Before Daymond John became a household name as a host of ABC's Shark Tank, he was just another kid with a dream of becoming an entrepreneur.
John got his start in 1989, selling wool hats on the streets of Queens. He called his brand Fubu, short for "For Us, By Us," but Fubu was hardly a real company. John had sewn the hats himself in the basement of the house he shared with his mother. By 1992, he had run out of money three times trying to launch the brand.
John successfully expanded the business into an apparel company by building Fubu's brand recognition, getting popular rap artists like Busta Rhymes, Ol' Dirty Bastard, and Salt-N-Pepa to wear Fubu products in music videos.
In 1994, Fubu secured $300,000 in purchase orders at the Magic industry trade show in Las Vegas, but the growing demand created a false sense of security, John says. Upon returning to Queens, he was turned down for a loan by 27 banks.
"I said, 'Alright, this thing is over. I don't know what I'm doing here,'" John says.
Instead of folding the business, however, John took out a $125,000 mortgage on the house he and his mother shared, and with the help of three childhood friends, turned it into Fubu's first clothing factory.
In 1997, John took out an ad in The New York Times that read: "A million dollars in orders. Need financing," and landed a distribution deal with Korean electronics manufacturer Samsung. If Fubu could generate $5 million in sales within three years, the partnership would be extended, Samsung said.
Fubu not only hit the $5 million mark within a year, it hit $30 million in sales. The company was gaining so much brand recognition that Fubu began licensing its name for ladies' merchandise like handbags and boots. By the end of 1998, the company had reached $350 million in sales, including licensing dollars. Product was selling so fast that John and his partners began ordering more than double what they needed for purchase orders. Once again, however, a spike in demand led to growing pains for the business. By overestimating future purchase orders, the company wound up with millions in excess inventory it would be forced to sell at a steep discount.
In 2001, John and his partners decided to turn one of Fubu's oldest marketing techniques on its head by producing their own hip-hop album. Rather than paying rap artists to promote the clothing line, the idea was to make money off of album sales and feature its own products in a music video.
"We said, 'The video will run 100,000 times. That's 100,000 impressions of our own commercial,'" John says.
The compilation album featured popular artists including LL Cool J, Ludacris, and Nas, but massive overspending on production made it impossible for Fubu recoup its investment through record sales. While Fubu generated millions in revenue by licensing out the name of one of the record's songs for use in clothing products, the project taught John an important lesson about expanding into new industries.
"I realized that there are no shortcuts," John says. "You can't just walk into a market and monetize it easily without having a partner who's been through it."
In 2009, Hollywood producer Mark Burnett offered John a spot on an American version of the Japanese reality series Dragon's Den. The new show, Shark Tank, would feature contestants pitching their business ideas in the hopes of securing an investment from successful entrepreneurs.
"I said, 'I'll shoot the stupid little show, and it will never be anything,'" John says. After the first season, John was invited back for a second and third, at which point Shark Tank developed into a hit series, attracting 8 million weekly viewers.
One of the lessons John has learned from becoming a household name is that entrepreneurs everywhere now view him and the other sharks as business role models.
"All the sharks realize that we have a bigger responsibility," he says. "I don't know if the other guys on business shows feel like they have a bigger responsibility to entrepreneurship, but we ended up realizing that the show is by far bigger than any of us."