Jimmy Iovine: Harness fear to drive innovation, part 2

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1:54Okay. What's the password for Wi-Fi? I need to get my iPad. Hi, listeners. This is Masters of Scale producer Chris McLeod, and we're getting set up in the studio with our guest host, Angela Arntz, to record the second and final installment of her series with Jimmy Iovine, record producer, co-founder of Interscope Records and Beats Electronics, and former head of music at Apple. If you missed part one, you should go back and listen. Take my jacket off. It's cold outside and warm in here. Okay, are we rolling?

2:36Angela, before we get started, I want to ask you a question. No worries. When Reed asked you to fill in as host, he asked who you thought would have the biggest impact on entrepreneurs. Why was Jimmy the right guest? Jimmy was one of the first people I thought of to have on the show. Because I love the way that he has always married his instincts with his passion. But he has this incredible courage that you just don't see in a lot of people. When he believes something, I mean, he is like a force. He just, he is all in. And he almost can't help himself. It's just, he becomes one with whatever that mission is, to continue to change things and to shape things and to mold things.

3:30And I've admired how he's always been on the cusp of culture as he's done that. I kind of stand back and it's like, how did he know that? How did he see that coming? He has this unique ability to look around corners and then bring all the rest of us along with him. That's perfect. We'll find a way to use that in the episode. Great. Great. You ready to begin? Okay. Okay. Whenever you're ready. I'm Angela Arndt. former senior vice president of Apple and Burberry CEO. And today, your guest host. And I believe to innovate, you'd need to trust your instincts. This will give you the courage to break down barriers, even when they're terrifying.

4:24You've got to have incredible talent at every position. It's like this huge push. There are fires burning when you're going home. Can you believe it? Such an idiot. And then you go back to, this is totally going to be amazing. There are so many easy ways. I have no idea what to do. Sorry, we made a mistake. But you have to time it right. Oops. Working out of a three-bedroom apartment. Stuff that just seems absolutely nut balls. Ten years later, we're like, well, that's just how you do it. We haven't made it just how you do it.

4:54This is Masters of Scale.

5:02I'm Angela Arntz, former senior vice president of Apple, and before that, Burberry's CEO. And today, your guest host. I believe to innovate, you need to trust your instincts. This will give you the courage to break down barriers, even when they're terrifying. We're going to continue exploring this theory now in part two of our two-part episode featuring Jimmy Iovine, record producer, co-founder of Interscope Records and Beats Electronics, and former head of music at Apple. At the end of part one, we heard how Jimmy co-founded Interscope Records. The rise of file sharing and platforms like Napster and Kazaa had put the music sales in freefall.

5:46The music industry was running scared, except for Jimmy. It didn't scare me. It pissed me off that these sort of what I called at the time nerdy guys just didn't give a s***. They were just going to do that thing and act like, oh, you know, this is the future. Well, it's the future if it's done right. Jimmy suspected these nerdy guys were locked into their own silos, so certain of their new tech's ability to scale that they had no interest in its huge negative impact on the artists. Jimmy also recognized that he knew nothing about the tech world. So he set out to make the first attempt at breaking through the barrier between the tech and music silos.

6:27I better go learn about these guys. You know, the guys that are ripping, burning, and all this other stuff, right? I went to Intel. I met with one of the founders, and he said to me, You know, Jimmy, it's a fabulous story, but not every industry was made to last forever. I said, wow, I never heard that before. I said, okay, we're going to overcome this.

6:52Jimmy saw that a new approach was needed. One that would courageously break through the barriers that divided artists and technologists to find a new constructive way forward to elevate rather than decimate the music industry. Jimmy got wind of a technology company that had the same goal. So Doug Morris, the head of Universal, said, go up to Cupertino, see Eddie Q and Steve Jobs. They're going to show you a thing called iTunes. They want our license. Tell me what you think. This is, of course, Apple founder Steve Jobs and Apple seeing your vice president of services, Eddie Q. The iPod had just launched in 2001, and now Apple was working on a paid for music download service, the iTunes Music Store.

