Rush Hour

Russell Simmons, the godfather of hip-hop, has used street smarts and a platinum Rolodex to create a $300 million conglomerate. Now he's flexing his political muscle. Come inside the frenetic world of a modern entrepreneur.

If it were empty, the executive suite at Rush Communications, the conglomerate owned by Russell Simmons, could be that of any CEO. Look around, and you'll see hardwood floors covered by intricate oriental rugs, a set of deep red, tufted leather couches and chairs, a mahogany desk, and the requisite 43rd-floor views of midtown Manhattan that span both rivers. You expect no noise other than the hushed tones of a secretary whispering that an appointment has arrived.

But that's not exactly this CEO's style. In Russell Simmons's office, Lord Nez, an intern, breaks out into a spontaneous rap while helping Simmons choose a pink Phat Farm suit for tonight's MTV Video Music Awards. The door is wide open, a good thing because it's often blocked by a stream of designers, friends, and employees trickling in and out without advance notice, asking Simmons to sign this or approve that. The phone is either ringing or Simmons is using it, all the while thumbing messages on his Motorola two-way like a madman, talking a blue streak to a reporter, and pouring a mysterious ochre-colored powder into a bottle of Evian (that's lunch). Forget about power ties: Simmons makes his executive statement with floppy Phat Farm jeans, spotless white sneakers, a neon-green Polo shirt, and a pink Barbie Band-Aid behind his ear.

Brrriinng! Simmons is calling Reverend Run, one-third of the famous rap group Run-DMC (aka Simmons's own little brother Joey) to talk about the sneaker company they co-own.

Brrriinng! It's Dr. Benjamin Chavis, the former head of the NAACP and now president and CEO of Rush's Hip-Hop Summit Action Network, who wants to prep for a corporate meeting.

Brrriinng! Kimora Lee Simmons, a former Chanel model, Simmons's wife of four years and the designer of Rush's Baby Phat women's and girls' clothing lines, is on the phone, fretting that she doesn't feel like going to the MTV awards. "It's okay, honey," he teases. "I'll just take [sexy female rap star] Foxy Brown." (Kimora didn't make it, but Simmons showed up with his brother instead.)

This attention-deficit-disorder-as-management-style is an amazing thing to behold. It's also business as usual for Simmons, arguably the most creative, successful, and respected African-American entrepreneur of the moment. He has built a career—and incubated a vast array of businesses—on the simple premise that the music and culture of today's urban youth have broad commercial appeal across the United States and around the world. As hip-hop has blossomed in Iowa, Connecticut, and Paris, so too have Simmons's wealth, power, and influence. "I consider him one of the great entrepreneurs out there today," says his pal Donald Trump. "He's a fabulous guy with a tremendous understanding of business."

Yet spend a few hours with Simmons, and it becomes obvious that he is no longer all about the benjamins. His favorite line, says Craig Marshall, Rush's COO, is "What else?" and that now seems to mean using his power to achieve social and political goals ranging from overturning certain restrictive New York State drug laws to encouraging voter registration. "I want to contribute more to earth than I take away from it," Simmons says.

Simmons's success comes as much from what he is not as from what he is. He is not a man who made it big and then abandoned his roots but rather one who is still as comfortable on the streets of the inner city as he has become on Wall Street. He vacations on St. Bart's with the gatekeepers of the establishment, virtually all of whom call him a friend, while holding political opinions and promoting cultural messages that many of those same people might find incendiary. He is radical and approachable at the same time. He is, in a word, authentic.

Today, the Russell Simmons empire, dubbed Rush after Simmons's most apropos nickname, spans clothing (Phat Fashions, featuring the Phat Farm, Baby Phat, and Phat Farm Kids lines, expects to bring in an estimated $615 million in retail sales this year) and music (he is chairman of Island/Def Jam records, although he sold his stake in the company in 1999). There's a new financial-services arm, an entertainment unit that includes the acclaimed Def Comedy Jam and Def Poetry Jam series of live shows and television programs, a monthly magazine, and an energy soda, DefCon3. Rush also houses the nonprofit Hip-Hop Summit Action Network, a nationwide series of youth conferences aimed at increasing voter registration and political awareness, and the Rush Philanthropic Arts Foundation.

