BY Butch Maier
butch.maier@insidebiz.com
Leave it to a "Shark" to hang around a beach and pounce on an opportunity.
One of "Shark Tank" star Daymond John's earliest business breaks happened in Hampton Roads.
"I am not certain the year, but - believe it or not - it was here: Virginia Beach," John said Sept. 29 at Founders Inn. "At that time, [music producer] Teddy Riley used to throw a big event, and I was down here, and the music artist Da Brat had a song out. And I went up to her, and it was on stage - I happened to have some friends there - and I asked her could she wear the product."
The product was a piece of FUBU clothing, created and designed by John.
"And she said, 'Ah, I've been looking for this forever. I'll wear it,'" he said. "Because I had already placed it in a couple of videos, but that was the first time that I had ever been able to actually interact with an artist, and then after that, it just kept happening, kept happening, kept happening."
John started FUBU in 1992 with a $40 budget. It has grown to a $6 billion brand. And John has risen to stardom on "Shark Tank," a hit television show on ABC.
So it was no surprise that an event-record 800-plus crowd packed Founders Inn for his Regent University Executive Leadership Series appearance last month.
Why was John in town? In part, to promote Regent University's Daymond John Certificate in Entrepreneurship. (See Page 15.)
But he also values inspiring people and sharing with others the knowledge he has gathered.
Backstage, while audience members ate lunch, John answered questions posed by Zack Miller, a co-host of "Hampton Roads Business Weekly," which is broadcast on WVEC ABC13.
On stage for the keynote address, John answered questions posed by George Thomas, a CBN News senior international correspondent and co-anchor.
The following is a compilation of John's words of information and inspiration from both conversations.
On the importance of entrepreneurship
"I think it's very important because it's the small businesses, the startups that feed America. I think it creates ingenuity. It's why we are who we are as a country.... We are not questioned for challenging change. And I just think entrepreneurs are on the forefront of challenging change."
On the changing perception of entrepreneurs
"There was a time when an entrepreneur was somebody who would come and set your house on fire and then come and sell you a water hose after."
On what it takes to be a good entrepreneur
"It takes hard work and discipline, no matter what. I think it takes being able to fail many, many times. It takes a strong feeling in your gut that you know that you're doing the right thing. I think it takes a level of responsibility, and it's not this concept that some people have that you get to just sit around all day in your easy chair and direct people and fire people. You need to know that you have to work harder than all your people. You have to lead by example. And that often you won't get paid."
On those uncertain about starting a business
"Don't quit your day job. Go into the business as somewhat of a hobby at first and set yourself some goals. If you are going to put two hours, four hours, eight hours into it a week, and then turn around and say, 'When am I going to make this decision? Six months into it? A year?' Because that time will start compounding. And they'll start to see if they really want to be part of this new venture or this new aspect, or do they want to just keep their day job. Just stick your toe into it. Don't go and leverage everything and mortgage the home and quit your day job, and then you don't even know if you're passionate over this, if it's going to be successful or anything else. You have to do your homework, and you have to put in the time."
On his first employees
"I was hiring my first employees when I was shoveling snow when I was 11, 12 years old. And I would shovel all the snow that I could at all the houses, and then I would ask the people that when springtime came, if I would give them a free shovel of snow, can I do the spring cleanup? So then I would hire the kid to shovel the snow for free, and then I would promise him a job for the spring cleanup. So I was leveraging at that age."
On businesses in Hampton Roads
"If you operate the fundamentals and you utilize this new world of technology, this new world of delivering a message to somebody, you can actually transform that business into being something new. So whether you said to us, 'We're a service-based industry and we have limousines,' and somebody comes up with Uber in the town, there's always going to be a new form of delivery. So you just have to find out how to master what you guys and girls have already mastered out here. Because there's an infinite amount of knowledge in running those industries, and how do you put that together with a new form of delivery, a new technology? And you master that."
On Regent University
"I'm here to thank everybody who has supported the Daymond John Center for Entrepreneurship, and I'm here to also talk to the existing students and the new students about our courses and meet all the great professors and give a speech that hopefully will inspire people to want to further their education and what I'm doing. And I want to thank Regent for having this agenda to take the mindset of entrepreneurship and make it something for the masses."
On turning a "no" to a "yes"
"A 'no' is always an 'absolute maybe' to me.... Often 'no' is because the person can't foresee or they don't have the vision, and I've often said, if they all had said 'yes,' then there wouldn't be a reason for you to exist because everybody would have thought of the things that you are going to go on and accomplish. I just don't take 'no' as an answer. It just doesn't exist to me.... The answer's always going to be 'no' unless you ask."
