"Shark Tank" co-star and Herjavec Group CEO Robert Herjavec knows a lot about small business. Here, he tells us what challenges entrepreneurs face every day and what's most important when it comes to focus.
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It's the most wonderful time of the year for retailers — and for "Shark Tank" investor Robert Herjavec.
He has consistently said that his favorite investment from the show is goofy holiday-apparel company Tipsy Elves. He invested $100,000 for 10% equity in the business two seasons ago in 2013.
Cofounder Nick Morton said that part of it has to do with the friendship he and his business partner, Evan Mendelsohn, have developed with Herjavec.
"We get along really well," Morton said.
"I'm pretty busy, so I like to invest in people that I like to hang with," Herjavec told Business Insider last year. "For me, I always want to invest in somebody who's incredibly, deeply passionate about the business, and these guys wanted to run a business. I mean they wanted to be there 24/7."
But beyond being good guys to hang with, Morton and Mendelsohn are making Herjavec a good chunk of money.
Herjavec made back his investment after just a few months, and he said that it's been his most profitable venture from the show. Tipsy Elves has been lucrative since launching in 2011 and continues to grow steadily. Morton said that he expects the company to end the year with $10 million to $15 million in sales, up from $7 million last year.
Before they became kings of the ugly Christmas-sweater movement in the US and Canada, Mendelsohn was a lawyer and Morton a dental surgeon, with six college degrees between them.
In 2011, Mendelsohn noticed a trend of young adults wearing gaudy sweaters to holiday parties, as an ironic nod to bad gifts they received as kids. He figured that there was a perfect opening for a company to own this market and called Morton, an old friend from their undergraduate years at the University of California at San Diego, to see if he wanted to participate in a fun side project.
Mendelsohn built websites for companies as a way to make extra money, but joked that ultimately Tipsy Elves was a dentist partnering with an attorney who knew a little bit about search-engine optimization starting an online-retail company.
Despite not really knowing what they were doing, Mendelsohn said, they used $140,000 of their own money to launch the business, sought advice from business-school friends, and used Morton's family ties in China to secure an affordable supplier.
They created all of the sweater designs on their own, differentiating their product by favoring irreverent and silly designs over tacky ones and using materials of a much higher quality than competitors in the novelty space. And as an extra incentive to themselves and customers, they partnered with Save the Children to dedicate a portion of their profits to providing underprivileged American children with winter clothing.
The two founders sold $380,000 worth of sweaters by the end of the first year, and then sold $900,000 the next. Mendelsohn committed full-time to Tipsy Elves in 2012, and Morton followed in 2014.
When Herjavec signed on, he told Mendelsohn and Morton that even though he trusted their judgment that the ugly-sweater trend had legs, they needed to become a year-round company to weather any sudden shift in taste.
This year, Tipsy Elves offered clothing and accessories for Christmas, Hanukkah, Valentine's Day, St. Patrick's Day, July Fourth, Halloween, and college-football season. It most recently expanded into ski gear, bringing its total product offerings to around 500.
It helped raise the company's profile enough to secure a deal with Sony Pictures for product placement in this year's Seth Rogen holiday comedy "The Night Before," as well as a product-giveaway campaign in partnership with Uber. But it came with growing pains, too.
Tipsy Elves had what Morton called "by far the biggest challenge we've faced in five years" when the New Jersey fulfillment center it partnered with failed to deliver 7,000 orders on time to customers, resulting in hundreds of frustrated customer-service calls and a handful of damaging reviews on their Facebook ads.
The two cofounders took a flight to the factory and found it teeming with management problems, Morton said. They will most likely be moving order fulfillment in-house beginning in 2016.
"On the whole, we're very happy with our growth, but we didn't maximize potential," Morton said, citing this delivery problem.
But ultimately, he sees it as a learning experience that will make the business stronger than ever.
"With the way this thing's ramped up so quickly, we've decided if you want something done right, you have to do it yourself," Morton said. "It's the missing piece, I think."
SEE ALSO: The 15 biggest 'Shark Tank' success stories of all time
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NOW WATCH: 'Shark Tank' star Robert Herjavec on the challenges standing in the way of entrepreneurs
"Shark Tank" star Robert Herjavec is a Canadian businessman, investor, and spokesman for Small Business Revolution. Here he talks about the struggle of having your own business and the right way to think when everything is against you.
To learn more about Small Business Revolution, visit them online.
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Most entrepreneurs who appear on "Shark Tank" take pains to make sure their products look as appealing as possible.
Evan Lutz, on the other hand, took pride in showing off some of the ugliest inventory he could find.
