In March 1989, Daymond John launched an apparel business by selling hand-sewn hats on the streets of Hollis, Queens. Since then, his company--Fubu--has notched more than $6 billion in global sales, and he's landed a seat as a star investor on the hit ABC series Shark Tank. In this exclusive interview with Inc., conducted over a long lunch in Chicago, John speaks candidly of the loneliness that comes with leadership, his hard-won understanding of why founders ignore their health--and the importance of a well-timed drink.
You recently went public with your cancer diagnosis. Why?
Last year, I got an executive physical. The doctors found a nodule. They suggested taking out part of my thyroid; it could be cancerous, they said, but there was a chance they would be taking out a perfectly good part of the gland. I told them to do it anyway. It turned out it was stage-two cancer.
I didn't want everyone to misunderstand and think that I was dying. I know that it's a touchy subject for a lot of people who have lost relatives to cancer. But I also know that people put their heads in the sand and go, "It's a big world. It probably won't happen to me."
I realized that I wanted people to see me running around, doing what I do, cancer free. I wanted them to say, "I want to be like him. I'm going to get a mammogram, or a biopsy, or a colonoscopy." There was a slight chance I could save one, two, or 10 people's lives. And after I started speaking about it, I got letters from people saying they got checked out and caught their disease early enough to treat it.
Founders aren't always the best at taking care of themselves.
They take care of everybody else first. They're running around miserable. They say, "We'll get to it tomorrow." They say, "I need this money to buy a new cash register. I can't do this. I can't do that."
In Fubu's early days, though, you didn't need money for a cash register--you needed it to save the business. Twenty-seven banks turned you down for a loan, so your mother took out a second mortgage on the house you both lived in for $100,000. Were you afraid you'd let her down?
Of course. Early on, I thought that money could solve everything. I thought that access to capital was no problem. The fear wasn't there, because I was too dumb to understand.
I didn't have the financial knowledge that I needed.
Once I depleted everything, it was a very scary time. But my mother saw the work I was putting in. I started the business in 1989, and we mortgaged the house in 1995. She saw that I wouldn't give up.
At the same time, you've recognized limits to what that brand could do.
Sure. In the late 1990s, Fubu was doing about $150 million in men's apparel, and Jordache offered to license a women's line from us. It made sense, because they had already created a women's denim business.
We had other offers. Some companies were promising $20 million and $30 million in annual sales, giving us 10 percent, to license our brand. But they could have made anything they wanted to, sold anything they wanted to. They could have burned the brand.
It wasn't an option for us to make ladies' apparel ourselves. If we had done that, I would have had to learn another business, one with a different sales cycle, a different design cycle. It was too big of a risk for where we were.
How is Fubu doing today?
In apparel, we're probably doing about $20 million globally. I don't think Fubu will ever get back to where it used to be. There's a lot of fragmentation in the market, and retailers are suffering. So unless we get into a subscription model, where it goes right to your door, I don't believe the growth will be there.
Considering how high revenue had been, does that number disappoint you?
Not at all. In the beginning, I wanted Fubu to be a boutique. It became a global brand. Just because it isn't where it was before doesn't mean it's bad.
Let's talk Shark Tank. How do you decide whether to invest in a company?
I've been wrong many times. I've lost as much as $6 million--when I invested in the fashion brand Heatherette. It always comes down to the entrepreneur's character.
On Shark Tank, I have this everyday man's approach. I've never understood the concept of grow, grow, grow without turning a profit. My co-Shark Mark Cuban is different. He probably makes more than all the Sharks combined, and people like him need to spend. But I haven't gotten used to hearing "Eh, it's just a few million," "Eh, it's just $100 million." I'm a welfare case, compared with some of the other Sharks. I know that my co-stars Barbara [Corcoran] and Lori [Greiner] feel the same as I do.
Recently, I got into a big fight with--I can't say who, but one of our guest Sharks. A contestant came on who had a very high valuation of a young tech company. They had several million dollars in the bank. And they were looking for more capital. To me,
99.9 percent of the people watching the show can't even grasp having millions in capital.
I started yelling at the contestant, because I felt this person didn't need us and was taking away an opportunity from some struggling mother who mortgaged everything after working on her company for eight years. I felt that person was very self-absorbed. They could have run around Silicon Valley and gotten the money, no problem. I was upset with the guest Shark because they were ready to invest. They were saying, "Oh, that's not so bad."
I guess that's the beauty of the show. Maybe that person will create the next Facebook, and then I'd be wrong.
Do you think the show has changed your investing style?
In the beginning, I didn't have anyone to vet the companies. I'd go, "Sure!" and throw money at them. Then, I realized, "Holy shit! People are actually ... "
... expecting something else, too.
It's an investment of time, too. In seasons one and two, they were like, "Hey, you want to come over for Thanksgiving dinner?" I'm like, "You're not my family." But then you start to realize, there's a responsibility you have.
It always goes back to whether you like the person. The due diligence starts the minute I have contact with you, whether it's online, social media, or shaking your hand. Your showing up late, showing up early, saying a couple of things.
The due diligence process starts: "Do I like this person?" If I don't, that doesn't mean you're not going to get the deal. It may mean the deal becomes something else, like "I have to secure myself, so let me make it just a loan or a convertible note, or whatever, because I don't know what this person's going to do." Or it's "I want to do more with this person, because I believe in this person's purpose."
What's a red flag for you when someone's making a pitch?
