Daymond John, a star panelist from TV’s “Shark Tank,” fashioned a garment business from his interest in music
Daymond John is sitting, pitched forward at the waist. His face rounded by that boyish smile he flashes on the television show "Shark Tank," he listens keenly. The tilted, eager posture suggests that what lies ahead of him is the only direction he considers worthwhile. He sports his signature diamond earrings, blinking above a gray, pin-striped wool suit, accented with French cuffs and massive gold cufflinks. "It's a Brioni tie," he volunteers, "with a little pop of orange." Indeed, the orange, set against the pinkish background of the tie, makes for his boldest fashion statement. "And I always wear some sort of boot, because I am a short guy."
His size is inversely proportionate to his achievements. His is a rags to riches tale—or a Queens to universe tale if you want the true scale of it—from selling hats from a garbage bag in New York to selling globally.
Looking back on how it all began, he recalls smoking a Romeo y Julieta, as he is now. "It was the first cigar I had that I really liked," he says. "So there is sentimental value there. We smoked them on a guys' night out. We were all just smoking and sitting around." He then recites a litany of anti-skills: "Can't dribble a basketball, can't sing, can't draw, didn't know anybody, didn't go to college—but that didn't stop me at all."
Nothing has. Aside from being a venture capitalist on the riveting, follow-the-dough reality show "Shark Tank," John, 48, was selected by former President Barack Obama as a Presidential Ambassador for Global Entrepreneurship. He is a three-time author and ubiquitous speaker, who espouses an unpretentious, pragmatic, and sensible business philosophy. Lately he has launched blueprint + co., an open workspace for like-minded entrepreneurs. Investing in more than 60 companies, he gives new meaning to the word "busy."
Daymond Garfield John was born on February 23, 1969. His mother, Margot, and father, Garfield, who was born in Trinidad, were divorced after John's 10th birthday. An only child raised by his mother and grandmother in Hollis, Queens, he recalls his mom working multiple jobs—ranging from an executive assistant at Lehman Brothers to the luggage department at American Airlines—to make ends meet.
Daymond was fortunate to be in a co-op program at Bayside High School that allowed him to work full-time and attend school on an alternating weekly basis. "And you would get the same kind of credits for it," he recalls. "Now, knowing I was dyslexic, I know that the job was my workaround for not wanting to go to school. But it was also my fascination for making money and also my love for actually being able to go to New York City every single day of the work week. I was a foot messenger for First Boston, a private banking firm. I could support myself and I didn't have to be another burden to my mother. I always wanted to help my mother instead of being a burden to her."
Though he didn't know it then, the job lit an entrepreneurial fire beneath him. "It taught me discipline, it taught me about having a job. It also exposed me to Lehman Brothers at 53rd and Park Avenue. Every time we had a package delivery that was over 10 blocks long, you would get $2, one for the train up and one for the train back. I would walk and save the fares. By the end of the day I would have eight extra dollars. By Friday I would go upstairs to the dining room at Lehman and treat myself to one of those steak lunches for $15. I was just 17. I was hearing these guys complaining that they couldn't buy the new Ferrari that was coming out, or that they were going through a divorce and it cost millions of dollars. They were private bankers, and they were stressed and always intense and so miserable."
Hip-hop music was emerging at the time, and it was a seedbed for creativity. "Russell [Simmons] discovered all of them," John says. "Salt-N-Pepa, Run DMC, LL Cool J, and then the rest came from my neighborhood: Ja Rule, 50 Cent, there's a bunch of them because of Russell. They started to influence everything—the way you walked, talked." John took notice, and saw opportunity. "I saw a De La Soul video and they were wearing a cap that looked like a ski cap. But instead of a ball on the top, it had a string an inch down from the top and it's tied and hangs there."