The 23-year-old from Baltimore, Maryland, is the cofounder and CEO of Hungry Harvest, a business built on selling "ugly"— but perfectly edible — produce that would otherwise get discarded. For every box it sells, the company donates a box to the hungry.
Lutz approached the sharks looking for $50,000 for a 5% stake in his company, and ended up making a deal with Robert Herjavec, who invested $100,000 for 10% equity.
As Lutz explained on "Shark Tank," he's aiming to solve two growing problems at the same time: hunger and food waste in the US. One-sixth of the American population goes hungry, Lutz said.
At the same time, according to the National Resource Defense Council, a whopping 40% of food in the US is never eaten. That's partly because supermarkets don't sell (and customers don't buy) produce that's misshapen or discolored, even though it's generally fine to eat.
Hungry Harvest purchases surplus produce from local farms and wholesalers. Boxes of ugly produce range from $15 to $55 a week (depending on size) and include leafy greens, vegetables, fruits, and sometimes seasoning.
The company is but one example of an increasing number of businesses across the US that aim to reduce food waste by marketing ugly produce that would typically get thrown in the trash.
In their first six months, Hungry Harvest had $37,000 in sales; in the last six months, they've had $104,000. Just over 500 customers currently have subscriptions.
Right now, however, the company isn't profitable, and they've had a net loss of about $20,000 — a fact that caused alarm among some of the sharks.
On "Shark Tank," Barbara Corcoran criticized Lutz for being too "in love with the idea" and not "greedy" enough to be the kind of businessperson she'd want to partner with.
Herjavec jumped in with an offer, which Lutz nearly lost because he was waiting to hear from Kevin O'Leary. After a few seconds of deliberation, and after some cajoling from the other sharks, he moved to accept Herjavec's deal.
SEE ALSO: The 15 biggest 'Shark Tank' success stories of all time
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NOW WATCH: 6 'healthy' eating habits you are better off giving up
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:
Related: 'Shark Tank' Update: The Sharks' Sour Reaction to a Vinegar Company Now Tastes Sweet
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.
Loliware is a great example of a company that got on "Shark Tank" due to its ability to open doors. Check out its press page and emulate what the company has done.
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:
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.
Related: The 'Shark Tank' Enjoys an Embarrassment of Riches: 4 Strong Proposals
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%: 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:
Things seem clearer the morning after, and that's a good thing.
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.
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% 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."
SEE ALSO: 8 types of people who will never be able to start a business
Some of the businesses featured on the popular ABC reality series "Shark Tank" have made some serious revenue.
Here are five of the most successful stories of all time.
Check out more "Shark Tank" success stories.
Produced by Lamar Salter. Original reporting by Richard Feloni.
Barbara Corcoran is an American businesswoman and "Shark" investor on ABC's Shark Tank. During one episode she told a female entrepreneur to stop crying because it gives away her power. Corcoran dropped by the Business Insider offices to explain what she meant and why she hates emotional outbursts at work.
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In seven seasons of "Shark Tank," every time an entrepreneur has made a last ditch effort to secure a deal after all five investors have bowed out it usually ends up being awkward and embarrassing.
But in the latest episode of the reality pitch show, instead of getting harassed out of the Tank by Mr. Wonderful as she plead for money, Hatch Baby cofounder and CEO Ann Crady Weiss laid out a carefully constructed alternate plan that the investors were willing to hear out.
And although billionaire investor Chris Sacca, a guest Shark, declined to make a deal with her a moment before, Weiss changed his mind and ended up with a $250,000 investment.
It was a great demonstration of the effectiveness of prepared negotiation strategies delivered with utmost confidence. "Who knows if it was entrepreneur virus (unfailing belief!) — but it worked," Weiss told Business Insider.
Weiss and her husband/cofounder/CTO, David, entered the Tank looking for $250,000 in exchange for 2.5% of their pre-launch "smart" baby accessory company. Hatch Baby's premiere product is an electronic changing pad with a built-in scale that can be linked to a smartphone app.
Parents of infants can keep track of their child's weight, length, and frequency of diaper changes. The scale is sensitive enough to weigh how much breast milk or formula a baby consumed in a sitting through a comparison of before-and-after weighings, one of the primary features that compelled Weiss and her husband to create the product.
Before committing fully to Hatch Baby in 2014, the Palo Alto-based parents of three left executive-level jobs at BabyCenter, Johnson & Johnson's independently operated online resource center read by 35 million parents around the world each month. Weiss joined the site in 2007 when she sold her social network Maya's Mom to BabyCenter for an undisclosed amount.
