Tapping the Spirit of Success

Entrepreneur Russell Simmons thanks yoga's philosophy for giving him the principles to operate his ever-growing hip-hop empire

By David Liss

Business and spirituality -- an odd couple? Not to Russell Simmons, hip-hop mogul, master dealmaker, and yoga devotee. Simmons says practicing yoga and studying its teachings have had a profound influence on the way he approaches his work.

"For any business to be successful in the long run, it has to be conscious of the fact that giving is, and will always be, the foundation of your success," he says. "All the religious teachings say the same thing...that you reap what you sow. Reading the yoga sutras caused these basic ideas to resonate within me. I use the science and the practice of yoga and the reading of various texts to remind me of these basic truths on a regular basis."

Simmons' success -- he presides over a business empire with retail sales of nearly $530 million in 2003 -- suggests he must be doing a lot of giving, and he intends to do more (see BW Cover Story, 10/27/03, "The CEO of Hip-Hop"). Many of his future deals will earmark specific dollars for charities, and others will target services for various social objectives.

PHAT DEAL.

  And more and more, Simmons demands that his business partners share his vision and be willing to donate proceeds toward social causes. Simmons is more than just talk: He has pledged 100% of the profits of energy-soda DefCon3 to the Hip Hop Action Network, whose goal is to promote voter registration across the U.S.

His latest coup: On Jan. 9, Simmons concluded a $140 million deal with Kellwood Co. (KWD ) for the sale of his Phat Farm and Baby Phat clothing lines. Kellwood is a St. Louis-based clothing manufacturer with reported 2003 revenues of $2.2 billion. Phat Farm and Baby Phat will operate as units of Kellwood. But Simmons and his wife, Kimora Lee Simmons, will remain in their respective roles as chief executives of these companies.

In between taking other calls and making deals, Simmons recently spoke with me as he rode around New York City. Edited excerpts of our phone conversation follow:

Q: What caused you to think about spirituality in relation to business?

A:

I started to practice yoga in the early '90s, primarily to chase women. From there, I progressed to a practice I do every day at Jivamukti Yoga in New York.

The definitive textbook or "bible" of yoga is The Yoga Sutras of Patanjali by Sri Swami Satchidananda. From this book and the daily practice of yoga, I started to think and to be more aware of the motivations of the human family and to focus more on the importance of people giving back to the world.

I became conscious of giving as a basis of business success. This reorientation of my priorities has made me become a better businessman. Overall, as explained in The Yoga Sutras, money and business are low-level priorities.

Q: If they are low-level priorities, why pursue them?

A:

Money is the vehicle that allows you to provide service -- and service is a high-level priority. You need to be thinking about what you can give every day and not what you can get. As my brother Reverend Run says, "You can't help the poor if you are one of them."

Q: How do you share your beliefs with your employees?

A:

I realized I couldn't ask staff to read The Yoga Sutras, [but] The Seven Spiritual Laws of Success by Deepak Chopra was given to me, and I found that it's a case study of my philosophy. All my employees have to read this book and write a report on it. This book is the most simple and direct way for people to understand the process of being a team player and the philosophy of giving.

Q: What do you want employees to get out of reading the book?

A:

The key business concepts from this book are that people must provide quality service, put their heads down and work hard, and not put their chests out -- get all puffed up with pride.

I read all the reports. I will fire people if they don't get these principles. The important thing is that people have to act on these principles as they do their work on a daily basis. People might say I am full of s***, but this philosophy works here. When I started out as a promoter and a manager for what is now Def Jam, it was about providing opportunities to people who had been denied access. I got them an outlet and a means for distribution.

Q: How important is money when considering a business venture?

A:

You just can't think only about making money. My frame of reference is, "What do people need?" not "How can I exploit people?" The foundation of any business is service. Every service you provide has to be something that people need. People come to me all the time with ideas on making money. I only talk to people with the idea of providing services.

I can give bonuses, but I can't have people around me that only have dollar signs in their eyes. My staff can't go to work strictly to exploit business opportunities. For any business to be successful in the long run it has to be conscious of the fact that giving is and will always be the foundation of your success. By David Liss

Q: Can you give me an example of a business venture that fulfills your philosophy?

A:

The Rush Card is a great example. It fills a void in the market. People came to me with a predatory price for prepaid phone-card services. It was clear that this deal was about people taking advantage of other people.

I started to think, why not give people other things besides just phone access? Why not create an empowerment vehicle for consumers who lack traditional relationships with financial institutions? Why not create a card that allows people to establish credit or that enables people to buy a house?

More than 100,000 people have spent $19.95 to activate a Rush Card. The card allows people direct deposit for their paychecks, to make deposits on their card, withdraw cash at ATM machines, and use the card with any business that accepts Visa debit cards. Card owners pay $1 per transaction.

It all comes back to doing well by doing good.

Q: How could this philosophy be practiced by other businesses?

A:

You have to wake up with a giving attitude and not a getting attitude.

Q: How do your beliefs influence who you will do business with?

A:

You need to look for people who are honest and have integrity and deal [with others on that basis]. You have to know who you're dealing with before you start talking. You must do your due diligence.

I surround myself with people that share the same spirituality that I believe in. People who are focused on living better and not just on being out for themselves. I want to be around people who aren't just money-oriented but are focused on how they can give back to the community.

You have to look at people's history as best you can [when you're considering a deal]. Look at their previous partners. Look at who they've done business with. Try to understand how well these partners did. From your research, you have to make a decision as to whether this person is trustworthy or not. You have to decide if you can live with this type of person as a partner.

I will turn away a deal...because people have dollar signs in their eyes. Making money is a pedestrian activity. The challenge is in creating a product or service that the world really needs.

Q: Can you close a deal on a handshake?

A:

You have to look in people's eyes. You don't have to remember what other people's handshake represents, you just have to know what your handshake means. When I shake someone's hand that means the deal is done. There will be no changes in the deal after we shake hands from me. I have dealt with people who shake hands then call back and want to change terms on the deal.

Q: How does your Phat Farm deal fit in with your philosophy of giving?

A:

I worked 12 years to get myself and my company in a position to make this deal happen. I wanted a partner who had the infrastructure and the power to grow the brand. I want to build an institution that's inspiring to the hip-hop generation. It's not just about clothing, it's about inspiring entrepreneurs who are locked out at the gate.

This deal is something that's way overdue. A lot of these old corporate guys don't see things clearly -- it's not about racism, it's about vision. If it was a company like Ralph Lauren, these guys would have bought it up in a second, seven years ago. Because it's hip-hop and a cultural phenomenon, they didn't think much of it. They weren't forward thinking.

Q: What's the most important lesson you have learned about making deals?

A:

You can't be attached to the results. As much as anything else in life, you have to focus on being present [in the moment] and do the best that you can. Don't worry about the results, worry about the process. The results will come out badly if you are too focused on the outcome.

When you're focused on the outcome instead of on the process, the people on the other side of the table realize this. They can see it in your eyes. This ends-oriented focus takes away from people's ability to trust you.

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Liss is a contributing correspondent for BusinessWeek Online. His background includes six years as a management consultant and as a legislative aide on Capitol Hill. He has a Master's degree in public administration from Columbia University

Edited by Patricia O'Connell

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