John believed he could make a better hat. So it was off to Jamaica, Queens, to buy fabric. "Because there is a heavy Caribbean influence in my neighborhood, and a lot of Caribbeans are tailors, they sewed and mended their own clothes. I bought a bolt of fabric, a big roll; it looked like a big old candy cane." It cost $40. His mother taught him to sew, and he made 80 hats. "I folded them and put them all in a garbage bag. And I stood on the corner and pulled one out, two, four at a time. And people are walking by. I sold them at the Colosseum Mall at 165th Street in Jamaica, Queens." He saw a competitor on a different corner selling for $22, so John sold his for $10. "I had to undercut him to get rid of these hats."
As his peers found their voice in musical cadence and rhymes, John's creativity filtered out through fashion. "It actually hit me; it wasn't a conscious stream of thought. I always loved fashion, and I always loved music. I never thought you could make money doing something you loved. Many of us were taught that we had to grow up and go to work in a factory until 60 years old and retire. And coming from a middle-class place like Hollis, Queens you either worked at Aqueduct Race Track, or Belmont, or LaGuardia Airport or Kennedy. But when I saw a couple of designers in urban clothing, I realized that we had the power and we could make our own clothes, we didn't have to be dictated to by someone in Italy. You always hear that someone else is so much greater. That's when I realized that this can be our culture making for us. We don't have to let these Italian designers tell us, "Hey guys, wear this on the street." And that was the genesis of For Us, By Us (FUBU). People have often mistaken it for a color. But it was actually about a culture that anybody of any color would love hip-hop."
Now he turned to creating and marketing different products. "I was 21 or 22. I started bringing on friends. We were doing it because we loved what we were doing. We were going to expos, flea markets. And why? Because we were selling it and we were feeling pretty good about what we were doing. And girls were out there, too, and we were talking, hanging out. I thought maybe we can make hats, sweatshirts. With sweatshirts you have screen printed and you have embroidered. So you had about six types of items in the line.
"FUBU came about right after I sold about 800 hats. I paid some money to a friend who drew up a logo for me, and that was what separated my hats from other people's hats." John had made his first foray into branding. "I went to all the video sets I could, and I would put it on a rapper if they allowed me to. All of a sudden people recognized the name, FUBU. To make ends meet, I was working as a waiter at Red Lobster, and working on FUBU as I found time. [In 1992] we decided to go to a trade show in Las Vegas. And we wrote $330,000 of orders." The order eventually secured a contract with Macy's in New York. Daymond soon sewed his logo onto hockey jerseys, sweatshirts and T-shirts. Then, in 1993, LL Cool J, a neighborhood friend of Daymond's, agreed to wear one of Daymond's shirts in a picture that became the centerpiece of his promotional campaign. Then, during a 30-second commercial spot for The Gap, LL Cool J wore a FUBU hat in the commercial and incorporated the line "for us, by us" in his rapping.
John was in direct competition with Donna Karan and Tommy Hilfiger. "It was amazing—when you are on the floor and Macy's puts you on the floor that is right next to these companies." It is hard not to be big-headed. "But being big-headed hurt us. The way that it hurt us was that we were so hot, that when you sell to the large stores, you sell them what is called a prepack, with 12 pairs of jeans: two size 32s, two 34s, two 36s, all the way to 42s. We'd say, ‘you can't break it up, take it the way it is.' Why? Because we were too lazy to go and say, ‘I'm sorry, how many of each do you want?' We were doing prepack and the store would want to break it up and we would say, ‘No, take it, take it.' So what happened is that we made them take it so much like that, so what happens? You're a store. You just bought $100,000 worth of jeans. 32 through 36 sold out, but 38 to 42 didn't. So now in every box you have extra jeans at 38 and 42, and so what do you do? Instead of the jeans being $60, you've got to discount them at $30 to get rid of them. It starts to corrode the line, because now the kid who comes in to buy the jean at $32 or $35 says, ‘why are those over there worth $60?' And that was us being [inflexible]."
