Steve Stoute, UnitedMasters

28:25I'll match that deal and give you a$10 million signing bonus right now to not take those meetings. That's the number. We'll give you the number plus the$10 million. So Paul took my advice all the way. LeBron, he's going back. He has to be in homeroom the next morning, okay? He's in high school, right? He's in high school. He's going back to the homeroom the next morning. He's in there with his mom and his team, his agent at the time. But he's clearly LeBron James. He's making the decision. We leave the meeting. He asks for some room. We leave the boardroom. Paul and I, we go in the other room.

29:06We're like, oh, you think he's going to do it? I'm like, man, I think so. Like, it's$10 million, man. And the guy, we're paying him exactly what he's going to get paid. We're not, this is just a bonus. It's not, this is not coming from the money. This is a signing bonus to sign it now and not take the other meetings. We come back in the room. This 18-year-old kid says, no, I'm betting on myself. He didn't say that, but we knew that. He was going to take the other meetings. He walked away from$10 million, a check signed to his name, to go back to the projects in Akron and back to homeroom. I applauded him.

29:49Because I knew at that moment in time that the world had changed. When a young African-American that was in poverty knew that his talent was bigger than that check, it taught me a lot. It taught me a lot of where the world was going and that we were already there.

30:15And it's something that I'm proud of him for to this day. Not that Reebok was the bad choice or anything like that. It wasn't even about that. It was the fact that he believed in him more than the money at that moment in time. That was a big shift for a community of people. But I think that's one of the main themes that runs through your entire career, is you're encouraging other people around you to bet on themselves. Even the story you told about the Ray-Bans, we sold the glasses. We didn't get anything for it. I read Andre Agassi's phenomenal autobiography called Open. And he goes out one night, is hungover, and he's a wild boy.

30:58and he winds up playing a tournament the next day, wins the tournament, but he's wearing Oakleys, like the crazy multicolored ones. And just because his eyes are bloodshot, he's hung over, right? He wins a tournament. There's a crazy photograph that gets put on like the cover of Sports Illustrated. He winds up selling a ton of Oakleys. Did he get equity in Oakley? No, you know what he got? He got a Dodge Viper sent to his house by the founder of Oakley. So it was like, if that guy bought you a$60 ,000 or$80 ,000 car, how much money did he make? And so your whole thing is just like, why are you giving it away?

31:24Why don't you, this is very entrepreneurial. Because it happens all the time. again, when the incumbent is already making money doing what they're doing. When you're making all this money, if you're in the record business at that time, think about this. The music business used to sell singles, right? So you'd buy the single for$4.99 or$3.99, and then the single was a way to get you to buy, ultimately buy into the artist for a less expensive price, and then ultimately, when they dropped the album, you'd buy the album. When the CD came, they didn't even fuck around that sells singles no more. They removed the single.

31:59The single was on cassette? The single was a cassette. Okay. Or 45 or, you know, back before that. But it was a cassette. So when they stopped selling singles, they wanted the artist so badly that one song, one music video, you heard Hot in Hair, and you seen that video, you're 1699. Without even knowing what song number two, three, four, five, six was, you didn't give a fuck. and the industry took advantage of that. What's the first single? Let me tell you what happens in that environment. You spend all your time making one single, the rest of the album, right? So the creativity suffers because they're buying it anyway.

32:44So let's just try to make the first single. What's the thing that's going to work on MTV and what's the thing that's going to get on radio? That thing. In fact, a lot of artists would make an album and then go to like all the top producers just to make the first single. So they'd make a whole album with one guy or two guys and then go to one specific person to make a song that was the radio record. And that song could sound like nothing else on the album. They didn't give a fuck. They just wanted to sell, obviously, the thing. And it worked. So when you're making that margin on that product, the last thing on your mind is who's making money off the glasses?

33:22All of the shit that's being sold in a music video. What are the other businesses that we should be building on the back of this because we're giving it away? And that's what Jimmy talked about. Why don't we own the end customer? Why don't we build businesses with artists? Why don't we build businesses with artists? When I first started United Masters, my music distribution company, the first thing I tried to do, the only thing I wanted to do was build a universal, not a record company agnostic CRM system. My whole idea was like, if like anything else, you go on Amazon, it's like if you buy this, then you buy that.

34:00Right. So they if they're selling you toilet tissue or whatever, they're selling you the next thing is a plunger. There's other things that have associated with that product that you just bought. My whole thing is that if you listen to Yeezus, the Kanye album, Life of Pablo, you know, 30 times, why the next thing I'm referring to you a pair of Yeezys or a hoodie that he made? It's not that. And the record companies and the artists had no CRM tools. every other product that I've seen, digital product, you found a way to go, okay, the margins are going to be a lot lower, but the remarketing is going to be cheap because I know who the customer is.

34:45So even if I make this amount of margin on the first transaction, the fact that I now have your name and your taste, I can sell you the next product. This is what you talk about that you learned Jeff Bezos knew about selling windshield wipers. Once you board on the platform and he had your intelligence, your information, he could find out what else you wanted and he could speak to you directly. The record business doesn't own their customers at all. I mean, at all. I have a theory around this, at least as of late. If the artists knew who their fans were, they wouldn't need a record company at all.

35:25if you're an artist and you have 200 000 people who love you you know how much money you can make with those 200 000 people selling them higher margin items or selling them the the music and then the higher margin items like hoodies and t-shirts and merchandise and other things that go back to the essence of why they fell in love with you in the beginning when the record companies cut the deal with Spotify and this whole 70-30 split. They had all the leverage in the world. In fact, they took equity in Spotify. The record companies own a piece of Spotify. It was a big thing that came out that's like, was that value passed along to the artist who was the leverage that they utilize in order to get that equity?

36:10But putting that to the side, rather than negotiating the equity, why wouldn't you renegotiate the access to the data, the real access to the data so that the artist would know if you listen to that, if Taylor Swift has a fan that listened to her album 700 times, why wouldn't Taylor Swift be able to communicate directly with that artist to sell them the ticket directly, sell it a fan, the gear directly? The record companies, I believe, never negotiated that when they had that leverage because they didn't even want to have to share that information with the artist. Time has passed and maybe there's privacy laws around it, but they could have still had the option to opt in.

