Harness fear to drive innovation, part 2

ANGELA AHRENDTS: Okay, what’s the password for WiFi? I need to get my iPad.

CHRIS MCLEOD: Hi listeners, this is Masters of Scale producer Chris McLeod, and we’re getting set up in the studio with our guest host Angela Ahrendts, 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.

AHRENDTS: Take my jacket off. It’s cold outside and warm in here.

MCLEOD: Okay, we rolling? Angela, before we get started, I want to ask you a question.

AHRENDTS: No worries.

MCLEOD: When Reid 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?

AHRENDTS: 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. And 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.

MCLEOD: That’s perfect. We’ll find a way to use that in the episode.

AHRENDTS: Great, great.

MCLEOD: You ready to begin?

AHRENDTS: Okay.

MCLEOD: Okay. Whenever you’re ready.

AHRENDTS: I’m Angela Ahrendts, former senior vice president of Apple and Burberry CEO, and today, your guest host. And 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.

[THEME MUSIC]

Copy LinkJimmy Iovine’s first meeting with Apple

AHRENDTS: I’m Angela Ahrendts, former senior vice president of Apple and before that, Burberry 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 free fall. The music industry was running scared, except for Jimmy.

JIMMY IOVINE: 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 shit. They were just gonna do their thing and act like, oh, you know, this is the future. Well, it’s the future if it’s done right.

AHRENDTS: 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 artist. 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.

IOVINE: I thought, I better go learn about these guys. You know, these guys that are, rip and burn it, 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.” They said, “Okay, we’re going to overcome this.”

AHRENDTS: Jimmy 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.

IOVINE: Doug Morris, the head of Universal, said, “Go up to Cupertino, see Eddy Cue and Steve Jobs. They’re gonna show you a thing called iTunes. They want all license. Tell me what you think.”

AHRENDTS: This is, of course, Apple founder Steve Jobs and Apple Senior Vice President of Services Eddy Cue. The iPod had just launched in 2001, and now Apple was working on a pay for music download service: the iTunes music store.

IOVINE: So 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 Marsh. I said, Doug, “The party is at Steve’s house.” This guy, Steve, understands the crossing of liberal arts and technology. No one else gets it. We gotta aim our boat in his direction.

AHRENDTS: Interscope 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.

IOVINE: I became of service. Eddy Cue and Steve needed help with iTunes. So I said, “Okay, I’m gonna do whatever I can to help these guys get whatever they need in music.”

AHRENDTS: That meeting with Steve helped Jimmy see the big picture for the future of music — a future that was impossible to see without breaking free from the individual silos of the tech and record industries.

Copy LinkThe origin story of Beats Electronics

IOVINE: I remember sitting at a restaurant with Steve saying, “Steve, I wanna get in the headphones business.” Because I thought maybe I’d do it with Apple. And he said, “You do it. Apple doesn’t wanna make headphones right now, you do it.” I said, “Okay, I’ll do it.”

AHRENDTS: The company Jimmy is talking about is, of course, Beats Electronics — the headphone and later, music streaming service that Jimmy would soon co-found.

IOVINE: Where do you think Beats came from? He had a shiny iPod. We had a shiny headphone. He made white earbuds. I made black. You know, I’m not original. I said, “Okay, this guy’s got it. I’m just gonna … what is he missing?” Oh, he’s missing good headphones. Okay, I’m gonna make them. You know? And it sounds simple, but it was simple. It was hard, but it was simple.

AHRENDTS: 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.

IOVINE: 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 Beats came from.

AHRENDTS: I 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 the product they both would love. Jimmy had the perfect co-founder for Beats in Dr. Dre.

IOVINE: 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. So, one day he said something to me, and I said, “No, no, no, you are audio, you’re not clothes, you’re not any of that stuff that people … you’re audio. Let’s go in the audio business.”

AHRENDTS: 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.

IOVINE: People said our headphones were too bass heavy in the beginning, et cetera. 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.

AHRENDTS: 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.

IOVINE: 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 cause then you were selling out or whatever it was called. But 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. Huh? I’m gonna do that.

AHRENDTS: 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.

IOVINE: For example, when we started at Beats, we started with music — musicians, music videos. And then one day at Interscope we were making More Than a Game with LeBron James.

AHRENDTS: 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.

IOVINE: And 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. He says, “LeBron wants 15, he’s going to Beijing for the Olympics. He wants them 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. Cause I’m … I think marketing.”

AHRENDTS: Suddenly, a whole new market and marketing strategy opened up.

IOVINE: LeBron’s using these things to get inspired to exercise. Okay, we’re gonna switch our marketing to athletes. You 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.

AHRENDTS: 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.

IOVINE: I’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 gotta morph my company. Music had to be more than just selling songs. I gotta work with our artists and come up with other ways to build something incredible.

Copy LinkWhy Jimmy Iovine and Dr. Dre sold Beats to Apple

AHRENDTS: 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.

IOVINE: So I saw making the records, playing ’em back on an instrument, which was the headphones, and I saw the distribution in music. I wanted them all in the same company.

AHRENDTS: 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. Jimmy also hired artists including Nine Inch Nails frontman Trent Reznor as Chief Creative Officer. And it was ahead of its time.

IOVINE: 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.

AHRENDTS: 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.

