Shark Tank is a popular TV show where entrepreneurs pitch their businesses to a panel of successful investors (called the Sharks) to encourage them to invest their money in exchange for a share of equity.
The entrepreneurs give a brief presentation and must then endure a tough Q & A session with the Sharks as they determine if their business is worth the investment. If the Sharks are interested, they will make an offer to the entrepreneurs. If the Sharks aren’t interested, or if the entrepreneurs can’t come to an agreement on the amount of equity they would give, the entrepreneurs walk away empty-handed.
An entrepreneur’s performance on Shark Tank can make or break him or her. Businesses picked by the Sharks have gone on to incredible success. Those who haven’t are often never heard from again.
If you listen to the speeches by the entrepreneurs closely, you can find out who the Sharks will choose — regardless of the type of business, the amount of money requested, and the percentage of equity being offered. Here’s what to look for.
Did they give a memorable and effective demonstration?
Show is better than tell, especially because the Sharks have limited time. Nearly all of the entrepreneurs that come on the show know this, and they usually bring samples that the Sharks can look at, touch, smell, and taste. But a winning demonstration has to go beyond that and give a demonstration that grabs the Sharks’ attention and sticks in their minds.
The most effective one I saw was one for Noene USA, which offers an insole made of a special shock-resistant rubber. The entrepreneur demonstrated his product’s shock resistance by sticking a piece of glass under the insole and hitting it with a hammer. The glass was unbroken. He then repeated the demonstration with an ordinary insole, and the glass shattered.
That demonstration showed everything you needed to know about the product in a dramatic and memorable way. The entrepreneur got a deal.
Did they offer a unique selling proposition?
Every successful product needs a unique selling proposition: What need does this product fulfill for a customer that isn’t available elsewhere? All of the entrepreneurs presented a unique selling proposition in some way, like PullyPalz that has pacifiers attached to a plush toy. The product gives babies a toy to play with and their parents a way to keep a fresh pacifier on hand.
When the selling proposition is less unique or doesn’t show a clear benefit to the customer, the business is usually rejected by the Sharks. One company emphasized that their line of clothing is made in America. Although “Made in America” appeals to some customers, most people evaluate a garment’s style, comfort, and price before they look at where it is made. Another clothing company that prided itself as being made in America suffered financial problems, labor conflicts, and scandals. “Made in America” may be a unique selling proposition, but it may not enough to sway investors and customers.
How well did they prepare for the challenges from the Sharks?
I’m surprised when entrepreneurs put so much preparation into their formal presentation, but they came unprepared to deal with the Q & A from the Sharks. Entrepreneurs who gave a killer demo and had a unique selling proposition still wound up losing the deal because they weren’t ready to address the Sharks’ questions.
Something the Sharks almost always ask about is the valuation of a business. If entrepreneurs are offering a 10% stake for a $100,000 investment, they estimate the value of their company is $1,000,000. The Sharks want to know how they came up with that valuation, but many entrepreneurs don’t have a solid answer. Some make up an absurdly high valuation even when a business hasn’t even earned any income. Sharks will not invest in a business when they don’t think they can get a return, no matter how brilliant a concept it is.
The entrepreneurs who got a deal were the ones who clearly prepared for the Q & A. They anticipated what the Sharks would challenge them on, and some even addressed their objections with humor. Because they were prepared, they stayed calm and professional. The quality of their answers and the manner they answered them helped them to win over the Sharks.
Lessons for your next sales pitch
More than a business show, Shark Tank gives powerful lessons of public speaking – both prepared and impromptu. The key to both types of speeches is preparation. Learn the strengths and weaknesses of your argument. What are your audience’s needs? How can you address them? What objections would they raise? How can you win them over? Before you dive into whatever Shark Tank you need to go to pitch your ideas, come prepared so that you have a better chance of coming out a winner.
For more tips on impromptu speaking and sample questions for you to develop your skills, look for Mastering Table Topics – Second Edition, coming soon in paperback and eBook.