In his second interview with Steve, Daymond John addresses how being broke can be the entrepreneur’s strongest asset on the road to success. His new book, The Power of Broke: How Empty Pockets, a Tight Budget, and a Hunger for Success Can Become Your Greatest Competitive Advantage, is written from experience. Daymond explains that had he not dealt with being broke early on in his career, he might never have achieved his ultimate success. Assuming drive and passion are in the equation, being broke forces you to think outside the box and to pull out creative resources that often lead to success.
Contrary to conventional thinking, Daymond says most businesses fail not because there’s not enough money, but, ironically, because there’s too much money. Many people start businesses with adequate capital, go the traditional route of hiring the best advisors, building the best website, then waiting for the sales to roll in. After a year, when that doesn’t happen and the money runs out, there’s nowhere to go but out of business. When you begin instead with little or no money, you’re forced to push through the resistance, to drive the engine of your business with creativity and determination and, if you position yourself well, learning along the way from mentors and the success of others. To back up his theory, Daymond cites the Forbes top 1000 where over 60% are self-made men and women.
Opportunities exist for all those people out there who have marketable ideas but no financial backing, says Daymond. A perfect example is Miller Lite’s “Tap the Future”, a competition where the smart entrepreneur can pitch a product, get an honest evaluation, and be exposed to like-minded contacts.
Of his early failed ventures, Daymond says they didn’t succeed because he lacked the passion for them, the belief in them. The ultimate success he had with FUBU, (after three failures with this company) happened because he was passionate about it and, by the third time around, had learned from his mistakes.
Daymond stresses the value of mentorship, whether it’s a board of advisors or your banker or your neighbor—those people who pass on information based on their own experiences and want to help you succeed. He also shares why he believes in Kanye West and is willing to invest some of his own money in Kanye’s success.
Regarding “Tap the Future”, Daymond’s interest and involvement stems from his own difficulties and then his successes in business. The competition which is open to submission until April 8 at mltapthefuture.com allows contestants to pitch their ideas to a panel of judges. The winner can come away with as much as 200K and the advice and insights of Daymond John and other successful business people. Not a bad deal.
Disclosure: The opinions expressed are those of the interviewee and not necessarily United Capital. Interviewee is not a representative of United Capital. Investing involves risk and investors should carefully consider their own investment objectives and never rely on any single chart, graph or marketing piece to make decisions. Content provided is intended for informational purposes only, is not a recommendation to buy or sell any securities, and should not be considered tax, legal, investment advice. Please contact your tax, legal, financial professional with questions about your specific needs and circumstances. The information contained herein was obtained from sources believed to be reliable, however their accuracy and completeness cannot be guaranteed. All data are driven from publicly available information and has not been independently verified by United Capital.
Steve Pomeranz: My next guest is a guy who literally started with nothing living in Hollis Queens, New York and slowly sometimes painfully built a huge business and an even bigger reputation built on giving back to the community. If you love Shark Tank like so many people do, you know my next guest. In my view he’s the coolest guy in the room and he’s the people shark Daymond John. Hey Daymond, welcome back to the show, it’s great to have you back on.
Daymond John: Thank you, Steve. I don’t think I’ve had a better intro than than ever and I really appreciate it, thank you very much.
Steve Pomeranz: Sure. We’ve going to talk about Miller Lite’s “Tap the Future” but before we do that you just had a book released called, The Power of Broke, How Empty Pockets and a Tight Budget and a Hunger for Success Can Become Your Greatest Competitive Advantage. Now when you say the power of broke, you’re not talking about broker, you’re talking about being broke, right?
Daymond John: Well, yeah, I’m talking about being broke, but I’m talking about the mentality of being broke because the people that exercise the power of broke more than anybody else are the people who have success. You look at broke. Broke is a temporary situation and poverty of the mind is permanent. The Power of Broke is a book that I wrote, and I studied 15 individuals who are wildly successful in whatever way, whether they’re Instagram stars or Kevin Plank who’s doing $4B a year annually with Under Armor and how they exercise what I call the power of broke which is tapping into their resources that are readily available. If you need money to make money, that theory is dead. Honestly ,if you look at the Forbes top 1,000, over 60% of the individuals on that list are people who are self- made men and women. That means they were broke. If you need money to make money, it’s all crap because generational wealth would have been passed down. Those people couldn’t have made it on the list. That’s the theory of the power of broke.
Steve Pomeranz: You know I was watching an interview the other day with Mark Cuban, and he talked a lot about the contribution he felt he was making through Shark Tank to reach 20 million people with the message of entrepreneurship and he wanted to inspire young viewers with the idea that they could be successful too, and I sensed the same zeal in your book. It seems to speak to maybe the current generation, the millennials, which I think in some ways you can say it’s the generation of broke. What do you say to them?
Daymond John: That’s very true. There are so many individuals that are somebody who is, somebody at home who can make a million dollars a year because they can just open up their smartphone and they can activate this idea and they can find people all around the world who resonate with it. Of course, that’s why, that’s a great segue because that’s why I’m part of Miller Lite’s “Tap the Future” because just like Shark Tank, it’s giving everyday individuals the opportunity to go out there and pitch their idea and get money actually from people that don’t have any interest in your company… and they’re not taking that and you can activate the power of broke. Whether you win the competition or not, you get to go up there and see if your idea is viable and meet like minded people.
