7 Entrepreneurial Lessons From "Shark Tank"

Shark Tank--the prime-time feeding frenzy where successful entrepreneurs fight over promising startups, and ruthlessly chew up the unprepared--provides a wealth of knowledge about what venture capitalists need to hear before they invest in your company.

Shark Tank--the prime-time feeding frenzy where successful entrepreneurs fight over promising startups, and ruthlessly chew up the unprepared--is stirring up much buzz in its third season. To date, the Sharks have invested more than $6.2 million of their own money in a number of companies. With billionaire Mark Cuban, real estate mogul Barbara Corcoran, venture capitalist Kevin O'Leary (aka Mr. Wonderful), and other business magnates sitting in as the Sharks, the show offers a glimpse of pitching sessions gone totally right--or deliciously wrong.

An example: When three ice cream makers first lined up in front of the Sharks to pitch their product, they generated some friendly conversation. After all, the concept of morphing together beer and America's favorite frozen treat is bound to appeal to our inner glutton. However, when the investors started asking the entrepreneurs tough questions about their finances, the men from The Brewer's Cow had a minor meltdown. Whether the Connecticut-based founders were the victims of calculated editing or simply unprepared, their presentation lacked a certain professionalism. The final verdict? A flurry of "I'm outs" from the Sharks.

Yes, the episodes are entertaining. But more than that, they provide a wealth of knowledge about what venture capitalists want to hear before they invest in your company--and what will turn them off. Here's are 7 lessons from the Sharks about learning what it takes to make it as an entrepreneur.

1. Know your numbers. This is the number one lesson from Shark Tank. Whether you're presenting to a team of investors or simply working to grow your business, it's critical that you understand how much cash is coming in and out of the business. While you might think that most entrepreneurs on Shark Tank have a handle on their books, many believe that their passion will sell their wares. However, as we've learned from many of the Sharks, passion only gets you so far--numbers tell the real story.

2. Be a good marketer. Although the boys from The Brewer's Cow didn't get the deal they wanted, there is no doubt that the exposure from the show is extremely valuable. However, as a Shark Tank fan shares on his blog, the company's website is pretty lackluster for a brand that hopes to go national. If you extend the online search to their Twitter feed, there is very little interaction since the show aired. The Brewer's Cow currently has a deal with Whole Foods, but on the online front there is a lot more they could be doing just days after the television broadcast to capitalize from the on-air buzz.

3. Be humble. When a young entrepreneur appeared on the show to sell his custom clothing, he expressed the business drive that the Sharks love, but things started to fall apart when he talked about his lifestyle. Aside from asking for a starting six-figure salary (when the company has only grossed just over $315,000), he also lost some Sharks when he declared, "I'm now living the L.A. life." As Shark Daymond John, founder of FUBU, expressed on his Twitter feed, a statement like this isn't very appealing to a potential investor looking to form a responsible partnership.

4. Understand good timing. There are good and bad times in your business to ask for investment money. For many of the companies diving into the Shark Tank, they have great ideas but it's too early on in their businesses to be on the hunt for a large amount of cash. Mom Raven Thomas was one of the most impressive entrepreneurs on the show in terms of leaking out little bits of information about her business to entice the Sharks, one by one. For example, when she shared that Sam's Club recently put in an order for $2 million for her chocolate-covered pretzels, she had Cuban drooling to seal a deal.

5. Have a good story. When Travis Perry explained his company's motivation to the Sharks, it tugged on their inner musician heart strings. Perry invented his product Chordbuddy to help new guitar players like his 10-year-old daughter avoid frustration when learning how to play the popular instrument. With a great story and a stellar product, Perry got investment help and now has his Chordbuddy product in more than 100 music stores.

6. Be prepared to walk. Some things are not meant to be, which was the case with entrepreneur Scott Jordan. As founder of the successful brands SCOTTEVEST and TEC, he appeared on the show to sell a percentage of the latter (a technology-enabled clothing patent). The Sharks, on the other hand, were interested in Jordan's main business, SCOTTEVEST, which is on track to make more than $20 million this year. After a heated debate with some of the Sharks, Jordan was happy to walk away without a deal but with some new publicity for both his businesses.

7. Be personable. While all of the above will get you closer to your dream of running a successful business, it's also helps to have a winning personality. No one wants to do business with someone who is unlikable, except maybe Mr. Wonderful. As Shark Barbara Corcoran said in a recent tweet, "All the entrepreneurs I've invested in have amazing personalities--no regrets."