"So you've got great experience. You've sold me on that," investor Robert Herjavec told the cofounders in the Tank. But he and the other investors needed convincing that a pre-launch company with no sales was worth $10 million, especially when they consider the $299 price tag of the changing pad to be above too many budgets.
Weiss explained that the valuation was based off an upcoming Series A round of fundraising, following a seed round in September 2014, where Hatch Baby raised $1.7 million as a convertible note, meaning the money was a loan that would convert to equity at a valuation set at a later time. The cofounders also said their experience in the industry proved to them that in a market where parents will shell out $500 for a stroller, a $300 advanced changing pad is not a long shot.
The Sharks were still wary of making an investment at such a high valuation before a proof of concept, and all five pulled out of a deal.
In the beat where the cofounders would say "thanks" and walk out, Weiss told the investors, "I'm so sorry to hear that, but I do want to take one more shot." She said that she was certain she could raise the money elsewhere, but she wanted a Shark since they are typically more hands-on than average investors.
She jumped into a second offer: There was $250,000 left on the convertible note from last September, and so she could bring a Shark on under those terms, which included a $7.5 million cap on valuation. That means that the investor would give Hatch Baby $250,000 as a loan that would eventually be converted to a minimum of 3.3% equity.
Weiss said later that she didn't think of this on the fly. "We'd definitely planned the second offer," she said. "Given what we'd seen on earlier shows, we knew the $10 million valuation we started with would be a very tough sell. I worried they might berate us and laugh us out of there — and I didn't eat or sleep well for days because of it."
Sacca, who had expressed his interest to Weiss in the potential for Hatch Baby becoming a leader in "smart" baby products that could help parents monitor their infant's health and track their growth, decided that under those new terms he'd be willing to take a bet on the company.
Weiss said that even though the footage didn't make the aired episode, Sacca was further swayed by her and her husband's explanation of how True Ventures, whose portfolio includes success stories like Blue Bottle Coffee and Fitbit, was going to be involved in an upcoming Series A round; following the segment's filming last June, True Ventures led a $7 million Series A in October.
Sacca said that he has invested again in Hatch Baby since filming, and while he could not yet disclose the terms, he told Business Insider "it was a healthy markup from my initial investment" and that he's "bullish" on the company and feels lucky to be invested so early.
Neither Weiss nor Sacca would comment on whether the company was meeting its initial goal of 20,000 units sold in its first year of launch, but Sacca said it had a successful launch last October and is building off "Shark Tank" momentum in the past week.
"The reviews are strong and the sales kept accelerating even before 'Shark Tank' aired," he said. "2016 is going to be a huge year for Hatch Baby."
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NOW WATCH: How Barbara Corcoran uses 'manterruptions' to beat the other sharks
"Shark Tank" investor and entrepreneur Daymond John was broke with a $40 budget when he started growing FUBU.
Today, FUBU has earned over $6 billion in global sales, and John — with an estimated net worth of $250 million— has been around his fair share of wealthy individuals and entrepreneurs who have founded multi-million dollar companies.
On a recent podcast, host and business coach Lewis Howes asked John what separates billionaires from the rest of the crowd.
It boils down to three things, John said:
"When your back is up against the wall and you have no other way to advance or create relationships and you can't buy anybody — you can't buy things to help you — you start to become creative,"John tells Business Insider. "When you become creative, that's when you think outside the box — and that's utilizing the power of broke."
John went from cash-strapped to tremendously successful, which he details in his new book, "The Power of Broke," but he refuses to abandon the "broke mindset." In fact, he says many billionaires thrive by sticking to this mentality.
"The billionaires I've seen use the power of broke," he told Howes on "The School of Greatness" podcast. "They may spend a billion dollars on a party, because that's a party. But they are very disciplined and they won't spend that on launching a company — they'll act like they don't have anything."
"We're in this day and age where people are typing into their smartphones," John told Howes. Billionaires "physically write down everything. I remember one of them said to me, 'The dullest pencil will always remember more than the sharpest mind.'"
John isn't the only one who's picked up on this success habit. Virgin Group's billionaire founder Richard Branson, who happens to be a note-taking connoisseur, attributes some of his most successful companies to the simple act of jotting things down.
Billionaires "think purely on a global scale," John explained. "We'll sit there and say, 'How many people can I get to walk by my service place in Manhattan?' And they'll sit there and say, 'How many cars are in the world? How much exhaust comes out of them?' They're really thinking like that. That's how they are."
SEE ALSO: 'Shark Tank' entrepreneur Daymond John explains why being broke was key to his success
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NOW WATCH: This couple sold everything to travel the world together
Paul Graham, one of Silicon Valley's best-known investors and a cofounder of the startup accelerator program Y Combinator, doesn't seem to be a fan of ABC's hit show "Shark Tank."
