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- 02/10/14--06:13: _'Shark Tank' Reruns...
- 02/11/14--08:19: _How One App Maker G...
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- 04/12/14--13:24: _Mark Cuban Just Inv...
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- 09/03/14--12:51: _6 Ways To Tell If Y...
- 09/10/14--09:41: _Mark Cuban Shares T...
- 09/12/14--09:13: _'Shark Tank’ Is Get...
- 02/10/14--06:13: 'Shark Tank' Reruns Are Saving CNBC's Ratings
- 02/11/14--08:19: How One App Maker Got 8 Million Users And Mark Cuban's Money
- 02/13/14--12:23: 12 Awesome Gifts Ideas That Appeared On 'Shark Tank'
- 03/11/14--10:41: 9 Things Entrepreneurs Can Learn From 'Shark Tank'
- 03/16/14--11:10: Mark Cuban Reveals What Happens Behind The Scenes Of 'Shark Tank'
- 03/17/14--10:33: Mark Cuban Reveals The Only 13 Apps On His Phone
- 04/23/14--05:22: Barbara Corcoran: Being Too Passionate Is Bad For Business
- 09/03/14--12:51: 6 Ways To Tell If Your Business Idea Is Good Enough For 'Shark Tank'
- 09/10/14--09:41: Mark Cuban Shares The 4 Simple Keys To A Perfect Pitch
- 09/12/14--09:13: 'Shark Tank’ Is Getting A Spin-Off Show Called ‘Beyond The Tank’
Joseph K. Moore, president and CEO of First Defense Nasal Screens, is a "Shark Tank" legend. At the end of his pitch, most of the sharks were making offers, and Robert Herjavec offered him $4 million for the entire business—the largest offer in the show's history.
Moore turned it down.
What was it about his presentation that sent the sharks into a feeding frenzy? He pitched a lightweight nasal screen that reduces the inhalation of allergens, pollen and pollution, and asked for $500,000 for a 10 percent stake.
The sharks thought it was a joke at first, with Mark Cuban asking, "Are you kidding me?"
But when Moore said he had sold 1.7 million units at 60 cents wholesale, with a client overseas who had given him an $8 million contract, they realized the product's full potential. They started making multiple offers, including the record-breaking $4 million.
Not wanting to sell the entire business, Moore instead accepted a joint offer on the show with Kevin O'Leary, Daymond John and Cuban for $750,000 for a 30 percent stake and a 10 percent perpetual royalty. Cuban had to kick in season tickets to Mavericks games.
So, how has First Defense Nasal Screens been doing since Moore's appearance? What is it like to turn down millions of dollars on national TV? And how much would he have been willing to sell his company for?
Check out the Q&A with Joseph K. Moore.
How would you describe the 'Shark Tank' effect on your business?
The effects have been tremendous. ... We are now in 30 countries and should be totally global within the next 12 months. We also have a new size for Asia, and have two patents finalized and more pending worldwide.
What was the immediate impact on your business after the show premiered?
We were overrun with orders, thank-you's and distributor inquiries. We had our website built to handle large volume, and it still went down as it couldn't handle the traffic.
What's your advice for prospective business people who are about to go into the tank?
Be prepared, don't be greedy but also don't be willing to give it away. Stand your ground if you believe in your product, and of course know your valuation.
What was your biggest surprise from appearing on the show?
My biggest surprise—besides all the traffic and orders and interest—is how many people contacted me from around the world after they saw [the show] in their country. ... I just heard from people in Portugal and Panama who just saw it as it continues to air globally.
Also, how many people recognized me when I was traveling. One guy recognized me at my hotel in Hong Kong. He was from Madrid, a renowned designer, and when someone tried to introduce me he said, 'I know him—he's my hero. ... He's a celebrity; he turned down the largest contract in TV history.' It made me really realize how much "Shark Tank" had done for us, how vast an audience it has and what a small world it is.
Can you tell us anything that happened that didn't make it onto the show? Your favorite thing left on the cutting-room floor?
The main thing I can think of is when Mark Cuban asked me if there was an amount he could write a check for and buy the company, and I said, '$10 million and a small residual.' I thought they would show that.
More bite is coming to Tuesday nights on CNBC. Get ready for "Shark Tank" on Tuesdays, 8 p.m. to 12 a.m. Watch Joseph K. Moore enter the tank Tuesday, Jan. 28 at 8 p.m. ET.
Last week, iPhone video app Cycloramic premiered on ABC's invention show, "Shark Tank."Cycloramic lets you take 360-degree videos on your iPhone without using your hands at all. The app uses the phone's vibrations to turn itself in a circle.
The app was a hit with both the judges and viewers. The judges, including billionaire Mark Cuban, gave Cycloramic $500,000 at a $3 million valuation. The creator, Bruno Francois, was only seeking $90,000. When the episode was filmed over the summer, Cycloramic had 660,000 downloads. It costs $1.99 in the App Store.
Now, Francois tells 9to5Mac's Jordan Khan that it has more than 8 million downloads. About 100,000 new downloads flooded in within an hour of Cycloramic's Shark Tank debut. That means Cycloramic made about $200,000 in 60 minutes. Cycloramic and its sister app jumped from obscurity to top placements in the App Store as well.
"By the next App Store Ranking period we went from overall ranking #800 to #2 for the Cycloramic Pro Version and from #220 to #1 for the Cycloramic Studio," Francois tells Khan. "Also our new selfie360 app did 30K downloads and went from no ranking to #7 in the Photo Category."
Here's the winning presentation, below.
Bruno François, the creator of hands-free video app Cycloramic, went on "Shark Tank" seeking $90,000 in exchange for 5% of his company. What he got was much, much better.