That would be plenty for any normal planetary being to handle, but Russell Simmons is not normal. He is 46 going on 12, with the manic energy of a teenager and the goofy, almost cartoonish grin of someone who can't believe how great life is. Easygoing, profane, and hilarious, Simmons regularly speaks all over the country to everyone from small-town entrepreneurs to Harvard MBAs, is photographed at every social event, takes an intensive yoga class every single day, and somehow makes it home every night to his palatial 35,000-square-foot spread in Saddle River, New Jersey, to see his two daughters, Ming Lee, 3, and Aoki Lee, 11 months. He has a platinum Rolodex of friends and contacts whose scope boggles the mind. How does he keep it together?

"Everybody around me is smarter than me," he says. "I don't keep track of shit, and I don't have to worry about nothing." Yeah, right. Simmons may not know what's happening on any particular day—"I had a 1 o'clock? What's that about?" he yelps at his best friend, the speakerphone—but he is, in fact, deeply involved in most aspects of his company, whether it's adding buttons on a suit, tinkering with the color of the sports drink, or canning a sneaker commercial that's already been shot. Simmons's management style is a mix of the business skills he learned selling fake coke on the streets of Queens; a mellow nonjudgmentalism, which he credits to his yoga practice; and the eclectic curiosity and unfailing optimism of a born entrepreneur.

Simmons can happily have a political dialogue with New York governor George Pataki or former Israeli prime minister Shimon Peres, and just as happily hang out with his friend Spuddy from Hollis, the Queens neighborhood where he grew up. Although Simmons moves effortlessly from Hamptons polo matches to the clubs frequented by 50 Cent, the rapper who's been shot nine times, he doesn't change much. He still graciously accepts tapes from the eager wannabe rappers whom he runs into on the street. He wears a Timex, although he owns part of a Swiss company, Grimoldi, whose watch faces are encrusted in diamonds. "What you see is what you get," says Donny Deutsch, chairman and CEO of Deutsch Inc., an advertising agency that has worked with Simmons. "He doesn't pretend to be what he's not."

Simmons is a man of contradictions. A true yoga fanatic who goes every afternoon to a class, no matter where he is, as well as a vegan, he has no trouble buying his wife a Bentley or building a home that some call a shrine to conspicuous consumption (it does have a meditation room). "Being a renunciate [a term for someone who gives up material benefits for spiritual reasons] is bullshit," he says. "Yeah, we've got this tremendous house, we got a flower man, a fish man, Basquiats, Warhols, a bunch of crap in here. But to deprive yourself of the world's toys is different from not being attached to them."

Simmons supported a PETA-led protest against the treatment of chickens at KFC, yet at the same time let a collar of real fur sneak into his men's clothing line. He is close to Minister Louis Farrakhan and actively defends the idea of reparations to African-Americans for slavery, yet is just as happy to break bread with Ronald Perelman or Donald Trump. ("He's my nigga," he says affectionately of The Donald. Responds Trump, after a pause: "I think that's a great compliment, and I think I will thank him for that.") He gets on with nearly everyone, and that has made him a political and economic force to reckon with.

One thing Simmons is not is a by-the-book details guy. He surrounds himself with people he trusts to handle the day-to-day aspects of his business. He is a kind of grand pooh-bah of marketing, a master brander and hype creator who leverages his reputation as the grandaddy of hip-hop to bring people together and let things combust. "Not only does he have a finger on the pulse of popular culture," says Tommy Hilfiger, a friend and rival, "but he also truly recognizes raw material and understands how to turn that potential into a marketable product."

Simmons is happiest as a connector of people and trafficker of information. He has always focused on the common interests of people from various races and classes, rather than their differences, and spends much of his life trying to bring together people with similar goals but disparate backgrounds. "He's just interested in people," says Island/Def Jam CEO Lyor Cohen, "and because he's interested, they're interested. He wants to know the nuances of how other people live, receive art, and experience culture. It has nothing to do with adding a number to the Rolodex. When you cut him open, that's what he bleeds."

