3 Kings
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The stories neglected to mention a fascinating connection between Jay-Z and Diddy: just like Cîroc, D’Ussé is made from ugni blanc grapes—one of a handful of varieties whose inclusion is necessary to earn the “cognac” designation. Labels aside, the process of making cognac lends itself to heavy use of cheap grapes. Finer types tend to be more difficult to grow, and low yields drive up costs. Cognac is distilled, so much of the flavor from a pricier grape would be lost along the way; during the aging process, additional material evaporates (the “angel’s share”). Says wine expert Arnold: “Using a higher-end grape would really be a waste of money.”53
Because there’s such an abundant supply of ugni blanc, costs are low, and there’s not the same risk of fluctuating yields and prices that could befall a champagne like Armand de Brignac. In other words, Jay-Z’s involvement with D’Ussé served as an effort to both expand and hedge his alcoholic beverage portfolio.
“As long as the world doesn’t run out of grapes, which I don’t see happening ever… this is a good business to get into,” says Fass. “Any business where you can just keep turning the shit out for the rest of your life is a good business.”54
An hour before midnight on a fall Tuesday in 2014, I walked through the door of Cedar Lake, an airplane hangar–esque event space on Manhattan’s West Side, to get my first glimpse of the latest addition to Diddy’s beverage portfolio. Inside, several hundred people sipped cocktails over the din of the sound system as an acrobat contorted herself while sliding up and down a long piece of ribbon hanging from the ceiling. Across the room, a lithe young woman stood motionless in front of the VIP area, naked save for a head-to-toe coat of body paint and a garment that was more a suggestion than an actual pair of underwear.
But the main attraction of the night was the brand behind the logo projected onto the wall: an ornate letter D, not unlike the logo of Major League Baseball’s Detroit Tigers. The D stood for Diddy’s new DeLeón tequila, a tumbler of which appeared in front of my face as the sound system’s bass rattled the oversize ice cube inside. I placed the drink on a nearby chrome-plated table, and when I picked it up to take another sip, a server materialized and polished the surface. At around midnight, Swizz Beatz waltzed in, and then Naomi Campbell.55
The atmosphere reflected Diddy’s outsize ambitions for DeLeón, which he acquired in partnership with Diageo that same year. DeLeón’s variants sell for $35 to $850 per bottle, making it a “sipping” tequila, unlike Sammy Hagar’s Cabo Wabo. (The rocker sold 80 percent of the brand to beverage giant Gruppo Campari for $80 million in 2007.)56 Diddy aimed to build something bigger. Says Meiselas: “He could have easily just started a new tequila, but he wanted to grow DeLeón the same way that he grew Cîroc.”57
Spirits entrepreneur Brent Hocking originally launched the libation in 2009, naming it after León, the Mexican town of its origin. He aged the tequila in wine barrels instead of jacking it up with artificial flavors, as many competitors did, and the results showed when his Diamante edition won the World Beverage Competition in Geneva two years in a row. For three consecutive years starting in 2011, DeLeón took home spirit of the year honors from luxury goods bible Robb Report.58
When Diddy initially approached Diageo about a tequila joint venture, the beverage giant had some reservations. “Sean, is it better for you just to focus on one brand?” Rust asked. Diddy’s typically outrageous response: “It’s like, after Spielberg made a movie, [having] somebody saying, ‘You can’t have another movie.’ I want another movie.”59
Rust couldn’t help but admire the mogul’s moxie. Diageo agreed to buy DeLeón with Diddy, and soon he was running a brainstorming session with one hundred of the beverage giant’s employees, figuring out how to relaunch the brand. Just as he’d done with Cîroc, he fixated on everything from the feel of the bottle to the font of the logo, making sure he knew exactly who handled every aspect of the product. “It was like watching a general at work with his army,” says Rust. “I called my boss and I said, ‘Well, he just took over the company. He’s got everybody working for him.’”