Within an hour of his segment airing on ABC's hit pitch show on Friday, Francois's app was downloaded more than 100,000 times. The two versions of Cycloramic vaulted from No. 800 and No. 220 in the App Store to No. 2 and No. 1, respectively. In that first hour, the company made roughly $200,000.
"I never would have imagined the impact that 'Shark Tank' had on the downloads and the website," François told Business Insider in an email.
The sudden spike in demand and sales that Cycloramic saw immediately after its segment ran isn't rare for businesses that appear on the show. It's a phenomenon that experts are increasingly terming the "Shark Tank effect." Some estimate that a slot on the show could be worth as much as $4 million to $5 million in free marketing exposure, particularly if the finicky Sharks take a liking to the product.
That certainly was the case for François, who landed an offer from all five of the show's celebrity investors. His iPhone video app uses the device's vibrations to spin the phone in a circle — allowing users to take 360-degree videos, hands free. Cycloramic also has a sister app that lets iPhone users take hands-free selfies.
At one point during the negotiations, Dallas Maverick's owner Mark Cuban offered up $1 million. François rejected that offer because it was "too much equity to give up," but negotiated a $500,000 deal with Cuban that gave his company a $3 million valuation.
The "Shark Tank" effect may be worth the effort, but it is hard won. François says he first auditioned for "Shark Tank" in April of last year after a five-hour wait outside the Fox Theater in Atlanta. After hearing nothing for months, he was invited to Los Angeles over the summer to do a last trial pitch to the producers and then finally tape his segment.
Even after all that, though, François had no guarantee that his footage or Cycloramic would ever make it on the air. "I was going to be notified if the show would air three weeks before the show time," he told Business Insider. "I was not even guaranteed, and it is independent of whether or not you make a deal."
All his time could have gone to waste. But instead, François won the "Shark Tank" lottery and secured air time. And the evidence of his success is clear.
Last summer, viewership in CNBC's core demographic — the 25-54 year old crowd — disintegrated to a fresh 20-year low of 37,000.
With riveting financial crisis plot lines like AIG bonuses and Lehman's collapse way in the rear view, people wondered whether business TV journalism had officially lost its relevancy.
"Most of the financial sector's sharp edges have been sanded down, its eccentricities and peccadilloes ironed out by five years of regulation and magnifying-glass public scrutiny,"wrote New York Magazine's Kevin Roose.
Well, all it took was some re-runs!
The New York Post's Andrea Morabito reports that CNBC's ratings have soared since the network started showing old seasons of "Shark Tank," where business owners pitch their products to investing "sharks" like Mark Cuban who then negotiate equity for cash.
The show has gained in popularity since its first season for ABC in 2009, according to the Post, and now it's right in CNBC's sweet spot. From the Post:
Airing Tuesdays from 8 p.m. to midnight, “Shark Tank” averaged 541,000 total viewers in January — more than any prime-time show on CNN that month, as several news reports gleefully pointed out.
It also appeals to a young audience, drawing 276,000 viewers (three times CNBC’s year-ago average) in the key advertising demo of adults 25-54, making it the No. 6 show in all of cable news.
As a result, a CNBC programming exec told the Post that other reality-based shows in the vein of "Shark Tank" are "in the pipeline or in production or pre-production."
Bruno Francois walked onto the set of "Shark Tank" last June with a mission. He wanted Mark Cuban's app expertise and Lori Greiner's strengths as a fellow inventor. What he didn't want, however, was money.
He had bootstrapped Cycloramic Studio 360 Panorama, a $1 iOS app that makes 360-degree panoramic videos, since the beginning, so he was sure he could get by without funding. Although he was willing to accept $90,000 for a 5 percent stake in the company, "it was not the top priority," he says.
What was top priority was getting access to Cuban's Rolodex. "I wanted to find some kind of partnership, not for driving my business but for advisement," says Francois, who lives in Atlanta. "Mark was my top choice. And Lori does more of the design, manufacturing, and distribution of hardware work, which is good for my inventing side."
By the end of the show, Francois had gotten a lot more than he anticipated. He walked away with $500,000 from the two investors in exchange for a combined 15 percent of the company.
During his presentation on the show, Francois, 42, said his app had drawn 660,000 downloads. The app had already had won accolades from tech writer David Pogue, who bestowed Cycloramic with a Pogie award and called it the "freakiest darned thing you ever saw," thanks to its ability to make a smartphone rotate itself by activating its vibration function. More interest came after Francois's cold pitch to Steve Wozniak prompted the Apple co-founder to film a panoramic tour of his kitchen that went viral.
Still, Francois couldn't have foreseen the "Shark Tank" effect. Within an hour of his appearance on January 31, Cycloramic received 100,000 downloads from the App Store. "We saw a little increase in activity shortly before the show as the companies and preview were announced," Francois told the Apple blog 9 to 5 Mac. "As soon as our segment started, the downloads skyrocketed [to tens of thousands in a matter of minutes]."
To date, Cycloramic has been downloaded almost 8.5 million times and was the top-selling app in the App Store this week, Francois says. That's in spite of the fact that the app has never been featured in App Store promotions in the U.S. "We got featured in many countries, but nothing on the main page of iTunes," he says. "I don't know why. I've tried to send emails and demonstrations."
Perhaps Francois doesn't need Apple's help. Though he partially credits "Shark Tank" with the app's success — "once you go on the show, it's like a commercial," he says — he doesn't believe his 12-minute appearance was the only thing that helped him succeed. Mark Cuban's presence was a huge factor as well. "He doesn't just invest in you and ignore you," Francois says of his backer. "He'll try an app, test it, and give feedback."
Last Friday, Francois launched another app called Selfie 360, which — you guessed it — enables panoramic selfies. Users have been uploading 4,000 photos a day and so far the app has been downloaded 60,000 times.
