These are billionaire John Paul DeJoria’s tips for investing well
John Paul DeJoria went from living in a car to becoming a billionaire thanks to shampoo and tequila. Some forty years after striking it rich, he shares the investment wisdom he has acquired throughout his life.
In 1980, John Paul DeJoria invested his entire life savings, $700, into a business selling a new shampoo he developed with hairstylist Paul Mitchell . The duo chose the now distinctive white bottles with black lettering because they didn’t have enough money to pay for colored inks. At the time, DeJoria slept in an old Rolls-Royce automobile and sold his stuff in salons across Southern California. As the 1980s progressed, the Paul Mitchell brand became a huge hit with salons and their customers, who were willing to pay premium prices for high-end hair care products. DeJoria became a wealthy man and began to diversify into new ventures, as he did in 1989 when he co-founded Patrón Tequila and sold the brand to Bacardi in 2018 for $5.1 billion.
In 2013, DeJoria appeared on Shark Tank and was part of an Emmy-winning episode , where he invested $150,000 for 20% of a Florida irrigation startup called Tree T-PEE . DeJoria is also a major investor in the House Of Blues nightclub chain . After his initial success as a businessman, the American businessman also began investing in stocks and real estate, and learned a lot over the past four decades about how to maximize his returns and minimize his losses. Forbes recently met with DeJoria, now 79 years old and worth $3 billion , at Utah’s Montage Deer Valley Resort during Goldman Sachs’ private “At The Helm” wealth management conference.
Forbes: How did you start investing?
John Paul DeJoria: I started investing when I was a little kid. He was about 11 years old and doing a paper route . I found out I could open a savings account, so I went to Citizens Bank in Atwater, California . I think I had 3 dollars. But other than that, I never had money to invest. So when I really started investing, whether it was in the stock market or real estate or other things, I was over 30 years after Paul Mitchell finally started making some money. I thought ‘now that I’m making enough money, how can I save some for the future?’ What you must do in life to be successful is not do what so many people do when they make money: spend . Mainly, because they start making money, they feel like it will never end, but then, the following year, it doesn’t come and they have already mortgaged their future with debt.
Before making any investments, I made sure I had enough money in the bank to cover six months of every bill I had (movie theater, popcorn, gas, insurance, all the costs). That way I knew I could cover the losses if something went wrong and I would be fine for at least six months.
The next thing I would tell investors is to realize that you are the best investment you could ever make . If you can invest in yourself , in education or in something that benefits you or your family, that is the first great investment you could make . I wanted to buy a house to begin with, so I saved money until I had enough to buy a small house. Then I started making money with Paul Mitchell. I didn’t improve my standard of living for a whole year. I didn’t change or spend more money . And I did it every year for a while, not knowing how long it would last. That’s how I got involved in investing.
Forbes: When you started in your 30s, what were some of the things you invested in?
DeJoria: It was a combination of things. At first it was other businesses that I thought were great and because I wasn’t involved in them, they didn’t turn out as well as they should have . Then I started investing a little in the stock market , because I never really understood it. I didn’t have much money in it. One of the more unique ones was Enron , which sold for many dollars a share, but then Ken Lay got exposed for not doing the right thing and the stock fell to something like 10 cents and I think I bought about 10,000 shares. I sold it when it went up to 40 cents . I made a huge profit on it and I thought it was cool. That was one of the first.
Forbes: How would you describe your current investment strategy? And how has it changed and evolved over the years?
DeJoria: It has evolved over the years. You can’t invest in just one thing. It’s like drilling a well. If everything goes into an oil well and doesn’t turn out well, you’ve lost everything . Now I am very diversified. I have some in the stock market, some in precious metals, or companies I have involved in precious metals. I have a couple of gold mines in New Zealand . I invest in the places that produce gold and silver. I also invest in real estate .
When I look at investments today, especially these past few months, what I’m really seeing is not «this is the one that’s going to be a great performer in the next year or two . » I look at how much staying power they have or have survived, for example, the problems we had in 2008, 2009 and 2010 , the recession, if they were present during covid, how they survived… In other words, if I invest in a company in the market of values, are they those that, if everything goes wrong, will still be here so many years from now? Then in real estate I simply invest without mortgaging too much. People go bankrupt by mortgaging too much . If I’m going to invest in something, it’s going to be with something I can afford.
Go very slowly and always invest less than you can afford to invest. And never put more than 10% or 20% into any investment, even if you think it’s a sure thing. John Paul DeJoria
Forbes: What type of real estate do you typically invest in?
DeJoria: Office buildings, big developments… One thing I’ve been associated with quite a bit over the last six years is a group called Discovery Land Company . They have fabulous real estate and private memberships in various parts of the world. These are big developments: 300 or 400 big houses in places people love, like Austin , Costa Rica and Scotland . They are family oriented. I could take my grandchildren there. Everything is private, has the best security in the world, the best chefs, golf courses and other outdoor activities.