7:41So I go in there and I meet with Eddie and Steve. And I start hearing their vision for music. Then Steve starts talking and he knows how to talk to me. So like I'm listening, I'm going, okay, wow. This guy understood the why of John Lennon. I spoke to him about it. He got it at its core. He just didn't like the music. He understood the person who made the music. So I left. And I just called up Doug Morris. I said, Doug, the party's at Steve's house. This guy, Steve, understands the crossing of liberal arts and technology. No one else gets it. We got to aim our boat in his direction.

8:32Interscope became one of the first record companies to fully embrace iTunes, beginning the long journey that would eventually minimize the negative impact of file sharing and create a whole new tech-powered ecosystem for record companies and artists. What really sold Jimmy wasn't the iTunes tech. It was Steve and his masterful ability to understand both technology and music. I became of service. Eddie Q and Steve needed help with iTunes. So I said, okay, I'm going to do whatever I can to help these guys get whatever they need in music. That meeting with Steve helped Jimmy see the big picture for the future of music.

9:16A future that was impossible to see without breaking free from the individual silos of the tech and record industries. I remember sitting at a restaurant with Steve saying, Steve, I want to get in the headphone business. Because I thought maybe I'd do it with Apple. And he said, you do it. Apple doesn't want to make headphones right now. You do it. I said, okay, I'll do it. The company Jimmy is talking about is, of course, Beats Electronics, the headphone and later music streaming service that Jimmy would soon co-found. Where do you think Beats came from? He had a shiny iPod. We had a shiny headphone.

9:55He made white earbuds. I made black. You know, I'm not original. I said, okay, this guy's got it. I'm just going to, what is he missing? Ah, he's missing good headphones. Okay, I'm going to make them, you know, and it sounds simple, but it was simple. It was hard, but it was simple. Now, Jimmy's being a little flippant here, not just by downplaying how hard it was to build Beats, but also about how innovative the driving idea behind Beats was. Headphones are like medical equipment. they're sterile pieces of utility they're commodities right now i had two headphones and i held them out and i said this one's axl rose and this one's tupac i want people to feel that way about these headphones i want to give them life and a personality and that's where beach came from

11:00I love how the idea of breaking down barriers was baked into Beats from the very beginning, crossing the divide between fans of classic rock and hip-hop with a product they both would love. Jimmy had the perfect co-founder for Beats and Dr. Dre. Dre hated the sound of these earbuds. He's hearing his kids play sound on crappy computers, which are made basically for voice at that time, and little earbuds that are given away for free. All he works on his whole life is defined by sound and the quality and the hours and hours and hours he puts in to make it exactly the way he, that's why he is the greatest producer in audio, possibly that ever lived.

11:44So one day he said something to me and I said, no, no, no, you're audio. You're not clothes. You're not any of that stuff that people, you're audio. Let's go in the audio business. So in 2006, they co-founded Beats Electronics. Another influential artist who was part of the Beats' early beginnings was Will.i.am. We won't tell his Beats story on this episode, but you can hear it on the Masters of Scale episode with Will.i.am. Beats was far more than a line of branded headphones. It was a bold statement about breaking down silos between art, fashion, and commerce, artists and their fans. regular consumers, and audiophiles.

12:26People said our headphones were too bass-heavy in the beginning, etc. That was all on purpose, because we were playing to an audience that wasn't being satisfied with conventional headphones and the audiophile experience. So we gave them the bass that we knew they wanted. Beats was also a way for the music industry and its artists to break into new opportunities, a mindset that didn't always come naturally for Jimmy. In my day, you weren't allowed to sell product. If you were Bruce Springsteen, Bob Dylan, Stevie Nicks, anybody, you weren't allowed to do that because then you were selling out or whatever it was called.

13:04But then all of a sudden, I'm watching Puff Daddy and the guys at Def Jam and all these guys, I'm saying, they're cooler than me. I'm going to do that. Once again, Jimmy had been inspired by hip-hop to break out of his own self-imposed silo that equated selling product with selling out. For example, when we started Beats, we started with music. Musicians, music videos. And then one day, at Interscope, we were making More Than a Game with LeBron James. Jimmy was an executive producer on More Than a Game, the 2008 documentary following basketball legend LeBron James and four of his teammates. So he was spending a lot of time with LeBron and LeBron's business manager, Maverick Carter.

