The Power of Broke: How Empty Pockets, a Tight Budget, and a Hunger for Success Can Become Your Greatest Competitive Advantage by Daymond John and Daniel Paisner
When I started reading this book I didn’t know Daymond John was on Shark Tank. I’ve seen the show before but only a couple times. I am not a fan of reality TV because I know they dramatize reality shows to the detriment of accuracy. They jack up the entertainment value, and in doing so they portray events inaccurately. I’d rather watch this kind of show to learn rather than to be entertained.
Books on business and entrepreneurship are great not only for business types but also for anyone who wants to improve their performance in work or their personal life. The principals of smart business practices translates to all aspects of life. I believe in the entrepreneur, and in the employee who can be an entrepreneur inside someone else’s business. They can use the entrepreneurial spirit to innovate and achieve, an intrapreneur.
Daymond would use his van as a bus.
Daymond John started his business FUBU (short for “for us, by us”) with $40. He made knock-off hats at home that were similar to more expensive ones, and sold them out of his trunk. He later grew the brand making it a lifestyle. FUBU is now a 6 billion dollar business.
The main theme of the book is: a lack of resources can motivate you to be innovative in growing the business. The idea of being “broke” will cause the entrepreneur to work really hard to be creative in coming up with ways to advance the business. The author is against large infusions of cash into the business. He says that the the entrepreneur becomes lazy, dependent on the cash – when the cash runs out, the business goes under. Also when you receive cash for the business it comes at a cost, usually in the form of control or ownership of the company.
The author tells a story of not financing 200K to an athletic shoe duo , they diversified the product line too far. Having a couple styles of shoe is ok. However considering the fact that they needed 12+ different sizes of each shoe type in inventory at all times led to problems when the owners grew the shoe style lineup to several different models, this 12x’s or more their manufacturing and inventory requirements.
Daymond John was one of the sharks who rejected the deal. Ouch. Nobody’s perfect and this isn’t the first deal to slip through Sharktank’s fingers to go on to become a blockbuster hit. However, the author’s tips in the book are still quite valid. Hindsight is 20/20.
The author uses several case studies in making his points.
Tim Ferriss – Multi-NYT best selling author, podcaster, performance optimizer, etc. In 2001, Ferriss founded BrainQUICKEN and sold the company to a London-based company. Ferriss is an angel investor and advisor to startups.
Acacia Brinley – one of the top influencers on Tumblr and social media “Selfie” Queen. Sponsors and endorsements.
Harvey Finkelstein – made t-shirts for his college to put himself through law school. He was one of Shopify’s first customers sh he had experience building an online store on their platform. He became their Chief Operating Officer.
Kevin Plank – played fullback at the University of Maryland, invented better moisture-wicking fabric and started Under Armour.
Rob Dyrdek – world-renowned skateboarding star, built identity and used his passion to build a multimillion-dollar brand. He is the founder of the Street league Skateboarding (SLS) Skateboard competition.
Loren Ridinger – founder of Market America, a fashion business and internet merchant.
Moziah Bridges & Tramica Morris – started making bow ties at nine. At 13 he’s sold 200k worth of handmade ties.
Mark Burnett – Worked as a nanny, sold t-shirts by using a fence at Venice Beach. Later went on to produce popular reality shows, such as Shark Tank, Survivor, The Apprentice, and The Voice. He is known as the father of reality TV.
Ryan Deiss – launched his first web-based business from a college dorm room in 1999. He went on to found over 40 different.businesses.
Linda Johansen-James – sold products out of small, 60 square-foot kiosks in malls. Now her company manages over 1,000 retail locations
Josh Peck – Started with Nickelodeon, later made funny short videos with his cell phone on Vine and other social media platforms. Now does tv shows and movies.
Jay Abraham – Saw a floundering 8-track business and found a way to successfully buy and distribute the tapes. Later he bought a small company and saved it from bankruptcy. Re-launched it as Icy Hot. He is one of the Top 5 Executive Coaches in the country.
Steve Aoki – Deeply in debt from starting his own record label at age 19. Used “By Any Means Necessary” and “Do It Yourself” motto, He became one of the top DJ’s in the world. His dad founded Benihana.
Christopher Gray – received over $1.3 million in college scholarships created an app to help other students do the same.
Gigi Butler – cleaning lady who started a cupcake shop in Nashville, Tennessee. Now has 100 Gigi’s Cupcake stores, generating over $35 million in annual sales.
The author created an acronym “SHARK” to communicate his philosophy on business:
S. Set a goal not too high or too low, but just right. Write it down. Grow your business slowly. Make affordable steps forward. start small. pace growth.
