Long before Uber was a household name, Shark Tank star Daymond John drove a 15-passenger, red-and-white, 1979 Ford van ferrying passengers around Hollis, Queens. As rogue as Uber, he undercut the city bus fare and dropped people off where ever they wanted. John used the same van — which he bought used with 100,000 miles on it for $12,000 cash — to launch his next business.
He drove the van up and down the East Coast to black expos, selling T-shirts and hats out of it. The humble beginnings of John’s fashion empire, FUBU, taught him that starting from zero is your greatest competitive advantage in business. He doubts he would have catapulted to fashion stardom had he not started out broke.
John launched the FUBU clothing line in the early 1990s with $100,000 he borrowed against his mother’s house. He sewed logos onto hats and T-shirts out of his basement in the mornings and sold them on the streets at night. In 1992, he scored $300,000 in orders and a deal with Macy’s at a Las Vegas fashion trade show. And the rest, as they say, is history. By 1998, FUBU flourished into a $350 million revenue firm. Today it’s a $6 billion global brand. And John is known as the godfather of urban fashion.
John opened his marketing firm, Shark Branding, in response to heavy demand from Fortune 500 companies for his branding expertise. President Obama appointed him as a Presidential Ambassador of Global Entrepreneurship. He’s received more than three dozen awards for his work.
The Advantage of Being Broke and Dyslexic
Being successful in business is more about having passion, ingenuity and determination more so than money and investors. If you don’t achieve proof of concept when you’re broke, you won’t achieve it with money either. And if he could start a business from nothing and grow it into a multi-billion dollar empire, anyone can, John contends in his book: The Power of Broke: How Empty Pockets, a Tight Budget and a Hunger for Success Can Become Your Greatest Competitive Advantage.
Raised by a single mother in Hollis, Queens, John believes growing up broke was as much of a godsend as his dyslexia. “Why? Because it forces me to think things through, to assess a situation from all sides, to take my time until a solution becomes clear.” Four of the six Sharks have dyslexia.
Starting from broke made the CEO of Shark Branding spend money wisely and think creatively about building his business. If you can’t afford to do what you need, find a cheaper alternative. He marketed his shirts by getting hip-hop artists and background dancers to wear them in music videos. His buddy LL Cool J wore a FUBU skull cap and tie-dyed football jersey in the video for the soundtrack of the football movie, Any Given Sunday.
John advertised by asking shop owners to let graffiti artists spray paint a FUBU advertisement onto the retractable metal screens that covered their shops at night. The more money you have when you start your business, the more trouble you’re bound to buy, John believes.
“You’re inclined to let the money call all the shots, instead of following good business practice,” he writes in his book. “You follow your wallet instead of your gut.
“When you take in too much funding too early, it sets you on an artificial high that tends to lift you way, way up to where you won’t even be able to see your bottom line.”
The more of your business you sell to investors, the more you end up working for everyone else. You bear all of the risk and headaches. But if you grow organically and finance your growth yourself, you keep more control of your company.
“Broke can break you, or it can give you immense energy,” John writes. “If you’re someone who’s wired in a way that you refuse to lose, it can give you the fuel you need to push through.”
Thanks to the Internet, you no longer have to rent retail space to sell something, spend a lot of money on advertising or schmooze with retailers to carry your product. Nor do you need financing beyond your simple production costs.
“Money is no longer the catalysts. You are the catalysts. Your ideas are the catalysts. And putting yourself and your ideas into the marketplace has never been easier.”
The “Power of Broke” features inspirational stories about 14 people who grew their businesses from broke and how they exemplify one of his five “Shark Points” or key lessons:
1. Steve Aoki: Musician, electro house DJ, record producer, founder of Dim Mak Records
2. Acacia Brinley: Teenage social media star with 15,000 Instagram followers
3. Rob Dyrdek: Holder of 21 world records for skateboarding, reality show star
4. Christopher Gray: Shark Tank contestant, developer of Scholly, an app for finding scholarships, recipient of Horatio Alger scholarship
5. Gigi Butler: Founded Gigi’s Cupcakes with a family recipe, now with more than $35 million in annual sales and 100 locations in 24 states
6. Jay Abraham: Investor who bought Icy Hot topical pain reliever out of bankruptcy and turned it into a top-selling, national brand, bestselling author, marketing strategist for Fortune 500 companies
7. Kevin Plank: Former college football player and founder of sports-clothing maker Under Armour (UA) with $3.08 billion in sales as of 2014.