Whether it takes off like Cycloramic remains to be seen, but for now Francois, who grew up in Corsica and studied aerospace engineering, says he's content to just keep developing new tech projects.
Next on his hit list is a levitating iPhone platform for chatting on Facetime. "The phone can rotate and follow you, and the person on the other [end of the] line can control what they're seeing," he says.
ABC's reality pitch show "Shark Tank" isn't all about drama and suspense — it's also about neat inventions.
Throughout the show's five seasons, the Sharks have seen some impressive pitches with products that have gone on to do quite well.
The following "Shark Tank"-approved items (all were picked up by Sharks on the show) are certainly appealing, and would make fantastic gifts for the "Shark Tank" fan in your life.
To keep their memories close, buy a subscription to GrooveBook.
In Season 5, Mark Cuban and Kevin O'Leary invested in GrooveBook, which sends users a booklet of 100 photos every month that are printed on special photo paper. With their smartphones, customers can choose which of their photos to print each month, and GrooveBook sends the pictures in the mail is 1o-12 days.
Buy it: $2.99/a month in the Apple store
The 180 Cup is perfect for college students and young professionals.
In Season 5, Daymond John almost didn't invest in these multi-use cups that function as both a beer cup and shot glass. He ended up making a deal though, much to the delight of the founder and college students everywhere. These cups are stackable, disposable, and built tough enough to handle any drinking game.
Travelers can shut out unwanted light with the Hoodie Pillow.
The Hoodie Pillow is an all-in-one neck pillow, sleep mask, and ear warmer that Robert Herjevic invested in during Season 4. The neck pillow will keep you from falling onto your neighbor's shoulder on a long bus ride or flight, and when you need some shut-eye, just pull the drawstrings so that the hood tightens and shuts out the light.
Buy it: $20
See the rest of the story at Business Insider
I don’t watch much television — with two small children and a business, I just don’t have time. But there’s one show that I DVR and watch without fail every week: "Shark Tank."
For those of you who aren’t familiar with the show, here’s the premise:
Aspiring entrepreneurs get a once-in-a-lifetime opportunity to pitch their business to a panel of “sharks” — five self-made millionaires and billionaires including the likes of Mark Cuban and Daymond John — and ask for funding in exchange for equity in their business.
Basically, it’s the dramatization of one of the most stressful, sweat-inducing, make-or-break moments in capitalism: the business pitch.
On any given episode you’ll see amazing and innovative businesses secure hundreds of thousands (and sometimes millions) of dollars worth of capital, or you’ll get to watch what’s obviously a weird, laughably-bad business be eviscerated by the sharks.
This is of course a “reality” show, with those quotes firmly in place; while the businesses are real and the entrepreneurs really do spend an hour or two with the sharks getting feedback on their products or ideas, that footage is then spliced and edited together into 5 minutes of entertaining television. The businesses that are comically bad were clearly handpicked by producers for that very reason.
But while it’s crafted for your viewing pleasure, "Shark Tank" actually offers a good dose of practical, real-world business advice for would-be entrepreneurs. You won’t get an MBA equivalent education just from watching the show, but you’d be surprised by the amount of actionable business tips you can pick up just from tuning in each week.
Below I highlight nine of the recurring lessons in entrepreneurship I’ve gleaned from "Shark Tank":
1. Learn how to pitch.
If there’s one lesson you take from "Shark Tank" and this post, let it be this: master the art of the pitch.
Even if you don’t think you’ll ever find yourself standing in front of a bunch of venture capitalists, every entrepreneur needs to know how to effectively sell himself and his idea to his potential partners, employees, and clients/customers.
You’d think on a show like "Shark Tank" — in which people know they’ll be asking for tens or even hundreds of thousands of dollars on national television – the entrepreneurs would prepare for their pitch like crazy.
But you’d be wrong.
I’d venture that 50% of the pitches on "Shark Tank" are absolutely horrible, 40% are so-so, and 10% are stellar. Some of the folks on "Shark Tank" just seem like they’re winging it, which makes for some awkward, yet entertaining moments.
“You have to learn how to communicate your vision. You have to practice in a mirror every morning. It’s the most important thing you can do because you only get a chance to make a first impression once. And when you stand up in front of sharks or any other investors you’ve got to be able to communicate why the idea works and why you’re the right person to do it.
I always tell young kids that I teach now in business school, ‘Look all this stuff you’re learning about numbers is great, but if you can’t stand up in front of your classmates and explain why you’re a winner and how you can be a leader, and how you can inform that business plan, you’re nothing… You’re just a nothing burger ’til that happens.’” –Kevin O’Leary, aka Mr. Wonderful
So how do you avoid being like the cringe-inducing pitchers on "Shark Tank"? Well, following the guidelines in our post on how to give an effective pitch (as well as what not to do) will put you leaps and bounds ahead of many folks. The gist of the advice in those posts is this: be poised, make your pitch sticky or memorable, know your business (and industry) inside and out so you can answer any question that comes your way, and play to the investor’s self-interest (show them the money!).
The best pitch I’ve seen on the show was from an 18-year-old girl who owns a skincare company called Simple Sugars. She was super poised (more so than many of the much older entrepreneurs who’ve been in the tank), she had a great story for her product (started the company when she was 11 to create an all-natural skincare product that was suited for someone who had eczema, like herself), she knew her business inside and out, answered the sharks’ questions and resolved doubts like a boss, and she clearly demonstrated how the sharks would make money investing with her. Her awesome pitch scored her a $100,000 deal with Mark Cuban. If you want to learn how to pitch like a pro, you’d do well to watch this young woman in action.
