Entrepreneurs

Daymond John broke his 'Red Lobster' rule to do these 'Shark Tank' deals—now they're his top 2 companies, making millions

Daymond John
David A. Grogan | CNBC
Daymond John

When Daymond John first started his apparel line, FUBU, before he turned it into a $6 billion brand, he spent five years waiting tables at Red Lobster for steady income.

So as a judge on ABC's "Shark Tank," John followed a rule inspired by his experience at the restaurant — stay away from investing in food companies.

"If you ever watch the first three years of "Shark Tank," I would not buy anything that you could consume," he says on "The James Altucher Show" podcast. "Because of my years at Red Lobster, when I saw how food was being lost or wasted, whatever the case is, I never wanted to deal with perishables."

But some rules were meant to be broken.

"Now, my top companies? Beef jerky, and Bubba's boneless ribs," Daymond laughs.

The two businesses that were able to sway John with meaty pitches were Three Jerks Jerky and Bubba's Q Boneless Ribs.

"I loved what they were and who they were," he says. "Those are the biggest companies in my portfolio."

Three Jerks Jerky

In 2015, Three Jerks Jerky co-founders Jordan Barrocas and Daniel Fogelson went on "Shark Tank" seeking $100,000 in funding for 15 percent of their business.

"We make filet mignon beef jerky," Barrocas, 32, tells CNBC Make It. "It melts in your mouth. It's not the really tough, hard, chewy jerky."

They started the business in his kitchen by making tasty jerky for themselves, and later took it to Kickstarter. And in the beginning there was a third co-founder, but not anymore.

He was "a little too much of a jerk," Barrocas says on the "Shark Tank" episode.

The pitch from Barrocas, who has an MBA but was a newbie entrepreneur, and Fogelson won over John. He beat out three other interested sharks to make the deal.

"My mother used to say there are two things, you can never have too much hot sauce or beef jerky in the house," John says in the episode. "I like this."

After going on "Shark Tank," online sales spiked. Within three months, sales hit $1.4 million, or over 150,000 bags of jerky.

"The night we aired, we sold a quarter of a million dollars," according to Barrocas.

But 1000 percent growth also presented difficulties for the small business.

"It was extreme," Barrocas tells CNBC Make It. "With hyper-growth, there is a lot of challenge. Good problem, but challenges nonetheless."

It's one place John has been able to help, hooking up the co-founders with Rastelli Foods Group, an operating company that now processes the jerky.

"That has been very beneficial to our business," Barrocas says.

Now, Three Jerks Jerky is focusing on new growth with brick and mortar retailers.

"We launched grocery distribution for the product one year ago, and since then, we are now in over 2,000 new stores," he says, like Publix, Safeway-Albertsons and ShopRite. "We're probably looking at 300 percent growth this year."

As for "Shark Tank," Barrocas would recommend it to any entrepreneur.

"It is by far the coolest thing that I have ever done," he says. But "it takes a lot of work — more work than one would really think."

Bubba's Q Boneless Ribs

Since former NFL player Al "Bubba" Baker pitched his barbecue business on "Shark Tank" in 2013, sales at Bubba's Q Boneless Ribs have gone from $154,000 to a whopping $16 million.

"The future couldn't be brighter for Al," says John on a 2017 "Shark Tank" episode that followed up on the company. "I still believe that this will potentially be my biggest deal ever."

After his career in football breaking records for the Detroit Lions, Baker, now 60, and his wife pursued a catering business in Ohio. For Baker, barbecue is a family affair, and he learned the trade from his uncle, "Daddy Jr."

Then, Baker noticed a problem he could solve. His wife didn't like eating ribs because they were too messy. So he found a way to take the bone out after the meat is cooked to make it easier to eat. He patented the process.

Baker pitched the sharks for $300,000 and 15 percent equity in his boneless ribs business. John agreed to invest $300,000 for a 30 percent share with a licensing deal.

After the episode aired, Baker dealt with challenges from big sales, he tells News 5 Cleveland, and even flew to check on the packing company processing orders.

"I found myself ... being a cheerleader, being a laborer, doing anything I could do to get [orders] out so I could take care of our new customers," he says.

The spike in sales is also the result of a partnership with CKE Restaurants, the parent company of both Carl's Jr. and Hardee's, to use his ribs in a new burger in 3,000 of its franchise locations.

For Baker, he says he is thankful and reflective on the success.

"I have been very lucky in my life. First to go to college. To play in the National Football League. And then to take my business to 'Shark Tank,'" Baker says in the 2017 episode. "It's proof that if you live your life with integrity, you work hard — good things happen to you."

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