(FORTUNE Magazine) – Let's ignore for the moment the gold teeth, the jaw-dropping $100,000 diamond-encrusted Rolex, and the pinkie ring with a gem cluster the size of the Louisiana Superdome. Don't dismiss rap mogul Master P because he travels with an entourage of boyhood friends and relatives, some of whom speak freely of their years behind bars. As difficult as it may be, try not to turn a deaf ear to his music simply because the songs contain lyrics that would make Larry Flynt blush.

Forget that stuff. This former street hustler from the deadliest public-housing project in New Orleans is more than mere flash and brash. He's a popular rapper, a sought-after actor, a 6-foot 4-inch near-NBA caliber basketball player, a successful record and film producer, an enterprising fashion and toy entrepreneur ("Ya heard me?" the Master P doll roars), and founder of perhaps the most scrutinized sports agency ever. He may also be the most intriguing executive in the music business. He's a master marketer who built an entertainment conglomerate around the hottest brand in the scorching rap industry--the appropriately entitled No Limit. (And he makes FORTUNE's debut 40 Richest Under 40 list with his net worth of $361 million.)

Never heard of No Limit or seen its audacious symbol, a military tank smothered in (you got it) diamonds? Then go ask your kids. Yes, your kids. Chances are they're listening to the often profane, always edgy "bounce" grooves of Master P, Snoop Dogg, Mystikal, Mia X, Silkk the Shocker, C-Murder (the last two happen to be Master P's baby brothers), or one of the other artists on No Limit Records. No Limit sold 26 million records in 1998, more than any other rap label--and don't think for a minute that all those records were sold only to urban (read: black) youth. The company's research shows that a significant portion of its records are being bought in cities without a large black population. "My audience is anybody who's looking for something different--young or old, black or white," says Master P. "If [my record] sold six million units, then I sold to corporate America's kids too."

Your kids may have also seen a No Limit film--maybe one of its direct-to-video movies, like I'm 'Bout It, Da Last Don, or Da Game of Life. Or perhaps a theatrical release like I Got the Hook Up or Foolish, which had box-office sales of $12 million and $8 million, respectively. Not quite Blair Witch numbers, but for movies produced for about $2.3 million each, hugely profitable.

Maybe your kids wear something from Master P's MP Clothing line, which is expected to generate about $10 million in sales in 1999. Perhaps they own a pair of his funky signature sneakers, the Converse MP3. Or maybe a No. 34 New Orleans Saints jersey belonging to star sports client and rookie running back Ricky Williams. They may download No Limit sounds from the Website MP3.com, which paid the label $2.5 million in shares in exchange for 100 previously released songs. And get ready for this: No Limit Toys, available online by early next year. In fact, your teenagers just may call themselves No Limit soldiers, claiming a brand loyalty shared by millions of young consumers eager to buy the next No Limit thing simply because it's a No Limit thing. No wonder Master P often says, "It's all good in the 'hood."

It's all good because Master P eschewed the path chosen by other members of the hip-hop elite--guys like Sean "Puff Daddy" Combs, Kenneth "Babyface" Edmonds, and the dean of them all, Russell Simmons--by refusing to form a "boutique" label in a joint venture with a major record company. Instead he built his own business, his own way, and in his own time. In fact the head of No Limit's various enterprises--each division is actually a separate privately held company--has succeeded with a surprisingly sound fiscal strategy and has attracted a cadre of enterprising young executives to help him manage the company's meteoric growth. He hired people like 33-year-old Tevester Scott, the tall and flamboyant head of No Limit Records (and until recently, No Limit Sports), who favors custom suits in outlandish colors; Stevie "Black" Lockett, 34, co-head of No Limit Films, who talks freely of his two stints in prison on drug charges ("I was young, living in the 'hood, and stupid."); Jeff Clanagan, 38, the other co-head of No Limit Films, a former hip-hop concert promoter; and No Limit Sports head (and general counsel) Edwin Hawkins, a 32-year-old ex-Marine with a penchant for brim hats. Each was drawn to No Limit by Master P's enticing dare: "I'm growing something," he said. "Either you believe or you don't."

Now if you stumbled over "sound fiscal strategy" while pondering that Rolex, this may surprise you: One of Master P's primary business tenets is, Don't spend money you don't have. An example: During No Limit's early days, Master P didn't have the $500,000 to $1 million that big record companies routinely sink into lavish promotional music videos. So he produced them on the cheap for around $100,000. He also figured out a way to promote his rap artists and make money too. No Limit used profits from its music division to produce low-budget direct-to-video features starring No Limit artists, then sold them to loyal No Limit soldiers. The first effort, I'm 'Bout It, released in 1997, cost just $200,000 to make, and looks it. ("P and I held the lights and cameras for each other as the other said his lines," says Anthony "Boz" Boswell, P's lifelong friend and now No Limit's vice president of operations.) No matter. To date it has sold more than 288,000 copies at $19.95; that's nearly $5.7 million in revenues.

