powerofbroke

by Daymond John
ISBN: 1101903597
Finished 2/1/16
Amazon page for details and reviews

Recap:

Hugely inspirational. This book highlights people from diverse walks of life and how they all applied the “Power of Broke” mindset to go from nothing to success in their businesses. Most were actually broke; some came from privilege. But all of them had the same attitude, focusing on affordable next steps and growing their businesses organically instead of taking dangerous amounts of venture funding. This is arguably one of the best business books of all time.

Throughout the book, Daymond John related his own story to the individuals he featured. As “The People’s Shark,” John is often known for not offering funding when he thinks the businesses should grow themselves from the ground up. The idea boils down to: if you have to succeed to survive, you will.

I picked up The Power of Broke after I heard my friend Chris Gray was featured. Along the way, I found myself in the story of my idol Tim Ferriss, but also in others like musician Steve Aoki, whom I was only tangentially familiar with, and shop.com founder Loren Ridinger, whom I had never heard of. Even stories from mega-corporations like General Mills and tobacco companies were inspirational. I walked away from this book with new business ideas and ways to expand my existing work. Similarly, I think nearly anybody can be inspired by The Power of Broke.


Notes:

Power of Broke (POB) is a mindset
– Exists in all of us: whether or not we have money, opportunities, or advantages
– Many do not recognize it

Many people think we need $ to start businesses

Deep pockets never deep enough to buy all the passion, ingenuity, and determination it takes to have success over the long haul

$ you need, not $ you have

Down to the last dime: no choice but to succeed
– If you have to succeed to survive, you will

Innovation is bottom-up
– Best movies tend to be indie
– Art Basel: Street artists, pop-up displays, next big thing in the sidelines

Fashion: John’s FUBU (For Us By Us) was authentic
– Even haute couture started with plain folks trying to dress nicely

Start from the bottom and grow… or not

John’s morning marching orders: rise and grind
– Choice whether or not to succeed is all his ventures

Superficial relationships don’t last

New Coke: All their money got in the way
– Change for the sake of change

Social networks: even governments need to keep it real or face the consequences of protesters keeping it real

SHARK Points:
– Set a goal (be realistic)
– Homework, do yours
– Nothing is new, only new form of delivery, new way to market, new way to figure it out
– “A fool can learn from his own mistakes, but a wise man learns from the mistakes of others”
– Only new ways to execute ideas
– Adore what you do (passion)
– Remember, you are the brand
– Keep swimming

Daymond John (FUBU, Shark Tank)
– Lived with single mother in Queens, NY – very disciplined
– Neighborhood crowd was getting into trouble
– John got into a bit of trouble, enough to know it
– Mom took $80k mortgage, needed it for everything
– Replaced job so she could spend time with Daymond
– Goal to keep him on track
– Was a worthwhile investment
– But money was very tight
– Had snow shoveling business
– Free screen cleanup for exclusive contracts for the season
– Lawn mowing
– Then Church’s Chicken and Red Lobster
– Then bought a used van for $12k
– Door-to-door transit service along bus route (like Turkish dolmuş)
– Charged less than bus for better service
– Got out after tickets and fines became common
– But kept van for clothing business
– FUBU
– Utilized hip-hop music videos and GAP ads to advertise
– Constant product refinement at Black Expos

If you need $, you work harder, smarter, faster, longer and will find a competitive edge. Queue Daft Punk.

Young businesses should take affordable next steps
– Think within reach
– $12k used van practically as useful/good as $40k new van. Can still sell for $12k
– Kept from making easy decisions that come back to bite

Steve Aoki (Musician, DJ, Music Producer/Exec)
– Came from privilege
– Father was restaurant entrepreneur and excessive partier
– Started as olympic wrestler from Japan
– Came to US, started with ice cream truck
– Steve felt like an outsider in 1990s California suburbs
– Embraced hardcore punk lifestyle
– Community expected you to make your own way
– Started record label at 19 with 2 friends
– Weren’t making much in the beginning
– Always put out a new record as soon as they could
– Started DJing for exposure
– Signed Bloc Party but had to max out 10 credit cards to get the record out
– Father didn’t believe in him in the music business. Thought he should get a more traditional job
– Steve believed in momentum over $ and built a huge following
– “You have to want it… You have to need it. Like a hunger.”

