Becoming a Successful Entrepreneur, with Daymond John

Marketing and branding expert Daymond John drew his inspiration and his first successes from the hip-hop scene in his native community of Hollis, Queens, New York. Starting out simply making hats for himself and his friends, he has become a fashion icon, branding expert and one of the most in-demand motivational speakers in North America.

SPEAKING.COM: What key advice would you give entrepreneurs starting out today?

JOHN: Whether it’s today or 100 years ago, entrepreneurship is about asking yourself, “Where are you seeing a pain in the market that you’re trying to solve and who else is doing it?”

Once you have decided that it’s something that you want to take on, community really needs to come first. A lot of times people have come up with concepts and products that they didn’t actually launch for two, five or ten years, but they kept growing this community and realized, “Wait a minute, I have so many other people that love my voice or think that I’m bringing value to them.”

You can be on social media just talking about all the great things you love to eat. My buddy, Bethenny, who created Skinnygirl, told me that she just decided that people needed to understand how to be skinny and eat organically. Later on, she came up with Skinnygirl because of the demand.

Once you’ve built a community, then you need to really develop your product to see if you have something of value to offer the community. In the event that you want to take this product past a hobby and into a business, you need to start putting together a plan – your road map. Your road map is not necessarily going to work every single time, but at least it’s a starting point and an ending point on how you’re going to get there. You can’t say, “I want to go to California today from New York,” and not know whether you’re going to take a car, train, plane, walk, etc.

The next step would be to create your structure as much as you can: your finance structure, your legal structure, your partnership structure, and your distribution structure.

Those are the steps that I would recommend an entrepreneur take. I know they seem daunting and a lot, but if you just take them one step at a time, you would be surprised at how much you can accomplish in a short period as far as getting this direction to then launch whatever your idea, concept, service, or product is.

SPEAKING.COM: What are some of the main reasons businesses fail and entrepreneurs should avoid?

JOHN: One of the main reasons that businesses fail is that entrepreneurs don’t take the steps I just mentioned. Another reason though – one of the top reasons – is over-funding. They actually go out and fund too much of the business without creating community, rolling up their sleeves and learning how to work things out as far as having proof of concept (meaning “a sale”), having a product and underestimating how much the product costs.

Many entrepreneurs believe you need to have money to make money, so they’ll go out with this great concept, borrow $50,000 and leverage all their assets, their home, or maybe their friendship or their credit cards. Then, they’ll take the $50,000 and make a $20,000 website page, when they really just needed a $1000 Facebook page. Somebody told them, “Bill, you need a patent or several patents and the patents cost $20,000” when in reality they just needed a trademark for $2500.

Since they don’t have the knowledge, a lot of times they think that the money is going to cure the problem, but in a startup the money generally highlights your weaknesses when you have some inferior goods that happen to come in (because your first rendition of your product is not going to be perfect). Maybe you start advertising and people aren’t spreading the word after they buy it. You can take that extra money you have and go do more advertising, but all you’re doing is advertising an inferior product even further and you’re spinning into a black hole. So over-funding believe it or not, is one of the top reasons why startups, entrepreneurs, and small businesses first start to fail.

SPEAKING.COM: On Shark Tank, what are the main factors you are looking for when investing in a new business?

JOHN: When I’m looking at companies, first of all, I’m analyzing the person. I’m seeing if I want to be a partner to that person. If the business does fail, would we do another business together? Do I like this person to the point that I’m willing to sit next to this person or call this person every single day for the next five years? If we’re going to be partners, we’re going to figure things out, we’re going to solve problems together, and we’re going to celebrate together.

I also consider this person’s history. Is this person coming in knowing their product, and/or their category or their space? Have they failed a bunch of times and realize now what they need to do because they’ve tried everything else? Have they had some limited success and know that they need a strategic partner? If they don’t know who their customer is and their industry, then they’re going to use my money as tuition.

Then, I look at the product. Is the product something that solves a problem? Is the product in a big enough segment? If it’s in a small segment of a small segment of the market, then maybe that person doesn’t need a partner because they’re going to top out at a small number, and why split 20% or 50% with me? Those are the main things I look for in the person.

Now, I have to also do some gut checking myself because I have to look at myself and say, where do I add value to this? Does this fit in my portfolio? Is this someplace that I want to go? Is it someplace I have no knowledge about?

Then I have to make the proper offer according to where my assets are, because if the person says to me, “I can’t wait for you to help me with distribution of this beauty company,” I have to say to the person, “I’m willing to invest, but I need to tell you that I’m going to be a passive investor. I don’t know anything about beauty.” (That’s not the case in this instance – I do know about beauty, but I’m using an example.)

Basically, I want to make sure that person understands the investor they’re bringing on, because if they think I’m going to help them paint faces and tell them what the newest makeup is for this type of woman, they’re absolutely wrong. But if they need my financing and they know that I can call up the Macy’s, the dealers, and the Sephoras of the world, then we have an agreement and I can add the value that I think I have, because I don’t want a free ride and I also don’t want to take a space of an investor that could actually add value to this person. So there’s many different things going on during the process of that one hour or two-hour pitch.

SPEAKING.COM: When do you know it’s time to cut bait and move on from a business venture that you’re involved with?

JOHN: There are a few deciding factors:
If I don’t like the parties that I’m involved with, and
The venture keeps me up at night even if it’s working. Time is the only thing I have, and I don’t have time to be up at night. I want to spend time on the things and the people that I love.