8. Moziah Bridges: 11-year-old Shark Tank entrepreneur who started his own business, Mo’s Bows
9. Tim Ferriss: Bestselling author of The Four-Hour Workweek, motivational speaker, angel investor, blogger
10. Josh Peck: Social media star, an actor best known for his role as Josh Nichols in the Nickelodeon live-action sitcom Drake & Josh.
11. Linda Johansen-James: CEO of American Kiosk Management with more than 1,000 specialty retail kiosks in malls across the U.S. and Canada.
12. Ryan Deiss: Founder and CEO of Digital Marketing
13. Loren Ridinger: Founder of Shop.com, with a database of 3 million customers and more than $3.8 billion in annual sales.
14. Mark Burnett: Producer of Shark Tank, Survivor, The Apprentice and The Voice, with nearly 3,000 hours of programming.
The Five Shark Points
1. Set a goal. Write all of your goals down. Setting goals entails a fine balance of doing things within reach yet challenging enough to stretch you. Aiming too high could lead to frustration and disappointment.
Only 3% of the population sets goals and commits to them, according to a Harvard business school study John cites in his book. Some 14% have goals but don’t write them down. The 3% who write down their goals are three times more successful than those who have unwritten goals. And the 14% with unwritten goals are 10 times more successful than those with no goals at all.
Take affordable next steps to get you closer to your goal.
“I always have a health goal, a family goal, a business goal, a relationship goal, and a philanthropy goal,” John writes. “Whatever it is, I keep it specific. And I try to keep in mind the visualization techniques I learned when I got started on the habit because after all, you can’t hit a target you don’t see.”
“When I write the goal down, I say what I want, the date I want it by, and a couple of lines on who I’m going to get there what kinds of things I’m prepared to give up or give back to do so.”
2. Do your homework. There’s nothing new that an entrepreneur can come up with — only new forms of delivery, ways to market or approach.
“Twitter is just an updated version of a note tied to a pigeon’s leg. Facebook is nothing more than an endless chain letter. Instagram is the scrapbook you used to keep and share with friends.”
In doing your homework, research the history of your idea, the market, industry, and competitors. Study what your predecessors have done and learn from their mistakes.
3. Adore what you do. When you truly love what you do, you can find a way to make it work. “You’ve got to love, love, love what you’re doing — otherwise, why not do something else?”
If you don’t love what you do, maybe you should be doing something else.
4. Remember you are the brand. How you carry yourself, how you deal with customers or audience and what you stand for shapes your business or career. It starts with everything about you. What you drive, wear, eat, love, hate. How you vote. Where you live. “It’s on you. Just you.”
The Sharks invest in people more so than businesses.
“When you’re so closely associated with your product and purpose, and when the thing you’re putting out into the world is reflective of how you are and what you’re about, then you become your first pitch. You won’t be able to make a single sale until you’re able to sell yourself.”
Come up with a two to five-word definition of yourself. If you don’t like others, will do it for you.
Be famous for something. Stick to a core concept. For example, Under Armour is known for its performance T-shirt.
5. Keep swimming. Persevere. “You have to be relentless, nimble, moving ever forward.” If sharks in the ocean don’t keep in swimming, they die.
Learn every aspect of your business. You will figure things out when you have no choice but to figure it out. Be prepared to adapt, change and grow.
Embrace failure. “Failure is part of the process. It’s an opportunity to start over again more wisely.”
Get a mentor. “Seventy-five percent of executives point to mentoring relationships as having played a key role in their careers.”