Insights and Strategies with Daymond John - Genius Network Episode #2

Welcome to the Genius Network show. In this episode, you'll hear from Daymond John and Joe Polish in a compelling conversation that covers topics ranging from the path of Daymond John's first business at age 6 to FUBU, his $6 billion brand. The inside scoop on how much money he's made from Shark Tank, and more. Recorded live for the Genius Network annual event. If you would like access to the full interview, the full feature video presentation, and a one page PDF guide with the insights and wisdom covered, please visit geniusnetwork.com 2. That's geniusnetwork.com 2.

For our next presentation, I'm actually going to be interviewing a TV celebrity who is also an entrepreneur. He built a business that was at its peak grossing 350 million in annual worldwide sales. And to date, FUBU has earned more than 6 billion in worldwide sales. Anyone here wants some wisdom that's built a $6 billion brand? Okay, but that's not all. He's also star in a TV show that averages 6 million viewers an episode. Anyone here want to know the secrets to being a celebrity personality or well known brand in your market? Yep, that's what I thought. It's like cueing you. All right, the business is fubu. Give it up for my friend Daymond John. Give us a bit of history about you. You know, have you always been driven to succeed? And I know that you and your mom mortgaged your house for 100, 100 grand to start FUBU in the beginning. So talk about that.

Talk about, have I always been driven to succeed or the mortgage home.

Yeah, well, both.

Well, you know, I've always been driven to succeed. I've always been driven to create some form of an income, but the income was really the afterthought of creating some form of an idea that was executed from beginning to end. So, you know, I opened my first business when I was 6 years old. It was in the first grade. I would, you know, the boys, when they liked girls in the first grade, they would, they would kick them, they'd pull their hair. So I saw a way to make a profit off of this. And I would go and I would find pencils and I would scrape the paint off the pencils and I'd paint the names of the prettiest girls in school on the pencils. And then I'd say, don't kick her. Sell. You know, I would sell the pencils to them to then give to the girls. And that was going pretty well, actually. The girls, because women are so vain, they bought all the pencils. Of their own names. But I was making a lot of money. And then my principal made me close the business after like one month, I think because he didn't have any vision. He found out that I was stealing the pencils from the guys I hated in school as well. So my cost of goods was zero. Right. That was my first business. And I always wanted. After that, I just kept going.

You know, it's funny when you. If people that are willing to admit it, there's always kind of a little criminal background in many successful entrepreneurs.

Absolutely.

Yeah. Yeah. You know, until you kind of learn integrity or at least learn that once you know how to do things that you can actually, it's more sustainable.

Yeah.

You know, so borrowing money to mortgage a house, doing that sort of stuff, I mean, did it almost not work?

It did almost not work. You know, it was one of those, you know, how us entrepreneurs take affordable next steps and we dream big. And I was one of the people who were fortunate enough to come out of it. But that was a very dangerous time in my life. I got interned down by 27 banks. And I didn't have any financial intelligence, but I had orders for $300,000 worth of goods. Not knowing that cash is a huge choke and the credit system and everything else like that. We took out mortgage on the house for $100,000, you know, moved out everything, slept in sleeping bags and turned the house into a factory. And that was all good. Right. And we figured we'd sell the $300,000 worth of goods and we put the extra. We'd put the hundred back into the house. But of course, you know, about six months later, I'm looking at three months later on the mortgage. They're about to take the. Take the house from me. I have $500 in the bank. I'm selling the goods. But my lack of financial intelligence at that time, you know, I didn't understand that paying three months in advance for raw goods to come from overseas was going to take. And paying for my utilities and my staff and shipping and everything was going to take that cash. And I had to give the stores terms of 60, 90, 120 days. So my ignorance in that sense. I was fortunate enough to take out. My mother took out an ad in a paper for strategic partners, and she said, money's always available, Sales aren't available. So she took out an order, took out an ad and said something to the effect of million dollars in orders, need financing. And of course, she knew how to romance the truth a little herself. I'm not saying that I was a thief and my mother was a liar, but maybe that's what it was. But 33 people call that ad. And one was Samsung and 30 of them were loan sharks and three of them were real. And one was Samsung's textile division.

Okay. You know, it's funny, Dan Sullivan, who's in the audience says that there's two things you need when starting a business. Ignorance and courage. Yeah, because. Yeah, totally. So what's the best piece of business advice you've ever received and how did it change your business path and your direction?