3. If it’s not working and we’ve laid everything on the field, we’ve tried everything we could possibly think of, and we’re just grasping at straws and doing Hail Marys. And even after that, I still have to consider, “Listen, we tried the straws and we tried the Hail Mary, let’s just cut bait.”

SPEAKING.COM: What other advice would you give businesses for making their brands stick in the minds of consumers?

JOHN: Know your “why.” Why do you exist? Why are you important to others? And why should they tell somebody else about you? Why would people resonate with you?

That’s extremely important to any brand. And some brands lose their why often, though they may find another why which sometimes works if it’s organic to the direction the brand is growing in.

SPEAKING.COM: What are some of the challenges you have had to overcome on your road to success and what did you learn from them?

JOHN: I believe the challenges were financial – the lack of financial intelligence through various different stages. I closed FUBU three times from ’89 to ’92, because I didn’t have financial intelligence. There’s a well-known story about me taking out a mortgage on my home. However, the flip side of the story is if I hadn’t gotten a deal with Samsung, I would have lost my home and the business because I didn’t have financial intelligence and I didn’t understand how money works. When I was trying to operate the business, I was ordering raw goods 90 days ahead of time, I was paying for staff, utilities and shipping and I wasn’t getting paid by my receivables for 30, 60 or 90 days. Not having enough financial intelligence was very painful.

Then I would go on into my personal life and I would be worth a great amount of money for a young man of 30 years old, and I would blow a certain amount of that money, not just on lavish things, but more so investing in the market high and then getting scared and pulling it all out when it’s low. Or I’d think that a house costs this amount without considering that I still had to furnish the house and pay taxes on the house.

So financial intelligence is one of the biggest challenges that I faced and most entrepreneurs face starting out. In your 30s to 50s, from what I’ve experienced, the biggest challenge that is on the rise for entrepreneurs is work-life balance. How do you have work-life balance when you’re working so hard to take care of and/or improve the people’s lives around you in your own life? If you work 24 hours a day, and put everything into that and then you lose your family or your health suffers from it, what were you really working for?

SPEAKING.COM: Who were some of your mentors and what did they teach you? You have talked about how your mother for instance, was a very influential figure on your ideas regarding branding and work. What were some of the lessons she taught you and how did you apply those lessons to building your image and business?

JOHN: My mother taught me faith, gut and hustle. She taught me to always have faith that things will work out if you apply yourself, and she always taught me to apply myself and be very confident in myself. We were driving in a car one day and she said, “Every single building, every single car, whatever you’re drinking right now, the lights, everything around here started with one person with one thought who took one action. Don’t feel inferior to anybody. Don’t feel dumber than anybody.”

She also taught me to keep educating myself, no matter when, so she taught me to go out and get other mentors. She taught me that if I didn’t know how to read something really well (because I was dyslexic), then read it several times, or go out and try to actually do it because maybe I didn’t comprehend it the correct way from a book.

Outside my family, my mentors were one or two of my teachers who believed in me, no matter how hard a time I was having academically. Another mentor was a gentleman who operated a very small corner store in my neighborhood and basically he let me intern over there and sweep up. I saw how he took inventory and how he dealt with his customers. He understood the fundamentals of business.

Later, my step-father came into my life, too. In all, I’ve probably had 10 other mentors throughout my life and I still keep seeking mentors even to this day. Recently, when I got onto Shark Tank and I was opening my brand, I was scaling my branding company so I called a guy named J. Abraham. He happens to be a very well-known marketer, brander, and guru who has released many books and audios throughout the last 40 years.

SPEAKING.COM: Why did you write your new book Rise and Grind? What is the most important message you like people to receive from the book?

JOHN: Rise and Grind is about finding the most efficient way to live your life. Every one of us is at a different stage of our lives and we use different tactics to run our lives. I studied several different subjects – everybody from Catherine Zeta-Jones to a young man who climbed Mount Kilimanjaro with no arms and no legs – and what I learned was that every one of them had different approaches on how they accomplished mentally what they wanted to do. One thing that I noticed was that they were all extremely selfish in a good way, meaning that they put what they wanted to accomplish first and foremost. We tend to want to solve everybody else’s problems first and then leave ours for last.

So one habit I love that I learned from the book is when I wake up in the morning, I don’t answer any emails for the first hour and I don’t go on social media for the first hour. You have everybody else’s problems on your email when you wake up. What you don’t have somebody saying is, “I solved that other problem. You’re getting a million dollar check tomorrow.”

Meanwhile, when you go on social media, everybody on there is showing you their sizzle reel instead of their blooper reel, so everybody’s sexier and funnier and happier on vacation, when in reality they’re all just as screwed up as you. If you look at all these emails and you look on social media first thing in the morning, you wake up stressed because of everybody else’s problems and depressed because of everybody else’s joy, so you don’t take care of yourself.

Instead of scheduling the time that you’re going to be with your wife or your daughter or your mother, schedule the time you’re going to work out, go home, eat healthy, or go over your goals – what you want to accomplish for the next five years or 10 years. That’s the most important takeaway I got out of Rise and Grind, because we tend to let everybody else into our world and then forget who we are for days, years, or forever.

To bring entrepreneur and branding speaker, Daymond John to your organization, please contact Michael Frick at: Mike@Speaking.com