36:52Like, do you want Taylor Swift to be able to contact you? Fuck yeah. Fuck yeah. Do you want Kendrick Lamar to be able to contact you? Fuck yeah. Beyonce? Hell yeah. But they didn't negotiate that because they may would have to share that. And once the artists had direct connection to their fans, record companies would then become obsolete. I was trying to build CRM tools for the artist. So like any other brand would have CRM tools. These CRM tools would allow you to navigate with your customer and that you could be able to manage that relationship. The root awakening was there is no data to be gotten.

37:34There's no data to be gotten. Meaning that the data source, Spotify or YouTube or whatever it was, were not going to ever give you the user IDs. Right? Apple wouldn't either, right? No, Apple. No. They're not going to give you the user IDs. So it's not like if that phone downloaded something, you know, or streamed something X amount of times, I wouldn't be able to send an advertising directly to that phone. They wouldn't allow you to do that. Years later, there was a law around GDPR that talked about this, so that definitely got in the middle of this, and it was around Facebook and voting and things of that nature that sort of brought this to light.

38:21But prior to that, if it would have been shared and the artists had an opportunity to get that intelligence and the fans had a chance to allow the artists to get an opportunity to that intelligence through those platforms. I think we'd be talking about a completely different industry today. When I was building United Masses and I started in 2017, the idea about building an independent distribution company was driven by the premise that the record business at one point, for many, yet for decades, since its inception, was you have to find a record company in order to find an audience. You get a record deal.

39:08We control radio. We're going to get you on the radio. We're going to get you on MTV. Oh, my God. Because trying to get on MTV and radio, if you didn't have a record company at a point in time, was almost impossible. Since this whole digital content revolution, artists would find audiences before they found the record company. So if they found an audience before they found a record company, why would they have to give over their rights? Why would they have to sell off their name, image, and likeness in perpetuity to somebody because they gave them a half a million dollars when they were 18, 19 years old in the beginning of their career?

39:45So we started United Masters with the premise to invert the economics so that the artists got the lion's share of the economics. Because they actually did the work. They kept the ownership. That's why you called it United Masters. Yes. You got it. And Ben Horowitz was a big supporter of that in the beginning. Tim Cook strongly believes in that. Tim Cook is a big believer. It's the Apple ethos to support and give the creative tools. They believe in that, whether it's an architect, a designer, or an artist themselves. They believe in that at its core. So it's not like it's an idea that doesn't have massive support behind it.

40:27But it takes a generational shift because the artist for so long, it was a Stockholm syndrome. They're stuck in these deals. They believe that if I'm signing a record company, A, I'm going to get a lot of money. They're going to make me global. I'm going to get awards, you know, and recognition around it. So I'm going to keep doing that. Then you have another generation of artists that are coming up right now that are like, are you fucking crazy? I own my shit. I market myself anyway. These guys don't do anything for me. At least I don't believe they do. I rely on myself first and foremost. I am the best marketer of myself.

41:05I'm the best marketer to my audience of myself that anybody else can do, a third party can do. So I'm betting on that. So you have artists, independent artists right now that are blowing the fuck up, that are done really well. You know, we have an artist on United Masters, Big X to plug. He's made$20 million this year. I mean, more, more, more, more. And it's his, and he owns this, and it's something that he can give to his family, his kids. He owns it. This idea, when you've seen years ago, People ask, when Prince wrote Slave on his face, Prince changed his name from Prince to a symbol to get out of a contract.

41:45Because Warner owned his name, image, and likeness. So he said, if I change my name to a symbol, doesn't that navigate me out of the contract that I signed? He wrote Slave on his face. one of the most successful artists of all time, wrote Slave on his face because he knew that I don't even own the shit that came out of my brain. That's crazy. When you explain this to technology companies, I explain this to Larry Page, who was the first guy that invested in United Races. I said, could you imagine if every time a seed investor came in, they actually owned the IP, an intellectual property, they owned it?

42:26That's what it is in the music business. The guy comes in first and gives you a check for half a million dollars. He owns your name and image and likeness. People look at you. You can't be fucking. That can't be real. I'm like, I swear to God that's real. That's why these artists at the end of their career, they die broke. Because they don't own anything. It's owned by the person who discovered them. It's not owned by them. Even though they have the unique gift to create something that others can't, they don't own it. They actually have the thing that's rare and therefore valuable. Yes. And why I love where we are today and the democratization that digital has provided is that an artist can now, not only musicians, artists painters painters but like i'm a painter i draw substack i'm a writer i'm a journalist podcasters podcasters like i don't need the publisher to be a third party that owns this anymore i can find an audience on my own And the power in that and the economics in that and the long-term value of that is something that we've never seen before in the hands of the actual creatives.

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44:58Learn how they can help your business today by going to deal.com forward slash Senra. That is deal.com forward slash Senra. There's a long history of the music industry, you know, the executive industry essentially fucking over the artists. I read Jay-Z's fantastic book, Decoded, and he talks about reading this book called Hitman. And I think it was all this stuff, crazy shit going on in the 70s and 80s. Yeah, yeah, yeah. And he's like, okay. Oh, 60s, 60s. Yeah, 50s, 60s, 70s. It's a crazy book. You have to read that book. It's almost like reading, it's like the movie that they turned, the book they turned into Goodfellas.

45:31Really? That's what it feels like when you read it. what was the name of the book they called that turned into goodfellas the movie i don't remember but jay-z's point was just like all it is like i just read the book i'm like i'm gonna avoid that okay so i've read jay-z's like i read the book and i'll just avoid doing that and then he came into the game independent i think he the the founding of rockefeller so he got it and he got it back in what 96 how the hell are you still telling the story in 2000 oh wait what's that You know, Jay got it because he was turned down. Record companies wouldn't sign him.