I think it was. Well, I received a couple of them. First. The first one was somebody said don't spend all your money kid, because it's really, really hard to make money and it's 10 times harder to keep it. I think that was one of them. And I think the other one was it's all about the numbers. There's only two ways to do business. Increase sales or decrease cost. That's it. And don't do anything because it's an ego play. Increase sales or decrease cost. That's it. And those things probably have been the ones and everybody else knows all the other ones. Of course do what you love. Of course do your research and everything else. But the room knows that already.

So FUBU has, it's had 6 billion in global sales. What are the key elements, secrets and requirements of building like a six billion dollar brand that people here can utilize.

Well in the days that we built it? I think that there are a couple of things. First of all, you know, in business it's purely about distribution. I think that you can have the greatest idea in company or whatever the case is, but you don't have a way to distribute it. It's a pipeline. It's a challenge. I think that to understand and don't fall in love with your product where you think that you're creating something new. Because we will never create anything new. It will only be a new position or a new angle on it, a new price. You know, I always say Twitter was a. As I shared with you before, it was a note on a pigeon's leg a million years ago. And I didn't put three sleeves on a T shirt. I just created a movement around it. So it's always a different positioning and I think those are the ways. And then after you get to a certain level where you have ran equity I think is creating a large amount of really amazing strategic partners. You know, licensing, whether it's a territory or licensing a different angle of Your product is important. I'm not going to understand what they necessarily want in Japan, even though they want Fubu in Japan. It's a different culture. As well as I can do my men's business. But you and I were two guys. If you wear a 32 and I wear 32, there's two size 32, there's 32 long, 32 short. If I sell a pair of seven or a pair of eight jeans to a female, there's 17 sizes because the thighs are too big, the butt's too. There's gaps over here. So I would license that business to an expert in that area because I don't have a lifetime to learn the ladies business as well. So I think that strategic partners are very valuable.

Okay.

You've been listening to a conversation with Daymond John and Joe Polish. We will return to the conversation shortly. If you would like access to the full interview, the full feature video presentation, and a one page PDF guide with the insights and wisdom covered, please visit geniusnetwork.com forward/two. That's geniusnetwork.com forward slash two. Let's get back to the conversation.

So your friend Kevin Harrington was here earlier and he was talking about Shark Tank and he said that Kevin O', Leary, Mr. Wonderful, was a far better, more intelligent negotiator than, you know. Your thoughts on that? He didn't say that. I totally get it. I would say I should have just let that go.

No, no, no. I knew, I knew that. Kevin's a great guy and I'm actually representing him in the speaking and I would absolutely make sure he doesn't. More gigs after that.

Yeah. If you were to get in a fight, a physical fist fight with Kevin o', Leary, you think you could take.

Him with Kevin o' Lear or Kevin Harrington?

Kevin o'. Leary. Well, both, actually. It'd be interesting to. Celebrity death match.

Well, so Kevin o' Leary, I could take. Kevin Harrington will crack my head to the white meat one day. I don't. You know, I think he's like 100 years old, but one day we all did push ups on the set and I think I was on my 19th and he was on his like 107th.

No, he's. He's a maniac.

He is a problem.

He came to Necker island and he was like in one of those sumo suits and everything. And I swear to God, he was like knocking everyone down. It was bizarre.

You know, if you've ever been in his office, he does not have chairs in his office.

He's too Neurotic.

He just has a table right there and a bunch of crap all around.

Yeah, can I get a timer up here too, so I know where we're at. What are the little talked about factors that most successful people wouldn't want to publicly share that drive growth and success?

Well, anybody that's really successful, such as yourself, such as Jay Abraham, and the people in this room that I respect have always shared every single aspect of success. That's probably one of the things that you end up forgetting to share is that the opportunity to give somebody this knowledge only comes back to you. But I think other things that people don't share in success is. I really wouldn't know. Honestly, I don't come from that model. Any and everything that I can share in success, I will. So I don't want to take up time trying to think of something.

Okay, well, you have to be all hurtful about it. Just kidding.