Steve Pomeranz: In your book, which I did read, you say most businesses fail… well,let me put it a different way. There is this saying out there that most businesses fail because they’re under capitalized meaning they don’t have enough money to keep going, but you say that most fail because they have too much money. Explain that.
Daymond John: Over funding is one of the top reasons why businesses fail because you’ll go out there, many individuals will go out there, they don’t have a proven concept. They’ll go take a $100,000 loan on this concept that they have. They didn’t sell not one item of whatever they had and before you know it, you turn around and after a year you’ve gotten some level of an understanding of what you’re trying to pitch, but you burn through $100,000 because you paid for the best advisors, the best consultants, the best website because you had capital. If you don’t have capital, you go out there and you get a kind of push back, you know that what you’re doing. Once you get pushed back if you keep going forward, first of all, you have a passion for it. Second of all, the people around you, they’re not getting paid to tell you “yes” all day, they are part of the movement because they’re not getting anything and they’re part of the movement because they believe in it. Also, your customers, you’re not buying your customers. You’re earning them every single day. That is why you need to go out there and activate the power of broke.
Steve Pomeranz: There’s some, you talk about resources in your book—and money is a resource and that’s what we’re talking about right now—but there are other resources that people need to tap into. One is the time that they have if they’re just starting out. Give us some idea about the resources that people have if they have no money.
Daymond John: Perfect example. We always say that OPM is other people’s money, but OPM could be other people’s manufacturing, other people’s mind power, other people’s marketing. You can always make a profit off of other people’s mistakes. I’m going to always go back to obviously “Tap the Future”, that’s why I’m here and I believe that it is a valuable platform because you’re dealing with other people’s marketing. Miller’s going to market you out there to amazing other entrepreneurs and strategic partners, so why don’t you use the platform? You’re also going to go out there and be able to approach other people’s mind sets. You’re going to go out there to the public who, you’re going to tell your idea and guess what? They don’t have to like you. They’re going to say yes, no or indifferent. You’re going to find out if you have something that’s of value, so always tap into other people’s networks.
Look at Kanye West. One of the most amazing individuals and most notable individuals of our time and, in regards to music, and he went and spent over $50M with this concept that he has so if you don’t have $50M to do it, how are you going to do it? You look at somebody like Kanye who hasn’t gotten to that point. You have to go out there and you have to really find this crowd that resonates with you. You have to come up with a concept that they resonate with and you have to sell it all the way through and believe what you believe in and you have to then create a following with it. Zuckerberg started out with one friend. Now he has 1.5B of them but he started off with one.
Steve Pomeranz: Let’s talk about Zuckerberg for a minute. When Facebook was just 2 years old, it was making $30M in revenue and he received an acquisition offer from Yahoo for $1B and he turned it down. I think he said, this is the best idea that he will ever have, but he was still in college. You, in FUBU, For Us Buy Us, the business that you built up from absolutely nothing, you said you were offered $10,000 for 40% of your business which 10 years later would have netted the investor over $160M. What is the lesson there?
Daymond John: The lesson is that you go through whether it’s Zuckerberg or myself. The lesson is as you go through the process of building your company, you hear the yes and nos. You hear the failures and you hear the doors are slamming in your face. When the doors start opening, because all that time you put into starts to compound, you have that feeling in your gut that you’re onto something. Mike Tyson has a great saying. “Everybody has a plan until they get punched in the face.” When you start a business or like you, being a broadcaster, you’ve been punched in the face a million times, so when you start feeling that rhythm and you get that gut feeling and you see the people around you and see how people are responding to you, you know you’re onto something and you know it’s not the time to sell because you’ve gotten punched in the face enough to know that you are onto something. That’s what happens when you are on that right path. That’s what happened to Zuckerberg, that’s what happened to me and that’s what happened to so many amazing people out there who are obviously what everybody deems to be called successful at a level of success.
Steve Pomeranz: I’m speaking with Daymond John, of course, he’s on Shark Tank. We’re also talking about his book, The Power of Broke: How Empty Pockets, a Tight Budget and a Hunger for Success Can Become your Greatest Competitive Advantage and we’re also talking about the Miller Coors “Tap the Future” which we’ll get into detail in one second. One quick question, do you think Zuckerberg’s going to give Kanye his money, a billion dollars?
Daymond John: You know what, that’s not up to me to say. Zuckerberg has more than enough, but I think that Kanye is extremely talented. They may come up with a strategic relationship. You never know. That’s really not up to me, but if Zuckerberg wants to give him a billion dollars, I’m here as well.
Steve Pomeranz: You’re hand is up.
Daymond John: My hand is up, my shirt is off, and I’m ready to rock.
Steve Pomeranz: To hear this interview again, don’t forget to join the conversation at onthemoneyradio.org. You mentioned in your book that you’re dyslexic and that there is so many successful people in this world who have struggled with it from Albert Einstein to Thomas Edison, Winston Churchill and Benjamin Franklin, just to name a few. You say that having a disability is kind of like being broke. What do you mean by that?
