On a recent Monday morning in his midtown Manhattan office, Russell Simmons feels the demands of running an empire. He juggles an interview with a barrage of phone calls, quick meetings, and other interruptions, all while thumbing his PDA and periodically calling out "next question." It's no wonder Simmons is restless: He has much on his mind. The man The New York Times recently referred to as the "CEO of hip-hop" just negotiated the sale of his Web site, 360hiphop.com, to Black Entertainment Television (BET); his Phat Farm clothing line is projecting gross sales of $300 million this year; and dRush, the advertising agency he co-owns, is busily attending to clients from Coca-Cola to HBO.
Not too shabby for a guy who at one time couldn't find a job in the record business. Since co-founding Def Jam records in 1984 (which he sold to Universal Music Group last year for $130 million), the 43-year-old Simmons has shown an uncanny ability to promote talent-including himself-using every conceivable media. He launched the careers of Run-DMC, LL Cool J, Public Enemy, and the Beastie Boys, and more recently trotted out such big-ticket acts as Method Man and Warren G.
Through it all, Simmons has seized upon every opportunity to broaden his business, co-producing films such as The Nutty Professor (which grossed $244 million) and creating the hit HBO series Def Comedy Jam, which introduced America to the humor of Chris Rock and Martin Lawrence, among others. But today, in a meeting with MBA Jungle, Simmons is more focused on business than jokes.
Jungle: What lessons did you learn about business growing up in Hollis, Queens?
Russell Simmons: I came from a lower-middle-class background, and I wouldn't say that it was particularly helpful to my becoming an entrepreneur. The only people in the neighborhood who were entrepreneurs were Black Muslims and drug dealers. It was not a real entrepreneurial culture-my business was something that just came about as a result of loving the hip-hop culture. I couldn't get a job doing it-I was sort of frozen out of the opportunity to get into the record business. So we made our own records out of necessity. Now, of course, I have a whole different attitude-entrepreneurial-which I've learned over the years.
Was there one decision you made that you think helped propel hip-hop into the mainstream?
There were two decisions that helped in different ways. Aerosmith recording with Run-DMC-that was one I was influenced to make. It was actually [producer and former Def Jam partner] Rick Rubin's recommendation, and I agreed to do it. The second one was making the Beastie Boys wear their natural outfits, instead of letting them dress up like they were planning to, which was almost like minstrels. I think what we've done is to let bands be honest and to always push for their integrity. I stick to my guns about that. It's about selling a person's art, and rejecting any commercial idea that would threaten the artist's integrity.
Every new business that I got into was a result of loving music and managing artists. In other words, we started managing the artists and tried to figure out how to get their records played, because at that time hip-hop was an art form that had no vehicle for exposure or exploitation. And then I started the record company because they needed a company that really understood how to market and develop their images properly, as well as to protect their careers. Later, I started making movies becuse they wanted to make movies.
What inspired you to start dRush, your advertising agency?
It was obvious to me that hip-hop artists had great marketing possibilities. They were great brand builders-the most important brand builders in America-and there was no real agency that understood how to exploit that. My story may not be so great for Jungle readers, because it isn't one based on, you know, a strategic plan to build a business. My business was a creative way to express myself and the clients that I represented; it became an entrepreneurial plan.
Over the years you've enjoyed successful business partnerships-notably with Rick Rubin, and Donny Deutsch, who co-owns your ad agency. What are the keys to a prosperous partnership, and how do you maintain it?
The key is to properly incentivize people. You've got to make sure that, at the end of the day, you both have a good reason to go to work, and that there are no good reasons-for them or for you-to move. The second thing is to let everyone fill in the holes that they're good at filling in. You have to employ winners, and then allow winners to do what they do. You have to give them autonomy, which means, in a lot of cases, the opportunity to make mistakes. I learned that I have a lot of talented, smart people around me. All my businesses run better when I'm working with people who are smarter than me.
You invented your business from scratch; do you ever wish that you could have attended an MBA program?
Yeah, it would be great if I had all kinds of education about all kinds of subjects that have to do with business. It's always better to know, to have the jargon down, because it spares you from almost every kind of problem. I survived without it, but I think a structured education could have prevented a lot of problems. For instance, I didn't realize how small the margins are in some businesses, like clothing. I didn't realize that the margins were pennies. Those pennies became important. So, yeah, an MBA is helpful to anyone. No education is a waste, but some schools and some people teach too many rules. Rules are sometimes a problem when you're a creative entrepreneur.
Most executives will give a look to a candidate with a degree from Harvard Business School. Given your background, does that matter to you when you're reviewing a resumé?
Of course I like to see Harvard Business School. I think that some people are winners-they're aggressive, hardworking, and appreciate the process of building something. Other people are kind of complacent and just do their job. It's a character trait.
How do you identify "winners"?
Urgency.
A sense of urgency?
Yeah.
That's a very difficult trait to convey to an employee.
It's hard. Some people have a sense of urgency and you find that they rise to their level; some people work all the time and never get shit done. It doesn't have to do with smarts. I know some of the dumbest people who are successful entrepreneurs because they don't think about it. They just do it. They hit a brick wall and keep banging until the wall has a hole, instead of starting over and digging another hole.
Have you hit any brick walls lately?
I hit a brick wall every day.
By selecting different brand names for your businesses-Phat Farm, Def Jam, 360hiphop.com-do you think you might have limited your brand extension possibilities?
I'm not in a lot of businesses; I'm in one business: Young American Culture. We could have a Def Jam clothing company, but it's not a good idea. See, that's why the MBA thing doesn't matter sometimes. That's common sense: Def Jam's a record company; it's not a lifestyle brand for clothing.
You must have been wooed by plenty of VCs when you were looking to start 360hiphop.com.
I turned them down.
Why?
Because I didn't think I needed venture capital. I only wanted strategic partners for 360hiphop.com. I got Sony, Seagram, Will Smith, and a bunch of music artists to invest in the company. I thought that's what I needed to start things off with.
Why are you betting that your business translates onto the Web?
You need to be able to exploit all media. The Internet is the basis for all synergistic opportunities in my companies, but you don't want to develop that content, put it on the Web, and have no other exposure for it.
So what does BET bring to the table?
Infrastructure, finance, and connections in the multimedia industry.
In 1996 you said that when you go to a Hollywood party, "the only black people in the room are Quincy Jones, Sidney Poitier, the waiters, and me." Would you say the guest list has changed?
Well, Sidney and Quincy don't go out as much. But that list will change and change dramatically because hip-hop is moving to Hollywood.
You and Martha Stewart are two of the most successful marketers in recent times. When you see her at cocktail parties, what do you chat about?
We talk marketing. I'm interested in how she markets her products. But the last time I saw her, I hit her up for charities. I always hit her up and she always writes a check.
What advice do you have for the future entrepreneurs who are in business schools right now?
Focus. If you don't break a hole through the brick wall, don't just start digging a new hole. Keep going until you break through that wall.