Hey, I love the whole 10 minute thing. You know what? Because I was thinking over here, all of us as public speakers, if you gave me 10 minutes, I would be uncomfortable, right. And I'd ramble through it. But you know what? I would have been uncomfortable and it would have tested me. So I want to stay on the. Even though I got 30. I like that idea.

Yeah. Okay. In 2009, you joined Shark Tank. How have your investments worked out on the show? And you know, if a business owner. These are the questions I have. Doing over a million a year was going to invest their wealth, what would you recommend they look at, analyze and try to do so.

All right, so in the investments on the show, I want to make this quick. So the first three years, I think I lost 750 the first year, 500 the second, and I think I made it all. I lost about 200 the third, and I made it all back in the fourth year off of one deal called Jamba Juice. Talbotis we sold to Jamba Juice. Here's the reasoning. You know, people really didn't know what Shark Tank was at first, so the deal flow was poor. Second of all, the producers are really producers. So in the first season of vetting people, whatever people said was whatever people said. And the producers didn't know any better. After sitting on set for three years watching, you know, 150 people per year pitch and two hour pitches, the producers became more savvy towards this. So the deal flow became much better. And the closing ratio went from only closing 30% to. To now we close approximately 95%. Also, the sharks themselves have become very Astute. We've all put the right resources around us after making those mistakes. So I didn't make anything up until that point. And then only one deal itself paid for everything. And now we have found ways to convert sales and license individual everything else. Taking that and going into the model of having a million dollars, you want to know what would, where should somebody invest that?

Yeah, like if they were going to invest the wealth, what would you recommend they look at, analyze deals and try to do so?

We're not talking about going to public markets or anything. We're talking about looking at venture that's out there in the market and angel things of that nature. Correct?

Yeah.

Tell you, if it was, if it was me, first of all, I would invest in what I'm seeing is a large shift in business where many people in this room are doing this already in regards to online curriculums and things of that nature. But I'm seeing that there are kids at home and people at home that are going into these networks and into these forums and they're speaking the voice of other people and people are prepaying for goods or whatever it is, and they're doing 2, 5, 7, $10 million worth of business. The entire business model is shifting now, you know, so they always say retail is messed up or bad or let's say my business is 20 billion. It's not that. It's not a 20 billion dollar business no more. It's just that these big guys like us aren't doing it. It's 10,000 kids doing a million dollars out of their home. So that is how business is shifting. And it's about social media and it's about continuity and transparency.

You read a lot?

I read a lot, but I don't get to read a large amount because I'm dyslexic. So reading a lot means three pages to me, but it may take two years. And usually the three pages of one of J. Abraham's emails.

That is actually funny with every adjective, every noun.

So I'm reading that, then I gotta go to the dictionary, then I gotta read that, Go back to the dictionary. What the hell did he say? What?

No, I mean, he has the most expansive vocabulary of any human being I've ever met.

Yeah, he's like the Muslim guys that come outta jail when we're kids and they just start saying everything. Cause they studied the dictionary every day.

No, I always let Jay talk about engineer reciprocity and stuff like that.

Amazing. But that's why he's my mentor.

Yeah, yeah. So what are the key things to look for and do when growing and developing talent and stars in an organization?

Good idea. I mean, you know, when I, when I speak, I can only speak off of my experiences and what's worked best for me. So. No, so, so people can't object. What I've learned for about in talent is first of all, I don't pay a high price for talent coming aboard. I want people who are willing to bust their butt and prove themselves. And I think we both then are a little uncomfort. And this is how that I structure with anybody in my company. Number one, you have an obligation to the team that you must do and this is in your silo. Number two is if you are able to contribute to part of the team, there is some form of compensation, a percentage or whatever the case is. And number three, if you do well enough, we will start this business together and we will be partners. Now why do I do that? Number one, you have to have a dedication to something. Number two, you have to show that you're a team player but you compensated. And number three is great. People are very hard to keep and sooner or later they will either leave and be your competition or they will just leave or they will be, they'll be, they'll, they will be such a large cost. So if you make them a partner here, you basically take them off the market, you increase your margin and your revenue, they start teaching everybody else down the line and it becomes a pyramid and domino effect. And that's the way that I've always run my business.

Okay, cool, cool. So this is always a complex one. How do you manage your time? And what's the biggest time management lesson you could share with the super busy.