Graham believes startups should focus on building great products, not on marketing, and for that reason he thinks shows like "Shark Tank" are a distracting waste of time for entrepreneurs.
He said as much on Twitter on Wednesday night, but billionaire investors Mark Cuban and Chris Sacca came back swinging.
Cuban, who owns the Dallas Mavericks, previously founded a company, Broadcast.com, that sold to Yahoo for over $5 billion in Yahoo stock. He is also one of the sharks, or judges, whom entrepreneurs pitch to on "Shark Tank."
He more or less called Graham and the startups his accelerator program had backed "entitled" and "arrogant."
@paulg you mean like the sense of entitlement and arrogance they get when they become part of a YC class ? It's hard to wash it out
— Mark Cuban (@mcuban) Y Combinator is designed to help startups grow rapidly by providing guidance and money to founders in exchange for equity in their companies. YC has helped multibillion-dollar companies like Dropbox and Airbnb get off the ground.
But the companies that go through YC — which has a very low acceptance rate — are known for demanding a premium on their valuations when seeking funding from venture capitalists, hence Cuban's "entitled" jab.
But a lot of people feel accelerator programs aren't worth the equity founders give up to participate in them, which Cuban also pointed out to Graham.
@paulg the real question is why does a startup become part of YC any more ? The good old days of YC are just that
— Mark Cuban (@mcuban) January 28, 2016@paulg Yeah, because a free 10-minute pitch to 7 million Americans is something every startup should turn down.
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NOW WATCH: 5 of the most successful 'Shark Tank' stories of all time
"Shark Tank" investor and co-star Daymond John explains how he beats out his fellow sharks to close deals on the show.
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When reality-show producer Mark Burnett called FUBU founder Daymond John in 2008 to ask him if he wanted to be an investor on his upcoming show "Shark Tank," John had previously only worked within the fashion business but saw the opportunity as the perfect way to promote his existing brands and diversify his portfolio.
John had invested in around 10 clothing brands before joining the show, but he was hardly a seasoned angel investor. As he reveals in his new book "The Power of Broke," the growing pains of the first season cost him "about $750,000 of my own money that I've yet to get back."
In retrospect, the experience taught him the following lessons that have allowed him to become a savvier investor and corporate adviser, whose small businesses now make millions of dollars in annual profit.
Because "Shark Tank" was new in 2009, the producers weren't able to book the generally high caliber of entrepreneurs that appear on the show now. This was the season where a urologist got $25,000 to build a business around his hollow golf club that lets you pee into it.
So that meant that not only were the offerings slim, but about half of the deals made in front of the cameras didn't close because the businesses didn't pass due diligence — about 80% of the deals closed last season, according to John.
But even if he was seeing something he normally wouldn't want to invest in, he found himself getting caught up in the excitement of a bidding war with his fellow investors. And even if he found himself in a dud deal, he would spend too much time thinking he could transform a hopeless business, since he had already made it that far.
John named his book "The Power of Broke" because, as he looked back on his career, he found that the common thread in all of his failures since becoming successful was the belief that an injection of capital could save a dying business or enhance a deal.
The scrappy attitude he had while building FUBU out of his mother's house in the 1990s helped him become the CEO of a hundred-million-dollar business because he made decisions as though every cent mattered — and it did.
Not only did he try keeping his handful of "Shark Tank" season-one businesses alive for longer than he should have, but he unnecessarily spent $200,000 on legal fees vetting and closing deals with them.
When he looked more closely at it, he realized that while he trusted his law firm, they weren't fit for that type of business. He began working with a venture-capital firm the next season, and cut his legal fees down to $30,000.
To help with his season-one investments, John hired consultants for licensing, marketing, and social media.
"All these different experts, when I was hiring them on an as-needed basis that first year, their fees were killing me," he writes.
It was unsustainable. It's why he built a new company, Shark Branding, with a full-time staff that handled licensing, business development, legal issues, contracts, marketing, and internal management.
"I was able to pursue similar deals away from the show, growing my business in ways I hadn't even anticipated and helping to spread those overhead costs across a number of different properties," he writes.
It turned out that a reality show, of all things, forced John to become a better investor, manager, and entrepreneur.
John writes:
I lost a bunch of money because I found myself making decisions in ways I'd never made them before. I was spread thin, with all these new demands on my time, so a lot of times I would just throw money at a problem and hope that would take care of it. But of course, that's not how it works, right?
