55: Branding 101 and What it Means to Lose it All with Daymond John of Fubu
Daymond John, CEO of FUBU and The Shark Group
FUBU Founder and Investor Daymond John Talks Branding, Bluffing, and Most Importantly, Learning
In the 1990s, the FUBU brand was everywhere, including on the backs of A-List celebrities like Will Smith, Janet Jackson, and LL Cool J. Like most trends, it seemed to come out of nowhere.
But in the case of FUBU, it sort of did. When Daymond John started the company with his longtime friends, they only had about 10 shirts. They’d sneak into a hip hop video set, put a shirt on one rapper, then take the shirt back and go do the same at another video set.
“Before you knew it people started to think of us as a huge clothing company, when we literally still had 10 shirts in a basement,” says John, now a celebrity investor on the hit reality show Shark Tank.
Daymond John’s talent for building hype didn’t hurt, but that was only the beginning. While today John can regularly be seen on TV in flawless suits, closing six-figure deals, the rise of his game-changing streetwear company was a tumultuous one. The branding icon gained his financial chops the hard way, with lots of stumbles, and a constant learning process that continues today.
The foundation of Daymond John’s entrepreneurial spirit began with a sense of hustle he picked up as a kid from his parents. Ever since he was young, he watched as his mother and father were always working hard and picking up side jobs.
“Every time they came home from work, they would do some other job. Work on the house and try to build a porch on the house,” or sell something at a market on the weekends, John says. “It was in my blood that I just figured you were never idle. You always had to work, and you always had to try to create more of an income for yourself.”
So John was always working some kind of angle. He also grew up steeped in early hip hop culture, which would lead him to his first business success. John grew up in Hollis, Queens, a neighborhood that was a birthplace of hip hop, and home to icons like Run-D.M.C., LL Cool J, and Russell Simmons, among others. This emerging form of music was more than that to the young people who loved it; it was about lifestyle and identity. And fashion.
In the early 1990s, John noticed tie-top hats, like a ski hat with strings tied on top, in rap videos. He made one just for himself at first, then for his friends, and then realized he could sell them. He decided to make a bigger batch and sold them on the streets for 10 bucks each, bringing in 800 bucks in just a few hours.
For Us By Us
Around this time, hip hop was beginning to go more mainstream, along with the style that went with it. For one, outdoor gear companies like Timberland and North Face were becoming popular among young hip hop fans, many of whom were young black men living in cities.
John says there were persistent rumblings at the time that the companies were trying to distance themselves from the trend. (The phenomenon was explored in a 1993 article in the New York Times, which included some loaded language used by a Timberland executive.)
Daymond John and a few of his childhood friends saw these popular brands being produced and sold by people who either didn’t respect, or at least weren’t part of, hip hop culture. In response, they came up with the idea for the brand FUBU, which stood for “For Us By Us.”
“It was for kids who loved this new music called hip hop, that came with a way to walk, talk, and dress—a lifestyle. And we decided that we were going to finally be proud of the people that purchased our clothes, and we were going to actually be the same people that made the clothes.”
These were the 10 t-shirt days, when the small band of fledgling marketers would talk as many celebs as possible into sporting the logo. In particular, LL Cool J started wearing the brand, and it gained more traction when the rapper rocked a FUBU hat in a Gap TV ad.
The early success of the brand had a lot to do with how grassroots and authentic consumers perceived it to be. It presented an image that this was gear from the streets, and wasn’t going to shy away from a black perspective. Young people, people of color, hip hop lovers, here was a brand they could identify with and make an emotional connection with.
It was indicative of, one, how hard-working and persistent Daymond John could be. But also, how he could listen to the audience—put his finger to the wind of what a culture wanted and deliver it.
Hard Knock Life
Again, FUBU seemed to rocket to popularity, but it was hard for the team to turn that into a solvent business. It was anything but an overnight success. In fact, John said he started and closed FUBU three times between 1989 and 1992, because he kept running out of money.
Even when they had the buzz going, they struggled to meet orders and pay bills. As he put it, he started out in business without the “financial intelligence” he needed—the knowhow of accounting and finance, when to place orders for how much, etc. “The money is really a tool, and it can hurt you or help you.”
He describes his lowest point in his career when, after gaining some attention at a clothing conference, they had $300,000 in orders. John took out a second mortgage on the house he and his mother owned for capital, but six months later, they had run out of money again.
“They were about to take my home, and I was about to lose the entire business, and it was a very dark time,” he says. In a last ditch effort, he put an ad out in the New York Times looking for financing partners. They got mostly sketchy phone calls, but a few real potential partners.