13:53And I knew that him and Maverick loved hip-hop. They loved hip-hop. They loved Dr. Dre. Maverick says to me in my office one day, give me those two headphones for me and LeBron. I said, absolutely. They call me back and says, LeBron wants 15. He's going to Beijing. for the Olympics. I want some for the whole team. I said, great. I said, do me a favor. Ask them to wear them around their neck and stuff when they get off the plane. Because I think marketing. Suddenly, a whole new market and marketing strategy opened up. LeBron's using these things to get inspired to exercise. Okay, we're going to switch our marketing to athletes.

14:39You make it up as you go. If you look, there's commercials with Dre and LeBron lifting weights and all that stuff. I mean, we would do anything. And the thing exploded. The headphones were a huge success. But the music industry was still struggling against illegal file sharing. On the legal front, online stores like iTunes were growing and gaining acceptance. Meanwhile, improving internet speeds meant streaming services like Spotify were beginning to take off. But Jimmy wanted to get ahead of the changes and make sure the people who had always been most important to him, the artist, weren't siloed away from the new opportunities that were opening up.

15:21I'm watching all these big companies use music and make billions of dollars. Everyone else is using the IP from MTV to whoever else, and they're making a fortune. And I'm realizing, okay, I got to morph my company. Music had to be more than just selling songs. I got to work with our artists and come up with other ways to build something incredible. In 2012, Beats acquired the streaming service, MOG, and created Beats Music, a subscription streaming service that in true Jimmy fashion focused on putting artists first. So I saw them making the records, playing them back on an instrument, which was the headphones, and I saw the distribution of music.

16:15I wanted them all in the same company. Beats broke down the barriers that had been keeping musicians trapped in an unfair business model. In the beginning, Beats was also a pay-only service, allowing listeners to also have a more engaging relationship with artists. With their 20 million song catalog, Beats Music offered higher royalties per stream and gave artists access to valuable data about where their fans were located, their listening habits, and other invaluable insights. Beats was a company of artists for artists. Beats offered playlists curated by artists and DJs rather than by algorithms.

16:56Jimmy also hired artists including Nine Inch Nails frontman Trent Reznor as chief creative officer. And it was ahead of its time. You don't think you're ahead of the curve when you're trying to do something. People tell you you were ahead of the curve later. The Beatles, right, which was ground zero for my generation, right? They weren't the only guys with those haircuts. You know, when you're thinking of something, a lot of people are thinking it. It's who can execute on it. Artists and their fans loved it. But there were others in the industry who feared this barrier-breaking approach. Jimmy needed a partner who understood both tech and music like he did.

17:35The only person that I ever met that understood it, truly understood it, was Steve Jobs. And that's why I was so attracted to him, because he was speaking a language that no one else in tech was speaking. So he sold to Apple. In 2014, Jimmy and Dre sold Beats to Apple for$3 billion. At the time, it was the most Apple had ever spent on an acquisition. Soon after the deal, Jimmy left Interscope and became Apple's head of music. He was now at a place he instinctively knew could bridge both the worlds of arts and technology. That's how Jimmy and I ended up starting at Apple the same week in 2014. We'll hear more about that meeting after the break.

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20:20IBM helps you turn AI into more than potential. It helps you turn it into smarter ways of working and ultimately scaling. Let's create smarter business, IBM. We're back with Jimmy Iovine. If you want to watch my full interview with Jimmy, head to the Masters of Scale YouTube channel. You'll be able to hear the stories and insights from Jimmy's career, including more on his early days as a producer, his time at Apple, and his views on the intersection of fame and talent. Okay, so I'm down to in 2015, right? Actually, Angela, before we do that, this is producer Chris McLeod again. I was going to ask you one more question.

21:02Oh, I love it. We're at the point of the story now where you and Jimmy finally meet at Apple. At the beginning, you talked about the impact that he's had on you. Did you witness Jimmy breaking down barriers firsthand? Maybe start with the story of how you met Jimmy. Ready? Okay. Burberry, we were very involved in music. We'd launched Burberry Acoustic online and used incredible music on the runway shows. And this guy named Jimmy reached out out of the blue. I didn't know who Jimmy was, and they wanted to get together and kind of strategize on some things. That actually didn't happen. We kind of went back and forth on email and kind of missed each other.

