I’ve seen literally every single episode of ABC’s award-winning reality television show, Shark Tank. Here’s just the tip of the information iceberg.
I used to wake up to watch an episode or two of Shark Tank before work (they’re only 42 minutes without commercials) and I’d watch a few episodes at night before I went to bed. At one point in my illustrious career of interesting jobs, I applied to a dozen companies that appeared on Shark Tank, and I eventually landed a job for Bee Thinking, a company that was featured on Shark Tank Season 6 (and Beyond The Tank Season 2).
Many of my friends and family have asked me, “So when are you going to apply to Shark Tank?” I’m always truly flattered at their confidence in me, but the answer’s remained the same for many years…
Not anytime soon.
Why? My own entrepreneurial endeavors are currently “small potatoes” compared to the companies that eventually get the handshake deals on the hit television show. Entering the “Shark Tank” is a once-in-a-lifetime experience (except for the four entrepreneurs that were able to get on the show twice, only one got a deal both times), so more than anything else, I don’t want to burn my one chance on a half-baked project that isn’t likely to get funding.
In the meantime, after watching over 93 hours of Shark Tank, there are some valuable lessons that can be taken away from the small businesses pitching on Shark Tank.
Your Story is Everything
Whether you’re interviewing for a job or pitching an investment for a shark, people want to work with people they like. That’s why Shark Tank has those introductory videos and the Sharks seem to ask those “poignant” questions that just happen to bring up the most personally defining characteristic of the business owner. Don’t be afraid to share the tragedies, struggles are the hallmark of an entrepreneur.
A few times on Shark Tank, we’ve seen what’s referred to as the “acqui-hire,” where a Shark accepts a deal for no other purpose than hiring the business owner to work for them in one of their portfolio of companies. While this isn’t exactly ideal (entrepreneurs tend to not work well with others), it is a very real possibility if your product is a flop, but you’re a rockstar.
Solve a Problem
Do you solve a problem? If not, it’s gonna be one hell of an uphill battle. A lack of s’mores in your life is not a big enough problem to get an investment, hence no deal. Needing a mobile breathalyzer to prevent drunk driving solves a HUGE problem, that’s why all five sharks went in on that deal.
You need to own the space you operate in. More specifically, you need to own your intellectual property. If there’s nothing proprietary about your product or business, there’s nothing to prevent a larger company from ripping you off and killing your “cockroach” of a business in their industry. If you don’t own your IP yet, you should probably get on that immediately.
If you do own your IP, there’s a number of avenues in which the sharks could take you, including QVC/HSN, big box retailers, or leasing to one of the major players. Also, in a time so electric with frivolous business lawsuits (Mark Cuban has dipped out of a couple deals to the potential for litigation), owning the IP right out is the best way to defend your product from being infringed upon, but it’s also a necessity to go out and enforce your patent to reinforce your position in the market. If others look like you, you’re not that special, and therefore, not that valuable or investible.
You MUST Know Your Numbers
Despite what Barbara Corcoran has said in the past, when you’re seeking an outside investment in your company, you have to know (and share) your numbers. Too many entrepreneurs have come into the Shark Tank with the attitude, “There’s two things my momma told me never to talk about, that’s my weight and how much my bags cost…” Plain and simple, at the bare minimum, you have to share your manufacturing cost, your margins, and your gross profit. You should also be aware of your customer acquisition cost, customer lifetime value, and your monthly burn rate. You may think it will negatively effect your business when a nation of eager consumers hears about the inner workings of your small business, and while a few consumers may be turned off, the “Shark Tank bump” will bring in potentially hundreds, maybe even thousands, of new customers. It’s important to sit down with your P&L ledgers and crunch the data. Share your numbers!
Don’t go into the Shark Tank with the “Our target market is [Size A], which means we the total market value is [B Dollars], and we can just capture a fraction of that market, we’ll make [C Dollars].” It’s not that the any of that information is irrelevant, it’s that market size and value is already known, and the Sharks are more concerned with your business, your success, and the methods you used to break into that large market.
Be Willing to Negotiate
There’s nothing more aggravating to a Shark than somebody coming into the tank with no desire to negotiate from their original proposal terms. It’s a delicate balance between offering an ownership percentage and maintaining a high valuation, and that’s where the negotiation tactics really kick in. Only a handful of companies have seen their wildest dreams realized: getting a shark on board with more money and less equity than their original offer, increasing their company’s valuation. For everybody else, if you’re lucky enough to get an actual offer from a shark, chances are you’re going to be giving up more equity for your ask. If you’re not going to deviate from your original offer, don’t enter the tank.
And on that note, if there’s one thing that “Mr. Wonderful” hates more than anything else, it’s being offered a measly 5% share in a company. “I don’t even get out of bed for 5%,” he frequently grumbles at these low-offering, high-evaluation deals. This is where he then goes into some ancient tale, maybe from Greece, maybe from Africa, but no matter the content the story, they all end the same way… fingers tented, “you’re dead to me.”
Seek Real Value
Sharks love the idea they’re considered “smart money.” If you’re heading into the Shark Tank looking for a payday, rather than a smart working business relationship with one of the Sharks, I can’t be the first person to tell you that you’re doing it all wrong. It’s about their brains, not just their bucks. (If it boils down to dumb money, get ready for a no equity/loan/residual deal from Mr. Wonderful). If you want passive money, write a pitch deck and go to a bank. If you want a strategic business partner, that’s why in you’re in the Shark Tank, and you need to be ready to elaborate on how each Shark can individually contribute to the success of the company.