Master P's video strategy also reflects another business tenet: Capitalize on your cross-promotional opportunities. And he does it like nobody in the music business. No Limit video films contain trailers promoting upcoming No Limit record releases and concerts. And liner notes tout yet to be released records from other No Limit artists, something few record labels did before No Limit. "Once you develop an audience, you take everything you've got and milk it," says Master P. "So if I'm successful on the music side, I'm going to take that success into the film business and rap to that same audience. That's my key to success. I have a record that's big, and I'll put the music in the movie. If I have a movie that's hot, I'll put new music from it on my next record track. It keeps my overhead down."

Today No Limit artists still appear in movies produced by No Limit Films, record soundtracks for No Limit Records, and appear in increasingly glitzy music videos (produced in-house by young No Limit directors-in-training), all while draped in No Limit logos. "[Master's P's] brilliant," says an executive at Combs' Bad Boy Entertainment. (On his new CD, Combs paid Master P the ultimate compliment: "Master P, you're a bad mothafucka.") "He's built a brand that's the Coke, IBM, or McDonald's of hip-hop. When people see the No Limit CD, they say, 'I don't know what I'll get, but if the tank's on it I know there's something for me.' Sony will never sell a CD because it's put out by Sony. Whatever the magic, it works."

Now, I'm not going to lie: Chasing and hanging with Master P and his crew during the past few months damn near killed me. No Limit's chief executive seems to have limitless energy. The 29-year-old entrepreneur says he sleeps seven hours each night, but a day I spent with him in Los Angeles provided no corroboration. It began just after 7 A.M. and ended (at least for me) when I left P, other No Limit executives, and several assorted compadres at a recording studio at 2 A.M. In between, Master P took reports on a meeting earlier in the day with MP3 executives, played some intense basketball (he's obsessed with making the NBA this season), listened to proposals on possible feature film roles, hosted a press conference introducing the Converse sneaker, and taped a segment of Byron Allen's syndicated entertainment show. He arrived at the studio around 10 P.M. Before I left him there, he met with promising No Limit rapper Mercedes to discuss, among other things, the outfits she would wear in the video promoting her debut album, Rear End. "It has to be sexy," he said, handling various sample thongs, "but [your character] ain't a ho." He also spent a few minutes with the sister of Baron Davis, a UCLA point guard who was entering the college draft, in an effort to woo the player into signing with No Limit Sports. (Davis later signed with another agent.) Sitting in the studio's lounge moments later, decked head to sole in No Limit gear, Master P said: "The business challenges get me more excited than anything. Anybody can be a performer, but I've seen a lot of people put a record out just to be famous, know what I'm saying? They can have that. To control the business and make things right, that's what gets me excited."

The thrills of Master P's youth were of a different sort. He was then Percy Miller, raised with four brothers and a sister by their paternal grandmother in the notorious Calliope projects in New Orleans' crime-infested third ward. Hope had abandoned Calliope long before Miller arrived. Still, his grandmother worked several jobs so that the children could have the things she never did, including a private school education at St. Monica Catholic School across the street. Boz, his best friend and schoolmate, remembers Miller as a natural leader with a powerful drive to make something of himself. Boz's favorite story takes place on a basketball court at Calliope where the lights had been shot out with guns: "Basketball was his dream, like it was for all of us. But he was more dedicated. Played 24-seven. One night I was coming from the gym, walking by the court, and I'm seeing a shadow just shooting in the dark. You know what I'm saying? It's P. He's about 12 or 13, and it's pitch black out there. All I hear is them chains snapping--chang, chang. You know we didn't have nets. I just heard them chains. I said, 'Boy, you practicing now?' He said, 'Yeah, man.' He wanted out bad."

Getting out seems so random in places like Calliope. The narrow path of a bullet can make the difference between those who make it and those who don't. That's how Miller lost his younger brother Kevin. P says the loss changed him. "It made me say, 'It's time to get your life together. I've got to make sure [Kevin's] son is taken care of. I've got to make sure my mom is taken care of. She can't lose any more kids.'"