H. Homework. Learn from others mistakes. Twitter is just an updated messenger pigeon. OPM Other People’s Money/Mindset/Magic
A. Adore what you do. If you believe then others will too, but have realistic expectations. Do something you love. Have fun.
R. Remember you are the brand. Connect with others. Define yourself in a couple words.
K. Keep swimming. It takes hunger to build success.
- 8 out of 10 businesses fail in the 1st 18 months.
- Execution is key. Businesses built on steroids and injections of capital are living on borrowed time. when the money runs out the business runs its course.
- Steve Jobs sold his car and Steve Wozniak’s sold his calculator so they could scrape together enough money to build the prototype of the computer circuit board that would become known as the Apple one.
- In the United States emigrants are twice as likely to start a business as US citizens.
- Embrace your failures.
- 52% of small businesses are home based according to Forbes.
- 70% of small businesses are owned and operated by a single person.
- Milton Hershey started 3 candy companies as a young man and all of them failed before he found success with the Hershey company.
- Before becoming one of the most beloved figures on television and a pop culture icon, Oprah Winfrey was fired from her job as a broadcaster and us because she was accused of being “unfit for television”.
- More than 35% of US entrepreneurs have dyslexic traits. Dyslexia is far more common among entrepreneurs than it is among executives.
- Let other people guide you, mentoring is important.
- Walt Disney was turned down 302 times before getting financing for Walt Disney World. Today the resort attracts over 25 million visitors each year.
- Before publishing his first book Stephen King was ready to give up on the writing career. After getting 30 rejections he threw his first novel in the trash but his wife retrieved it and urged him to keep going. Since then he has gone on to sell over 350 million copies of his books many, of which have been made into motion pictures.
- Keep one shrimp to yourself red lobster. They reduce the number of shrimp in there scampi by one rather than raise prices.
- In 2011 there were 5.68 million employer firms and United States 99.7% of businesses had fewer than 500 employees 89.9% had fewer than 20.
- For almost all retailers inventory is the single largest asset on their balance sheet but in most cases it’s also the least productive asset. Seek new sources of revenue and new methods of delivery.
- According to a Harvard business school study 83% of the population does not take the time to set professional goals 14% have goals in mind but they don’t write them down and 3% set down their goals on paper and commit to them.
- People between the ages of 55 and 64 have the highest rate of entrepreneurship in America.
97% of the entrepreneurs who give up become employed by the 3% who never quit.
Always dedicate time to the business on a regular basis. Don’t rush or ignore. Make goals based on specific times.
Think about your customer.
(bridges BPP #4 solve other peoples problems, and 6 understand their perspective)
Take inventory of yourself. What resources do you have. What are your talents.
Sell the truth.
“cola” vs. Coke. 4 stages. Item, Label, Brand, Lifestyle
It’s easier now than ever before to start a new business.
Asses risks carefully.
Rise and grind.
Money doesn’t guarantee growth of the business. You give away some control or a percent of your business.
You don’t know if it will work until you try to sell it. Asking for advice, everyone will love it and give “nice” advice. *I have read this from other sources and it appears to be a common theme.
Broke Power Principles
1 Use all the resources available to you. Have patience. Use resources to your smartest advantage. Jay Abraham talked about OPM – other people’s money, mindset, and magic.
2 Honesty and authenticity. At the end of the day the more humility and integrity you put into the world, the more you’ll connect with others who want to help you succeed.
3 Optimize. Make the best use of all resources. Time – don’t waste it.
4 You will be rewarded for solving other people’s problems or filling holes in the marketplace. Figure out how to do something better than anyone else.
5 “Put all your Passion and purpose behind whatever it is that you’re doing. If you don’t believe in yourself, in your product , your service , or your business , you can’t expect anyone else to either. That said , you don’t want to come across a nut, so don’t be fanatical or unreasonably optimistic. Remember that you’re selling people on the idea of trusting you, because people invest in people , not just a product or service.”
6 Build relationships with everyone. Understand their perspective. Be their cheerleader. Communicate you care. They will respect you for respecting their reality. They may reciprocate.
7 “Think beyond the moment. This can be tough to do, especially when you’re up against it. Find a way to support your vision with logic, data , and realistic projections. Wishful thinking and conjecture have a way of working against you , and breaking you in a bad way.”
8 Be optimistic and believe that you will succeed. It’s like a self-fulfilling prophecy. Believe in yourself. Also be realistic. Keep pushing forward. Keep your goals in sight and in reach.