2. Hustle is necessary, but not sufficient.
A common refrain entrepreneurs on the show resort to when they’re about to get the nix from all five sharks is: “But I’m such a hard worker! I will toil night and day to make this business a success!” And every time, one of the sharks — usually Mark Cuban — will respond with something to the effect of: “You and everyone else on this show!”
We’ve argued that the world belongs to those who hustle. And it does. If you’re lazy, you’re not going anywhere in life. But in business, hustle is a given. You have to work hard to be a success, but working hard doesn’t guarantee you’ll be successful. If your business sucks and your product is a complete lemon, it doesn’t matter how hard you work. You’re going to fail.
Hustle, but make sure you’re hustling in the right direction.
3. Don’t be blinded by passion.
Here’s another recurring theme on the show: the overly-passionate entrepreneur who’s poured their heart and soul into their product and is absolutely convinced that their business is the next big thing/will change the world…even though everyone else can plainly see that their idea is an utter dud.
“I think passion is overrated. Everyone has a lot of passions. I have a passion for sports – a passion for music. That doesn’t make it a business, and that doesn’t make you qualified to run the business.” –Mark Cuban
It’s hard to knock these folks. Their passion and emotion is well-intended and is frankly admirable in our day of “overwhelming meh” aloofness. Ideally, you should love doing the thing you’re trying to make money at. But passion isn’t enough. Just like hustling can’t transform a sow’s ear into a purse, if nobody wants your product or service, passion in spades won’t magically turn your business into a success. In fact, that unchecked passion can blind you to warning signs that you’re on a sinking ship — before you know it, you’ve invested years of your life and thousands of dollars into an emotionally and financially costly failure. It’s truly sad when the entrepreneurs on the show admit they’ve taken out a second mortgage or emptied their children’s college fund to pursue a dream that all the sharks end up turning down. Had they led with their head instead of their heart, such a devastating anagnorisis could have been avoided.
4. Just because your friends and family love your idea, doesn’t mean it’s a good idea.
I can’t count the number of times I’ve seen people pitch what is obviously a stinker of a business, only to be stunned when Mr. Wonderful declares, “This is insanity! I forbid you to continue!” How do these incredulous would-be entrepreneurs invariably respond? “But all my friends and family think it’s a great idea!”
Of course they do. They’re your friends and family. They think you’re awesome, so they think everything you do is awesome; it’s the halo effect! Even if your friends and family do realize your business idea is a bad one, they probably wouldn’t say so. They’re worried you’ll shoot the messenger and so they’ll simply tell you what you want to hear.
Take the husband/wife creators of “Elephant Chat.” They invested $100,000 of their own money into developing their product – a little plush elephant stuffed inside an acrylic “communication cube” that a spouse could place out on the counter to let their partner know they wanted to talk about an issue in the relationship (“the elephant in the room”). It retailed for $60. They swore everyone they talked to thought it was an amazing idea. None of the sharks took the bait.
Besides being blinded by your passion, beware the family and friends filter. Always, always get an outside, unbiased opinion. Better yet, test out your idea on the unforgiving public to see if there’s even a demand for it.
5. Know your business.
Above we mentioned that in order to pitch effectively, you gotta know your business. But what does that mean exactly?
“Know your business and industry better than anyone else in the world.” –Mark Cuban
First, you need to know your numbers — sales, cash flow, debt, margin, and so on. The sharks often hesitate to make a deal with entrepreneurs who don’t know important data points like their customer acquisition cost.
But knowing your business extends far beyond having a handle on your numbers; it requires a deep understanding and grasp of the industry you’re competing in. Lots of entrepreneurs come on the show pitching a product or service they think is truly unique, only to be informed by one of the sharks that a very similar product or service already exists. If they had done just a bit of due diligence, they could have avoided that embarrassing “surprise.”
There are also plenty of entrepreneurs who come on the show with dreams of conquering certain industries (food, clothing, apps, etc.), but have no idea how those industries actually work; for example, they have a food item they want national grocery stores to stock, yet they aren’t aware of the huge amounts of money big corporations spend to secure that shelf space and what an uphill battle breaking into the market will require. Consequently, their plans to succeed are naive at best — completely misguided at worst.
A perfect example of entrepreneurs who came on "Shark Tank" without really understanding their industry (or even business) was a pair of doctors pitching a social network for their fellow MDs called Rolodoc. The docs had no clue how social media worked, or even what it was, despite the fact that their business idea would supposedly revolve round it. Consequently, they stumbled over even very basic questions about how their idea would be executed and how it would actually make money. Mark Cuban called it the worst pitch in "Shark Tank" history.
Before you start your business, research the heck out of the industry you’ll be competing in by reading industry journals and blogs and talking to folks who are already doing business in that market. Heck, even pick up a Dummies guide – there’s one for just about any industry you can think of. This research phase could take months, but it will save you major headaches down the road.
6. Concentrate on your core competency.
Sometimes an already successful business will enter the tank seeking more capital to expand and grow. Nothing wrong with that. The problem arises when one of these companies wants to use that money to expand into a somewhat related product line or service that detracts from their original core competency. Most of the sharks are leery of these businesses and will often tell the entrepreneur that they’ll only invest if they drop their plans for the expanded product line. Why would they want their money funneled into an untested product or service instead of being used to boost a proven winner?
It’s good to experiment and try different things in business, but never lose sight of your core competency. Getting sidetracked has been the downfall of many a business. This is especially true with the volume and ease with which you can get feedback on social media these days; you might hear from a bunch of folks who say, “I wish you guys would make this too!” leading you to believe there’s a popular demand for a new expansion in your business. Then it turns out that those commenters actually represented a very small but disproportionately vocal minority.
Know what you’re good at and stick close to it.
7. The best businesses solve real problems.
The entrepreneurs that succeed in landing a deal usually have one thing in common: their business solves a real problem. Typically the problem the entrepreneur sets out to solve was one they experienced themselves.