When times changed, I ended up purchasing Hamburger University in Chicago. McDonald’s moved to larger facilities, closer to the city center. It was approximately 200 acres, with a magnificent 700-square-foot office space, a lake, and a Hyatt hotel . It was McDonald’s headquarters to train managers and people who wanted franchises. After selling Patrón , I bought it all. The city let me come because I was going to think about ecology and not harm the lake and make everything there more beautiful.
Forbes: What is it used for now?
DeJoria: Ace Hardware is headquartered there right now and a couple of accounting firms as well. It is a property that generates income for future generations. When I have many projects, I put 75% in my name, but the other 25% in a trust just for my children. So no matter what happens to the 75%, there will always be something for the future .
Forbes: What investment do you consider to be your greatest triumph?
DeJoria: John Paul Mitchell Systems . When I didn’t have the money for it, I said, I’m going to find a way to make this happen. It was the greatest thing I did in my life. That money opened Patrón Spirits and other businesses.
Forbes: What investment do you consider your biggest disappointment and what did you learn from it?
DeJoria: I got into the phone reselling business. I didn’t know anything about it. I thought the people involved knew what they were doing. I lost a few million dollars because of it. That’s when I learned not to make stupid investments. I didn’t know anything about the business. I trust these people I was looking at and I thought they were going to quadruple my investment in a year. Bad bad bad. I learned not to act so quickly; Do your due diligence. I now have a home office [family office] that does all the due diligence for me.
Forbes: Are there any particular factors, whether micro, fundamental or macro, that you as an investor pay special attention to?
DeJoria: Yes. Number one is how I feel it in my heart, not just in my brain. Is it something that will do the most good for the greatest number of people or is it just for the money? Is it something that the customer will really love and say is really cool? And how can I help improve it? Whether it’s oil and gas or anything else, how can I get involved, make this investment better for the planet or people? That’s the first thing I look at when I get into something .
Forbes: If you could give your 20-year-old self one piece of advice about investing, what would it be?
DeJoria: Go very slowly and always invest less than you can afford to invest. This way you don’t lose it. And never put more than 10% to 20% into any investment, even if you think it’s a sure thing, because of Murphy’s Law. If something could go wrong, it could happen. Five percent is even better.
As an investor, if you are right 51% of the time, you will be ahead of the game . I’ve been lucky a few more times.
Forbes: Who are some of your investing mentors and what have you learned from them?
DeJoria: I wish I had investing mentors. I never had them until I got involved with people like Goldman Sachs, Discovery Group and then my own home office, where I learned about other ways to invest. But I never had a mentor. The closest was my mother , giving my brother and me a lot of love and telling us “boys, you can do anything in your life. Just persevere.»
Forbes: How about an investor you admire?
DeJoria: I think Warren Buffett is great. And then some of the guys in my home office, who really keep a watchful eye on my investments and their own.
Forbes: Are there any current investing ideas or themes that you think are particularly appropriate for today’s investors?
DeJoria: You don’t have to just look at what’s trendy or what’s standard today. We have to look at what we may have and need in the near future and look at the companies that are at the forefront of doing so, not just the things that promise to be at the forefront. I will give you an example. One of the big news that exists today is a vaccine for diabetics called Ozempic . People I know lost a lot of weight during the first two months, but most had terrible side effects : headaches, nausea… They lost weight and said it wasn’t worth it. Their doctors told them to stop. So I came across this group that made what I call “vitamin pill.” It is composed of three natural plants, without chemicals. They said they made it for diabetics or prediabetics, but they seem to have an unusual side effect . People feel better, their skin looks better, and they are losing weight. I tried my luck and got enough space to take it and try it with people I knew. We tested it on at least a dozen people . As was? Well, all of them, during the first week, felt better, with more energy. The worst one we experimented with lost a pound a week for seven weeks; the best lost a little more than 20 pounds in two months.
Forbes: What’s his name?
DeJoria: I can’t say right now because we’re trying to complete the deal, because I’m definitely going to get involved . But each of the plants is good for you. Some of the Orange County housewives were impressed. They want to put it on their website. And it doesn’t cost $1,200 a month either; It will be around 100 dollars.
Ultimately, look for things that people need, that are good for the future, not just now to make some money.
Forbes: What would you say to investors today and what keeps you up at night?
DeJoria: Nothing keeps me up at night anymore, but I would say if you can’t sleep, my suggestion is to get up, grab a piece of paper, and write down everything that’s on your mind, whatever it is . Go back to bed and tell yourself I don’t have to think about it anymore. It’s on a piece of paper and when I get up I’ll read it. That really helps .
Also, if you are going to invest with someone, check them carefully because many times people are not what they seem . I found that a few times in my life in different types of investments, and the ones where the people were not what they seem to be, they always went wrong.
Forbes: And lastly, are there any books you recommend all investors read?
DeJoria: The first book everyone should read is one I read many years ago when I was selling encyclopedias. It may be the best book ever written about people in business. I think it was written 90 years ago. It’s called How to Win Friends and Influence People by Dale Carnegie. Another is The Richest Man in Babylon , by George Clason.