46:05A guy that talented, they wouldn't sign him. He had no choice but to go independent. He figured it out. And then when he got independent, he obviously figured it out. Master P figured it out. Cash Money figured it out to a certain extent. Because there's different versions of this. There's different versions of guys figuring it out. Like, there's a figuring it out where you're like, I own the whole fucking thing. It's mine. And you're my partner. And I pay you a percentage. Right? Then there's a version of it like, look, I'm not going to allow one contract to hold everybody, which was Wu-Tang's thing.

46:41The RZA had a record deal, and it didn't work. Then he came back and invented this thing called Wu-Tang. and he made sure that he did not sign what he had signed prior when he was Prince Rakeem, an artist. What was the difference? All those artists could be allowed to sign. Wu-Tang was signed in one place, but the artists had the right to sign in different places. They weren't stuck under one agreement, right? So what happened in the record deal, like if I signed the group, that if anybody in that group ever went solo, they also had to be with me. That's what record company deals looked like at the time.

47:19So if I signed you in a group, if you decide to break off from the group, you're with me first. When he did the deal immediately with Wu-Tang, none of them had to sign with the record company that originally, BMG, RCA, which originally gave them the deal. That was a breakthrough. That guys got hot off the album, the Wu-Tang album, and it was signing deals in other places. People had never seen that before. And then when you see Master P No Limit, this was independent and putting out number one top five records every week and talking about how much money they were making and selling records out the trunk.

47:53It was like, what are they doing down in New Orleans? These guys were finding ways in resourceful manners and were making a ton of fucking money. But how did they get on radio or MTV if they were independent? This idea, the power of emerging subculture. They were building something on the way up. Remember, man, if you get 200 ,000 people who love you, the amount of money in that is tremendous. And they grow with you. They didn't need MTV and radio at the time. They may have had a local radio station. They were down in New Orleans. They had a community of people who bought into this idea, and they were building No Limit Records.

48:37And that contagion and growth kept going throughout the South. And, you know, at some point, MTV had to play it. You couldn't be left out, right? So it wasn't about you needed it at some point because it was so popular versus it needing you to break. Okay, so this is the difference between, like, top-down record companies at the time. They're like, we have these relationships with national radio and MTV. We're going to make you a star. We're going to push it from the top down. Master P and these other guys, they did bottom-up. I remember hearing Sean Parker on an interview one time. He said this unnamed record company executive was just like, you know, give me anybody in the world, even if they're not talented.

49:15And with enough push behind them, I can make like them a popular musician. Basically saying they controlled the system. Yeah, they did control the system. They control radio. Is this related to what you were saying earlier, how mediocrity was like famous? Rewarded. Yeah. You know, and I'll use references, like I said, you know, Kenny G, who's a great musician, or Michael Bolton. And sometimes I just say these things because I know it brings, like, shock value. But just to make the point, I shouldn't know the Britney Spears song, Oops, I Did It Again. There's a lot of NSYNC songs I shouldn't know.

49:50But they were pounded in your brain. You couldn't avoid it because MTV and radio, local radio, they had a monopoly on it. So all of a sudden you started listening to this music. By the way, I grew up my whole life thinking Holy Nose was black. Because you wouldn't even, you would listen to these songs. And they were like, there were a time in the 70s where they weren't on music videos. So you'd hear the voices. And like a lot of these artists were trying to sound African-American or like R &B artists. So you would hear it and you'd be like, I guess they are black. And then you find out, you know, obviously they were not.

50:27But like, when they control the system, they can push something on you. And the power of repetition will force you to have some recall. Whether you like it or not, that's a whole other story. But the awareness is more than there. and like if i got 50 if i got a 50 50 shot because you already heard it i love those odds versus the shot that you never heard it at all repetition is persuasive so again i think we both have a love of like i love to study the advertising industry and i'll go back to like the early 1900s when it was just copywriters for the best advertisers but even if you think about the 50s and 60s when they're building all the um the massive advertising firms the global advertising firms on madison Avenue.

51:18It's like they all talk about this for a hundred years. You're not repeating your ads enough. Repetition is for space to do it over and over and over again. If you see all the deals we do with our partners, you can't buy an ad on any of my podcasts, a single ad. You're doing at least a year, in many cases, many, many years. You have to repeat this. It's so important. So going back to you're realizing, hey, what is the purpose of a record label? You're essentially creating almost like a record label infrastructure in United Masters or through United Masters, but the artists maintain ownership. Yeah.

51:50So you're taking the parts like, you guys can market better than we can. You have control. Like I've watched all your interviews. I love Russ, the rapper Russ. Love him. You've done a bunch. Yeah, you've done, I've taken so many ideas. He's so fucking good. The way he explains it, his passion around it, dope as fuck. And I've taken ideas from the way he markets his music to the way I run my podcast. It's the exact, I don't see any barriers here. It's the same thing. Whether you're a filmmaker, you mentioned a writer earlier, a rapper, a podcaster, a founder. It's all the same thing. Painter. Russ is a rapper, but he's really an entrepreneur.

52:24His product is. He is. Yes. First of all, A, he is an entrepreneur. Like full stop. A good one. A really good one. We should tell people that don't know him, he's the first person in history to a single person that wrote, recorded, engineered, produced, mixed, and mastered an album that got a billion streams. A single person. I don't know all of the stats around him as an artist. Him as a business person and the way he, how prolific he is at explaining his business and the amount of songs he puts out, knowing that, you know, if you don't like this song, I may put out 12 songs and then you like the 13th song and then all of a sudden you like song number one and then his whole catalog.

53:09When he was explaining that at the beginning of my sort of entering his journey, I was just blown away by how prolific he was as a business guy to explain it. And then Chance the Rapper. There were a lot of guys that took independence in the whole digital era and took it and turned it on its head. And they were proud about it. I don't want a record deal. Are you fucking crazy? Pay, you can't give me$200 million. You can't buy me out of this shit. That was the next step. Like when I just talked about LeBron James saying I wouldn't take the$10 million. That's Russ saying I wouldn't sell my publishing for$200 million.

