What’s this show called … Shark Tank?

Although it’s certainly not the only culprit in history, the Internet has spawned countless inventor millionaires who have only one identifiably marketable skill. But because a fortunate few have managed to translate IT abilities into riches, a new iteration of investor has been born: the business-sense-challenged financier with money to burn.

Enter a show like Shark Tank, which provides a board of investors with the opportunity to buy into numerous ventures week after week. This show obviously sinks or swims with the panel, so just who are these folks?

Barbara Corcoran is in real estate and does deals every day; she might be out of her element at times, but the art of the deal shouldn’t be lost on her. Daymond John is FUBU clothing; nothing to sneeze at, but his vision is fashion. Kevin O’Leary made his money in educational software … I loved how he talked about knowing the toy business because Mattel bought his company. That’s barely more accurate than saying you know the convenience store business because you bought a pack of gum at one last night. Robert Herjavec has built and sold multiple technology companies. And while we’ve all heard of Mark Cuban’s Dallas Mavericks, he built his fortune off of Broadcast.com, a business that revolutionized the way sporting events are streamed over the Internet.

The first entrepreneur on the most recent episode of Shark Tank was Nikki, founder of Toygaroo, a toy-share company. Basically it’s a subscription service that allows customers to rent a box of toys and then return them when their kids’ interest inevitably wanes. I had two problems with her pitch. One, her pricing model was completely out-of-whack, and it was based on the supposition that families spend more than $500 a year on toys. Really? The second was her claim that breakage wasn’t really an issue … for anyone who has kids, you know how unlikely that is. If she has yet to experience the need to replace a toy due to damage or breakage, she’s gotten lucky.

Kevin made the first offer for thirty-five percent of the company, while Robert and Mark teamed up to offer more money for forty. Honestly I was shocked that any of them saw promise in the idea. But it was only when Mark dumped his partner Robert for Kevin and they matched the high money offer and the low equity offer that Nikki took a deal. The first entrepreneur walked away happy.

Then came Matty, pitching his company Wake N’ Bacon, an alarm clock system that wakes you up to the smell of cooking bacon. In theory maybe a cute idea, but practically it’s awful, and not for Kevin’s stated liability issues. Mark was right in his dissection of the product as a gag gift, but it shouldn’t have been Matty’s need for an additional $130,000 that stopped Mark from buying in … common sense should have done that. Matty walked away empty handed.

Brian founded Vurtego Pogo Sticks, which essentially sells supersonic pogo sticks. While I agreed with Barbara and her safety concerns, as well as with the men that mass market is not the way to go with the product, it was a mistake not to invest. The fact that it’s a high end specialty item is exactly what made it attractive. It would have been a steal for one of them to walk away with twenty percent of a surging niche company for a mere half million dollars, all to enable the company to improve its ability to produce a quality product. That was a good idea that they let slip right through their fingers.

Last came Joe and his company First Defense Nasal Screens. His product is a filter that fits over the nostril and reduces inhalation of all sorts of bad stuff by ninety-nine percent. Americans are too self-conscious a consumerate to be the right market for the product, but we’re such a small percentage of the world that it doesn’t matter. This was a product that was ready to go.

Joe’s mistake was that he was looking to finance the production of a sizable order that he couldn’t handle. In exchange for fulfilling that need the investors rightly could have asked for control — more than fifty percent — because without the eight million dollar order Joe’s company would be nowhere. Instead they took the other route, which was to advise Joe that they’d help him land smaller orders that would in turn finance the big one. Thus ensued a bidding war, which in the end saw Daymond making a million dollar investment offer, Mark and Kevin teaming up once again, and Robert offering to buy the company outright for four million dollars.

But when Joe asked for a little more Robert pulled out, leaving two competing investment offers that quickly turned into one when Kevin, Mark, and Daymond joined forces to offer $750,000 in exchange for thirty percent of the company and ten percent perpetual royalties. Joe asked for season tickets to the Mavs (I hope for life) and the deal was done.

A fifty percent success rate for the entrepreneurs is huge, although I don’t know how that stacks up against the show’s percentage in general. It was interesting that Mark and Kevin did the majority of the spending, while it was Robert who came across as the only competent investor in the room.

As for the show, it wasn’t bad for a laugh, but Kevin O’Leary is immensely annoying. I know the panel rotates, but I’m not sure if he’s one of the rotating investors. With him it’s not worth my time. Without him, maybe….

Clacked by Aryeh S.
on Mar 28, 2011 @ 16:00 EST5EDT