now, i could very well sit here tonight and i could give you some financial lesson, something that i would want all of you to remember. but here is what i really want you to know. i wish you all a very, very merry christmas. i hope this holiday season brings you gifts beyond your wildest imagination. gifts of truth and honesty. gifts that you will hold on for the rest of your life. so from me to all of you, merry christmas, everybody. we'll see you next week, but there's still only one thing that i want you to remember when it comes to your money and it is this. people first. then money. then things. now you stay safe. bye-bye. >> tonight... >> everybody thought i was mad. >> ...sir james dyson turns his crazy, dirty idea into a big-money bonanza. >> $10 million sounded a lot.

a billion is unbelievable. >> and homeless and living out of his car, a los angeles salesman starts up a shampoo and hair-care company. >> i went door to door, and i said, "hey, my name is john paul dejoria." >> the making of the billion-dollar hair-care giant john paul mitchell systems. their stories of staggering success on this special edition of "how i made my billions." >> good evening. i'm tyler mathisen. tonight, two debt-ridden rebels wind up starting businesses that sky-rocket them well past the million-dollar mark into the billion-dollar stratosphere. sir james dyson wasn't born with a silver spoon in his mouth. he earned his lofty title by re-imagining a household product that he thought simply

"sucked" -- the vacuum cleaner. his overhaul of the machine nearly cleaned him out. now he's seriously cleaning up. [ vacuum cleaner running ] >> sir james, i think you missed something here. meet sir james dyson. he rarely misses a thing, especially when it comes to vacuum cleaners. >> actually, i think that's in the carpet. >> remember his tv ads that didn't just nitpick traditional machines? >> and the bags and filters were hopelessly clogged, so i thought i'd try and design something better. >> he's the guy who decided to ditch the bag and show us the dirt. >> and when i showed it to retailers, they said, "forget it. no one wants to see the dirt. it's disgusting. it's revolting." but i liked seeing the dirt. i liked seeing it accumulate. >> by following his instincts, dyson, now 65, created an innovative, engineering-driven powerhouse that also transformed

the hand dryer, retooled the space heater, and developed a powerful blade-less fan. so you can literally put your head in there? he may be britain's fourth richest man now -- his fortune's estimated at more than $4 billion -- but there's been plenty of failure, rejection, and hardship along the way, beginning with the loss of his father when james was just 9. >> it's made me want, immediately, really, after leaving college, to do my own business, to make my own money. >> were you a good student? >> at school? no, a terrible one. i was much more interested in acting and doing art. >> lucky for him, he was a highly talented artist and got accepted into the royal college of art in london, where he studied design. >> and i immediately saw that products are partly about what they look like, but they're much more -- much, much more important how they work. >> as a 22-year-old student, james sketched this unusual mushroom-shaped theater. he didn't get the money to make it, but it did lead him to his first big break -- a meeting

with british industrialist jeremy fry. >> and he asked me, while i was at college, to design and engineer a high-speed landing craft that he had invented. he taught me the value of experimenting and making mistakes. i used to theorize about things, and he said, "shut up. just go and make it and see if it works." >> with several modifications, james helped create fry's sea truck -- a flat-hulled water craft that could carry heavy vehicles. they sold a few hundred to military outfits around the world. >> i suddenly saw what i wanted to do, you know. i wanted to control it all. i wanted to do all parts of it. i didn't want someone else making what i'd designed. i didn't want someone else telling me what to design. >> but making a move from something as big as a military landing craft to something as small as a consumer product is a big leap. >> i wanted to do things for ordinary people -- things that i used myself. >> so he began by reinventing the wheel -- sort of. >> well, i was doing up a house in the country, and the wheelbarrow kept getting stuck

with its narrow wheel in the soft ground, and cement slopped out of it. >> what was the solution? >> the solution was a ball -- a big ball instead of the wheels. >> he called it the "ballbarrow." industry insiders balked at the ball and disapproved of the color, but with the help of his wife, deirdre, and some investors, he managed to start his first company, kirk-dyson, which made, marketed, and held the patent on his unconventional creation. >> so what i got out of it was that you can sell something that's very strange and different to people. they will buy it. they'll trust you. >> but in 1979, after several years of successful sales, james says a management disagreement got him kicked out of his own company. that's when he turned his attention to another household item that annoyed him -- his vacuum cleaner. >> anger! and frustration at having to bend down and pick things up that the vacuum cleaner wasn't sucking. as an engineer, i figured that it was the bag that was the problem. >> soon, images of this local saw mill swirled in his head. that funnel-shape on top is