53:53Right? Like you start to realize the power of ownership. There's a funny story I got to tell you about Russ. He might have said it to you on the interview you did with him, which again, both of them were excellent. When his business manager said, hey, this company wants to buy, you know, your catalog, he goes, I just need to know the number. You obviously know the answer is no. I just want to know the number so I can put in a song. I can rap about the fact that I turned down this much money. LaRussell, Russ, Toby Niwe, Big X the Plug. But it's still Larry June, Brent Fires. There's so many artists that your audience may not even know the name.

54:29They're making so much money because they're independent. And now you're watching the artists that were signed for many, many years. Usher's an independent artist now. Usher's independent. Usher was the first independent artist to play the Super Bowl. Then Bad Bunny. Bad Bunny's an independent act. Are you serious? Yes, he signed to Remos. Bad Bunny's an independent artist. These guys are making a fortune. They own themselves. that's the future of the music business that's the future of all of these media businesses you own this podcast what does it mean the power of that fucking look at Joe Button when I talk about Russ I think about Joe Button too Joe Button walked away from a lot of money man and you know forget me and going into the advertising business this guy left you know a rap career whether he left the career the career left him he went into the podcast business very early and he's done an amazing job.

55:33And then he turned down Spotify and went to Patreon because he wanted to work directly with fans. He says, I don't want any obfuscated version of money. I want to know exactly what, I want to get paid exactly what I deserve because I have the audience who pays me directly. And he uses Patreon. These are great things that are breakthrough in business models. I look at all of these artists as solo entrepreneurs, as SMBs. The SMBs that used to be flower shops and bodegas and this, that, and the third are now streamers, independent artists, influencers, podcasters, vloggers and writers on Substack they're the new SMBs and I don't think industries have caught up to that idea yet I don't think the insurance companies understand it a lot of the new fintech companies understand that but there's so many incumbent industries that don't see that yet so they're still looking at the old version of SMBs and they're so locked in with that.

56:57You know who gets it? Like it's the founder-led companies because just like you had that observation when you were 29 years old, it's like I'm in this industry that's like maybe dying or this can't be sustained. It's being attacked by technology, right? You're not going to sell these high margin CDs anymore when Napster exists. Same thing that Jamie Iovine realized, you realized as well. And so like even look at like some of our big partners, like I'm a huge part of this company called Ramp. It's like, that's a founder-led company. They think like founders, and they place a huge, huge, I should have a multi-year bet on me because of all they asked.

57:30They didn't, there was no numbers. You talk about being intuitive. They didn't even know how big the audience was. All they said is like, us and all of our founder friends, the most elite people, are listening to you. Let's figure out how to work together. 100%. And that's how founders say. He's like, I don't care if State Farm hasn't come into podcasting yet, or they have now. But like all the money that's flowing from TV and radio is going into podcast once to another thing. I've seen this with Cash App. It was in very, very early. It was a marketing guy at Cash App. So fucking good. Seen it early.

57:57Placing bets on emerging subculture is on its path to mainstream culture. So placing the bets on the right guys who are driving this emerging subculture, whether it be podcast or whatever it may be as a medium, it's just a matter of time before those things become the next mainstream go-to mass consumed product and the founder i mean dude i've talked to mark zuckerberg about this i've talked to jeff bezos about this to daniel like they see what under they get it completely they understand the power of this especially when you have a very you know wealthy you you know you you do the work the one thing about you is that you actually do the work you're well read you understand the topic of each person that you are interviewing this whole idea now that and you and jimmy sort of got into this and i'm a big believer in this that we're at odds um with fame and talent I'll see you next time.

59:06Fame and talent historically always had this relationship where they knew how to coexist. In fact, fame was an accelerator, would blow the flames so that talent could actually get bigger. So they had a great partnership. And I would say in the last 20 years, maybe longer, but like 20 years has become very profound, that those two things are at odds. In fact, fame believes it doesn't need talent at all. And I've come to the realization that talent believes that. And what I mean by this is this whole idea that you are famous without having any talent. Or if you're talented, you actually will put the talent to the side and do the thing that will get you most famous, rather than actually utilizing your talent to get that attention and that fame.

1:00:01And that's a very dangerous aspect of where we are in society when talent is not being incentivized to be talented. Where fame is being incentivized to be famous for things that are not necessarily driven by talent. Yeah, it's not a world I want to live in. It's the world that we do live in.

1:00:27And I don't know what the long-term unintended effects are of this, but I've seen this affect many different industries, including politics, where fame is more important than the talent. in corporations, in politics, in popular culture, whether it be films or podcasts, you name it, that fame is the driver, not the talent itself. Now, you find the rare cross-section of talent. You do all the work and you have a great follow. But that's rare. I think this also plays into what you're saying is like why independence and retaining ownership is so important. Because like Russ may not have obviously the audience that Taylor Swift does, but Russ makes a phenomenal living.

1:01:20You know, I think he's got like whatever, 10, 15 million listeners. So it's not a small audience, but it's not, you know, it's not 100 million monthly listeners. But if you own it and you retain control, his unborn grandkids are already rich. And if you really owned it, he would have the CRM intelligence around the people who loved him. And that's the next step of the music business. That's where these industries have to go next. That's because the creators are going to demand that. They're one step removed from demanding that. Like, I need to know exactly who listens to this podcast. I don't give a fuck.

1:01:53Or you're not going to get the podcast. Whoever the distributor is, whoever the platform is, you know what? The next evolution of this in the next three years, I have to be able to go direct and I have to be able to collect that fan data. I want to send out the newsletter. I want to send out the fan sort of correspondence. Like, it's the platform you own. I now want to be able to have my direct relationship with the fan. And somebody's going to build the next platform that's going to become the one that drives consumption, is the one that allows that to happen fluidly. That's for certain. Book it.

1:02:32That's what Jimmy's talking about, what he wants to do with his company. That's exactly what we're doing. That's why you're seeing these shifts right now in the marketplace. There's a company called Eleven. Or Even, rather. Eleven Labs is different. Even. We use Eleven Labs for our transcripts. Shout out Eleven Labs. Eleven Labs is an Andreessen Horowitz-led company. They're fucking awesome. They invest in and they believe in founders. They believe in CEOs. They bet on good CEOs. They have great CEOs in their portfolio. What does the company Even do? It even allows artists to sell directly to their fans.

