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 [amazon asin=1401312926&template=*lrc ad (left)]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.[amazon asin=B00GZ96JEQ&template=*lrc ad (right)]
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.
[amazon asin=1591844185&template=*lrc ad (left)]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 [amazon asin=B00I02GNTW&template=*lrc ad (right)]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 [amazon asin=B00E1R3C58&template=*lrc ad (left)]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.[amazon asin=0988479702&template=*lrc ad (right)]
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.