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.
Produced by Graham Flanagan.
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In five seasons of ABC's reality pitch show "Shark Tank," we've seen some doozies. Hopefuls have pitched products including an energy drink for Cougars, a vortex chamber that generates gold, and flatulence-scented candles.
At times, contestants show up unable to even explain why anyone would want to buy their product.
With an average viewership of seven million and airtime that's worth about half a million dollars to the aspiring entrepreneurs who make it on, you'd think every pitch would be thoughtful, well-rehearsed, and airtight. But you'd be wrong.
Andrew Figgins, a Chicago-based entrepreneur and owner of the fan site InTheSharkTank.com, says nearly half of the hundreds of pitches that have been made on the show have been awful. The most common problems? Far-fetched ideas, wacky personalities, and a lack of basic business knowledge. "The people who have gone on the show and don't know their numbers get chewed up and spit out," Figgins says.
In anticipation of the sixth season's two-hour premiere on Friday, we take a look at some of the biggest duds in the history of the hit pitch show.
Episode 507: "Kymera"
In the most recent season, Woods asks for $250,000 for a 20% stake in his company, which he's been developing for 10 years. The problem is he doesn't have a business plan. Oh, and he's never sold a single one in a decade.
Episode 507: "Kymera"
Because Woods couldn't figure out how to finalize a product and sell even a few with the $130,000 he spent on development over the past decade, the Sharks conclude an injection of capital won't save him.
Episode 501: "Rolodoc"
It would function as a secure platform for medical professionals to upload their medical records and put each other in contact, they say. They want $50,000 in exchange for a 20% stake. Sounds like there may be an idea there, right?
Fear has been a healthy business driver for Melissa Carbone, the mad scientist behind Los Angeles-based Ten Thirty One Productions. Named for Halloween, Carbone's favorite holiday, the company scares the bejesus out of willing customers at interactive events, including the Haunted Hayride (a tractor-drawn trek through the abandoned Griffith Park Zoo) and Ghost Ship (which sails out on short horror cruises).
Ten Thirty One events feature costume-clad actors, lavish special effects, spine-tingling original music and a deluge of simulated severed limbs, bodily fluids and related horror props.
"People love to be scared, but in a safe environment," Carbone says. "To be scared when you can actually be hurt or when there is real danger, that's obviously not fun. But that adrenaline of being scared in a safe environment — people will consume that all day long."
Carbone — a former senior manager at Clear Channel Media and Entertainment, where she organized events across multiple corporate platforms — launched the company in 2009 along with Alyson Richards, who remains Clear Channel's vice president of strategic partnerships.
"I was always a huge horror fan," Carbone recalls. "Every Halloween, we set up a haunted courtyard at our house, and hundreds of kids from across the neighborhood would come through. I realized that if you have the best-decorated house of the season, everybody comes over, and I began to wonder if that could be turned into a business."
Her research revealed that annual consumer spending for Halloween is nearly $7 billion, according to the National Retail Foundation.
Ten Thirty One launched with the Haunted Hayride, based on the Halloween farmland excursions that are a childhood staple in Carbone's native Connecticut. But the company "supersized the concept and put it on steroids, L.A.-style," leading thrill-seekers on a 25-minute tour past gothic castles and burned-out churches, complemented by a maze overrun with monsters and maniacs. The Ghost Ship's maiden voyage was in 2011, delivering 75 minutes of frights amid three floors of a vessel said to formerly house criminals too dangerous and unstable to remain on dry land.
Ten Thirty One went national last summer with the introduction of the Great Horror Campout. Spanning nine U.S. cities over 11 weekends, the interactive scavenger hunts had campers (ages 18 and older) collecting items at nightmare scenarios like sacrificial voodoo rituals and blood baths, with the winner crowned "Hellmaster." The intense physical demands are just one facet of the experience; campers must also avoid up to 100 "scare actors"— Ten Thirty One repertory players and local hired guns authorized to forcibly handle, capture and exact simulated torture on ticket holders.
"You determine how far you want to go, how much you want to do and how dirty you get," says Tori Miller, a registered nurse from Kingman, Ariz., who attended the campout in L.A. "Sometimes you have to dig through something ooey and gooey, or dig through a toilet full of vomit. And then all of a sudden you look up from digging, and a monster is staring at you. It scares you half to death. It's so much fun."
The monster mash brings in monster cash. Tickets for the Haunted Hayride cost $30, the Ghost Ship costs $59, and the Campout starts at $99. In 2013, the Haunted Hayride alone pulled in $1.8 million during the 17 days leading up to Halloween. Carbone projects sales of 200,000 tickets this year.
Investors include Shark Tank's Mark Cuban, who gave Carbone $2 million for a 20 percent stake in the company — the biggest deal in the TV show's history. Other Ten Thirty One investors include concert production firm Live Nation.
In 2015, Ten Thirty One will roll out the Haunted Hayride in New York City and San Francisco. And Carbone is already scheming more diabolical plots to come. "This is a model that doesn't exist in the marketplace," she says. "Most Halloween attractions are small, but these are incredibly layered events. There's nothing else like it."
SEE ALSO: 6 Ways To Tell If Your Business Idea Is Good Enough For 'Shark Tank'
Over the past five seasons of the hit ABC reality show "Shark Tank," countless entrepreneurs have pitched their products to some of the world's most influential investors.
Not only do contestants have a shot to convince billionaire investor Mark Cuban or real-estate mogul Barbara Corcoran to fork over a few hundred grand, but they do so in front of a national audience of about seven million viewers.
Some aspiring entrepreneurs have risen to the challenge and shown how to give a pitch that's so concise and effective that the investors feel like they'd be missing out on some major cash if they didn't gain a stake in the company.
In anticipation of the sixth season's two-hour premiere on Friday, Sept. 26, and with the help of Andrew Figgins, a Chicago-based entrepreneur and owner of the fan site InTheSharkTank.com, we look back at some of the greatest pitches we've seen so far on "Shark Tank."
Vivian Giang contributed to this article.
In the fifth season, Yim galvanizes all five Sharks around Breathometer, a startup that makes a breathalyzer that plugs into your smartphone. He already has $1 million in venture backing, $100,000 in sales the previous month, and readily answers the Sharks' questions. He initially asks the Sharks for $250,000 for a 10% equity stake in his business.
Yim ends up with all of the episode's investors — Mark Cuban, Kevin O'Leary, Daymond John, Lori Greiner, and Robert Herjavec — in his corner and a whopping $1 million investment for 30% of his company.
If you place your phone vertically on a solid surface and use the Cycloramic iPhone app, it will vibrate your phone in a circle as it records video.
François boldly tells the Sharks he expects to have one million users after one year and requests $90,000 for 5% of his company.
In the second episode of Friday's two-hour season six premiere of "Shark Tank" on ABC, a young entrepreneur moves even the coldest Sharks — including Kevin O'Leary, a.k.a. "Mr. Wonderful"— to tears with his story of why he gave up a comfortable lifestyle to pursue his passion.
Of course, tears won't guarantee you a deal in the tank, but Phillip Lapuz, designer of the high-end golf putter company Kronos, proved that a big investor is only willing to go the distance with a founder who will do whatever it takes to succeed.
During the pitch, the Sharks know that Lapuz and his business partner and creative director Eric Williams have a quality product, but they are wary of investing in a company that wouldn't see an immediate return. It was only after a display of Lapuz's powerful entrepreneurial drive that investor Robert Herjavec agrees to make a deal with Lapuz and Williams.
