Tonite the Shark Tank had an eclectic group of entrepreneurs. None of them gave outstanding presentations, so no Sharky’s will be awarded. A brief run-down of their strengths and weaknesses…….
Jim and Sabin from Cousins Maine Lobster …..They are selling lobster sandwiches from their truck. This is a growing trend…..preparing and selling various foods from trucks and attracting customers via twitter and other social media. They didn’t display very deep business knowledge or expertise. They did get an investment from Barbara who will need to provide lots of her marketing expertise to get this business in high gear.
Zach from Freaker USA is an eccentric entrepreneur who had a nice business selling unique one-size-fits-all glass/cup jackets. I think he had a great grasp of the numbers but was asking for too much money…..his company valuation of $2 million was WAY too high. He also made funny beeping and booping noises. I think he was crazy like a fox, but he really scared the Sharks.
Brandon and Tanya from Pro-NRG had sold $126K worth of protein energy drinks in 3 months…..an excellent start, but their margins were small in a very competitive market. If it wasn’t for a couple of great stories told by Brandon Jacobs (two-time Super Bowl winner) they never would have gotten an investment. I think Daymond was in awe of him and his Super Bowl rings. Celebrities do sell!
Mona and Scott from Eco Nuts operate in a very small market (the Soap Berry market?!). Scott played it fast and loose with the market size numbers and the Sharks caught him. Robert advised him, “Scott, you’ve got to know the numbers”. BTW, if you’re not sure of the overall market size you’re in, quote a third-party source if you can. Mona also insulted Robert by telling him if he did invest, she’d expect him to work 16 hours a day like them. Seriously?
The Valuation Question…..The recurring theme tonite was that company valuations were too high. There is no easy answer to the valuation question. Ultimately a company is only worth what a buyer or investor is ready to pay. A good rule of thumb for a self-funded entrepreneur is to value your company at 1X to 2X revenue (the last 12 months revenue) or 4 to 8 times EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization for the last 12 months). This gives you a credible, defensible starting point for a negotiation with an investor or buyer. (I cover this subject in more detail in “Unlocking Your Entrepreneurial Potential”).