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GUY RAZ, HOST:
You come back to New York with 300,000 dollars' worth of orders. How are you going to finance that?
DAYMOND JOHN: That was the big question - right? - that I didn't know what I didn't know. I didn't have enough financial education. I didn't even have an accountant at the time. So I went to all the banks I could. And I got turned down by 27 of them.
RAZ: Twenty-seven banks.
JOHN: Yeah. It was so bad loan sharks were turning me down.
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RAZ: From NPR, it's HOW I BUILT THIS, a show about innovators, entrepreneurs, idealists and the stories behind the movements they built.
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RAZ: I'm Guy Raz. And on today's show, how Daymond John went from waiting tables at Red Lobster to building FUBU, one of the biggest hip-hop clothing brands ever created.
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RAZ: So as with any history, there's some disagreement over what I'm about to tell you. But by and large, lots of people will say that hip-hop was born in the Bronx - probably in 1973. And the Bronx was the center of hip-hop culture for most of the rest of the decade. But by the early '80s, hip-hop's center of gravity started to shift to Queens - specifically a neighborhood in Queens called Hollis. This is the neighborhood where some of the most influential names in hip-hop grew up - Russell Simmons, LL Cool J, and of course, all three members of Run-DMC. You might even remember their song "Christmas in Hollis." Here, I'll do you the favor.
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RUN-DMC: (Rapping) It was December 24 on Hollis Ave in the dark when I see the man chilling with his dog in the park. I approached them very slowly with my heart full of fear. Looked at his dog - oh, my God - an ill reindeer.
RAZ: OK. So Hollis is kind of crucial to understanding how Daymond John was able to build a global brand of hip-hop apparel - a brand he started from the trunk of his car - because as hip-hop culture started to explode, so too did Daymond's little clothing label called FUBU. It's a brand that, to date, has sold over $6 billion in apparel. Now, today, you might know Daymond as one of the sharks on "Shark Tank." He's confident and smart and always well-dressed. But you might not know about his backstory - his childhood in Hollis and the challenges he faced from a very early age.
JOHN: Right around my - about 11 years old or 12 years old, my parents separated - got a divorce. And I would never see or speak to my father ever again...
RAZ: So you haven't seen your dad since you were 12?
JOHN: I did not.
RAZ: And so it was just you and your mom at that point?
JOHN: Just me and my mom struggling, trying to work it out.
RAZ: And how did she make a living?
JOHN: Well, mom was an executive assistant. So she worked for Lehman Brothers, American Express. And she would have her little side hustles. She would probably, you know, sew clothes and try to sell them. She would go and open up, you know, maybe a little kiosk at a flea market and buy goods and resell them. So Mom would do a whole bunch of things such as that to make some extra ends meet. But she'd also just mainly be a secretary or executive assistant for people.
RAZ: So you're growing up in Hollis in the late '70s, early '80s. And it was kind of a tough neighborhood, right? I mean, did you feel safe as a kid? Like, did you feel like you had a pretty normal childhood?
JOHN: I felt safe. It was a great time. It was what I think as the last of those old-school neighborhoods where everybody knew each other and, you know, all the kids had to go inside before the lights came on on the street lights. I mean, my mother used to always say I had to be either faster than the Concorde or faster than the lights on the Empire State Building. And the reason was that the Concorde would land approximately, I think, 7:50 or 7:30, you know, during the night.
RAZ: Wow. Yeah, at JFK.
JOHN: At JFK. So when all the kids heard the ground rumble because the Concorde was landing, you had to be in the house by the time that rumbling stopped. But during the winter months when, you know, it was still landing that late at night, but yet it was getting dark at 5 o'clock, parents would say you need to be home by the time you see the lights come on on the Empire State Building. So it was a very great community - you know, a lot of barbecues and cookouts and fun stuff like that.
But that would all change around '86, '87 where we stopped feeling safe - when crack started to devastate, you know, our neighborhoods, and we started hearing of deaths and things of that nature. Now, maybe that's because I'm at 16 or 18 years old, you know. And I'm driving, and I'm seeing more of the world. But also crack was starting to devastate every neighborhood across the country.
RAZ: Yeah. So how were you living, you know, in a neighborhood environment where you had the crack epidemic? You had friends who were kind of getting caught up in it and selling drugs. And how were you able to - how'd you avoid it?
JOHN: I've always been somewhat analytical. And I remember doing the math one day about - you know, if I were to work at McDonald's and if I were to sell drugs over the course of 5 years, where would I make more money? And it looked like I would make more money at McDonald's because if you look at the drug dealer who has to pay for all the attorney fees and everything else every once in a while - and they get caught, and they out in 5 years. If they had to stay in jail 2 1/2 or 3 of those years - and then you have to look over your shoulder, and you end up dead - maybe dead. Then how - and they have no medical. How much really would they be bringing home? How much were they netting? So I looked at that. And I said, well, I'd rather work at McDonalds.
RAZ: Yeah. You - as a kid, did you sort of dream about the things that you wanted to do, the kind of person you wanted to become?
JOHN: Earlier on in life, I really dreamed that I wanted to be maybe a pilot. I really didn't know what else I wanted to be in life. You know, I had no idea until rap music really started coming around. And I figured I wanted to be working in rap music. But I didn't know how to do that if I couldn't rap, sing, dance or produce. I really didn't know how to do that. I tried - well, I could dance a little bit. I actually did do some kind of dancing hoping that Run-DMC or LL Cool J or Russell Simmons would discover me. At one point, I did get an offer to dance for a group name Houdini.
RAZ: Sure, yeah.
JOHN: They were going on tour.
