Russell Simmons' rush for profits - Rush Communications; includes related article - Company Profile - Cover Story

Black Enterprise, Dec, 1992 by Christopher Vaughn

Simmons is one of only a handful of entrepreneurs who cornered the market on rap music and culture--primarily because few others saw the value in the music. "In the beginning, the philosophy of the major record companies was that rap was just a flash in the pan, that it had no longevity," says Rush Management President Lyor Cohen, who joined the company in 1985. "We survived, not because we were especially competent, but because everybody else thought this was not a business to be in."

"Russell Simmons is the main reason for the financial success of the whole hip-hop/rap music culture; if he hadn't gotten into it when he did, who can guess where it would be today," says Clarence Avant, the record industry guru acknowledged as the most powerful black man in the record industry. "Not only is he one of the main reasons that so many people are making so much money from that culture, but he's also at the center of an empire that everyone wants a piece of. That gives him incredible clout in the power corridors of Manhattan and Hollywood."

Today, Simmons is positioning Rush even more prominently in mainstream America via the successful Russell Simmons' Def Comedy Jam television show on Home Box Office (HBO) and his development plans for additional TV programs and feature films. To handle that move and to oversee Rush Communications' recent music deal partnership with Sony Inc., he has built a management team that includes Boston University graduate Carmen Ashhurst-Watson as president of the parent company Rush, and Yale Law School graduate and attorney David Harleston as president of its largest subsidiary, Rush Associated Labels (RAL)/Def Jam Records. (See sidebars, "The Corporate Presence" and "A Man Of Two Worlds.")

Yet Simmons seems as different from the traditional BE 100s CEO as his old neighborhood Hollis, Queens, is from the old-money shrines of Wall Street. His conversation is littered with obscenities, and he dresses like the boy in the 'hood. And although he has three offices in various locations around Manhattan, he rarely visits them, preferring to conduct business from his living room couch or from his bed. (There's a telephone within arm's reach in every room of the $1.6 million triplex apartment he purchased from actress/singer Cher in 1990; he has two more in his white Rolls Royce.)

However, don't be fooled by Simmons' raw language, hip-hop attire (an inspection of his spacious closet reveals only two suits, both gifts and neither of which he's ever worn) and apparent disdain for the executive suite. The CEO of Rush Communications is strictly business.

Demonstrated Leadership

Simmons' Def Jam has demonstrated a clear ability to maintain its leadership position as the premier rap label in the music business--a plus in the eyes of the investment community.

With 10 gold, 6 platinum and 2 multiplatinum records, and a roster of artists that includes rappers LL Cool J, Public Enemy, Run DMC, EPMD and Bid Daddy Kane, Def Jam was responsible for 60%, or about $21 million, of Rush Communications' annual revenue last year. According to the leading rap music magazine, The Source, Def Jam, the crown jewel of Simmons' empire, is the largest and most important rap label in the business. "Def Jam has had an immeasurable impact on the sound, look and feel of rap," says The Source Editor-in-Chief Jon Shecter. "From the start, Russell has always marketed rap and hip-hop the right way, so that the music never lost its intensity even though it reaches a wide audience. He's marketed it in a way that fans can love it and not feel that it's been sold out."