Anyone who has watched ABC’s Shark Tank knows that pitching your business idea to a venture capitalist, let alone four of them, is no joke. Before going into the meeting, you need to know your product better than the back of your hand, including the financial numbers behind it. You better have your number of sales to date ready, as well as a deal to start negotiations with. All this comes before you can worry about diction, posture, or any other public speaking skills. Unfortunately, there are some amateur CEOs who weren’t quite prepared enough for the experience. Let’s learn from their mistakes:
This company is an online environment for women who want professional mental health counseling in their living room. The website features video chat, journal writing, and other options for those who wish to vent their frustrations. The sharks in this episode were genuinely impressed with the idea, for which founder Bea Arthur (not that Bea Arthur) was asking $100,000. Not one panelist, however, was willing to invest any money. Why? Because Bea’s website was facing large drop-off rates–or, as a psychological researcher would call it, attrition. This may be a perfect example of a great product with poor marketing.
Who wouldn’t want ice cream infused with premium beer? It would seem such a product would sell itself. Not so much for these entrepreneurs, who had one of the lowest sales figures in the show’s history. Perhaps they decided to get on TV a bit early, since they were able to secure a deal with Whole Foods Market before their appearance, but not yet as a regularly shelved item. Just to find out how much money the company had made (about $5,000), each of the panelists had to pry while the founders beat around the bush. This level of dishonesty alone cost them Barbara Corcoran’s support. The men also had a problem with taking criticism constructively, becoming defensive about the size of their target market. Though even the lactose intolerant Mark Cuban loved the product, he and the other VC’s passed on the deal.
Two sisters created a mailing service involving personalized rubber balls sent as greeting cards. The idea is a bit gimmicky but fun and, actually, quite successful. The business made about $100,000 in one year, and was building in popularity before the founders asked the sharks to fund a machine for manufacturing. Everything was going well in this company, and in this pitch, which is exactly why everybody said…no.
It turns out that if you’re successful, you might not need any help in the long run. Sure, a new ball-maker would have been great. But there was no point in asking for other people’s money, when simply hanging in there would help the ladies avoid additional obligations to an investor.
Yes, you read correctly. A cartoon character from the Disney program Phineas and Ferb had a pitch for an evil shrink ray, the…wait for it…”Shrinkinator,” which he would sell for a profit of one dollar. After showcasing his lack of finance skills, and his lack of promotion for the product, Heinz completely disregarded his disgraceful track record. According to the inventor, “I look at it as, I’m really due for one!” For the icing on the cake, the behemoth machine completely malfunctioned, and the mad scientist left to fight another day.
By Jeremy RappaportSuscribe to the podcast