Russell Simmons learned to be a successful entrepreneur by selling drugs
Not everyone enters entrepreneurship through the same door.
Case in point: Russell Simmons, the hip-hop mogul and serial entrepreneur behind brands like Def Jam Records and Phat Farm clothing learned how to be an entrepreneur selling drugs on the streets of New York.
"I sold drugs," Simmons tells CNBC. "I was a number runner and a drug dealer."
Simmons, 58, said when he was young, there was no established track for learning how to start a business available to him besides the drug business.
"Other than that there was no training, no real cultural platform to teach people from where I came from to be entrepreneurs," said Simmons, who is originally from the Queens borough. "The idea of building out entrepreneurship, it was not a cultural thing in the black community."
It taught Simmons the basics of running a balance sheet. "I bought something for a dollar and sold it for three," he told Bryan Elliott in an episode of "Behind the Brand" on Entrepreneur. "I bought a lot of it for a dollar and sold a lot of it for three. So now it became a business. I understood the margins, the business."
He also learned "the mindset of being independent and being responsible for your profit," he told Elliott. The lucky ones among the drug-dealing set of his youth eventually found something else to sell.
Simmons isn't the only one to parlay his experience running a drug business into other more traditional channels. "If you look at all of the entrepreneurs, especially from years ago, a lot of them that were African-American had their experience in the street," he told CNBC.
For example, Ice-T — the rapper, actor and founder of the Rhyme Syndicate record label — started hustling on the streets of Los Angeles after the untimely death of his mother and father. And the Grammy award-winning rapper, entrepreneur and investor Jay Z was a crack dealer in his younger years.
Simmons went to college for three years, and while he was there he started promoting hip-hop parties.
"That's when I became an entrepreneur! I mean a real entrepreneur, a legitimate entrepreneur," Simmons said.
From there, he started producing hip-hop records, and in 1984, the young entrepreneur founded Def Jam Records, which launched the careers of LL Cool J and Public Enemy.
Correction: This story was revised to correct the spelling of Bryan Elliott's last name.