The Kronos guys appear in traditional golf attire to ask the investors for $150,000 for 15% equity in their company. Two years ago, they explain, they acquired a deal at the PGA Merchandise Show for distribution of their putters, the cheapest at $500, in Japan and Scotland.
They explain that they've sold $260,000 worth of merchandise so far in 2014, with 95% of sales in Japan. Lapuz and Williams tell the Sharks that the reason they have not yet made it in the US is because of the American business model of selling sports equipment through celebrity athlete endorsements, which they did not have the capital to spend on.
O'Leary tells the Kronos partners that there are instances where a piece of equipment catches fire in the golf industry, and there's a chance lightning could strike for Kronos. But it would be a big risk that required a considerable time investment.
By this point in the pitch, investors Mark Cuban and Barbara Corcoran have bailed because they hate golf, and Lori Greiner drops out because she thinks Kronos would only be a big success in Japan.
Playing with one of the putters in his hands, Herjavec asks Lapuz and Williams why they started a business in the first place. Lapuz suddenly becomes choked up, with tears running down his face.
Lapuz explains that he's engaged, and his fiancée lives in Japan. Shortly after his engagement proposal, he left a high-paying job as a consultant and invested $100,000 of his own money to start Kronos, something he had long dreamed of doing. His fiancée's traditionally minded parents couldn't fathom why he would leave a good job to start a business and no longer approve of their daughter marrying Lapuz. He is working for Kronos to take off so that he can get married in the States.
"It's like, do I have to choose between my company of my dreams and my fiancée?" Lapuz asks.
O'Leary, typically the most blunt and cynical investor on the panel, wipes tears from his eyes.
Corcoran is also moved. "I think you ought to sit tonight and write her parents a thank-you note," she tells Lapuz. "And you ought to start like this: 'Thank you for the insults. For not thinking I'm worthy enough for your daughter. Watch me now, and watch what I do.'
"There's no better motivation in the world than somebody who insults you," Corcoran says. "Those parents are guaranteeing your success."
O'Leary pulls out because he can't figure out a strategy to make it work, even though he'd like to.
Herjavec tells Lapuz he identifies with him, since his main motivation to succeed has always been to validate the many sacrifices his parents, who fled communist Yugolsavia, made for him.
In terms of the business plan itself, he sees a tipping point where Kronos can take over the consumer market. But it's far from immediate. That said, he trusts Lapuz's spirit and is willing to be patient. He offers $150,000 for a whopping 35% stake in the company, which Lapuz and Williams are able to negotiate down to 30%. They come to a deal.
It's impossible to say whether Lapuz and Williams would have been able to make a deal had Lapuz not become emotional, but there's no denying that Herjavec was willing to take a bigger risk than he'd normally have liked to because he felt Lapuz's emotional investment in the company and understood it.
You can have a great product, but your pitch will fall flat if you can't show an investor that you're willing to do whatever it takes to make their investment worth it.
You can watch the full episode on Hulu Plus.
SEE ALSO: The 15 Best 'Shark Tank' Pitches Of All Time
DON'T MISS: Here's How A Billionaire Investor Coached An Entrepreneur Through The Pitch Process
When it comes to dressing for success, you'd better look the part or you might not get the part at all. Because people definitely do judge a book by its cover, especially in business.
That's the basic but wise common thread of business fashion advice from celebrity "Shark Tank" investors Kevin O'Leary and Daymond John. It's simple: Dress strictly according to your profession and position, and always dress to kill. Both sharp-dressed Sharks agree that this is the single most important rule to follow when suiting up for the work day ahead, and for your career overall.
"Your look really needs to be true to your profession, head to toe," John recently told Entrepreneur.com on the set of "Shark Tank." The millionaire founder of FUBU was dressed to the nines at the time, rocking a black velvet ultra-formal, peak-notched suit coat over a wine shirt buttoned to the top, and a meticulously folded matching maroon pocket square. Surprisingly, the menswear mogul went without a necktie. He did, however, don his trademark marble-sized diamond earrings.
"Don't come as a construction worker dressed in silk. I need to see you in some overalls with a hard hat on. If you're a coder in the tech world and you walk into the room in a nice three-piece suit, I won't believe that you're in a dark room for four straight days coding. I'm just not buying it. Always dress to what is accurate to who and what you are."
John said the same doubly applies if you work in the financial arena. If you're "in a suit that's not fitted and you have a bunch of jewelry on," he'll suspect "you'll also be also loose with my money. Not good."
Fellow Shark Kevin O'Leary, clad in a classic black suit and tie, and a crisp white shirt adorned with elegant silver ball collar pins and cuff links, shares John's traditional views on dressing for business success. "You have to dress as your clients expect to see you, to their expectations," he told us between "Shark Tank" takes.
The shrewd Canadian mutual funds magnate, who also goes by the moniker "Mr. Wonderful," said the days of dressing down in the financial sector are dead and gone, and he doesn't miss them a bit. "In financial services, for a while during the tech boom, it was cool not to wear a tie, or to dress down with jeans and a coat. It was awful."
Now, he said, people respect "a crisp, clean, unfettered disciplined look, like what I wear every day." We couldn't describe O'Leary's day to day business apparel better. "That's my uniform. My look is what I am, who I am. I'm very comfortable that way and it works."
John said you can still look good, even if you're a newbie entrepreneur on a shoestring budget.
"It's not about having money," he said. "If you have a suit that only cost $150, go the extra mile and get it tailored. Shine your shoes. Make sure you manicure your nails. It's the simple things that people notice, that take you far."
Two "Shark Tank" entrepreneurs show that if you're indecisive in a negotiation with an investor, you risk appearing amateur, arrogant, and untrustworthy. And you will probably go home with nothing.
In the latest sixth-season episode of ABC's hit pitch show, San Francisco-based entrepreneurs Lei Yu and Tyler Freeman present their company DrumPants, which sells wearable technology that uses your smartphone's Bluetooth capabilities to turn your body into a full band. Its secondary features, which Yu and Freeman say they plan to expand on, can be used to do things like control presentations with a small pat on your pocket.
After raising $74,000 on Kickstarter in January, well past their $35,000 goal, they ask the Sharks for $150,000 in exchange for 5% equity to take the product past its beta stage. That would give their company a $3 million valuation.
Freeman and some friends give the investors a demonstration, which investor Robert Herjavec rocks out to:
Yu says the two have secured 720 preorders for the product, which launches later this year, and that they expect $220,000 in sales by the end of 2014.
Investors Lori Greiner and Kevin O'Leary find DrumPants interesting but aren't convinced that it's anything more than a niche product, so they bow out.
Herjavec agrees that he doesn't imagine millions of people would want to buy a full-body instrument, but he's taking a long view and is interested in the next step for the company. He offers $150,000 for a 20% stake.
Investor Daymond John asks the entrepreneurs if they're interested in licensing the product, to which Freeman says, "Definitely," as Yu nods in agreement. He offers $250,000 for a 20% stake, saying he would help secure a company to add DrumPants to its catalogue to get upfront cash and guaranteed annual minimums.
Yu and Freeman ask if they can step into the hallway to discuss.
"You know what happens in 'Shark Tank' when you leave the tank? Nasty, nasty things," O'Leary warns. "What is wrong? You've got two offers. You've got to make a decision."
John agrees but lets the cofounders take a moment to talk it over. Away from the investors, Freeman expresses interest in John's offer, while Yu says he doesn't seem to understand the full capabilities of the technology. The investors beckon them to return, and Freeman and Yu come back without a plan.
Freeman asks Herjavec if he'd drop his stake from 20% to 15% for the same $150,000, which is met with silence. Yu adds that it would be great to get a joint offer among the remaining Sharks.