1:03:09And they're selling merch and vinyl, and vinyl is now considered merchandise. And a lot of the independent artists have used them for a while, and now artists on labels have used them, and they have found success using their platform to sell directly. And now UMG is moving in that direction. They just signed a deal with them. So I guess the good news out of all of this since we started United Masses is that the independent music space, and there's a lot of us, have outgrown on the front line the major labels. So if you talk about new releases, market share, the independents have, obviously the record companies make a lot more money.

1:03:54They have catalog and all these other things. But because of that trend line, what the major labels are doing now are borrowing tactics from the independents, including buying the independents. UMG just completed the sale of the purchase of downtown records, which has a lot of independent, all independent music assets. And Sony has an independent, the fastest growing part of their business is a company called The Orchard, which is all about independence, which is where Bad Bunny, for example, is signed to, or through his company Remas. So the majors are now following The Independent. Watch and see what happens.

1:04:35Pay attention to what Ryan Coogler has just done with Sinners. Now, what's that? Oh, so Ryan Coogler, top three, if not the best director, Fruitvale Station, and obviously Black Panther, and now Sinners, which got nominated for the most, you know, Oscars and probably ever. I think 16 is the most ever. The rights of that movie reverts back to him. So what he did when he negotiated his deal with Warner to put out Sinners, which he wrote and directed, was that he would only put it with a studio that would allow him to get the rights back in a certain period of time. So they put up the money and he gets it.

1:05:16That is unprecedented in the film industry. What we just talked about is happening in the music business with Russ. It does not happen in the film industry. We're talking about hundreds of millions of dollars as the initial bet. He says, you're not getting the movie. You're not getting my intellectual property unless you allow me this movie to revert back to me. I'm not giving this to you. They agreed to it. The movie went on to make$400 million at the box office. It's the most awarded movie definitely this year, probably ever, with 16 Oscar knobs. What do you think every other director and film producer is thinking right now?

1:05:55Because once you break that ice, right, the door is now open. I want Ryan Coogler's deal. I want to get that. I want ownership. That's where this is going. Ben Harwood said to me, you know, we were sitting there years ago. He said, you know, he talked about the evolution of, like, the workforce. And it, like, it went from the indentured servant to the slave to the employee to the owner. We're at the owner. People want ownership, whether it's stocking the company or ownership of a print or ownership. in the art business. You know, one of the big things with artists is like artists sells, gallery finds artists.

1:06:36Artists work, gallery markets artists and sells to you buy. You buy it for, you know,$100 ,000. Artists are so happy, you know, David owns his work. David sells that work that he paid for$100 ,000 for$10 million. dollars. Artists doesn't get any of the lift from the, from the hundred thousand to the 10 million. Artists feels like, why don't I get a carry on all of this? It's, it's my name. It's my, my intellectual property. How come I don't get a piece of this? You're going to start to see that take place when artists sells work and they get a carry every time that work is sold. The galleries, which are the, at this point, necessary middleman, because the galleries are Like, you wouldn't have an audience if it wasn't for me.

1:07:28As everything else is taking place, you're going to start to see the galleries start to lose relevance because the artists are going to start finding audiences directly without needing a gallery to authenticate the fact that they are great artists. And this is where the world is going. Yeah, the common theme through everything we're talking about is just the constant elimination of middlemen. Brian Halligan founded HubSpot 20 years ago, and he has this line about AI that I keep thinking about. He said most companies are using AI to make their teams more productive, but the companies that will thrive make the company itself the intelligence.

1:08:01And that is exactly what HubSpot does. HubSpot gives you AI that works, AI that actually knows your customers and your business. Your AI needs to know what you know, your actual customer conversations, your sales history, what worked last quarter and what didn't. HubSpot connects AI to your real customer data. So when it writes an email, it knows this customer asked about pricing three weeks ago. It knows what campaign brought them in, and it knows that they already contacted support twice this month. And that's when you start seeing actual results. Visit HubSpot.com to learn more. That's HubSpot.com.

1:08:34So we've been talking a lot about, like, ownership, going your own path, making your own independent decisions. We had dinner at our mutual friend Rick Gerson's house several months ago, and you told this amazing story. Rick Gerson just got paid. He's coming on the show. So we'll let him talk about that. Don't edit that out. No, no, no. That's staying in. He definitely did an incredible deal just now, which we're going to talk about on the podcast. But something you told me that night, which was very fascinating, is like, I really admired the fact that you, like, bet on yourself, just like you talked about LeBron betting on yourself, the people you respect the most.

1:09:07Because, like, people don't understand. You built a phenomenally successful, not only was translation influential, but it was making a ton of money. And you took the unusual, another unusual decision to roll that in to United Masters. Yeah. Can you talk about that? Yeah. You know, I believe strongly that music and marketing, at least the segment that I focused on with translation, is the same customer. And if I'm going to make marketing ideas that focuses on, you know, Gen Z primarily and understands that culture is what drives decision making. If I have a music company that distributes artists at scale, I'll be able to gleam intelligence from that in order to make that a marketplace offering that no one could fuck with.

1:10:06That was really what I was the idea. Like, in my heart of hearts, building a company today, if you want to disrupt and do something that is groundbreaking, you have to live at the convergence of culture, technology, and storytelling. They have to be able to coexist. The culture people can't be too cool for the technologists. The technologists can't be too nerdy to give a fuck what culture is talking about. Like these things must work as one. So when Jimmy was talking about his school at USC and he talked about like, you know, software people don't make hardware because they don't respect design or these, these worlds must collaborate.

1:10:50So the emotion that brings these things together are obviously it's curiosity, but the emotion that drives it is empathy. You have to have empathy for things that you actually don't understand and know that the power of these things working together is going to create something phenomenal. Bono said something to me one time, which is so profound, that we should all take with us, which is you can get anything done in this world if you're willing to not take credit. So this idea that you're going to put the idea of doing that thing and you're not going to let the politics of who gets the credit for it affect everyone's incentive of doing that thing, if you can actually remove that feeling of needing to be self-applauded for doing that, you can get anything done.

