Shark judge Daymond John: What I learned from a $6M mistake

How I Made It: Daymond John and the Power of Broke
How I Made It: Daymond John and the Power of Broke

Despite his success, Daymond John is still hungry.

Financial constraints and the desire for success give entrepreneurs an advantage in starting a business, the founder of FUBU and "Shark Tank" co-star said. It's the concept behind his most recent book, "The Power of Broke." But it's not a concept that applies only to financially disadvantaged people.

"The people that use 'the power of broke' ... most are the people that get to a level of success and realize they still have to maintain that hunger, that drive, that focus," he said.

Daymond John.
Noam Galai | WireImage | Getty Images

"I probably made the biggest mistakes in my life when I had the most money," he said, citing the time he tried to expand FUBU into women's clothing as an example. John said he spent too much on the production value of the fashion show and not enough on market research.

"It doesn't matter how big you make something if your stuff is crap when it's small, it's gonna be crap when it's big, and you're gonna lose all your money," John said. "I wasn't paying attention to the customer, who really is the one who you have to create the following with. And when I didn't do that, $6 million later, I failed."

Fubu's Daymond John and Keith Perrin circa 2003.
Johnny Nunez | WireImage | Getty Images

What does it take to use "the power of broke?"

"First, put skin in the game yourself before you go and ask anybody else to help you," John said.

But nothing pays off like hard work. John advises entrepreneurs to work 10 times harder than their competitors.

"Get up in the morning before everybody. Go to bed after everybody," he said.

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."