By this point, John is frustrated and says the pair's indecisiveness has forced him to withdraw his offer.
Herjavec, also visibly annoyed, says he is going to stick with his original offer. Freeman spends a moment looking at Herjavec before asking investor Mark Cuban, who previously had suggested Herjavec's offer sounded good, if he'd like to add anything.
"I think what your challenge is, and you've probably been hearing it your entire lives, is that you're both very deliberate," Cuban says. O'Leary says they're the opposite, but Cuban finishes his point.
"But that's part of the problem, right? Sometimes the perfect is the enemy of the good. Right? Paralysis via analysis," Cuban says.
He says he was trying to figure out if his suspicion that the two were unreliable was true. The product has potential, Cuban says, but needs a definitive push in a specific direction, and Yu and Freeman proved they wouldn't be willing partners in a growth plan. He says he's got no deal.
At this point, Herjavec has had it. He tells the two that he knew he would withdraw his deal as soon as the pair met his offer with a plea to Cuban.
"This is an incredible example of two entrepreneurs who are incapable of making a decision," O'Leary says. Yu begins to explain why they're still worth it, and she continues to talk as Cuban, John, O'Leary, and Herjavec start yelling for her and Freeman to leave.
"That was the first date! Imagine what would happen after that," John says, referring to what it would be like to work with the DrumPants' founders over the long term.
"I guarantee you this happens to them every day of their lives," Cuban adds.
You can watch the full episode over at Hulu Plus.
SEE ALSO: These 'Shark Tank' Entrepreneurs Made The Sharks Cry, Proving Emotion Is Key To A Successful Pitch
When there's a successful company that claims to be led by a kid, it often seems disingenuous. An 8-year-old may have come up with an idea for a business, but it's most likely mom or dad doing most of the work.
But 14-year-old Noah Cahoon, CEO of the toy company Paper Box Pilots, is not merely a PR prop for his dad Brian's business. They're a father-son duo from Salt Lake City learning how to operate a small business together, with Brian letting Noah have the final say in the direction of the company.
The Cahoons appear on the latest sixth-season episode of ABC's hit pitch show "Shark Tank," when Noah, who was age 13 at the time of filming, makes a deal with investor Kevin O'Leary, a.k.a. "Mr. Wonderful," without the advice of his dad.
Brian is a senior sales consultant at Oracle who had previously set aside his dream of starting a business when he started a family.
"When Noah was born, I was getting my MBA. I've always wanted to be an entrepreneur, but when I brought home that little guy — it's a feeling of responsibility that you have to be careful. And I never got the chance to take that risk," he tells the investors.
Brian and Noah used to make designs for airplanes they made out of empty cardboard boxes when Noah was little. Last year Noah, an Eagle Scout, decided that they could not only start printing out designs for his 6-year-old brother Milo, but they could start selling those designs to retailers.
Brian had an opportunity to become the entrepreneur he always wanted to be while giving his ambitious son a business education before he even entered high school.
He tells the Sharks that he wants to teach Noah that there's not a single path in life and that he doesn't need to pursue a career where his main goal is to rise up a corporate ladder.
Brian tells the investors he treats Noah as a real CEO. In the first eight months of Paper Box Pilots they've made just $7,500 in sales from their online shop and small independent retailers, but the Cahoons say that Noah has been involved in every sale and every design and production decision.
"What a great education," investor Lori Greiner says.
The Cahoons come to the Sharks looking for $35,000 in return for 25% equity and a partnership with a Shark who can mentor them to accelerated growth.
Investors Mark Cuban and Greiner both express admiration for the father-son team, but Cuban thinks the toy industry is not his forte and Greiner thinks the business isn't scalable.
O'Leary, however, does know the toy industry. He struck gold when he sold children's software maker The Learning Company to Mattel in 1999 for nearly $4 billion.
He thinks that he can use his industry connections to make Paper Box Pilots ride an anti-technology trend in toys and take off. He offers $35,000 for a full half of the company, as long as the Cahoons start offering pre-made toy boxes in addition to the decal kits they built the business on.
Investor Robert Herjavec makes the same offer as O'Leary, with the suggestion that he has a perfect way to package the toys to make a ton of money. Investor Barbara Corcoran then says that as long as the Cahoons start making more girl-friendly toys, she's offering $35,000 for a 35% stake because "it sounds cool!" Herjavec ups his deal to $50,000 for 50% equity with the extra selling point that he's "the fun Shark!"
The Sharks look to the Cahoons to make a decision. Brian asks for a little more direction from the investors, but Corcoran stops him, warning that it's dangerous to push when you've been given a rock-solid offer — or in this case three of them.
"All I can say," Brian tells Noah, "is you're the CEO, and it's ultimately your decision." Noah gets nervous and asks his dad under his breath which investor he should pick, but all Brian offers is: "Who do you think would be the best mentor?"
Noah decides to hand over 50% of his company to O'Leary so that he can take his entrepreneurial education to the next level with O'Leary as his guide and his father by his side.
A quick look at the website shows that they're taking Corcoran's advice and have started marketing more to girls, though they still have yet to release pre-made toys. O'Leary will likely take care of that.
Low production costs, a product that every family can afford & enjoy, and a powerhouse father-son duo! What's not to like? #PaperBoxPilots
— Kevin O'Leary (@kevinolearytv) October 11, 2014You can watch the full episode on ABC.com.
SEE ALSO: The 'Shark Tank' Entrepreneurs Who Lost Out On $250,000 Prove Why 'Perfect Is The Enemy Of Good'
Robert Herjavec is one of the most successful tech entrepreneurs in the world.
He sold his first company BRAK Systems for $100 million to AT&T, and another one for $225 million to Nokia. His current company, The Herjavec Group, is Canada’s largest IT security company, with more than $150 million in sales.
Although he may not be a household name, Herjavec is now a popular TV personality, too, thanks to his role on ABC’s reality pitch show, “Shark Tank.”
Unlike some of his counterparts on “Shark Tank,” Herjavec is known for making more shrewd investment decisions, and trying not to instigate as much tension as Mark Cuban or Kevin O’Leary does on the show.
Business Insider had a chance to meet with Herjavec this week, when he was in town for FinancialForce.com’s Community Day event. He revealed his relationship with the other judges, especially with Mark Cuban, and his thoughts on running a successful business.
Here’s what Herjavec had to say (the interview has been slightly edited):
Business Insider: What was the best and worst deals you’ve done so far on “Shark Tank”?
Robert Herjavec: The best for me has been Tipsy Elves. It’s just incredible to me that people love being ugly. And they buy inappropriate, ugly Christmas sweaters. When they came on the show, they were doing about $600K a year, that was 2 seasons ago, and we’ll do $12 million this year. It’s just one of those stories. And that’s what we’ve learned, all of us on the show, that to have a great investment, you have to connect with the consumer. The business of America is consumerism, so if you can get a product that people will buy right away, you can do really well with it.
The worst, I haven’t had a really bad one yet. I always like to say I haven’t lost any money — yet. There’s probably going to be a few of them that I’m going to have to write off soon, but they are still plugging along.
BI: What really drew you into investing in Tipsy Elves?
RH: Well, they had sales, and they’re great guys. I’m pretty busy, so I like to invest in people that I like to hang with, and also want to run a business together. 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.
I didn’t feel like I had to worry about them, wander around their business. Because some people that come on the show think that once they get the investment, it’s over. They think they got the money, so they can sit back and relax. And what we say to them is, that’s just the beginning, that’s just the start. You got to go.
BI: Do you ever get offended when contestants seem to wait for Mark Cuban to make an offer, even after you put in an offer first? Do you hate it when Cuban steals a deal from you?
