Archive for September, 2009

Why ABC’s “Shark Tank” is a Great Show for Entrepreneurs

September 1st, 2009

While millions of entrepreneurs are busy building the country’s future, very few of them are given any direction on “what not to do” - and thus they must learn the hard lessons of launching a venture first-hand.

Enter ABC’s “Shark Tank”

Finally a show that gives a vicarious dose / diet of reality to help other entrepreneurs hone their startup instinct and keep their entrepreneurial careers on track.

During the show, entrepreneurs pitch their ideas to 5 successful investors (i.e., the sharks) who then decide on the spot whether or not to invest. As in real life, more often than not the decision is to not invest, and the reason why is given in colorful - and often harsh - language.

The problem with most entrepreneurs…

Most entrepreneurs start with an interesting idea, then gradually invest more and more  time, energy, and money into that idea until it becomes an obsession. If it turns out the idea was a good one - this obsession is EXACTLY what will make the idea transform into a successful startup.

But if it turns out the idea was not so good (or the world wasn’t ready for it), this same obsession will lead to disaster. And sadly, far too many entrepreneurs don’t see the writing on the wall until they have lost literally everything.

Kevin O’Leary’s solution to the lost entrepreneur.

The show’s “Simon Cowell” is a shark named Kevin O’Leary, who built a software company out of his basement and sold it for $3.2 billion. Fantastically successful, and even more fantastically blunt - O’Leary told one entrepreneur on the first show that he was “lucky to have people like us tell you how terrible your idea is”. I.e., the sharks don’t pussyfoot aroud their opinion - if they think your idea is horrible - they will tell you. And that may save you months and years you would otherwise waste.

Shark Lesson - the expertise is often as valuable as the money it comes with.

Another great lesson from the “Shark Tank” is the value that comes from connections (vs passive investors, or “dumb money” that just invest their cash). In many of the deals offered by the sharks, the connections and execution experience of the sharks offering the cash is far more likely to impact the company’s ability to succeed than the $500,000 or so in cash they are bringing to the table.

Some of the entrepreneurs pitching their companies have seen the value of the connections and jumped on these deals - even if the valuation they were given was much lower than they had originally hoped for. Other entrepreneurs have pig-headedly stuck to their guns and walked away from amazing offers of expertise - and many of these no doubt will now watch their companies rot on the vine as a result.

Separation of Entrepreneur and Idea

As harsh as the sharks are with many of the ideas that are pitched to them, they will often make it a point to praise the entrepreneur even as they are trashing the idea. “I think you are awesome, I just don’t like the business.” There is a really powerful lesson here that most entrepreneurs miss until they’ve burned through an enormous amount of time and money.

Entrepreneurs are different from their ideas. To the degree that an entrepreneur can recognize this fact, and see themselves as distinct from their idea - they will be much more levelheaded in making decisions to continue investing time and money into their business. By thinking less like someone who is married to an idea, and more like an investor, they will be able to make that tough decision to “move on” if necessary - and they will then be able to pursue another idea with more potential to succeed.

Author: Jeff D'Urso Categories: Startups Tags: