Daymond John knows a thing or two about starting a business.
While waiting tables at Red Lobster, he founded streetwear brand FUBU on the side, building it into a company worth $6 billion. Now a judge on ABC’s “Shark Tank,” John identifies up-and-coming ventures and helps new founders get their businesses off the ground.
But the landscape of entrepreneurship is changing. With heavyweights like Facebook, Amazon and Google dominating several industries, new ventures often end up selling to larger companies for a profitable exit, rather than sticking out the competition.
Recently on CNBC’s “Squawk on the Street,” John was asked his thoughts about the type of entrepreneurs who found businesses with visions of one day selling to an industry leader. John says he doesn’t advise adopting that mindset. Entrepreneurs should be focused on what their company is doing right now.
“If you start a company with the idea of just selling, it’s like driving forward looking in the rear view mirror,” he says. “I don’t want to invest in a company like that.”
Entrepreneurs who are in it for the payout aren’t going to get far. Rather, John says, the most prosperous businesses fulfill a need.
“[The] most successful entrepreneurs that I’ve ever met were trying to solve a problem and they had a purpose,” he tells “Squawk on the Street.”
Other entrepreneurs echo John’s outlook.
Says Facebook CEO Mark Zuckerberg: “I always think that you should start with the problem that you’re trying to solve in the world and not start with deciding that you want to build a company,” Zuckerberg says in an interview with Y Combinator’s Sam Altman.
In fact, says Zuckerberg, too many founders in Silicon Valley it the wrong way, and it “feels really backwards,” Business Insider reports.
“The best companies that get built are things that are trying to drive some kind of social change, even if it’s just local in one place, more than starting out because you want to make a bunch of money or have a lot of people working for you or build some company in some way,” says Zuckerberg.
Billionaire and fellow “Shark Tank” shark Mark Cuban believes entrepreneurs should be obsessed with their companies from the start — not looking to sell and move on.
“Don’t start a company unless it’s an obsession and something you love,” he wrote in a column on Entrepreneur. Because, “if you have an exit strategy, it’s not an obsession,” he says.
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Check out John’s full “Squawk on the Street” interview:
Daymond John, Mark Zuckerberg and Mark Cuban all agree on what makes entrepreneurs successful