A new book has revealed how a premature celebration from Dr. Dre cost him $200 million and almost torpedoed his agreement with Apple that would lead to the Cupertino company acquiring his Beats headphones company in 2014.
In the book in question, After Steve, Tripp Mickle explains how Apple CEO Tim Cook became aware of Beats and wanted to acquire it because of its human-curated playlists, and as a solution to Apple’s failure to enter the music streaming market.
A source of friction in discussions was the insistence of Jimmy Iovine – the record executive who founded Beats alongside Dre – that Apple buy both the streaming service Beats Music and the consumer audio products manufacturer Beats Electronics.
Eventually, however, a deal was reached. According to Mickle, “it was a sum that Iovine and Dre could barely fathom. As the lawyers worked through final details, Iovine summoned the leadership team of Beats to his home near Beverly Hills. He told everyone that they were on the cusp of finalizing a massive deal. The only thing that could spoil it would be for word of the deal to leak.”
Iovine explicitly warned the Beats staff not to leak the news. Unfortunately, at 2am the following morning, Puff Daddy called Iovine to explain that Dr. Dre and rapper Tyrese had posted a video on Facebook revealing the deal.
In that video, Dre famously announced that the Forbes rich list would have to be updated to reflect him becoming the first billionaire in hip hop.
When Cook learned about the leak, he summoned both Iovine and Dre to Cupertino, expressing his disappointment but assuring them that his resolve for Apple to acquire Beats had not changed.
The Apple CEO did, however, apparently use the leak as leverage to shave $200 million off the acquisition price. In Mickle’s words, “the reduction left staff at Beats to say that Apple had given Dre just enough of a haircut to make sure that he did not become a hip-hop billionaire.”