RH: Oh yeah, absolutely. Of course, we all get offended. But I hate it when Kevin gets a deal from me, or when Lorie steals a deal from me, too. But man, I used to hate Mark for the first two years. And he didn’t like me either. And we really get pretty emotional about these stuff.
We have a segment coming up where, I can’t tell you about the whole thing yet, but Lorie, Mark, and I got into an argument, and I walked off, because the next words out of my mouth were going to be rude and not very nice to them. I actually stood up and said, I have a lot of respect for you, but you’re just really pissing me off right now. And I got up and walked out. And then Mark said, I have no problem being rude (laughs). That’s coming up this season.
But I think we respect each other, so we can yell at each other and then have lunch together. Mark and I were just at a bar, and we had a little too much to drink, and we kind of had a man hug, and we kind of hugged it out.
BI: Why do you think contestants seem to want Cuban more?
RH: I think when Mark first came in, it kind of shifted everything because he was so big, and he invested in everything. But I think a couple of things have happened since then. I think we’ve all figured out how to deal with Mr. Cuban, and I think Mr. Cuban’s lost enough money to realize, ‘Oh, I shouldn’t invest in everything.’
So I think, this season, you’re seeing a much more balanced approach. And what people have realized too is, just because Mark’s super wealthy, it doesn’t mean anything for the success or the value of their business.
BI: What makes Shark Tank so great?
RH: It’s the American Dream. It’s the desire to better one’s position in life, and who doesn’t have that desire? I think when people watch the show, they always think, ‘That could be me,’ and it really could. I mean, anybody can get on our show. Mind you, we’ve had 145,000 people apply this year, and 230 got on. But it’s the only show where you don’t have to have god-given talent in order to be successful. You don’t have to have a voice, and you don’t have to be able to dance. You can come on with an idea, and get an investment, and become very wealthy.
BI: So you don't think entrepreneurs are born with entrepreneurial skills?
RH: Absolutely not. The key to entrepreneurial success is simply weighted against your desire to improve your situation in life. People say to me all the time, ‘Oh, I wasn’t born that way.’ And I say, you haven’t suffered enough pain. Trust me, if you suffered enough pain like I have, you’re going to make yourself an entrepreneur.
Most immigrants that came to this country didn’t come to these shores saying, ‘Oh, I’ll see if I could do a little bit better.’ When they landed here, they didn’t have anything. They didn’t have the choice to think about, ‘Oh, I want to start a business, I want to get ahead.’ They were simply forced to do it.
BI: Do we need more immigrant entrepreneurs?
RH: Absolutely. One of the downfalls of this country is that only to Americans is America no longer the land of opportunity. Everywhere else in the world, this is the land of opportunity, hallelujah. I mean, I went on a cruise the other day, and I went by the Statue of Liberty, and I got really emotional. I mean, I looked at it and said, ‘Everywhere in the world, this is freedom.’ And I think we’re just too myopic sometimes in this country.
BI: So what’s the key to success for any startup/company?
RH: If you can’t inspire the people around you, you are going to fail. If you can’t inspire the people around you, you should go sell real-estate, because that is probably one of the only businesses where you could make a lot of money working completely on your own. But I think if you want to build a great business, you’ve got to bring other people along, and nobody wants to be managed. People want to be led.
If you’re a fan of ABC’s reality pitch show “Shark Tank,” you know how things can really heat up quickly among the panel of judges, or "sharks."
Every week, contestants pitch their business idea to the sharks, who either decide to invest in the startup or pass. Each of the sharks is an extremely successful business owner, and they all have millions (if not billions) of dollars sitting in their bank, competing to invest in the next big thing.
So on almost every episode, viewers get to see the sharks, including Mark Cuban, engage in almost WWE-like trash talking and big brouhaha moments.
But if you ever thought those moments were scripted, you’re wrong.
According to Robert Herjavec, the CEO of The Herjavec Group and also one of the sharks, those heated moments could lead to real animosity among the judges.
“Man, I hated Mark for the first two years. And he didn’t like me, either,” Herjavec told Business Insider. “We really get pretty emotional about this stuff.”
Herjavec said tensions had even led him to walk off the set while filming one of the episodes this season. “We have a segment coming up where, I can’t tell you all about it, but Lori, Mark, and I got into an argument," Herjavec said, referring to Lori Greiner, another shark. "And I walked off because the next words out of my mouth were going to be rude and not very nice to them.
"I actually stood up and said, 'Look, my mom told me that if I can't say anything nice, I shouldn't say anything at all, but you're just really pissing me off right now.' And I got up and walked out. And then Mark said, 'I have no problem being rude.'"
Cuban often happens to be at the center of a lot of these arguments because he’s by far the richest among the judges and is capable of stealing some of the deals with higher offers. Some of the contestants also seem to like him better, waiting until he extends an offer, even after the other judges have made an offer earlier than he did.
“Of course we got offended; we hated him. But I hate Kevin when he gets a deal from me, and I hate Lori when she steals a deal from me, too,” Herjavec said of Greiner and his fellow shark Kevin O'Leary.
But Herjavec said things had changed in the latest season of “Shark Tank,” as Cuban realized his investment strategy wasn’t always working.
"I think when Mark came in, it kind of shifted everything because he was so big, and he invested in everything," Herjavec said. "But I think we've all figured out how to deal with Mr. Cuban, and I think Mr. Cuban's lost enough money to realize, 'Oh, I shouldn't invest in everything.'
"And what people have realized, too, is, just because he's super wealthy, it doesn't mean anything for the success or the value of my business."
Herjavec seems to have a point in describing Cuban as investing in "everything." Over the first four seasons, Cuban invested in the most deals and spent the most money of the sharks, according to this blog on “Shark Tank.”
Any contestant of ABC’s reality pitch show “Shark Tank” can attest to the difficulty of landing a deal.
The contestants need to show the “sharks,” or the panel of investors, that they have a great product and strategy that can sell to the market. And then they need to prove their team knows how to execute. On top of that, they need to have a great leader with the desire and passion to succeed.
But according to Robert Herjavec, the CEO of The Herjavec Group and also one of the sharks, so many contestants fail to remember the one thing that’s most important and basic to any type of business: its finances.
“Finance is the language of business,” Herjavec told Business Insider. “If you don’t understand your basic numbers, you’re going to fail.”
Herjavec says he understands how the contestants could get nervous, because they’re under a lot of pressure on the show. But having no idea of the business’s finances is usually a sign of an absolute disaster. “The biggest thing is you got to know your numbers,” he says.
Aside from knowing the numbers, Herjavec said it’s also important for people to invest in themselves. In fact, when asked about the best investment he’s ever made in his life, Herjavec proudly said, “investing in myself.”
“People always ask me, ‘What should I invest in? Where can I find the next Apple?’ and I always say, ‘Invest in yourself,’” Herjavec said. “The greatest asset you have in your life is yourself. You just got to continue to invest in training, educating, and being in the right place at the right time.”
Becoming a successful entrepreneur requires a tremendous amount of confidence and determination. But it also requires moments where that passion gets dialed back for the sake of making a grounded decision.
The founders of the novelty sunglasses company Sun-Staches learned that in the most recent episode of the sixth season of ABC's "Shark Tank," right in time to make a deal with fashion mogul Daymond John.
Old friends David Levich, Eric Liberman, and Dan Gershon started Sun-Staches in 2011 as a way to expand on the idea of the classic toy disguise glasses with attached eyebrows and mustache. Sun-Staches offers products that make you look like Uncle Sam, a cowboy, a cat, or a Teenage Mutant Ninja Turtle.