IOVINE: The 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. Cause he was speaking a language that no one else in tech was speaking. So we sold to Apple.

AHRENDTS: 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.

[AD BREAK]

AHRENDTS: We’re back with Jimmy Iovine. Okay, so I’m down to “in 2015,” right?

MCLEOD: Actually, Angela, before we do that, this is producer Chris McLeod again. I was gonna ask you one more question.

AHRENDTS: Oh, I love it. 

Copy LinkHow Jimmy Iovine and Angela Ahrendts worked together

MCLEOD: 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.

AHRENDTS: Ready? Okay. At 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. I remember my first day walking into Apple, and it’s a surreal experience. You know, I was from such a different world. I was from a different planet. You know, fashion in 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, you know, conversations in some of the executive meetings about this potential acquisition, and this guy named Jimmy comes up again. 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. And 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, did you think about it this way? Did 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. And 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.

MCLEOD: Amazing.

AHRENDTS: Perfect. Do you want to keep going? 

MCLEOD: Yeah, let’s take it from 2015.

Copy LinkFinding the intersection between culture and technology

AHRENDTS: In 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.

IOVINE: 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 says, okay, now Apple’s in the game.

AHRENDTS: 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. They’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.

IOVINE: When I had Beats, I was trying to find employees that understood what we were trying to do between culture and technology. I 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 designs 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.

AHRENDTS: 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. Jimmy 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. Now, 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.

IOVINE: So I said, “oh, school needs to be not siloed.” That’s what hit me. You know … like, it was like a lightning bolt. I have no idea. It’s the future of education. Siloed learning should be dead as a duck.

AHRENDTS: But listen to what Jimmy says next — acknowledging that education was another strange new world to him.

IOVINE: 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, so 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 Seeger 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, of course, we’re crazy. We went and we put up a lot of money to start this school.

AHRENDTS: 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. The Academy is teaching a new generation of entrepreneurs, artists, and technologists to break down barriers across disciplines. It’s a new approach to education that will engender more courage, more boldness, and more willingness to follow creative instincts.

IOVINE: We’re really proud of the school and we’re proud of having kids be able to go to places like Meta, Apple, Google, Netflix, and bring these skills and these other disciplines to the party.

AHRENDTS: But even now, with five schools following the curriculum Jimmy and Dre started, they still find it hard to break down the walls of siloed education.

IOVINE: I can’t believe it. I’m running into the same stuff that I ran into in the record business. On every level of education, you’re dealing with, you know, presidents and deans and boards and locked in people that have been doing this for 30 years. And some people are incredible and very open. Some people are less open. You have to have a certain amount of humility, because you’re running into people that you know have no idea what you’re talking about, think you’re nuts, think you are not educated enough to even talk on this subject. And you gotta keep pushing.

AHRENDTS: They keep pushing. In 2022, Dre and Jimmy expanded their curriculum to high schools. The Iovine and Young Center Integrated Design, Technology, and Entrepreneurship Magnet in LA aims to redefine the high school experience. Their approach is also starting to get picked up by other major education institutions, but scaling is still challenging.

IOVINE: MIT is starting a school now — I hear like our school. But I do believe we’re the best. We’ve been doing it for 12 years now, and we believe in it. We’re gonna scale this thing somehow.

AHRENDTS: It’s essential that not just schools, but companies and business leaders recognize the value and need for cross silo learning by emphasizing the connections between people of all backgrounds and expertise, replacing humanity and human interaction at the center of what we do.

IOVINE: I just believe after my experiences in the arts, in tech, that you need to understand each other. And right now, it’s at an impasse. They don’t understand no matter what. They don’t like hearing it. They don’t understand the why. The leaders of the future, if they’re fluent in other disciplines and understand the why of the other disciplines, it’s gonna make for a better world.

AHRENDTS: Breaking down these barriers and reaching beyond our silos brings the big picture into focus. This is key to remember as we rocket towards an AI infused future. AI is all about the how, but it knows nothing about the why — the core passions and instincts that drive us all.

IOVINE: Well, you don’t understand the why of somebody, whether it’s your husband, your wife, your kids, your best friend, your partner. You better understand the why. You know what it’s called? Empathy. The world goes around on empathy. You have to understand who you’re sitting across from.

AHRENDTS: Leaning into empathy builds deeper trust, unlocks creative thinking and emboldens us to keep on breaking down barriers. But whether you’re an optimist or a pessimist when it comes to the impact of AI, one thing is clear. We all urgently need to think more like Jimmy.

IOVINE: I like working with people. I like a band, I like an infield. Okay? Always, always giving credit along the way to everyone who helped me. Anybody who’s ever done something for me, I try to keep in my life. With Mr. Geffen. I sat next to him at the Laker game the other day. When we started Beats, as many minutes as I could get with Steve Jobs, I took. We sat at a Greek restaurant and there were these tablecloths that were paper and you have magic markers there. And he just wrote the entire ecosystem of hardware. And we sat there for hours doing this. There’s a pattern here. Okay? Be of service to everyone, from the artist to the product, be of service, and people will want you around and help you become better.

AHRENDTS: How can we amplify our human qualities: empathy, trust, instincts, courage, to enable us to stay ahead and ensure the future is human driven? I’m Angela Ahrendts. Thank you for listening.