JOHN: I got an offer to break dance for them. And my mother said, no way in the world are you going on tour.
RAZ: It sounds like you were a pretty good kid. Like, you didn't really fight with her that much. You didn't rebel.
JOHN: No. I think I may have had one or two arguments with my mother during the course - maybe now, I'm 49. I've had three arguments with her in 49 years.
JOHN: And, yeah, probably two of them were when I was in my 20s.
RAZ: Did you - was college ever something that you considered when you finished high school?
JOHN: I did. I did consider it now. But I'm dyslexic and reading always presented a challenge. Science and math - no problem. I could do it in my sleep, you know. That was a challenge. And I said to myself, I'm going to take off one year, you know, getting out of school. I said, I was going to take off one year. And that one year became five years, 10 years.
RAZ: What were you doing in that year off that you took off from college?
JOHN: In that time, I was working here and there. But I also was partying. You know, dating as many girls as I could - you know, the normal kid thing, you know, 18 to 20. And I turned around again, and I looked. And I said, I don't have anything. And not only do I not have anything, I don't even have an education to fall back on. So again, looking at all the friends I lost and then talking about all the kids that I thought were not so bright - but yet they were coming back from college, and I was a waiter at Red Lobster serving them. And I said, maybe I'm the idiot here.
RAZ: You were a waiter at Red Lobster?
JOHN: I was a waiter. Yeah. I was having a great time as a waiter. But I was also learning from Red Lobster. You know, they would issue these quarterly books on, you know, their PNLs basically - what was working, what wasn't working. I was, you know, learning how to service people.
RAZ: Wait. You were reading their quarterly PNLs when you were a waiter?
RAZ: I mean, how many waiters at Red Lobster or any company would take the time to do that?
JOHN: I don't know. But that's not my problem.
JOHN: I was reading them.
RAZ: So all right. So you are clearly thinking about bigger things. If you are waiting tables at Red Lobster, and you're reading their quarterly reports and their PNLs, like, you're doing this because you have a plan. Did you have a plan?
JOHN: I didn't know what the plan was going to be, but I knew that just like working out every single day and just like anything else - trying to educate myself, I had the ability to put various different things in my body or my mind. You know, drugs and Rock 'N' Roll and rap music and drinking all the time, I could put that in and sow how productive I was going to be later on. Or I can put in PNL statements and listen to Tony Robbins and listen to Jay Abraham and "Think And Grow Rich" and "The Seven Highly Effective Habits Of" - whatever - you know, "People."
RAZ: And you were reading that stuff? You were listening to Tony Robbins and reading Stephen Covey?
JOHN: All day - all day, every day. That's what I was...
RAZ: Wow. When you were 21 - 22 - that's...
JOHN: No, I was listening to that stuff when I was 16. And it's not that it was easy. It got darker and darker. And often I would question myself and say, did I - am doing the right thing? Am I on the right path? - because at the end of the day, I started setting my goals pretty low - that I just wanted to be somebody who can take care of their family and have a decent house. And I wasn't sure what kind of business I was going to have - if it was going to be a business at all. But I wanted to have a steady income. I didn't want to just...
JOHN: ...You know, just be roaming the streets.
RAZ: And how does this idea of making apparel - FUBU - how does it even begin? What's the story?
JOHN: Well, so the funny story is that I would talk about that with my girlfriend at the time. I was living with an older - she was a little bit older than me. She was 30. I think I was 20. I think she worked for American Express or one of them - and very supportive. But I would give her my ideas all the time. And, you know, I remember. She would laugh at some of them.
And then, one day I asked her to borrow $800 - no, I asked her to borrow $500 for this idea I had called FUBU. And she said no. I would leave her after that, of course. I left her after that - well, funny story. I left her after that. And I remember maybe about 15 years ago or something - she is still my friend. But she came into my office, and she heard my secretary talking about my houses and all this type of stuff that we had to take care of from a financial standpoint - like wire the money. And she was like, you still want that $500 for FUBU?
JOHN: God bless her. She's a great person.
RAZ: OK. So how did you come up with the idea for FUBU?
JOHN: So, you know, we - I was spending so much money going out and buying clothes that the hip-hop community loved to buy. And they could be ski jackets, Timberland boots and whatever the case is. And we start to hear rumors that, you know, clothing companies, apparel companies just didn't want rappers - African-Americans, inner-city kids, whoever - they didn't want people wearing their clothes. But I started to get fed up to hear about all these types of brands. And I wanted to create a brand that loved and respected the people who loved and respected hip-hop. And I called it FUBU, For Us By Us.
RAZ: For Us By Us. And so what was the first article of clothing you made?
JOHN: Well, I didn't make anything at first, to be very honest. What I first did is I got a bunch of labels, and I just went and bought Champion shirts, and I just put my FUBU on top of the Champion.
RAZ: You got labels printed that said FUBU on it?
JOHN: Uh-huh. And I just wore them on top of my Champion shirts just because I wanted somebody to - I didn't want anybody to even know it was mine because it was just one shirt. It's not like I could resell it to somebody because let's say a sweatshirt's $30. Well, I bought the Champion shirt for $30. So what? Am I going to sell it to you for 40?
RAZ: Right, right.
JOHN: You know? So I just tagged all the clothes I had. And then I started to see this hat that was on a lot of these rappers, and it didn't look like it was made by a major clothing company. And it looked like a ski cap - not with a ball on the top but with a little tie, like a shoe string, on the top.
