To aspiring entrepreneurs dreaming of landing a deal on “Shark Tank,” a former contestant says don’t bother.
Scott Jordan, founder and CEO of apparel line TEC-Technology Enabled Clothing, appeared on ABC’s hit pitch show in March 2012 seeking a $US500,000 investment in the licensing of his clothing company in exchange for a 15% stake. He was eventually offered a combined $US1 million in deals but felt all the equity asks were too high, and walked away empty-handed.
Two years after that experience, Jordan says he considers “Shark Tank” an entertaining TV program but a terrible way to raise funds. “If you truly think that this is an opportunity to raise money, it is idiotic to say the least,” he tells Business Insider.
Jordan argues that the percentage of deals that actually receive funding on “Shark Tank” is tiny. According to ABC, some 36,000 people applied to be on the show last season. During that time, 26 episodes aired with four products typically featured in each. That’s a total of 104 entrepreneurs (or teams) that actually got air time, or a mere 0.3% of the people that applied for a spot — and none of them are guaranteed an investment from the Sharks.
That said, the lucky few that do secure air time on “Shark Tank” certainly get a boost. Experts estimate that a slot on the show could be worth as much as $4 million to $US5 million in free marketing exposure, particularly if the temperamental Sharks take a liking to the product. In the past, appearances have vaulted smartphone apps to No. 1 spots in the iTunes App Store overnight, and doubled sales in just months.
Jordan acknowledges the exposure value of going on the ABC show. But even considering that, he still doesn’t think the slim chance of a big payoff is worth the six to 12 weeks of effort it can take to apply and, if chosen, film a segment. He takes issue most with what he feels is a massive perception problem about “Shark Tank.”
“I think that people watch the show and think that appearing on it is pretty much a guaranteed path to riches,” he says. “It’s important for people to know that this is not the golden ticket. There are more traditional, better ways to do it.”
Rather than trying to raise money on “Shark Tank,” Jordan suggests people go to family and friends for help, or take out a second mortgage on a house. It’s a valid point, but also worth taking with a grain of salt. Unlike most other early-stage entrepreneurs, Jordan was not strapped for cash when he went on the show.
At the time, Jordan’s company was on track to do $US12 million in sales for 2012. He was an ex-lawyer who had carefully calculated how to seek funding from the Sharks without sacrificing a bit of his lucrative retail line. He also had powerful connections, and made a point of placing a call to his board member, Apple co-founder Steve Wozniak, midway through his “Shark Tank” segment.
When Jordan balked at the options on the table, the episode became confrontational and nasty. “What is your problem?” Shark Robert Herjavec asked. “Kevin, you’re out, you’re out,” Jordan shot back, pointing at Kevin O’Leary and Herjavec. “I don’t need you.”
“Show a little more respect,” Herjavec yelled, as the TEC founder stormed out of the tank.
Today, Jordan still clearly holds grudges against the Sharks (he’s happy to call Dallas Mavericks owner Mark Cuban a “billionaire bully”), but his thoughts on the show are more tempered. Watch it, enjoy it, but don’t put all your faith in it.
“There are lots of business lessons to be learned, but do not believe that what you see on TV is what is happening,” he says.
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