Daymond John: Founder, shark, survivor
Daymond John’s life could have turned out very differently. “I'm African American. I'm short. I'm dyslexic. I can't play a sport ... My father wasn't around after (I was) ten or 12 years old. I never went to college. I don't have a formal education,” he told CNBC’s “The Brave Ones.”
Yet John, now 49, is the highly successful founder of fashion label FUBU, a company that turned over $350 million a year at its peak. “I didn't know anything about this industry. But yet, I'm here. And if I can do it, anybody in the world can do it,” he said.
Growing up in the Hollis neighborhood of Queens, in the mid-1980s, John could have ended up a drug dealer. “Most of my friends would go over to this part of our community and want to aspire to be these drug dealers. And many of my friends were dead or in jail at the age of 16 to 17.” At one point, he was losing a friend every three months.
But around the same time, hip hop was taking off in Hollis. “All of a sudden we started to see, you know, these music artists driving by in the same neighborhood. They were just as wealthy, or even more wealthy, than these crack dealers, but they were selling music. It was LL Cool J, Run-DMC, Salt-N-Pepa, Ja Rule.”
John got his entrepreneurial instinct from his mother, listening in to her business discussions with friends. “As soon as she came over, he would suddenly be in the kitchen with us, in the middle of us, paying very much attention to what we were saying, even though I thought he was watching TV,” Margot John told “The Brave Ones.”
“Years later, I found out he was really listening to us trying to figure out how we were going make things better for ourselves, and what are the type of businesses we might have wanted to go into. And he was there, soaking it all up, and I didn't know it,” she said.
Margot John worked two jobs plus weekends. “But I always had time to sit with Daymond so we could talk about what was going on in his life and what was happening with mine … I would get information out of him, like, ‘the drugs are here,’ and you know, I would find out what was happening with him and (the) other kids. And I found out there (were) drugs rampant in the neighborhood, so I had to figure out another way to keep him busy all the time so that he wouldn't get involved.”
She would send him to camp at age 15 or 16. “I told him whatever money he could save up from his allowance, from his shoveling snow, from his birthday gifts, from his Christmas gifts, I would match it so that he could buy a car. He came back from camp with $800 … He would sell his sneakers, tell me ‘Mom, send me some more snacks.’ And the snacks I was sending him he was selling to the other kids in the camp and to the camp next door. So he was always about business.”
John’s childhood was a time of hanging out and dancing. “We used to stand on the corner, outside of my house and just break dance every time the cars would drive by, because Run-DMC was going to pull over and go, ‘Wait a minute. I've been waiting for a dancer like you for all of my life.’ … That didn't happen.”
What young people wore was important. “During the time that rap started to really emerge, the brands I was wearing (were) Kangol hats, Cazal glasses. I would wear Reebok shoes, Fila, a couple of tennis companies, such as Le Coq Sportif or Ellesse. Lee's and Levi's,” John said. It was all about customization and went with the music scene of the time.
“If you had any money you can go to the dry cleaner and get them to tell the tailor to put a permanent crease all the way down … A really good Friday night, I could go out after the street lights were on, I would have one pair of Pumas and every weekend I would dye them a different color so the girls thought I had 17 pair(s) of Pumas in a year,” John said.
Elena Romero, a journalist and author of "Free Stylin': How Hip Hop Changed the Fashion Industry," explained the link between fashion and music of the time, “The idea with hip hop is to show out and be seen. Right? And you want to stand out in the crowd. So, how do you do that? Well, you have to put your own spin on things. And sort of like that's what happens with music, right? In hip hop, there's a lot of remix or sampling. Fashion is the same. So, we took the brands that existed in those days and times and gave it our own spin,” she told “The Brave Ones.”
One day, John saw the hip hop group De La Soul wearing a particular type of hat. “It looked like a cut-off sleeve with a tie on the top. And I couldn't find it anywhere in Manhattan … I was like, ‘Wait a minute. Somebody's making clothes for our community and I love this thing,’” Eventually John did find the hat, and his mom taught him how to sew a version himself.
“I would go out and stand on the corner of the Colosseum Mall on 165th Street in Jamaica, Queens on Good Friday 1989 at 3pm and it was 42 degrees outside. And I would sell my hats. And I would sell $800 worth of hats in one hour … and that would turn my life from black and white to technicolor,” John said.
John wanted to create a fashion label specifically for his community, partly in reaction to some larger brands that had sidelined it. “We had heard that a boot company had said: ‘We don't make our boots for drug dealers,’ and I just got pissed off at that time. I was working at Red Lobster, I was a waiter … And you just called me a drug dealer and I’m a hard-working man at Red Lobster.”
He called it “For Us, By Us,” or FUBU. “I just remember standing on that street corner and saying, "This is For Us, By Us. I understand what you want to wear. You understand what I want to wear. And if you're wearing this across the street, and I'm wearing it over here, we silently know that we all love hip hop.”
