YWR: Dre & Jimmy
Disclosure: These are personal views not investment recommendations.
You are now about to witness the strength of street knowledge…
Everyone knows where they were when they first heard Straight Outta Compton. For me it was 1989 and I was at a summer hockey camp in Northern Minnesota. I went to high school in a small town in Montana and didn’t know anything about West Coast gangsta rap, but that wasn’t the case for my cool roommates from Minneapolis. The lyrics were shocking, and new and “is that really the name of the band?” Fifteen of us shared a dorm room and when we weren’t playing hockey we were playing NWA. I was hooked and took NWA back to Great Falls. That summer my friends and I drove around in Josh’s Suburban with the windows down, music up, rapping all the songs. We knew every word and each had parts.
Naturally, when I came across The Defiant Ones on Netflix, a documentary about Dr. Dre and Jimmy Iovine, I had to watch it. I was drawn in by Dr. Dre, and he is still amazing, but for me Jimmy Iovine steals the show. I’d never heard of him, but became fascinated by his business story. There were lessons to be learned. The documentary is four hours long and I’ve watched it 3 times.
Some quick background; Jimmy is born in 1953 and grows up in a lower middle class Italian family in Brooklyn. His dad works on the docks as a longshoreman. Jimmy hates school and has trouble reading. He enters college to avoid the Vietnam War draft, but never graduates. Jimmy is into music and forms a band with his friends, but it isn't successful. This is a crushing reality, but he moves on to work as a sound engineer at a music studio in New York City called The Record Plant.
It’s a mix of the right guy in the right place at the right time and Jimmy has the opportunity to work with John Lennon and Bruce Springsteen. This kickstarts his career as a music producer and he goes on to produce Tom Petty, Pattie Smith, Stevie Nicks and U2. By 1990 Jimmy is tired of producing records, and decides he wants to be a producer of producers and starts Interscope Records, which is how meets Dr. Dre. Dre and Jimmy produce many successful records starting with The Chronic, but the highlight is when they start Beats in 2006, the famous music headphone company, which they sell to Apple in 2014 for $3 billion.
That’s the summary, but I want to share a few quotes and moments that especially struck me as takeaways for all of us.
“You get what you give”: We’ve all heard this advice or some version of it, but I like the Jimmy version. Jimmy was highly ambitious and openly wanted to get rich (for himself). He was no saint, but he knew the road to success was by making his artists successful. In Part 1 of The Defiant Ones Jimmy launches Pattie Smith’s career by convincing Bruce Springsteen to give her a song Bruce had written, but didn’t want to use, called “Because the Night”. Pattie originally didn’t care about the song, but Jimmy thought it was a great idea and keeps pestering her to listen to it, whereupon she loves it and realises it will be the smash hit of her album. Same thing later on with Stevie Nicks. Stevie is recording a solo album, but doesn’t have a hit song. Jimmy was at the same time also producing for Tom Petty and works his magic to convince Tom to give Stevie a song he had written, but wasn’t planning to use, called “Stop dragging my heart around.” Again, like with Pattie, it was the key song that defined the album and it was Jimmy’s idea. He had a knack for identifying things that would go well together. As Stevie Nicks describes it "Jimmy didn’t want to be the #1 guy. He was ambitious for you.” I call that “You get what you give.”
Know when to disrupt yourself: Last week we highlighted Whitney’s Johnson’s book on disrupting yourself, but it comes up in Jimmy’s story as well. Jimmy knows in 1990 it’s time to stop being a record producer himself and time to start Interscope records. Later on he sees the challenge to the record industry from streaming music and when he gets the opportunity to pivot he creates Beats, a consumer electronics company. Bruce Springsteen has a great take on this ability:
People become successful and they get locked into the behaviours that led them to be a success. Jimmy was very, very good at letting go of the things which might have made him a success to this point. He is willing to shed that to go for something completely else. And not afraid to partner with other very visionary people. So, Jimmy’s career is based on a tremendous lack of fear of moving forward.