The middle son of three boys in a middle-class family, Simmons decided early on that the straight path of his dad, a teacher, and his mom, a recreation director, was not for him. School bored him, and he wanted nice clothes, so he turned to the street, selling ganja for extra money. He joined an infamous gang, the Seven Immortals, watched his older brother Danny—now a successful artist—go to jail for using drugs, got a job at the Orange Julius store in Greenwich Village, and eventually graduated to selling fake cocaine. Bogus coke wasn't illegal and the margins were better, Simmons says, plus he reasoned the only people you had to worry about were ripped-off clients.

Everything changed one day in 1977, when Simmons saw a man named Eddie Cheeba whip a club crowd into a frenzy by shouting out rhymes. Simmons had an epiphany. "Just like that, I saw how I could turn my life in another, better way," he writes in his autobiography, Life and Def: Sex, Drugs, Money + God (Crown Publishing, 2002). "All the street entrepreneurship I'd learned selling herb, hawking fake cocaine, and staying out of jail, I decided to put into promoting music." Simmons quit dealing and became a concert promoter for New York-area shows and then eventually a manager, helping to get some of the first rap singles on the radio. He got his biggest break when he coproduced Run-DMC, the rap group featuring his kid brother. The group became the first rappers to appear on MTV and the first to score crossover hits with white listeners, particularly because of its rap-rock collaboration "Walk This Way," with heavy-metal band Aerosmith. Today, the marriage of hard rock and rap seems natural, two strands of the same teenage angst and anger. But in the mid-1980s, the idea that black street kids and white suburbanites could like the same music was shocking.

Simmons learned a huge lesson from Run-DMC's success. The group made it precisely because it wasn't trying to cross over at all. Unlike other aspiring rappers, the members of Run-DMC didn't wear fancy superstar clothes but rather leather suits, hats, and Adidas sneakers—exactly what was being worn in the 'hood at the time. By appealing to a smaller audience with their own authentic style, they became mainstream stars. Simmons says this insight has been a constant in every business he's owned. "You have to tell the truth," he says. "It endears you to the community. The [people] can smell the truth, and they're a lot smarter than the people who put the records out."

In 1985, Simmons and his partner Rick Rubin cofounded Def Jam Records, the label that featured such huge rap stars as Public Enemy, the Beastie Boys, and LL Cool J. Then, as now, he surrounded himself with a small cadre of smart, loyal partners and employees who flourished in a disorganized, entrepreneurial free-for-all. The lifestyle was wild—Simmons says having sex and snorting cocaine in the office was part of a normal business day—but it was a rush to be on the edge of a rapidly changing culture. Island/Def Jam's Cohen has worked with Simmons for 20 years and remembers those days fondly. "I lived in a welfare hotel and slept on the floor, and it was an incredibly fun period of time," he says. "We had the tremendous amount of arrogance that's necessary to swim against the tide."

Def Jam teamed up with Sony before selling a 60% share to Polygram, and in 1999, Simmons sold the remaining 40% for $120 million. Today, he has little operational involvement at Island/Def Jam but serves as a father figure to rappers such as Ludacris and Jay-Z, helping to solve legal and personal problems and teaching them the business of entertainment. "We talk every now and then about the industry, music, etc.," says Ludacris. "I look up to him. I want to follow in his footsteps in terms of the business ventures."

