as anything less than victorious. Losing the documentary pained Fab; for his subject, the episode was something best swept under the rug. And because Jay-Z didn’t call attention to it, most observers to this day think of 2003 not as the year Jay-Z lost the Rucker Park tournament but as a positive turning point in his career. “It was the beginning of him becoming this more grown Jay-Z, if you will,” says Fab. “The business ventures became more pronounced and diverse… He became more of his own thing.”41
Jay-Z’s plans included outflanking his Roc-A-Fella cofounders. After Def Jam bought out the trio’s remaining equity for $10 million, a head-spinning game of musical chairs consumed the seminal hip-hop label. Kevin Liles, who’d worked all the way up from intern to president at Def Jam, followed his mentor, Lyor Cohen, then head of the label’s parent, Island Def Jam, to Warner Music Group. Cohen then tried to lure Jay-Z to his new company as an executive. Says Atlantic Records chief Craig Kallman, who worked under Cohen at the time: “I know Lyor would have loved to have Jay-Z in Warner.”42
But it wasn’t meant to be. Universal, which owned Island Def Jam and, by extension, Def Jam itself, brought in executive L.A. Reid to run the former—and Jay-Z to head the latter. In this role, he came to oversee all of Def Jam’s labels, including Roc-A-Fella, which meant becoming the boss of his old partners Dash and Burke. “It’s just business,” Jay-Z reportedly told Dash, who subsequently left the label and evaporated into obscurity. (Burke was arrested for drug trafficking in 2012 and spent four years in prison.)
Under Jay-Z’s leadership, Def Jam went on to launch acts including Kanye West, Rick Ross, and Rihanna. But perhaps his most brilliant move was signing an old foe. In November 2005, Jay-Z held the ominously titled “I Declare War” concert at the New Jersey Nets’ home arena in East Rutherford (he had recently purchased a small stake in the NBA team). On a stage set to look like the Oval Office, complete with a large desk and mock Secret Service agents, Jay-Z tore through his set, pausing only to bring out special guests including West and Diddy. He closed with one final surprise: Nas, who joined him to perform Jay-Z’s song “Dead Presidents,” which samples a Nas track.
“All that beef shit is done, we had our fun,” he said onstage. “Let’s get this money.”43 Within months, he’d signed Nas to Def Jam; their duet, “Black Republicans,” appeared on Nas’s next album, which sold 355,000 copies in its first week.
Ever the trendsetter, Jay-Z had moved hip-hop away from the aggressive lyrics of 50 Cent and his ilk, finding that unity could be much more remunerative. Others followed his lead. In 2006, for example, West Coast rapper Xzibit released “California Vacation”—which featured Bloods and Crips rapping on the same track in the form of the Game and Snoop Dogg—with Xzibit delivering the core message: “From what I see, red and blue can make green.”
At the same time, the overlapping Venn diagram of subgenres known as Backpack Rap and Conscious Rap, which include bookish acts like Common and Lupe Fiasco, began to take shape. Jay-Z noted on his triple-platinum Black Album that, in the wake of a recent $5 million payday, he hadn’t been rhyming as thoughtfully as Common. But it turned out that rapping about the perils of violence and capitalism could be lucrative, too. I once asked Common about the Jay-Z line. His response? “I’ve made more than $5 million.”44
The last time I interviewed 50 Cent, we sat high above the icy Manhattan streets in a SiriusXM studio where he was about to do some promo work for his latest album, Animal Ambition. But more than the music, he remained focused on scheming a way to make his next Vitaminwater-esque score.
Though the precious metals deal he’d dreamed up in South Africa never came to fruition, 50 had taken equity stakes in a number of companies closer to home that he in turn promoted heavily. Among them: Street King (a performance-boosting shot meant to compete with 5-Hour Energy), Effen (a vodka brand aspiring to challenge Diddy’s Cîroc), and Frigo (maker of the $100 climate-controlled boxer brief). But he spent the most time obsessing over headphone maker SMS, short for “studio mastered sound.”
This proved surprisingly problematic for his mentor, Dr. Dre, already committed to a headphone line of his own. After 50 made a music video and saw the final cut, with his SMS hat blurred out, he decided that he’d had enough and left the company that launched him to superstardom in favor of an independent distribution deal in February 2014.