Acacia Brinley (Social Media Star, “Selfie” Queen)
– Bullied in school in Orange County, CA
– Didn’t have the “right” clothes, didn’t play sports or music, no extracurriculars
– Rediscovered herself on social media
– Thought she could make friends online
– Started posting selfie every day
– Once she had a large # of followers, there was negativity
– Realized people were putting her down to feel better about themselves
– Never reacted to any haters
– Sponsored by many brands
– Only endorses items that fit her personality
– Companies know that if Acacia likes them, millions of teenage girls are likely to follow

Rob Dyrdek (Skateboarder, Producer, Reality Show Star)
– Started out just skating for fun
– Entered skate contest put on by local shop
– Didn’t have $ for entrance fee, parents were struggling
– Proposed idea to event organizers
– If he could get 10 others to sign up, could he get in free?
– Organizers agreed, he followed through
– Determined to make money skating
– Set 21 world records
– Takes “nothing to lose” approach to his sport and brand-building
– Always sporting his sponsors’ clothing in a casual way
– Persistently authentic – “Your brand is you”
– Was bold enough to make a plan as he went along
– Was always a push to be the best, not to make money
– TV shows, video games, movies, licensing, sponsorship, products, events
– If you can’t put a 2- to 5-word description of yourself out there, nobody will figure it out
– Rob’s: “Relentlessly Living Amazing”
– Mix of passion and reality: how to channel interests into a way to make a living
– Research and development played a major role in Rob’s negotiations and honing his career

Chris Gray (Entrepreneur, App Developer, College Student)
– Scholly: App and platform to connect students with more than $100 million in unclaimed scholarships
– Matches students with appropriate scholarships
– Chris was his own success story: earned $1.3 million in scholarships
– Lived with single mom and 2 younger siblings in Birmingham, AL
– Couldn’t afford application fees to some schools
– No computer or internet at home
– Used library computer to search. Library limited use to 30 minutes
– Applied for any scholarship he was eligible for, and even some he was unsure about
– Often wrote essays ahead of time and copy/pasted to maximize library computer time
– Had good grades and test scores
– But often unable to get application fee waiver
– In AL, this was often guidance counselor’s job
– Counselors were pressured to put top performers in state schools
– But, many schools with independent fee waivers and common application
– Teacher had encouraged Chris to make his essays personal
– Relating to books he read
– His own circumstances
– What it means to reach beyond one’s own grasp
– Chose Drexel University in Philadelphia (represent!)
– Started coaching students on how to tap into scholarship $
– Could only do so many consultations (not scalable)
– Started building app with 2 other students
– Got exactly the deal he wanted with Daymond and Lori on Shark Tank
– Self-reported stats: over $15 million received in scholarships and grants by Scholly users
– Scholly has big contracts with governments

One of the main reasons businesses never take off or go bust: overfunding

Bigger $ early on means bigger mistakes, when you can’t afford to make any

Money allows you to take a bunch of shortcuts and leaves you unprepared

To give yourself a meaningful shot at meaningful success, colossal bootstrapping is the way to go
– Facebook is the textbook example of colossal bootstrapping
– Proof of concept is not to prove to potential investors or customers. It’s to prove something to yourself

Gigi Butler (Entrepreneur, Cupcake Boss)
– Started cupcake business in Nashville with $33 to her name
– Took college tuition $, went to Nashville to become a country music star
– While chasing dream, cleaned houses and worked at Red Lobster
– Red Lobster educated her about food service
– Also ended up cleaning for some country music stars. Met through waitressing at Red Lobster
– Hired people to work her cleaning business
– Still sung on nights/weekends, but gave up dream at age 30
– Grew house cleaning business further
– Call from brother: “You should open a cupcake shop in Nashville” – “Why not?”
– Tried to get bank loans, no go
– Maxed out credit cards and took $100k in cash to start up
– Continued cleaning and tested recipes on her clients
– Day before opening, checking account down to $33
– Had faith that it would work
– Explosive popularity
– 6 years later, 100 Gigi’s Cupcakes stores, $35 million annual sales