Miller's first foray out of Calliope--and toward a future where he could help his family--was to the University of Houston. A basketball walk-on, he injured his knee and never played for the school. Then, at age 20, another tragedy gave Miller an opportunity to change his life. A New Orleans hospital settled a negligence claim brought in the death of his grandfather; Miller says he got $10,000 of the money. With it he moved to be near his mother in Richmond, Calif., and open a record store--the original No Limit Records. In the early '90s rap was riding high on the strength of hard-core artists like Ice-T, Tupac Shakur, Ice Cube, and Biggie Smalls. Nearly all rap stars were based in New York or California, which inspired the senseless coastal feud that likely led to the violent deaths of Shakur and Smalls. Miller was from the South, a rap neutral zone, as it were. He knew his customers were missing out on something--the sounds popular back in his hometown. "We had a big bounce style down there that they didn't have nowhere else," he says. "There were some real great bands with music that was unique."

Confident that he could make it big with that sound, Miller spent about $1,000 to produce The Ghetto's Tryin' to Kill Me, his first CD. He then closed his store and took off in his car to sell Ghetto. He sought out his customers in some rough inner-city neighborhoods along the journey through Texas and into the South. Not surprisingly, he often ran into gang members protecting their turf. "I told them, 'Hey, I'm not a criminal, blood. I just want to sell music,'" says Master P. "They respected that." One tactic was to roll up to the fanciest car, the one blaring the loudest music, and give the driver a CD. "Just to get the buzz started," says P. He sold more than 100,000 Ghetto CDs. He made 99 Ways to Die the following year, and sold twice as many.

Suddenly record company bigwigs were trying to lure him. Priority Records executives Bryan Turner and Duffy Rich were among the suitors. But rather than jump on a quick and easy boutique deal with Priority, Master P negotiated a distribution-only agreement. "I wanted to explore ownership of the company, so I said, 'Nah. I'm going to take my time and do it right,'" says P. "I was happy with the money I was making. I wanted to make it without having to beg."

It was unusual for a major company to allow an artist to retain ownership of his music, but on the other hand, the deal was practically risk-free. Besides, Priority executives didn't have huge expectations for new artists, particularly for a rapper they thought would have only regional appeal. "Typically," says Rich, "if a new artist did 7,500 in the first week we were pretty happy." Rich and Turner must have been ecstatic. Ice Cream Man, Master P's first record distributed by Priority, sold 32,000 in the first week. It has since sold nearly one million units.

Bottom line: Master P's gamble has paid off. Unlike other artists, who earn only royalties on their record sales, Master P's No Limit retains 85 cents on each dollar generated. Priority gets the other 15 cents plus marketing expenses. More important, No Limit owns the masters to its music. Ownership allows the company to use the music without restriction. For example, No Limit is free to make its deal with MP3.com. "Those are the bank," P says of the masters. "If you don't own, then you are owned."

I arrive in Baton Rouge in early summer to check out No Limit's headquarters and find a frenzied operation that has outgrown its small space in a nondescript office building. It's moving day. No Limit Records (the film division is based in L.A.) is moving into new but still temporary headquarters while waiting for the completion of its ambitious (some are whispering fiscally obscene) megacomplex in another part of the city. The original construction budget was $6 million, but by the time the place opens next spring it will have cost more than $15 million. Not exactly the kind of overrun Master P is proud to admit. But when it's done the place will be the architectural embodiment of Master P's grandiose ambitions: four recording studios, a massive health club (with a basketball court, of course), two libraries (one for music), and in time, cozy cabanas where artists can live while recording.

For now there are boxes everywhere. Computers are unplugged and strewn about. Tevester Scott's small desk is cluttered with invoices to be paid and checks to be deposited. Scott, a Mississippi native, was managing Mia X when he met P, then a fledgling producer trolling for artists, five years ago. Master P got the artist and added a partner. Scott now oversees No Limit's most successful unit (music) and formerly ran its most risky venture: No Limit Sports. No Limit Records is a machine. Last year the division put out 23 albums; 15 went either gold (500,000) or platinum (one million). Total sales reached $200 million. No Limit Sports is a gamble, an expensive venture into the sometimes sordid, always competitive world of sports agents.

You can see why Master P started the sports division two years ago. Today's young black athletes were weaned on hip-hop--and, yes, many of them think they can rap. He got so many calls from athletes seeking marketing advice--or a record deal--that recruiting and negotiating contracts seemed only natural. Today No Limit Sports represents about 20 pro football and basketball players, the most prominent being Ricky Williams. Other sports agents paid little attention to No Limit until the company signed Williams, the Heisman Trophy winner. You'd have thought Master P had decided to become a priest for all the furor that created. It got worse when Williams signed an ill-constructed seven-year deal worth between $11.1 and $68.4 million, plus an $8.8 million signing bonus. The problem? The incentives were set too high. To reach the top salary level Williams would have to perform like, say, Denver Bronco running back Terrell Davis, widely considered the best rusher in the NFL. Williams is good--but that good? Probably not yet. In an effort to rectify the misstep--and to keep Williams happy--No Limit will likely propose after the season that the Saints lower the bar for incentives.