Those ventures extend far beyond music. In 1990, Simmons started Rush Communications, an umbrella company for a variety of ventures aimed at American youth. Today, the company is a percolating mix of businesses, led by Phat Fashions clothing, which was founded in 1992. Phat Farm's advertising and brand is quintessentially Simmons: The men's and boys' clothing lines have the classic styling of a Tommy Hilfiger or Ralph Lauren but with a slightly edgy twist. There are sweat suits, jeans, and preppy pink argyle sweaters, all made well enough (and priced high enough, says Simmons) to satisfy the aspirations of the poor yet also appeal to the rich. The multi-ethnic ads show more attitude than you might see in a Ralph Lauren spread, and they frequently carry a social or political message. Often, you'll see Simmons's cross-marketing skills at work; he loves to use Def Jam rappers as models, or feature the platinum-colored Motorola flip phone he designed, complete with the Phat Farm logo and Simmons's signature (it retails for $549). Today, Phat Farm has become the most broadly distributed urban brand, although primarily through smaller chain stores. In order to go head to head against such retail giants as Tommy Hilfiger and Ralph Lauren, Simmons's stated goal, Phat Farm must break into department stores. Federated Department Stores Inc., the owner of Macy's and Bloomingdale's, has carried Phat Farm for several years, but others haven't, believing the crossover appeal is limited.

Although Phat Fashions is still growing at 30% a year, according to Marshall, Rush's COO, Simmons has decided it's time to sell a majority stake. Is that because he sees a coming slowdown or because he needs scale? "We need better investment, sourcing and production and better infrastructure," Simmons says. "The obvious urban business has been fully exploited. We're growing dramatically still, but I believe we're hitting a ceiling."

Simmons has held serious negotiations with Kellwood, but at press time there was no deal. Skeptics say they think his clothing's popularity with the mainstream—suburban white kids—is more of a trend than a permanent cultural shift, as Simmons believes. Another issue is that in the fickle world of youth, popularity almost always means alienating the trendsetters, in this case urban buyers. Simmons's success has also inspired many imitators who are using their roots in the entertainment world to promote their clothing. "I'm agreeing that hip-hop is a culture and a lifestyle, but I'm not agreeing that he's going to be the only player in it," says Marshal Cohen, chief industry analyst at NPD Group, a consumer-market researcher. "Simmons is the biggest player now, but he was filling a void, and that void is rapidly closing."

While hip-hop music has crossed the cultural divide, not every urban-suburban venture has made it. In fall 2002, dRush, Simmons's advertising joint venture with Deutsch, set up to market mainstream products to urban youth, shut down. "Clients' budgets were limited, and they would just take slivers and say, 'This is our minority budget,' " Deutsch says. "But I'd go into business with him again tomorrow."

There are plenty of other projects, starting with DefCon3 soda, which is being distributed exclusively by 7-Eleven, and a joint venture with Unifund, a financial-services company, for the new Rush Card, a prepaid Visa debit card aimed at the estimated 45 million Americans with no access to checking accounts or credit. Simmons hopes to break people's dependence on pricey check-cashing agencies by allowing their paychecks or other funds to be transferred to the card. Not that Simmons plans to give it away: The card costs $19.95, and each transaction costs $1. Cheaper than a check-cashing window, yes. Charity, no. "He loves to say it's hard to help the poor if you're one of them," says David Rosenberg, Unifund's CEO, who predicts that the Rush Card will reach 250,000 people by the end of the year.

Businesses like this one, the kind that may improve someone's economic status, are attracting Simmons's attention these days. In part, the change comes from his nine-year yoga practice, which he says has transformed his life. He goes to class at Manhattan's expensive and star-studded Jivamukti, which combines an intense workout with a distinct spiritual philosophy. A recent Thursday afternoon saw Simmons sneak in late, clad in gray Phat Farm sweats that became drenched over the course of the challenging 90-minute class. Forearm stands, headstands, difficult balance poses—he did them all, concentrating as fully as he had on anything all day. Then he was gone, skipping the meditation segment so he could make it to the MTV awards in time. If Simmons on yoga is a calm man, it's hard to fathom what Simmons on cocaine was like 20 years ago.

Today, the types of activities he's interested in are as much about the give-back as the bling-bling. So he's wading more deeply into politics, making headlines earlier this year by meeting with Governor Pataki and others in his attempt to try to get New York State to repeal the draconian Rockefeller drug laws. The attempt backfired; not only did the laws remain, but Simmons found himself under investigation by the New York Temporary State Commission on Lobbying for organizing a rally on the issue without lobbyist credentials. Typically, he's undeterred. "People were saying I'm in trouble," he says, amazed. "But they're talking about the drug law. That's all I ever wanted. I can say whatever the f*** I want about their laws. How dare they?" Simmons is suing the state for violating his free-speech rights, and in a telling line, says he did it "on behalf of the hip-hop community."