Jay Abraham (Exec, Consultant, Public Speaker, Direct Marketing Guru)
– Modest background in Indianapolis. Only completed high school
– Married at 18, 2 kids by age 20
– Struggled getting jobs and keeping them
– Had a knack for getting in the door
– Printed funny business cards
– Companies gave him an opportunity to listen/shadow, but no job
– 8-track tapes: already going out of fashion
– But many cars and home stereos had players
– Stocked convenience stores with tapes at no cost, no risk
– Took 2/3 cut of each sale
– Offered to test on single store for larger chains
– Had answers to all objections
– Got distributor to send $200k of tapes, no up-front cost
– Win for distributor because it had minimal penetration in Indiana
– Soon cleared $4k/week with no capital
– Bought small mail-order company selling arthritis cream out of bankruptcy
– Tried to use unused TV ad space, found it was very competitive
– Thought of negative responses from TV stations
– Mail order companies weren’t always true to their word
– Sent sample to each TV station to try out
– Offered full price plus 15% on each sale to station
– Realized product could be recurring, so he could keep the proceeds after the first sale
– 90 cent loss on first jar, but $40/year for each customer
– Icy Hot, sold brand for $60 million
– Committed to adding value in every interaction
– The meaning of life is the process. Help someone else while you help yourself

Kevin Plank (Founder/CEO of Under Armour)
– U Maryland football player. Wanted performance t-shirt to wear under jersey
– Hated having to change wet cotton shirts mid-match
– No background in fashion or design
– Committed to the idea, even when many didn’t get it
– Senior year: drove to NYC, bought fabric, took it to tailor
– Had him sew it like a tight Hanes t-shirt
– Made 7 prototypes, $400
– Brought to practice, many tried out and gave feedback
– Back in NY. Negotiated 500 shirt run
– Used $16k life savings
– Office/storage in grandmother’s Georgetown row home
– Went to $5 million in sales in 5 years
– Then $300 million over the next 5. Then went public at $1 billion
– Used the toll-free # 1-800-4-ARMOUR as primary sales channel
– Rough patches. Gambled all $ and lost. But check arrived in time

Daymond was dyslexic – started programs to help others with dyslexia
– Can actually be an asset
– Many great leaders were dyslexic

There is always something in the way

When pitching, think “What’s in it for them?,” not “What’s in it for me?”
– Extend your helping hand instead

Moziah Bridges and Tramica Morris (Bowtie Designer and Middle School Student, Single Mom and Supporter)
– 11-year-old from Memphis
– Mo’s Bows: Handcrafted Bowties
– Sewn by himself and relatives, materials about $6 per tie
– Major support from mother and grandmother
– Came out of a need: wanted affordable, stylish ties
– Went to school, rode a bike in his Sunday best
– Teased at first, but then people started asking for them
– Didn’t charge much, wasn’t a “business” yet
– Then had to start buying fabric. Here the business really began. Charged $20
– Gained lots of media attention, but never advertised traditionally
– Hired locals to help with sewing
– Built website
– Tramica quit her job
– Watched the books, filled orders, managed the press
– Price bump to $25, more for adult sizes and special orders
– Sold in local specialty shops
– Casted by Shark Tank
– All sharks backed off because they thought Mo didn’t need $, except Kevin
– Kevin offered full amount, no equity, royalty of $3 per tie
– Daymond tried to talk them out of it. Really needed mentor, not $
– Would only mentor if they didn’t take the $
– They took Daymond up on his offer
– $250k of business in 4 years