JOHN: And I knew how to make those. My mother showed me how to make those because the first one I bought was about $20. I went all uptown Manhattan. I couldn't find it anywhere. And when I finally found it, if you add up the gas, the tolls, I paid $30 for this thing. And I showed my mother the hat. And she said, you know, you can't afford to just pay that kind of money for something you can make for $2. And she told me to go to the store and get some fabric. I went to the store. I got $40 worth of fabric. I came back. I sewed a bunch of hats. And now, all of a sudden, I wasn't thinking from a commercial standpoint.
JOHN: But I bought the same roll of fabric, so I have now this big roll of striped fabric. And I made 80 hats. So I decided to go stand on the corner and sell them.
RAZ: So you brought this roll of fabric home and - what? - you, like, cut out patterns and sewed them together?
JOHN: They were really easy. You know, the pattern - it wasn't even a pattern. It was just a straight square. You take the square, you fold it over, you sew one side, and then you flip it in and out, sew. And then you sew it on the top, and you tie the string on the top. You're done. You just had to sew a straight line.
RAZ: It was one square with one straight line? And then you just tied it on top, and there you go. You had the same exact look.
JOHN: It was like making - it was like taking a sleeve - right? - and folding it in half and using the part, you know - and then putting on your head. And the top that's open, you just tie it with a string.
RAZ: Wow. And those just, like - those were really popular. Like, lots of hip-hop artists and kids were wearing those kinds of hats.
JOHN: Yes, and nobody - and no major corporation was making them, so there was no place to find them. So where do you find them? With guys like me, selling them on the street corner - so I made 80 of them. It took me probably about three hours. I made 80 of them. And I hit that street corner, and I sold all of them.
You know, and a lot of people go, what are you talking about, standing on the corner? - because I know a lot of people may be listening to this, and they may not live in a condensed area. But trust me. It is not that I stood on the corner outside my house. I went to the shopping area in this place called Colosseum Mall, where people were actually going in to shop. So I caught people while they were walking in that mall and out of that mall by standing on the corner.
RAZ: And did you - did the hats have FUBU - the FUBU label on them at that point?
JOHN: I did. I put the FUBU logo on the front the hats, yeah.
RAZ: And people would buy them. And how much - do you remember how much you sold those hats for?
JOHN: I sold them for 20. But if you didn't have 20, it would be 17. If you didn't have 17, they were 15. If you didn't have 15, they were 10. If it was my last two hats, they were $3.
RAZ: And they were costing you, like, $2, $3, right?
JOHN: $2, $3 - I don't think so because I bought $40 worth of fabric, created 80 hats, so that means they were 50 cents...
JOHN: ...Apiece they were costing me.
RAZ: So you come home that night, and you must be thinking, wait a minute. I've got something here.
JOHN: Well, I was on my way home, and I remember counting that money, and I was so excited counting the money. I just couldn't believe that I actually came up with a concept, and I sold it. And I was - it was dependent on whether I could sell it or not. And then I just looked up. And bang - I hit a car.
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JOHN: And I remember that guy getting out. And it was a nice car. And I remember him getting out. And I said, man, I don't have any insurance. I'm sorry. He said, all right; you know, how much cash you got on you? I said, I don't know, $800. He said, all right, give me it. I'll take it. And he took the money and left.
RAZ: (Laughter) Oh, no.
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RAZ: In just a moment, how Daymond earned that $800 back and then some and then some more. Stay with us. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.
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RAZ: Hey, welcome back to HOW I BUILT THIS from NPR. I'm Guy Raz.
So it's 1982, and Daymond John has made and lost his first $800 selling FUBU hats. But the word about his brand is spreading around town, so he keeps making more hats. And then he decides to branch out to T-shirts as well.
JOHN: I started really, you know, refining the way I made the hats, get better quality hats, you know, get better FUBU logos on them, and then start to put T-shirts there, and then start to say, OK, well, I can't just hang out here in the mall and sell these T-shirts. So where can I get a booth at? Or where can I go to? So I started to look at other places and outlets. Then I started walking over to stores that were outside that mall - saying, hey, I'm usually outside this mall on the weekends. But if I can't be here, can I put some shirts in your place or hats in your place on consignment? So I just started trying to figure any and every way out that I can increase my sales and my exposure of the product.
RAZ: How did you find the stuff? Did you - were you just going to like shops and buying a bunch of T-shirts.
JOHN: Yeah, I was going to physical shops down on the Delancey Street area where people knew they can go and buy shirts. And then I was starting to order as many catalogs as I could of people that were selling sweatshirts. So like, CCM, the jersey company, would sell CCM jerseys that were blank. Or I would go to Boulder - The Boulder Company in Boulder, Colo. They would sell sweatshirts. So I would just start to source as many places as I could - find something of high-quality that was - that had no name on it. And they were using them for that purpose. They were premium companies. They were the same company that would sell it to any, you know, large companies, so you can put your company name or logo on it.
RAZ: And you were literally sewing the labels on?
JOHN: I was ripping the old labels out. I was sewing these labels in. I would then start going to screen printers and start putting screen printing on the shirts. Then the next step up after that was to go to embroidery places to start embroidering the shirts to get a higher quality. I kept improving the product, improving the quality - and to basically see the resistance or the acceptance of customers. What level would they buy it at? How much would they pay 30? Would they pay 60, 90? Did they like extra large, large, red? I wanted to just really start to understand the customers, so I had to keep going back and improving whatever I was doing.
RAZ: And I mean, this was, like, pre-Internet. So it's like - today, you can just type up, you know, in Google screen printing - silkscreen printers or whatever. I mean, how did you find...
JOHN: Isn't that nice?
RAZ: How did you locate all of these places that were willing to do this for you?
JOHN: Yellow Pages, cold-calling. If you drive into New York City, you'll see some sign on a bridge that'll say, New Jersey, the embroidery capital of the...
