How I Turned $300 Into $5.1 Billion

From Homeless to Starting a Hair Care Company

• John Paul DeJoria needed half a million dollars to start a hair care company with a partner.
• They made a deal where they each took 30% and gave the remaining 40% to anyone who invested $500,000.
• Dick Holthaus from Citicorp helped them find an investor from the island of Jersey.
• However, the investor backed out due to economic uncertainties, leaving them with zero money.
• John Paul DeJoria borrowed $300 from his mother and lived in his car, too proud to ask for help.
• He learned how to live off of $2.50 a day, relying on inexpensive meals and happy hour specials.

“When you’re really doubting out, the next thing you should think about is not why you’re down and out and how bad things are because that’s yesterday’s newspaper. If you do that, you’re stuck in the past.”

Overcoming Challenges and Moving Forward

• Despite the tough circumstances, John Paul DeJoria focused on the next steps and staying positive.
• He constantly thought about what to do next, who to call, and how to make more sales.
• He believed in forgiving others for past mistakes and not dwelling on regrets.

“You can’t change yesterday’s newspaper, and what slows most people down is they’re stuck in the past.”

Transitioning from Homeless to Successful Business

• John Paul DeJoria’s persistence paid off as he started knocking on doors to sell his products.
• After six months, he had enough to hire his first secretary.
• He continued to hire more people and grew his business steadily.

“How did you go from zero to annoying to knocking on doors? And then after six months, I was out of hire. We had just enough to hire a secretary.”

Building the Business and Reinvesting

• Noah Kagan reinvested everything he had into the business.
• He didn’t change his lifestyle and continued living in an apartment.
• Only when he had enough money to support himself and pay all his bills did he change his lifestyle.
• Noah had no personal bills and enough money to invest in something else.

“Everything we had, we reinvested. Never changed my lifestyle until I had enough money to be able to survive on what I have, my bills paid in full and no bills for me personally, and enough money to put down on something.”

Knocking on Doors and Early Experiences

• Noah talks about how he had numerous experiences of knocking on doors during the early days of the business.
• He mentions that some people were dismissive and didn’t want to talk to him, directing him to their salesmen.
• Noah often had to clarify that he was the salesman and didn’t have a separate person named Ryan.
• Despite some negative experiences, he found that people were usually friendly, especially hairdressers who became some of his best friends and educators for the company.

“Oh yeah, lots of it. Oh, of course, yeah. But they were nice. Some of them were like, ‘No, you know, talk to my salesman, not to me.’ Well, I am your salesman. We don’t have a salesman Ryan. Anyway, so but it was good. People were usually pretty friendly. Hairdressers are very friendly people. You know, there weren’t that many that were rude, very, very few if any.”

Business Partnership with Paul Mitchell

• Noah and Paul Mitchell were friends for nine years in the beauty industry before deciding to start their own business.
• Paul Mitchell was already a top educator and had a name for himself.
• Noah and Paul had a perfect partnership where Noah handled the business side while Paul focused on hairdressing and education.
• They had separate lanes but would cross over and support each other in their respective areas.
• They would do hair shows together, promote products, and present them to customers for more sales.

“With me, Paul Mitchell, we were pals for nine years in the beauty industry. We were very, very good friends. In fact, a young lady, our mutual friend, Denise Pratt, introduced us to one another. Just saw we – I was starting in the industry, and Paul was really hot and heavy as the top educator in the industry and had a name for himself. We became friends, and after nine years, we decided, ‘Hey, let’s do our own business here together,’ and it was a perfect relationship with Paul and I. I didn’t do hair, and he didn’t do any business. He was a businessman but a top hairdresser, top educator, so we never argued about anything when it came to hair. How to do things with hair or the classes. Paul, yep, yep, you’re right 100% on that one in most cases.”

Keys to Success for Entrepreneurs

• Noah emphasizes that having a quality product or service is crucial for success.
• The product should be so good that customers will want to reorder it.
• Hairdressers, in particular, are knowledgeable and can provide valuable feedback on the product’s quality.
• Noah advises entrepreneurs to be prepared for rejection and to maintain enthusiasm throughout the journey.
• He shares his own experience of facing rejection and using it as motivation to improve.
• Enthusiasm and constantly striving to get better are important traits for success.