Another political power base is Simmons's Hip-Hop Summit Action Network, which meets in different cities and had its 11th meeting in Philadelphia in August. The all-day event featured speakers such as Philadelphia Mayor John Street and rapper LL Cool J, and the price of entry was a voter-registration card. "Our high aspiration over five years is to register 20 million voters," says Chavis, the network's president and CEO, who claims that the group has already registered 1 million voters. It's no wonder that Democratic presidential candidates Howard Dean, John Kerry, Dick Gephardt, and Al Sharpton have already met with Simmons. "I think he's going to end up running for some sort of political thing," says Ludacris. (Simmons denies it.)

His growing clout in the corporate world is also causing people to take notice. Earlier this year, he threatened to call for a public boycott of Pepsi when, under pressure from Fox's Bill O'Reilly, it fired Ludacris as its new spokesperson because of his use of obscenities and then went on to place the equally obscene—but white—Osbourne family in a Super Bowl commercial. Simmons quickly won Pepsi's agreement to donate $3 million to charity. "I definitely appreciated that he stood up for me," says Ludacris.

He seems to like flexing his economic muscles. As an executive from Abbott Laboratories waits to meet with him, Simmons gets visibly upset, explaining that the company paid him around $150,000 to do a public-service campaign encouraging the community to get HIV testing. He agreed, donating the money to the Hip-Hop Summit Action Network, but says he thought the money was coming from a nonprofit, not an $18 billion company that makes the tests themselves. Suddenly, $150,000 looked like chump change, and Simmons was getting ready to tell the woman so. "Why are we just talking about testing?" he asks. "Why aren't we talking about prevention? I made a deal, but I want to talk about a better deal."

These days, Simmons does a lot of speaking. His listeners have included Motorola executives (he shared a panel with Jack Welch, who wrote him a rap song ["He was very nice, but it was ridiculous," says Simmons]), and he keynoted the awards ceremony for Crain's 100 Most Powerful Minority Business Leaders. "There was Stanley what's-his-face [O'Neal, the CEO of Merrill Lynch], Dick Parsons, others," he says. "I can't even count, I can barely read, and these guys are in the audience." They paid attention. So should the rest of us. The man has got something to say.

Sidebar: One Degree of Russell Simmons

Is there anyone this guy doesn't know? We don't think so. Here are just a few of the boldface names in Simmons's circle of friends.

  • Jack Welch, Fellow panelist, Ex-CEO, GE
  • Tommy Hilfiger, Friend and competitor, Fashion Designer
  • Ludacris, Mentee, Def Jam rap artist
  • Sharon Gannon, Spiritual mentor, Co-owner, Jivamukti Yoga
  • George Pataki, Political sparring partner Governor, New York State
  • Sean "P. Diddy" Combs, Protégé and competitor, Rap Entrepreneur
  • Joey "Reverend Run" Simmons, Brother, Star of rap group Run-DMC
  • Donald Trump, Branding role model, Real Estate Mogul
  • Minister Louis Farrakhan, Political ally Leader, Nation of Islam
  • Hillary Clinton, Political ally, New York Senator

Sidebar: Business, Rush Style

Russell Simmons didn't get an MBA from Harvard but learned all he needed to know about running a business on the streets of Queens. Here are a few of those lessons.

Keep It Real

Design your brand for a core market, and don't worry about appealing to the masses. They'll come to you if your product has integrity. "You go to the people who are the smartest and most sophisticated and deliver on day one. Do a good job of it, and it'll grow on its own," says Simmons.

Never Quit

A new business idea can take years to come to fruition. You can lose a lot of money in the meantime. But most entrepreneurs give up way too early. Simmons often takes years to develop a new idea, learning from mistakes along the way. "If something doesn't work, then you know what not to do," he says.