When the entrepreneurs put on their glasses during the pitch, John rolls his eyes at the idea of a novelty business. But he and the other Sharks quickly perk up when the Sun-Stache founders tell them they brought in $5.7 million in sales last year. "Not so funny anymore!" investor Robert Herjavec says.
The revenue breakdown is $2.8 million from the novelty line of glasses, and the rest is from the founders' offerings of affordable generic glasses sold under H2W Inc. Still, the Sharks are impressed with the way Levich, Liberman, and Gershon have built their business with huge profit margins — the glasses range from $7.99 to $12.99 and cost only 75 cents to $1.50 to make.
But the fact that the Sun-Staches founders are seeking a $300,000 investment for a 5% equity stake is too much for the Sharks to take seriously, even though the founders say they expect to bring in $6.4 million in revenue and $750,000 in profit in 2015.
Kevin O'Leary says that instead of valuing the company at $6 million, as they have, he'd say it's worth $2.5 million. He says that number is actually generous, considering that it's five times the amount of after-tax cash flow they would be making.
The founders defend themselves by saying that they think $300,000 for 5% is a good deal, since using a Shark to acquire more licenses like Marvel and DC will make their business explode.
Investor Lori Greiner says she won't do a deal because she doesn't think she's right for the company. O'Leary follows suit because he thinks the entrepreneurs have gotten ahead of themselves.
Herjavec is a fan of the product and the founders themselves but agrees with O'Leary.
"Here's my challenge with it. You're in love with the future. I mean you have to believe in the future, but you can't love the future so much that it changes your metrics of today," Herjavec says. "I really wish there was a more reasonable value that you had on this business. It's like any great love affair. You've got to have some sense of reality to it."
Herjavec says no deal.
Investor Mark Cuban asks the founders outright how high an equity percentage they'd be willing to give for $300,000, and O'Leary chimes in: "The right answer is 20%."
O'Leary explains that if the founders went to a typical venture capital firm, they'd be looking for 15%, but there's a 5% premium for a Shark, since "Shark Tank" investors are unusually involved in developing the businesses they're invested in.
The Sun-Staches founders say they'd give 12.5%, and Cuban says he's out because he just doesn't see it.
By this point, John shows that he wants to invest, and he makes it clear to the guys that if they weren't on the show, he'd probably ask for 30% for the same offer.
"I'll save you a lot of time and money," John says, offering his extensive network of licensors and retailers.
Before John can back out, the entrepreneurs decide that maybe one day the company will be worth as much as they imagine, but it's not there yet. And John has the connections to help them achieve their vision.
"I'm gonna make you $20 million," John tells the entrepreneurs.
"I like them a lot!" he says about the founders, wearing a pair of their captain's-hat novelty sunglasses.
You can watch the full episode over at Hulu.
SEE ALSO: How A 13-Year-Old CEO Made A Deal With 'Shark Tank' Investor Kevin O'Leary — Without Dad's Help
SEE ALSO: The 'Shark Tank' Entrepreneurs Who Lost Out On $250,000 Prove Why 'Perfect Is The Enemy Of Good'
Former "Shark Tank" investor Kevin Harrington has heard hundreds, if not thousands, of pitches in his long career and has given plenty himself.
He's the man behind the "As Seen On TV" distribution vehicle that launched major brands like OxiClean using infomercials, an advertising industry that's now worth around $200 billion.
Harrington is also one of the cofounders of the Entrepreneurs' Organization and has worked with founders to launch over 500 products that have brought in more than $4 billion worldwide.
We recently caught up with Harrington, and he explained his three-tiered pitching system, which he says you should follow whether you're pitching to a venture capitalist, shooting a commercial, or setting up a crowdfunding page.
People have short attention spans. When Harrington develops an infomercial, he makes sure that the problem is teased within six seconds.
In an OxiClean ad, this might be something silly (yet relatable) like a meatball falling onto someone's shirt and staining it. If you're pitching your company, your meatball equivalent is the context that elevates your company beyond being simply amusing but rather necessary.
How can the problem you introduced be solved, and what makes whatever you're offering unique? Give proof that you know what you're doing.
In a video, you can show that OxiClean gets out a tomato sauce stain. In an investor pitch, you're explaining how your service or product will work and how your background shows that you're the right person to bring this idea to fruition.
A classic advertising technique is using a testimonial that lends credence to what you're saying. If you're pitching your company to an investor, use hard data to back up your points. If your company has existed for some time, give specific examples of how you have interacted with satisfied customers.
Now give your audience a deal.
Tell them how much money you're looking for from them, and explain how it will be used and then returned at a profit to the investor. In the same way an advertiser wants to persuade you that parting with $9.99 for stain remover is a small sacrifice for all of the stained clothing you're going to save, you need to persuade an investor that giving you cash is a wise investment that will pay off.
You need to create a sense of urgency, that the investor has to invest now to avoid missing a massive opportunity.
Harrington says that whether you're writing a commercial or preparing for a pitch meeting, you need to be able to get all three fundamentals of your pitch in and sum them up concisely. A full-length infomercial can run 30 minutes long, and an investor pitch meeting may take over an hour. But in either case, the initial pitch has to be wrapped up in under two minutes.
"The art of the deal is being able to do it all in 60 to 120 seconds," Harrington says.
SEE ALSO: Here's How A Billionaire Investor Coached An Entrepreneur Through The Pitch Process
Former "Shark Tank" investor Kevin Harrington is the man behind the "As Seen On TV" distribution vehicle that launched major brands like OxiClean using infomercials, an advertising machine that's now worth around $200 billion.
He's also one of the cofounders of the Entrepreneurs' Organization and has worked with founders to launch over 500 products that have brought in more than $4 billion worldwide.
When we recently asked him about the biggest marketing mistakes that small-business owners make, he told us it comes down to not working hard enough for customer retention and outreach.
"One of the big problems entrepreneurs run into is they get too comfortable," Harrington says.
Small-business owners need to aggressively use social media to continue reaching new customers and building relationships with existing ones, or else the business growth plateaus. "You need to go out and pursue the marketplace," he says.
Harrington says the recent transition of hosts on "The Tonight Show" is a perfect illustration of his point. He explains:
Why did Jimmy Fallon come in and take over from Jay Leno? Was he a funnier guy than Jay? Maybe not. What he was, was current with his marketing.
So when Jay Leno would go on the air, he had 4 million people watching the Jay Leno show. And he was number one. When Jimmy Fallon would go on the air, he'd have 4 million people watching, but he would film things that would go on YouTube. And he'd get 8 million views on YouTube and Instagram and all the other places where he was out doing his social media.
Jay got too comfortable in his old ways of just doing what he did. If you always do what you've always done, you'll always get what you've always got.
Harrington says too many business owners he's worked with become like Leno. Once they reach a certain level of success, they think running things steadily is sufficient.
His main point: Be entrepreneurial with your marketing.
Aggressively use Facebook, Twitter, Instagram, Google+, and email newsletters to advertise products via text, images, and video.
As investor and marketer Guy Kawasaki explains, you should never be afraid of annoying your customers over social media, as long as you're telling stories and engaging them on a one-on-one basis instead of flooding them with lifeless announcements.
The good news for small-business owners on a budget is that this entrepreneurial approach to marketing is cost-efficient. The most important thing is to leverage as many outlets as possible.
"In the old days, I went to a few channels and spent millions of dollars. Today, I go to millions of channels and spend a few dollars," Harrington says.