1:11:44And I believe in building a company that's disruptive to be able to get culture technologists and storytellers to work together. They have to be able to put themselves second to the idea. and be in service to that idea. And that's the company I'm building. And that's the company I want to be a part of. That's the only thing I want to do is be a part of things like that, that bring worlds together. And I did that in the music business. I was always working on, like, you know, how do we tell stories that are going to bring that and that together? So whether it be basketball and that or, you know, even Gwen Stefani, You know, these things that I was working on was always about, like, if you could put two worlds together, you're going to find a synergy that's going to compound each one of those worlds as individual worlds.

1:12:37Yeah, you kind of, you're like a habitual, like, line stepper. You don't really respect boundaries between anything else because you don't think there should be boundaries. Like, even your decision to sign. I don't believe it. Exactly. Well, it's obvious to be like me studying your career for so long. Yeah. But even your decision to sign Kobe. Yeah. Well, let's talk about that for a second. Let's talk about Kobe. God bless. God bless. Yeah, yeah. God bless that man and his family. When Kobe came out as a rookie, I had found out that he was part of a group, actually, when he was in high school.

1:13:07And they were recording. But the one thing I knew about him, which we all knew about him, was his competitive nature with Shaq. Shaq was a successful musician. Shaq sold millions of records. Shaq really sold millions of records. Shaq has a song with Wu-Tang. Shaq has songs with Notorious B.I.G. on Shaq's first album. I know this sounds crazy. So when I went to Kobe, I already knew he wanted to do better than Shaq. So he wanted a record deal. And my bet was that he's going to like really do his thing because he wants. And the first thing is Kobe Bryant would do. I signed the group three months later he gets rid of the group and now he's the solo act you know i had a got a chance to know him really well he spent um a month at my house in new jersey at the time working on recording the album and i watched his routine which was phenomenal and i watched this and i remember i'm 19 i had to book a local gym and watch him shoot a thousand shots and then And he had these tapes of Michael Jordan going right, Michael Jordan going left, Michael Jordan guarding people going right, Michael Jordan guarding people going left.

1:14:26And, you know, you realize that he didn't come to America until he was 15, 14, 15 years old. He had all this footage that I guess the team had made for him of these cutdowns and shit. But watching him go through that taught me a lot about, like, discipline. And he had that fucking early. I mean, he obviously, I'm not saying anything that's not obvious to everybody at this point in time. But his recording career, we made the first song. It didn't go over well. But he met his wife. He met Vanessa at the set. So it went over very well. He met his soulmate on the set. But the experience of working with him was amazing.

1:15:08He worked really fucking hard. Even on rapping. He immersed himself in it, man. And he was around Nas all the time. And, you know, obviously Nas and Foxy Brown. And, you know, he came to New York. He lived with me. I mean, he was in it. He was in it, man. Yeah, I love the idea that it's like the way you do one thing is the way you do everything. By the way, if you look, that's the one thing I learned in life. That idea. Whoever said that coined it perfectly. How you do anything is how you do everything. That guy was hardworking. You know, you ask athletes, whether it be Tom Brady, LeBron, like you go to these guys' lockers, it's perfect.

1:15:49It's how they play on the court is how they fucking make sure that their locker looks. It's like pristine, like all the great athletes. It's not sloppy. It's not sloppy because somebody comes and does it for them. They don't leave it sloppy. They are very pristine. If you just look at a player's locker, it will tell you a lot about how that player's play. And that's everything about that. And I was just saying about Kobe, everything he did, he went all the way. And then, like, he came to New York. And I have great stories where, you know, he was training to play against Allen Iverson, and he got, like, 10 New York City-type point guards.

1:16:28And I had a guy go get him for me and my man. Shout out to my man Anton, who worked for me at the time in the music business, but always had a love for basketball. He's now a recruiter for the Cleveland Cavaliers. but back then when I said look Kobe wants he's gonna go down on Iverson he wants 10 like New York City point guards with handles can you find them this guy go finds them we go to Chelsea Pairs Kobe's these guys will line up at half court 10 of them with basketballs Kobe's at half court and they at the foul line and they start coming through fools one by one and they with a head of steam they have to get by him and go to the basket he's stripping the ball blocking the ball and as soon as he gets that one the next one comes he does not play offense like an assembly line i was like this is after a thousand shots and this that it's like who am i dealing with and he's in the 18 19 is there anybody in the music industry that you thought had a kobe level work ethic beyonce she's at the top i mean the work from everything i've seen like work ethic i i know michael jordan obviously has a strong work ethic i i don't but i don't know that firsthand beyonce kobe ed reed ray lewis and ed reed who's the rapper that has the best work ethic i would say jay has the has out of all of them has the strongest work okay i wanted to ask you about jay-z i didn't expect you to answer that with him uh i heard you tell this hilarious story years ago on a podcast that Jay-Z like rolled up.

1:18:05I think this was before you guys were close. He like rolled up on you with like his crew at the office. I think you were so Sony and you're like, this is the first thing. This is when we started to get close. You told the story that you were barefoot. Yeah. I remember I was like, why are you barefoot at Sony and that's what's going to be? Hold on. You know, I don't know if it's because I'm from the West Indies and from Trinidad and shit. I love it. I would be barefoot right now. Well, next time. I don't know why I'm not barefoot. Next time we do the podcast together, I love being barefoot. I feel comfortable being barefoot.

1:18:34My son and my daughter, they take off their shoes all the time. I have a lot of stories about being barefoot. This is the first time I heard about you. This is like 99, and I think this is like a remix of like a Maya song or something. That was a result of it. He's like, tell us not to holler at me, man. That was before that. That led to that. The story is like, obviously I had known of Jay, and in New York, there was this thing, like after it was like Biggie and Nas, and then Jay was the guy coming up behind them in the New York rap scene thing. Because Illmatic and Ready to Die came out before Reasonable Doubt?