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NOW WATCH: 'Shark Tank' star Daymond John on the advantages of being broke
One of the biggest movements in business today is providing employees with benefits that recognize the importance of their personal lives, like extended parental-leave policies.
But, if you're a serious entrepreneur, says "Shark Tank" investor and Herjavec Group founder Robert Herjavec, you need to set all that aside.
"People often ask me, 'Is there a balance in life when you start a business?'" Herjavec said in the latest episode of "Beyond the Tank."
"And I say, 'If you're expecting balance, don't start a business,'" he added.
In that "Beyond the Tank" segment, Herjavec discussed one of his Season 1 investments, grilling-accessory brand Grill Charms. Its founder, Leslie Haywood, was making hundreds of thousands of dollars in annual revenue, but was spending less and less time with her two young daughters.
After seven years of dedication to her business, she decided in 2013, when her kids were 8 and 10, to enter an exclusive licensing deal with Fox Run Brands. This was essentially a passing of the baton, and Haywood now gets quarterly royalty checks.
Herjavec said that he respects and admires her for her decision, because she recognized the sacrifices a founder needs to make to scale a company and, rather than diminish her effort, decided it wasn't right for her at that point in her life.
In a Business Insider interview with Herjavec last year, we discussed how all entrepreneurs who want to have a thriving business need to commit to it full time, and he clarified that the sacrifices this entailed should not be made at the expense of loved ones, but rather with their consent and understanding.
"Don't quit your job if it's going to hurt your family," he said, "but at the same time, a business is a living, breathing thing. If you don't quit your job, it's never going to grow. But only you can make that decision."
It's related to a point Herjavec made in the latest episode of "Shark Tank" Season 7, as well. Herjavec was impressed by Shaan Patel, founder of SAT tutoring company 2400 Expert, and admired his work ethic, high intelligence, and ability to drive impressive sales.
Patel would later make a deal with Mark Cuban, but Herjavec was worried that Patel had too much on his plate. Patel was not only running a company, but also pursuing an M.D. at Yale and an MBA at Stanford.
"My challenge with it is, you're kind of playing at it," Herjavec told him. "You want to be a doctor and you want to be an entrepreneur." Herjavec also noted that Patel was too quick to entertain a spur-of-the-moment licensing deal.
"Business isn't that," Herjavec continued. "You can't play at business. Because you're going to come across a guy who doesn't want to be a doctor, and he is going to kick your behind. I can't invest in a part-time entrepreneur."
SEE ALSO: Daymond John reveals what he learned from losing $750,000 on the first season of 'Shark Tank'
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NOW WATCH: 'Shark Tank' star Robert Herjavec knows what to do when everything is against you
With a perfect SAT score, Shaan Patel thought he'd be able to get into one of his dream schools in the Ivy League.
Unfortunately, that didn't happen, but Patel's fine with it.
Instead, he's been able to build a thriving SAT-prep startup that got him on ABC's "Shark Tank" and let him strike a deal with Mark Cuban.
"My goal is to become Mark Cuban’s most successful 'Shark Tank' investment," Patel told Business Insider.
From growing up at his parents' budget motel to getting a perfect SAT and running his own startup, Patel likes to joke that he's "every Indian stereotype rolled into one." But his story serves as a great reminder that hard work eventually pays off — and an appearance on "Shark Tank" can really make your business fly.
"The 'Shark Tank' effect is very real, and it’s still going on," Patel said.
Patel grew up in a budget motel his family owned in Las Vegas. His high school was in one of the country's worst school districts with a 40% dropout rate, he says.
But that didn't deter Patel from achieving academic excellence. He was his class's valedictorian, homecoming king, and a White House Presidential Scholar, a program reserved for only two students per state.
Despite getting a mere 1,760 on his first SAT practice exam, Patel spent hours studying the test, and was even able to get a perfect 2,400 score.
With that kind of a background, Patel seemed like a perfect shoo-in for some of the top schools. But he was rejected by every Ivy League school he applied to, including Harvard, Princeton, and Brown. Stanford rejected him too.
Eventually, Patel took a full scholarship offer from USC, enrolling in its dual BA/MD program. He always wanted to be a doctor, so it was a perfect program to prep him for medical school — but he soon had a change of heart.
In the summer before starting med school, Patel tried to write an SAT prep book, based on his own test-taking skills. But over 100 publishers rejected his idea, so he launched an online SAT-prep site called 2400 Expert instead, using some of his scholarship money as seed capital.
Soon, his company took off, and McGraw-Hill, one of the publishers that initially rejected him, came back and offered him a book deal. Patel wanted to keep growing his business, so he ended up taking a two-year leave of absence from USC to pursue an MBA at Yale.
