The Shark Tank star opens up about busi­ness—and his health

Inc. (USA) - - FRONT PAGE - BYZOËHENRY Pho­to­graphs by Miko Lim

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. Twen­ty­seven 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 … ”

"I thought money could solve ev­ery­thing. I didn't have the fi­nan­cial knowl­edge I needed.

… 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. Yeah.

"Fubu got up to 200 em­ploy­ees, and ex­ter­nally an­other 600. I wanted to kill my­self. You don't know any­one's name.

IN THE POCKET One new area of in­ter­est for John: drones and drone de­liv­ery.

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