One of its kind, Shark Tank’s not just a reality show; it doubles up as a lesson for any and every entrepreneur
Reality shows, across the world, have dealt with the funny and the absurd for years now. And then there was Shark Tank. Started in 2009, the entrepreneurial reality program was inspired by UK’s Dragons’ Den and Japan’s Money Tigers. The addictive show—that’s seen over 12 seasons so far—brings to the TV set a highly dramatized version of how a startup or a company would pitch to an investor. Except this show has five of them.
It works a little like this: You have a startup that requires funding to grow, or a faltering company that needs money to survive. You demo and pitch your product or service to the sharks in the Shark Tank, who then choose to fund your company—or sometimes buy you outright! This is one of those rare shows that has a real world impact, in the sense that the money invested and the shares parted with are all too real. As are the negotiations and pitches.
For years, Shark Tank has served as a great education platform to new entrepreneurs and those wishing to learn about the world of building and selling businesses. But when you look beyond the obvious, there’s a lot more young startups can learn from the show. Here are five lessons you can learn from Shark Tank pitches, and use them for your startup’s success:
Have a solid pitch (deck)
Long-time viewers of the show will remember 1031, a production company that put up horror themed shows. It’s one of the most successful investments made by billionaire entrepreneur Mark Cuban on Shark Tank. But what stood out most was the glimpse of a show that the founder put together for the sharks—a proper scare fest! A real immersive experience that showed the investors just why the production was so popular and made over a million dollars a night!
Now while you can’t necessarily scare your investors in a meeting with actors, what you can learn from the show is how to let your pitch do the talking for you. Don’t forget, you’re selling a dream and an ambition when you ask for an investment. Luckily, unlike in Shark Tank, you will have ample time to show your pitch deck… once you’ve won that elusive meeting, of course!
Make sure you’ve adequately explained what the problem that you’re solving is, and what’s the magic sauce behind it. Tell your potential investors about your business model and where you plan to get your revenue from. And most importantly, allow them to see the value proposition you bring to the table. The question, after seeing your stunning pitch deck, shouldn’t be whether or not to invest in your product; it should be how much to invest!
Know your startup’s numbers
It all boils down to the numbers, doesn’t it? And this one’s rather important. We’ve seen too many startups being booed out of the tank for not knowing how much they’ve made in the last few years, how much their net earnings were, how much their customer acquisition cost is… the list goes on. If you don’t know every single vital number like the back of your hand, investors are bound to see red.
And not just about your product; you need to know numbers about the field you’re serving to and the problem you’re solving. One out of every three people in the world struggle with bad breath and your mouthwash will be handy to all those people? Cool, let the investor know!
Another vital number game you must absolutely master before you step into YOUR Shark Tank is what your company is worth now, what you see it being worth in five or ten years, and how much of it are you willing to part with for what amount. Want to know how these negotiations can go horribly wrong? Simply watch a couple of pitches that have an insane valuation to see how quickly sharks will make an exit. Setting a valuation too high or too low will both see you return empty-handed from your meetings.
Know who you want to pitch to
Within Shark Tank, there are five millionaire and billionaire entrepreneurs, each an expert in their own fields. They’re not just well-versed with the arenas they started their companies in, but also have experience in fields they’ve invested in. Some of these investors know how to take a product to retail market quickly, another may have previously helmed a successful pivot, yet another is a rebranding maverick. Contestants usually come into the tank knowing exactly who they wish to get on board.
Take a leaf out of the entrepreneurs’ books. Pitch to everyone, but target the one (or multiple) investors you know will be the perfect match for you. Before you get into that meeting room, know what your challenges have been while scaling up, and what you may be up against next. And while the main aim of looking for investors is getting the capital, the last thing you need as an entrepreneur is just the money and no direction whatsoever. Getting a hold of the right investors will tick both boxes.
Timing is everything for a pitch
Is your solution to a long-standing problem still in an ideation phase? Or have you launched only this year and the uptake has been slow? Well, maybe you need to wait a little longer before you take your business to an investor. “It’s not a viable business yet,” is a phrase uttered way too many times on Shark Tank episodes, enough for even laymen to know what’s going wrong.
Very rarely do handshakes happen over mere ideas or in the nascent stages of a business. Is your MVP (Minimum Viable Product) ready, and has it been tried and tested? You may then be in for at least the full attention of the sharks. If your product has found thousands of users or subscribers, great—you’ve proved that the solution works, people know how to use it, and keep coming back for more. You’re on time!
On the other hand, if you had a once-thriving product but you failed to see the downward trajectory on time, you’re too late. You’d want to avoid this other extreme too because investors (and sharks, of course) would rather not take up the challenge of reviving your business when it’s already on the decline. This is also a red flag for many investors because it shows the entrepreneur isn’t self-aware enough to avoid crashing and burning. So, find the right time to go look for investments!
Listen and be receptive
In all probability, you’ll have to make pitches in two or three figures before you can actually find the right match of an investor providing the right capital and taking the right equity off you. But in the meantime, the other hundreds of pitches will offer you something really valuable—advice. It may come as an off-handed comment from a potential investor, or you may find a mentor in the midst of your pitching. Whatever it is, don’t shy away from admitting to yourself that you do not know everything, and are willing to learn.
This learning happens when you talk less and listen more. In Shark Tank, entrepreneurs regularly miss out on not just valuable advice, but also opportunities, when they decide to talk over potential investors. It mostly starts as a why-I-can’t-invest-in-you monologue, but often turns into advice by the end of it. And a few minutes of being able to pitch to the likes of Cuban, John O’Leary, Robert Herjavic, Lori Grenier, etc. comes once in a lifetime. So when they (or your potential investors) talk, listen to their advice. Heeding comes later!
And after all of this, what happens if you still get turned down? Think of Jamie Siminoff. The founder of a smart doorbell company called Ring, Siminoff was turned down by the sharks in 2013 for an investment opportunity. They say the best revenge is success, and Siminoff did it right. Not only did he sell Ring eventually to Amazon for $1 billion in 2018, but he also returned to the Shark Tank… as an investor himself! The moral? There’s plenty of sharks in the sea, so keep going!