In fact, his story was so good that he was able to grab the "Shark Tank" producers' attention, and in June 2015, he ended up going on the show. (His episode didn't air until January 2016.)
But the sharks weren't too impressed. Although they liked his growth and margins, they didn't like the fact that he was doubling as a student and entrepreneur.
"You have to be completely committed," Kevin O'Leary, one of the sharks, better known as "Mr. Wonderful," told him. "I don’t believe you. You can’t be a part-time entrepreneur."
One by one, each shark started to drop out. Patel, who was confident he'd get multiple offers before going on the show, started to get nervous.
"That was a really scary moment — reality sort of slapped me in the face," Patel says.
At the end, he was able to get a deal with Mark Cuban, but at a much lower valuation. Patel sought $250,000 for a 10% stake, valuing his company at $2.5 million. He had to settle for $250,000 for 20%, slashing his company's value in half.
Still, Patel calls his experience on "Shark Tank" the most transformative thing to have ever happened to him. Aside from the expertise he gets from Cuban, Patel says the national exposure he received is invaluable.
Now Patel manages more than 40 employees, mostly part-time instructors. His business has a growing archive of recorded sessions and offers in-person classes in nearly 20 cities nationwide.
He says his sales are projected to hit over $3 million this year, a huge jump from the $500,000 it was seeing before going on "Shark Tank." He also expects to sell roughly 10,000 of his SAT-prep books in this year alone, the same amount he sold over the past four years combined.
"I'd say 'Shark Tank' was probably the single greatest moment of my life so far," Patel said.
It's why Patel says everyone with an idea or an actual business should apply for "Shark Tank" and take their chances on going on the show. And to anyone considering going on the open-call audition, Patel offers the following three tips:
Give away something memorable: You only get 60 seconds to impress the open-call directors, so make sure you impress them with something physical or memorable, preferably at the end of the open-call pitch.
Be entertaining on video: Once you pass through the next round, you're asked to submit a five- to 10-minute video. Be witty and entertaining, like Patel did. ("I'm an Indian-American who got a perfect score on the SAT, got straight A's, my parents own both a gas station and motel — yes "Patel Motel" is a thing — and I'm in med school to become a doctor. So I'm pretty much every Indian stereotype rolled into one.")
Fill out the application as if you're talking to a stranger: The application is over 20 pages long, but the producers know nothing about your business. The only way to keep them interested is to ask yourself, "What would a stranger want to know next?" until you've conveyed all your thoughts.
You can watch Patel's appearance on "Shark Tank" below:
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On the February 19 episode of "Shark Tank," Mark Cuban decided to invest $1.5 million into the company Nexercise, producers of the fitness app Sworkit, in exchange for a 10% share of the company. (Fellow "shark" Barbara Corcoran declined to meet the founders' huge ask, but loved the look of the app: She said she would "invest $3.99 and download it today.")
Cuban's $1.5 million is not the biggest "Shark Tank" investment ever, but it's up there, and according to a press release emailed by a Sworkit representative, it's the largest tech deal ever. And while it's hard to pick one fitness app to recommend out of more than 100,000 health-related apps in the app store, for an overall general workout that can be done at home, I'd pick Sworkit as well.
It's the one app I kept using after trying a selection of phone apps that would help someone get in shape.
It turns out my personal preference is backed by science: A team of sports scientists analyzed 30 popular free fitness apps and found that Sworkit was the most closely aligned with the American College of Sports Medicine's training guidelines.
Those guidelines say a workout should include aerobic, strength and resistance, and flexibility components; it should follow evidence-based guidelines for frequency, intensity, and types of workouts; and it should include safety measures to help make sure beginners start at a safe point.
No app was perfect, the analysis found (and most were terrible). People with different goals will have different needs, and of course the best workout is whichever one you actually do. Other apps may be better, in fact, at motivating people to move.
But I enjoy the range of workouts that Sworkit offers, and think they're a great way to get a full workout in with limited time. The app is basically like a playlist for fitness that you can just follow along. And now we know that its routines are expert-approved.
Here's how it works — and why I've stuck with it.
When you open up the app, you can choose whether you want to focus on strength, cardio, yoga, or stretching.
All the exercises are bodyweight-based, so you don't need any additional equipment for any of the workouts. While I wouldn't use this as my only fitness option, it's a nice way to get a varied workout that can be done at home or on the road.
There are also options for either a quick five-minute workout or a custom workout.
While five minutes isn't a lot, it's enough for a quick morning wake-up routine at least. Even a small amount of exercise can have a huge impact on your life, especially if you keep your intensity level high.
