Shark Tank: Daymond John Lost $6 Million On His Worst Investment

Like all successful people, Daymond John has experienced his fair share of ups and downs. While the longtime "Shark Tank" investor has found success with investments in businesses like Bombas — one of the most successful products to have appeared on "Shark Tank" – there have also been times when things haven't worked out. This includes one investment he made before he was ever on the show.

After establishing himself with FUBU in the 1990s, John invested in the fashion label Heatherette. John had great hope in Traver Rains and Richie Rich's fashion line, investing $6 million with plans to help the company find a widespread audience. However, according to John, the designers' managerial skills were lacking and they failed to deliver a retail line that matched the same output as their more lavish runway clothing. 

John also blames his lack of experience in the market as a reason for it crashing. While he initially thought he could compensate for this with more resources, this ended up not being the case. "We thought we could just throw people at it, throw money at advertising, [but it] didn't move the needle," he told Business Insider. "It was just us lying to ourselves."

The costly lesson taught John that, even if he's not familiar with the field, any company he invests in should prove that they are knowledgeable in whatever area they hope to scale up in. However, the creators of Heatherette saw the reason for their failure in a different light. 

While Daymond John partially attributes his negative experience with Heatherette to his own naivety, he also felt that the company's operators, Traver Rains and Richie Rich, were also to blame for their poor leadership skills. However, the designers behind the illustrious fashion brand believed that exterior forces were responsible for them closing up shop. 

Starting in 1999, Heatherette became a dominant force in New York's fashion scene. With their vibrant style that emphasized camp, color, and unpredictability, the brand became popular amongst the club scene, as well as various celebrities. Such stars as Paris Hilton, Gwen Stefani, Naomi Campbell,  Lil' Kim, and Kim Kardashian donned their clothing at various high-profile events, growing Heatherette's audience significantly during the company's peak. 

However, things changed in the late 2000s. The financial crisis of 2008 gave the team trouble as they began struggling to figure out where to go next. According to Rains, their investors at the time didn't make things easier. "Prior to the market crash in 2008, we had a huge amount of orders in production," Rains explained in an interview with i-D. "When things crashed, department stores went back on their orders, so we got stuck with too much stock. Everyone got nervous, our backers wanted us to stop doing the fashion shows, and things just stopped clicking." The company closed its doors the same year, but they remain fondly remembered for ushering in a new era of high-spirited camp.