Give Back

Simmons lives exceedingly large— his home in Saddle River, New Jersey, measures 35,000 square feet and features such amenities as Gianni Versace's bed and 10 fireplaces. But he also gives large, with charitable foundations, regular benefit bashes, and business ideas that he says are aimed at helping poor people. Not that he's not interested in making money: "It's hard to help the poor if you're one of them," he says.

It's All About the People

Simmons's companies are filled with longtime loyalists who get to act as entrepreneurs, developing projects they feel passionately about. Typically, Simmons and one of the other executives will discuss a new product or line, then the executive will go off on his own to develop a working business plan and come back to Simmons for the ultimate sign-off. "I try to incentivize people fairly," says Simmons, "with opportunity and money."

Jennifer Reingold (jreingold@fastcompany.com) is a Fast Company senior writer.

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1 Comments

  • THELMA SHEARIN

    Complaint: Sent: Friday, February 29, 2008 11:59 AM
    To: agent@rushcard.com; complaints@complaints.com; Shearin, Thelma (DMHMRSAS)
    Subject: DO NOT DELETE - SERIOUS PROBLEM

    To Whom It Concern:

    I am contacting all media and newspapers I can until Russell Simmons hears about this.

    This is just one email that I sent to rushcard agents. I only got an auto response saying they receive my complaint, nothing else.

    I would like to say that the TV stations are advertising Rushcard.com so people can obtain a debit card, well this is a rip off. When you join rushcard.com, you have to pay 1.95 + whatever the atm charges which is usually 2.50 to 3.00, which I usually pay 4.95 to get my own money, and you have to pay 1.00 on swiping transactions.

    I have a Rush card and I tried to withdraw my money on payday on February 1, 2008 for 780.00 from Bank of America's Atm Machine. The machine did not dispense my money. I tried to do the transaction again, now it was insufficient funds. I didn't receive the money at all. I went inside to talk to the people at Bank of America and they said they couldn't help me, that I would have to talk to my Bank (rushcard). I called Rushcard and talked to some foreign person (which is always the case, and you can't never understand what they are saying) in which they told me that I would have to fill out some Error allegation papers which they faxed to me and I faxed back 5 times.

    I have been calling Rushcard since my money was taken, and all I can get is a foreign person telling me the papers have been forwarded to their corporate offices which no one seems to have the number to. I have sent all necessary paper work, and they tell me its going to take 90 days. I feel like it didn't take 90 days or seconds for them to take my money and put it in the hold status so why can't they just give me my money back. A guy named Victor has called me twice asking me for a receipt from that day. I faxed the receipt along with the other papers, but the only receipt that Bank of America's ATM gave me only showed by balance, nothing more and nothing less. That is all I have. That receipt has the number on transaction number on it and I have called the ATM network services and they said they don’t see why my bank is taking so long to give me my money because their records indicate that I didn’t get my money that day, but they can’t issue my money, my bank has to do it.

    780.00 might be chump change to Russell Simmons and his associates but it's a hell of a lot to a working person such as myself. I want my money back and if I don't receive my money, legal and media actions will be taken as well as the internet. People need to know about this RUSHCARD that is advertised on TV. with the high fees, and no dispense of money. Because of this, I have surely cancelled my direct deposit. This happen 3 times to me, but it won’t happen again because I have cancelled my direct deposit with this company. I’d rather wait on my check being mailed then to mess with this company ever again.

    There are a lots of complaints found on the internet and it's a lot more people complaining. All I get is a foreign person telling me it takes up to ninety days. Well May 1 will be ninety days, I don't know what the hold up is but if my money is not there on May 1, I will be pursuing this at a higher level. All I want is my money back that I worked damn hard for. I didn't work to give my money away especially to rich people.

    For other complaints refer to: http://russellsimmons.humanarc..., http://www.creditcardbling.com.... These are only a few. You can find more by doing a internet search and typing in Complaints about Russell Simmons rush card.
    Thelma Shearin