Daymond John: Swimming With Sharks : The Indicator from Planet Money Daymond John, founder of the iconic brand FUBU and investor on the reality show Shark Tank, talked to us about how he got his start and maintained his lead in the cutthroat world of fashion apparel.
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Daymond John: Swimming With Sharks

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Daymond John: Swimming With Sharks

Daymond John: Swimming With Sharks

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UNIDENTIFIED PERSON, BYLINE: NPR.

(SOUNDBITE OF MUSIC)

STACEY VANEK SMITH, HOST:

This is THE INDICATOR FROM PLANET MONEY. I'm Stacey Vanek Smith.

CARDIFF GARCIA, HOST:

And I'm Cardiff Garcia. The myth of the American entrepreneur is a really powerful one - someone who starts with nothing and then builds an empire just based on business sense, intelligence and a little bit of chutzpah.

VANEK SMITH: You always need some chutzpah.

GARCIA: A little bit.

VANEK SMITH: Daymond John is an entrepreneur like that. Daymond grew up in Queens, raised by a single mom, and he always had this itch to start a business. He said when he was a teenager, he was always reading business books.

GARCIA: So he started a bunch of different businesses. But none of them really took off until one day he saw a bunch of guys walking outside with these snow hats on and he had this idea.

VANEK SMITH: An idea that led to the creation of his clothing line FUBU, the iconic hip-hop brand. And eventually to...

GARCIA: "Shark Tank."

VANEK SMITH: ..."Shark Tank."

GARCIA: To "Shark Tank."

VANEK SMITH: "Shark Tank."

GARCIA: Daymond John is also a judge on the show "Shark Tank," where entrepreneurs pitch their ideas to try and get seed money from big investors. And Daymond John is one of those investors.

VANEK SMITH: Today on the show, a conversation with Daymond John about how he created his business, being a "Shark Tank" shark and his new book "Powershift."

(SOUNDBITE OF MUSIC)

VANEK SMITH: Daymond John, thank you so much for joining us. So my first question is about being an entrepreneur. You talk about this quite a bit in your book "Powershift." It starts out with you in high school. You've just graduated from high school.

DAYMOND JOHN: Yeah.

VANEK SMITH: And you describe yourself as having kind of an entrepreneurial fire.

JOHN: Yeah.

VANEK SMITH: Did you know what direction you wanted that to take or you just felt it? I mean, I don't think I have that myself, so I don't know what that's like.

JOHN: No - so you know, listen. When you're a kid - and I started out selling pencils at 6. And I did - raked leaves and did this and that. You know, you're not thinking entrepreneur. You're thinking hustle. You're thinking, my mother's working three jobs; she can't afford to buy me clothes. How am I going to get the clothes? Well, I'm not going to rob anybody. That's the easy way out.

And then when I look at everything else around me and I'm driving down the street and my mother said to me, everything around you was started with one person, with one idea that took one action. I said, well, then why can't it be me? And I had all this math figured out on how I was going to be a gazillionaire by the age of 20, and I was at the brokest time in my life at the age of 20. Mr. Smart Alec knew everything. I did not know anything.

VANEK SMITH: And so you took a job at Red Lobster.

JOHN: I went to Red Lobster to take a break 'cause I had a van service. It was almost like a carpooling service. And I realized I was working 20 hours a day, and I was netting almost nothing after I paid for Department of Transportation tickets, insurance, fixing the van, gas. And I said, I want to break for a little while. I went back to Red Lobster. I started to realize all the kids I laughed at that went to college when I was 18 and I thought they were stupid, they're coming back. And I'm their waiter now in Red Lobster, so maybe I'm not as smart as I think I am.

But I started to put my two passions together - my love of hip-hop and my love of fashion together. And I came up with a brand that - called FUBU where, you know, I opened it in '89. And I closed it three times from '89 to '92 because I kept running out of capital. But unlike all those other businesses that I failed, this one kept calling me back.

VANEK SMITH: Talk to me about the brand's named, FUBU. It stands for - for us, by us. But how did you come up with that name, and what did that mean? What was the meaning of that brand?

JOHN: So I came with the name because Timberland, at the time, the CEO or one of the top heads of Timberland would say - in the interview, they would say, we don't make or sell our boots to drug dealers. And that was when I had heard rumors that Tommy Hilfiger, Donna Karan, Ralph Lauren didn't want rappers and urban kids wearing their clothing. I said, who's just going to be proud of the people that wear their product?

VANEK SMITH: Which is so weird because now, like, designers will kill to have rappers wearing their clothes.

JOHN: Right. But back then - remember - rap was fairly new. It was - you know, we're talking '89, '90. It was the voice of the streets. But I felt the energy in the streets, and I started to notice that people were neglecting it.

VANEK SMITH: Wow.

JOHN: And I got pissed off. And I went home, and I said, I'm going to come up with a brand name that I feel are going to empower a culture. And that's when I came with the idea of making the hat that I saw on the street and making the hat myself. And I stood on the corner one day. And I sold $800 worth of hats in one hour. And that would open up my mind to saying, I'm never going to work for anybody for the rest of my life. And I never did after that.