Shark Tank is Just the Beginning
Unless you are like one of the three businesses that offered 100% of their business to the sharks, if you are lucky enough to get a deal, it’s only the beginning! The buzz can last overnight, but the very next day, you gotta get back to work and keep hustling!
From my experience at Bee Thinking, I can tell you the “Shark Tank Bump” is a very real thing, especially if you don’t get an offer. Overnight our orders jumped up from 26 to nearly 400 overnight after the airing of the Shark Tank episode, and a similar epic bump happened when we appeared on “Beyond the Tank.”
It really is a trial by fire, and if you’re not ready to buckle down and deliver, you’re going to drown in the wake of the Shark Tank.
Keep it Together!
Never having been on Shark Tank myself, I can’t tell you what it’s like to stand on that rug, in front of the sharks, with the hot lights blaring on you. What I can tell you is you need to keep an even emotional keel when you’re up there. Your business is your baby, and nobody is doubting how invested you are in it. But, if you are overly-emotional, it’s gonna end up hurting you. The last thing you want to do is get down to one shark left, and you completely melt into a groveling puddle begging for a deal, because chances are you’re not going to get a deal. Everybody loves passion, nobody loves desperation.
Do Your Research!
You gotta do your research on the Sharks, and know how their individual networks would work in with and benefit your business. All the Sharks are interested in a good business, but each of them has an area of expertise.
Here’s some information on the sharks, why I would work with them, and some affiliate links to the books they’ve written.
“Mr. Wonderful,” “The King of Licensing Deals,” “The Devil Incarnate.” Whatever you want to call him, there’s no denying that Kevin knows how to make a deal that stings so good. “Don’t cry for money, it doesn’t cry for you.”
I would be interested in working with Kevin O’Leary because taking businesses to the next level is his reputation. With O’Leary Ventures, his connections may almost be worth the terrible royalty he’ll try to stick you with. But deep down, I gotta admit, there’s something slightly heartwarming about watching Kevin laugh so hard that he cries, even if it’s at a business owner’s expense.
Kevin’s written three books of “cold, hard truth:” Cold Hard Truth: On Business, Money & Life, The Cold Hard Truth On Men, Women, and Money: 50 Common Money Mistakes and How to Fix Them, and The Cold Hard Truth on Family, Kids & Money.
Barbara makes a lot of food and product related plays, but she’s really more concerned with the business owner herself. As a charismatic entrepreneur, she prides herself on being able to partner with up-and-coming businesses and turning them into billion dollar businesses.
I would love to work with Barbara because she reminds of me my grandfather, who first introduced me to the stock market with a newspaper and a yellow highlighter. Both of us are “zany” (to say the least) and to be a business partner of Barbara’s would be a total trip!
Barbara’s written three books, Shark Tales: How I Turned $1,000 into a Billion Dollar Business, Nextville: Amazing Places to Live the Rest of Your Life, and If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails: and Other Lessons I Learned from My Mom
Daymond is perhaps the most eclectic Shark, with investments in everything from fashion to food, child inventors, tech plays, and mail-order companies. This doesn’t mean he lacks focus, but more importantly, it means he’s completely focused on building brands in whatever industry they’re in.
That’s predominately why I’d love to work with Daymond, because I know that he could help me take the Mystery Tin brand from a handful of staggering companies to a mammoth network. (Hit me up, Daymond!)
Raymond’s written three books, Display of Power: How FUBU Changed a World of Fashion, Branding and Lifestyle, The Brand Within: The Power of Branding from Birth to the Board Room, and most recently The Power of Broke (which is fantastic!).
Cyber-security, extreme lifestyle, and cuddly pets are all of interest to Robert, but if there’s anything you can learn from his Croatian legacy, it’s the unparalleled value of hard work and intuition.
Honestly, I would be interested in working with Robert because he’s not like the other sharks. He’s like my cool “Uncle Robert,” a guy that would give me business advice and then show me his latest car or toy. He’s the “buddy shark,” and sometimes, that’s all you really need in a partner.
The “Queen of QVC” focuses mostly on simple products and patents. With over 120 patents and 400+ products under her belt, she’s got some great advice for inventors and entrepreneurs.
I would love to work with Lori on some of my products, especially the family card games. With her influence, she could undoubtedly get me into the big box game retailers, as well as connected me with the right people to cut down on my manufacturing costs. I also feel, on a personal note, I could benefit from having more female influence in my business ventures and ideas, and Lori could bring it in spades!
Lori’s written one book, Invent it, Sell it, Bank it! Turn Your Million-Dollar Idea into a Reality
The only billionaire in the Shark Tank, Mark’s looking for mammoth growth and a minimum of a 5x return on every single investment. Most of his deals are in the social media and tech space, compliments to his Dallas Mavericks, or something completely random (“Let Me Draw A Cat For You”). You never know when he’s gonna throw his hat in the ring, but if you can get a little insight into his psyche, you might figure out a way to land the biggest shark of all.
I would LOVE to work with Mark Cuban because… he’s fucking Mark Cuban! Not only does he have the business acumen to hockey stick any small business, he’s also a basketball loving, tech-savvy dude, that drinks gluten-free beer and loves a good party. Entrepreneurs should aspire to be like Mark, well balanced between his work and home life. As he said in Season 3, “I’m a business builder. I take small businesses and make them great!” That’s why working with Mark Cuban’s on my bucket list!
Mark’s written one book, How to Win at the Sport of Business: If I Can Do It, You Can Do It.
After I hit “publish” on this blog post, it’s back to work on writing the marketing e-mails for the Happy Hour! card game, building out some webpages for an upcoming website project, and taking the afternoon to do a little business reading.
Now get to work!
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