known as a cyclone. it's separates dust using centrifugal force, but could it work on a smaller scale? >> well, the first thing i did was to -- on the kitchen table, as it were -- to make a prototype of a cyclone, a small one, that would fit on the vacuum cleaner. my first prototype appeared to work. >> he eventually realized he would need two cyclones -- a bigger outside funnel to collect larger debris and a thinner interior one to filter fine dust. >> but that, you know, took me 5,127 prototypes. >> 5,000 prototypes? >> over about five years. >> that's 5,000 individual, discrete failures. >> yes. all failures. but interesting failures, fascinating failures, because i learnt something from each one. >> were there times when you thought about giving up? >> oh, well, yes. i mean, you know, the long, dark days where i'm going out every day to my shed and getting covered in dust and coming back in and saying what a rotten day i'd had. but, you know, my wife was very supportive, and she said, you

know, "go back out there. make it work." >> by 1982, he felt he'd perfected his vacuum cleaner and went searching for a manufacturer to license it. >> and i approached the obvious people -- people who are now my competitor... >> the hoovers, the electroluxes... >> no, hoover wouldn't see me unless i signed a bit of paper saying that anything that came out of the conversation between them and me -- >> was theirs? >> was theirs, you see? so i though that was dangerous. >> but none of the others, like electrolux and shop-vac, were willing to build it either. >> so, i thought, "well, if they're not gonna do that, there's a great opportunity for me to do that." >> first, he would head to japan. a company over there had agreed to license dyson's design. it then built a vacuum called the g-force, which hit the market in japan in 1986. the royalty money james earned from the success of the g-force gave him a boost towards creating his own vacuum cleaner and company, but he still needed more. >> i went to venture capitalists and the government and all sorts of people, and they all rejected me, so, in the end, i managed to persuade a

bank to lend me a million pounds. >> so the big companies weren't willing to take the risk, but you were willing to risk everything? >> yeah. >> how afraid were you of failing? >> well, i was terrified, but, um, i wanted to do it. i believed in it. my friends thought i was mad. i mean, everybody thought i was mad. >> undaunted, he founded his namesake company from his shed in 1992. the next year, his first machine, the dc01, rolled off the production line, and 18 months later, the roughly $300 machine was the best-selling vacuum in the u.k. -- a crazy idea dyson wisely protected. >> you've got to have a patent, 'cause there's no point in going through all that agony and spending all that money if you can't stop other people making it. >> 43 million vacuums later, dyson now employs nearly 4,000 people in about 60 offices worldwide, including this state-of-the-art global headquarters in england, where every product undergoes rigorous testing to ensure it will meet

not just international requirements, but dyson's own stringent standards. in 2011, the company boasted an annual revenue of more than $1.5 billion. >> could you ever have imagined that? >> $10 million sounded a lot. a billion is unbelievable, yeah. >> unbelievable, too, to dyson is that, according to forbes, in 2012, he hit number 255 on its list of the world's wealthiest people. and you're sir james? >> yes. because there's an english tradition. >> that's right. he's even been knighted by her majesty the queen for his contribution to british business. his products also command impressive prices -- anywhere from $200 to about $650 -- a cost that's not lost on this ambitious inventor who's constantly looking to improve our everyday lives. >> seeing someone deciding to spend all that hard-earned money on what you've made and, you know, the thing you've invented, it's the ultimate pleasure, really.

[ applause ] >> with the help of his dyson team, sir james continues to revolutionize household items, and he also shares his wealth -- donating millions to various charities and the royal college of art, as well as creating the james dyson foundation. it actively encourages the next generation of edisons to study engineering and design through awards, grants, and workshops. >> up next on "how i made my billions," the door-to-door salesman who knocked over the beauty industry with a humble salesman who knocked over the beauty industry with a humble shampoo.

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>> welcome back to this special edition of "how i made my billions." john paul dejoria worked a series of odd jobs before he and a partner came up with a new approach to hair care -- john paul mitchell systems. their plain black-and-white bottles were soon on the shelves of hair salons everywhere. later, dejoria gave the spirits business a makeover, too -- introducing patrón, a premium tequila. >> whoo! >> billionaire john paul dejoria began at the bottom -- selling encyclopedias door to door in his hometown of los angeles. >> if you knock on a hundred doors and they're all slammed in your face, but you're just as enthusiastic on door number 101, well, hey, you succeeded. >> he pounded the pavement for almost four years before a chance job at redken, the hair-care giant, put him on a different path.

