Dashing Diversification

By Sean Gregory

After a day at the office filled mostly with meetings and phone calls, Damon Dash, CEO of Roc-A-Fella Enterprises, hops into the rear of a Ford V16 party van with two underlings. There will be no party tonight. His driver is taking him to XM Satellite Radio's New York City studios, where Dash and his Roc-A-Fella crew put on a weekly talk show to plug his rap, clothing and film empire. Slouched in his leather seat, Dash grabs control of the CD remote and makes a selection. It isn't Roc-A-Fella superstar Jay-Z, with whom Dash launched the company from his Harlem apartment eight years ago, or even Dirt McGirt, a.k.a. Ol' Dirty Bastard, another player on the Roc-A-Fella roster. Dash listens to a fiddle and starts to bop his head; he has settled on the 1980s cult hit Come on Eileen by Dexy's Midnight Runners, whose Irish lead singer introduces the chorus by belting, "Toora loora toora loo rye aye."

Not much street cred here. But Dash doesn't need any. At only 32, he is CEO of a $500 million company. Beyond the fact that he's a hip-hop executive, Dash defies easy characterization. He loves the disco rhythms of Blondie. He has seen friends gunned down in his Harlem neighborhood, yet he attended an exclusive New York City prep school and played lacrosse in Connecticut. "Do you know how hard it was to come back to my neighborhood in penny loafers with khaki pants and a blazer?" Dash asks. And he recently produced comeback singles for the former Posh Spice, Victoria Beckham, whose British girl-band, the Spice Girls, briefly ruled the late-'90s airwaves.

Dash's new business plan fits him like a Roc-A-Fella hoodie. This fall he started Roc Music, the first hip-hop company to produce rock, alternative and R. and B. He's flipping the turntables: over the past decade, pundits have lauded rap for "going mainstream" and finding suburban skater punks far from the smoked-out city neighborhoods where the music was founded. With Roc Music, Damon Dash is formally inviting rock into the hip-hop world. "I've had 20 albums go gold or platinum," he says. "Why can't I have that in rock, soul and R. and B.? You can't just sit around and do the same thing for 10 years." Dash's challenge is one he shares with many other CEOs: Where is the next phase of growth coming from?

Diversification is part of a hip-hop mogul's DNA. Russell Simmons, the godfather of urban marketing, and Sean (P. Diddy) Combs have set the standard. To really make it in the $5 billion rap business, you have to mix more than beats. You have to be into fashion, movies and maybe even a Broadway play. Simmons founded Def Jam records and runs Phat Fashions, a $263 million clothing line, and produced Def Poetry Jam on Broadway. P. Diddy, a star recording artist, also runs Bad Boy Records, a $325 million clothing line and two restaurants.

Simmons and Combs have spawned imitators: rappers Master P and Jermaine Dupree have diversified, while execs like Shady Records V.P. Paul Rosenberg, who manages Eminem, and Mona Scott of Violator Management, Missy Elliott's chief operator, have sauntered out of the studio.

But many see Dash as the one who is inheriting Simmons' throne. "Because of Damon's ability to sit down at a table with corporate partners and quickly figure out what's necessary, he has even more potential than Russell," says Erin Patton, president of the Mastermind Group, a marketing consultancy that has worked with both men. "It's all about his timing."

Given the condition of the music industry, Roc Music's timing isn't ideal. Web piracy has helped cause a 14% drop in record sales since 1999. In mid-November, Dash's biggest star, Jay-Z, released what he says will be his final record, The Black Album. It topped the charts in one week, but if Jay-Z, just 33, doesn't pull a Michael Jordan and lay tracks once or twice more, "the Roc" could lose some cachet. "Damon's done a great job, but he's clearly been in the right place at the right time in his partnership with Jay-Z," says Ryan Berger of advertising agency Euro RSCG Worldwide. "I'm not sure he can reach that next level without him."

Dash hears the whispers. "People are contemplating our demise," Dash tells some dozen Roc-A-Fella staff members gathered in his Broadway office. "With Jay retiring, now more than ever we are going to be critiqued on every level." Dash doesn't just moderate a meeting. Sitting at his desk, two black greyhound statues flanking him, Dash cups his hands and lectures.

Prissy pop acts like Britney Spears and 98-o are on today's syllabus. Dash wants his people to know that although Roc-A-Fella will move beyond hip-hop, the company won't lose any edge. "This pop-music thing, it's starting to bother me," he begins. "Everything that's hot, it's going pop. What sells now is this bulls___." His cell phone interrupts. Dash spends 10 minutes jousting with a colleague. "It's not my fault that your company owes me $85,000," he says. Dash flicks the phone shut and continues. "We have to come out with something--maybe a 'Posh Spice Is Dead' mix tape. I refuse to make our culture look stupid to get on MTV."