The businesses that typically fail at securing funding don’t solve an actual problem. They’re either novelty products or products that solve a problem that doesn’t actually exist. Every now and then you’ll see a shark invest in a novelty item because they see the opportunity to make a lot of money really fast by riding a trend or fad, but for every one of those, you have something like Man Medals – novelty items that are as a dumb as a rock, not the next Pet Rock.
8. If you’re not making money, it’s just a hobby.
Kevin O’Leary has a saying, “Any business that after three years isn’t profitable isn’t a business, it’s a hobby.” There’s nothing wrong with hobbies. They’re fun and provide a creative outlet. But don’t fool yourself into thinking that your little manly-scented artisanal soapmaking experiment is a promising biz just because you’ve sold 8 bars on Etsy. If you’re plowing lots of money into your project, but seeing little return on your investment, embrace your endeavor for what it is – a pleasant pastime.
9. Not every business needs investors.
Some entrepreneurs come on "Shark Tank" looking for an investment to expand an already successful business, only to be told by the sharks that they don’t need an investor and should actually continue to bootstrap the business. I think this is an important, but often overlooked point. In a business culture that glorifies million dollar venture capital deals, lots of aspiring entrepreneurs have the mistaken belief that if you want to succeed in business, you have to have investors.
Plenty of successful businesses bootstrap their way to success without the assistance of investors; with a good idea, hard work, and proper money and resource management, they’re able to fund continued growth with the cash flow they have coming in. Bringing in an investor wouldn’t do much for these businesses except add another cook in the kitchen – and another hand in the pie.
“Banks are not forgiving, and the last thing you want to do is build your business with a priority placed on having to pay back the bank before you invest further in your business. Equity is far better and sweat equity is the best.” -Mark Cuban
Besides, some businesses just aren’t well suited for investment. Investors typically want businesses that they can scale and aggressively expand. You can’t scale a business that specializes in handcrafted wooden chests made by you, unless of course you’re willing to license your design to a factory in China. But managing the mass-production of wooden chests may not be what you envision as your vocation and you’d rather keep things small – making less money, but staying hands-on with the work.
Taking venture capital ultimately means giving up control. We ourselves have been approached a few times with VC offers but have never seriously considered them. Once you bring in people who are only concerned about the bottom line, they’re going to start pushing you to do things that may not jive with your values and vision. “We need to blow the Art of Manliness up and increase traffic faster! Why don’t you publish more often and do like, oh, I don’t know, some posts on the ‘hot girl of the month?’” Um, no thanks.
Before seeking investment, ask yourself: Do we really need outside funding? Have we reached a point where we can’t continue to grow without it? Are we the type of business an investor would even want to invest in? If so, what would we do with the extra capital? Do I really want to give up control of my business?
Also, if you’re looking for a great bootstrapping success story, look no farther than our friends at Huckberry. I’m so impressed with their success — they keep growing and growing — and they’ve done it without VC. For an inside look at the benefits and challenges of taking this path, check out this great article on them at 37Signals.
If you’re an aspiring entrepreneur, I hope you’ll take all this advice under consideration, or in the words of Mr. Wonderful, “You’re dead to me!”
To aspiring entrepreneurs dreaming of landing a deal on "Shark Tank," a former contestant says don't bother.
Scott Jordan, founder and CEO of apparel line TEC-Technology Enabled Clothing, appeared on ABC's hit pitch show in March 2012 seeking a $500,000 investment in the licensing of his clothing company in exchange for a 15% stake. He was eventually offered a combined $1 million in deals but felt all the equity asks were too high, and walked away empty-handed.
Two years after that experience, Jordan says he considers "Shark Tank" an entertaining TV program but a terrible way to raise funds. "If you truly think that this is an opportunity to raise money, it is idiotic to say the least," he tells Business Insider.
Jordan argues that the percentage of deals that actually receive funding on "Shark Tank" is tiny. According to ABC, some 36,000 people applied to be on the show last season. During that time, 26 episodes aired with four products typically featured in each. That's a total of 104 entrepreneurs (or teams) who actually got air time, or a mere 0.3% of the people who applied for a spot — and none of them is guaranteed an investment from the Sharks.
That said, the lucky few who do secure air time on "Shark Tank" certainly get a boost. Experts estimate that a slot on the show could be worth as much as $4 million to $5 million in free marketing exposure, particularly if the temperamental Sharks take a liking to the product. In the past, appearances have vaulted smartphone apps to No. 1 spots in the iTunes App Store overnight, and doubled sales in just months.
Jordan acknowledges the exposure value of going on the ABC show. But even considering that, he still doesn't think the slim chance of a big payoff is worth the six to 12 weeks of effort it can take to apply and, if chosen, film a segment. He takes issue most with what he feels is a massive perception problem about "Shark Tank."
"I think that people watch the show and think that appearing on it is pretty much a guaranteed path to riches," he says. "It's important for people to know that this is not the golden ticket. There are more traditional, better ways to do it."
Rather than trying to raise money on "Shark Tank," Jordan suggests people go to family and friends for help, or take out a second mortgage on a house. It's a valid point, but also worth taking with a grain of salt. Unlike most other early-stage entrepreneurs, Jordan was not strapped for cash when he went on the show.
At the time, Jordan's company was on track to do $12 million in sales for 2012. He was an ex-lawyer who had carefully calculated how to seek funding from the Sharks without sacrificing a bit of his lucrative retail line. He also had powerful connections, and made a point of placing a call to his board member, Apple co-founder Steve Wozniak, midway through his "Shark Tank" segment.
When Jordan balked at the options on the table, the episode became confrontational and nasty. "What is your problem?" Shark Robert Herjavec asked. "Kevin, you're out, you're out," Jordan shot back, pointing at Kevin O'Leary and Herjavec. "I don't need you."