In a scene that might sound something from a Shark Tank episode, John was trying to negotiate a deal with one such partner, but it was just taking too long so he had to walk away.
“They called back, because I guess they felt that these guys had such a level of confidence to walk away from them, that they must have been on to something. That’s when things got brighter.”
The company was Samsung’s American textile division, and they worked out a distribution deal. With persistence, and a little negotiating swagger, the company came back from the brink of collapse.
At its peak in 1998, FUBU had annual sales of $350 million. Not only that, it paved the way for future streetwear brands to compete with big name fashion companies.
Since then, John has been awarded Brandweek Marketer of the Year, the Advertising Age Marketing 1000 Award for Outstanding Ad Campaign, Crain’s Business of New York Forty Under Forty Award, and Ernst & Young’s New York Entrepreneur of the Year Award.
Diving into the Tank
As fashion tends to go, FUBU has since waned as the hot brand it once was, scaling back its presence in the United States and focusing on markets abroad in the 2000s. But Daymond John continues to be a high-powered investor, as well as a popular motivational speaker, and an author of two books on business.
He is probably best known for the wheeling and dealing he does as an investor on Shark Tank. There, he hears pitches from up-and-coming company founders alongside a panel that includes larger-than-life personalities and investors such as Mark Cuban and Barbara Corcoran.
Fireworks often ensue, as was the case with one of John’s latest investments in Titin, which makes weighted workout apparel using gel packets that flex with the body. Cuban practically called the gear snake oil before passing, but John knew and trusted the trainers attached the company—he bit, landing a 20 percent stake for $500,000.
Even though he’s now more often than not in the role of backer and mentor, John finds that he’s still learning and staying in touch with the principles of business, even in a changing market.
“It reminds me of the fundamentals of all business. Sometimes I mentor them, and I learn way more than they do,” John says. A lot has changed since he was sneaking into rap video sets, including social media reshaping marketing, and online commerce meaning you don’t even need retail stores. But those fundamentals are still valid.
For example, John says, he’s always reminded that money doesn’t make a business work or solve its problems. It still takes thinking outside the box. It also takes that financial intelligence that he could have used more of in the early days. And, of course, hard work.
“No matter how much technology is there, you still have to put in those sleepless hours to become successful.”
He’s also still finding time between episodes to start up new businesses, including his latest Moguls Mobile, a fashionable line of accessories for mobile devices. The company recently participated in a pitch competition on college campuses, in which young entrepreneurs could commercialize their product concepts through the company.
“I’m a digital immigrant, these kids are digital natives, and they’re born with these cell phones in their hands,” John says. “I think they are the sharpest, brightest minds and we want to give them all an opportunity.”
After all these years and success, Daymond John is still listening and learning.
- Marketing hacks to grow your business
- The key components of what makes a successful business
- How to bring confidence to the table when negotiating
- The importance of education and mentorship
- How to build an unwavering drive to succeed
Full Transcript of the Podcast with Daymond John
Nathan: Hello and welcome to another episode of the Foundr podcast. My name is Nathan Chan and I am your host coming to you from Melbourne, Australia. So, I just wanted to say good morning, good evening, and good night wherever you are around the world, sharing your earbuds with me, listening to another episode.
I’m really excited about this episode. It’s with the one and only Daymond John. Now this guy doesn’t need an introduction. He is a very famous, very influential entrepreneur in the entrepreneurial scene or space or startup space, whatever you want to call it and I was lucky enough grab him for about 15 to 20 minutes. Now, he was actually quite sick. so we had to do a lot of editing for this one, but there was some great gold that came away from it. You know, Daymond shares like his journey around FUBU, how he almost lost it all and what he looks for when investing in entrepreneurs. Yeah, we’ve interviewed a few entrepreneurs now from Shark Tank America and, yeah, this one is not to be missed. I’m really, really excited to share this one with you guys.
It’s funny, you know, because in this episode Daymond shared some things with me that you just don’t really think happens when it comes to looking at successful entrepreneurs, because you only see the end product. So, this is a great one for you guys to see the true dark side of entrepreneurship. So, if you are enjoying these episodes, please do take the time to leave us a review. Please do check out the magazine. It’s the fruits of our labor. Thank you so much for taking the time. Let’s jump in.
Can you share with us, what was your childhood like, and more specifically the elements of the early years that drove you to become an entrepreneur?