For Diddy, DeLeón also represented a way to insulate his liquor portfolio from potentially unfavorable industry trends. Toward the beginning of his Diageo run, Diddy’s new Cîroc variants—along with flavored vodkas from Pinnacle and others—helped drive the entire vodka category to a growth rate of 5 to 6 percent annually. But after peaking at 2.1 million cases in 2014, Cîroc dipped to about 2 million the following year, according to beverage analyst Schmidt. Though he believes it’s a billion-dollar brand, it’s hard to get bigger in a category whose growth has plateaued. Tequila is a different story. DeLeón moved an estimated ten thousand cases in 2014 and doubled that number in 2015, its first full year with Diddy on board. Says Schmidt: “Tequila’s growing faster than vodka.”60
Diddy believed he could grow the brand by focusing on the same “art of celebration” he had brought to Cîroc—a notion evident at Cedar Lake. At about half past midnight, the DJ began to repeat a proclamation: “Puff Daddy is in the house.” This continued for twenty minutes before Diddy finally appeared, decked out in a black fedora, sunglasses, and a dark fur coat that combined to make him look like a very fashionable porcupine. He grabbed a microphone, and the crowd noise faded to a murmur.
“There’s no ‘I’ in ‘team,’” he said, before thanking dozens of friends and colleagues. “There’s a new tequila in town, and you are here for the first part of our history as we launch, as we raise our glasses to health, to love, to happiness, and to DeLeón!”61
Fass and I have nearly made it through all eight Cîroc variants, and though I’ve tried to take his lead and spit out each sip as I taste it, I’ve indulged a bit, which has made his commentary all the more entertaining.
Fass was quite displeased with Green Apple (“so candied and so sugary and so awful”), somewhat mystified by Red Berry (“That does not exist in nature… What the fuck is a red berry?”), heartened by Coconut (“The coconut would be really nice to mix”), and unsurprised by Pineapple (“It tastes like pineapple juice spiked with vodka”).
The most colorful reactions were reserved for Peach (“like a peach truck crashed with an Absolut truck and all of a sudden you’re passing by the accident and this is what you smell”) and Mango, which Fass seemed to like a lot more (“It’s not cough syrup mango, it’s not dumb mango, it’s like polished mango… like mango went into a nightclub”).
Now we’re down to the last variant—Cîroc Amaretto—whose name technically suggests a drink-flavored drink.
“That’s like Courvoisier-flavored vodka,” says Fass wryly, before offering a hint of optimism. “This could be the best. That’s why I saved it for last—because you can’t fuck up hazelnut. You know? Just like you can’t fuck up fried calamari. It’s just one of those things.”62
Fass takes a whiff.
“It smells almost like… Italian Christmas cake.”
“Kind of like a marzipan,” I offer.
“Totally marzipan,” he says, taking a sip. “Marzipan. Oh, God. Fucking marzipan. Fuck marzipan, seriously. Like, yes, I want to eat candy that looks like a fucking hot dog. Who came up with that? And it’s not even good candy.”63
We move on to the final beverage of the night: D’Ussé. The bottle is designed like an upside-down water tower: fat on the bottom, curving up into a thin cylinder. The front is dominated by a gold double-barred cross of Lorraine, the centuries-old French symbol used as an emblem of resistance during World War II.
“Despite the Cattier debacle, I have high hopes for this, although I’m looking at the bottle right now and my hopes have just gone down,” says Fass, prying open the vessel. “It smells really fucking fruity. That’s the fruitiest cognac I’ve ever smelled in my life… Usually cognac smells like alcohol.”64
He takes a sip.
“Caramel and spice,” he says. “And lots of alcohol.”
Fass sighs.
“All this shit is awful,” he explains. “I�
�ve had cognac that’s been buried at the bottom of the fucking sea since eighteen seventy-five… I’ve had the most expensive liquor on earth, and the whole thing’s a fucking con, dude, in my humble opinion.”
Though our tasting hasn’t instilled an appreciation of hard liquor in Fass, it has highlighted more threads that weave through the stories of Jay-Z and Diddy, two men who, despite their differences, have the same first name and last initial, the same hometown, the same birth year—and the same preference for partnering with beverage giants to make spirits from ugni blanc grapes.
“They are businessmen, and you want to have the lowest possible cost, and you want to make the highest possible profit, and they both have figured it out in their own way,” says Fass. “That is the bottom line. Because at the end of the day, any person that has half a fucking palate understands that liquor is designed to get you drunk as quickly as possible. Period.”