VANEK SMITH: What did - what was this hat? Like, what is the hat? And, like, how did you reimagine it?

JOHN: The hat looked like a ski cap with a ball on top, but it didn't have a ball. And instead, the top was open. And it was a shoelace that you just put on the top to close the top of it. And it'll just hang off your head with a little shoelace hanging off. Super simple. I knew how to sew a straight line.

VANEK SMITH: You just had this idea. Like, you saw the hats and you're like, I could cut the top off and...

JOHN: ...And do the same.

VANEK SMITH: Oh.

JOHN: And I just sold these hats. And I stood on the corner.

VANEK SMITH: So you start with these hats. And then what happens? Like, how does it evolve?

JOHN: Well, first of all, I took, like, 10 T-shirts, and I would put them all in rap videos. And where I lived in Hollis, Queens, many, many rappers came out of that one area. LL Cool J, Salt-n-Pepa, Run DMC, Tribe Called Quest, Ja Rule, 50 Cent - all in this small area.

VANEK SMITH: Really? Wow.

JOHN: Lost Boys. But I wasn't able to get to the LL Cool J's of the world. But how I built that influences - I had money for 50 shirts. I took those 50 shirts, and I made all 5X's and 6X's because if I would've given one of those shirts to the skinny hip hop - the skinny dancer kids and all the fashion - they'll wear it one time, and they'll throw it away because they're too cool.

But the 5X and 6X guys - they didn't have any place to get anything. If they even had Rochester Big and Tall - you get a plain old shirt. Or you had to make something custom. And when you're making a 6X custom, it costs you a lot of money. I dressed these guys. I dressed them for a year. And you know where those guys ended up? Those guys ended up being in front of the red rope at a prestigious club, in front of the rappers because they were their bodyguards. They were big billboards. And these guys...

VANEK SMITH: That's so smart. But I never would've thought...

JOHN: I didn't realize I was doing it, but these guys would wear it 10 times a month. By the time I got around to the LL Cool J's of the world and all those people, the influence was built prior.

VANEK SMITH: And so you're building this business out of your mom's house. You're trying to get loans. It sounds like banks are not wanting to...

JOHN: I got turned down by 27 of them, yeah.

VANEK SMITH: And you're getting all these orders, and you can't fill them.

JOHN: Correct.

VANEK SMITH: And your mom has this idea, which - I couldn't believe it when I read it.

JOHN: You know I didn't have any financial intelligence. I was paying 90 days ahead of time for raw (ph) goods. I was paying for manufacturing, a staff. And I was paying for shipping. And my accounts receivables weren't paying me for 30, 60, 90 days. I said, I don't know what else I could do now. I'm three months late on the mortgage. Now we're about to lose the house. She comes home and says, I got one last, you know, no idea. She took an ad in the newspaper. And it said million dollars in orders - need financing.

And 33 people called that ad. Thirty of them were loan sharks. But one of them was these guys named Norman and Bruce over at Samsung's textile division. They called and said, we've been watching you. We see this stuff out there. And, you know, let's come to terms and try to make some formal agreement to distribute your clothes and manufacture your clothes.

VANEK SMITH: And you said you went to this meeting. It was in the Empire State Building?

JOHN: Yeah.

VANEK SMITH: And you took your mom.

JOHN: I took my mother. And my partners Norman and Bruce laughed. They were like, why'd you bring your mother? But they thought I was like a little kid bringing mommy to help me. No. Just 'cause she's my mother doesn't mean that she's not a brilliant person.

VANEK SMITH: She got the meeting.

JOHN: I brought my advisor. Yeah, I brought my advisor. And by the way - yeah, you're right. If she wasn't as brilliant of a person, we wouldn't have met. So, you know, but I brought her. And the deal was I had to do $5 million worth of sales in three years to keep the distribution deal. I did $30 million in sales in three months.

VANEK SMITH: Whoa.

JOHN: And that's when everything changed, yeah.

VANEK SMITH: Wow. I guess looking back over your career, which has been quite extraordinary and, I would say, like, quite an amazing story of entrepreneurship and, like, very much these sort of American dream - like, what do you feel is is the thing that was the most important? Like, what was the quality that you had or the thing that you learned that was maybe the most fundamental or crucial to your success?

JOHN: I think the underlying thing of the way I've been able to be successful is I built a lot of influence one by one by one by one. And we're not talking about just business. This could be in your church community, your personal relationship. I'm - in my company, I am Batman. Everybody else is Robin. However, most of the time I spend as Robin and let them be Batman because if I allow them to do that, they're going to do more for me. They're going to want to do more. I'm going to learn from them. They're going to feel important. And they're going to empower me more.

VANEK SMITH: Thank you for joining me.

JOHN: Thank you. Thank you for having me.

VANEK SMITH: This episode of THE INDICATOR was produced by Darius Rafieyan. Our fact checker is Brittany Cronin. Paddy Hirsch is our editor. And THE INDICATOR is a production of NPR.

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