"Show a little more respect," Herjavec yelled, as the TEC founder stormed out of the tank.
Today, Jordan still clearly holds grudges against the Sharks (he's happy to call Dallas Mavericks owner Mark Cuban a "billionaire bully"), but his thoughts on the show are more tempered. Watch it, enjoy it, but don't put all your faith in it.
"There are lots of business lessons to be learned, but do not believe that what you see on TV is what is happening," he says.
During his South by Southwest keynote, Mark Cuban revealed some behind-the-scenes "Shark Tank" secrets.
"Shark Tank" airs every Friday night on ABC. Each week, entrepreneurs present their startups before a panel of judges, including Mark Cuban. The judges, or "sharks," can either decide to invest in the startup or pass.
Cuban revealed the secrets during an hour-long keynote. We recorded the conversation and pulled out the best quotes, organizing them into relevant topics.
Here's what Cuban had to say:
What a typical day filming 'Shark Tank' is like:
Mark Cuban: We get there in the morning. We go on stage at 8:00 which means I get there about 7:45. I rush my suit on. That gives them less time to do makeup and more time to screw up my hair.
They start bringing in the deals at about 8:15. We sit there, they set up the set-up thing that you see then the stage manager or producer basically says, “It’s [X-Person] and [Y-Person] and those are the two names.” Then they come in; we’re not allowed to use our phones or our tablets. You see us pick up whatever pads we have and pick up our pen and we start taking notes and they start pitching.
Is it real or staged?
MC: It’s all real. There’s nothing fixed and nothing staged. Literally those deals go from 30 minutes for just stupid-ass ones to 2.5 hours for some people.
How the sharks really react to pitches, both good and bad:
MC: The people who are true entrepreneurs, I want to be as supportive as I can. I want to protect them against Kevin [O'Leary].
...There are some gold diggers, which is someone who’s just doing it for the PR and they have no intention of doing a deal. You can tell because [in one case], they had $600,000 in sales and they wanted $100,000 for 1% — some amount that doesn’t reflect the valuation.
...I love the scams. “With these life pills you can go 8 days without eating.” Obviously [ABC] edits [the pitch] so it goes down from 2.5 hours down to a half-hour down to 8 to 14 minutes. And so knowing it’s going to be edited, I’ll rail into them and say like, “F*ck you, there’s NO WAY…” I love to mess with them.
Do the Sharks/judges all get along?
MC: We all get along but when you’re there from 8:00 in the morning until whenever we finish, and there’s 8, 10, 12 deals coming through and you’re shooting 8—9 hour days, just like any family you get annoyed as all get-up.
We all have our ways of doing things. I’ll try to give [entrepreneurs] advice and this and that, Lori [Greiner] wants to tell a story about how when she had nothing and this and that, Robert [Herjavec] wants to talk about his family being from Croatia…and all the other Sharks, their minds are everywhere else and I just can’t help but have a reaction so that’s when they show me making these dumb-ass faces all the time.
What happens after the show, and how many deals actually close:
MC: We get the opportunity to do due diligence. 60—70% of my deals close.
In [one] case, it was from some tiny town in the state of Washington, there were four owners, but the husband of one of these owners thought it was unconstitutional to pay income tax. He had never filed his taxes ever. I’m like, "Ok so, it’s going to be on national TV, what do you think happens next? They’re not coming after you, they’re going to come after me."
Why Cuban loves "Shark Tank":
MC: The reason I love doing the show — and it’s a lot of work — it’s the #1 show on television watched by families. Everyday I have people coming up to me saying, “My son...” “My daughter...they love the show and we watch it together on Friday nights."
Every parent wants their child to live the American dream. Shark Tank reinforces the American dream is alive and well.
...The show is real, it’s our money, we get along, but it does get intense.
We caught up with billionaire entrepreneur and investor Mark Cuban during South by Southwest Interactive in Austin.
Our first question: what apps does the "Shark Tank" star and Dallas Mavericks owner have on his smartphone?
His answer will surprise you.
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Barbara Corcoran built her fortune in real estate – she tells us what makes a great salesperson. The "Shark Tank" investor also reveals what her pitch would have been if she were seeking financing on the hit show.
Produced by Justin Gmoser. Originally published in November 2013.
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Barbara Corcoran, an investor on "Shark Tank," tells us what really happens between investors on the hit TV show, and how Mark Cuban makes his investment decisions.
Produced by Justin Gmoser. Originally published in November 2013.
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An awesome device that charges your phone by boiling water in a pot has just become the next hot thing, thanks to its appearance on ABC's hit reality show, "Shark Tank."
The makers of the device snagged a $250,000 investment from billionaire Mark Cuban on the show that features inventors and entrepreneurs pitching to investors. They were initially offering to sell 10% of their company, Power Practical, for that sum — a $2.5 million valuation.
Cuban liked the company and at first offered $250,000 for 20%. But the founders countered with 12% equity, plus another 3% in "adviser options" and a seat on the board. And he bit at that. At 12%, that's a valuation of just over $2 million.
The company has sold about $300,000 worth of PowerPots, the founders said. When they said they expected sales to zoom to $2 million, they got a round of laughter from the investors on the show.
That laughter didn't deter Cuban, who took to Twitter later saying,"Notice how the other sharks are confirming my value #Shark Tank." (Tweeting is a big part of the "Shark Tank" show.)
PowerPot is being marketed toward campers, but it earned Cuban's investment when the founders talked about selling it to developing countries like Uganda. That's a potentially huge market for the device, where local villagers in test markets are using it to light their huts.