“Understand that we made a hell of a good product. We made the best product we possibly can. So, your product or service has got to be the best. That’s number one… Be prepared for a lot of rejection because you’re going to get it. If you’re prepared for it, it’s not going to affect you. It’s like when I sold encyclopedias… The two biggest things you’ll ever need is a quality product or a quality service.”

Educating and Selling the Product

• Noah reveals his strategy of educating potential customers about the product.
• He used engaging demonstrations to capture their attention.
• In the case of Paul Mitchell’s conditioner, he would show it to them and emphasize its benefits.
• Noah created curiosity and made customers eager to learn more about the product.
• This approach helped him sell the product effectively.

“I would take and say, ‘Let me show you something amazing, watch this.’ I put it in my hand, right? May I have your hand, please? Yeah. Figure out. Watch now, don’t have a clue what to do with that. Say, ‘Now, let me tell you about this conditioner.’… I’d say, ‘The conditioner is a moisture treatment, a protein treatment, a nucleic acid treatment, lets you cut the hair easier and slip…'”

“I’d say, ‘The conditioner is a moisture treatment, a protein treatment, a nucleic acid treatment, lets you cut the hair easier and slip…'”

Jean Paul DeJoria’s hairdressing strategy

• He would hold the glass and explain to the hairdresser that they’re special.
• By using a specific shampoo and involving the customer, the hairdresser would feel valuable.
• DeJoria shares a story about a guy selling glass and how involving customers can create a powerful experience.

“I would go in there and hold the glass I would explain to the hairdresser when they’re at the back base and say on your hair because it’s fine hair we’re going to use shampoo one that’s what we’re going to use on your hair is shampoo one because it’s a special shampoo for you so now the customer thinks the hairdresser really thinks they’re special and then when they’re sitting in the chair get your customers here put a little bit in there and tell them what this does and at home they can do the same exact thing and it’s good for your skin yeah I’m Incorporated them into it.”

Scaling Paul Mitchell and investing in education

• Paul Mitchell grew from a million to a billion by reinvesting money and focusing on the education of hairdressers.
• They started Paul Mitchell Schools to train new hairdressers to be successful.
• The company also provided education on the latest hairstyles, techniques, and business ideas.

“We reinvested and did good things for the hair stylist and then started schools we have over a hundred schools uh Paul Mitchell Schools so you tune the new hairdresser how to be a great hairdresser and be successful well of course we’re doing with Paul Mitchell products and our knowledge and we also went into education besides the education of how to use our products we went nationwide at one time time we had.”

Becoming the largest privately owned hair care company

• By focusing on customer care, research and development, and helping their customers become more prosperous, Paul Mitchell became the largest privately owned salon hair care company in the world.
• This growth was achieved through hard work, belief in oneself, and taking care of the customer.

“So a lot of us through hard work believing in yourself but taking care of the customer not just say well hell let’s just make a lot of money keep on selling let’s not renew it it’s like people that have research and development of course you want research and development you want to always improve we always try and help out as much as we can and the company grew quite rapidly.”

The origin story of Patron Tequila

• The idea for Patron Tequila came about when Jean Paul DeJoria’s friend introduced him to a smooth tequila he had discovered in Mexico.
• DeJoria decided to bankroll the idea and ordered a thousand cases of the tequila.
• They found a recycled glass bottle and created a sustainable packaging design.
• Initially, no one wanted the product because it was more expensive than other tequilas on the market.

“Martin came back with this long bottle you know nondescript had a horseshoe on it and uh he said this is what they’re a lot of them are drinking down there and I thought wow that’s the smoothest tequila I’ve ever had you could actually sip this a bit he goes yeah but it ran across this guy named uh Francisco alcarez he’s a chef of Tequilas he could make it smoother I said well let’s check it out he went back down and probably some back it was live man this is smoother right so I said okay I’m gonna bankroll this Martin let’s order a thousand cases that’s 12 000 bottles and let’s see what we could do with it right and then Martin found this bottle which is still at the Patron bottle of today found it out of recycled glass it was a gift bottle right and I said if we made these in quantity Where we have recycled glass and it’s in recycled cardboard boxes you know so we’re really into it it goes yeah we could probably arrange that and we did we were able to pull it off anyways but the interesting thing was nobody would take us nobody wanted the product everyone we ran across said I’ve never tasted anything like this but it’s way too expensive the average tequila in 1989 was around five dollars a bottle the I think the best one was 14 if you could find it we had to sell ours for 39 37.95 way more than anybody else they said no.”