“Interscope is Beats Records,” he told me. “There’s no artist that has a marketing budget supporting what they’re actually doing that doesn’t have Beats headphones in the actual visual to support that brand, that company. So when I invested in SMS Audio, it kind of made people afraid.”45
But unmoored from Dre—and from Lighty, wh
o died of an apparently self-inflicted gunshot wound in 2012—50’s punches, both musical and entrepreneurial, just weren’t landing. Animal Ambition sold a mere 47,000 first-week copies during its summer 2014 debut; by that point, 50 hadn’t played more than a dozen shows in a year since 2010 (after averaging more than thirty annually over the prior eight years, according to Pollstar). In 2015, he got hit with multimillion-dollar lawsuits from Sleek Audio ($18 million, for a headphone deal gone bad) and from a woman named Lastonia Leviston ($7 million, for posting a sex tape featuring her, in an apparent attempt to get back at rival Rick Ross, who had fathered a baby with Leviston).46
The rapper’s equity stakes were worth millions on paper, but with his cash flow dwindling and a list of money pits like his Connecticut estate drinking up his Vitaminwater windfall, the lawsuits caught 50 in a liquidity crunch—and he declared bankruptcy in the spring of 2015. As part of the settlement, he agreed to pay a court-designated disbursing agent $7.4 million up front (presumably, the remaining total of his liquid assets) plus $6 million from the planned sale of his mansion and another $10 million gleaned from his annual earnings at a minimum of $2 million per year. Sleek Audio would receive $17.3 million, Leviston $6 million.47
In an interview, 50 told Larry King that it was a “strategic” move. The rapper did not respond to a request for comment on the matter. But 50’s filing served a strategic purpose indeed: though it shaved only a couple of million dollars off the total he owed his creditors, bankruptcy meant that he could pay them off a bit at a time instead of being forced to sell stakes in early-stage companies all at once. Beginning shortly after his filing, he demonstrated his resolve to get out of debt by increasing his annual gig count by about 50 percent while averaging $360,000 per city, according to Pollstar. He also launched an even more expensive underwear collection with Frigo ($150 for the “Nano Stitch” boxer brief, which is covered with images of lions with crowns on their heads) and a re-upped for a fourth and fifth season of the Starz television show Power, which he both acts in and produces.
Perhaps most importantly, 50 received a windfall of $14.5 million after winning a malpractice suit against the lawyers who negotiated his deal with Sleek (he initially sought $75 million in damages). By 2017, it seemed that this unfortunate chapter in 50’s financial history was on the verge of early resolution.48
Dr. Dre, meanwhile, seemed to have barely noticed the departure of his onetime protégé. He’d filled up his schedule putting the finishing touches on the masterpiece of his career as a businessman—and the end result would make 50’s Vitaminwater deluge look like a mere droplet by comparison.
CHAPTER 8
The Beats Generation
Noel Lee is a man who knows how to make an entrance. Accompanied by an entourage of a half-dozen or so, he rolls into the sky lobby dining room of the Marriott Marquis in Times Square on a gold Segway accented with flames and then settles into a banquette beneath a towering waterfall in the center of the room.
Lee sports a navy blazer and a black T-shirt bearing the logo of his company, Monster Cable, which he founded in 1979 after working as both a professional drummer and a laser-fusion design engineer for a nuclear weapons research outfit. There, according to Lee, he was exposed to toxic doses of radiation that led to the development of a nerve disorder that prevents him from walking—hence the Segway, which he prefers to a wheelchair. The greatest breakthrough of his career came when, frustrated that most stereo systems were wired with the same cables used for household lamps, he designed a high-performance cable that enabled crisper, stronger sound.
Monster still peddles these trademark cables along with speakers and headphones. The company does not disclose its financial performance, but Lee says he expects annual revenue to top $1 billion within the next five years. Most recently, he’s teamed up to create a range of products, including Monster DNA with Swizz Beatz, ROC headphones and speakers (no relation to Jay-Z’s Roc Nation) with soccer star Cristiano Ronaldo, and, most famously, Beats by Dr. Dre. These experiences have taught Lee lessons he never could have learned in engineering school.
“What is popular in hip-hop is popular for every white kid in suburbia and every Korean kid doing a rap… and all corners of the world,” he says. “It affects the vernacular of how you speak, so the word ‘motherfucker’ means ‘good,’ or it could be bad. That’s what I learned.”1
A waitress comes by to take our orders; I ask for a mac and cheese, making sure to request a separate check for myself, per journalistic custom.2
“I’ll write that in our memoirs,” says Lee. “‘Couldn’t even buy Zack a mac and cheese.’”3
“You’re not allowed to buy him anything,” one of his lackeys pipes in.
“Shut up, will you please?” says Lee.
I can’t tell if he’s actually annoyed, and neither can his employee.
“Sorry, boss,” he says.