JOHN: ...The embroidery capital of the world. So what do I do? I take a train to New Jersey, and I start walking around.
JOHN: I start walking around saying, you know embroidery places? You know embroidery places? I mean, just not stopping - getting up at 6 o'clock in the morning and just hitting the subway.
RAZ: All the while working at Red Lobster at night, right?
JOHN: All the while working at Red Lobster at night and sewing the hats and delivering the hats at the same time and trying to source the goods - yeah, I mean, just - but enjoying and loving what I was doing. It was kind of like this new discovery - this path that I was going down that I was just so excited about. And to say that, I also have to say that through '89 and '92, I closed the business three times because I ran out of money because all these development costs, all the gas, all this going on those trains and cars to going these places, I would run out of money.
But I would only run out of like $500 or $1,000. And before you know it, you know, I'm walking down the block, somebody would say, hey, aren't you the little kid that sells FUBU? I said yeah. They'd be like, I need some more. I've been looking for you. What do you mean you've been looking for me? I need some more. And I would keep opening the business back up because the business started to call me instead of me calling the business.
RAZ: Yeah. Did you ever get like - were you ever in a situation where you were selling stuff on a street corner and like - I don't know - city officials came up and asked for a permit or anything like that?
JOHN: Yeah. I mean, that had happened once or twice, but the best permit ever when you're selling stuff on the streets is being able to run faster than them.
JOHN: That was a great permit.
RAZ: So OK, there's clearly a demand on the street for your clothes at this point. But when did you decide it was time to take it to the next level?
JOHN: So when I finally got to the level of 1992 and my friend, J. Alexander, came back from fighting Desert Storm, and he had had a couple of dollars, he said, I want to put in some money, and I want you to take this thing serious. And my plan at that time in the neighborhood was - the big black guys in the neighborhood, they had little options on what they can have to be very stylish. So they had to go to Rochester Big & Tall or - and get a big white shirt or a black shirt. Or they had to pay a lot of money to get their stuff custom-made for them because nobody was really making...
RAZ: If somebody was really tall or heavy, basically, right?
JOHN: Right, so what we did was we just found a place that made 4X, 5X, 6X shirts. And we made 20 of those shirts because - we made 20 of them because we knew that if we gave these guys these shirts, these guys were normally bodyguards - not all of them, of course, right? But the ones we did give were the bodyguards. They were in front of the clubs. They were bouncers or someone like that. And we knew that they would not just wear it once and wear something else like the more stylish kids who don't want to be seen in something twice. We knew that these guys would wear it forever.
JOHN: So that was our first plan of attack. For the first six months, get these same 20 shirts out to these guys. And that's what we did. And we just would do that. And before you know it, these guys were walking billboards. And the artists started to say, what am I, chopped liver?
JOHN: Why are you giving it to, you know, this guy over here, and I can't get any? And we're, like, well, I don't know. We don't really make your size. You're not going to really wear it. No, I'll wear it. I don't know. Are you sure? Yeah, I'm sure. You know, that was our strategy when we first started to really launch it.
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RAZ: And did people - I mean, at that point, were people, like - did they know what FUBU was? Or were people still saying what is this FUBU thing?
JOHN: Well, they started to know a little bit about it in the tight community we were at. And then this one thing that just put me on the map was we would dress these two or three bodyguards that worked for a guy in New York named Ralph McDaniels. And Ralph McDaniels' show "Video Music Box" has probably been on longer than MTV.
JOHN: Or it came out the same year. And Ralph is really known for breaking most of the music artists from - I would say '85 all the way to '98. They all had to really, really beg him to go on his show. And we put it on the bodyguards all around Ralph. And we found out Ralph was going to Teddy Riley's concert - or Teddy Riley had a weekend that he used to throw in Virginia. So we said, all right, we're going to take the train down there because we know he's not going to know as many people in Virginia. So we'll be able to get to Ralph easier. And we got to Ralph. And he said, I'm out looking to your stuff. I know who you are. I want to put you on my show.
JOHN: And he did this interview with us. And I was so - we were so scared to death.
JOHN: But he told everybody that, you know, FUBU's the next best thing.
JOHN: I think we had (laughter) - I think we had 50 shirts. And I owe Ralph so much as being one of my mentors and somebody who was a mentor to the community that he really put us out there. And after that, all the rappers - all of them - were ready to wear our stuff because Ralph gave us the thumbs up.
RAZ: So I guess - I mean, around this time, '92, FUBU - this is becoming bigger. I mean, you start to realize that this has potential to become something more than just a side project, obviously.
RAZ: So what was your next move? How were you able to get it more exposure?
JOHN: Well, now it was about time to put my game face on, and it was about time to start looking at the numbers and being a real businessman even though I wasn't. So I started to put this plan together on how many retail stores would take my product, how many we can ship - and start taking out ads, such as Right On and Black Beat Magazine - and how can we start shipping these shirts across the country? And also how many street corners can we sell them on, in regards to flea markets or street corners?
JOHN: And I started to do that. I started to reduce my hours at Red Lobster, and I started to put in more hours here. And then I started bringing two and three other partners to help with the man-hours that we needed.
RAZ: Except all that would require a lot of money.
JOHN: That would require a lot of money at first. So of course, you know, like many businesses, I leveraged my credit cards, you know, up until, I think - my partners and I, all of us leveraged our credit cards up to be above $50,000 with a very high interest rate, which is not the smartest thing to do. And then it all culminated to when I decided to go out to the MAGIC trade show in Las Vegas.
RAZ: This is a famous like industry trade show where - like apparel and stuff.