If Williams isn't happy, it could be disastrous for the Saints and No Limit. Recruiting top players is tough enough. It's expensive and the competition is fierce. For now No Limit Sports is a money-loser. If Williams bolts, it's over. "We're adapting and we're changing," says Hawkins, "like any growing company."

It's hot. Damn hot. Its barely 8 a.m., but the Arizona desert sun is already frying the cast and crew on the set of Lockdown, a movie about an Olympic hopeful wrongfully convicted of murder. (It's due to be released in the spring.) People are lolling about for shade around the basketball court outside the now empty Santa Fe State Penitentiary. Things are pretty much at a standstill on the set because one of the stars is nearly an hour late. Finally, an eager voice crackles from the walkie-talkies sprinkled among the crowd: "Master P has arrived!"

Heads turn toward the prison's barbed-wire gate just in time to see a gleaming, customized luxury bus roll into the yard bearing Master P and his crew--guys like childhood friend Boz, no-nonsense security head Kevin, and Hot Boy, P's first cousin. Hot Boy (Jimmy Keller) heads logistics for No Limit's concert operations. Like most of Master P's crew, he's moonlighting in Lockdown--as one of the prison inmates. For Hot Boy it's not all acting. During a break from shooting he talks of how P called him on the day he was released from prison after serving 7 1/2 years for manslaughter. "He had left me a few messages, but I was too embarrassed to return his call," says Keller. "He finally got me, and he didn't say anything about where I'd been or what I'd done. He just came and got me and said, 'We got work to do.' He saved my life."

Master P has saved many people from less than promising lives. Now some of the people who work for him--including Scott, Mystikal, Snoop Dogg, Silkk, and C-Murder--reside near Master P in Baton Rouge's exclusive old-money Country Club of Louisiana, a gated community where homes range from $300,000 to $3 million. (Oh, yes, former governor Edwin Edwards lives there too. Talk about a block party you wouldn't want to miss.)

Back on the set, the task of explaining to Master P the actor that his tardiness is costing Master P the producer much paper (money, for the unhip) falls to Black. "It's all right," he says. "If you talk to P straight, he understands. He's all about the business. He gives each of us what we need to do our jobs, including talking to him like we need to--when we need to." The two men spend a few minutes behind closed doors.

Not many CEOs would take orders from the people who work for them. But P plays his role well. He's just another actor here. Besides, Lockdown is in a different league from I'm 'Bout It. With a $4.2 million budget, it's Master P's most expensive movie to date. And it is the first No Limit co-production. The film is being funded by Palm Pictures. The two companies will split any profits equally (the soundtrack's included), giving No Limit an unusually generous split for a partner that didn't risk a dime of its own cash. But No Limit had the script, its loyal soldiers, and Master P. "He's an icon to his fans, and they're loyal to him like no fans in the music business," says Palm executive Hooman Majd, who is visiting the set. "Given his track record in films, this was not what we consider a major risk."

The relationship with Palm Pictures, as good as it may be for No Limit and Master P, is the first hint that perhaps this enterprise can't stand alone forever. The company is wrestling with the challenges of growth, and Master P is flush with opportunities that could choke his schedule. In September he'll shoot a pilot for a possible MTV series in which he stars as a former police officer mentoring troubled teens. He is also considering other feature film offers from outside producers. He says he has retired as a solo rapper, yet he's producing new songs for a "greatest hits" record coming out this fall, and he still records with his brothers in the group TRU and with other artists. He will also perform on the No Limit Army Tour. Oh, yeah, if he really makes an NBA team--at best, a long, long shot--then his schedule's kaput.

Master P says he turned down in excess of $200 million from a prominent music company for the record division alone. But he doesn't dismiss the idea of a sale. "In business you have to do what makes sense. That's what I'm looking to do," he says. "I'm willing to make the healthiest decision I can make for me and my corporation. Right now, the best decision is holding on to the company. In a few years, if it's worth so much money where it don't make sense [to keep it], we'll do what we have to do."

Meanwhile, P says, don't underestimate him because of his diamonds, for his music, or for what he appears to be. "I'm from the ghetto, yeah, but if you penalize me for [it], then you're ignorant. That's not who I am; it's where I'm from." Ya heard me?