Empathy and persistence. A master class in negotiation: You know the guy Steve Voss on Youtube who is an ex-FBI hostage negotiator and teaches a masterclass in negotiation with lots of gimmicky tricks like ‘mirroring’? Well, I think when you are dealing with real people, for real money the master class is Jimmy Iovine’s negotiation with Steve Gottlieb to sign Trent Reznor. When Jimmy first starts Interscope records he wants to sign Trent Reznor from Nine Inch Nails. At the time Trent was popular and controversial, but Jimmy knew he would be a great long term artist for Interscope if he could sign him. Trent wanted to sign with Interscope, but was already signed to a small label called TVT owned by Steve Gottlieb.
Steve was stubborn and didn't care that Trent didn't like him and was intent on Trent delivering the remaining seven records in his contract. Other labels had tried lawsuits to get Trent out from under Steve, but it didn’t work. Steve was a tough cookie. It would be challenging, but Jimmy knew he somehow had to convince Steve its was in his best interests to partner with Interscope, so he picks up the phone and starts calling Steve, Trent, Trent’s manager and everyone else involved. Jimmy is persistent with his phone calls and works on the deal for over a year, until Steve Gottlieb finally agrees to a deal. In the interviews you can tell Steve is a difficult character and at one point he is asked why he eventually agreed to sign Trent Reznor over to Jimmy. For Steve the question is like asking a great warrior to respectfully analyze the tactics of a combatant who has outsmarted him. Steves sighs, thinks and says:
Empathy; his ability to take on the other person’s point of view, to understand it and put himself in their shoes. That also informs why he is so good as a marketer. In terms of his being able to understand people and really think about their primal motivations and desires, to have this Vulcan mind meld about what is going to move them.
Empathy and persistence. That’s the master class in negotiation.
Untouchable situations are an opportunity if you are new. Jimmy eventually signs Trent Reznor, but his Interscope record label is still new, not well known and is competing against more established record companies to sign hot artists. Everyone wants to sign the hot artists, so Jimmy had to think differently and look for opportunities and situations where others wouldn’t.
After two successful records with NWA Dr. Dre left Ruthless records over a contract dispute and joined with Suge Knight to form Death Row Records. Dre was out to prove himself as an independent music producer and had put his heart and soul into his new album, The Chronic. Dre met with record companies from Los Angeles to New York to find a distributor for his new album. To his surprise nobody was interested. It was 1992 and times had changed since Straight Outta Compton. Earlier that summer LA had erupted and burned with the Rodney King riots and there was a mainstream media backlash against gangsta rap. The big studios didn’t want to look bad by being associated with gangsta rap anymore. In addition Dre was still involved in a legal disputes with Ruthless Records. Despite his huge success with NWA nobody wanted to touch him or The Chronic. Dre started to question himself. Maybe the Chronic wasn’t that good.
Enter Jimmy. Jimmy hears The Chronic and thinks it is amazing. He thinks Dre and Snoop are the next Keith and Mick. (Snoop doesn’t know who he’s talking about). Jimmy tells Dre. “Give me three weeks and I’ll sort out the lawsuits with Ruthless.” True to his word Jimmy sorts things out and signs Dre to Interscope. He tells his execs to start buying radio slots all over the country. The experts tell him radio stations will never play Dre’s album. Jimmy tells them to shut up and buy the slots anyways. The Chronic goes on to be the success we all know and sells over 3 million copies.
Dre was at a low point and nobody would touch him. Where others saw bad media coverage and legal complications Jimmy saw opportunity and eventually a great friend. As Steve Stout would say, “No white executive would have taken on what Jimmy took on, which was one of the biggest headaches in the industry.” That ‘headache’ helped Jimmy make $3 billion, and defined Interscope as a new leader in the industry. The key lesson for us is that when you are new, looking for your edge, and trying to break into a difficult industry you have to look again at these supposedly ‘untouchable’ situations. There might be a Dr. Dre or a Tupac out there waiting to be found.