JOHN: Yeah. So it's the MAGIC trade show. The MAGIC stands for Men's Apparel Guild In California. It's held in Nevada - I know. I'm a little confused at it myself. But that's where all the stores go twice a year. And they basically say - you know, they'll go and see your Ralph Laurens, your Nikes, your FUBUs of the world, and they'll say, OK, this is what we want to come in for spring. This is what we want to come in for fall.
And as I'd go out to that show, my friends and I would scrape up our money, and we would all go on buddy passes in standby. My mother happened to work for American Airlines at that time. So we all flew into Las - flew into California and flew into Nevada and took the buses over because it was too busy to go into Vegas being on standby.
JOHN: And we got a small hotel room a couple of miles away from the trade show. And we put our clothes all in the corner of the hotel room, slept on the beds and on the floor. And we would sneak into the MAGIC trade show.
RAZ: Wait, you didn't have a booth at the MAGIC trade show?
JOHN: No, we didn't have a booth. We didn't even have passes to go into it.
JOHN: Those passes - we probably had - you know, we probably each one of us had on us maybe $30 a piece...
JOHN: ...About the time we got there. So we'd sneak into the trade show.
RAZ: Wait, you would just go - so you snuck into the trade show. You didn't have a booth there, but you would just go around and talk to people about your shirts?
JOHN: I would have the FUBU on, and I would see brands that I felt were like ours. So if I would see Timberland, or whatever the case is, I'd stand outside their booth and say, hey, how are you doing? Hey, I've got this new brand named FUBU. And some people would be like - would say, FUBU? The For Us By Us stuff? You're here? Where are you? Where's your booth? Come on. I'll walk over to your booth.
JOHN: All right. Well, instead of walking over to my booth, you want to hop in a cab or a bus because...
JOHN: ...My booth is over at the Mirage Hotel. Oh, they're showing at the Mirage Hotel? No, no, no, no, they're not really - it's up in the room. So it worked out. And, you know, we would write $300,000 in orders, and that's when I would...
JOHN: ...Realize how much capital I really needed.
RAZ: You'd walk away from that show without even a booth with $300,000 in orders. How were you going to finance that?
JOHN: That was the big question - right? - that I didn't know what I didn't know. And I wasn't part at that time - knowing all the things I know now - I wasn't part of the Chamber of Commerce. I didn't have a financial education. I didn't even have an accountant at the time. So I went to all the banks I could, and I got turned down by 27 of them.
RAZ: You said, hey, I've got this business, and can I get a loan?
JOHN: Yeah. I didn't know how to fill out a loan application. I didn't know how to - you know, as much I was reading PNLs, how can I write a PNL on a business that I never have grown past, you know, 200 shirts at a time or 5,000 shirts at a time, right?
JOHN: I didn't know how to project what $300,000 would turn to. And I kept getting turned down by banks.
RAZ: Twenty-seven banks.
JOHN: Yeah. It was so bad, loan sharks were turning me down.
RAZ: (Laughter) My God.
JOHN: That doesn't happen, man.
RAZ: I mean, you were, I guess, in your sort of mid-20s, still living at home with your mom.
RAZ: And banks are looking at you - you had no sort of history having a business. So they're thinking, you know, why are we going to take this risk?
JOHN: Why would they take the risk? I had no financial intelligence. I had no history in this business. I had - you know, I had - really, I couldn't collateralize the home. I didn't do it at the time because my mother wasn't allowing me to go and put that up at risk. So...
JOHN: ...You know, I don't blame them. I wouldn't have gave myself the money, you know? And then my mother I remember coming home. And she came home, and she said, you know, you've been working on this house as long as I have. You've put as much money as you could into this house, and we have some equity in this house. And we need to go out - and I wouldn't do this if you didn't have $300,000 in orders because this is all we have. Let's go out, and let's take out as much equity as we can in this house. And once you sell the clothes, you put the money right back in.
JOHN: And hopefully, you'll have a nice profit. So she goes out, and she gets a $100,000 loan on our house.
RAZ: So your mom really - I mean, that's a kind of a crazy risk that she took on. You know, I mean, she really believes it. She must have really believed this was going to work.
JOHN: It was a really big risk. So...
JOHN: ...I don't know anything about manufacturing. I may know stuff about, you know, putting an embroidery on a T-shirt, stuff like that. But as far as I know, I've only heard about manufacturing is over in China. But I'm not going to risk my money over in China. So what happens is my mother moves out. My friends all move in my house. So we start - they start all paying $75 a week for the room that they would rent out of my house. So I have now six friends all living in my home. And all the furniture I couldn't sell I took out in the backyard, and we all chopped it up, and we burned it all in the backyard because we wanted to make room in the house for sewing machines because we weren't going to trust $100,000 of our money overseas with somebody we don't know because we knew that we just weren't sharp in that area.
JOHN: So we get all these sewing machines. We get a cutting room. We hire a bunch of seamstresses, and we hire somebody to cut the fabrics and trim the fabrics. And we create a factory in the middle of Hollis, Queens. My house...
RAZ: In the house - you decide that you are going to be the factory to fulfill these orders of $300,000?
JOHN: My house is a big version of Airbnb meets a factory.
JOHN: That's exactly what this...
RAZ: How hard were you - did you have to work to fulfill those orders?
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JOHN: It was hard. I think we filled about $75,000 worth of those orders until I turned around, and I only had $500 left in the bank, and I was about four months late on the mortgage.