Daymond: I was raised in Hollis, Queens. My father was from Trinidad and he was a very hard-working man. My mother is an African-American and she’s a very hardworking woman. You know, every time they would come home from work, they would do some other job, you know, work on the house to try to build a porch on the house or try to sew some clothes and get it ready for the weekend when they would go to the market and try to sell them. So, it was in my blood that I just figured you never were idle. You always had to work. You always had to try create some more of an income for yourself, you know?
Nathan: So, you were brought up with the hustle mentality.
Nathan: Awesome. Can you tell us a little bit about FUBU’s origin and idea? How did you get the idea for the company and how’d you get the initial growth?
Daymond: Yeah, I mean, the idea for the company came from when we were out there and we were wearing all these other brands and, you know, we started hearing rumors that these designers just really didn’t respect or value us as a customer base, meaning, you know, the kids who love hip hop, the kids who are from the streets, and we started to get frustrated. I would just constantly hear things, you know, that people didn’t like it. So, we came up with an acronym. You know, FUBU, stood for “For Us, By Us”. It was for kids who loved this new music called hip hop. It came with a way to walk, talk, and dress, a lifestyle. We decided that we were finally going to be proud of the people that purchased our clothes and that we were going to actually be the same people that made the clothes. That’s how I initially came out with it.
For quite some time I would sneak onto video sets and I would take our shirts, we only had about 10 shirts, and I would keep putting them on rappers and I would take the shirts back and put it on another rapper and take the shirts back because we didn’t have any money to make, you know, a large quantity of shirts. Then, before you know it, people actually started thinking about us as a huge clothing company when we literally still had 10 shirts in a basement, you know.
Nathan: I see. What were the factors that led you to take FUBU out of the U.S. to the market in 2003? Then you brought it back in in 2010. What were the factors that made you decide to do that and what have you learned from that process?
Daymond: Well, we didn’t take it fully out of the U.S. in 2003. We just stopped pushing it in the way that we traditionally did with heavy marketing and advertising. We kind of still just made it for all of our celebrity friends, artists, and people who were performing, so that’s what we did. We just didn’t go after the hard push. The reason why is because it obviously started to slow down because, you know, people had 10 years of FUBU in their closet and new brands were coming out. The lifespan of a lot of lines stay really, really hot for five years and we wanted to cool down. We started to also heat up with our other brands that we had. So, our brands such as COOGI, which is, you know, an Australian brand that we bought out of bankruptcy. COOGI started to heat up and we wanted to concentrate our efforts on COOGI domestically, while FUBU, we started to really change the image.
Overseas, they already know FUBU from overseas. It wasn’t necessarily over size in certain countries. If you look at FUBU in Korea, it’s more like a skate brand. So, we wanted to just really give it a little rest over here. That’s why we decided to do that. Then we relaunched in 2010. The launch was okay, it wasn’t successful from a monetary standpoint. You wouldn’t look at it like, “Oh my God, they’re just everywhere,” but it actually started to change people’s perception of the brand domestically as well.
Nathan: I see. I’m curious. You know, you mentioned around FUBU you do a lot of other things now, like Moguls Mobile and TITIN. I’d like to talk about some of the other projects that you’re working on at the moment, especially TITIN. You know, Mark Cuban went as far as calling it snake oil on the show. What attracted you to it?
Daymond: Well, you’ve got to understand Mark’s position, you know? Mark is constantly approached. He obviously owns an NBA team and Mark is approached every other day by someone who says they have the magic trick to make his players jump higher, run faster, live longer, so he’s going to say that. I think that when Patrick, the CEO of TITIN, came on he made a lot of claims that, I mean he actually can back up, but he’s a very interesting guy and he made some claims of, you know, maybe what his personal thoughts were on the product or what other people thought, they weren’t scientifical claims. So, I think that’s where the ground that Mark Cuban started to feel that this was absurd.
But where I resonated with it is from is, I technically don’t know how…You can make all the claims on how an airplane technically works. I have no idea. All I know is it get me up in the air and it gets me from California to New York in five hours. I’m a pretty simple guy. TITIN, it’s weighted compression gear. It’s eight pounds on the top, eight pounds on the bottom. The medical gels are placed, as you can physically see, where your muscles are, so it moves with your body unlike the traditionally weighted vest out there that the metal bars are just there and it doesn’t move with your body. Now, I don’t need to be a rocket scientist to understand that if I have 16 extra pounds on me, I have a heavier mass, a heavier point of resistance on me and then if I could do 100 pull ups with 16 extra pounds on me I most likely can do more pull ups with the pounds off of me. It’s just common sense. I don’t need to overthink this. So, that’s what attracted me to it, number one.
