I always ask the students what it is they like about Shark Tank. The answer is invariably, “It’s entertaining.”
Well, there’s your answer. If the purpose of your business presentation is entertainment, then Shark Tank could be held up as a model. But the purpose of a business presentation is rarely entertainment. The purpose is most often the successful communication of information necessary for consequential decision-making.
Shark Tank is entertaining to a degree that satisfies primetime network television standards. But it’s a mistake to:
- Equate audience engagement with entertainment: i.e. to assume that to be engaging, a presentation must be entertaining. Superficial entertainment value contributes very little to meeting the goals and objectives of most businesses (businesses that are unrelated to the entertainment industry.)
- Think that Shark Tank represents reality (even though it’s categorized as Reality TV.) Shark Tank represents business reality about as well as Grey’s Anatomy represents the practice of clinical medicine.
- Miss where the real value lies for the participating entrepreneurs. It’s not the money they may raise or even the “expertise” they may acquire. It’s the media exposure they all get.
The best thing about Shark Tank is the energy and enthusiasm that contestants bring to the show. Most of the erstwhile entrepreneurs that I’ve seen on the show seem to truly believe in their products and enjoy the opportunity to showcase them. But that excitement easily tips over into hucksterism.
The other desirable characteristic is brevity. Participants are only given a few minutes to pitch, so they have to get right to it. That creates a good sense of urgency, but it also means what you get right to has to be really important. Unfortunately, what most contestant do is just try to show how fun their product is for the TV audience.
The worst thing about Shark Tank is that so many of the products are just novelty items. They are QVC, infomercial, airline in-flight magazine, and craft show type products. And a single novelty product does not always make a business, especially if you define a business as a going concern. It makes for good television because these products can be easily explained and understood by the TV audience. And that means the show can quickly get to its real purpose, which is creating tension and drama. That also makes for good television.
Virtually the whole pitch is focused on a rapid-fire product demo and the handing out of product samples (like cheese squares at Trader Joe’s.) The real purpose of the show is the mild humiliation of the contestants (occasionally rewarding some of them for submitting to this humiliation) and watching the Sharks pretend to be nasty and insulting to one another. The “bidding” that takes place among the Sharks demonstrates real investment decision-making about as well as shameless haggling over the price of a rug does in a bazaar. In fact, I think witnessing the latter could be more instructive to the participants and audience at home.
I am particularly fond of the preemptive, “I’m out!” as the camera zooms in on disappointed faces. You’re out? As far as I can tell, you were never in. You haven’t earned the right to say, “I’m out.” The most you should be able to say is, “I pass.” But that’s less dramatic and hurtful and so not as good for television.
Business issues are typically not addressed at all until Q&A and even then, only in the most cursory and rushed manner. “Oh, and what’s the business model?” as if they almost forgot to ask. As an article in Forbes suggested, it’s not surprising that virtually all “deals” that do get “done” on the show change dramatically, and about half simply fall apart when it comes to negotiating definitive terms. The real reward to all participants is not the ridiculously arbitrary terms offered by Sharks on the show, it’s the publicity that the products being showcased get from
As it turns out, what the business school students really want to know most when they ask the question, “What about Shark Tank?” is whether you should begin a pitch with the amount of funds you are looking to raise and the amount of equity you’re willing to exchange for it. I discourage this unless it’s specifically required by your audience. As a presentation begins, the audience has no context in which to judge whether $250,000 for a 15 percent equity share is a reasonable ask or not. A haggler always assumes it’s not. An implied valuation is largely meaningless at this early point.
A better beginning in the case of most investment pitches is to immediately establish – not that you have hit upon some flashy novelty item – but that you have gained some insight into consumer behavior or found a solution to a business problem, that has its initial expression in the product you are offering. Establish that this insight can form the basis of a vialble and sustainable business concern that will support multiple products and business models. Not a small business opportunity. A big business idea.