21:50I remember my first day walking into Apple. And it's a surreal experience. I was from such a different world. I was from a different planet. You know, fashion and London. And all of a sudden, I'm in this place called Infinite Loop, which is kind of like in the business world, Oz. And it's like, you know, why am I here? About a week in the job, I hear some conversations in some of the executive meetings about this potential acquisition. And this guy named Jimmy comes up again. And it's like, oh, wow, maybe I should have figured out a way to meet with him. And all of a sudden, someone walks in and introduces me to Jimmy.

22:35And there was just a mutual admiration and respect. You know, we were the outsiders. We were just starting to envision the entire new in-store experience, to which music needed to play a huge part. At Apple, we had these things called mock stores. I'd say, hey, Jimmy, you know, can I show you this? Would you pop over? And he always, he would just pop over if he was in town and, you know, give us his two cents. And, you know, do you think about it this way? Do you think about it that way? And coming in and working his magic. We always had geniuses that repaired phones. We actually created a new position called a creative pro.

23:17And a creative pro was to music or was to photography or video making what the genius was to repairing your phone. They were highly skilled. We had two or three Grammy winners in our New York stores that were employees that we didn't even know about. Jimmy was instrumental in helping us decide exactly what that final in-store experience should be like. It was kind of a kismet experience. And that's kind of how it started. Amazing. Perfect. Got to keep going? Yeah, let's take it from 2015.

24:04In 2015, Jimmy oversaw the launch of Apple's subscription music streaming service. Jimmy also used his time at Apple to continue breaking down barriers to create a more equitable streaming ecosystem for artists. They're an incredible company, boy. And I'm so glad because, you know, Apple getting into streaming really helped the record industry because it kind of validated the whole thing. And everybody said, okay, now Apple's in the game. This is one of the most powerful things about breaking through barriers. You'll give others the courage to follow you. And once you've done so, you'll have a much easier time helping them see the big picture.

24:44They'll embrace the startling new opportunities, partnerships, and innovations that were impossible to comprehend from back behind the barrier. It reminds me of a famous quote from Steve Jobs. You can't connect the dots looking forward. Only when you look back does it all make sense. In 2018, Jimmy left Apple and now had time to focus on another project. To hear how that began, we need to rewind in our story a bit to before Apple acquired Beats and Jimmy was trying to staff it. When I had Beats, I was trying to find employees that understood what we were trying to do between culture and technology.

25:26I can't find people that understand both languages or understand each other. They don't learn like that. They either come out of engineering, sitting next to 60 other engineers, or design, sitting next to 60 other designers. There's no collaborative innovation in school. These people are all siloed, and they're siloed because they learned in a siloed way. without a deeper understanding and respect for other disciplines, you don't get the connection that builds trust and enables you to break down barriers. And something I want to highlight here is how Jimmy's entire career built up to this insight.

26:11Jimmy had time and time again seen the huge benefits of getting people to break out of their silos, Whether that was between two musicians in the recording studio or two entire industries grappling with the seismic changes in technology.

26:30Now he instinctively saw the mindset of keeping people siloed wasn't instinctive at all. It was taught. So to change things, he would have to go into another siloed institution, education. So I said, oh, school needs to be not siloed. That's what hit me. You know, I was like a lightning bolt. I have no idea. It's the future of education. Siloed learning should be dead as a duck. But listen to what Jimmy says next. Acknowledging that education was another strange new world to him. I have an instinct, but I don't know how to do a lot of things. First of all, I don't listen to people that speak about education.

27:14So I have no idea if somebody thought that before. Maybe they did. I most certainly never thought of it. In beats and our school and me with hip hop. These are things that I didn't understand. Bob Seger had a great line. He said, I wish I didn't know now what I didn't know then. That is so powerful. We didn't care what we couldn't do ever. And we went against convention every time. A little naivete goes a long way. So me and Dre, because we're crazy, we went and we put up a lot of money to start this school. In 2013, Jimmy and Dr. Dre donated$70 million to USC to found the Jimmy Iovine and Andre Young Academy for Arts, Technology, and the Business of Innovation.