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How FUBU Founder Daymond John Conquered Urban Fashion

Daymond John
Source: Daymondjohn.com
Daymond John

No big fashion designers were paying attention to the urban market when Daymond John began building his business in 1989.

That changed with FUBU, or "For Us, By Us," the apparel line started by John that proudly reflected its rap and hip hop roots. Since then, FUBU has become an international brand, reaching $350 million in sales at its peak. It opened the doors for other popular fashion lines such as Jay Z's RocaWear.

And it has made John a star. He's now well known as a brand and marketing expert, as well as one of the "sharks" on the television show "Shark Tank," featuring entrepreneurs pitching their ideas before John, Dallas Mavericks owner Mark Cuban and three other investors.

It took some unconventional moves to get there.

FUBU started with a tie-top hat John had seen on a rap group in a video. The hat wasn't widely available and John, whose mother had taught him to sew, decided to make a few of his own. His friends liked the hats, too. So with about $40 in material, he produced a few dozen. In one day, he sold all of them on a street corner in Queens, New York and made $800 in cash.

"I learned that I was on to something," he said.

But because he lacked the funds, he shut down and restarted the business three times before it began to get its footing.

With the help of three childhood friends, J. Alexander Martin, Carl Brown and Keith Perrin, John pressed on with FUBU and expanded beyond hats to clothing. They all kept their day jobs, which for John meant waiting tables at Red Lobster.

During his off hours, however, John would hit music video sets and try to coax rappers to wear FUBU apparel in the shoot, a move that would ultimately pay off as millions of fans saw their favorite stars wearing FUBU clothing.

He heard the word "no" a lot but kept on it, seeing each trip as a new chance to further the business.

"I still see people today who have the biggest opportunity in their face and they don't take advantage of it," says John. "It didn't matter how small or large the opportunity was. I looked at everything as an opportunity."

A big break finally came when LL Cool J, a rapper who had grown up on the same street as John in Queens, agreed to pose for a photograph wearing a FUBU shirt. To do so was a risk for LL Cool J, whose star was on the rise.

"But he looked at me and said, 'I wouldn't be where I was if people around my neighborhood hadn't helped me,'" said John, who keeps in touch with LL Cool J, now starring on the television drama "NCIS: LA."

John used the photograph to market FUBU. He took it with him when he and his partners attended a major fashion trade show in Las Vegas. Unlike other fashion companies, FUBU didn't have a booth at the show. John and his partners stayed in a hotel five miles away, but they drummed up enough noise about their clothing that they landed $400,000 in orders by the end of the show.

But John didn't have the funds to manufacture the orders. Turned down by 27 banks for a business loan, he and his mother finally took out a second mortgage on their home in Queens. His partners moved in, and they turned the home into a makeshift factory.

"I would not recommend it," said John, looking back. It was a risky financial move, and one that could have cost them their house.

On the flip side, he had a plan. He had already spent several years getting to know the market and the customers. After about three years of approaching various artists, using a rotation of just 10 shirts, FUBU apparel had been worn in some 30 to 40 music videos.

A Turning Point

Fubu
Source: Amazon.com
Fubu

"I had tested the market and I knew there was demand," he said.

But he still didn't have enough funds. In a "crazy" move, his mother placed an advertisement in the New York Times looking for backers. Most of the respondents were not legitimate business people, but a few were. Ultimately, FUBU struck a deal with Samsung Textiles, which would underwrite the manufacturing of their orders.

It was a turning point for FUBU, and the move opened the door for more traditional marketing. And John continued to look for innovative ways to market FUBU. He approached small businesses from New Jersey to Philadelphia about spray painting "FUBU" onto the metal grates that protected the entrances to their business. Customers passing the stores when they were closed would see the advertisement.

More than 20 years later, FUBU is now a fashion business that also includes other lines. Last year, FUBU began selling its shoes at Wal-Mart , a move that allows the brand to reach the masses, John said.

John is also looking beyond fashion. The fashion industry has changed, he said. Instead of premium clothes, teenagers are choosing to spend their discretionary money on technology, such as smartphones and mobile apps and games.

So he hopes to bring the same entertainment influence to the technology industry as he did for fashion. Among his projects, he has teamed up with celebrities such as Leonardo DiCaprio and Serena Williams to be part of the mobile photo and video app Mobli.

He also thinks Facebook founder Mark Zuckerberg should consider partnering with him. Among the brands under FUBU is FB Legacy. Consumers confuse that brand with Facebook's ticker symbol.

"We get calls for FB, with people wanting it because "fb" is Facebook," he said. "I think there could be a great partnership there."

John also finished taping the latest season of "Shark Tank" in late July. It begins airing Sept. 14.

"I know my drive," John said. "I only stop when I am dead and I am not there yet."

Email us at SmallBiz@cnbc.com and follow us on Twitter @SmallBizCNBC.

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