Remember all those things you learned about being nice in kindergarten? Those same things apply in the boardroom, no exceptions.

[Images: ABC]

Follow @AmberMac and @FastCompany.

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35 Comments

  • I am the inventor of the laser level US 5836081. I have this patent licensed to most tool manufacturers. 10 years ago it was easier to introduce ideas inventions to corporations. Today corporations do not want to hear new ideas because they have"in-house smart people" that design and invent for them. You could not possibly have anything

  • I am the inventor of the Laser Level US 5836081. I have it licensed to most tool manufacturers in the USA. 10 years ago it was easier to introduce new ideas. Today, most corporations simply do not want to hear new ideas or inventions form "outside". " We have our own internal team". I applied for patents for a method that "guarantees" costumers will view the entire commercial. This is the Holy Grail of advertising. This same method will assure that employees will view the entire training video as most employers would like. Too many ideas to sort through these days and these big corporations will miss some amazing ideas because they feel they already have the smartest new product designers.

  • Sherrie Carter

    I never miss an episode!!! (record)... I am sick of having an invention, but no one to help me & I am too scared to tell anyone what it is, because I KNOW it will go to the top. (yahta, yahta, ....) You heard that a million times, I know. This is BIGGER than the key remote opener to you vehicle, but it's NOT anywhere & I came up with it over 10 yrs. ago & still haven't moved on it & it's still not on any market. I also had the idea to build a stun gun on a cell phone & ran my mouth about it a few years back & now, this past year, 2 LSU students built it. I sent an email to shark tank, but I realize how it works. But I also know that my idea would be on EVERY vehicle built & every car owner at this time would want this product. I am sending this just one more time, in hopes, one of you sharks would contact me.

  • Karine Clark

    OVER IT.
    The show is loosing it for me. Don't like the arrogant attitude and demeaning approach of the "experts." Over it.

  • Mike Trudell

    I own a pickled product company in North Syracuse, N.Y. I't s been just under a year since we incorporated. I just secured a local Topps chain of markets and currently have two manufacturers and one distributor along with a new beef jerky line of 6 flavors. Shark Tank inspires me to do better and I enjoy the diverse companies and options that the Sharks offer. Maybe you'll see me in front of the Sharks someday. PICKLE UP! WWW.PICKLED.NET

  • Glennsage

    The two main points that I have learned are...
    FIRST, do EVERYTHING possible to not need an investor. Design your business model properly and pursue those dreams that allow you to start small and build it up.
    SECOND, it's not about the product or idea, it's about execution (sales, sales, sales).

  • Sandra Riley

    I just love the cool seven entreprenuerial lessons from "Shart Tank" and reading these lessons have impressed me greatly.  Thanks so much.  This is a note from Sandra Riley from the small town of Tuckerman, Arkansas.  I have a wonderful that would benefit humanity.  I wish I could get onto your show.  I have always thought of this idea which includes housing for people with units that would include also a spiritual rich growth to each and every person living there.  When us people with ideas, put physical needs with spiritual needs, what a wonderful place for any person to live there.  Email me at rileysandra21st@yahoo.com and let ME be on your show please.  Sandra Riley, Master of Arts, Sociology, Former "Who's Who Among America's College Teacher's".  Thanks so much for great people like you.

    Sincerely, My Thanks To You Ladies and Gentlemen.

  • Michael Avery

    I have to admit that i'm nervous as hell about the whole idea of being on the show because I don't have a company. I invested $12,000.00 into the idea. I know that my idea will be a Worldwide hit, thats why I invested what money I could afford. I'm independent and need some advice one how to present my idea. The 7 Entrepreneurial Lessons From "Shark Tank will be a great help, but still I'm looking for any advise I can get. Thank you all that respond.
    Michael Avery
    avery2retire@yahoo.com

  • Erickcoleman

    I thank you for this 7 step lesson, and it all sounds very helpful to me as a new inventor. I think it will prove to be very prosperous to me !!! 