1:19:13Before, but people were judging it just rap skills. It was almost like a, it was A, sales, and notoriety, and skills. And it was just like Biggie was the best, or Nas was the best. Jay was coming up to be in that conversation. He says that on a record. People on the streets is watching. Who's the best rapper, Biggie, Jay-Z, or Nas? He talks about that because that was like a thing. He inserted himself in that conversation. Which is smart. It was very smart because the conversation really was Biggie or Nas. But anyhow, there was something going on with an artist that they were supposed to sign, and they had never signed them.

1:19:53They basically, let's say you and I, you're doing a deal, and then you don't sign the deal for six months, but the paperwork is there and you're basically holding an option without even holding it because you don't sign the deal. So when after six months, there's time that goes by, I'm like, look, I was working with the artists. There was a lot of other interest for more money in the artists. I'm like, he's going to do a deal over here. And then Jay and his team were like, no, he has to keep his word. bro it's been fucking six months like his word is like expired I mean it's been six months and they did not like my response so it's nine o 'clock in the office and they roll into the office him and four or five other guys this is Jay-Z Jay-Z uh uh Tata had you met Jay before in person or no I'd seen him before but like we didn't know each other like that and I didn't give a fuck and neither did he and he come to the office i met sony at the time and they're like so we speak on the phone and he's like we're coming to see you right now i'm like great i'm at 550 madison and they come upstairs and i'm sure that i didn't even notice at the time they thought oh we're going upstairs and he's probably going to have some guys and there's going to be like a you know some face-off or some version of that i guess they came upstairs i let them upstairs front desk, light them up, they come upstairs, and I'm by myself barefoot.

1:21:26And I'm like, and you've seen their face. And I'm like, listen, I don't want to have an argument about anything about anything that doesn't involve big houses. They just start laughing. I'm like, unless they're big houses involved, this is a stupid conversation. And then like literally after - Wait, wait, wait. What do you mean I don't want to be involved anything big house you say it's like a small deal yeah like this deal can't buy if we're not talking about a lot of motherfucking money what are we talking about so my my analogy to that was just big houses i'm like are we talking about big houses because it doesn't even matter unless we're talking about big houses they love that shit started laughing and then jay and i became friends and started playing madden all the time and then realized that our or not realized, but my cousin was his cousin.

1:22:21My father's brother married a woman that happened to be connected to his side of the family. They were cousins. So my cousin was his cousin. So we were second cousins. And that all came out because we started to hang out with each other. It was like, oh, shit, right, that's true. Fuck, I didn't even realize that. And we ensued a... And then how soon after did you guys start doing business together? Because you did. Immediately, immediately. Okay, so you did his shoe deal. The first deal we did was I got him the right still DRE for Dr. Dre. So Jimmy comes to me. This is Jimmy. Jimmy Iveen. Jimmy Iveen.

1:22:58I love that. You're in podcast mode like Jimmy. The audience doesn't know that. Jimmy Iveen. Jimmy Iveen, who was on the last episode, in case you really go and listen to that again. Dr. Dre comes in with the album, The Chronic 2001, which is a fucking amazing album. Classic. Right? And he plays it for Jimmy. And Jimmy goes, are you sure? That's the, that's it? Dre's like, yeah, this is the shit. So Jimmy's like, what does Eminem think? Because Eminem's hot at the time. So Dre's like, the fuck you mean what does Eminem think? And I'm sitting in the meeting, and Jimmy's so good at reading the room.

1:23:43He bets on his nose more than any other sense. Fuck his eyes and fuck his ears, his nose. Does Dre know, confidence, tell me that this is the shit? Or is there any fucking crack in the door that he can go further? and whatever line of questioning he asked led to like let's try to make one more jimmy's always one more one more one more one more so dre plays a bunch of beats for the one more and like i picked five beats they cut me a cd with five beats to make the one more, and Steve's going to go help get the record made. Man, I'm honored. I'm fucking, it's Dr. Dre. Fuck all that. Motherfucking Dr.

1:24:36Dre. Fucking, motherfucking Dr. Dre. Fuck all that. I can't believe I'm getting on a plane with Dr. Dre beats, and I'm flying to New York with it. It is, that, there's nothing, there's nothing I could be more responsible for than having a fucking, this guy cooks on me. And I go to New York. There's a beat I like, but I don't say anything. I play the beats for Timbaland. I remember playing it for Timbaland. He's like, you got fucking Dre beats? I'm like, hell fucking yeah. Play it for Timbaland. Timbaland's like, that shit right there is crazy.

1:25:13Call Jay. Yo, Jay, listen to this shit. You got fucking doctor. Yes, motherfucker. Listen to this. He hears that shit. he picks the same exact beat. The same beat I like, Timbaland picked, and then Jay-Z picked. I told Jimmy, see if I can get Jay to write it. I asked Jay to write the record, and Jay writes fucking Still DRE. And he doesn't actually write, right? Is this at the point in his career where he stopped writing, he's still doing it? Yeah, yeah, but he fucking raps like a West Coast artist. Listen to Still DRE. every line Snoop says in the hook is fucking J-Road I was like this guy's different he wrote Snoop's parts on that song he knew West Coast lingo he understood the nuance of being from the West Coast if you listen to that song talking about the four or five talking about khakis with the cuff and the crease like he understood that thing and they did it word for word.

1:26:19It ended up becoming the first single. You just brought something to my mind because I've been reading a lot about Bob Dylan and, you know, it's like, I'm always interested in like who influences the influencers. So like some of the greatest living musicians are like Bruce Springsteen. It's like, I just followed Bob Dylan. And when you studied Bob Dylan's early career, he was so good at mimicking. He could sit in Club Wawa in Greenwich Village and listen to you play and then be able to recreate your sound sound exactly as if he was you. Kobe could mimic, we're talking about people, Bob Dylan, great, right, can mimic people.

1:26:51Kobe could mimic, I mean, look at his, look, he could mimic Michael Jordan. Now you're saying the exact same thing. Jay-Z's not from the fucking West Coast, yet he could rap as if he grew up there. It's not even a problem. It wasn't even an issue. Jay-Z can write R &B songs. What people need to know is I am not taking anything away from the great writers, Maya Angelou, Shakespeare. You name the writers, nothing.

