Daymond John (bottom left), Carl Brown, J. Alexander Martin and Keith Perrin, the entrepreneurs behind of FUBU, pose for a photo in their New York City offices in 1999. (Tyler Mallory/FTWP)

In the late afternoon on March 24, 1989, Daymond John, who had just turned 20, stepped onto a street corner in Queens, New York with his first batch of handmade hats. It was Good Friday, about 40 degrees out, and John started peddling his headwear— basically wool beanies with a string knotted on top, replicating a popular urban design—to pedestrians on the sidewalk.

An hour and a half later, he had sold $800 dollars worth of hats.

A decade later, he had built a $350 million clothing company — but it was far from easy.

“Honestly, I didn’t think it would ever become anything,” said John, the founder of FUBU, a hip-hop inspired apparel brand with sales eclipsing $6 billion in the past 25 years.

In an interview, John, now an investor on ABC’s “Shark Tank,” walked us through the evolution of FUBU, an acronym for “for us, by us.” He discussed the house he turned into a clothing factory, how he made a handful of shirts look like hundreds, and the surprising career advice he would give the younger version of himself. What follows is a transcript of our interview, lightly edited for clarity.

Daymond John is now a branding and marketing consultant in New York and an angel investor on ABC’s reality series “Shark Tank.” (GUS RUELAS/REUTERS)

J.D. Harrison: Okay, let’s go back to the beginning. How did you get your start in the clothing and fashion world?

Daymond John: Initially, it was through printed T-shirts, but not my own brand. I went and printed up some shirts when the Rodney King riots were happening in Los Angeles, with lines like “What happened to poor Rodney King?” Then Mike Tyson got incarcerated, and we did the whole “Free Mike Tyson” shirts. We would sell them at events and on street corners.

It showed me something about the reason people buy clothes—that when there’s an emotional slogan or an emotional connection, products sell quicker. That’s when I started thinking about this concept of “for us, by us.”

Harrison: Why that message?

John: I had heard rumors that many of the top fashion designers were turning away from or didn’t want to acknowledge that they were making a lot of money off of the hip-hop community—African Americans, break dancers, whatever we were called at the time. Having since met many of those designers, I think those were just urban legends. But at the time, we heard that they were saying things like “We don’t make clothes for rappers.”

It frustrated me, being from New York and being part of that community. My thought was, “Who’s going to be proud of this segment of the market?” And it wasn’t about a color. Many people think it was about a color, but it wasn’t, it was about a culture. It was about people who loved hip-hop.

Harrison: Can you tell me about the first product, these hand-sewn hats?

John: They were almost like ski caps, with a string tied on top. I had seen people wearing them, and they were selling for about $20 in stores. I thought I could make them and sell them for less, so I sold mine for $10. My mother actually taught me how to make them.

When I had success selling them that first afternoon, the light bulb went off. I realized I didn’t have to wait for an incident to happen like a Mike Tyson or a Rodney King. People just loved this product and the idea behind FUBU.

Harrison: How did you come up with the name FUBU?

John: I don’t remember the exact moment. Being young kids who never thought this would amount to anything, we were probably sitting around in the basement drinking beer and playing cards, and we just came up with it.

Harrison: When you say “we,” who were you working with?

John: It was three of my childhood friends. Our plan had always been to have five guys, with the thinking being that, by combining all our tastes, we could appeal to every type of person in our community. But that fifth person never lasted, so we had this revolving fifth member.

Harrison: During this time, did you have another job?

John: Yes, I had a little delivery van, and I did work around Queens. I was also a waiter at Red Lobster, so I was working on the business in between jobs.

Harrison: So what came next after the hats?

John: We started selling screen-printed T-shirts along with the hats. We would go around to big events and expos around the Northeast. As we made more money, we made more products, and we eventually started taking some of that to stores and giving it to them on consignment.

Harrison: When did the brand start to take off?

John: Using some of the money from our sales, we made these really nice, high-quality shirts and hockey jerseys with the FUBU logo across the front. But they were expensive and we only had enough money to make about 10 of them.

So for two years, we took those amazing shirts around to as many music videos as we could, placing them on different rappers and artists. It was easier to get in the videos back then, because rappers weren’t huge and they didn’t have the big budgets they have today for videos. So we would loan them a shirt for the shoot and then we would take it right back.