Business Insider's Dylan Love tested the $149 PowerPot and it worked well. He wrote:
"The model we tested generates 5 watts of electricity, which means it'll charge your iPhone twice as fast as connecting it to your computer over USB. There's also a 10-watt model for those who want to be extra-prepared."
Here's a video of the PowerPot in action, being pitched on Shark Tank.
"Shark Tank" investor Barbara Corcoran talks about her investments on the show over the seasons – how many go through, and why others fall through.
Produced by Justin Gmoser
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Real estate mogul Barbara Corcoran has seen a lot of passionate entrepreneurs come and go on ABC's reality pitch show "Shark Tank." She's learned that overexcitement can drive a business into the ground.
"Too much passion blinds an entrepreneur, just like a guy who's madly in love," Corcoran tells Business Insider. "He can't see clearly, he can't listen, and he knows for sure that the girl is 'absolutely perfect!' Being too wrapped up in a love affair with your new business idea doesn't allow you to change what's wrong."
Corcoran, who recently launched online class "Fundamentals of Entrepreneurship: Pitching Your Business and Yourself" with Skillshare, first realized that being too passionate could be bad for business when she invested in a young, aspiring entrepreneur. He had a great product with a lot of consumer appeal but refused to budge an inch from his vision.
"After giving him my $100,000, along with my truthful, experienced feedback about what needed to be improved — like a needed design change and offering a lower-priced model that everyone could afford — he didn't listen and changed nothing," says Corcoran. "He was too much in love with his original product to hear or act on a single word. One year later, his business is still bumbling along, but it's sure not going to succeed."
Of course, Corcoran readily admits that she's made this same mistake herself. She recalls falling head over heels for one of her business ideas in the early '90s. She decided to put all of her apartments for sale on videotape, so buyers could view them without leaving their La-Z-Boy chairs, and named it H.O.T. for "homes on tape." A year later, stacks of unwanted videotapes sat untouched in her office basement, and not one person had checked out what Corcoran had considered an "ingenious" video tour.
"My blind passion didn't allow me to realize my idea had one big flaw: Our salespeople wouldn't show their customers the tapes because they included the names and phone numbers of the other competing agents in my office," Corcoran remembers. "My great idea was dead on arrival, and my pig-headed passion had cost me $71,000."
Today, Corcoran thinks of a healthy business passion as more of a slow burn than a raging fire. Sure, it should start out strong, but it should also grow stronger as the business evolves, she says. When she evaluates entrepreneurs, she now looks for their persistence and ability to stick with the business the way a committed spouse stays with a marriage. "It's mostly hard work and doesn't feel very passionate when the bad times hit, but stay you must."
How can you tell the difference between a healthy passion and a blinding lust for your exciting new business? Corcoran recommends not going the traditional route and asking friends and family what they think of your business idea. They love you too much to be objective, she says.
Instead, she believes you're much better off going outside your circle of friends and family to get unbiased responses to your product or service. If you get lukewarm or negative reactions, you can use that feedback to make your idea stronger. And if they love it, Corcoran suggests you "tell them you'll take an order right then and there, and see if they'll hand over the money!"
Barbara Corcoran, an investor on the TV show "Shark Tank," who made her fortune in real estate, tells what she is looking for when listening to entrepreneurs' pitches.
Edited by Justin Gmoser. Originally published in October 2013.
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RadarOnline.com has exclusively learned that the reality TV star and entrepreneur has been slapped with a $5 million class action lawsuit by students in his beauty schools, who claim he worked them like dogs and paid them nothing in return.
According to court documents obtained by Radar, DeJoria, the founder of the hair products company Paul Mitchell and Paul Mitchell cosmetology schools, is not giving his students any compensation for their services, and they are suing for “failure to pay minimum wages and/or overtime wages.”
The school charges the general public a lower rate for hair services than local salons, but the lawsuit claims that the students are required to provide the services to those customers without receiving wages in return.
The Paul Mitchell schools — allegedly numbering “over 50 and possibly over 100″ in 35 states — are able to operate at a lower cost because the students are providing them with free labor, according to the court documents. If the students weren’t there, they claim, the school would have to hire regular cosmetologists, and pay them minimum wage at least.
“The class members are paid no compensation by the defendants for the labor they provide in the Paul Mitchell Schools’ personal service business, meaning they receive no payments in United States currency,” the documents claim.
The class action lawsuit against Paul Mitchell Schools also says that due to the policy of making students work for free, the schools are able to operate at low cost and high profit, making competitors are unable to pay their workers more than minimum wage.
The members of the lawsuit state they were employees, not students, and since they weren’t paid, DeJoria broke federal law. They are asking for a jury trial and a $5 million payment from DeJoria.
If you're blessed with an entrepreneurial spirit and tend to spend Friday nights at home on the couch, you've no doubt found yourself watching ABC's "Shark Tank," starring a panel of investors who take pitches from entrepreneurs looking for funding, mentoring and the valuable connections striking a deal with a high-profile investor would afford.
But if you've ever imagined yourself standing in front of the likes of Mark Cuban, Kevin O'Leary, Barbara Corcoran, and the rest of the usual stars of the show, there are some things you should know about what really makes a good business prospect. After all, you wouldn't want to be one of the silly ideas the show's producers always include just for entertainment's sake, right?
Mike Collins, CEO and founder of BIG, a Bedford, New Hampshire, incubator and innovation consulting company, has spent 14 years helping inventors, entrepreneurs and startups vet their ideas and move them forward.
Here's his advice on how to know if your idea has legs.
Your good idea — the one that's going to make you millions — is just a starting point.
How many times have you had a good idea, only to see it come to fruition in someone else's product before you had time to do anything? That's the chord "Shark Tank" hits, Collins says. People feel an urgency to get ideas off the ground before anyone else can beat them to the punch. The problem with that thinking, however, is this: Ideas are usually only starting points and there's no need to run out and get a patent for something you thought up driving home from work.