CHAPTER 10
Sound Investments
There might not be a single soul on the planet who understands the link between hip-hop, Hollywood, and Silicon Valley better than Troy Carter. In addition to working with this book’s three kings in various capacities throughout his decades-long career, he has managed Lady Gaga, John Legend, Meghan Trainor, and many others. The list of startups he’s invested in personally or through his company, Atom Factory, includes Uber, Dropbox, and Spotify.
I pull up to Carter’s office, located on a nondescript stretch of pavement in Culver City, just north of Los Angeles International Airport. The building more closely resembles a refrigerator tipped on its side than the office of an entertainment industry power player: the structure’s color palette is composed entirely of chilly shades of gray, and there are no windows visible. But once the ponderous doors groan open, Carter’s headquarters comes to life.
An anteroom features plush couches, soft lighting, and a fish tank the size of a movie theater screen. Through a door is Carter’s inner sanctum, where skylights illuminate two floors arranged like a Moroccan souk, with walkways encircling an interior courtyard. The decor is dominated by warm wood floors, sumptuous leather sofas, and accoutrements Carter has accumulated: MTV Video Music Awards moon men, won by Gaga and others, gleam on shelves alongside pictures of Carter with dignitaries including Barack Obama. On one wall hangs a saxophone that once belonged to Bill Clinton—a gift from Legend.
But one of Carter’s favorite artifacts is a picture that’s about a quarter of a century old. In the photo, he sits on a folding chair in an orange T-shirt, his slight stature magnified by the two men on either side of him: to his right, Notorious B.I.G., clad in baggy pants and a black Mecca brand T-shirt, and to his left, Diddy, bare-chested and wearing athletic shorts, a black beret, and black-and-white Adidas shoes with Nike socks. “I never noticed that until Heavy D pointed it out,” Carter says of Diddy’s clashing footwear.1
The photo was taken at the Philadelphia Civic Center; Carter promoted half a dozen Biggie and Diddy concerts in the area during the mid-1990s. The relationship didn’t exactly start off on the right foot: the first time Carter booked Biggie, the rapper stayed late in New York filming a music video, and by the time he got to Philly, it was too late to play the show. Rather than give in to bitterness, though, Carter asked Biggie and Diddy to refund his costs, which they did—$15,000 to $20,000—and they decided to go out on the town. Though Carter already had a decent gig as a local promoter, his keen sense for promising startups caused him to ask Diddy for a job at Bad Boy (“His pretty good thing was better than my pretty good thing”). Diddy offered him an unpaid internship on the spot (“Free labor!” says Carter, who accepted)—and then asked Carter to arrange an introduction between himself and a bartender who’d caught his eye.
“That was my first interaction with Puff,” says Carter. “I got him the girl from behind the bar… I started my internship with them a few weeks later.”
Carter began commuting between Philadelphia and New York, and was immediately impressed with his new boss, who would frequently party until three o’clock in the morning and still be the first person in the office the next day. At the same time, Diddy navigated the different worlds inhabited by his artists, who mostly came from the streets, and his Arista mentor, Clive Davis, a denizen of New York society circles.
In the years that followed, Carter became an artist manager and ended up working with Jay-Z at Roc-A-Fella and Dr. Dre at Aftermath on various projects. His interactions with all three kings remind him in hindsight that, although they had very different personalities and methods, they were all doing the same fundamental thing: running hip-hop-focused startups long before the term “startup” was popularized by today’s Silicon Valley elite.
“None of us had MBAs, none of us came from business backgrounds,” Carter tells me. “None of us went to college or anything like that. We were all building these companies off of instinct.”
Indeed, hip-hop’s top organizations were born out of a combination of gut feel and necessity. Diddy, Dre, Jay-Z, and their ilk founded record companies because at first they couldn’t get deals with major labels; they launched their own clothing and liquor lines because mainstream brands wouldn’t meet their compensation requirements for endorsements.
“We were forced to start these record labels out of trunks of cars and distribute music like that,” says Carter. “It’s been this thing of forced entrepreneurship that turned into a significant amount of equity in these businesses.”
