Famous ABS Show, Shark Tank Can Teach You Legit Business Lessons
You just need to watch and pay attention
Thanks to the huge success of startups like WhatsApp, Alibaba, and Spotify, Singapore’s Grab, and Filipino companies Entrego and Goodwork.ph, private investors have become a famous funding source in the business world.
Many founders these days want to partner with investors to help grow their business. ABS’s hit show Shark Tank is proof of that.
Shark Tank, now on its 11th season, is still going strong. Hundreds of entrepreneurs have tried their luck at winning the panel’s hearts. The panel is made up of incredibly successful, self-made, and cut-throat investors—aka the “sharks.”
Entrepreneurs could learn from the successes and failures featured on the show. Here are a few we picked up along the watch:
1. DO YOUR HOMEWORK NO MATTER HOW MUCH YOU KNOW YOUR BUSINESS.
These guys are called “sharks” for a reason. Show your fear and and they’ll smell blood. You can be sure they’ll eat you up alive if you don't do your homework.
That’s what happened to brothers and doctors Richard and Albert Amini when they pitched Rolodoc: a social media app for doctors.
When they stepped into the stage, they looked confident and prepared. But when the questions came, the two completely blanked. At the end of their pitch, Mark Cuban shook their hands and told them it was the “worst presentation ever.”
Remember, these investors may offer your business their own cash. They're actively looking for weaknesses your business might have. So even if you’re a pretty smart doctor and you think you’ve got a good idea, it’s always better to do your homework.
2. MAKE YOURSELF STAND OUT.
In a season, the sharks listen to about 300 pitches from eager founders. If you want to make yourself memorable to the investors, your pitch needs to make a statement.
In season 6, Brian Lim of EmazingLights walked in front of the judges in a giant cartoon headpiece and danced while wearing gloves with LED-lit fingertips. It represented his strategy of catering to “ravers” who use a form of modern dance with light emission gloves.
The real performance came after that. He showed off his numbers and business strategy. He even shared a heartwarming story of being a hardworking and passionate entrepreneur.
Robert Herjavec called Brian “one of, if not the best entrepreneur we’ve had here.”
All the sharks on the panel gave Brian an offer, and he walked away with $650,000 from Mark Cuban and Daymond John.
3. KNOW YOUR AUDIENCE.
It might seem like investors all want the same thing: a great new idea, huge margins, and high projections. But each investor has his or her own style. Lori Greiner, for example, is better known as the “Queen of QVC.” She invests in businesses that would do well on network TV.
Enter Scrub Daddy, a simple household product that sparked little interest in the beginning. But the sharks changed their minds when they found out about its special feature: FlexTexture. It makes the sponge soft in warm water and stiff in cold water. It doesn’t collect little bits of food over time.
The sharks got into a bidding war over it. But Lori saw the product's potential. She offered $200,000 in exchange for 20% equity.
Turns out, Lori made the right choice. Scrub Daddy brought in $75 million in revenue three years after the investment.
4. CHOOSE THE "RIGHT DEAL" OVER THE "BEST DEAL."
Money isn’t everything in the business world. It might be tempting to take any offer, but don't. Sometimes it’s better to not go with an investment at all than to get one from the wrong partner.
In an earlier season of Shark Tank, Rick and Melissa Hinnant pitched their lace sock company Grace and Lace. While the business seemed saturated, the investors were blown away by their numbers.
Robert Herjavec offered the Hinnants US$175,000 for 10% equity—the deal they asked for. But he wanted the couple to accept or decline the offer before hearing what the other sharks might counter.
It was a risk, of course, not to accept the offer when it was exactly what they needed. But the Hinnants had their eye on getting Barbara Corcoran as an investor.
Robert withdrew his offer after the couple’s indecision. But as luck would have it, Corcoran ended up giving them the same offer. And it has become a very good lucrative deal. In just two years after the show aired, Grace and Lace increased their revenue to over $14 million in sales.
5. KNOW WHEN TO KEEP WORKING AND WHEN TO LET GO.
It's difficult to recognize trial from failure. Is my business not successful because it’s lacking a success element? Or because it’s really an unprofitable idea?
Be Fit Food was having this exact problem. Founder and CEO Kate Save claimed it was Australia’s first dietitian- and doctor-designed meal program with proven results.
Prior to their appearance on Shark Tank, the business wasn't doing well. But because she had faith, Save decided to apply to be on the show. Turns out, it was a wise choice because it landed her and her partner US$300,000 for 33.3% equity from shark Janine Allis.
Their Be Fit Food grew 1,500% practically overnight. Their annual revenue jumped to $4.5 million in their third year.
When you’ve got a product you believe in, sometimes all you need is a push in the right direction.
IT'S A SHARK TANK OUT THERE.
You have to have thick skin. Sometimes, luck's on your side. But most times, the road's filled with bumps and potholes.
Every failed pitch that comes on the show leaves us with a valuable learning experience: that the only real failure is giving up.
An example is Jamie Siminoff. He pitched a wifi doorbell in 2013 and went home empty-handed. Five years later, Amazon acquired Siminoff’s company for $1 billion. He was so successful that they brought him back on Shark Tank, this time as a guest judge.
Only in the business world can a guppy turn into a shark. What was your best takeaway from Shark Tank?
Get more tips on building a strong and innovative business; visit the Globe myBusiness website.