Dashing Diversification

After a day at the office filled mostly with meetings and phone calls, Damon Dash, CEO of Roc-A-Fella Enterprises, hops into the rear of a Ford V16 party van with two underlings. There will be no party tonight. His driver is taking him to XM Satellite Radio's New York City studios, where Dash and his Roc-A-Fella crew put on a weekly talk show to plug his rap, clothing and film empire. Slouched in his leather seat, Dash grabs control of the CD remote and makes a selection. It isn't Roc-A-Fella superstar Jay-Z, with whom Dash launched the company from his Harlem apartment eight years ago, or even Dirt McGirt, a.k.a. Ol' Dirty Bastard, another player on the Roc-A-Fella roster. Dash listens to a fiddle and starts to bop his head; he has settled on the 1980s cult hit Come on Eileen by Dexy's Midnight Runners, whose Irish lead singer introduces the chorus by belting, "Toora loora toora loo rye aye."

Not much street cred here. But Dash doesn't need any. At only 32, he is CEO of a $500 million company. Beyond the fact that he's a hip-hop executive, Dash defies easy characterization. He loves the disco rhythms of Blondie. He has seen friends gunned down in his Harlem neighborhood, yet he attended an exclusive New York City prep school and played lacrosse in Connecticut. "Do you know how hard it was to come back to my neighborhood in penny loafers with khaki pants and a blazer?" Dash asks. And he recently produced comeback singles for the former Posh Spice, Victoria Beckham, whose British girl-band, the Spice Girls, briefly ruled the late-'90s airwaves.

Dash's new business plan fits him like a Roc-A-Fella hoodie. This fall he started Roc Music, the first hip-hop company to produce rock, alternative and R. and B. He's flipping the turntables: over the past decade, pundits have lauded rap for "going mainstream" and finding suburban skater punks far from the smoked-out city neighborhoods where the music was founded. With Roc Music, Damon Dash is formally inviting rock into the hip-hop world. "I've had 20 albums go gold or platinum," he says. "Why can't I have that in rock, soul and R. and B.? You can't just sit around and do the same thing for 10 years." Dash's challenge is one he shares with many other CEOs: Where is the next phase of growth coming from?

Diversification is part of a hip-hop mogul's DNA. Russell Simmons, the godfather of urban marketing, and Sean (P. Diddy) Combs have set the standard. To really make it in the $5 billion rap business, you have to mix more than beats. You have to be into fashion, movies and maybe even a Broadway play. Simmons founded Def Jam records and runs Phat Fashions, a $263 million clothing line, and produced Def Poetry Jam on Broadway. P. Diddy, a star recording artist, also runs Bad Boy Records, a $325 million clothing line and two restaurants.

Simmons and Combs have spawned imitators: rappers Master P and Jermaine Dupree have diversified, while execs like Shady Records V.P. Paul Rosenberg, who manages Eminem, and Mona Scott of Violator Management, Missy Elliott's chief operator, have sauntered out of the studio.

But many see Dash as the one who is inheriting Simmons' throne. "Because of Damon's ability to sit down at a table with corporate partners and quickly figure out what's necessary, he has even more potential than Russell," says Erin Patton, president of the Mastermind Group, a marketing consultancy that has worked with both men. "It's all about his timing."

Given the condition of the music industry, Roc Music's timing isn't ideal. Web piracy has helped cause a 14% drop in record sales since 1999. In mid-November, Dash's biggest star, Jay-Z, released what he says will be his final record, The Black Album. It topped the charts in one week, but if Jay-Z, just 33, doesn't pull a Michael Jordan and lay tracks once or twice more, "the Roc" could lose some cachet. "Damon's done a great job, but he's clearly been in the right place at the right time in his partnership with Jay-Z," says Ryan Berger of advertising agency Euro RSCG Worldwide. "I'm not sure he can reach that next level without him."

Dash hears the whispers. "People are contemplating our demise," Dash tells some dozen Roc-A-Fella staff members gathered in his Broadway office. "With Jay retiring, now more than ever we are going to be critiqued on every level." Dash doesn't just moderate a meeting. Sitting at his desk, two black greyhound statues flanking him, Dash cups his hands and lectures.

Prissy pop acts like Britney Spears and 98 are on today's syllabus. Dash wants his people to know that although Roc-A-Fella will move beyond hip-hop, the company won't lose any edge. "This pop-music thing, it's starting to bother me," he begins. "Everything that's hot, it's going pop. What sells now is this bulls___." His cell phone interrupts. Dash spends 10 minutes jousting with a colleague. "It's not my fault that your company owes me $85,000," he says. Dash flicks the phone shut and continues. "We have to come out with something — maybe a 'Posh Spice Is Dead' mix tape. I refuse to make our culture look stupid to get on MTV."