These Elite Musicians Are Rockin’ in the Business World
Filed under: Company News, Technology, Entertainment Industry, Entrepreneurs, People
Over the course of a nearly 50-year music career, Neil Young has touched nearly every genre, from country to post-punk to blues. But his most recent venture is unusual even for him — he’s now the CEO of a tech company.
PonoMusic is the company, and its signature product is a player that stores high-resolution music (essentially, much richer versions than the current MP3 standard — closer to the sound on the studio masters). Along the lines of Apple’s (AAPL) iDevice/iTunes one-two punch, PonoMusic will also sell digital content for the device. PonoMusic’s player and service have yet to hit the market, so it’s too soon to tell whether Young’s new venture will rise up the charts. If it does, perhaps he can join the elite club of musicians who successfully made the leap into top ranks of the business world, like these three busy musical entrepreneurs.
50 Cent
Known to his mom as Curtis Jackson, hip-hop artist 50 Cent has a fat net worth at great odds with his stage name. This is due in no small part to his involvement with vitaminwater, the flavored “enhanced water” beverage.
“Fiddy” was originally just a devotee of the product, but that changed after he was seen holding it in an advertisement for adidas’ (ADDYY) Reebok shoe line. The drink’s maker, Energy Brands, was made aware of the ad and it recruited him for promotional work.
The clever musician wangled an equity stake in the company instead of a fee for the new gig. His association with vitaminwater greatly boosted Energy Brands’ visibility, so much so that it eventually attracted the interest of beverage behemoth Coca-Cola (KO). In 2007, Coke paid more than $4 billion to acquire the company. 50 Cent cashed out at an estimated $100 million.
That was far from the rapper’s last business move. Since his vitaminwater adventure, among other investments 50 has expanded his G-Unit brand (named for his first group) into such ventures as athletic shoes, launched a film production company and introduced a new drink, SK Energy.
Bono
When not singing with his obscure European bar band U2, Bono (name on birth certificate: Paul Hewson) keeps an eye on his private equity investments.
That’s because he’s a managing director of Elevation Partners, a company that he co-founded in 2004, named after a U2 song. The following year, Elevation raised $1.9 billion for its initial investment fund and went shopping.
Its success has been mixed. In 2006, the company bought a piece of fading Forbes Media, publishers of the eponymous business magazine. According to the New York Times, Elevation didn’t clear much of a profit when the media firm was sold this past July. Meanwhile, Elevation eked out a small gain on its position in personal digital assistant maker Palm when that company was sold to Hewlett-Packard (HPQ) for $1.2 billion.
A more promising investment was the one Elevation made in Facebook (FB) two years before the social media giant’s ultimately lucrative initial public offering. After two investments totaling $210 million, the company holds a 1.5 percent share.
Such a percentage at Facebook’s current market capitalization would value the stake at nearly $3 billion. That’s enough to make even a wealthy rock star sing out loud.
Dr. Dre and Jimmy Iovine
Is the music leaking from your headphones or earbuds weak and tinny? If so, hip-hop impresario Dr. Dre (aka Andre Young) and star record producer/executive Jimmy Iovine can solve your problem.
The two music veterans teamed up to form Beats Electronics in 2006, a company anchored on high-end headphones and earbuds that aim to bring “the energy, emotion and excitement of playback in the recording studio to the listening experience.”
That pitch struck a chord. According to research from NPD Group quoted in The Guardian, Beats had a commanding 64 percent of the high-end (i.e., over $100) headphone market in 2012.
This made the company a serious power in the market, and soon a bigger entity came to jam with it. That was Apple, which this past May committed $3 billion to buy the company and its sister entity, streaming service Beats Music. That’s the priciest acquisition in the tech powerhouse’s history, by the way.
This was sweet music to the ears of Dre and Iovine, who held the majority of the company, with asset management firm Carlyle Group (CG) owning a smaller stake.
Into the Black?
As for Young’s new venture, early reviews of PonoMusic’s player and service are mixed, with some commentators pointing out that the human ear can’t readily distinguish between high-resolution audio and MP3.
But perhaps Neil Young’s strong association with the brand will carry it through to success; celebrity cachet certainly didn’t hurt the prospects of vitaminwater, Elevation Partners or Beats, after all.
Motley Fool contributor Eric Volkman owns shares of Facebook. The Motley Fool recommends Apple, Coca-Cola and Facebook. The Motley Fool owns shares of Apple and Facebook and has the following options: long January 2016 $37 calls on Coca-Cola and short January 2016 $37 puts on Coca-Cola. Try any of our Foolish newsletter services free for 30 days. Turn up the profits in your portfolio with our free report on high-yielding dividend stocks.
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