5 Surprising Things I Learned From Interviewing 100 'Shark Tank' Entrepreneurs
Almost every time I finish reading an article about Shark Tank, I think to myself, "If they only knew. . . " The reason is that I have interviewed more than 100 of the best entrepreneurs from the show. And, I've found, a sizeable chunk -- 80 minutes on average -- of their pitches does not make it on to TV. Here are five other fun insights I gained about Shark Tank that most viewers don't know:
1. One out of every four entrepreneurs appearing on 'Shark Tank' was invited to apply.
For those of you who lie awake at night dreaming of new and innovative ways to get on to Shark Tank, my advice is, play the odds. Shark Tank seeks out, on average, one out of every four entrepreneurs featured on the show. So, let's assume you started your business today and your goal was to air during Season 8 of the show. I would have one word for you: Kickstarter.
In fact, the show's producers go into high gear in January. They review applications, set up regional open calls and scour the web for new products to make great TV. So, help them help you: Contact local news outlets. Contact print magazines. Contact influencers in your niche with large tribes on YouTube, Instagram, Facebook, Pinterest, etc. Create viral videos. Do something to make it easy to find you.
2. 'Gold-digging' goes both ways.
Have you noticed the shift in attitude during the last two seasons of Shark Tank? Who is the new nemesis/persona non grata of Shark Tank? The Gold digger. Shh, don't say it too loudly, lest someone hear you. Who are these people? And what crimes are they guilty of? Let's review:
- Going on the show for publicity/exposure
- Lacking a strong desire to do a deal, if any at all
Exposure is the oxygen of Shark Tank. Everyone benefits from it, and nobody would be there without it. It has turned the sharks into celebrities. As Kevin O'Leary has said, the show offers entrepreneurs a "tremendous brand platform." As usual, he's right. Shark Tank does what the Sullivan Generator from Season 1 could not. It turns exposure into actual gold.
Entrepreneurs invest close to a year of their life in exchange for a chance at eight minutes' worth of "gold." Why do they have to pretend that isn't the main reason they are there? Mark Cuban would probably say, "Don't hate the player; hate the game!" These entrepreneurs get the exposure regardless of their desire to do deals, and in some cases, despite it.
3. More than 50 percent of the Tank's TV handshake deals do not close.
This tidbit has traveled faster and more loudly than any of the other content I have shared on the podcast. Bloomberg ran a quote from Shark Tank Podcast in 2014. After surveying almost 100 Shark Tank entrepreneurs, I estimated that about two-thirds of their deals did not close.
For the record, at least one shark has publicly claimed that the number is 5 percent: Mark Cuban recently said he had completed "more deals than the rest of the Sharks combined." I won't show my math here, but Mark's statement confirmed that my assessment was correct.
The question is, though, so what? Why is there an expectation that every first date that goes well will end in marriage? For every great relationship, there are several that don't work out. Somewhere in the mix is one that results in a call to Judge Judy. That's life.
Example? After a successful negotiation with Cuban and Barbara Corcoran, the grannies of Ice Chips discovered they had a minor tax issue. It was from more than two decades in their past. "We didn't even know about it," said cofounder Beverly Vines-Haines. "So the shark teams really do their homework."
Cuban withdrew his interest and Corcoran played the waiting game. Once the episode aired and it was revealed that hundreds of thousands of dollars in product had sold, the deal no longer made sense. A no-fault separation was the result. The grannies lamented they weren't able to work with Corcoran and Cuban. But no one lost face.
Reasons cited for broken deals have included:
- Offer renegotiations
- Tax issues
- Differences of opinion or different vision for the company
- Simple change of heart/buyers' remorse
Things seem clearer the morning after, and that's a good thing.
4. More sharks isn't always better.
Getting multiple sharks can increase the TV drama and the equity premium. But in fact, two cooks in the kitchen can also cost you the deal. ZinePak recently closed a deal with Lori Greiner and Robert Herjavec for $725,000. Herjavec then left Greiner at the "shark alter" along with that sizable financial commitment. You can guess what happened next: Zinepak's founders are now on their own.
The founders of Loliware, the edible cups company mentioned earlier, said on a recent podcast that Corcoran had advised, "Don't do a deal with more than two sharks or it won't go through." Not surprisingly, this sound byte never aired.
5. The hard work starts after the show.
As difficult as it is to get on Shark Tank, that's only the beginning. Some have referred to the show as the "easy" part. An entrepreneur once told me, "Sure, you can get a year's worth of sales in one night, but two years of work gets squeezed into the following months."
"Why two years?" I asked.
"Well," this person said, "without the experience it takes twice as long."
In fact, the sharks are keenly aware that their success isn't tied solely to the product: The operator can't be ignored, nor can his or her skill. The amount of new tasks generated by a Shark Tank "tsunami" will be a challenge for most entrepreneurs. Mistakes are frequently made, and the show simply amplifies them.
Example: Dave Alwan of Echo Valley Meats made a shipping error that cost him almost $100,000 dollars on his first airing, back in Season 4: Savvy Naturals actually saw its website crash during the company's segment. The site was down for almost a week. Ouch. The company has done almost a half-million dollars in sales since that time, but likely took a six-figure hit.
Then there was Off The Cob Sweet Corn Chips. Its manufacturer went bankrupt prior to the company's air date. That meant that the company could fulfill less than 20 percent of the purchases post-Shark Tank. Great communication with its customers, however, mitigated the damage. After ramping up a new manufacturer, Off The Cob delivered the remaining product, with a discount offer for future orders. The promo code? "Growing Pains"!
All in all, I love Shark Tank. If you want to hear the "reality" behind this slice of reality TV, listen to the featured entrepreneurs' stories on the Shark Tank Podcast.