Mentors very valuable for entrepreneurs. Growth of 106% with vs. 14% without

Tim Ferriss (Author, Entrepreneur, Angel Investor)
– Grew up in working-class part of Long Island, went to Princeton
– In 2006 he was struggling. Built Four-Hour Workweek (4HWW) concept
– Had built supplements startup, was doing speaking on the sidelines
– Volunteered for an organization that had some big connections
– Took on event lead role. Job was to put together panel of A-list speakers
– Recognized he had to give to get
– E.G. Chicken Soup for the Soul author Jack Canfield
– Never asked him for much for years other than basic questions
– When he decided to write 4HWW, Canfield was all over it
– Canfield introduced Tim to an agent
– Many publishers turned him down
– Most were intensely negative. “Who is this kid?”
– But convinced Crown Publishing they were buying a brand, not just a book
– He was super aggressive, generated publicity on his own
– Built brand online, even though he had to learn what blogs were
– Ended up at CES to try to connect to bloggers
– Talked his way into a lounge: “Bloghaus”
– Was really nice to the Bloghaus receptionist
– She was the wife of influential blogger Robert Scoble
– Tim really wanted to meet Scoble
– Introduced him. Got Scoble to mention Tim on his blog
– Begged for a SXSW invite
– Connected with Hugh Forrest, who ran the show
– Was persistent, found an opening on the conference schedule for a speaking gig
– Practiced speaking with his friend’s 3 chihuahuas
– If he wasn’t engaging, dogs would wander off
– Tech failed but Tim still nailed his material

Josh Peck (Actor, Comedian, Social Media Influencer)
– Famous for Drake and Josh on Nickelodeon, voice of Eddie in Ice Age
– Now major social media influencer, complete 180 from former career
– Growing up, comedy was defense mechanism for being chubby
– Only child, single mom in NYC. Had “Big Brother” through Big Brothers Big Sisters
– Had just enough $ for acting lessons, had good mentors
– Went to Professional Performing arts school
– Acting business is mostly defined by the whims of others
– Trouble finding next gig after Drake and Josh
– Started posting videos of himself from his cellphone on Vine
– Deeper, more personal connection with followers
– Voice to follow dreams gets smaller as you get older
– That voice faded as he grew social media presence
– Starting getting contacted by big companies for sponsorship
– Rolled out new content on consistent basis
– Did a lot of research about how to be a social media hit
– His online persona is completely authentic
– His “business” doesn’t feel like a business

Even with many resources to throw at a problem, continue to act hungry
– No company is too big to think small

General Mills
– Nature Valley Launched in 1975 with limited success
– Guerilla-type campaign
– Reached out to ski resorts, other places with active, health-minded people
– Posters and signs, gave away free bars, stickers
– Win for resort owners because of free benefit

4 Stages of Brand Development:
– 1. Item
– 2. Label
– 3. Brand
– 4. Lifestyle

Daymond offered to clean NYC store owners’ security gates for free to display FUBU logo
– 50-75 stores, cost $200 each
– Hired Graffiti artists, each was unique
– Expanded to Philadelphia
– Some logos still visible

Girl Scout Cookies
– $700 million annual sales vs. $2 billion for OREO
– Feel good vs. feel guilty pleasure
– Scarcity, 12-week purchase window

Michael Jackson: thinking how his listeners listen with tiny transistor radio

Don’t just spend time attracting new customers. Try to upsell existing ones

Think of ways to be lean
– 10 instead of 11 pieces of shrimp at Red Lobster
– Pocket Books price increase from $X.95 to $X.99

Linda Johansen-James (Serial Entrepreneur, Retailer)
– American Kiosk Management: Mall kiosks
– Only 60 sq. ft., may be all that’s needed for proof of concept
– Manages over 1k kiosks
– Services for independent kiosks
– 800 locations owned by AKM. Selling Proactiv acne product
– But started selling Proactiv from very small amount of kiosks
– Proactiv ideal for kiosks because it is recurring
– Even has SolarCity kiosks, solely for lead-gen

