Forgotten by Dre: How two Beats founders were cut out of the $3.2 billion deal

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If you’ve read Walter Isaacson’s Steve Jobs biography, you possibly know the name Ronald Wayne. That’s the investor who dropped out of Apple 12 days into its existence as a company — losing around $35 billion after selling his shares for just $800.

In the wake of a reported deal with Beats, we have a repeat of that story — courtesy of the one key party that won’t see a scratch from the rumored $3.2 billion acquisition.

Although Iovine and Dre get all the credit for Beats, it was Monster CEOs Noel and Kevin Lee who designed and developed the world’s very first pair of Beats headphones, and did the engineering and technology distribution for the company’s first five years.

Essentially the Lees were sunk by a lack of business experience, which saw them spend millions of dollars before inking a deal with Iovine and Dre. To recoup the money they’d invested, Kevin Lee then signed a complex deal giving Iovine and Dr. Dre permanent ownership of whatever Monster developed.

The story was first revealed last year by Gizmodo journalist Sam Biddle, who called it one of the “all time worst deals” in tech history. Over the weekend, however, there was a follow-up, when Business Insider spoke to Lee to get his take on the Apple deal.

“The immediate reaction was, what a deal for Jimmy and Dre!” he noted. “We’re very happy that they received such a high valuation. And I’m thinking of what that means for Monster’s valuation.”

At the same time, he’s (unsurprisingly) not that happy:

“I feel that we weren’t recognized,” he continued. “We got erased from the history of Beats. We were the founders. Most of the public has only heard a one-sided story and they’re not even aware of Monster’s participation. And they’re not aware that we’ve gone onto bigger and better things.”

As to what those “bigger and better” things are, Monster has been continuing to create headphones since being cut out of the Beats deal, now incorporating a new technology called Pure Monster Sounds.

“That technology that we designed for Beats, that Beats still uses now, it’s a little dated, in my opinion, and in the opinion of a lot of people on the internet,” Lee said. “Our latest technology takes the enjoyment of music to the next level. So I think that this deal could shine a light on that.”

And as for the plans from here? With the sounds of Apple money ringing in their ears, Monster are now thinking what they need is to reach a deal with a company like Apple.

Hmm… maybe Samsung is interested?

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About the author

Luke DormehlLuke Dormehl is a UK-based journalist and author, with a background working in documentary film for Channel 4 and the BBC. He is the author of The Formula: How Algorithms Solve All Our Problems, And Create More and The Apple Revolution, both published by Penguin/Random House. His tech writing has also appeared in Wired, Fast Company, Techmeme, and other publications. He'd like you a lot if you followed him on Twitter.

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