Pitching, Partnering and Licensing
Video transcript+ Daymond John
Daymond John — "Let’s talk about pitching, and let me try to give you some advice on how to make you a person who people want to hear when you are pitching."
First of all, when pitching, it’s very important to understand that you are pitching to somebody. What is important to you is not necessarily important to them. Let’s look at Shark Tank. Why do each one of the Sharks invest? We are fortunate enough to have Google, so you should understand what’s viable, and/or what’s important to one of the Sharks. Robert Hejavec: anything his kids think are cool. Barbara: she loves to invest in people because she believes that she was given a certain chance and that if you are ready to live and die by your company - she is going to back you. Kevin O’Leary is a traditional BC. He wants to be in it in three years and out of it in five. He has funds and people to report to so he is a very disciplined investor. Mark Cuban is the kind of guy who it has to resonate with him at home and he will invest in several brands and if one sticks he will make it. Damon John (myself): is this something I can bring into my operation? Can I add one of my celebrity friends or another brand with it and can I push it out into the world of the retailers I already work with and create bigger brand?
So first of all: understand your target. If you walk into a room and you say ‘Well, I want to do a deal with you because I want to be rich and I want to change the world and do this and that!‘ Nobody can care less. How will you pitch to somebody to make their life a little easier? Will it help their portfolio? Will it expand the current brand that they have? Will it utilize their staff and maximize their ability to do work? Will it give them a better vacation? Will it take up more time because you are running the business? So understand that.
Second of all: the elevator-pitch-theory. Sixty seconds to ninety seconds is the amount of time that you would be in an elevator with an executive or a CEO and that’s the only time. Do not over-sell. Take your time and hit the exact points that you need.
Third of all: know your numbers, know your business. You should be the most knowledgable person about your business because you are selling yourself. You see, when we invest in a lot of companies, if a company doesn’t work out? Then I’m gonna do another business with that CEO if that CEO understands what he or she was doing. So you are selling yourself. You need to know that you know that numbers. I understand that you won’t know every aspect of the business but if your answer is ‘Well, with the money I am going to hire an accountant in this area, and I have five accountants and I got the best number here who understands this category...’ then you know how to utilize your resources, and that’s very important.
Somebody else told me one day that you should be able to summarize your company on the back of a business card. You’d better write really, really, really, tiny; or you better be laser-focused on what you bring to the table and what the company is. If it takes you five hours to explain it then I am going to be lost, you’re going to be lost, and we’re not going to know how to do the business.
Those are some of the key points in how to pitch people. Now when coming up with strategic partners (hopefully you get past the pitch!), then what is the business after that? Have you understood why this strategic partner wants the business? Do they want the business so they can invest in it and stay home and not think about it because of financial contribution? Like me - I invest in Apple. They have never called me to help with a computer, actually I don’t even get a discount - but I make money with Apple stock. Or is the investor investing with you because they want to flip the company quick? If you want to have a brand for the next fifty years then maybe that’s not the investor for you. Is the investor someone like me who wants to go out and license the brand? For people who don’t understand licensing: when I created Fubu and I partnered up with my partners, we understood that we could make the best men’s apparel that we could do, but we couldn’t make ladies; we couldn’t make bags; we couldn’t make fragrances. So what did we do? We found professionals and companies that can make that stuff, we would loan them the name and help them with the art and the DNA of the brand. They would go sell it and give us 6-10% as basically a revenue (or a royalty, as we call it in the business). That is how the brand was able to grow from $20-50 million to $350 million, because we would do $50 million in ladies, $50 million in bags, $50 million in fragrance... and that’s how you scale a brand. Licensing is probably one of the most effective ways to scale quickly in business.