On learning from failure
"I had failed three times because I ran out of money. And I closed the company three times. Every time I learned, No. 1, I had a burning desire to open it back up, so I had a passion for it. No. 2 is, every time I spent money - it wasn't a large amount of money, it was $1,000, $5,000 - I learned what I did wrong. And I learned how to improve it and do it again better. And the next point is, I learned who around me had the same agenda I had and who had the same passion."
On a loan from his mother
"When I came to her, I had $300,000 in orders. If I would have said to my mom, 'I want to open up this business, and I don't have any orders,' I don't want to tell you what she would have said. I asked for a $100,000 loan, and she said, 'All right, this is our nest egg. If we're going to do it, we're going to get a $100,000 loan if we can.' I don't know how she got a $100,000 loan. The house was only worth ($75,000). To this day, I don't know. That's mom. And she said, 'You're going to sell clothes, and you're going to put the money back into the house.'"
On success
"The only thing anyone who is successful has in common is that they love what they do. Money is not success. By far. You guys live in a very beautiful area where there may be somebody who runs a little store for six months out of the year, but they get to spend time with their family all of the time or maybe they contribute to their community. That's success. Money doesn't do anything but drive you up to your problems in a limousine."
On "Shark Tank"
"If you look at what's going on with the 'Shark Tank,' we thought at first we're going to get up there and nobody wants to see four or five businesspeople talk and see that kind of stuff. And we thought maybe we'll make a couple of good investments because at the time, it was '08, and nobody could pay their rent or mortgage and [nobody was] buying clothes. So I wanted to diversify my portfolio.... We think the show is going to last maybe one season. Right now, [it's the] No. 1 show for networks, kids 5 to 15 years old. No. 1 show on networks where parents and kids are watching it collectively. We're starting to inspire people and change the way they think."
On his "Shark Tank" investments
"I really don't know that number. It's hard cash against hiring my staff against travel. If I had to put a number on it, that number you'd probably have it around $3 million. If I put a number on it, it's $10 million. If you really look at everything I have had to move around. I'm not complaining. I'm just saying that it's the intangibles that cost way more."
On "Shark Tank" co-star Mark Cuban
"You look at people like Mark Cuban, who probably has, six, seven, I don't know, 10 and counting liquid billion [dollars]. Why is he doing the show? He's doing the show because he believes in what change is happening."
On the "Shark Tank" team
"Anybody who says they have succeeded by themselves are out of their mind. I look at 'Shark Tank.' You see five, six, seven 'Sharks.' Three hundred people run that show. There's 300 people that make that show what it is. And you have to thank every single one of those people. I surround myself with teams much, much smarter than I am. And if you can give those people acknowledgement and some sort of reward, you will continue to be successful."
On "Shark Tank" pitches
"Those pitches last anywhere from 20 minutes to 2 1/2 hours. You only see eight minutes of it. We don't know anything about those individuals. We don't even have a piece of paper on them. If we do know them, they're disqualified. Because then I would be putting all of my companies up there. I would. I'd be a gold digger, and I wouldn't be the first gold digger on the show.... Then it takes anywhere from three to six to nine months to close the deal, to invest the deal."
On what happens after the "Tank"
"I'm involved in the process as much as I can. First, what happens is it gets handed off to a professor or somebody who understands the space, and they do due diligence and they break it down. You get past that, you get assigned to a team member of mine, and we average out hiring two new team members per year. So I have approximately 15 team members who deal with the 'Shark Tank' companies. One may need licensing. One may need some social media help."
On "Shark Tank" partners
"When I actually pull back the layers of what's going on, I have to go, 'Fire your daughter. Sorry. You have to do this.' And they go, 'Wait a minute. I thought you were going to wave a magic wand, and everything was gonna be done.' And I'm like, 'No. This is your company. I can't do that.' And that's what's frustrating."
On investing in people
"At the end of the day, we only invest in people. We don't invest in companies.... I am going to invest in a problem solver. I am going to invest in a person who failed several times, so they don't use my money as tuition. And I'm going to invest in somebody who, normally, we believe in the same things. If I can't relate to this person who I may speak to for the next 10 years, every single day, why do I want to do the business?... If I want to invest in a company, I can keep sending money back over to Apple. They don't call me with their problems. They don't want to have lunch with me. They're not even going to give me a free computer. They just send me my check."