JOHN: Again, I didn't have financial intelligence at the time, and what was happening was I was paying for the setup of the machines and bringing all the raw goods here, so I had to pay for all that in advance. Then I was paying for the salaries of the people that were working there for me, and that money was going out. The stores, when they receive the goods, they don't want to pay you for 15, 30, 60, 90 days. And my lack of financial intelligence was starting to just underline how this company was never going to go anywhere. And now I've made $70,000 worth of the goods that I have a $300,000 order on, and the stores are starting to say, you're not delivering this in time. We're going to start canceling the orders.
RAZ: Wow. So this is, like - what, like '95, '96?
JOHN: Yeah. This right around '95. Yeah.
RAZ: It sounds like you're close to, like, going bankrupt.
JOHN: I'm close to going bankrupt and losing the house and losing all the orders that I have. Those stores are not going to trust me again because if they're waiting six months for something to come in - when they give you these orders, it's the orders that they're not giving somebody else that they could be turning other goods.
JOHN: So now they're losing faith in me. And it got to be - it was a really, really dark time. And I see this a lot now in entrepreneurs who don't realize what they don't know.
RAZ: So were you panicking?
JOHN: Yeah, I was panicking. I was panicking for sure. I didn't know how to get out of it. And then my mother comes over to me and says, I have an idea. And I said, what? And she said, you need a strategic partner.
JOHN: And I said, what the hell is a strategic partner?
RAZ: (Laughter) And?
JOHN: She said, it's OPM, Daymond. You know, OPM doesn't have to be other people's money, to be other people's manufacturing, mind power, manpower, marketing. I said, all right, well, what do you mean? She said, I need $2,000. So I didn't have $2,000. I go back to Red Lobster, and I work for a month. And I come back home, and I give her $2,000 and say, what are you going to do with the money? She's says, I'm going to take an ad in the newspaper. And I said, that's - that could be the stupidest thing I've ever heard in my life.
RAZ: Like, asking people if they want to fund your company? Like, taking an ad out...
RAZ: ...In the paper?
JOHN: Classified ad.
RAZ: And what did the ad say?
JOHN: Million dollars in orders - need financing.
RAZ: And what happened? Did people start calling the number?
JOHN: (Laughter) Yeah. So 33 people called that ad - 30 of them, 125 percent interest.
JOHN: I had to live in their attic for collateral...
JOHN: ...Pictures of loved ones in case I got lost - you know, all because I can't refuse.
RAZ: These are loan sharks.
JOHN: Yeah. But three of them were real, and one is - one was Samsung.
RAZ: Samsung - like the Korean...
JOHN: Korean conglomerate.
JOHN: The $200 billion privately held Korean conglomerate...
RAZ: Wait. Somebody at Samsung saw that classified ad and was interested?
JOHN: Samsung - the head of Samsung's textile division. Because Samsung makes everything from nuclear reactors to cars...
JOHN: ...To phones.
JOHN: And the textile division saw it and said, hey, why don't you come in? I like this opportunity here. We finance textiles. And the deal with us was that they would finance the manufacturing and distribution of our product, but we had to sell $5 million worth of clothes in three years to keep the deal.
RAZ: Wow. And so you went there to meet with them, and they - was the person that you met with in New York?
JOHN: Yeah. Of course, I was nervous. I wanted to present it - you know, I brought my mother with me.
JOHN: So (laughter) later on, you know, my partners at Samsung would say, you know, first meeting we ever had for a potential investment or whatever structure that somebody brings their mom. I'm like, hey, well, mom's pretty smart, so I'm going to bring her with me. And, you know, I didn't think I was going to hit $5 million worth of clothes in three years. I barely even sold the first $300,000 worth of clothes.
JOHN: But I had known my customers so well because of all those things that I was doing that as we started to put the brand out there, we did about $30 million in three months.
RAZ: So Samsung and this huge textile manufacturer, all of a sudden, is making your clothes and distributing it. You're going from, like, a tiny, little mom-pa shop to working with the biggest textile maker - one of the biggest in the world.
JOHN: Yeah. But, I mean, the work was still up to us. They were just financing. We still had to market. Even though they had to manufacture, they manufacture in a source of funding the manufacturing. We would have to find - you know, we'd have to find the factory. The factory would have to be up to par. And we'd have to say, OK. Wire the money over here. Here's who we're working with. I mean, all of it still landed on us. The only area where I felt that, obviously, it was giving us the ability to scale is, number one, the stores knew they were going to get their goods in time.
RAZ: Yeah. How did you get, you know, entree into the big retailers to carry your products?
JOHN: Well, that really wasn't hard at that point because we had already had six or seven years full of, you know, really servicing specialty stores really well.
JOHN: And retailers - and actually, we'd have to stop the retailers. We'd have to not allow them to purchase because some of the kids would look at some of these big retailers and say, well, now FUBU's not cool anymore because it's in these big retailers.
RAZ: You know, this - I guess, like, 10 years before FUBU starts to really take off, Adidas struck a - like, a really famous deal with Run DMC after "My Adidas," which was the - one of the first times a major company did a branding deal with any musical artist. And I wonder if a lot of these big-box stores like Macy's or the other companies that wanted to carry FUBU - were they trying to jump on that - on the hip-hop bandwagon? Did they see this as a hugely potentially profitable market that they wanted in on?
JOHN: They did. So they - first of all, they were scared. I actually did hear many stores say, we don't want, you know, a lot of those type of people in the store because they're going to have shootouts and/or shoplift. I saw - you know, a large retailer did ask me to take the picture of myself and my three other partners off the hang tag because they said we look like a gang.
JOHN: So you've got to understand the ignorance of some of them.
RAZ: Were you - when you were running up against that kind of racism and bias, and people kind of judged you even before you walk through the door, did that anger you?