Childhood friends Carl Brown, Keith Perrin and J Alexander Martin started FUBU with John. Martin went to fashion college to learn about manufacturing, Perrin befriended the artists they hoped would wear the label in their videos, and Brown did nighttime deliveries, John said.
The four worked around the clock to get FUBU started. “I would get up at 6 in the morning, I would answer all the calls that were on the voicemail and then I would (deliver) as many hats as I could, or t-shirts, to all the stores I could until about 12,” John said. “I probably need(ed) to get to Red Lobster about 2. I would work till about 10, 11, 12 at night. I would then come home and sew the labels on things … until 3, 4 in the morning.”
The team had persuaded LL Cool J to model one of FUBU’s shirts, recalls Perrin. “We had heard he was coming back, you know, around the way. So we were like, ‘OK, let's drive around the corner and see if we can catch him, by his mother’s house.’ And (it) so happened, he pulled up in a limousine and, you know, we talked to him for a minute,” he told “The Brave Ones.”
They asked him to put on a shirt for a photo. “And he looked at the shirt and said: ‘This shirt is ugly as hell. It’s purple … Listen, I have Nike, I have Timberland, I have all these major brands ready to endorse me … This might mess up that.’” But he put it on for a quick photo that became a major marketing coup for FUBU.
In 1994, John and his co-founders headed to the MAGIC show, a menswear trade event in Las Vegas run by the Men’s Apparel Guild in California. They flew there using standby buddy passes from his mother, who worked for American Airlines.
By that time, the group had persuaded several musicians to wear FUBU’s clothes in their videos. Perrin knew video director Ralph McDaniels and John knew another director, Hype Williams. “Hype was just, like, coming up in the game,” Perrin said. “And every time he would direct a video he would call Daymond and be like, ‘Hey, D, I'm shooting LL (Cool J) this week. I'm shooting this person. I'm shooting Missy (Elliott). And we would be on set.”
FUBU had made around ten shirts and hockey jerseys and loaned them to musicians as they made videos. “And we used to literally put the clothes on the artists, and as soon as they finished it's like, ‘Ah, let me get that back,’” Perrin said.
The company was using credit cards to fund orders from stores that had seen the clothes on the artists, and when they got to the MAGIC show, they had little money left. But they had exposure, because they’d sent the picture of LL Cool J to retailers, with a note that read: “‘You’ve seen it in all of the music videos, the kids have been asking for it, FUBU just signed its first multi-million-dollar deal with LL Cool J and we will be at this year’s MAGIC show!’ I had to embellish a little bit!” John wrote in a 2014 blog post.
FUBU couldn’t afford the $5,000 to $10,000 cost of a stand at the trade show, so instead took a room at the Mirage hotel to show its clothes, John said. “We would sneak into the MAGIC show. Now at that time at the tradeshow there were no African Americans. So, it's pretty easy for the security to spot the six guys walking around with afros talking about, ‘psst, I got some FUBU back in my hotel.’”
That all changed when John was approached by Karl Kani, then a young designer whose clothes have since been worn by Tupac Shakur, Ariana Grande and Rihanna. Kani had seen the photograph of LL Cool J wearing FUBU and introduced John to his contacts at the MAGIC show. FUBU got $300,000 worth of orders.
The problem was, FUBU didn’t have the cash to make the orders. So John talked to his mother. She suggested taking equity out of their home and John would repay it when the $300,000 came in.
Margot John raised $100,000 from the house and her son turned it into a factory. “I buy a bunch of industrial sewing machines. I buy a bunch of fabric. I hire a bunch of seamstresses and we have a facility in the middle of my house. And my friends move in so that … they can all pay $50 a week rent so I can hopefully keep up with the mortgage,” John said.
But months later, that $100,000 had become $500. Again, it was John’s mother who suggested a solution: Taking an ad out in the newspaper. “She took an ad and the ad said: ‘Million dollars in orders. Need financing.’ She knew how to romance the truth a little bit.”
Of the 33 people that responded, three were genuine. One was a Samsung executive and in 1996 the two started working together in a partnership that became part of the electronics company’s fashion financing and infrastructure initiative. “The first terms would be that I would have to sell $5 million worth of clothes in three years to keep the deal because they were going to set up supply chains and logistics and all that,” John said.
“I was really concerned if I could sell $5 million worth of clothes in three years because I didn't even really technically sell the first $300,000 I had orders in. But I would end up selling $30 million worth of clothes in three months.”
By 1998 the company had around $350 million in annual sales. “We would go into, I think, 27 countries … we would have windows in Macy’s, we would open stores in South Africa,” John said.
A further coup came in 1999 when LL Cool J was hired by Gap to star in a commercial. By then, he was a spokesperson for the FUBU brand, and took the Gap opportunity as a way to promote both. He wrote “For Us, By Us” into the lyrics and wore a FUBU cap.