Daymond John: It makes you work harder. If you understand and recognize a disability that you may have or that challenges, makes you hone in on it because there’s no way to make excuses for it. You look at Shark Tank, there’s 6 sharks and 4 of us are dyslexic. You look at that fact and you start to hone in on it. Once you know what you’re challenged with, you have the ability to then face it and deal with it because it’s not going away.
Steve Pomeranz: How much of the process of being successful in anything you do is what you call “rise and grind”, the daily activity that maybe you don’t want to do on a particular day but you’re still out there pushing it and pushing it.
Daymond John: Every single thing in regards to success has something to do with “rise and grind”. I read it the first time when I was 16 years old and I read this amazing book called, Think and Grow Rich and it said in the book, you’re going to hear this word or see this word over a 100 times in a book and until my third time reading that I didn’t realize it was called, the word was desire, drive and things of that nature. Everybody has an idea. Everybody has a concept but everybody doesn’t have hustle. People think that other people are going to do it for you or that it’s going to magically appear, and it’s not. You got to go out there, instead of waiting for your ship to come in, and you got to swim out to the ship and go get it. Again, that’s, of course, why I’m here because over the last 3 years a part of Miller Lite “Tap the Future” contest we’ve seen amazing individuals that come out, they go to every one of the cities we’re at. They apply. They work their way up through the ranks. They compete with everybody else and they go and they go and get the prize, and we want to be part of what they’re doing because it’s infectious and that is exactly what you need. You need to “rise and grind” every single day.
Steve Pomeranz: So many people that you highlighted in the book were really down to their last desperate dollars. Tapped out on their credit cards, mortgaged, $100 in the bank kind of thing. You quote Bob Dylan, “When you’ve got nothing you got nothing to lose.” It reminded me of a quote from Franklin Roosevelt who said, “When you’re at the end of your rope, tie a knot and hang on.”
Daymond John: Great quote.
Steve Pomeranz: You say that’s when the real magic happens. Does it take being down that far before you’re kind of able to pull it all together to rise from those ashes?
Daymond John: It often does. You have this level of faith because at that point when you’re down there you realize listen, why am I going to continue? I have a passion for it. There’s something here. Listen, before FUBU, I’ve had 4 or 5 other businesses, if they failed, I didn’t go back to it, why? I really didn’t care about it, and I was probably doing it for the money. I failed and closed FUBU 3 times from ’89 to ’92, but I kept wanting to go back because I had a passion for it. I would of dressed people for the rest of my life for free if I could of because I just felt, I got a high when I saw people adorning their body with something I created. The real passion was there. Unfortunately, everybody’s not going to win, but if you are doing something that you’re really passionate about, even if you don’t monetarily have success, you are going to be amazed and you’re going to be excited about the progression you have if you are able to do what you want to do every single day. Yes, you have to do it.
Steve Pomeranz: I was really impressed with your story about what your mom did when you entered high school. She mortgaged the house and she had all these jobs. She stopped working so she could spend the time with you and to make sure that you developed properly. Were there important mentors in your life? That must have really helped you to a tremendous level.
Daymond John: We talk about some of the things that are the top reason why people fail. One of the reasons why people succeed are mentors. Life is a series of mentors. If you have people who are mentors who are not a part of your business or whatever you’re doing and they give you the honest truth about what you need to do. That’s why we see companies, the bigger companies, they always say, here is my board of advisors. Why? Because these are the people who want to lend their name to something and/or advise you in where you need to go. Mentors are a very, very important part of it. Again, I’m always going to bring you back to Miller Lite “Tap the Future”, that’s why I’m a part of that because they allow me to be a mentor to a lot of these companies, and you just can’t get that. If I had the opportunity to go in and tap into mentors who made those mistakes ahead of time, I would have always taken up that opportunity, and that’s why mentors are very important because they made those mistakes and they can pass that information onto you because people who are successful want to see other people be successful.
Steve Pomeranz: Let’s talk about “Tap the Future”. Entrepreneurs get to compete for a $200,000 grand prize and the opportunity to pitch their business live in front of you, Daymond John. Phase 1 starts, started February 11th. It goes through April 8th. That’s when entrepreneurs will be able to submit their business information through Mltapthefuture.com. Then there’s Phase 2 which is a live pitch events. 30 semi finalists will be selected to compete in live pitch events all over the country. Then Phase 3 the top 6 winning teams from the live pitch events will present before a panel of judges in Chicago at a closed door session. You’re involved with it. You’ve been involved with it from the beginning, right?
Daymond John: I’ve been involved with it from the beginning. This is our third year going on. People need to go onto mltapthefuture.com and the deadline is April 8th. There have been people wildly successful. Hopefully they’ll win the money. We don’t take any part of the business and people have gone onto really done great things with their companies and everybody needs to come out because this is a win win for everybody involved.
Steve Pomeranz: To hear this interview again, don’t forget to join the conversation at onthemoneyradio.org. Daymond, thanks again for joining us.