The hosts really are the heart of Shark Tank, but not because they're cantankerous or charming. They center the show because of their energy, and they bring energy to it because they're personally invested in the outcome. There is no producer underwriting their risks and they don't have the luxury of playing the whole scene for a laugh or for drama: they want their money. This simple investment strips the show of a lot of the artifice of which reality shows usually consist.
Each host also brings unique expertise to the table. Mr. Wonderful, aka Kevin O'Leary, plays up the dark-hearted capitalist angle and always cuts to the quick of the deal. He's the Blue Shark. He's fast but he wants his money to work for him. He can take big prey, but he'll also settle for a lot of little royalties that'll keep him full. On the spot he'll calculate all your finances and tell you how much you're worth and likely to make, and that his little nips are cheap. He's also vulnerable to parasites who try to mooch off of his initial offers.
FUBU founder Damon John, real estate mogul Barbara Corcoran, and Lori Greiner, Queen of QVC, seem among them to know every market. They can tell you who wants your product and what you need to do to put it in their hands. They're your Grey Reefs. They're good at gathering information and you can tell when they're ready to strike with an offer.
Robert Herjavec is the Mako in the tank, fast and smart. He has a huge advantage with his knowledge of technology that lets him pounce on deals while others are still trying to figure out how they work. Finally, billionaire Mark Cuban is the Tiger of the group. He's aggressive, plowing into existing deals with offers that throw everyone into confusion. Cuban also has the widest variety of expertise.
For all the bravado of the show, though, the sharks can be pretty conservative. They restrict themselves to their areas of expertise and don't throw themselves into businesses far afield from what they know. Likewise if they don't have enough information, they'll back off. Sharks manage risk, making an offer that'll balance protecting and increasing their investment. The sharks don't throw their money around because of the soft, touching, stories that tug at the heartstrings. They'll tell you that they like you, but that you don't have a business. They may admire you, but won't invest in your business. They may want your product, but don't see a larger market for it. The sharks ultimately want to make money, and that really just means putting resources where they are most useful, and therefore most valuable.
This process is often caricatured, but putting money where it is useful is simply putting it where it is most needed. Inventors and entrepreneurs think that people need their product but it is the sharks who take the risk to bring products to consumers. The sharks bridge inventors and consumers by means of capital, expertise, and connections. Without their knowledge and liquid resources, entrepreneurs would only have their limited experience and minuscule personal savings and debt to realize their projects. Of course the funding comes at a price, but there's a place in the chain of commerce, and food, for sharks, as there is for entrepreneurs.
And entrepreneurs can learn from watching the show. The chief question that comes up is whether there are any sales. It seems obvious, but how do you find out whether anyone wants your product? The sharks want numbers–sales and orders–but so often aspiring business owners talk about forecasts, how great the product is, and sounding very much like the present administration, that their main problem is advertising. People would love our product but they just don't know about it! No matter how wrong they are, the entrepreneurs can be quite persuasive. It's humbling to be taken in by a sales pitch and then, when I might have invested, see a shark cut the deal down to size, saying, "You're selling a product at $10 which costs you $4 to make and $3 to move on top of spending $2 to acquire the customer." On second thought...
When the sharks bite, though, things really get interesting. Do you go with the offer that takes the least money or which gives you the most control? Do you go with the shark who gives you the most money or who brings the more valuable expertise? Would you rather give up equity or royalty? These are all tough questions which quickly become confused in the heat of negotiations.
Another common confusion for contestants is that some of them have products, not businesses. Products come and go. They may be fads, they may become so ubiquitous that they disappear among knockoffs, or they may be bought up and folded into larger products or services. A business has to sustain itself with a plan to grow, adapt, and prosper. Aside from fundamentals, more details also come to the forefront in negotiations than most people would ever guess, even when selling a great product. For example,
- What size inventory do you need? How do you know?
- What's your demographic? How do you find and then appeal to them?
- What's your competition like?
- What's to prevent someone from improving on your design?
- Not only how much money do you need, but when?
That's a dirty word, profitable, but all it really measures is whether customers are willing to pay what it costs to put the product in their hands, a cost which includes rewarding those who do the work to get it there. This sense of profit as nexus of service, efficiency, and risk, a definition which is born out in every episode, isn't the premise on which the show is sold, though. Part of me likes the unapologetic, blatantly profit-seeking patina to the presentation of the show, because we too often judge how much others ought to make when we haven't taken their risks. On the other hand, I think a more nuanced definition might persuade people who react to profitable commerce with hives.
Presentation aside, Shark Tank is an entertaining show and even an educating one, especially for people who don't themselves take many fiscal risks. My favorite aspect, though, is that fact that after so many seasons with the same format, there is so much variety–and anyone who says it's the same thing over and over again would be a poor businessman. That variety is a testament to the struggles of business and the diversity of ingenuity with which Americans meet the challenge.