“He just felt that (Gap) didn't really respect hip hop, they were trying to use the vehicle only to bring customers into their store,” John said.
“He asked them, could he wear … a custom-made hat that he's very passionate about, in the commercial. He would do the commercial and he would say: ‘For Us, By Us on the low.’ You know, it shook up The Gap. They would spend millions of dollars airing a FUBU ad not knowing it. The entire hip hop community was just dying laughing.”
By the mid-2000s, the appetite for urban fashion was declining, Romero explained. “Once the department stores decided they weren't going to be into that market in the same kind of way, that became the demise for many of the brands … by around 2003, FUBU had already kind of fizzled in terms of having its peak and heyday.”
Today, FUBU is more of a licensing operation, John told “The Brave Ones.” “The FUBU empire today is licensed out in various different divisions. It's a pretty big brand in Korea … It's in China. In America we still do collaborations. We do stuff with Puma and we have suits … It obviously is not the way it used to be. Fashion comes around and goes back around.”
John is now known for his role on “Shark Tank,” where entrepreneurs pitch for investment. He joined the show in 2009, after a call from TV producer Mark Burnett. “They call me the people’s Shark because I come at it with an … everyday person’s view … If I see that a hard-working family that has done everything right and they're standing on that carpet and they just need a little bit of help, I'm going to invest in the people more than … into the company,” John said.
When Randy Goldberg and David Heath realized that socks were the most-requested item of clothing by homeless shelters in the U.S., they thought there might be a business in finding the solution.
They pitched their company, Bombas socks, on Shark Tank in 2014 and John invested $200,000 in return for a 17.5 per cent share of the business. Their point of difference? Athletic-style socks for everyday use — plus for every pair sold, another gets donated.
“I think for Daymond, what he saw in us was a New York-based company,” Goldberg told “The Brave Ones.” “A company that's giving back to the community, which he strongly supports and believes in … And that was almost enough. But then it's (also) a really high-quality product.”
Being online-only appealed, Goldberg said. “I think it's new to the business style that he's used to over the years. So what he's got in terms of business smarts, intelligence, hustle, the huge business that he's built, we're just doing it in a new way.”
The model attracted John. “I realized that Dave and Randy were talking directly to their customer. There was a social cause to it. It was an item that didn't cost that much, but the margins were huge and they were growing,” he said.
It has paid off: In 2017, Bombas made just under $50 million in revenue.
First, John considers the product being pitched. “Do I resonate with it? Do I see that there's a need for it? How big is the market? Is it a sub-segment of a market? OK, there's scalability. No problem.” Then he thinks about whether he likes the person or team pitching.
He estimates he’s invested $9 million to $12 million into businesses to date, including Bombas socks (see box out) and Al Baker, a former NFL player who now runs Bubba’s-Q Boneless Ribs. “What I found fascinating, it was just a new idea for a product. Think about it, he made it because his wife didn't like ribs because she didn't want to get it stuck in her nails and her teeth,” John said.
The “Shark Tank” star also got the attention of former president Barack Obama, who John first met at a fundraiser in Maryland, while he was running for office. “And I walk up to him and he goes, ‘One of the greatest entrepreneurs of our time.’ I turn around and look for Henry Ford or Bill Gates and nobody's around. And it's me.” John became a Presidential Ambassador for Global Entrepreneurship during the Obama administration, attending events such as the launch of the U.S.-Cuba Business Council in March 2016.
A year later, John was diagnosed with thyroid cancer. During surgery, doctors found a lump, a stage-two cancer in his throat that had started to spread. It was removed, and John made the decision to talk about it. “It would be challenging for me to want go public about it, but I realize(d) that entrepreneurs don't take care of themselves. They take care of everybody else.”
He is also an advocate of being open about mental health issues. “As you look at the things that have happened, such as Anthony Bourdain or Kate Spade, we're at a day and age where as much as we're connected, we're disconnected.” Being an entrepreneur can be lonely, he said, especially if there are problems in the business. “You can't tell your staff your problems because it's their job to tell you their problems. And what happens is, mental health is such a challenge as an entrepreneur.” John encourages business people to think of their mental and physical health in his book “Rise and Grind.”
“I tried to share that as much with people through my books and through my speaking that you are human and that if you don't take care of your body, whether it's the cancer that, thank God, I beat, or your mental health, then you're not going be good to anybody.”
What’s next for John? “I probably will do more in philanthropy. And I love (educational) curriculums. I love giving the knowledge to people to let them go out and become who they want to be and tell them, ‘No, don't go out and borrow money’ ... I love educating people so they can go off and empower themselves.”
The full episode of “The Brave Ones” featuring Daymond John is available on CNBC International’s YouTube channel.
Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."
Design and code: Bryn Bache
Editor: Matt Clinch
Executive Producer, The Brave Ones: Betsy Alexander
Producer, The Brave Ones: Kelly Lin
Images: CNBC & Getty Images