We’ve been watching Shark Tank, the “reality” show that provides entrepreneurs an opportunity to pitch investing in their business to some the country’s most well known investors. While the show is aired primarily for its entertainment value and to showcase the larger than life personalities of its sharks, it does hold some important entrepreneurial lessons.
On TV: Investors invest in people they LIKE. On the show, the sharks mention personality over and over – whether or not they like someone – as a reason they are investing. The business concept seems secondary. They also mention if they don’t like someone, then immediately indicate they are “out.”
In Reality: Few people want to be in business with someone they don’t like. When prospecting for a new client, keep personality in mind, and keep an eye out for character clues that will let you know if you and your prospect are compatible. Be ready to walk away if you don’t think you can work together.
On TV: Investors machine-gun the entrepreneurs with valuation questions. They want to know the basis for the current valuation, potential for growth, and variations based on different levels of investment. The entrepreneurs must do math quickly and respond in rapid-fire kind.
In Reality: Know your numbers when talking with a prospect, and be able to do the math quickly when they ask to configure the deal differently. Be familiar with your business, what it’s value is, how much it costs you to do it, and how much you need to make to do it right.
On TV: Each entrepreneur has about 8 minutes to make a presentation and negotiate their deal. Of course, the sharks always have a different deal in mind, and pressure the entrepreneur to make an immediate decision. We’ve seen some take the deal, some negotiate, and some walk away.
In Reality: You’ll probably have more than 8 minutes to make a deal, but be ready to take the deal, negotiate, or walk away.
We also remember that we are watching television, and despite the fact that they call it “reality television,” there is very little real about it. Great entertainment, though!