JOHN: No, not at all. I don't know where these people - I don't know. When somebody is biased or something like that, I don't know what they've been exposed to in their life. You know, maybe they weren't around certain other people, and maybe they just need that one person or that other person in their life to come into their life to hopefully show them the difference that people are people. I also felt that I wouldn't be here if everybody knew what I knew. So if they all were that smart, then there would be no place for Daymond John.
So I can't spend my life being worried about what other people think or the ignorance or the challenges they may have had growing up. They may have just had the wrong family members in their life telling them the wrong things. But, you know, I'm - listen. The glass is half-full. And I believe love doesn't come in a color or a gender, and we have - there's so many beautiful people in this world that the people who don't understand that are suffering.
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RAZ: So 1996, Daymond, you get this deal - you do this deal with Samsung. Within two years, FUBU is doing (laughter) $350 million in revenue. I mean, that...
RAZ: ...That's insane. I mean, how do you - what happened?
JOHN: I don't know. It's all a fog...
JOHN: ...Sometimes. You know, it's this rocket ship. But it was having really great partners and mentors all around and being able to have these systems put in place where we could start scaling. But if you want to simplify it - you know, if the men's division of what we were doing - we were doing approximately - let's say, argument's sake, we were doing $100 million. By that time, by three years, what happens is after year one, you get a license - comes aboard. Jordache was our first license, and they came aboard, and they started doing ladies' clothes. So now we're doing 100, say, 150 million in men's. They're doing 100 million alone in ladies'.
JOHN: And you start to put other licenses on - so bags, shoes, boots, fragrance, suits, bedding. And each one of those is doing $15 or $10 or $5 million apiece - socks and things of that nature. And that's how the scalability got to 350. But, you know, $350 million in the fashion business is great. But it's not - you know, listen. Under Armour is doing $3 billion...
JOHN: ...Or $4 billion.
JOHN: Puma's doing $12 billion, you know? There's real numbers that are out there, even though I'm extremely proud of what happened. But that's how we started to scale.
RAZ: And who was buying FUBU? Who were your customers?
JOHN: So many people. So in America primarily, you know, African-American and/or people who loved rap music of all colors. I remember, you know, when we first put it NSYNC in one of our ads. You know, we started getting so many calls from stores in Nebraska and Ohio. Like, hey, you know, this is not just a black thing. And then when you start to have too many goods or overruns of goods, then you sell it to the places such as Burlington and T.J. Maxx. And those customers come in, and they're price-conscious customers. They're just not looking for a brand. They're looking for some good, old drawers, good, old socks, good, old jeans.
JOHN: And they buy - and a lot of us - I see so many parents and grandparents with my stuff on going, I didn't know this was FUBU until I looked at the label.
JOHN: I had it for 10 years. My son bought it for me. So FUBU just has its own interpretation from various different people.
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RAZ: OK. So you had this, like, several years of this incredible expansion and growth. And at some point - like, at a certain point, FUBU was everywhere. Then I guess you did something interesting, which is sort of a euphemistic way to describe this. You - in 2003, you semi-retired the brand, at least in the U.S. Was that - I mean, was that because FUBU was, like, overexposed, or what?
JOHN: Well, what we did was we reduced most of the distribution of it. I mean, we still obviously kept our categories. But we would really narrow down to just a couple of stores just to test the product and see how it's going. Because we felt that it just needed to cool down. And more importantly, we would reduce all the logos, as we could. So - because people, you know, they already had 10 years of FUBU in their closet. They already thought that, you know, it may not have been for them at the moment because we, you know, it goes through cycles, you know? And a hot brand lasts five or maybe six years, maybe seven years. So we kind of just slowed the brand down.
RAZ: And were you - I mean, was FUBU - did it seem at that point that it was kind of time to wind down a little bit because it wasn't - I don't know - it wasn't making as much money?
JOHN: Well, I think it was you didn't want to force it on the consumer.
JOHN: That's how I felt. And I think that, you know, if the stores weren't, like, oh, my God, I have to have it, then, you know, we needed to find something else to give to them and just put you know, FUBU not on a back burner - but kind of just slow it down. So it was just really adjusting the way - the visibility of the product.
RAZ: You had a - like, a completely - just a total change of career path in some ways...
RAZ: ...In, like, like the late 2000s - 2008, I guess - when you became a TV star because, I mean, a lot of these other labels were run by people who were kind of well-known in the hip-hop community, like Russell Simmons and Puffy and Jay-Z. And you were kind of quiet. I mean, people didn't necessarily know you as well. They knew the brand, right? All of a sudden, you become a TV star by becoming a shark on "Shark Tank." How did that happen?
JOHN: Yeah. So I wanted to start paying it forward and educating people on what I went through and trying to, again, show them where the landmines were. So I started writing books. And I wrote my first book called "Display Of Power." And it talked about the fact that we all have the same engine underneath our hoods. But are you going to tap into what drives you and what can make you a rock star, make you proficient...
JOHN: ...And bring you success? And I started to go onto stations like MSNBC - Donny Deutsch, CNBC - talking about the book. And Mark Burnett's, you know, crew saw me. And he had a show called "Dragons" then that was already popular...
JOHN: ...In Europe and Japan coming over to America. And he said he wanted me to be a shark. And I said, yeah, whatever. Why not? Let's try it. It sounds like the show sucks.
JOHN: It doesn't matter. But I'll go on anyway.
JOHN: I went for an audition, and they ended up using the pilot as the first couple of episodes of "Shark Tank." And before I know it, the show that I thought would never get anywhere and sucked with these, you know, five businesspeople just talking business all the time - who wants to see that? Before I know it, you know, we're going into our 10th year.
