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The Music Mogul

Jay-Z has bult an empire on the back of his hip-hop stardom with a cigar in his hand.
Marshall Fine
From the Print Edition:
Jay-Z, May/June 2009

(continued from page 4)

"I know exactly what crime is—but you start to become a cynic when you see it existing at every level of society. This kid I knew was 16 and got 15 years in jail for selling drugs. And Bernie Madoff is living in a beautiful apartment on house arrest—and he's robbed the nation blind. You start to say, 'Man, this is unfair.' So yeah, I know what crime is."

Having launched his own record label—and then created a business empire of his own—Jay-Z became the focus of a bidding war between Warner Bros. and Def Jam when he announced his retirement from recording and performing in 2003. He finally went with Def Jam, because the deal included regaining ownership of the master recordings for all of his albums—a hugely valuable property. While running Def Jam, he launched the careers of a number of stars: Ne-Yo, Young Jeezy, Rihanna—as well as nurturing the recording and performing career of Kanye West, who'd gotten his start producing tracks for Jay-Z. Still, Jay-Z harbors no illusions about his own business acumen.

"I never had a desire to be a businessman," he says. "I never had a job—forget about running a company. When we started Roc-A-Fella, we didn't read a book about running a company. We just did what needed to be done. Do I think I could run any company? Naw. Like, I can't see me running Google or something like that. Everything I've been involved with are things I could touch, things I could have a passion for. Music, fashion—they're an extension of the culture. Running Def Jam, I knew that I knew what a hit single sounds like."

Asked how he developed his sense of business, he says, "One thing I always lived by is that I always try to make a fair deal. I don't want to make deals where I make all the money and someone else gets hurt. There are a lot of guys who do business that way. I don't want $1 over what I'm supposed to get.

"And the other thing is, I go by intuition. I have to have a good feeling about the people I'm getting into business with and the things I associate myself with. I never do something for money or because it's cool."

The most relevant lesson of the street? "You know, when they say there's no honor among thieves—that's not really true. When I was on the street, you had to carry yourself a certain way. You had to treat people fairly because that's how you survived. Then everyone would want to deal with you. That's how you develop a reputation as a good guy to deal with.

"If you go back on your word when you're on the street, they don't take you to court; they don't file a lawsuit. You can cause yourself some real problems. You had to be a stand-up guy or you could place yourself in peril. When I first came into the music business, I'd have these conversations with executives and we'd shake hands on something—and the next time I saw them, they'd say, 'I never said that.' So I'd say there's no honor among businessmen."

So what does he know that generations of MBAs don't—the kind who were running Lehman Brothers, AIG and others of the dominos that toppled the country into economic chaos with subprime lending and credit default swaps?

"That's probably the problem—they know too much," Jay-Z says with a knowing smile. "The problem was arrogance, not ignorance. They started thinking, 'I'm so smart, I can borrow the same money twice. I can lend the same money six times—and then take that debt and sell it.' They figured, well, Lehman Brothers will never go broke, so I'll never have to pay that debt. Then one day it happens and that $1 million you lent is suddenly $700 trillion kazillion and there's no way to get on top of it.

"That's not ignorance. That's an intelligent, conniving person. That's intelligence and arrogance."

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