SEE ALSO: Guy Kawasaki: 'If You're Using Social Media Right, You Will Piss Some People Off'
Growing up in Hollis, Queens, Daymond John's mother taught him that he was in charge of his own destiny. It was a message that inspired him to start the business that would make him a millionaire, the apparel company FUBU.
FUBU is no longer the powerhouse it was in the '90s, but John has been a sought-after branding and marketing expert since.
And today he is best known as a cut-throat investor on ABC's hit pitch show "Shark Tank," where he competes alongside the likes of Mark Cuban and Barbara Corcoran for the best deals.
His company Shark Branding manages the wide variety of investments he's made on the show.
We spoke with John about what motivates him as a businessman, what he looks for in an entrepreneur, and what it's like being a Shark.
The following interview has been edited for brevity and clarity.
Business Insider: Was there a moment when you knew you wanted to be an entrepreneur?
Daymond John: I never knew anything other than wanting to be an entrepreneur. I tried my first business when I was 6 years old, and I started another business when I was 8. I don't think I knew anything besides that.
BI: So it was always part of your identity?
DJ: Yeah. My parents always taught me that my day job would never make me rich; it'd be my homework.
BI: What drives you now?
DJ: Constantly learning. Making a change in people's lives; paying it forward. Being absolutely obsessed with loving what I do and loving the people I work with. Not doing anything necessarily for money. Doing it purely because it's exciting, and knowing that even though you're doing it because it's exciting, you're having something established and a way to make money from it, hopefully, but at least getting into the passion of the business first.
My new book coming out is called "The Power of Broke," and the philosophy of that is whatever I'm creating or doing makes use of my mental resources before I'm just throwing money at it. 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.
BI: What was your business education? What got you to where you are now?
DJ: I barely finished high school. So it's purely trial-and-error, and it was proof of concept, meaning not only studying it, messing around a little bit, but also analyzing it. Because some people have bad ideas, or it's not the right time. So knowing when to stop your efforts because all the proof has given you that it won't work.
BI: What books have changed your life?
DJ: "Think and Grow Rich" was the number-one book in terms of being impactful. I read that at 16.
BI: Why was it so important to you?
DJ: The main takeaway from that was goal-setting. It was the fact that if you don't set a specific goal, then how can you expect to hit it? And if you don't set a specific goal, you could be setting negative goals without realizing it. So if you don't go, "I'm going to get a raise by the end of this year by putting in an extra two hours a day at work, which is going to compound into X amount of hours, which is going to make sure that my superiors see that I'm a team player," you may set a negative goal. "Eh, I don't feel like going to work. Eh, I don't feel like being a team player. No one in my job respects me." And you start setting a negative goal that will actually hurt you.
BI: Are there other business books that have changed your life?
DJ: There are the normal ones that everybody loves. There would be "Rich Dad Poor Dad,""Who Moved My Cheese?;" I love all the Dale Carnegie books; "The One Minute Manager." I love newer ones like "Blue Ocean Strategy" and all the "Freaknomics" books.
BI: What's a favorite piece of advice from one of your mentors that you've never forgotten?
DJ: My mother said, "Money is a great slave but a horrible master." [It was her version of a French proverb.]
I think that in the earlier days, when I was a "wantrepreneur," I was really doing things because I thought what I wanted was to be rich. For the most part, those businesses failed, and then later when I started doing something casually because I loved it, that business burst.
So all those old sayings that your grandmother and grandfather used to tell you are actually somewhat real, you know? I learned that over the years. And then after becoming wealthy and having money, I failed at a lot of things, and that reinforced some of those theories that I was told at a young age.
BI: So now, as you've been working with entrepreneurs on "Shark Tank," what has your favorite investment been?
DJ: It hasn't aired yet, so I have to go with another one… It would be Al "Bubba" Baker's Boneless Ribs. Absolutely, yup.
BI: How involved are you with the entrepreneurs you make deals with?
DJ: Every one of them is different. Some it's purely cash. The others it's a little fusion of it. And then another would be I speak to them almost every day or we are running some of the business within my corporation.
I enjoy working with most of them no matter what. But some of them geographically aren't located in New York or there's nobody in New York. Also it may be an industry that I'm not well-versed in, so my role in there is not needed as much because the people who are in there are running the business really well and they just need me to do the heavy lifting once in awhile. It's like any relationship that anybody has, with a friend or a romantic relationship. Sometimes somebody puts a lot into a relationship, and sometimes somebody puts in very little. But it all depends.
BI: When you're competing with the other investors on show, how much of that is getting heated in the moment, how much is personal, and how much is for the camera?
DJ: It's all in the moment. And in the moment, it does get personal here and there. None of it is for the camera. Listen, I don't care if you're my brother — if we go play football I'm gonna try to crack your head open. It doesn't mean that I don't love you. It doesn't mean that I don't respect you. But I'm going to try to crack your head open! There is real stuff at stake. There's real money, and there are also real egos. And you have 10 million people watching you get smacked down on national television! It's real.
Ninety-five, ninety-seven percent of the time, as soon as that deal is over, we have totally forgotten. Have we carried a little animosity throughout that day of shooting over one deal that we really liked? Yes. But I think that's why we are at the level we are in life.
BI: What's an example?
DJ: Robert [Herjavec] beat me out of a deal this last season. It hasn't aired yet. The deal was apparel-based, it was fitness-based, and Robert beat me out. So I'm sitting there saying to myself, "Should I be mad at Robert or should I be mad at myself?" Because this a natural layup for me. The person knows my expertise. What didn't I communicate to that person that made me lose the deal, or what did I say to that person that may have pissed them off?
I can't be so mad at Robert. It's almost like going into sports. Two boxers go out there and somebody whoops your ass — you know you weren't on top of your game in that fight. I don't know if I'm mad at that person.
BI: How do you decide what's worth your money and how much?
DJ: That's the problem. We get caught up in so many things in the moment, and we always spend more than we want. [laughs] So we're like, "I've got 10 companies, 15 companies this year! Oh my God, what's wrong with me?" But that's the nature of the beast. We're opportunistic. We're sharks. We smell something, and we're like, "Man, this is a great opportunity for me to be part of a new industry or for me to do something that's amazing. I'll do the deal!" You can't help it, man.
BI: What's your all-time favorite and least favorite pitch?
DJ: My favorite one would probably be Scrub Daddy that Lori got into. It was like watching an infomercial without the editing. He was so good. He was just great.
I hated Scottevest— not even Scottevest, that Copa Da Vino pitch. I don't know about saying "the worst," but with some I didn't like the people. They were obnoxious or there for the wrong reasons.
BI: Does it come down to the person selling themselves more than their product? If you don't like a person, you're not going to want to work with them?
DJ: A hundred-and-twenty percent. We're not investing in companies. We're investing in people. There's nothing that we've seen, that you will ever see, that is brand new. It's always going to be a new form of delivery or a new angle on it. Instead of working in seven minutes it works in six. So it's not going to be what you like. You are going to have to potentially talk to the person on the other side of that pitch every day for the next 20 years. Can you deal with that person?
BI: What is your advice to an entrepreneur pitching you? How can someone appear more likeable?
DJ: You can't know what the other person is going to like about you. You may look like their husband's ex-girlfriend!
But for the most part, the best thing to do is be very smart with comments — but not too smart with the investors. The investors may feel like, "You know what, you're so smart, I need you, because this is something tech-based and I need you to figure it out." Or they may feel like, "You know what, you're so smart that I'm never going to see my money because you'll be stealing it every two minutes."
You have to be energetic — but you also don't want to be too energetic. Because if you're too energetic, the investors may be like, "This is a show. You're trying to sell me a bunch of smoke and mirrors."No matter what, the most important part is that you need to make the investors feel like you're going to wake up every day and bust your butt.
