I received an e-mail from Frank Rumbauskas with the subject line “Why I Hate Shark Tank”. Frank is a smart guy and I really enjoy his e-newsletter, but I have to disagree with him on this particular email.
Hel got my attention because I love watching Shark Tank. I watch most Friday evenings after my wife and I put our 1 year old son to bed.
Anyway, the 2 reasons Frank hates Shark Tank for business owners are as follows:
1. A business should grow organically instead of through venture capital financing giving up equity
This is a decent argument. Keep all the equity to yourself. I can’t argue that in many cases.
But another part of me can’t help but asking “would you like to make $1 million dollars in 1 year or 5 years?” There have been business owners on ST where I’m scratching my head as to why they would give up equity when they’re growing fast and seemingly don’t need any help. Sometimes the only explanation I can come up with is the amazing publicity any business receives on ST.
The Shark Tank is about trading equity for cash. If the idea of giving up equity in your business makes you sick, you probably agree that Shark Tank isn’t very good for business owners.
In a perfect world, all business owners wouldn’t have to part with equity.
It’s all well and good to pontificate about the dangers of parting with equity, but if you need cash and/or help and failing that the business could easily go under, I can’t help but believe receiving cash for equity is good and often necessary. I’d rather own 75% of a successful business than 100% of a bankrupt business.
There’s also the connections and access you gain partnering with any of the Sharks. When you watch “update” episodes, you learn that some partnerships with Sharks saved/catapulted the business to massive success due entirely to the shark’s involvement. And yes, I realize not all business owners who make a deal end up with a successful business … I’m sure there are examples of failures despite cash infusions and expert help.
2. People are “humiliating” themselves BEGGING for money in front of millions of viewers
Suggesting people are humiliating themselves is like saying Tony Horton of P90X fitness fame and success “humiliated” himself on infomercials.
Arguing that business owners are “humiliating themselves” is not a good reason they should avoid Shark Tank. Frank states “The dummies on “Shark Tank” usually go nowhere because they’re up there, begging for money, while the real money is out looking for people who are ALREADY successful.”
There isn’t easy money for any business “out there”. Many people on Shark Tank seeking capital already have a successful business. Besides, they’re keen to partner with very capable business people with connections that make big things happen quickly. Banks often deny loans unless there are assets for security.
You can consider going on Shark Tank as “begging for money” or you can view it as a way to bring your business a TON of publicity which can help your business tremendously whether a deal is made or not. In fact, for anyone who has a decent product, going on Shark Tank is like a free 15 minute infomercial on network TV during prime time viewing. That exposure can’t be bad for business.
My wife and I suspect some business owners on Shark Tank go on only for the publicity and have no intention of making a deal. I’m sure the producers screen for this as much as possible, but when you see how some of the business owners behave, doing pretty much everything to ruin a deal, it makes you wonder. I don’t want to point any particular business owner because I’m merely speculating without any proof (I can’t read their minds).
About Frank Rumbauskas
Frank Rumbauskas teaches people to become much better sales people by never cold calling again. He’s the creator and author of “Never Cold Call Again” and has been featured in CNN, Investors Business Daily, Fast Company and Entrepreneur. More notably, his work is used by people at Century 21, Aflac, IBM, AT&T and other major corporations.