During those two years, our shirts were in about 30 videos, and suddenly we were perceived as this huge clothing company because we were all over the networks and all these rappers were wearing our shirts. No one realized it was the same shirts over and over. Once the videos started coming out, stores started requesting more of our products, and we started to leverage credit cards and everything we had to keep up with demand.

Harrison: So the company was mostly financed through savings and credit cards?

John: Until the “Magic” show. In 1994, we went to “Magic,” this convention out in Las Vegas, and we came home with about $300,000 in orders from retailers. We didn’t have enough capital to make that much, so we went to the bank, because none of us knew anything about angel investors or venture capital. We got turned down by 26 banks.

So we took out a second mortgage on the house my mother and I had—because I had working since I was about 10 years old and was always contributing—and that was for about $120,000. We decided to turn the house into a factory and started manufacturing our clothes there.

Harrison: Can you tell me about this house-turned-factory. What details can you remember?

John: It was a typical Queens house, the kind you see on “All in the Family.” It had three levels: A basement, the first level with a dining room, living room and the kitchen, and then three bedrooms upstairs. After we took out the mortgage, we took all of the furniture out of the house, sold what we could, and the rest we burned in the backyard.

We put all the raw materials down in the basement, and on the first floor, we converted the living room and put eight sewing machines there and we hired some seamstresses. In the dining room, we put a cutting table where we cut all the fabrics. The kitchen, well, the kitchen was still the kitchen.

Upstairs, one of the bedrooms was converted into an office, and another one was converted into a shipping area. We would sleep either somewhere in the third bedroom or up in the attic or wherever we could find some space. We lived like that about for two years.

Harrison: Okay, so orders are coming in, you have a small factory, and the brand’s popularity is growing. What challenges did you face in those early years?

John: Well, we ran out of money.

Harrison: Completely out of money?

John: Almost. We had about $500 left out of that $120,000, and not because we were spending on anything lavish, but we just didn’t have enough financial intelligence between us. We were paying and then waiting 120 days for raw goods to arrive from overseas, then paying staff and shipping and electricity, but not seeing payment from stores until another 120 days later. So we were basically out of money. We considered shutting it all down, which would have meant losing the house, too.

Harrison: Where did you turn?

John: We used what we had left to take out an ad in the New York Times. This was in, I think, late 1996 or early 1997, and it said something to the effect of, “A million dollars in orders. Need financing.”

Samsung America’s textile division saw the ad and gave me a call, and we ended up doing a distribution deal with them. That changed everything. They were my version of a shark that came in with the financing, the back office, the industry knowledge. They helped us not just keep running, but basically push everything onto a global scale. We immediately moved production out of the house, shifted overseas and started producing our goods much faster.

Harrison: Once you started going global, and you were suddenly in charge of a large organization, were there new challenges that stand out?

John: There were so many. I think understanding finances and taxes, and learning how to use money in efficient ways, that was probably number one. Medical, vacation, bonuses— you’ll have a heavy turnover if you don’t learn how to manage things beyond salaries that improve people’s quality of life.

Harrison: What other lessons did you learn as the company expanded?

John: Another important one was learning to take my eye off the business a little. As an entrepreneur, you love your business like a child, and you’re taught to be laser-focused on the business. Once you get to a certain point, though, and it’s running well, you have to start thinking about what will happen when it stops running well. One of my business partners would remind me that no fashion line lasts forever, that we would hit the down curve eventually, and that needed to look for new brands that complement the first one.

But at what point is it right to start looking? Because if you shift your attention too early, you’ll guarantee the company’s demise. So, I think that’s a real challenge, determining when to start broadening your portfolio.

Harrison: So if you could go back and give yourself one piece of advice, or do something differently, would you?

John: No, I wouldn’t. I think the naiveness of being young and not knowing any better, and all the stupid mistakes that came with that, that’s what got me to this point. Honestly, if I was talking to myself back then, I would probably say don’t do it, get a regular job, go back to school.

One of things I probably should have done more of , though, was schooling. No matter what business you’re in, business is business, and financing and money are critical. I would have made a lot fewer mistakes if I had more schooling in that area. Thank God I was able to survive them.

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