Despite such early setbacks, some would come to refer to John as "a branding genius." John laughs at the label. "I don't know what it means to be a branding genius, because I am not," he says. "That may be another way that people want to describe me for sizzle. If I was a branding genius, FUBU would be Apple. My understanding of branding is a ‘mark' that is identified with a story or a promise of something or of ownership. People confuse branding and marketing. They are two separate things. Branding is the mark on something."
John can, at times, seem unimpressed, even self-effacing, in describing his own abilities. But it seems rare that others underestimate him. Now, with an Alec Bradley Prensado sending off smoke from his left hand—an "amazing" cigar, he says of the Honduran—he recalls the genesis of his participation in "Shark Tank." John relates how in 2009 producer Mark Burnett was launching the new reality-based television show as a franchise of the Japanese show "Dragon's Den," which had premiered eight years before. John was skeptical of its chances. "There was a Skype-type of interview. The producers were telling me how great the show was and all the people they were going to have on it. I laughed at them. I told them they were full of crap, and that ‘You guys around Hollywood are just crazy and that no one wants to see this crap.' They told me Mark Cuban was going to be on the show, and I told them they were full of it. I didn't know Mark then, but I said, ‘The crazy guy who throws chairs on the court—the billionaire who's on TV more than he needs to be? Why the hell would he ever do your stupid show?' I guess that really turned them on. I guess they said ‘I really like this guy, he doesn't give a shit.' "
The rest is history. Last year the ABC show had more than 7 million viewers, and it's now in its eighth season. The success owes to a real-time, horse-trading feel as entrepreneurs compete for investments bestowed by venture capitalists. John often sees something in the contestants that goes beyond what can be tabulated on a spreadsheet.
In one dramatic episode, a woman from Oregon named Kristina Guerrero was pitching Turbopup bars for dogs. She sought $100,000 for 20 percent of her company—a $500,000 valuation—for a company that made what was essentially a pocket-sized 250-calorie bar equivalent to a whole meal. The Sharks dove in. "What makes this different than the other 5,000 dog treats on the market?" said Kevin O'Leary, known for his nasty streak. "That's exactly what makes it different; it's not a dog treat," she replied. Now peeved, O'Leary sassed her: "What is it, a sandwich?" Unfazed, she held to her script: "It's a complete meal—250 calories." Mark Cuban inquired about the price. She distributed the bars, so the Sharks could feed her dog. Cuban stayed with the numbers: "What are the sales?" In 2015 she had $7,000 in sales. No sooner did her cause appear lost than Lori Greiner set up a tee shot by asking about her background.
Kristina was a medaled pilot, having flown three deployments with C-130s, one for Operation Iraqi Freedom. While she was making the bars in her kitchen, Turbopup became the official dog food for the National Association of Search and Rescue. She also outran the competition by getting her bars in ski and bike shops. The sharks now praised her for her service, but one by one they bowed out, Robert Herjavec applauding her sideways strategy, but saying her sales needed to go from $7,000 to $100,000 before he would wet his beak.
Only one remained: John. But he was on the fence, because of her ungrounded valuation of $100,000 for 20 percent of her company. "The problem is you're asking so much, I would have to take so much."
"What would you ask as far as your equity?" she asked.
"The gamble I will take with you is because of your tours and everything else—you must be disciplined; you obviously don't sleep, just like me. So here's my offer: I will go $100,000 for 40 percent." O'Leary needled John. "The company isn't worth $500,000," he said. John countered: "The company is scaling fairly quickly with no help."
Kristina asked John if he would take 30 percent. "It's not worth it for me," John said, softly and regrettably. "That's why they call it the Shark Tank," snapped Herjavec. "That's why you didn't have enough meat on the bone to prove its value," O'Leary added, twisting the knife. "Kristina, he's offering you $100,000 at 40 percent," said Herjavec. "Do you really want to counter at 30?" She heeded the advice, saying "35? Is that fair?" A dramatic pause ensued before John said "35—you got it." As Kristina left, O'Leary, AKA "Mr. Wonderful," couldn't resist one last dig, turning in John's direction and saying, "That was a mercy financing." John replied, "I think she's got it all together to this point, and a woman who did three tours for our country is not gonna go to sleep." Herjavec agreed: "There is no doubt she is the real deal."