The five-minute workout is also a good warm-up option before a yoga session.
The full body workout is a great go-to option here. While I like to go for a run or a bike ride or a climb when I can, this is a nice alternative for particularly hot or freezing days.
It's easy and well-defined enough that you can make yourself do it, even if you are just relaxing around the apartment.
You can work up a good sweat and push yourself hard enough that you get the mental clarity that's one of the best benefits of exercise.
"Shark Tank" investor and entrepreneur Daymond John, 47, wanted to run his own business as long as he can remember.
"I never knew anything other than wanting to be an entrepreneur," the New York native told Business Insider.
Before he made a fortune launching the clothing line FUBU ("For Us By Us"), his entrepreneurialism started in grade school.
He would scrape the paint off pencils and customize them with the customer's name for a fee — and his market was exclusively the prettiest girls in his first-grade class.
At age 10, his parents divorced, and from that point on, he was raised by his mom alone.
"We went from middle class to poor,"John told Business Insider. "I became the man of the house and started working at that age." He handed out flyers in his neighborhood of Hollis, Queens, for $2 an hour.
After scraping by in high school — John spent years struggling with reading and writing, only to be diagnosed with dyslexia much later in his adult life — he waited tables at Red Lobster in the early 1990s.
One day, his mom said to him, "Listen, you're going to have to figure out what you're doing the rest of your life, one way or another." He told her that he wanted to start an apparel company for young men, so she taught him how to sew wool caps.
He immediately bought cheap fabric, sewed 80 of them, and sold them for $10 a pop, which earned him $800, John explained on a podcast with James Altucher.
"Did you go back the next day and sew more?" Altucher asked.
John responded: "No. I went back the next hour and sewed more."
After seeing her son's passion and scrappy attitude, John's mom decided to mortgage her home to raise $100,000 to fund his business, which officially launched in 1992. He set up camp in her house, splitting his time between FUBU and Red Lobster.
His brand started to take off after he got big names to wear his product in music videos, but he continued waiting tables.
"Even though I had placed our product in the hottest music videos out there, I was still working full-time at Red Lobster,"John told Tim Ferriss. "To the public, FUBU was a huge company. Little did they know that I was still serving them shrimp and biscuits!
"At the point where I had enough money to quit, I decided that I had to give the business all of my attention and effort. So I quit Red Lobster around '95 or '96, and went completely full-time with FUBU."
John quickly realized he could dream even bigger. "When I made my first million, I realized how poor I really was,"he told Business Insider. "It takes about a million to get you out of debt."
John's hustle helped him turn a small operation based out of his mom's home into a booming business, bringing in $350 million in revenue within six years. Today, FUBU has earned over $6 billion in global sales.
While his brand's popularity faded in the early 2000s, John did not.
He jumped on the opportunity to reinvent himself by taking a risk on a new reality show: "Shark Tank," which allows budding entrepreneurs to pitch their ideas to five investors, called "sharks," including John.
Although the first season cost him about $750,000 of his own money, he says he's a more savvy investor because of it, and his small businesses now make millions of dollars in annual profit.
Today, his estimated net worth is $300 million, according to Wealth-X, but John strives to get back to that feeling of being broke that he became so familiar with in his early days. Rather than abandon the "broke mindset" as he continues to thrive, he leverages it, which he details in his new book, "The Power of Broke."
"When your back is up against the wall and you have no other way to advance or create relationships and you can't buy anybody — you can't buy things to help you — you start to become creative,"John told Business Insider. "When you become creative, that's when you think outside the box — and that's utilizing the power of broke."
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As a 14-year-old, Daymond John had yet to be diagnosed with dyslexia but knew that he struggled with reading.
But there was one book — Napoleon Hill's 1937 classic "Think and Grow Rich"— that so enthralled him that he not only pushed through it, but decided to read it again every year.
In John's own book, "The Power of Broke," he writes that the tome profoundly changed his mindset from focusing on what he didn't want to become to instead concentrating on what he did want to become. This shift allowed him to start the FUBU clothing brand in his early 20s and then grow it into a multimillion-dollar business, he says.
In a recent Reddit AMA, the "Shark Tank" investor shared several books that he thinks every new entrepreneur should read. We've collected them here along with some books John previously told Business Insider had changed his life.
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When the legendary businessman and philanthropist Andrew Carnegie met Hill as a young journalist in 1908, Carnegie decided he liked Hill so much that he would use him as a vehicle for distributing the strategies he considered responsible for his success. This essentially launched Hill's career as one of the founders of the personal-success genre.