Overcoming initial challenges and finding success with Patron

• Wolfgang Puck, a friend of DeJoria, agreed to serve Patron Tequila at his restaurant, Spago.
• DeJoria gained celebrity endorsements, such as Bruce Springsteen, who brought Patron on tour with him.
• Eventually, a wine company took a chance on Patron after seeing the demand and success it was gaining.

“Wolfgang Puck gave me a great break he brought it in served it to all the celebrity guests pretty soon I knew Bruce Springsteen is on the road and with his uh the main uh saxophone player they’re bringing the case of Patron with them on the road on every concert they want to do well that was pretty cool and then Martin knew the guys to Bob Cantina Marina Del Rey he got them so we finally went to a wine company this so why company all they saw was why do we said would you take on our spirit and they said we don’t sell spirits well they sell why we say well the other guys don’t really want to get into because it’s really an unknown name they don’t want to get a tequila we said but uh we’ll work with you to sell it JP will come in you know I will come in I’ll hold your sales meeting.”

Overcoming Rejection and Believing in Yourself

• Jean Paul DeJoria faced rejection when approaching distributors and companies with his tequila product.
• Distributors initially only sold a little over a thousand cases in a year, leading to DeJoria dropping them.
• Partnering with a big company like Jim Beam didn’t result in significant sales either, with only about 12,000 cases sold after a year or two.
• Despite these rejections, DeJoria believed in the quality of his tequila and thought they could sell 40 or 50,000 cases a year.
• DeJoria emphasized the importance of believing in yourself and not always accepting negative feedback without question.

“Believe yourself if someone tells you something that’s real, there’s no reason not to believe them. But if they tell you something negative, question it. What do you feel in your own heart? What do you feel can be done? And just go for it.”

The Path to Success with Patron Tequila

• After dropping Jim Beam and continuing with Seagram’s, DeJoria’s tequila sales started to grow.
• DeJoria eventually bought out the contract with Seagram’s and took over the tequila business himself.
• Sales skyrocketed, and within five years of selling Patron Tequila, they were approaching 4 million cases a year.
• Eventually, DeJoria sold Patron Tequila for over 5.1 billion dollars.

“A lesson people will learn that one product that was too expensive that nobody wanted, or a big person thought that all the statistical data showed no one could ever approach that. But all of a sudden, it took off, and people wanted to treat themselves to the very, very best.”

Giving Back and Making a Difference

• After selling Patron Tequila, DeJoria wrote a check for 50 million dollars to start the Peace Love and Happiness Foundation.
• He believes in giving back to change not just Austin, but also the world.
• DeJoria’s generosity extends beyond financial contributions, as he actively participates in making changes for the better.

“I figured that if the creator of everything gave me that opportunity, part of it was my destiny to give back along the way and find new experiences and help others along the way. Things were so good for me, why not help others? So I’m very generous in that area.”

Belief in Your Product and Persistence

• Having a great product that you believe in is crucial for success.
• DeJoria’s story parallels the importance of persistence and not giving up, citing examples like Sylvester Stallone’s persistence with pitching the movie “Rocky” and successful individuals in the internet industry.
• He advises keeping focused on the target and ignoring trivial matters while paying attention to vital ones.

“No matter what the rejection is, keep your eye on the target, ignore the trivia many, and just pay attention to the vital for you. And get rid of all the baggage off your shoulders.”

Starting a Business with Limited Resources

• Jean Paul DeJoria started out with limited resources and couldn’t afford to hire anyone initially.
• Shirley Wong, his business partner, took on multiple roles in the business to help it grow.
• They hired their first salesperson after a year and a half of starting the business.

“We couldn’t afford anybody but couldn’t do everything … Shirley Wong would do 10 jobs. A year and a half later, we had enough to hire one salesperson.”

Growing the Business with Fewer Moving Parts

• Jean Paul DeJoria’s philosophy is to have fewer moving parts in his business.
• He believes in having one person do the job of multiple people, rather than hiring unnecessary staff.
• This approach allowed the business to grow steadily while managing costs effectively.

