Dr. Dre's Boast Cost Him $200 Million

In May 2014, Apple announced it was buying Beats Electronics - the headphone company and music streaming service co-founded by Dr. Dre and music producer Jimmy Iovine - for $3 billion. It was Apple's largest acquisition to date, and the deal that would make its founders extraordinarily rich.

How Beats Became a $3 Billion Brand

Dr. Dre and Jimmy Iovine launched Beats by Dr. Dre headphones in 2008, turning a music brand into a luxury accessory empire. Athletes wore them on the sidelines. Artists wore them in music videos. By 2014, the brand controlled more than half the US premium headphone market. Apple paid $2.6 billion in cash and $400 million in equity vesting over time. Iovine and Dr. Dre - who each held roughly 25% stakes - stood to receive hundreds of millions of dollars. Pre-tax, each founder's share was estimated at around $750 million, according to reporting at the time.

The Video That Cost $200 Million

Before the deal was officially announced, a video appeared on musician Tyrese Gibson's Facebook page showing Dr. Dre celebrating the acquisition - and calling himself "the first billionaire in hip-hop." Fellow artist Diddy saw the video and called Jimmy Iovine. The video reached Tim Cook. According to Tripp Mickle's book After Steve: How Apple Became a Trillion-Dollar Company and Lost Its Soul, Cook summoned Dre and Iovine to Apple headquarters. He told them he was disappointed, but that the deal would proceed. Then he reduced the acquisition price by $200 million. Staff at Beats later noted the cut was precise enough to ensure Dre would not cross the billion-dollar threshold. The celebration video had pre-emptively cost him the title it announced.

What Dre Actually Walked Away With

The final acquisition price was $3 billion. Forbes reported that Dr. Dre earned approximately $620 million in 2014 - the highest single-year income any musician had recorded at the time. After taxes, his take-home was estimated at around $500 million. Both Dre and Jimmy Iovine joined Apple as executives following the acquisition. Beats headphones continued under the Apple brand, and Beats Music was eventually folded into what became Apple Music. Dre eventually crossed the billionaire line years later through other ventures - but in 2014, the celebration came just a little too soon.