Number two, is I used to where one of those weighted vests. I wore that to the gym. Two weeks I used to walk to the gym. I walked about, you know, a mile to the gym and a mile back with a weighted vest on and because the weights didn’t move with my body, two weeks later I had a double hernia and I had to get surgery.
Nathan: Oh, wow.
Daymond: So I understood, and I resonated with it. Last but not least is the names that… I didn’t need scientifical proof. The name’s that Patrick mentioned about the athletes and the people that used the product, I knew that no matter what after the show was over, after we filmed, that I had, you know, my time to do due diligence and if he was lying about those people, that everything was a lie. But the names that he had, that he provided, they were some of the most, you know. The guy who had MobilityWOD is by far the most respected man in CrossFit. Because I own the Reebok CrossFit gym in New York, which is the largest CrossFit in the world. You know, when he tells me about respected guys like that, and Annie Thorisdottir daughter and Rich, who are the fittest man and fittest woman in the world. When they work out in it, there’s nothing else to say after that. These are the top people in the most, you know, cult physical fitness genre there is and they wear the product. I knew the homework from that point on.
Nathan: Okay, yeah, so a lot of social proof, common sense. Okay. What is it like, just on that subject around companies that you’ve invested in, what’s it like to mentor companies that you invest in and what have you learned from mentoring these entrepreneurs that can be applied by other aspiring entrepreneurs?
Daymond: It reminds me of the fundamentals of all business. You know, sometimes I mentor them and I learn way more than they do. Because I learned that money doesn’t solve it. Money will come. And I learned that, you know, they exercise what I call my power of broke theory. I mean, that’s what my new book is because of all these entrepreneurs. That none of them have gotten there and have been sustaining their position due to having a lot of money. They all have thought outside the box. I learned that this new world of social media is giving a lot of power back to the people and that they’re converting these people that follow them into actual sales. You no longer need retail stores the way we needed them in the past. Everything is still always started with a small spark and a small, small following that becomes your biggest ambassadors. And then a lot of them I just really learned a lot of them had way less than when I started.
It’s still at the end of the day no matter how much this technology has made the world easier, it’s also easier for everybody to have a barrier, you know, for everybody to get into it. So, no matter how much technology’s there, you still have to put in those sleepless hours to become successful. So, I learned the fundamentals are just reinforced. It’s just a different day and age, you know?
Nathan: When we talk about entrepreneurship what has been one of your biggest mistakes as an entrepreneur?
Daymond: My biggest mistake was at first not having any financial intelligence and I notice that in a lot of other entrepreneurs. In regard to, you know, not understanding how to use the valuable lesson that money, you know, is really a tool that can either hurt you or help you. Often, you’ll have a business end or something to make a lot of money, and then you won’t understand how to manage it and because you don’t have a financial intelligence, you end up hurting yourself.
Nathan: Can you take us back to your lowest moment that you’ve had as an entrepreneur, that’s like greatest moment of uncertainty, despair, stress, or sense of failure, and how you overcame that? Because it is such a lonely journey at times and so up and down.
Daymond: I think the lowest moment I had is, you know, FUBU. I opened it in 1989 and I closed it three times up until 1992 because I ran out of money. Then it got to a certain level, we had $300,000 in orders, and I took out a mortgage on my home. Again, financial intelligence, my lack of it would start to set in in that six months later I had a loan for $125,000 and then all of a sudden, six months later, I looked and there was $500 in the bank account and I was a couple of months late on my mortgage and they were about to take my home and I was about to lose the entire business. It was a very dark time.
In one last ditch effort we took out an ad in the newspaper looking for strategic partners and a bunch of partners called me, but three people were real. The rest were loan sharks and things of that nature. I tried to negotiate with them for quite some time, but then it got to the point where the bank was just about to take my house. I kept trying. I kept putting this stuff out there and one of those partners that we negotiated with, even though they were taking their time, they finally came back to the table because we decided, you know, we were going to walk away from it because they were just taking too long. And that was the darkest moment of my life, when I decided to shut the door on them, get ready to have the house taken, and get ready to close the business. Then they called back because I guess they felt that these guys had such a level of confidence to walk away from them that they must have been on to something. Then that’s when things got brighter.
Nathan: Wow, that’s an amazing story. I’d like to switch gears and come back to some other companies that you’re working on. Let’s talk about Moguls Mobile. Where did that idea come from? You recently have announced a pitch competition seeking ideas from college entrepreneurs. What sparked this idea?