Hill's greatest work, "Think and Grow Rich," was first published in 1937 and became one of the top-selling books of all time. It's a collection of insights derived from interviews with Carnegie, Franklin Delano Roosevelt, Thomas Edison, and Henry Ford that teaches readers how to develop the drive and habits necessary to maximize one's potential.
"The main takeaway from that was goal-setting," John says. "It was the fact that if you don't set a specific goal, then how can you expect to hit it?" One of the fundamental ideas in the book is determining your purpose in life and working toward concrete milestones.
John says that "Think and Grow Rich" made him realize that when he didn't set very specific goals for himself, he could find himself making excuses for why he wasn't working as hard as he could.
John says that he's a fan of all of Carnegie's books. Carnegie was a contemporary of Hill's, and his writings on how to maximize success have had just as much longevity.
Carnegie's most widely read book is "How to Win Friends and Influence People," first published in 1936. It is a collection of advice on self-promotion and describes how the most influential people listen more than they speak.
Warren Buffett famously took Carnegie's class on the subject when he was 20 and still has the diploma he received for it in his office.
Johnson's parable has been a consistently best-selling business book since it was released in 1998. It tells the story of two mice and two sprite-like people living in a maze where the location of the cheese suddenly starts changing every day.
When Johnson wrote the book, companies around the world were adapting to the rise of a more accessible internet and new ways of doing business. Its lessons on how to let go of a fear of change, however, are timeless.
John says that he used to think that throwing money at a failing business would somehow save it, but at this point in his career he understands that he needs to take a more measured approach.
"Money's not going to make it any better. It may make the opportunity come faster, but it also can hurt you if you think that money's going to solve it," John says.
The "Shark Tank" investors were charmed by baby-faced Benjamin Stern, the 16-year-old founder and CEO of bottle-less bath products company Nohbo, whose pitch involved washing his grandmother's hair.
But after the high-school junior from Florida explained how he cold-called invention headhunters at companies like Clorox and then set forth to secure patents after hearing interest, the Sharks respected him as a bona-fide entrepreneur.
Mark Cuban said he saw himself in Stern, calling Stern "Mini Me," and made a deal with him for $100,000 in exchange for 25% of the company.
Stern and Cuban closed the deal since filming the pitch last summer, and Stern said his business has been kicked up a level since his segment premiered in a season-seven episode two weeks ago.
Stern told Business Insider that Cuban and his team have already revamped Nohbo's website and secured it with a manufacturing deal, as well as given him plenty of valuable guidance. Stern shared several key lessons they've already taught him.
When he was 14, Stern watched a documentary about the plastic-bottling industry and realized that much of the plastic that goes unrecycled came from people's bathrooms, where they're more likely to toss an empty bottle into the trash.
He decided to find a way to take the idea behind detergent pods and apply it to shampoo, body wash, and shaving cream. He and a chemist developed a prototype that looked like a Lindt chocolate ball — a dissoluble ball held in a biodegradable wrapper.
Stern has always wanted Nohbo to be a revolutionary product; one that could end up in hotels and licensed to major toiletry manufacturers. Cuban was drawn to Stern's passion but taught him to minimize risk and keep his ambitions grounded.
"They have taught me I shouldn't start something without knowing and preparing for the absolute worst outcome that could happen, even if we expect the best," Stern said.
While Cuban taught Stern to stay grounded, he's also given him the assurance that reaching out to potential licensing partners this early in the company's life "is never a bad thing," and that he was right to follow his instinct when he called Clorox a couple years ago to gauge its interest in his product.
Cuban wants Stern to hedge his bets, but not to lose his aggressive confidence.
Stern has already exceeded the $10,000 goal for his Indiegogo campaign for the launch of Nohbo and has been fielding investment offers. But Cuban and his team told Stern the "Shark Tank" buzz won't last forever.
Stern said he realized that "keeping up the excitement is an inevitable and ongoing challenge." He's determined to build relationships with customers and clients, making the most of the momentum he's got.
"I want to run Nohbo in a way that allows flexibility and secures a sense of loyalty for all of our workers," Stern said.
"As a CEO, I'm adjusting to working with people all the time, and jumping into an area which I know little about," he said. In his journey as a founder-CEO, he's already recognized that Cuban and his team have helped him avoid mistakes he would have made on his own. He wants to bolster his team even further, and not let his ego get in the way.
"I know how many bad turns I have avoided by surrounding myself with geniuses in the business field, so if I can get them on board to back us completely, that would be amazing, and would progress Nohbo more than anything I could possibly do," Stern said.
SEE ALSO: 'Shark Tank' investor Daymond John shares 9 business books he thinks everyone should read
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