Let race horses be race horses: It’s a small point, but both Dre and Trent Reznor appreciate that Jimmy lets them be artists and doesn't try to micro manage them. Dre brings in Snoop, who is controversial, and Trent bring in Marilyn Manson, also controversial, but Jimmy doesn’t mind. I liked Jimmy’s quote on this.
When you have great artists like that (Dre and Trent) you want their message and what they are doing to be as pure as possible. What you do is you give them the keys to the car and you say ‘drive’.
Focus on your opportunities, not your problems. This is the advice my Dad gives me when I ask him for help with a tough situation. Yes, you have to deal with your problems, but give more energy to your opportunities. Dre doesn’t express it this way, but it’s what I see when he decides the violence and culture at Death Row Records is too negative and he wants to leave. Death Row is the company he formed together with Suge Knight, but he no longer gets along with Suge, who is acting more like a thug than a record executive. For Dre there is no way out of the legal agreement without giving up his 50% stake. Friends tell Dre he shouldn’t give up his stake since it is worth a lot, but Dre doesn’t care. He’s a creative person. He knows he has great things still ahead of him, and he can’t create while surrounded by the fights, drugs and drama at Death Row studios. It was difficult but Dre ends up leaving Death Row, which he had made into a huge success, to start on his own again. It seemed like Dre was giving up a lot, but it was the smart move. He would go on to create so much more.
Eminem and the synchronicity of life: Finally, this isn’t a business story, but I like it. After leaving Death Row Dre starts his new label, Aftermath. Surprisingly, Dre’s first two records at Aftermath are failures. Jimmy’s execs at Interscope are annoyed at the costly failures and start to wonder if Dre has lost his touch. Jimmy doesn’t doubt him, but for Dre the pressure is on. His next record needs to hit.
Meanwhile, a young white rapper from Detroit has flown to LA to compete in a rap battle. He does well, and makes it through the qualifiers, but loses the final battle to take second place. After losing he is frustrated and dejected. He really wanted to win and get noticed. Afterwards, sitting with his head hung down looking at the floor a young man in the crowd asked him for a tape, which he tosses in the direction of the voice without even looking up. He doesn’t care. The young rapper knows he has to go back to his job in Detroit and it’s depressing.
A few weeks later Dre is still working on ideas for his third album, but lacking inspiration and goes over to his friend Jimmy’s house for a chat. Jimmy, encourages him not to worry. A good idea will come along. Jimmy then takes Dre to his garage and digs around in some boxes and finds a tape which his intern had recommended to him. The intern had picked up the tape from an interesting new rapper at a concert and passed the tape on to Jimmy, who passes it on to Dre. “Here Dre. Listen to this. This guy raps like his pants are on fire.” Dre take the tape home and gives it a listen. The next thing Jimmy knows his phone is ringing and it’s Dre saying he wants to get this rapper into a studio immediately!
Dre and Jimmy fly Eminem back out to LA for a session with Dre and the rest is history. Dre’s third album is with Eminem, The Slim Shady LP, and goes quadruple platinum! Little did Eminem know when he dejectedly tossed that tape out at the rap battle it was going into the hands of Jimmy Iovine’s intern, who would give it to Jimmy, who would dig it out of a box in his garage to give to Dr. Dre, his musical idol. Amazing.
Jimmy and Dre sell Beats to Apple for $3 billion and Dre becomes the first gangsta rap billionaire. With some of the money Jimmy and Dre donate $70 million to USC to create the Jimmy Iovine and Andre Young Academy for arts, business, technology and innovation. It’s a cool facility with 3D printers, CNC machining tools, and mixed reality film studios. I even showed it to my younger daughter as an interesting future school to attend. Here’s the thing though… as cool as the Iovine and Young Academy is, I’m pretty sure the next Jimmy Iovine or Dr. Dre is not going to come from that academy. I don’t know why, it just seems more often than not amazing, world changing entrepreneurs don't graduate from shiny academy’s at highly ranked schools.
Have a fun Happy New Year celebration tonight and I hope 2022 is a great one for all of us. Now, let’s get the speakers warmed up with that infamous Dre-Tupac collaboration….California Love!
The track hits you ear drum like a slug to your chest…