By Michelle Tauber
October 25, 2004 12:00 PM

For a rapper who’s famous for his toughe-than-Kevlar lyrics, in person Jay-Z is surprisingly soft-spoken and sweetly exuberant. Recalling the finalization this summer of a deal that made him part owner of the NBA’s New Jersey Nets, he notes, “When the NBA approved me, I was like, ‘This is really happening! This is crazy!’ ” Then came discussions of relocating the team to his native Brooklyn. “Forget about it,” says the star, relaxedly munching on mini grapes. “That just put it on steroids!”

The rapper himself has plenty to be pumped about these days: He just kicked off the two-month, 40-city Best of Both Worlds tour, coheadlining with R & B star R. Kelly (their joint album. Unfinished Business, is due Oct. 26); his documentary-concert film, Fade to Black, hits theaters Nov. 5; and he continues to preside over his multimillion-dollar recording and clothing empires, Roc-a-Fella Records and Rocawear (see box). It gets better: For two years he and the ultra-fabulous Beyoncé have been crazy in love. But having sold more than 30 million albums worldwide, he announced last year that he has retired from the studio to concentrate on the boardroom. “There’s a glass ceiling for blacks in the record business,” says the 34-year-old hip-hop star, kicking back a week before a Chicago concert in a pair of black Versace slippers. “I know I’m in the position now where I could break that glass ceiling and open the door for everybody else.”

Don’t put it past him. “He laid down the blueprint of how an artist should not rely only on the money from the music,” says Damon Dash, his Roc-a-Fella partner. As a businessman, “he has a lot more compassion than I do,” says Dash. “Every time I would fire someone, he’d hire them. He’s always been that nice of a guy.”

The rapper’s softer side is also on display during rare public outings with Beyoncé, 23. But don’t mistake the pair’s recent shout-outs (to “J” and “B”) at August’s MTV Video Music Awards as a sign that the couple plan to open up about their romance. “We don’t play with our relationship,” says Jay-Z. However, he is considerably more forthcoming on another personal subject: Does he want kids? “Everybody does!” he says. But “I’m really scared to have kids because the way I love my nephews, I don’t think I’ll be able to go outside. I’ll never want to leave my kids. [Parenthood] puts everything into perspective.”

So too does his own history, which has provided much of the fodder for his music. Born Shawn Corey Carter, he grew up in Brooklyn’s bleak Marcy projects as the youngest of four siblings raised by a single mom, Gloria Carter, an investment company clerk. (Jay-Z reconciled with his father, Adnis Reeves, who left the family when Jay-Z was 11, just before his death last year.)

As a teen, a troubled Jay-Z began dealing crack cocaine. “Either you was out there selling it or you was on it,” he says. “There was no other way.” Desperate to escape the projects, he decided to pursue his dream of stepping behind the mic, selling CDs out of his car. His breakthrough came with 1996’s Reasonable Doubt, followed by a Grammy for 1998’s Vol. 2… Hard Knock Life. But then came another setback: In 2001 he pled guilty to misdemeanor assault for stabbing record exec Lance Rivera at a club in 1999. “I felt like I was untouchable, but that let me see that it could all go away in an instant,” he says. “It made me more careful.”

Since then, Jay-Z has gone about scrupulously building his businesses-and savoring the fruits of his labor. This summer he and Beyoncé vacationed in the Mediterranean using travel tips from U2’s Bono. (“Bono talked to my concierge service and gave me a list of all the right places to go.”) And when he wants to kick back closer to his New Jersey penthouse, he hits his own private hangout, Manhattan’s 40/40 Club. “I feel like, Is this the Capone suite?’ ” he says with a laugh. “You know how in all the gangster movies they would go to their clubs and go in the back and put their hand in the stuff in the kitchen [to taste it]? It feels like that.”

As for his “retirement” from rapping, don’t look for him to dip into that 401 (k) any time soon. “If I have withdrawal in three or four years, if I’m in the bathroom, chills on the floor or something,” he says, “maybe I will make another album.”

Michelle Tauber. Lauren Comander in Chicago