Ryan Deiss (Entrepreneur, Digital Marketer, Consultant)
– Student at UT Austin in the late 90s
– Tried everything to stay ahead of expenses
– Reached out to every local dot-com to offer work for free
– Hoped for stock options
– Convinced email marketing company to bring him on
– Only laster a few years
– Knew how to build basic text sites
– These got better response/conversion than Flash sites
– Met a girl, Emily, wanted to marry her
– Ring would cost $10k
– Started offering hosting, domains, and tools as bundles
– Tracked clicks, sent users to his own products
– Private-labeled a popup builder tool for $500
– Built Opt-In Automator, sold for $14 a copy, able to pay off the $500 in 30 days
– At graduation, had about 500 products he was marketing
– Built ebooks based on what people were searching for
– E.G. how to make sushi
– Either hired ghostwriter or licensed existing content
– Over $100k in sales, kept around $30k
– Had no financial intelligence, never realized it could be a career
– Went to work for financial services company
– Realized he could make more online
– Quit
– But stopped monitoring web services
– Google changed algorithm
– Suddenly $250k in auto-draft payments owed
– Cut 500 products down to 4-5
– Got to pay off debt in a couple months
– But didn’t pay taxes, owed $250k
– Created promos for all his businesses in 1 night
– In some, was transparent about situation
– Got $80k by morning
– Able to cover full amount 2 days later
– Now head of firm Digital Marketing

Loren Ridinger (Fashion Trendsetter, Internet Retailer)
– Started Market America in 1991
– Thought online shopping would be huge before most people had computers
– Husband worked for Amway (Multilevel Marketing)
– Incorporated networking aspects of direct-sales industry into online shopping
– Local reps with large commissions
– First product: cream to help quit smoking
– But it didn’t work
– Next: Thermochrome, a weight-loss supplement
– Worked, remains one of their bestselling products
– Drove to many cities to recruit people
– Sold $60 million in first 18 months
– Put $ back into the business, which continued to grow
– Now shop.com
– Loren is widely-respected fashion consultant
– Cosmetics, skincare lines
– Fine jewelry
– 3 million repeat customers
– 180k+ “shop consultants”
– $6.5 billion retail sales
– 400+ individuals are millionaires

Time can’t be bought, yet we have found a million ways to monetize it

World is changing and urging you to get on board if you don’t want to be left behind

Only real commodity you need to start a business is creativity, not capital

Barriers to entry are lower, but market is much more competitive

Future of selling is “retail anywhere”
– The consumer dictates to the retailer how he or she wants to buy
– Power has shifted back to the people in today’s economy

Seek new sources of revenue, new methods of delivery

Crowdfunding: generate interest in a product while it’s still in development (proof of concept)

Set positive goals
– Napoleon Hill’s Think and Grow Rich
– And write them down! Those who write down are 3x more successful
– Set an expiration date on goals
– Daymond always has a health, family, business, relationship, and philanthropy goal
– Keep it specific

Get with the program in terms of digital skills

Power of Broke is always there, even if it gets away from you every once in a while

Mark Burnett (TV Producer, Author)
– Producer of Shark Tank, Survivor, The Apprentice, The Voice
– Started in working-class London suburb
– Family was always dreaming, regret that they didn’t start a business
– Wanted to avoid this fear
– Didn’t want to miss out on opportunities
– Dad made same $ he made in the military
– Moved to Malibu, worked as many, employer owned an insurance co. and he worked there too
– Sold t-shirts on Venice Beach
– Started on weekends, then full-time
– Interested in girls. Movie industry was much more attractive to them than t-shirt business
– Focused on “adventure”
– Participated in 2 Raid events in Costa Rica
– Brought the concept to the U.S.: Eco-Challenge, was televised
– Gut instinct to get a helicopter shot. Wasn’t approved, put it on his credit card
– Evolved into Survivor
– No $ for exotic location
– Malaysia had big tourism campaign
– Made big ask from them, win-win situation
– Limitless energy: will the person keep going no mater what?

Bible book of Romans: “Suffering produces perseverance; perseverance, character; and character, hope”

Broke Power Principles:
– 1. Use all resources, but don’t expect them to be on autopilot
– 2. Keep it real and authentic
– 3. Learn and embrace the power of optimization
– 4. You’ll be rewarded for solving other people’s problems or filling holes in the marketplace. Also, for helping others reach their desired objectives
– 5. Put all your passion and purpose into your work
– 6. Understand and appreciate everyone you meet on the path to success
– 7. Think beyond the moment and be realistic
– 8. Make the probability of your success a natural part of your thinking. Keep goals in sight and in reach

Focus on each of the SHARK Points and master them, one-by-one

Even if you are not resource-constrained, act like it