Daymond: You know, these digital devices are getting more and more powerful. We’re getting more and more dependent and reliant on them. They’re doing everything now from, you know, not only contacting our friends and entertaining us, but they’re actually paying bills and, you know, acquiring all the information, and food and car services from them. So, with these devices on, you know…Most of the planet has these devices, well there’s going to be things that are going to be needed to, you know, protect these devices or enhance them and I felt that this was just a natural extension of things. I mean, my phone is my most valuable asset to some extent, obviously, besides my health and my family. This is what allows me to be mobile and not be chained at a desk like we were 10 years, 20 years ago in the office until the middle of the night. We are out living and working with these things, so I basically created it to enhance that area of people’s lives.
The reason why we’re doing this college competition is because we think that the digital natives know what’s more needed. I mean, I’m a digital immigrant. These kids are digital natives and they’re born with these cellphones in their hands. I think they are the sharpest, brightest minds and we want to give them all an opportunity. Because, you know, if one of the big boys and girls comes out with a product that’s an accessory, you know, the everyday person doesn’t get a chance to profit off of that. But we want to give everyday people, you know, a way to not have to worry about opening up their own company, but coming up with their own idea and concept, being a part of my company, but yet making money as an individual, you know?
Nathan: Yeah, no, I think that’s really smart. Let’s talk about branding and specifically your method of branding behind any of your companies, in particular Moguls Mobile. What are your top three components, tactics, strategies that you look to incorporate in building any brand? Can you share some of those elements and strategies behind Moguls Mobile?
Daymond: Yeah. Well, first of all, come out with something somewhat distinctive where people don’t feel like it’s a “me too” product. They feel like it’s a “I have to have it” product, have a strong connection to it, number one. Of course, make sure it’s quality as well.
Number two, find a good way to communicate that and put it out there in the world where people immediately notice it, which is the actual packaging of the product and/or the item. Number two.
Number three is find vehicles to distribute it and make sure that people can get it after they’ve seen it. So, there’s a lot of products and people that come out with things, but then you can never find out. So don’t go ahead and try to launch an entire huge line of 50 things. You’ll frustrate somebody if they can’t find it the first time and they never get ahold of it.
Those are my three key components and that’s exactly what we do at Moguls Mobile. So, Moguls Mobile, you know, we came out with the first gold protective screen that’s actually a mirror. We know that females, for the most part, want to constantly check themselves out and make sure they’re on point. I think that the guys need to do that more often as well.We also came out with, you know, a lot of chargers and things of that nature. They’re very stackable, they’re very square, and they’re compact. They can also charge three devices at one time, so that’s the authenticity of the product.
The second aspect is we try to make it very clean, white gold and then, hopefully, my face is recognizable enough in this field. Not only do we use me, but we’re starting to work with some of my influencers to repackage it with them.
The third is we use stuff like HSN and ways like that to distribute it and get it out immediately so we can fulfill the consumers’ requests.
Nathan: In your opinion, what are the two or three most important qualities, characteristics, entrepreneurs today need to succeed? You mentioned financial intelligence. Do you have any more?
Daymond: Sure. They have to have unwavering drive and desire succeed. They have to understand that they’re going to fail way more than they succeed. They must absolutely love what they do. The financial intelligence is going to part of all around education. So that means that, number one, they have to have the drive. They have to never stop. Number two, they have to have an education, financial, as well as the field they’re going into, as well as sales, and everything else. They have to constantly be willing to learn. Then they also have to be in love and absolutely be obsessed with what they do.
Nathan: Last question. What do you value the most about entrepreneurship in your life? Out of all your achievements of running your own business what do you value the most?
Daymond: The freedom to know that the decision you made is directly responsible for where you are in life.
Nathan: Awesome. All right. Well, look, I’ll let you go, Daymond. Thank you so much for you time. I hope you feel better. I’ll be in touch soon.
Daymond: All right. Thank you. Have a good one.
Nathan: You too. Bye bye.
Daymond: Bye bye.
- Learn more about Daymond John on his website
- Follow Daymond John on Twitter
- Visit Daymond’s Facebook Page
- Check out Daymond’s store
- Check out Shark Tank’s Facebook Page
- Learn more about ABC’s Shark Tank
- Read Daymond John’s Blogs
- Explore the Shark Group
- Follow the Shark Group’s Twitter account
- Visit and shop at Fubu’s website