1:27:20Nas and Jay-Z are in that conversation. They're that good. The way they can paint pictures that you would never, with words, like you're watching a film, is a phenomenal gift that because of the art form being rap gets overlooked because of the beats, the clothing, the media surrounding it. But the words that they paint, the feeling that they can give you, if you listen to those songs, it's why you love it. Because you could actually put yourself in an environment that you didn't grow up in. And you could live through those lyrics. they painted the pictures more vividly than anybody else and one of the greatest things that i've ever done if the people give me a lot of credit for doing many things the greatest thing i've ever done was be able to manage nas one of the greatest writers of all time you went into the hood queensborough projects to find this young prodigy can you tell that story real quick about like how the hell did you even hear about nas and then what lengths did you go to manage him yeah So let me back up too.

1:28:35This is why, shout out to our mutual friend Jared Kushner for putting us together, the way I met you. I'll tell the story real quick, right? So listen, Queensbridge Projects, Nas, Jared Kushner. That's what you just did. Yes, exactly. But we're going to go back. But like this, because I was like a little like sad the first time I met you because obviously Jared's a close friend of both you and I. And he's like, we're having this private birthday party at this private restaurant in Miami. And there's, get in that room. There's not a lot of people. There's like eight, 10 people. And there's just fucking killers.

1:29:07I heard Steve Stout. I was like, oh shit. And I'm sitting across from you. And you're like, who is this big headed fucking dude that like I was lighting you up with questions all night. I couldn't believe that you knew. No, you know what it was? No, no, I'm glad you said that. We never talked about this. I was shocked by the nuance of what you knew. The specificity and the nuance of what you knew was alarming to me. It was alarming to me. That's what it was. It was almost like, wow. But it wasn't, it was wow in a scary way. Now that I, but I didn't know what you did. Yeah. Because if you knew that level of information and you didn't do this, it'd be psychotic yeah yeah i didn't know what you did so i didn't know that i was speaking to a journalist or i'm not a fucking journalist but i that's why i told okay what the fuck you're more than a podcaster yeah but like that's why i i was like jared like i need you to because it felt that way i was like dude i need another shot at stout because this was and so jared you know said something to you vouch for me and then rick no when they told me what you did then i got But when you started coming at me with these hip-hop fucking Jeopardy fucking insights, I'm like, fuck off.

1:30:19And we're trying to eat a dinner. It's this guy's birthday. You fucking attacking me. Anyhow. Let's go back to nothing. Let's go back. Jared Kushner definitely played a role in this. Big time. I'm at home. I live with my parents. And, you know, I decided that I wanted to be in the music business. I didn't know what I was going to be. I didn't know what was going to turn out. All I knew is that that was my calling at that time. I, you know, whatever. And what nailed it for me was I was sitting in my, I had my car, I was in my driveway, listening to Nas, It Ain't Hard to Tell. Before Illmatic's out or no?

1:31:02Yes. There were two singles. Okay. Halftime and then It Ain't Hard to Tell. Is Halftime the one he did with Lawrence Professor? Yes. Where it's like, Street Disciple, my rap's a trifle. I shoot slugs from my brain just like a rifle. That's one of my favorite Nas Bynes ever. That's Live at the Barbecue. Okay. And then Live at the Barbecue was him part of a, there's four other rappers on that thing. Halftime came out, and it ain't hard to tell. It was just a Michael Jackson sample. And I heard it ain't hard to tell. I was in my driveway. I was like, I need to know this guy. Prodigy. I can't. This is, the thing that he was saying shit, I couldn't even believe what this person was saying.

1:31:49That he wrote it, but he was like 16. Yeah, he was 17. I didn't even, I can't even believe. It was like so fucking genius. So anyhow, I was on my journey. I'm like, you know, like for me, my idea of trying to figure something out when there's no clear path, it's to start from ground zero. And ground zero was, where does he live at? Queensbridge Projects. Go to Queensbridge Projects. There was no other way to find this guy. Not that I knew of at that time. So when I went to Queensbridge Projects, you know, I make this joke. The Projects, it's not even a joke, but the Projects doesn't have a front door.

1:32:28It's a bunch of buildings. There's no, like, clear front door. So you basically are walking to a building and I'm trying to find somebody who I could ask, yo, where does Nas live or hang or whatever? And that person immediately goes to get a gun. Because I looked like one of the guys that they had beef with. And then somebody tell you, wait a minute, wait a minute, wait a minute. I think that guy works with these producers and shit. And the second guy who said that happened to give the first guy reasonable doubt to, like, go further in the question. It happened to be Nas' brother, Jungle, that I asked.

1:33:17So I did ask the right person immediately, randomly, or the wrong person, depending on how that thing ended. And, yeah, knowing about Jungle, like, he's going to have a gun. he's never leave home without it and that led to me meeting him and when i met him i realized that as brilliant as he was and as successful as illmatic was that the infrastructure around him did not give him the opportunity to be able to be everything he can be. And as much as I credit for going there and having the guts to do that, I was one of 50 people who tried to seem that he was an undervalued asset. It wasn't a unique idea.

1:34:07He chose me. And he put his career in my hands at 25 years old, and I had not done it before. Why he chose me, I'll never understand. I do know that 30 years later, 31 years later, that's my brother. We're really good friends. And I look at a lot of relationships in the music business. And whether the person's died or they're no longer friends or partners or whatever it may be, him and I started our careers together. And not one thing has ever interfered in our relationship and us being brothers. I love him. he's one of the greatest things that ever happened in my life, in my family's life. That's a beautiful place to end.

1:34:50Stout, thanks for taking the time, man. I really appreciate doing this. I hope you enjoyed this episode. Please remember to subscribe wherever you're listening and leave a review and make sure you listen to my other podcast founders. For almost a decade, I've obsessively read over 400 biographies of history's greatest entrepreneurs searching for ideas that you can use in your work. Most of the guests you hear on this show first found me through founders. you