On investing in people's dreams
"It's amazing, and it's scary, and it's frustrating. I may learn more from an entrepreneur than they learn from me. I'm a digital immigrant, right? I'm over a certain age. These digital natives are doing business in a whole new, different way. And I'm learning how they're doing business as well. And where it's scary is, in the event that you let them down."
On losing $6 million
"Everything looked right to me. I always say, 'Don't do things for money.' I did this for money. Everything looked good on paper. The fashion show that would normally cost half a million dollars, they were getting for free. Now that I'm backing them, half a million dollars. They started making clothes for Macy's. But what I realized was that they were costume designers, meaning they would take Naomi Campbell, put an Ace bandage all the way around her, mark some funny things on her with a marker, put a garbage pail on her head and push her out on the runway. And everybody thinks that's beautiful. We can sell that. So what I started to notice when we went into mass production, they would never get the clothes fitted right because they couldn't do that from operating a factory. Four fashion shows later, at a half a million dollars a pop, a little bit of advertising staff, old inventory, $6 million gone.... I should have been super hands-on, and I wasn't."
On his average 19-hour work days
"I don't sleep much. It's not something that I need to do. I don't want to tell anybody that that's something good."
On not having financial intelligence early on
"It almost destroyed me many times in my life, because I grew up like everybody else, or many people.... When I grew up, I didn't have a banking account, so I would get a check and go someplace and pay 10 percent to have the check cashed. Then I would go and get a bunch of money orders and pay for the money orders and then I would mail it someplace and pay again, not realizing that almost 18 percent of my entire income was lost in just the processing. They say that a bankruptcy in America is about $2,500. A person's $2,500 short. That's one bankruptcy in America, so think about that. And it was those small things that I didn't know or maybe I wouldn't have closed the business three times. I wouldn't have maybe lost my home after a $100,000 loan because I was paying out money 90 days ahead of time for rural goods to come from overseas, paying the staff salaries, utilities and then my receivables were 60, 90, 120 days. Because I didn't know about the flow, I almost lost the house. When I first made money, I probably blew $20 million. Not on foolish things. Not on jewelry and this and that, it was on buying a couple of homes, trying to furnish them, then I invested in the market, but the market goes down, but I have these bills here, and I have to pull out of the market when I invested at this point and had to pull out. It was a lack of financial intelligence."
On dreaming big
John's mother had an abnormally large can opener. "I honestly didn't understand. She had it for so long. Then it hit me when I was maybe 20 years old. No matter what you do, think about it in a big way. You are the only mental chains in your own life. You are your glass ceiling.... One night, when I was telling her about FUBU, I said, 'We're thinking about having a boutique.' She said, 'Bigger. Bigger. Bigger.' She just kept pushing me."
On how easy it is to run out of money
"And people look at them like they're crazy, but look at this: Up to about 70 percent of professional athletes are bankrupt three years out of the league, what does that mean? That means, up until they were 25 years old, they were taught one thing: To be the best physical specimen ever. They didn't have time to get a financial education. So how can you go through $30 million? Your $30 million contract, you pay your agents and everybody else and Uncle Sam, now you're down to about $14 million. You buy two or three homes at $1.5 million, $2 million a pop, then you have to pay to interior-decorate them, you get a couple people out of trouble. You're done. You are done. We're not even talking about the four girls you may have gotten pregnant."
On giving money to friends
"There's probably a couple people in here wealthier than I am. I have been in many rooms with people with a lot of money, and it never made them happy. If they were happy, they were happy regardless. So I just think money is great and it helps my kids get the best education and the best medical, but it doesn't solve much. Actually, it creates a lot of problems. There's a lot of people who think that you can help them. When I started making money, everybody had a $5,000 or $10,000 profit. And they genuinely believed they did it. And I remember I gave out $250,000, $300,000 over the course of a year, two years. And I thought, 'You know, I'm going to stop.' They all want to borrow money from me. And I never want to get to the point where they can't pay me, they hide from me and I've lost friends. So I go and give it to them. 'Here you go. Don't worry about giving it back to me.' Then I stopped. And all those people, miraculously, to this day are still living. Nothing happened."
On handling fame
"I was fortunate enough to come up in business surrounded by my good friends from my neighborhood. If you really get to hire true friends, when you get beside yourself, they're going to remind you. My partner Keith [Perrin] could say, 'I saw you poop on yourself in sixth grade.'"