Entrepreneurs, which is most people here, that is, that is going to be the biggest challenge ever. And I am, you know, I think that I'm in a room full of, you know, people just like myself. And I've been having an enormously hard time with that this past year about time management. And that's the biggest struggle I think we all have because you have the time management challenge of first of all being with the ones you love. Because that's why we work. You have the time management challenge of staying up with your health and then you have the time management challenge of not going out and putting out fires, but starting fires. So learning the new way that things are shifting and time management is very, very hard. So my basic practice as much as I can has been to put the work out and get the things out of the Way daily. That needs to be done immediately. I have a goal setting process to keep me on schedule and those have been the biggest challenge. I'm having a big challenge with it now. I was just sharing that with you and where I think the biggest challenge I have is, well, if you don't create a solid form of communication. I've noticed the 204060 rule is getting worse every day. No matter what I say to my team, if they say to somebody else, 20% is gone, they say to somebody else, 40% is gone. By the time you know what you are adding on 2, 3, 4 hours to your day of fixing things you said and you thought it was done. And the two aspects, the problem is this. Am I going to talk to somebody like a child and say do this, this, or am I going to fire them if they do something wrong? Or am I doing something wrong? And it is a big, big challenge. And I know somebody in here probably has a book or a curriculum. I can fix that. And talk to me later about that.

Ok, so what do you see as the biggest opportunity right now in the marketplace that you may not want to fully share, but you just know there's huge opportunity for entrepreneurs who can take advantage of it. That would be worth 10 times the 10,000 to 25,000 people invested to be in this room.

I think that, and I don't mind sharing, I think that there are influencers and people all around the world right now that have become pseudo celebrities. And I think that we are going back to the days of the proprietor. You feel like you're dealing directly with the proprietor. No longer is there three forms of separation between you and something you're consuming. You can consume something from a proprietor. And I think that the days that I grew up of needing the rappers and the artists to wear something and talk to the manager and do this and that, and then needing the TV to air it. I think it's a different time now where there are kids in the middle of Australia sitting there on Instagram with 10 million followers, but they're not moving anything but content. And then if you have something else, whether it's a pen, a jacket, a book, a cup or something like that, and you brand that, you brand it to that kid and the average is a half a percent or 1%. Go aheads and converts, you can sell something else every single week. And if you end up creating infrastructure where you have 5, 10, 15, 20, 30 of those kids, you can create a total movement.

Awesome. So who do you privately turn to for advice? If Anyone. And why you, Jay?

Who else? You know, I turn to my kids because, you know, I've gotten to the point where, you know, these, these little brats of mine were on Snapchat, they were talking about Uber, they were talking about this and that. And as adults, we go, what the hell are you doing? You should go, no, what the hell are you doing? Because, you know, that's just where it is.

You know, that's actually really good. Okay, what is your business model and model for living as successful of a life that you can? And what's the most critical single element you focus on with having fun?

By far. And I've gotten to that place in my life where it is and many people in this room may say, well, you know, you have enough money to have to have fun what you're doing. But I really look back at the days and even when I started fubu, when I started fubu, even due to the frustration of the fact that we felt nobody wanted to support this community, most of my friends where I grew up were drug dealers and things of that nature. And at that time, to be a designer in 1989, 1990, the perception of a designer was they either Italian, older white, Caucasian individuals or they were gay. And I have no issue with anybody's sexual preference. But I decided that I love to dress and I wanted to do it and I had fun doing it. So now, even when I'm at this stage in my life of having fun, I'm excited about people I work with and people I have fun with. It's not because I have the wealth, because once I stopped chasing my friends and hanging out and wanting to be cool and make the money and get the girls, and I just stopped and told some tell a bunch of rough guys, hey, I want to make a couple of little hats. It wasn't easy, but when I did that, when I did that, I found success and I found peace. And then, you know, and that's just why I operate business. And hopefully that answered it. And I'm sure everybody up here has said the same thing.

Thanks for listening to the highlights from a recent conversation between Daymond John and Joe Polish. If you would like access to the full interview, the full feature video presentation and a one page PDF guide with the insights and wisdom covered, please visit geniusnetwork.com 2 that's geniusnetwork.com 2. Don't miss out on more insights, strategies and wisdom like this on geniusnetwork.com subscribe to geniusnetwork.com today by going to geniusnetwork.com subscribe that's geniusnetwork.com subscribe.