"The idea, in a way, is the easy part. And the patent — the intellectual property side of it — is really at the end, as a strategy," he says. "What is valuable is an idea that someone has actually done a lot of work on. And work means research, prototyping, getting some feedback, revising it." In the end, he says whatever you end up selling or licensing will likely be quite different from your Eureka moment.
You focus on the problem more than the solution.
When entrepreneurs pitch BIG, the group tries to steer the person or startup to focus on the frustration more than the great solution they think they've found, which people inevitably want to lock down and patent.
"We try to slow people down and say 'Let's really understand that problem.'" Collins says. "So if you're frustrated that your toddler keeps throwing his sippy cup on the floor, a lot of times people come up with a solution to that without really taking a step back and saying, 'What are the dimensions of this problem from a utilitarian standpoint? What are the emotional sides to it? What else is out there?'"
Use Google to do research or put together a Pinterest board that displays what already exists surrounding the problem at hand, he suggests.
You're someone who's easy to get along with.
If BIG — or a millionaire Shark, for that matter — is going to commit to being in a business relationship with someone, the person needs to be likeable and open-minded. "Besides a really interesting problem to work on, we want to get along with the inventor because who likes working with jerks, right?" Collins says. "And the other side of it is a willingness to be open to learning and evolving. If people get feedback and react to it, they morph and evolve. You really want a partner that's excited by that, like, 'Oh, that's even a better way to do it' or 'That's a nice improvement.'"
You have mapped out the business model.
How are you going to make money with your idea? Collins says it's important to think about your goals and objectives. Maybe your idea is something that would be most profitable if licensed to a bigger company. Or, maybe you're looking for a way out of your day job but haven't thought through the reality that your new business won't make a dime for several years.
"Think through goals and the business model with the end in mind," Collins suggests. "Where are we trying to get? If we're just trying to license this off to a company, maybe all we need is a prototype and some marketing materials. If you're really trying to create a business, maybe different things are involved."
You have received and considered objective feedback.
It's one thing if your mom and all your friends tell you your idea is a winner. It's quite another thing if complete strangers love it. So, it's important to find ways to get honest input from people who may be in the demographic you're trying to reach, whether it means hiring a marketing research company to do the work for you, holding focus groups or any other method of getting objective feedback from folks who don't care about your feelings.
"None of us wants to be told our kid is ugly or our idea is stupid," he says. "That's just part of being a human being. But it's really important to do some of these things, like research and getting objective feedback, even though it's hard, and you may not want to hear the criticism."
You're realistic about the value of your business.
You see it all the time on the show — an entrepreneur stands in front of the panel, throws out a number he says his company is worth, and then the sharks tell him he's crazy.
Ever wonder what they're thinking about when it comes to valuing a company? Collins says they're looking at several things: Do you have customers? Is your solution proprietary, meaning no one else has it except you? Do you have a team, or is your company just you? Do you already have financial backing? How much have you sold?
"Think about it like real estate. There are a lot of comparables done," Collins says. "And then it's square footage and the neighborhood and the schools. That's really the same kind of process that goes into valuing a start-up business."
Mark Cuban knows a thing or two about investments. When he's not screaming on the sidelines of Dallas Mavericks games or writing his frank blog posts, the billionaire investor is blasting flimsy pitches that cross his path on ABC's hit pitch show "Shark Tank."
First, Cuban warned that funding isn't the "end-all, be-all," which is especially important given the intense focus on funding in most young Silicon Valley companies. Instead, Cuban emphasizes cash flow.
He keeps an eye out for the company's game-plan for becoming "insanely cash-flow positive." With the insane cash flow, he says, it's an easy decision for the investor to keep funding as the company matures.
The second major faux pas that entrepreneurs make, Cuban says, is asserting that your company is going to be a disruptive success if it captures a mere slice of a billion-dollar market.
Cuban tells TechCrunch he looks for four things when deciding whether to invest in a company:
• The company's core competency: What you're aggressively, remarkably, and incomparably good at.
• Why you're great: Why the team is totally capable of cruising through the storms that will inevitably come in launching a startup.
• How the idea is protect-able: Why you're not going to get scooped by someone doing it more cheaply and faster than you.
• How it can scale: How you're going to be able to serve the whole of a market — not just a slice of it.
For more from Cuban, watch the video.
ABC has found tremendous success with “Shark Tank,” and that means the network wants more of it. That could come in the form of a companion series that serves as a kind of sequel for the entrepreneurs and products that appear on the parent show.
Mark Burnett is attached as producer of “Beyond the Tank,” according to The New York Times, which is expected to be announced soon by the network. The newspaper suggests that the show could become part of ABC's schedule as early as this season.
The appeal of this companion show's format is that it answers the question of what happens next for the participants on “Shark Tank.” Once they've secured investors for their products, it's time to take the next step. For viewers interested in what that step is, their main recourse was to head to Google and start trying to track down the entrepreneur or their product.
While details were scarce on the pending project, as no deals have been finalized, the investors from “Shark Tank” would be expected to take some kind of role in “Beyond the Tank,” as they remain involved in the business ventures they've invested in.
ABC current does this in short segments in various episodes of “Shark Tank” itself. But these are just quick check-ups on how past entrepreneurs are thriving, or not, after their time on the show. “Beyond the Tank” will offer a much more in-depth exploration of what happens after they leave the “shark tank.”
“Shark Tank” has grown into one of ABC's most consistent and strongest performers, averaging 7.2 million viewers last season, while beating most of its Friday competition each week in the 18-49 demographic advertisers covet.
“Shark Tank” kicks off its sixth season with a two-hour premiere on Friday, Sept. 26 at 8 p.m. EDT on ABC.