When 4 secured a $300,000 order for his upstart hip-hop clothing start-up FUBU, he was elated.
At the time, it was a big break for his clothing brand, which was little more than a basement operation. The problem was, he realized, now he had to make $300,000 worth of clothes.
He had neither the infrastructure nor the resources. So he went to the bank to get a loan. He was rejected. He went to another bank. He was rejected again.
In total, John went to 27 banks. He was rejected at all of them.
How I Made It: Daymond John and the Power of Broke
John says that, in hindsight, he wouldn’t have lent himself the money. His pitch to the banks was pretty terrible: “‘Hello, I am out here in these streets. And the struggle is real. LL [Cool J] is wearing my clothes and I just want to be rich!'” recounts John, speaking at Forefront, the first large-scale live event of the I Will Teach You to Be Rich community in New York City.
Dejected and without a backup plan, John didn’t know what to do. That’s when his mother stepped in. She took out an equity line on their home in Queens, securing John $100,000. With that money, he set up a mini-factory in the house.
Pretty quickly, that $100,000 had dwindled down to $500. John was six months late on paying the mortgage, too. He was in danger of losing his mother’s house. “My lack of financial intelligence and my lack of having like-minded people around me was about to be my downfall,” says John.
“MY LACK OF FINANCIAL INTELLIGENCE
AND MY LACK OF HAVING LIKE-MINDED PEOPLE AROUND ME WAS ABOUT
TO BE MY DOWNFALL.”
-Daymond John, founder of FUBU and investor on ‘Shark Tank’
John’s mother told him that she needed $2,000 to fix his problem. John went back to Red Lobster, hustled some biscuits and chowder, and came back with the cash, which his mother used to take out an advertisement in the local paper, “One million in orders needs financing.” (John says his mother wasn’t afraid to stretch the truth.)
The majority were spoofs. One, however, was from Samsung’s textile division. The multinational conglomerate had been watching the rising urban wear trend and wanted to use FUBU to test the market. Samsung made John an offer: They would fund his orders but he would have to make $5 million worth of sales in three years.
Daymond John knew that wouldn’t be a problem. And it wasn’t. He made $30 million worth of sales in three months.
Being rejected by a bank once is tough. Coming back after being rejected 27 times? That requires a remarkable level of resilience, which, as it happens, is one of John’s five “Shark points,” or tips for success.
Maybe listening to your mom should be one of his “Shark points,” too.
called from The Sun