Since his childhood in Harlem, Dash has brandished the idea that he would come out ahead of the game. He would sweep barbershop floors and hawk newspapers to get money so he would have the very latest Fila sneakers. And there's that action-hero name. His mother Carol Young Dash raised Damon alone and worked a couple of jobs to provide a middle-class life for her son. Her labor, and scholarship money, enabled Dash to attend Dwight, a prestigious Manhattan prep school, and later a Connecticut boarding school. "I was around kids that had country houses and cooks and maids and stuff like that," he says, "and I didn't think anyone was that much better than me. I was like, Why shouldn't I have that stuff?"

His mother never saw him get it. An asthma attack killed her when Damon was 15. Her portrait covers his left biceps. Two years ago, tragedy struck again when his fiance, the singer Aaliyah, died in a Bahamas plane crash. Dash shocked co-workers when he strutted through the office only a week after Aaliyah's death. "Once I realized how many people depend on me at Roc-A-Fella, I knew I had to recover," he says.

Roc-A-Fella first bounced into Dash's mind when, at age 19, he went to a birthday party for rapper Heavy D at a cousin's Manhattan nightclub. The money and beautiful women hooked him. Two years later, a local DJ introduced Dash to Brooklyn rapper Shawn (Jay-Z) Carter. They teamed up, and Dash took Jay-Z on the road, but record labels weren't interested. Frustrated, Dash kept hustling Jay-Z at clubs in order to raise the money to start his own label, named in homage to the oil barons. He eventually persuaded Priority Records to distribute Jay-Z's debut, Reasonable Doubt, and it quickly sold a million copies. In 1997 Def Jam bought a 50% stake in Roc-A-Fella for about $1.5 million. Dash still laments the price but learned a business lesson. "We should have held out for more," he says. "Those f______ got us so damn cheap." Roc-A-Fella has averaged some $50 million in annual revenue over the past seven years.

Dash started Rocawear apparel in 1999. Sales of its jackets, sweatbands and tank tops now total about $300 million a year, making the company one of the major urban-gear brands, alongside Phat Fashions and Sean John. "I like the nylon windbreakers, the logo--Rocawear's stuff is just rugged," says Simmons. "People shouldn't be asking me about what I've taught Damon Dash. They should be asking me about what I've learned from him."

Almost every big rap star has a line of clothes, but only Roc-A-Fella lifts its own drink. Tired of seeing liquors like Allied Domecq's Courvoisier profit from mentions in songs, Roc-A-Fella partnered with William Grant & Sons, a Scottish distiller, to release Armadale, a premium vodka, last January. Armadale has already produced a $700,000 profit as well as criticism of Dash for pushing liquor to kids. Dash sees a double standard. "We're not saying kids should drink it," he says. "We're saying, 'Hey, kids, you can start a business.' Is it a negative thing when someone else starts a vodka company? As soon as hip-hop does it, there's criticism. It's really funny to me."

These days Dash spends most of his hours building up his less controversial film business. Death of a Dynasty, a hip-hop-industry spoof that Dash financed, produced and directed, will be released soon. Dash Films will shoot State Property 2, a revenge drama, in February. The pressure sometimes is evident. When Artie (Choke) Alston, a cameraman, shows Dash some backstage scenes on a laptop one recent afternoon, Dash doesn't hide his displeasure. "Everything gets done half-ass with you," he says. Choke then sits on a windowsill, staring at his feet. Dash is hard not only on the movie crew. "Sometimes you just want him to shut up," says Samantha Ronson, whose debut rock album, Red, is scheduled for release in March. "But then you remember he came from nothing and built all this, and you respect what he's saying." Ronson, 26, should cherish such attention--Dash has been hawking her single, Pull My Hair Out, in clubs and on the street. (He says CEOS should not avoid dirty work once they reach the top.) Red is Dash's first diversion from hip-hop, and some wonder why he's starting an unproven ex-club DJ on opening day. "He's putting his reputation on the line with me," Ronson says.

Aboard a private Gulfstream jet to Ronson's Pull My Hair Out video shoot in Los Angeles, Dash brushes aside the skeptics. "With Jay done, we have to take some chances, try new things," he says. His entourage surrounds him. The head of his film business peruses a script (she recommends that Dash take a pass). A marketing guy is reading Mao in the Boardroom, while two others flip through a branding book. Dash punches at his BlackBerry. "This is the smallest jet we'll ever be on," he says. True--if Roc-A-Fella sails through the rough weather that inevitably lies ahead for any young and growing business.