RAZ: Do you ever - when you're in the shark tank, and those you know, those like - the entrepreneurs come out, do you ever go back to you trying to pitch your company to Samsung? Like, do you ever think about how you felt?
JOHN: No. I don't because I remember I was so unprepared. I don't even - I give those people that walk in front of us way more respect than I gave myself when I was pitching because those people are night-and-day comparison to Daymond John. So I value what they're doing. And I do, though - I care for them because, you know, I love to see the people up there - that they put all the work in, and they just need a little extra step. And so I value their guts. And I value their entrepreneurial spirit.
RAZ: So last question for you, Daymond. How much of your success do you think is because of just your hard work and your intelligence and your skill and how much because of luck?
JOHN: Very hard. I always contradict myself because I don't believe that there is anything such as luck. I just believe it's determination, and drive meets opportunity. But when I look back and I sit there and I say - see who I am, you know, on this national platform - able to change lives, father of three and a Pisces - I say to myself, wait a minute, you know, something's - God has had to bless me in various different ways, and that's why I work so hard to try to pay it forward to other people because it's got to be some kind of luck. I don't know why I was chosen. I have no idea. But a lot of it is determination, drive. But I think there is a bit of luck on what's going on in my life.
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RAZ: Daymond John, founder of FUBU. He's got a new book out. It's called "Rise And Grind." By the way, according to Business Insider, Daymond's grown his net worth to a quarter billion dollars since those days selling FUBU shirts on street corners in Hollis. And as for "Shark Tank," Daymond's put about 8 1/2 million of his own dollars into companies featured on the show.
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RAZ: And please do stick around because in just a moment, we're going to hear from you about the things you're building.
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RAZ: Hey, thanks so much for sticking around because it's time now for How You Built That. And this story begins in South Florida, where Len Testa grew up. And every year, he and his family would pile into the minivan and go to Disney World. And he loved it. But like everyone else, he hated waiting in those long lines.
LEN TESTA: And the summer before I went to graduate school, I took a trip to Disney World with my twin sister. And we waited for two hours in line for this ride called The Great Movie Ride, and I was baking in the Florida sun. I thought to myself, you know, my God, there's got to be a better way to do this.
RAZ: And, in fact, there was a better way to do this. And Len was the right guy to figure it out because he was going to graduate school to study computer science.
TESTA: And I went to my thesis advisers, and I said, I want to write a computer program that solves this problem.
RAZ: And so Len decided to do his entire master's thesis on, basically, the most efficient way to visit Disney.
TESTA: Yeah. The first paper I ever wrote was in 1997. This is 10 years before the iPhone. I said, you know, one day we're going to walk through a park, and we're going to have these hand-held devices. It's going to have GPS, and something's going to be feeding it the wait times for the ride. And it will optimize your route as you're walking through the theme park.
RAZ: OK. So Len eventually worked out an algorithm that would help people breeze through Disney based on how busy the rides were at any given moment. And when the iPhone eventually came along, Len turned that program into an app.
TESTA: You tell the app the ride you want to ride, and the shows you want to see and the meals that you want to eat, and the app will tell you the order in which you should do those things to minimize your wait in line.
RAZ: Len's app first came out about seven years ago. And since then, he's expanded it to cover Universal Studios. And that's how I accidentally stumbled across it when I was planning my own family's trip to Harry Potter world. OK, so Len?
RAZ: So I have to tell you, I downloaded this thing, and it worked.
RAZ: I mean, we would've been stuck for, like, hours outside of some of these rides if we didn't follow the app and if we'd have just gone through Harry Potter world blindly.
TESTA: It's good to hear.
RAZ: And is that pretty typical? I mean, how much time can, like, can an average family save if they use the app?
TESTA: So on a busy day, we can save you four hours in line pretty easily.
RAZ: OK. But here's the thing, if your app works like Waze - right? - I'm in this situation very often where I'm driving home, and then Waze is, like, no, quick, make a right turn here. And then I'm going through, like, this windy (ph) suburban street. And, like...
TESTA: (Laughter) Yeah.
RAZ: But I notice there are, like, four cars behind me and four in front of me. They're also using Waze. And I'm like, this is the Waze of vacation now - driving. So what happens when everybody at the park is using your app? Does it stop saving you time?
TESTA: Right. So we thought about that early on, and here's what we do. We know when we're sending people to each ride. And we know how many people each ride can handle in a given hour. Let's say we send you to Dumbo at noon. And we know that it takes about three seconds for Dumbo to handle every person in line. When we send you and your family of four to Dumbo, we will add 12 seconds to the wait time so that the next family gets whatever the wait time was plus 12 seconds. And we're constantly adjusting that throughout the day.
RAZ: By the way, Len's app is free. But the company makes money by charging a subscription for all this other specialized data about when to visit the parks and how to map out your trip. And he expects Touring Plans will make about $1.5 million this year.
TESTA: I mean, I tell people all the time, I have the greatest job in the world.
RAZ: To find out more about touringplans.com, you can head to our Facebook page. And, of course, if you want to tell us your story, go to build.npr.org. We'd love hearing what you're up to. And thanks for listening to our show this week. If you want to find out more or hear previous episodes, go to howibuiltthis.npr.org. Please also subscribe to our podcast at Apple Podcasts or however you get your podcasts. You can also write us. That's email@example.com. You can tweet us - @HowIBuiltThis. Our show is produced this week by Ramtin Arablouei, who also composed the music. Thanks also to Neva Grant, Sanaz Meshkinpour, Thomas Lu and Jeff Rogers. Our intern is Nour Coudsi. I'm Guy Raz, and you're listening to HOW I BUILT THIS from NPR.
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