In late 2000, Tony Fadell approached RealNetworks with the idea of building a premium MP3 player, one that was sleeker than existing designs and backed by a streamlined content-delivery system. Obviously RealNetworks declined the offer, seeing little room for a personal music device in its portfolio.
Fadell also discussed the business idea with Phillips with no success before talking to Apple, which loved the idea considering only months prior it had purchased music delivery service Soundjam MP, perhaps better recognized as iTunes today.
The original iPod hit store shelves on November 10, 2001 and by December 31 the company sold 125,000 of the devices. Today, the iPod has seen over a dozen iterations and Apple has sold more than 390 million units of them.
Also of note, RealNetworks is known to have rejected Valve's request for building a game client like Steam before the game developer wound up taking on the project itself (ouch x2).
Fadell's name may be more recognizable today as being the co-founder of home automation company Nest Labs.