But Lee is just getting started. Swatting down members of his retinue is part of his personality, as is pontificating about hip-hop and, occasionally, referring to himself in the third person.
“Guys like Dre and Jay, they’ve extended beyond their time… Diddy, too, but not in the musical sense,” he says. “Let’s take Dre… How does somebody who doesn’t put out music become the richest hip-hop artist? Well, guess what? Noel Lee put that in the driver’s seat for him.”
Dr. Dre and Jimmy Iovine see things a little differently from Lee, as I learned the afternoon when I first met them in 2011. A small group of reporters gathered at an airy loft in midtown Manhattan to cover the launch of Beats’ latest offering, and Iovine gave some opening remarks. With Dre at his side, he explained the genesis of Beats: he and Dre were walking along the Pacific Ocean one day in 2006 when the latter said he wanted to start a shoe line; he even had an offer on the table from a major brand.
“Fuck sneakers,” said Iovine. “Let’s sell speakers!”4
It’s a great Hollywood line from a great Hollywood story. But as is often the case with such tales, there’s quite a bit more to it—namely, the extensive involvement of Lee. His son, Kevin, who initially turned him on to hip-hop (and later went on to found his own Sol Republic headphone line), was the one who suggested sitting down with his future Beats partners. “Dad, we’ve got to hook up with Jimmy and Dre,” Kevin said. Lee’s response: “Jimmy who? What does he do? And Dre—isn’t he done?” But Kevin prevailed and helped set up a meeting. According to Lee, Iovine was indeed convinced at first that speakers were the way to go.5
“Jimmy,” said Lee. “Nobody buys speakers anymore.”
“What do you mean, ‘Nobody buys speakers’?”
“Big speakers—you can’t take it with you. Everything is portable,” Lee replied. “Kids don’t listen to speakers. You got to do headphones.”
Iovine quickly came around and Dre became the face of the product. Lee agreed to have his company design, engineer, manufacture, and distribute the headphones; he’d pay a royalty to Iovine, Dre, and Interscope, who would collectively provide marketing and own the brand. Iovine and Dre held the lion’s share of equity, with Interscope parent Universal possessing a large chunk as well. Lee eventually negotiated a 5 percent stake in Beats. Smaller pieces went to artist Will.i.am and NBA star LeBron James, both of whom would go on to play a key role in Beats’ development.
Of course, the entertainer who contributed the most to the project was the one who gave it his name. Dre actually came up with the Beats by Dr. Dre moniker, according to Lee and others close to the company. He also defined the company’s guiding principle, a pure product of his passion for “perfecting the beat,” as he once rapped. “Apple was selling $400 iPods with $1 earbuds,” Iovine later recalled. “Dre told me, ‘Man, it’s one thing that people steal my music. It’s another thing to destroy the feeling of what I’ve worked on.’”6
Lee developed nearly one hundred prototypes before passing a dozen or so to Dre and Iovine for their input. Dre used 50 Cent’s “In da Club” to test differ
ent iterations, eventually settling on a bass-heavy version that made Beats the first headphones truly designed for hip-hop. He and Iovine envisioned the “Beats curve,” a thumpy sound profile that would extend across all the products they’d build together.7
“It was the first time anybody had heard that bass—Sennheiser didn’t do it, Bose didn’t do it, Sony didn’t do it,” says Lee. “They were still doing studio or orchestral stuff, but they weren’t doing hip-hop… The kids, when they listen to music, they want to hear it like they hear it in the club.”
Dre tested out other genres on the headphones, too, listening to everything from Sade to Kraftwerk to make sure that both soul and electronic music sounded right. Yet Lee worried that they’d turned up the bass too far (many audio purists would later agree with that assessment) and sought the counsel of Will.i.am. “Will, I’m not quite happy with the bass,” Lee remembers saying. The artist’s response: “Don’t touch it. You’ve got magic.”8
Getting retailers to sign on wasn’t quite so easy. Beats debuted in the middle of the great recession—not exactly the best time to be selling $300 headphones. Dealers didn’t believe that an aging rap star who hadn’t released a solo album in a decade would be enough to move the needle. So Lee went to work convincing Brian Dunn, then the chief executive of Best Buy, that Beats would be not just the next big product but the next big category.
Dunn was an unlikely ally. He started out at Best Buy in 1985, selling televisions in Minnesota to make some money over the holidays, but when VCR technology hit, he found himself in the middle of a consumer electronics industry revolution and stayed on with the retailer. He worked his way up the ladder, running a store, then a district, and then a region; he eventually ascended to the rank of COO and took over as Best Buy’s chief executive in 2009.9
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