It’s only natural that, after hip-hop’s top moguls learned how to start their own businesses, they began to leverage their fame as a way to invest in promising companies started by other people—yet another means of monetizing their celebrity.
In the early 2000s, 50 Cent became the first rapper to grab a chunk of equity in something that could be classified as a startup created by someone else—Vitaminwater parent Glacéau—but Jay-Z and Diddy turned down a potentially bigger investment opportunity at around the same time: Boost Mobile.
The cellular prepaid provider was founded in Australia in 1999 by the trio of Peter Adderton, Paul O’Neill, and Mike McSherry. Boost operated as a mobile virtual network operator (MVNO) that would provide a branded front end to be used with other companies’ towers and networks. Boost took its name from a term that Aussie surfers use to describe cresting a wave; its founders initially geared much of its marketing toward extreme-sports enthusiasts.2
Though prepaid cell phones enjoyed great popularity overseas at this point in time, they hadn’t yet made a major splash stateside. Mobile provider Nextel wanted to experiment with the model but faced one major problem. “Prepaid in the U.S. was seen as a very lowbrow, credit-challenged service,” says McSherry. “Nextel was hesitant to associate its brand with prepaid.”
So McSherry and his colleagues convinced Nextel to try out prepaid with a Boost-branded joint venture in the United States. The partnership—one-third owned by Boost and two-thirds by Nextel—was launched in 2002; in its first year, Boost activated more phones in California than the rest of Nextel did. The prepaid offering popped with young people in urban areas. Boost found an eager audience for Nextel’s push-to-talk feature—rumored to be untraceable by police—which the company had previously marketed to limo drivers and construction workers. The brand lured new customers by offering unlimited walkie-talkie messaging for one dollar per day.3
At the same time, Boost cofounder Adderton sensed an opportunity to push the brand deeper into the hip-hop world. He reached out to a number of big names in 2002, including Jay-Z and Diddy, to see if they’d be interested in partnering with Boost as investors and brand ambassadors. Diddy seemed particularly interested and agreed to meet with Adderton and his team.4
“He talked for over an hour; we said nothing,” the Boost cofounder recalls. “He said he knew the market we were going after, and [that] he was the key to let us in, almost like a godfather.”5
Adderton asked what it would take to get a deal done.
“Two Gs,” Didd
y said.
Thinking that Diddy meant $2,000, an elated Adderton quickly offered to throw in a small amount of equity to seal the deal. Diddy laughed.
“Two Gulfstream jets,” he explained.
That was just a starting point. As talks progressed, it became clear that Diddy wanted his very own mobile brand—Sean John Wireless, or some such—perhaps in the form of a joint venture, as Boost had initially done with Nextel. Adderton was attempting to get Diddy, along with Jay-Z in a separate deal, to become a shareholder in the Boost brand. He tried to explain that setting up a stand-alone wireless service wasn’t as easy as it sounded; there were customer service, billing, and retail considerations to be dealt with. But neither king budged.
“They wouldn’t listen,” says Adderton. “But they knew, as I did, that in the future the mobile phone was going to be the conduit to the youth market… They just didn’t know how to connect the dots.”6
It was certainly a missed opportunity. In August 2003, Nextel paid somewhere between $50 and $100 million to buy out Boost’s one-third share of the joint venture; by December, Boost had gained its millionth customer.7
Boost hired Coca-Cola’s Darryl Cobbin the following year to be vice president of marketing, figuring he might be able to replicate the success he’d had with Sprite with the help of hip-hop. The genre had expanded beyond its traditional footholds: Percy “Master P” Miller’s No Limit label and Bryan “Birdman” Williams’s Cash Money put Louisiana on the map, while Houston specialized in a syrupy subgenre and Atlanta launched Outkast and others to superstardom. So Cobbin decided to bring on three artists from different regions of the country—Ludacris from the South, Kanye West from the Midwest, and the Game from the West Coast—to put together the song “Where You At?” The track, which appeared on a West mixtape and was distributed by regional DJs, featured all three rappers shouting out the song’s title, which also happened to be Boost’s tagline.8