When they just tell me how big the market is, I'm glad, because I can tune out and think about what I'm going to have for lunch. If they go, "Well, it's a $50 billion market," I go, "Yeah. And the bankruptcy market is about $1 trillion, and I think you can get 1 percent of that, for sure."
Are there any business sectors that you're particularly bullish on?
I'm actually taking courses for drone operation at BrooklynDronesNYC.
I did not see that coming.
It's the way the world is going. What I'm learning about drone operation is going to widen my perspective. My drone can go three miles, 300 or 400 feet in the air. I could spy on someone right now, if I wanted to.
One of my friends--a massive builder--doesn't leave the office anymore. Doesn't have to call for reports. They just send a drone to their buildings. A lot of houses now are starting to have drone pads on top, for Amazon delivery.
Hmmm. Maybe Fubu will go into subscriptions, and the clothing will be delivered to customers' doorsteps by drone.
That might happen.
What sort of knotty personnel issues have you experienced?
In the fashion industry, there are pigs. Once I hired a guy, and I remember him saying to Leslie Short, who was then my head of PR, that he would never answer to a woman. I fired him immediately. That was 15 years ago. Today, Short is the president and COO of my new startup, the co-working space Blueprint+Co.
It can be hard to hire the right people. Nobody comes to you with a résumé that says, "Hi. I'm a pig." Entrepreneurs have to be shrinks. You're forced into it. Some companies are growing so fast that they're hiring maybe 70 new people a day. How much vetting can you do then?
You tell me.
You're asking me? I don't know! I'm always fascinated by people who oversee 1,000, 10,000, or 20,000 employees. I don't want a company with more than 100 people. I had it, once. Fubu had gotten up to 200 employees and change, and externally probably another 600 people. I wanted to kill myself. You don't know anyone's name anymore.
But, yes, you become the shrink. Everybody comes to you with their problems, right? And everybody assumes you don't have problems of your own. Whether somebody has to take time off for something, or they need more money, or whatever the case may be, they have to tell you about it.
Doesn't that get lonely?
I'm an only child, so I internalize a lot of things. Generally, no matter what, I don't share them with others. You can't talk about your problems with your employees. I don't want to take them home, because I don't want to think about it there. If my fiancée, Heather, says, "Hey, tell me what's going on," I'm like, "Why?" Because there, I don't want to think about margins.
So how do you deal?
You drink. [Asks waiter for a vodka and soda.] The other thing is that people don't realize that we still need to learn. Startups believe that Daymond John has all the answers. No, Daymond John does not have all the answers. If I had a golden wand, Fubu would be called Ralph Lauren.
Let's say tomorrow I have to close the business. What am I going to do with my people, some of whom have been working for me for 10 or 20 years? They're not my children, but I want to know that they're taken care of. And if business is going bad, it's like, "Man, you guys are working so hard for me, and I let you down with my decision."
In 2006, everybody thought the business was dying. People wore the same shirt 200 times instead of buying a new one. I had to let go of dozens of people. I had to fire friends I've known since I was 11. Sometimes it was their fault, because things had gotten bad, and they could have worked a little harder. But at the end of the day, you're still letting go of a friend. Man. It was horrible.
[To his assistant] She's gonna make me start drinking some more, Danny. She's got me thinking about how lonely it is, letting go of people.
Do you feel pressure as an African American role model? There weren't many when you were growing up.
Yes. I feel there is a role I play. At first, I accepted the job on Shark Tank to diversify my holdings with great deals and opportunities. I was nervous that clothing was dying. Then I realized the social impact that I was having.
It improved my personal brand, but I also understood that as an African American--and a minority, period--I was showing other minorities that it can happen. I also think I'm showing the masses that there is no black and white in business.
I'm happy that the crowd on Shark Tank is so diverse. Hopefully, when another minority walks into the room and people want to talk business with them, it won't come down to their gender or race or religion.
But surely you've experienced racism.
I've experienced racism, when I was growing up and we got pulled over many times by the cops.
My father left when I was 10. A lot of people don't know that my stepfather is Jewish. He came into my life when I was about 14. He'd say that you should always be pro-black, but never anti-anything else. His brother was one of the attorneys in the U.S. who was
on the case to free Nelson Mandela. I realized then that while a lot of people grew up not understanding other colors and races, it wasn't everyone. When people acted on me or the cops would pull me over, I knew it was because they were ignorant.
I don't necessarily experience racism in business, but there's always going to be prejudice. There's prejudice because I'm short. There's prejudice because I'm really, really handsome, like Alex Rodriguez. This year, I couldn't do all the episodes, so they replaced me with A-Rod on a couple of them, because we look the same. I get a lot of prejudice because I look like A-Rod.
[Laughs] Were you conflicted about being the only African American on Shark Tank?
I wasn't conflicted, because I saw that the producers were smart enough to put somebody on the show everybody could relate to. Everyone else on the panel came from humble beginnings. But most of America would assume they didn't.
You see Robert [Herjavec], he's all slick. And Kevin [O'Leary], you wouldn't think he came from nothing. But once you start putting on minorities who aren't athletes or entertainers, people generally assume they came up the more meager way.
Like I said: I'm the welfare case, compared with some of these guys. I always say if Bill Gates woke up as Mark Cuban, he'd cut his wrists and jump out the window. And if Carlos Slim woke up as Bill Gates, he'd cut his wrists and jump out the window. But those are billionaire problems. I don't have those, and I don't want them.
You just have millionaire problems.