“Move off fewer moving parts … Have one person do what they should be doing, but don’t hire three people to do the job of one person.”

Success Comes from Doing the Things Others Avoid

• Jean Paul DeJoria suggests that success comes from doing the things that others don’t want to do.
• He emphasizes the value of hard work, dedication, and persistence even when faced with setbacks.
• Successful people go the extra mile and take actions that others are not willing to take.

“Successful people do all the things unsuccessful people don’t want to do … Knock on two more doors, keep on going.”

Finding the Right Product and Customers

• Jean Paul DeJoria advises finding a great product and understanding who the end user will be.
• Customizing the product for the target audience increases its appeal.
• The next step is to establish a distribution network or find channels to reach the end users directly.

“Find a great product, who the end user is, and try and customize it more for that end user.”

Money Management and Pricing Strategies

• Jean Paul DeJoria suggests incorporating a small discount into the price to encourage upfront payments from customers.
• This helps generate immediate cash flow and supports business operations.
• Managing money effectively is crucial for business success.

“I worked into my price a 5% discount already … people give you money on the spot. Now you have money to operate off of.”

The American Dream and Defining Success

• Jean Paul DeJoria highlights the importance of redefining success beyond just wealth accumulation.
• He shares a personal anecdote about his son asking if they were rich, to which Jean Paul explained that richness should be measured by happiness and good health.
• Success should be defined by personal happiness, health, and the progress made in one’s endeavors.

“Rich is really are you happy and healthy … if you and your family are happy and healthy, you’re just as rich as we are.”

Advice for Aspiring Entrepreneurs

• Jean Paul DeJoria suggests aspiring entrepreneurs consider what success truly means to them.
• He advises focusing on personal growth, doing things no one else wants to do, and being dedicated to continuous improvement.
• Jean Paul shares his own experience of starting as a janitor and being successful by excelling at his job.

“Success means how far have you gotten … successful people do all the things unsuccessful people don’t want to do.”

“Do you go to bed watching TV for the last two hours to get your mind things off things, or would you read a book about success? … That’s success.”

Starting a Business

• Used a Xerox machine to make copies
• Bought envelopes and had a friend run them
• Started with no computers or cell phones
• Used a regular answering machine

“Today you have computers, we had nothing. We didn’t have cell phones in those days, they were just being invented.”

Working Hard and Having Passion

• Has been working since part-time at seven years old
• Started working full-time at 11 years old
• Didn’t mind working and had a job in 1980 and 1981

“[…] today many young people don’t have that passion to work. I’ve been working since, well, part-time at seven years old.”

Making Bill Payments

• After two years, was able to pay bills on time
• Used to always be late on payments
• Having bills paid on time felt like a major accomplishment

“All I knew was after two years we could pay our bills on time. We were always late, so we thought, ‘Hey, we haven’t made it.'”

Dealing with Regrets

• Having regrets about the past is not productive
• Cannot change the past, so it’s important to let go
• Focus on the future instead of dwelling on past mistakes

“You can’t change yesterday’s newspaper, and that’s something you gotta get off your shoulder, all those regrets.”

The Power of Kindness

• Kindness is a key factor in success and relationships
• Being kind to others makes both parties feel good
• Learned the value of kindness throughout the years

“If I ever had a secret to a lot of my success and my relationships with people, it’s kindness.”

What Makes a Great Life

• A great life is being happy and healthy
• Money and wealth do not guarantee happiness
• Have seen wealthy people who were unhappy and unhealthy

“A great life is being happy and healthy. I’ve seen too many people that were extremely wealthy but they were neither healthy nor happy.”

Book Recommendation: “How to Win Friends and Influence People” by Dale Carnegie

• Considers this book one of the greatest books everyone should read
• Gives this book to people who need help with relationships
• Emphasizes the importance of eye contact and kindness in dealing with people

“There was a book there that I think is one of the greatest books everybody should read. It’s called ‘How to Win Friends and Influence People’ by Dale Carnegie.”

Happiness and the Importance of Kindness

• The interviewee reflects on his life and admits that despite his immense wealth and power, he has not been happy.
• He expresses regret for not giving away the majority of his fortune in exchange for happiness.
• Happiness is emphasized as a crucial aspect of life.

“I was never really happy. Happiness is very, very important.”