How To Invest Like Daymond John Of 'Shark Tank'

Daymond John is an entrepreneur, CEO, investor and panelist on the hit TV show "Shark Tank." John is also a motivational speaker who talks about his investments and what he views as signs of opportunity. He often shares advice in his blog.

People First: John thinks the relationship between an entrepreneur and an investor is extremely important.

“I want to work with founders who know their business, have a plan and a vision, are resilient masters of their industry and are infectious leaders," he said. "We are going to be spending a lot of time together; we have to like each other.”

John has earned the nickname “The People’s Shark” because he’s ultimately investing in people, the entrepreneur as his focus.

The billionaire said the first thing he does when he approaches an investment opportunity is to determine if he can see himself working with the person, even if their current business model doesn’t work.

Scalability: John asks himself, is the business scalable? What potential do they have to grow? And is that growth cost-effective? He went on to say that your idea should be based on market research, not just your buddies’ opinions.

In-depth research and analysis are key. In a recent interview with Scott Duffy, John says “Before taking on the risk of investing, I ask myself ‘Is the business scaling too quickly?’ 'Are they taking in money too fast?' 'Are they focusing on the small and precise things they want to do?'”

See Also: Daymond John Tells Detroiters How To Become 'Sharks'

Proof of Concept: This is a realization of a certain method or idea in order to demonstrate its feasibility. With investing, a company must prove whatever they’re doing is working.

On this matter, he said, “Don’t talk to me about hypotheticals and what could happen. Have you made sales? And do you know what they mean? Do you understand your market? If you tell me everyone is your customer or you can’t prove that people want to buy your product, count me out.”

Know Your Business: When being presented with a potential investment, John thinks knowledge is key. A business needs to understand how to scale and grow without an investor's liquidity.

John was quoted as saying “My investment isn’t tuition for you to learn business basics. It’s so we can scale. That’s not to say that you shouldn’t expect guidance from an investor. But I’ve made my fair share of mistakes. Learn from the people who came before you. Take online courses, read books, listen to podcasts. Do whatever you have to do to take in every ounce of knowledge you can get.”

Photo: Courtesy of Shark Tank