A 'Shark Tank' Alumnus Reveals How to Use Psychology to 'Sell' Customers and Investors on Your Company Skyler Scarlett recently appeared with the 'sharks' for the second time. Here's his advice on sales, storytelling and crafting the perfect elevator pitch.

The video was terrible, and Skyler Scarlett knew it.

It was winter 2015, and he and his sister Brittney had set up a camera in their 700-square-foot cryotherapy spa in Carmel, Calif. The goal: Film a standout audition video for the next season of Shark Tank to get their company, Glacé Cryotherapy, in front of investors. They'd done a couple of takes, but Scarlett and his sister seemed wooden: They were nervous, lacked energy and weren't showcasing their personalities in the least.

Scarlett knew they needed to forget about the camera, so he banked on a time-honored remedy: wine and pizza. The pair decamped to the restaurant next door, ordered some Pinot Noir and then got back to work. This time, they were full of energy, having fun, improvising — Scarlett even jumped out of the nitrogen cryosauna like a jack-in-the-box.

The audition video set them apart from the competition, and a few months later, Scarlett and his sister were standing in front of the sharks. It was a game changer. When they went on the show their club had about 30 members, and two days after the episode aired, a major health club chain reached out about a potential partnership. The two moved to Mountain View, changed their business model and, six months after that, the spa had 200 monthly members. One investment firm even told Scarlett that with a single 423-square-foot location, he was making more revenue per square foot than Orangetheory Fitness.

"If we had sent that first [video], we never would have been on the show," says Scarlett. "My life would be completely different."

Scarlett co-founded Glacé Cryotherapy with his sister at 23 years old, when the health and wellness trend — which involves exposing the body to near-freezing or freezing temperatures for short durations — was just taking off. They had no business experience and launched their first location with $5,000.

"It looked like a garage," he recalls. "We had a piece of plastic, and we were trying to sell people on getting really cold and to pay us for it."

In a Shark Tank episode that aired last month, Scarlett earned himself another "second take" in that he returned to the show under different circumstances. An entrepreneur with a cold-weather clothing company, Fortress, needed a way to test his product in front of the investors. Since producers "couldn't exactly bring a frozen lake out to the Shark Tank set," says Scarlett, they asked if he could come back with his cryochamber in tow. He did just that, and although Scarlett wasn't able to pitch his company again, the experience has led to additional partnership opportunities.

Entrepreneur spoke with Scarlett about his top strategies for "selling" your company — to both customers and investors.

This interview has been edited for length and clarity.

Let's talk about the advice you'd give to entrepreneurs who aren't necessarily going into a VC meeting or pitching to Shark Tank but who are carrying on conversations with influential people. What's your top tip for effectively "selling" your company to anyone you're speaking with?

As far as telling the story that gets them interested, I think you have to balance hype with being realistic. Everybody thinks their service or invention is the greatest thing ever, so you really have to be able to show them how you'll get from A to B to C — and how you personally, in your role, are going to get the business there. People do want to invest in people they like. They want to invest in people they believe in. It's the idea of whether you're betting on the horse or the jockey. It's kind of both, right? Who's on that horse? Sometimes you have these great ideas, but if you look at the team and they don't know how to execute, it's not going to go anywhere. That's why investors really do care about what you've done. And if you're first starting out, you may not have done a whole lot, but you can explain why you're the right person to do it. That's what it's really all about.

What about advice when you're in the room pitching to investors, an incubator or even a TV show? I know the preliminary process for Shark Tank likely involved both phone screenings and in-person meetings. What's the number-one piece of advice you'd give, based on your own experience, when it comes to cinching that kind of opportunity?

In my experience dealing with investors, it's very important to know all your numbers. You'd be surprised how many people I've talked to who are doing really well and don't think they need to know their numbers, or the opposite — they're forgetting the difference between revenue and profit. Investors usually want to deal with people who have a clear understanding of all the numbers that go into the business. If you want to explain why something will work, you need to be able to explain things like the conversion rate. Every entrepreneur thinks their company is the next billion-dollar company, but where are the numbers to suggest your claim is true? The market never lies. A lot of the time, it's a numbers game — you can just look at the numbers and find patterns.

Over the past six-and-a-half years, what was the toughest period when it came to building your business?

Because everything was working out in the beginning, I think I became a true entrepreneur when things started not working. I feel like I had two and a half years after Shark Tank where nothing was going my way. Everything was breaking the wrong way. We'd be talking to these investment groups, spending six months with them trying to line up investment money, and then they would just drop out at the last second. So being able to adapt is important. Also, we always assumed we'd be up and running within three months, but it took nine months. Now I believe it's important to keep in mind that reaching a goal usually takes twice as long as you'd think.

Tell me about the biggest mistake you made while growing your company.

When you try to grow something small into something huge, it changes everything. For example, my sister and I were a two-person team trying to be this huge company. I was creating the website, we were both in the location selling, we were handling every aspect of the business. Eventually you need to start handing those things off and create that infrastructure if you want to scale correctly. Looking back, I wish I'd found someone that had experience growing and scaling a company. We made so many mistakes that are now obvious, but we had no idea. I don't want to beat myself up about it because we just didn't know. But if you're just starting now and trying to scale a company, if you can find a business mentor, someone that's done it, that's invaluable.

Entrepreneurship journeys are often long and arduous. When you're summarizing your experience, it can be difficult to trim the fat and focus on the most engaging through-line of the story, especially since you usually have a limited time to speak. How should an entrepreneur decide which parts of their story to include in their "elevator pitch"?

That's a great question. I think that the most valuable thing anyone can learn if they want to open a business, or be an entrepreneur, is psychology. Once you learn about psychology and human nature, it almost feels unfair. For example, I sell things that I love and use, but at times, when someone walks into my business, I know within two seconds if they're going to buy or not. And on the phone, I can read someone and see if they're paying attention or losing interest. Once you know what to look for, you can basically sell anything.

And what's your advice for learning about psychology? How did you do it, and how can others take advantage of that approach?

I've been interacting with people in this way for six and a half years. So when I'm trying to sell to someone who doesn't know me, I need to try to sell them on the point that they can trust me enough to take off their clothes and get into a chamber that's going to have negative-200 degrees of nitrogen — really? That's probably one of the craziest, most insane things in the world you could sell. I laugh about it, like if I can sell this, I can sell anything. So I really learned how to figure out what the person wants. You cannot sell someone something they don't want. If they want something else, you really need to identify what they are in fact looking for. It's also important to make it clear you're not just a car salesman — don't push sales on people, be realistic about what they can expect, make sure they feel comfortable buying.

I've gotten good at reading people when they walk in, finding out what they're looking for, understanding their objections. There will always be some objections — it's human nature — and they're all going to be very similar. I see them all the time, so it's about knowing how to respond to those objections. It works every time. Even negative selling: I had someone come in the other week who lives in New York, and I told them I didn't think it made sense to start doing treatments right then, that they should look into doing it back home in New York. And they bought a membership to join here for a couple of days since they loved my honesty. That's just reading the room and not trying to sell them on something that doesn't make sense to them. I think a lot of people go too far instead of being present with the person you're trying to sell to.