"It's always the person," John says, reflecting on that investment. "I saw that she had fought for our country. She flew bombers operating multimillion-dollar equipment, so she can handle selling dog bars.
"And then she had this energy that lit up the room. You want to call an entrepreneur who, even when it's a bad day, will say, ‘Hey, it's just one of those tough days, I always expected it.' You want to have a conversation. You don't want to go, ‘Damn, I don't want to call that person. Because that person is going to be depressing.' Right? Anyone can lift you on a great day. Kristina does that on bad days. She hasn't let me down; she's doing over a million dollars in business."
He also likes entrepreneurial ventures with causes attached. He invested $500,000 for a 17.5 percent share of Elephant Pants, where 10 percent of every purchase of the pants is donated to saving elephants from poachers.
Now, as a Presidential Ambassador for Global Entrepreneurship, John says he gets to use "my passion to share entrepreneurship with as many people as I can to hopefully empower them. My manager Eric Ortner connected me with [Obama's] Secretary of Commerce, Penny Princeton. We saw eye to eye and she thought it would be an honor for me to represent the White House. The plan was for me to talk about entrepreneurship domestically and internationally. So I accompanied the president and the White House staff to Kenya, Cuba, San Francisco. The idea was to share entrepreneurship. There were three pillars to it: one, to educate people on entrepreneurship; two, to educate them on how to get access to capital; three, to educate them on how to scale the businesses. We've seen that the No.1 reason for domestic violence has been the lack of capital in a home. And the reason that President Obama wanted to do this is when people don't have resources to feed their families or take care of themselves or feed themselves, then they are susceptible to people who have alternative motives. But if somebody in Kenya realizes that it takes a dollar to heat their home in a week, and they can open up their cell phone and make $5 a week on their phone, then they are less likely to pick up a weapon or less likely to do something else not in their best interest."
With a hand in about 60 small businesses, John seems every ready for a new deal. And, he often observes, some of the best ones didn't grab much of his attention when FUBU was absorbing his time. Bubba Q's Boneless Ribs is one example. Now he's into blueprint + co. "We are in a shared economy, as we know. Whether you are sharing a car called Uber, whether you shared a house, people do now share open office space like this, usually start-ups share those things." Located on 38th Street in Manhattan's garment district, blueprint already hosts representatives such as Leesa, a direct-to-consumer mattress company; a woman's plus-sized clothing company, Ashley Stewart; and a private jet ride-sharing company, JetSmarter. People who share this space also end up sharing ideas.
Daymond John is always open to the new experience, the next idea, the new venture, the next smoke. Now he is multitasking, talking alternately about his favorite cigars and cigar rituals. "I like to smoke with people who are real cigar smokers, because they tell me what cigars are the best or what I would like," he says, now taking a draw on an Aging Room 356ii. He also enjoys Padrón Anniversaries.
"I mostly like to smoke after an event is done and when I can decompress with people I know to discuss what we are going to do in the future for some of our businesses," he says. In his new book, The Power of Broke, John argues for the counterintuitive idea that you don't need start-up money or contacts to make a buck. Rather, starting from nothing—with only desperation, hope and hunger coursing through your veins—forces you to think more creatively and marshal your resources more efficiently. There is some support for this notion, since in 2014, 275 of the wealthiest Americans on the Forbes 400 list were self-made entrepreneurs, which means they started out with nothing and made use of the "power of broke."
What will be the fourth book? It's unknown for the time being. Right now, John would rather think about the next great smoke. "I still want to smoke a real Cuban Cohiba," he says. "To me, it has always been an iconic cigar so I am going to have to make that happen."
It should be easy, considering everything else that's happened.
Kenneth Shouler is a frequent contributor to Cigar Aficionado, and an associate professor of philosophy at the County College of Morris in Randolph, New Jersey.
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