Daymond John is among the most high-profile entrepreneurs and investors in the nation, serving as a co-star on ABC-TV’s “Shark Tank” and the founder/CEO of apparel giant Fubu.
John also is this year’s closing keynote speaker at MJBizCon with a Friday appearance.
John founded Fubu in 1992 out of his mother’s home before the brand skyrocketed to $6 billion in global sales.
As an investor, he focuses on the entrepreneur versus what the company is offering.
“I look for problem solvers,” he told MJBizDaily. “I look for people who are creative and scrappy and honest.”
Ahead of his keynote, John shared his insights with MJBizDaily on investing, branding and the best business advice he’s ever received. The interview was conducted via email.
What do you focus on to determine if a given company is a worthwhile investment, and how do you think that could be applied to marijuana businesses?
My focus typically isn’t on the product or service or technology. In fact, I don’t really invest in the companies.
They call me “The People’s Shark,” because I’m ultimately investing in people. The entrepreneur; that’s my focus.
The first thing I’m trying to decide is if I could see myself working with the person, even if the current business doesn’t work.
This may sound simplistic but I’m trying to figure out if I want to talk to you for the next five or so years. Problems are part of the business-creation process, so oftentimes you have to be willing to talk things through to work things out.
While somebody like Kevin O’Leary has no problem working with people he hates as long as they make money together, I’m a little different.
At this stage of my life, if I don’t like your energy, if I don’t like you, it’s not going to work for me.
If it’s just about parking my money somewhere, I can go to Wall Street. Amazon, Apple, Shopify. They don’t call me for anything. We don’t have to get along.
I look for problem solvers. I look for people who are creative and scrappy and honest.
I want to hear about the problems you’ve had and, more importantly, what you’ve learned about them.
If you pitch me and your entire experience sounds too good, I wonder if you’re naive or just not being genuine. It doesn’t matter the industry, authenticity matters.
What really sells you on a company looking for capital, and what kind of tips would you offer for entrepreneurs trying to raise money?
It’s always the person that sells me. Underline your resourcefulness. I like people who can make a dollar out of 15 cents.
Tell me how you’ve learned to stretch what you have.
A lot of people think you can just throw money at a business challenge. It doesn’t work that way. In fact, one of the biggest problems I see with startups is over-funding, not under-funding.
People will go out and try to build a brick-and-mortar bakery before they’ve sold a cookie.
Sometimes bigger money just enables you to make bigger mistakes. So my advice is to take in money as almost a last resort.
Borrow, barter, trade – bootstrap for as long as possible.
As an investor, if I see you doing a lot with a little, I’m much more inclined to add to what you’re working with.
How important is branding for companies that you’ve invested in? Do you think that might prove a key asset for marijuana businesses in years to come, as the industry continues to grow and become more competitive?
Branding is key, especially when selling a product that isn’t blatantly different from your competitor’s.
Look, I sold T-shirts. Were they made with quality material? Yes. Were they stylish? Absolutely.
But they were just T-shirts. I didn’t put three sleeves on them. The shirt didn’t jump up in the morning and cook you breakfast.
It was a T-shirt. T-shirts were everywhere.
The difference was in how I branded mine. It’s the way I connected with my consumers.
When you bought a Fubu T-shirt, you were buying into a movement. The shirt stood for something.
It said you were part of a community that loved and respected hip-hop music and culture.
Branding is what makes you unique. What your brand says can absolutely be your key differentiator.
What’s the best business advice you’ve ever received?
The best business advice I received was from my mother, when she kept telling me to think big as a kid.
She always said it takes the same amount of energy to think small as it does to think big, so you might as well think big.
Over the years, I’ve learned that mom was right, but there’s a twist to it all: Think big, but start small. Think big, but take affordable steps to get going.
Don’t let thinking big cause you to make mistakes so big that you can’t recover from them.
When I started Fubu, I closed it down three times from 1989 to 1992.
But I was always able to open it back up because I was only investing like a thousand dollars at a time.
As someone told me a long time ago, “Act. Learn. Repeat.” That’s what being entrepreneurial is all about.
What are the best and worst investments you’ve ever made and why?
My worst investments, and business moves in general, were the ones in which I was overly focused on just making money.
This might seem counterintuitive, but don’t do things just to make money!
There’s nothing wrong with making money, but money should never be your sole reason for doing something.
There’s an old saying, “Money is a great servant but a horrible master.”
If you do things just for money, you won’t be as fulfilled and/or you’ll lose your motivation once you have some.
Know your “whys” and make sure they’re aligned with the things you value the most.
As a kid, I started engaging in all sorts of entrepreneurial activities to make money.
However, my real “why” was wanting to help my hero. My mom and dad got divorced when I was 10 years old.
My dad left – completely. In fact, as a child, I never spoke to him again.
My mom had to work two and three jobs to make up for him walking out on us.
It wasn’t the love of money that inspired me to be an entrepreneur, it was hating to see my hero – my mom – working so hard. I wanted to contribute to our household. That was my “why.”
When you move according to your values, you win whether or not you make money.
My best investments and business moves were done for reasons other than money.
I didn’t agree to be on “Shark Tank” to make money. In fact, they told me I had to spend my own money as an investor to be on the show!
I went on “Shark Tank” to learn new ways to do business and because I wanted to diversify my business opportunities.
I didn’t invest in Bombas socks – the most successful company in “Shark Tank” history – to make money.
In fact, I wasn’t convinced a sock company could even make a lot of money. Hell, I literally had thousands of pairs of Fubu socks in a warehouse that I couldn’t sell.
I invested in Bombas because I liked the entrepreneurs. I liked their core values. And I liked their business model. Money wasn’t their sole motivation.
For every pair of socks they sold, they gave one pair away to the homeless. Giving away half your inventory isn’t what you do if you’re overly focused on just making a buck.
They wanted to make a difference. They had what I call a double bottom line: They wanted to create economic as well as social value.
Moreover, as a guy who came up in business via retailers, I was interested in learning more about their direct-to-consumer approach.
I had few different “whys,” but money wasn’t the most significant.
This interview has been edited for length and clarity.
John Schroyer can be reached at john.schroyer@mjbizdaily.com.