then he was fired. along the way, though, he made a very important connection. he became friends with paul mitchell, a renowned hair stylist living in hawaii at the time. in 1980, they decided to take on the highly competitive beauty industry and make their own hair-care products. >> you know, there's only two of us -- my partner the hairdresser, who didn't do business, and me the businessman in marketing, sales, and i helped formulate the products. >> they developed a system of hair care they believed could change the way hair salons operated. they called the system "john paul mitchell," combining their names. >> we had a shampoo where you only had to use it once instead of twice. we developed a conditioner that you left in your hair and a setting lotion that didn't flake. we called it sculpting lotion. >> ever the salesman, dejoria found an investor willing to stake a half-million dollars in the new products. next, he found manufacturers,

promising them huge initial orders. >> they got pricing on a hundred thousand bottles of everything. >> they were certain their business was about to take off, but at the last minute... the investor pulled out. desperate, dejoria and his partner scraped together as much money as they could -- $700. almost penniless, dejoria soon found himself homeless, as well. >> my marriage was not going very well, so i just loved the opportunity to get out of that house. whatever money i had, i left with my wife. >> john paul moved into his car. >> this was my safe haven. this was my home for a couple weeks -- in my car, right here. >> but he had a new business to run. >> and in the morning, i would just wake up, go down to griffith park where the tennis courts are, have a shower, go to the freeway cafe -- they have what they call the trucker's special breakfast for 99 cents. you got one egg, one piece of toast. >> during the day, he hit the streets of ventura boulevard, selling his new shampoo salon to

salon, much like he had with the encyclopedias. >> and i said "hey. my name is john paul dejoria, and i have a new product here. it's gonna save you time and money." >> most salons said no, but others were won over by his persistence and charm. >> i'd ask them to stick their hand out, and they would. i'd put a little, about the size of a dime, in the middle of their hand, put the size of a dime in the middle of my hand, and then i would start talking. now i had a captive audience. they had some in their hand and they didn't know what to do with it. >> one morning, opportunity knocked on his car window. a neighbor, the actress joanna pettet, had a spare room in her home. john paul made it his office as well. >> we had an answering machine. that was our office. >> dejoria and mitchell also made a decision to target hair stylists and salons, not consumers. >> we went for hair stylists because they knew what good hair products were all about and would use them and would recommend them. >> the partners offered free classes to the salons on how to use the john paul mitchell

systems. >> and then i gave them a deal they couldn't refuse. "if in 30 days you're not completely satisfied, i'll take back every bottle you haven't used or sold out the door and give you your money back. now that's fair enough, isn't it?" and they'd go, "no. i got too many products." >> with another door closed in his face, john paul just knocked on yet another one. >> "okay, i'll tell you what i'll do. i know you're gonna like it so much. if you only take three bottles, would that be okay?" >> a dozen salons agreed, and john paul mitchell systems was in business -- almost. the partners didn't have the money to pay for the actual product they were selling. but by the end of the second year, john paul mitchell systems turned a corner. they added more salons throughout the los angeles area and turned a modest profit. dejoria rewarded his success with a trip to the diner. >> i went down to the same restaurant that i went to for

99 cents and ordered, for the first time in my adult life, off the right side of the menu. it's a portion of the menu that tells you what you get, not the portion that tells you what it costs. >> but john paul mitchell was just getting started. the word-of-mouth buzz was terrific, and revenues leaped -- from $3.4 million in 1983, to $5.3 million in 1984, to $11.2 million the following year, 1985. >> then when it started rolling, we realized, "boy, we have something here, you know. now let's manage it a little bit differently and let's, you know, look at building it." >> mitchell and dejoria were insistent that the company stay private and under their control. within eight years of founding the company, john paul mitchell revenues soared past $50 million a year... but tragedy soon followed. in 1989, his partner, paul mitchell, died of pancreatic cancer. mitchell's share of the ownership was passed on to his son, angus. he and c.e.o. dejoria turned

down multiple offers to sell the company, vowing to keep the vision alive. >> at that point, he said, "j.p., i know -- i just know -- that one day this company will do over $100 million a year. i just know it." >> the company passed that $100 million mark within six years. by 2009, john paul mitchell was earning revenue of nearly $900 million a year selling in more than 36 countries -- a world giant in the beauty business. the same year his business partner died, dejoria discovered a new path. a friend had brought him tequila from mexico. >> and he brought back a couple bottles of this un-descript tequila i've never heard of before in my life -- simple tequila, but smoother than anything we've ever tasted. >> a mexican distiller named francisco alcaraz claimed he could make that tequila even smoother. dejoria believed him and had him make a thousand cases of it. they called it patrón. >> and, worst scenario, that if nobody bought it from us, that friends for ten years, you

