On a surface level, this could be considered a weak episode. The grand total invested by the Sharks was $50K….no Sharky Awards tonite. There were, however, many thought-provoking subjects that can help all entrepreneurs avoid the many pitfalls of starting and running a business.
Instead of my usual contestant-by-contestant analysis, I want to highlight a few of the teachable moments on this episode.
Product Improvements……Even though 14 year olds, Oliver and Sam from The Drip Drop, got a $50K investment from Shark Barbara, the deal is contingent upon them improving their product….the edible ring that catches the melted ice cream that drips from an ice cream cone. The Sharks said they need to make it taste better and make it more visually appealing. The young men need to make these improvements in order to have a chance of succeeding. They were open to these product improvement suggestions.
Risk vs. Reward Analysis……….Jarrett and Raja from Jarrett and Raja Productions have developed a music and magic show for a Vegas venue (TBD). The show needs to be fully funded before a Vegas property will give them a venue on their property. This requires $750K to cover all the costs of promoting and performing the show. When asked, Jarrett said there were currently 11 magic shows in Vegas. They had no idea how many magic shows in Vegas actually make money. They also appeared to have little marketing and business expertise. The Sharks saw this as too much risk and not enough potential reward. That’s the analysis most investors make before writing a check.
“Perfection is the enemy of profitability”……Mark Cuban said this in reference to Will from Kid Runner who had taken over three years to design a prototype of his hands-free baby stroller for parents who are runners. Will tried to pitch this as a “go to market investment opportunity”, but the Sharks pegged him as a procrastinating perfectionist who hadn’t received any real customer orders in three years. In addition to Mark Cuban’s words of wisdom, I would add two of my favorites…..when deciding how much time to take developing a product, err on the side of selling it before it is perfect or “Go ugly early”. Then understand that “Progressive improvement beats the hell out of postponed perfection”. You can always improve your product while selling it to real customers.
Retail vs. Online Sales…….Brenda from Inchbug started her company in 2004 and has sold over $15 million of her first product, “Orbit Labels”, all online. She has a vision of selling her second product, “MyDrinky” (a kids’ drink holder) thru big box retail channels. The Sharks repeatedly warned Brenda that retail is a whole different ball game with many headaches and complexities that she isn’t equipped to deal with. Also, she’s giving up a big chunk of her margins to go retail instead of selling online. Mark pointed out that going retail doesn’t play to her core competencies or experience. Brenda said she was in negotiations with a big box retailer and if the deal comes to fruition, it could generate $1 million in sales in the first year. I think Brenda should have waited until she had the order in-hand before she came on Shark Tank. Up until now she’s only sold $50K of MyDrinky.
OVERALL EPISODE RATING………..B