Shark judge Daymond John: What I learned from a $6M mistake

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How I Made It: Daymond John and the Power of Broke

Despite his success, Daymond John is still hungry.

Financial constraints and the desire for success give entrepreneurs an advantage in starting a business, the founder of FUBU and "Shark Tank" co-star said. It's the concept behind his most recent book, "The Power of Broke." But it's not a concept that applies only to financially disadvantaged people.

"The people that use 'the power of broke' ... most are the people that get to a level of success and realize they still have to maintain that hunger, that drive, that focus," he said.

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Shark judge Daymond John: What I learned from a $6M mistake
PASADENA, CA - JANUARY 10: Daymond John of 'Shark Tank' speaks onstage during the ABC portion of the 2013 Winter TCA Tour at Langham Hotel on January 10, 2013 in Pasadena, California. (Photo by Frederick M. Brown/Getty Images)
PASADENA, CA - JANUARY 10: (L-R) Hosts Robert Herjavec, Lori Greiner, Daymond John, Kevin O'Leary and Executive Producer Clay Newbill of 'Shark Tank' speak onstage during the ABC portion of the 2013 Winter TCA Tour at Langham Hotel on January 10, 2013 in Pasadena, California. (Photo by Frederick M. Brown/Getty Images)
PASADENA, CA - JANUARY 10: (L-R) Hosts Robert Herjavec, Lori Greiner and Daymond John of 'Shark Tank' speak onstage during the ABC portion of the 2013 Winter TCA Tour at Langham Hotel on January 10, 2013 in Pasadena, California. (Photo by Frederick M. Brown/Getty Images)
LOS ANGELES, CA - NOVEMBER 23: Businessmen/'Shark Tank' cast members Mark Cuban, Daymond John, Robert Herjavec, and Kevin O'Leary speak onstage at the 2014 American Music Awards at Nokia Theatre L.A. Live on November 23, 2014 in Los Angeles, California. (Photo by Kevin Winter/Getty Images)
MIAMI BEACH, FL - JANUARY 20: Daymond John attends NATPE Reality: Case Study: SHARK TANK at NATPE 2015 at Fontainebleau Miami Beach on January 20, 2015 in Miami Beach, Florida. (Photo by Aaron Davidson/Getty Images)
Daymond John, second right, of Shark Tank and FUBU, joins Bill and Tani Austin, founders of the Starkey Hearing Foundation, as they fit Jayden Orlang, 10, of New York, with free hearing aids at the Foundation's hearing mission, Saturday, Feb. 1, 2014, at Yankee Stadium in New York.(Photo by Diane Bondareff/Invision for Starkey Hearing Foundation/AP Images)
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"I probably made the biggest mistakes in my life when I had the most money," he said, citing the time he tried to expand FUBU into women's clothing as an example. John said he spent too much on the production value of the fashion show and not enough on market research.

"It doesn't matter how big you make something if your stuff is crap when it's small, it's gonna be crap when it's big, and you're gonna lose all your money," John said. "I wasn't paying attention to the customer, who really is the one who you have to create the following with. And when I didn't do that, $6 million later, I failed."

What does it take to use "the power of broke?"

"First, put skin in the game yourself before you go and ask anybody else to help you," John said.

But nothing pays off like hard work. John advises entrepreneurs to work 10 times harder than their competitors.

Disclosure: CNBC owns the exclusive off-network cable rights to "Shark Tank."

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