And show that you have determination and you have a level of honesty. Honesty means that you don't go up there and act like what you're doing is so great and that it's never had any problems. Tell me about the problems as much as you tell about the opportunities, and how you may have solved some of the problems.
BI: Do the Sharks get paid per episode? And is there an allotment for investing?
DJ: The Sharks get paid per episode, and there is no allotment. Producers and ABC do not tell us what we can and cannot spend, or expect to spend. They couldn't do that. We're like any host or talent or judge; we get paid per episode, but it's nowhere near the money we spent. [laughs].
There's no limit on what you get to spend. If someone comes in the door asking for $5 million and you feel you can make money off of them, or if someone comes in asking for $50,000 and you feel you can make money off of them [you go for it]. And the $50,000 might be better than the $5 million one. It's just the stage you want to spend it on. People always look at it as, "Oh, you spent so much." Well, you spend, and you also start to make cash off it as well. So it's money at work. That's basically all it is.
BI: How much time does being a Shark require?
DJ: It is a big job. Every one of us has hired probably 15 to 20 people to handle all these projects and companies. It is not like anything else where you finish shooting and you go home. We finish a show and then we go to work. It probably takes up a good six to eight months of our lives [each year].
BI: Can you tell me a little bit about what you're working on at the moment?
DJ: I'm working on this recent season as well as those from the past. What I'm excited about: There are a couple companies that have recently aired: Bombas socks, SunStaches, and Sleeping Baby. They've all been pretty strong performers. And I'm still working with Al "Bubba" on his boneless ribs, and he's amazing and the product has come along amazingly. And then I have this guy Nate from Mission Belt. Those are the "Shark Tank" investments that I'm doing really well with.
And personally, we just acquired a company Etonic, the old footwear company. And we just released our Akeem "The Dream" Olajuwon retro sneakers that were one of the first athletic sneakers of their kind. And we're really doing well with that. FUBU is having some level of retro comeback — not the way we used to be before, but for a younger generation. The hipsters are finding it.
You can follow Daymond John on Twitter.
SEE ALSO: Original 'Shark Tank' Investor Kevin Harrington On The Worst Marketing Mistake Entrepreneurs Make
The New York real estate mogul turned television personality Barbara Corcoran is every bit as succinct and quick on her feet in person as she is on the hit show "Shark Tank."
What does it take to build a multimillion-dollar empire? Who better to ask than a women with experience as a bootstrapping entrepreneur and an angel investor who swoops in and saves struggling companies?
Here are four lessons for achieving massive success, Shark style, that I gleaned from my conversation with her at the Four Points Sheraton in Norwood, Mass., after her recent appearance at a Greater Boston Real Estate Board event.
It took 25 years for Barbara Corcoran to build her New York City real estate empire and she did it by bootstrapping. Today, she invests in businesses of all sorts on "Shark Tank."
I asked her if, knowing what she does now about seed money, angel investing and venture capital, would she do things differently today to build a real estate firm from scratch.
Answering "no," Corcoran explains that bootstrapping is the way for an entrepreneur to go if she can.
"When you build your business by bootstrapping, every penny counts," Corcoran says. This requires the entrepreneur keep operations lean and although it may be a tougher road for growth, she'll end up at the finish line with full control of her business.
How does Corcoran decide which businesses to invest in? It comes down to the entrepreneur involved. Corcoran invests in companies whose owners can sell, exuding a mix of confidence, high energy, street smarts and absolute business knowledge.
What kinds of companies does she avoid? Corcoran usually won't buy into a business started by a rich kid, she says, as she likes to collaborate with people with a strong work ethic. Corcoran prefers investing in the companies of those without a backup plan whose only option is absolute success.
Corcoran has two kids, an 8-year-old adopted daughter and a son in his 20s. When asked if there's such a thing as work-life balance, she says "no." For her, work has always been a big part of her life and the perfect balance is impossible to attain.
That being said, she has found ways to leave her work at the office so she can truly be present when she's with her husband and kids.
For example, if she's taking her daughter to the park, she'll usually leave her phone at home. If she's having dinner with her family, the phone is left behind. Achieving balance is difficult, Corcoran says, but being really engaged with the people one cares about is something all business owners can strive for by taking small steps like putting down the phone.
The best entrepreneurs are the ones who can take a blow and come back stronger, Corcoran says. For example, her original business partner was her boyfriend, Ramone Simone. He was 51% owner of a New York real estate business but Corcoran was the hustle behind its growth, she said.
When he announced that he was breaking off his personal relationship with Corcoran because he was dating the company's secretary, Corcoran was stunned. Instead of falling down and staying down, she used her anger and resentment to leave their joint real estate firm in favor of starting her own.
Simone told Corcoran she would never make it on her own, but she used those words as fuel to fight her way through the ups and downs of a tumultuous real estate market. Whereas his real estate business eventually went under, her company went on to become a massive empire that she eventually sold for $66 million.
When investor Kevin O'Leary takes a sip of BeatBox Beverages' neon Blue Razzberry Lemonade on the latest episode of ABC's hit show "Shark Tank," he flatly proclaims, "This tastes like sh--."
But even though he would rather enjoy a fine Merlot than the entrepreneurs' fruity boxed wine, O'Leary concludes with the rest of the Sharks that BeatBox is on the verge of something big.
The entrepreneurs from Austin, Texas, offer proof of concept as well as proof that they know how to penetrate a limited market, which in their case is the state of Texas. It assures the investors that they would be reliable partners to scale the company on a nationwide level.
And that's why investor Mark Cuban, who says he actually likes the neon-colored fruit wines, is so quick to lay down $1 million for a third of the company, an investment that's unusually large for the show.
BeatBox cofounders Justin Fenchel, Aimy Steadman, and Brad Schultz enter the tank looking for $250,000 in exchange for 10% equity in their company.
They tell the investors that they have been self-distributing and using a large packer in Dallas. In the company's first 14 months they have made $235,000 in sales. They got BeatBox off the ground with $55,000 and an additional $100,000 borrowed from family and friends.
The Sharks are impressed but want to know how the entrepreneurs would spend the money. "Tell me how you're going to take it from $235,000 to $5 million," investor Robert Herjavec says.
Fenchel, as BeatBox CEO, says the money would mostly be used to hire brand ambassadors to set up BeatBox tastings at liquor stores in markets they've determined to be ideal.
Cuban doesn't like this strategy. "Your leverage points for any one store aren't great," he says, meaning that getting products in even the largest private store doesn't offer potential for explosive growth. He says they need to instead bring their products to big events with thousands of people.
"We've already gotten rid of the biggest risks," Fenchel tells the Sharks, explaining that the founders have already managed to secure the biggest manufacturer in Texas and find markets. They've proven that the product has an audience and that they know how to arrange profitable deals on their own.
Franzia, the world's largest producer of boxed wine, has $1 billion in annual sales, Fenchel says, and he's found that the easiest customer acquisitions are the people who buy a box of Franzia for a party only because it's what's at the store. BeatBox is about offering its customers something unique that they could get excited about.
O'Leary acknowledges that a beverage can go viral, as Bethenny Frankel's Skinnygirl recently did, when a company focuses on select markets around the country and ignores the rest.
Investor Barbara Corcoran offers the BeatBox team $400,000 for 20%, a deal which would bring BeatBox's valuation down to $2 million from the founders' valuation of $2.5 million.