    THANK YOU

    APOSTLE  DR  ERICK  

  • Mona Febonio

    Thank you Amber Mac and Fastcompany - on Twitter:   7 Entrepreneurial Lessons From "Shark Tank" (What VCs need to hear before they invest) http://bit.ly/GUEGRW from fastcompany.  The "Shark Tank" is such an excellent and compelling show to watch.  What an amazing learning tool for anyone who has a great small business idea or product to promote to the World.  And yes the "Sharks" want to hear a good biz plan story, and stealth strategy. Yes even with or without the pressure and sweat pouring down some of the founders appearing on the show pitching their ideas - who are lucky enough to be selected to be on the show in the first place!  The best biz plan resource and tool in this 21st Century I found is called the Funding Road Map (http://zfer.us/N3Jwb), perfect 2012 interactive biz plan tool to tell your business story to an investor or anyone with whom you want to share your vision with. It's even free to use for 7 entire days, that is plenty of time right - to map out a great biz plan, memorize the exec summary, financials all in proper detail before appearing on this awesome program I love to watch!  Kudos to ABC as well.

  • Mona Febonio

    Thank you Amber Mac and Fastcompany - 7 Entrepreneurial Lessons From "Shark Tank" (What VCs need to hear before they invest) http://bit.ly/GUEGRW from fastcompany.  The "Shark Tank" is such an excellent and compelling show to watch.  What an amazing learning tool for anyone who has a great small business idea or product to promote to the World.  And yes the "Sharks" want to hear a good biz plan story, and stealth strategy. Yes even with or without the pressure and sweat pouring down some of the founders appearing on the show pitching their ideas - who are lucky enough to be selected to be on the show in the first place!  The best biz plan resource and tool in this 21st Century I found is called the Funding Road Map (http://zfer.us/N3Jwb), perfect 2012 interactive biz plan tool to tell your business story to an investor or anyone with whom you want to share your vision with. It's even free to use for 7 entire days, that is plenty of time right - to map out a great biz plan, memorize the exec summary, financials all in proper detail before appearing on this awesome program I love to watch!  Kudos to ABC as well.

  • Hotdogman

    The Brewer's Cow guys revamped their website the day before the show aired, but after I wrote about their site. They have definitely NOT made the best use of the show's exposure, but I will get their side of the story in an interview to be published very soon on the Shark Tank Blog.

  • Diane

    Only one deal got done?  I've seen at least 3-4 follow-up stories on companies one or more Sharks invested in right on the show itself.  Barbara seems to have helped two of the entrepreneur presenters alone.  Their connections might be almost as important as their funding.

  • SCOTTEVEST

    These are great tips, Amber. One thing to remember is that the Sharks are looking for profits, they are very smart and can be intimidating. Great experience though! 

  • Daniel

    As many commenters have mentioned below, Shark Tank is a fabulously entertaining program. Its success, in my opinion, is largely a product of a favorable supply/demand dynamic. In other words, audiences want to hear stories of the average American who takes an idea and turns it into a personal fortune. I can't think of another high profile show with a similar structure -- it's surprising other networks haven't approached similarly popular, wealthy investors to essentially spin off a new program (much like we saw following the success of American Idol).

    With that said, I think the show has changed markedly from season 1. In the inaugural season, the type of business on the show was much more in line with what I'd expect to see (e.g., a good idea turned into a business with a history, albeit often brief, of mild success). It seems, however, that the current season has focused its efforts on more "entertaining" businesses that attract a larger viewing audience -- ABC is, after all, running a business themselves. A perfect example, in my opinion, is the man who draws cats on a website for $10 per drawing. I find it hard to believe that Mark Cuban genuinely intended to scale this business model and turn a profit that, in the aggregate, was worth his time. While it's possible that Cuban's help could double or triple (or even more) company revenue, such a small project with no real long-term market doesn't have a place on this show as a legitimate potential investment. It's my sincere hope that the show returns to its roots with an increased focus on the "true" enterpreneur. But, if not, I'm sure another show will come to fill the void (an idea I'd love to see pitched in the Shark Tank).

  • John Papis

    @ Michael Huska. You make some good points based on the show. Some of the sharks can open a world that the founder may not be able to reach and certainly mentorship and guidance goes a long way. But I have to
    disagree on some of it for real world situations. There is always a risk involved. That comes with the
    territory of being an investor. Nobody likes to lose
    money. To be sure, I’m not suggesting as low as a 5% or even 10% share in many of the
    cases. But again, it depends on what you are getting for the money. For Angels
    a $5m cap is normal and VCs go for more. There are benefits and downsides to
    both. But if you are going to go from Seed to A or C or D rounds, the founder will
    end up getting hosed if the early round is too expensive. I think Cuban seems to get it. It has to be fair to both. I enjoy watching the show and agree with the premise of this article.

  • Edward Ford

    Yes it is an excellent show and learning tool for anyone who has a small business or product to promote.