Shark Tank: A shark shares his secret to sales: An emotional connection

J.D. Harrison (c) 2014, The Washington Post. In the late afternoon on March 24, 1989, Daymond John, just turned 20, stepped onto a street corner in Queens with his first batch of handmade hats. John peddled his headwear — wool beanies with a string knotted on top, replicating a popular urban design — to pedestrians, who quickly snapped up $800 worth.

From there John built FUBU, the hip-hop-inspired apparel brand that’s notched sales eclipsing $6 billion in 25 years. John is now an investor on ABC’s “Shark Tank.” This was edited for length and clarity.

Q: How did you get your start in the clothing and fashion world?

A: I printed up shirts when the Rodney King riots were happening in Los Angeles, with lines like “What happened to poor Rodney King?” Then Mike Tyson got incarcerated, and we did the “Free Mike Tyson” shirts. We would sell them at events and on street corners.

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It showed me something about the reason people buy clothes — that when there’s an emotional connection, products sell quicker. That’s when I started thinking about the concept of “for us, by us.”

Q: Why that message?

A: I heard rumors that many top fashion designers didn’t want to acknowledge that they were making a lot of money off the hip-hop community. Having since met many of those designers, I think those were just urban legends. But at the time, we heard that they were saying things like “We don’t make clothes for rappers.”

My thought was, “Who’s going to be proud of this segment of the market?” And it wasn’t about a color. It was about a culture. It was about people who loved hip-hop.

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Q: Tell us about those hats.

A: They were like ski caps, with a string tied on top. They were selling for $20 in stores. So I sold mine for $10. My mother actually taught me how to make them.

When I had success selling them that first afternoon, the light bulb went off. I realized I didn’t have to wait for an incident to happen like a Mike Tyson or a Rodney King. People just loved this product and the idea behind FUBU.

Q: How did you come up with the name FUBU?

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A: I don’t remember the exact moment. Being young kids who never thought this would amount to anything, we were probably sitting around in the basement drinking beer and playing cards, and we just came up with it.

Q: When you say “we,” who were you working with?

A: It was three of my childhood friends. Our plan had always been to have five guys, with the thinking being that, by combining all our tastes, we could appeal to every type of person in our community. But that fifth person never lasted, so we had this revolving fifth member.

Q: During this time, did you have another job?

A: Yes, I had a little delivery van, and I did work around Queens. I was also a waiter at Red Lobster, so I was working on the business in between jobs.

Q: What came next after the hats?

A: We started selling screen-printed T-shirts along with the hats. We would go around to big events and expos around the Northeast. As we made more money, we made more products, and we eventually started taking some of that to stores and giving it to them on consignment.

Q: When did the brand take off?

A: Using some money from our sales, we made high-quality shirts and hockey jerseys with the FUBU logo across the front. We only had enough money to make about 10.

So for two years, we took those amazing shirts to as many music videos as we could, placing them on different rappers and artists.

Our shirts were in about 30 videos, and suddenly we were perceived as this huge clothing company. No one realized it was the same shirts over and over. Stores started requesting more products, and we started to leverage credit cards to keep up with demand.

Q: So the company was mostly financed through savings and credit cards?

A: Until 1994, when we went to “Magic,” this convention out in Las Vegas, and we came home with about $300,000 in orders from retailers. We didn’t have enough capital to make that much, so we went to the bank, because none of us knew anything about angel investors or venture capital. We got turned down by 26 banks.

So we took out a second mortgage on the house my mother and I had for about $120,000. We turned the house into a factory.

Q: What challenges did you face in those early years?

A: Well, we ran out of money.

Q: Completely?

A: Almost. We had about $500 left of that $120,000, and not because we were spending it on anything lavish, but we just didn’t have enough financial intelligence between us. We were paying and then waiting 120 days for raw goods to arrive from overseas, then paying staff and shipping and electricity, but not seeing payment from stores until another 120 days later. So we were basically out of money.

Q: Where did you turn?

A: We used what we had left to take out an ad in the New York Times. It said something to the effect of, “A million dollars in orders. Need financing.”

Samsung America’s textile division saw the ad. We ended up doing a distribution deal with them. That changed everything. They were my version of a shark that came in with the financing, the back office, the industry knowledge. They helped us push everything onto a global scale.