On social media
"I post all my social media. There is a team that does other posting for me, but it is approved by me, and we go over it. So, at certain times when I am busy - it's an amazing holiday or a day we need to acknowledge something - we've already created some sort of graphic or something that goes up. They go and they post it, but I have to approve it. But don't get me wrong, there are a lot of young, brilliant guys and girls that work on my team that we go back and forth, and I learn from them on how I post it."
On first impressions
"Today, in this day and age. It's unlike when we grew up, when it was, walk up to somebody, shake their hand, you feel how firm their handshake is, they look you in the eyes, you call up their resume, you call their references. We don't do it anymore. We look at these digital devices, and through these digital devices, people are going to be judging you. And nothing is going to be erased that's out there in this world. So if you are going for a job, the employer's looking at you through that digital device. We're finding out now that insurance companies are looking at how you post pictures about you, so if you have a worker's comp problem, and you post a healthy picture of yourself, you're done. People are not thinking that this world is where it has moved. I'll give you an example. A girl was recommended to me to work in my finance department, and the CEO recommended her. And she comes over and she talks to the people in my company, and then I come back after two weeks, and I said, 'When are we going to hire her?' They said, 'Why do you want to hire her?' And I said, 'Because she came highly recommended by a CEO.' And they said, 'Check this out.' And I look on her Facebook, and two years ago, there are three separate times. 'The board's not here at 2:00. You know how I do. I'm out of here at 2:30. Woo-hoo!' She didn't go to any financial conferences. None of her books that she said are her favorite have anything to do with finance. And then on one of her other platforms, she's in a skimpy, nasty bikini drinking a bottle of vodka straight. Nobody's ever going to tell her why she didn't get hired. A couple of us called her for a date..."
On representing a company
"I talk to employers, and I say, 'Have you given your staff a directive that they are a direct representative of you?' People can't differentiate when you are a staff member and when you're talking on your personal time and not on your personal time. And you're airing all the business, all the laundry of the company. It can hurt in many, many ways, and it can help in many ways."
On social media engagement
"By hiring and keeping around me extremely smart, younger men and women that I believe in. Now let's talk about the amazing opportunity of the digital space. One of my team members shared with me how, you look at Twitter or one of these platforms for half an hour of content. Now, if you're watching a half-an-hour TV show, and 27 minutes of it are advertisements, then you're going to switch the channel. So that means, those sites that you're running, you're saying to everybody, 'Buy this from me, buy this from me, buy this from me.' But if you're watching something, and 27 minutes of it is content, it may be fun or information, the three minutes that you are selling to people, they'll buy. So that means, everybody who's an expert here, if you're giving out great information - this is how to do this, this is how to do this - you know what happens? They start coming back and ask, 'What can I purchase?'"
On monetizing social media
"Everybody today is trying to brand themselves. And I like to tell people this story about this kid I met in this hotel. And this kid walked up to me and said, 'Hey, could you brand me as a music artist?' I said, 'I don't do that. I do T-shirts.' And he said, 'No problem.' So we go out to the parking lot, and the valet got our cars. His car is more expensive than mine. The kid was about 18. I said, 'It looks like you're doing pretty good.' He said, 'No. I'm a graphic artist. I'm a fine painter. And every Monday on Instagram, I have 100,000 people that follow me. I put out a white T-shirt. I paint it. Everybody that wants one from it, I tell them, 'Anybody that wants it, I tell them only for the next 24 hours can you get this shirt. It's $50. Whether you buy one or 1,000, you'll never see it again.' Everybody that likes it prepays for it, on Tuesday, they screen-print it, and Wednesday, they mail it out to every single person. And I do it all over again the following week.' I said, 'How much have you made this year?' I believe he had $1.2 million in receivables. That's social media. You know what he's doing? He's only doing Columbia Records or, what's the name, Publisher's Clearinghouse. He's converting half of 1 percent to 1 percent of his followers every single week. It's the old direct mail model, just done in a new form of delivery. So if you really look at social media and these platforms, they really can be used.... I don't care what level you are on, you can monetize this."
On knowing your customers
"You need to understand this because every person in here who does a business and they'd be dying to sell to the store, well, if we sell to the store and the store decides to put it on the rack, who are they selling it to? When they were buying FUBU, was the mother buying it for the kid, was the mother buying for the husband, was the husband buying for himself, was the kid buying it? Now, when you sell directly to your customer, you know who they are. They are guys in Detroit between 30 to 32 that love cars. You know exactly who they are, and you can find them again and sell to them again and ask for their information. The power is going back to the people."
On persistence
"It's only called a failure if you think of it like that. I think it's just a process of elimination. And everything that I have - other people would say - failed, I have learned to keep working until I made it just right."