know, for any holiday, would have a bottle of tequila. >> the bottles were hand-blown by mexican artisans and each hand-numbered. the tequila was made more slowly and in small batches, so it was priced much higher than existing brands. in fact, patrón was the first premium tequila in a spirit category that didn't have one, so john paul found himself in a familiar position. how do you get skeptical customers to try it? >> i learned how to sell door-to-door when i sold encyclopedias, no appointments. when i started paul mitchell, it was salon to salon, knocking door to door. when we started patrón, even though i was a little more affluent at the time, we went from bar to bar, pouring bartenders a drink of our tequila, showing them how it's different than any other tequila. >> dejoria also got some help from friends like clint eastwood, who featured patrón frequently in his movie "in the line of fire." soon, customers were lining up to try the new premium tequila. the growth has been as steady and remarkable as john paul mitchell systems.

today, patrón sells tequila and other spirits and had revenues of more than $540 million in 2011. >> when i started john paul mitchell systems with my partner, we went door to door... >> meanwhile, dejoria has thrown his energy and fortune into gingack. >> when in our hearts we know there's hope we keep going at it, then we get some good results. >> he's begun with funding organizations like chrysalis, which helps the homeless get their lives together and find jobs. it's no coincidence that it takes john paul back to his own beginnings and struggles and to those 99-cent specials. far from sidewalks, he started the appalachian program, where people from one of the country's most disadvantaged regions are taught to grow their own food. so far, it's reached more than 75,000. >> every time you do something for somebody else, especially groups of people, and ask nothing in return, you get one of the biggest rushes and biggest highs you can imagine. >> mr. dejoria should be feeling

even better these days as he helps more groups. recently, he's been busy funding home building in louisiana, orphanages in mexico, the boys & girls clubs in east l.a., and even funding science that may enhance the world's supply of clean water. >> when we return, how several entrepreneurs have used their businesses to make even more entrepreneurs have used their businesses to make even more money. ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade. >> welcome back. entrepreneurs, by their nature, are risk-takes. sometimes their risk pays off in

a big way. other times, it can keep paying off in an even bigger way. tonight, a look back at some of the entrepreneurs we've featured. they're still moving forward and making more. >> this was one of my very first designs. >> remember lolita healy? in february 2012, we introduced you to her hand-painted glassware. she once filled an order for 1,200 glasses all by herself, but it wasn't until she licensed the designs to a studio that could get them mass-produced that she really hit it big. >> she is a rock star in the gift-ware industry, truly. >> now, the gift-ware rock star has a line of glasses inspired by a rock star -- jimmy buffett. lolita's margaritaville glasses are doing so well that her team is filling new orders for shot glasses, and, in case you'd rather have a beer, next up is a line of pilsners, too. wayne beckley likes to think the antioxidants extracted from grape seeds can help keep your

skin looking young. when we featured his line of merlot skin-care products back in march of 2011, walgreens had taken him national. since then, the c.e.o. of avon japan saw our story on an international flight and bought in in a big way -- ordering half a million dollars' worth of beckley's made-in-america products to sell in the far east. beckley expects avon japan to offer even more products from his line in 2013. >> i'm ben kaufman, and i founded quirky. >> and in february of 2012, ben kaufman showed us how he's helping inventors get some input online, using crowdsourcing to help turn an idea into a product that sells. >> thousands of people are looking at it. they're enhancing and refining each others ideas. >> the inventors, quirky, and the contributors all stand to take a cut each time a product gets on the market. now, kaufman is trying to give more inventors a chance. since our story first aired, investors have poured $68 million in new financing into quirky.

that financing was led by andreessen horowitz -- remember andreessen? yeah, that's the netscape co-founder marc andreessen, a legendary inventor who sold his creation, the netscape browser, for more than $4 billion. creation, the netscape browser, for more than $4 billion. we'll be right back. [ indistinct shouting ] ♪ [ indistinct shouting ] [ male announcer ] time and sales data. split-second stats. [ indistinct shouting ] ♪ it's so close to the options floor... [ indistinct shouting, bell dinging ] ...you'll bust your brain box. ♪ all on thinkorswim from td ameritrade. ♪

♪

[ cows moo ] [ sizzling ] more rain... [ thunder rumbles ] ♪ [ male announcer ] when the world moves... futures move first. learn futures from experienced pros with dedicated chats and daily live webinars. and trade with papermoney to test-drive the market. ♪ all on thinkorswim. from td ameritrade.