O'Leary then offers $200,000 for 20% because he thinks the company is worth $1 million at this point. He also says he'd be a more valuable investor because he's got a wine company of his own, O'Leary Fine Wines, and knows how to penetrate new markets and secure distributors in key states.
Then Cuban chimes in. "You guys don't sell wine," he says. "You sell fun." The entrepreneurs agree. "You get it," Steadman says.
Cuban offers $600,000 for a third of the company, which values it at $1.8 million. Meanwhile, investor Lori Greiner quietly conspires on a deal with Herjavec over a notebook.
Cuban tells the entrepreneurs they should go with him because he thinks that BeatBox has a shot at going viral, and the only way to do so is to act as fast and big as possible, which he's ready to do. He tells them they need to make a choice.
Fenchel is grateful but admits, "We didn't anticipate giving up..."
Cuban interjects, "If you've got a counter, just give me it."
Without hesitation, Fenchel offers, "Would you do $1 million for a third?"
Cuban glances at his notebook for a few seconds. "Yeah!"
"I'm jealous of the deal!" Corcoran says.
In previous "Shark Tank" episodes, some promising cofounders missed out on deals because they were indecisive. The BeatBox team was prepared for every question and rolled with the punches. Both Steadman and Schultz allowed Fenchel, their CEO, to have the final say on the deal without objecting. They assured the investors that they would be reliable partners.
As the founders walk out of the tank, Cuban yells "Let's party!" in his best fry voice.
You can watch the full episode at Hulu Plus.
SEE ALSO: Daymond John Reveals What It's Like Being A 'Shark Tank' Investor
Daymond John's parents taught him that a day job was never going to make him rich. He was in charge of his own destiny and could accomplish what he wanted if he put the work in.
When John was 16, he read Napoleon Hill's classic business book "Think and Grow Rich," and it changed his life. It reinforced what his parents taught him and inspired him to set lofty goals.
In 1992, at the age of 23, he and his mom mortgaged their house in Hollis, Queens, for $100,000 so that he could start a clothing business. The company, FUBU, was a pioneer in the streetwear fashion movement and made John millions.
Today, John is best known as an investor on ABC's hit pitch show "Shark Tank," and FUBU is now a much smaller part of John's business, which consists of brand consulting and management mainly in the apparel industry.
We recently spoke with John and asked him about the business books that changed his life. Here are his all-time favorites.
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 Hill 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 years old 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 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.
This book, a collection of parables about how two different fathers approach life, counts Oprah Winfrey and Donald Trump among its biggest fans. Supporters praise it for the same reason its detractors have critiqued it: The message is simple and non-technical. It focuses on breaking a mindset that limits you to the lower or middle class you were born into.
According to Kiyosaki, the rich don't work for money; they make their money work for them.
John says that aspiring to be rich didn't work for him, but thinking like a rich person did.
"I think that in the earlier days, when I was a 'wantrepreneur,' I was really doing things because I thought what I wanted was to be rich," John says. "For the most part, those businesses failed, and then later when I started doing something casually because I loved it, that business burst."
Kim and Mauborgne are INSEAD professors who studied 150 strategic business moves across 30 industries over a century. Their 2005 book declares that the world's most successful new companies don't directly compete with competitors but rather create their own "oceans" of opportunity in a new market.
Billionaire investor and entrepreneur Peter Thiel expressed a similar idea in his new book "Zero to One," in which he declares that the most successful companies are actually monopolies.
This book from 1982 is a guide to effective communication between bosses and their employees. The "one-minute manager" whom Blanchard and Johnson describe can explain a task for his or her employees within a minute, as well as take just a minute to give motivational praise or necessary criticism.
It's all about lowering barriers between managers and their teams and being as direct as possible.
John says he's enjoyed all three books in the "Freakonomics" series.
The original book from 2005 is essentially a celebration of not being afraid to explore concepts that people may initially find absurd, including a study of how a person's name affects lifelong success and whether legalized abortion has had a role in reducing crime.
SEE ALSO: Daymond John Reveals What It's Like Being A 'Shark Tank' Investor
Ever wonder why people have to wear pants but horses don't?
It's a tough question that late-night host Jimmy Kimmel recently posed in his pitch to "Shark Tank" investors for a bit on "Jimmy Kimmel Live."
Since both shows run on ABC, Kimmel was able to shoot his pitch using the full "Shark Tank" crew and set. The five Sharks present were Mark Cuban, Barbara Corcoran, Kevin O'Leary, Lori Greiner, and Robert Herjavec.
Kimmel and his sidekick/business partner Guillermo Rodriguez enter the tank and present their line of Horse Pants, a collection of equine trousers that are not only stylish but keep riders from being embarrassed by their nude horses.
They ask for $500,000 for 10% equity in their company, giving it a $5 million valuation. Kimmel tells the investors that he's invested $40,000 of his own money to supply materials for his mom to sew an initial line of pants.
He's yet to sell a pair, putting him in the red, but he assures the Sharks that it's potentially a multibillion-dollar business.
Watch the full clip below to see how Kimmel and Rodriguez are able to entice Herjavec, the self-proclaimed "fun Shark," into making the biggest "Shark Tank" investment yet.
SEE ALSO: Why Mark Cuban Invested $1 Million In This Boxed Wine Company On 'Shark Tank'
When fashion and marketing expert Daymond John is watching entrepreneurs pitch their products to him on ABC's hit show "Shark Tank," he's more focused on the person than the product.
"We're not investing in companies. We're investing in people," he tells Business Insider.
And the main thing he's looking for is the assurance that he's going to get a return on his investment.
"No matter what, the most important part is that you need to make the investors feel like you're going to wake up every day and bust your butt," he says.
John says that he certainly gets excited about opportunities to jump into a new industry or market, but if he doesn't like an entrepreneur, he's not going to want to work with them.
"You are going to have to potentially talk to the person on the other side of that pitch every day for the next 20 years," he says. "Can you deal with that person?"
Obviously a good personality isn't going to win an entrepreneur any money on its own, but if they've got a good product and business savvy, there are ways to increase the chance of making a good impression on the Sharks, John says.
He wants an entrepreneur who is knowledgeable about their product and industry but isn't arrogant and stubborn. "The investors may feel like, 'You know what, you're so smart, I need you, because this is something tech-based and I need you to figure it out.' Or they may feel like, 'You know what, you're so smart that I'm never going to see my money because you'll be stealing it every two minutes,'" he says.
He also looks for entrepreneurs who are energetic — but not excessively energetic, because that raises a red flag for him that the founder may be using smoke and mirrors.
And to prove to John that they can be trusted to work hard, entrepreneurs need to be honest. "Honesty means that you don't go up there and act like what you're doing is so great and that it's never had any problems. Tell me about the problems as much as you tell about the opportunities, and how you may have solved some of the problems," he says.
John tells us that his favorite pitch may be from Scrub Daddy founder Aaron Krause, a company Lori Greiner invested in, because it "was like watching an infomercial without the editing." He found Krause earnest, prepared, and likeable.
John's least favorite pitches came from Scottevest's Scott Jordan and Copa Di Vino's James Martin. He found the entrepreneurs to be obnoxious know-it-alls who were convinced they were smarter than the Sharks, an approach that investors certainly don't appreciate.
And finally, John says he gets frustrated by entrepreneurs who appear to only go on the show for the publicity, without any intention of handing over a decent portion of their company to a Shark in return for their capital and expertise.
So, if you're going to pitch to the Sharks, John says, be humble and informed. And hope that luck is on your side.
"You can't know what the other person is going to like about you. You may look like their husband's ex-girlfriend!" John says.
SEE ALSO: Daymond John Reveals What It's Like Being A 'Shark Tank' Investor