Daymond John, the street hustler from Queens who launched the renegade FUBU line of apparel and ended up on the hit reality business show Shark Tank, said he was there to give back to the 650 students, entrepreneurs and fans who packed the conference center at Kent State University at Stark in North Canton, Ohio, recently.
Circling the stage as he recounted his triumphs and failures, John’s message cut through the audience as clearly as his diamond earrings.
“The only thing that is fundamental is finance,” the 45-year-old mogul told the crowd as he launched into a rags-to-riches story punctuated by a hip-hop track. “You take affordable next steps and you do what you love.”
What he possessed when he got into business was plenty of street smarts. What he lacked, he says, was financial intelligence.
The son of a street-sweeping father from Trinidad and a mom who worked three jobs after his parents divorced, John looked around his hardscrabble neighborhood and found it wanting. “All we saw were pimps and drug dealers,” he remembers.
Soon, though, he found his heroes in the form of hard-working parents and the merchants at the mall. “They were the first person in the office, they were the last person to leave … they were amazing people,” he says.
Helping his mom bring in money, John started sewing head caps with string-tie tops, knock-offs of similar products that were selling for $20 retail. Standing outside the mall, he sold his versions for half the price and pocketed $800 within two hours.
John, then 20, knew he was on to something. So he and three friends hatched a plan to capitalize on the growing hip-hop culture overlooked by mainstream marketers with caps, shirts, and hockey jerseys. Their brand: FUBU, “For Us, By Us.”
The group built brand power by engaging in guerrilla tactics — visiting the sets of rap videos and snagging free product placements, persuading neighbor LL Cool J to plug FUBU, and finally visiting an expo in Vegas where he took $300,000 in orders in a hotel room. “I’m moving to Tahiti,” John recalls thinking.
But there was trouble in paradise.
To finance his expanding operation, he pitched 27 banks and got 27 rejections. Still needing money, he and his mom took out a second mortgage on top of credit card debt and had seamstresses camp out in his home, producing clothing “up to the ceiling.”
He now says, “I shouldn’t have mortgaged the house. It wasn’t an affordable next step.” More debt piled up as production costs escalated while John waited on payments from retailers.
“Everything that I worked for was at risk because of my lack of financial intelligence,” he recalls. So with $500 left and three months late on their mortgage, John’s mother took a long shot, placing a newspaper ad: “One Million in Sales. Need Financing.” The 33 responses were dead ends, John says — except one.
Cutting a deal with Samsung’s textiles division, John tapped into the global company’s financing, operations, and networking prowess. Shuttering his home factory, production shifted overseas and FUBU sold $30 million in apparel in just three months shortly after.
Now a high flier, John got a call from the producer of Shark Tank, and the dreamer from Queens joined the cast of the ABC show to listen to other people’s pitches.
The Sharks tend to invest in people they generally like, John told a news conference prior to his talk. “Can I spend eight hours with this person every day?”
When assessing deals, John says he looks for three key elements in a business: its scalability, the relative simplicity of its model, and some proof of success.
John advises entrepreneurs to take the time to write a business plan, be able to describe their brand in two to five words, not be overconfident, and manage their reputation on social media.
But in the end, he says, it’s all about financial literacy. “I would have had capital if I had gone to college,” he told his spellbound audience in North Canton.
Having reached the mountaintop in terms of wealth and fame, John is the kind of hero that he searched for as a teen, yet he has kept his perspective.
“You can’t judge success by somebody’s public stature. Public persona is not success. I can’t emphasize that enough,” the celebrity Shark concludes. “A lot of them [the rich and famous] are worse than the everyday people I know.”