Is Shark Tank good for Australia?

Is Shark Tank good for Australia?

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If you’ve ever watched any reality TV (and don’t say you haven’t), you may have noticed a formula.

Author and satirist Ben Elton breaks it down nicely in his satirical crime-thriller Dead Famous.

To get on TV, according to Elton, participants must fall into one of the following three categories.

They must be…

A Singer
A Blinger

Or…

A Minger

Cruel, right?

They must have talent, personality or be incredibly awful. And that clearly makes compelling telly.

Last night, I watched Channel Ten’s latest reality TV import, Shark Tank.

The premise is simple.

Sweaty and anxious entrepreneurs line up to pitch to a panel of cool and cashed-up potential investors.

Some ideas get funded. Most get torn to shreds.

So, it’s basically Dragon’s Den of another name.

As I watched, I wondered, ‘Who are the singers, the blingers and the mingers?’

And, yup, a certain pattern did emerge.

A blinger with a hot-dog/hamburger innovation gave up half his equity for $2. (Yup. Two hundred cents. More on that later.) A minger got dismantled for his outrageously overvalued dotcom. And a singer wowed the panel with a patented, portable electric skateboard.

However…

Unlike the music competitions (like Australian Idol) or the cooking shows (like MKR), I did not feel icky, anxious or even remorseful while watching the work of ‘invisible’ producers pick apart human dreams. I did not feel shame at my fellow consumers for enjoying the role of judge, jury and executioner, from the safety and comfort of a couch.

And that’s because, for the most part, the show was realistic. (Well, as ‘realistic’ as reality TV gets.)

First, I’m not sure that the producers set out to pick ‘mingers’.

Entrepreneurs and innovators are already pretty good at unmitigated optimism. If they weren’t blind to criticism nothing new would ever get done in Australia.

Also, you’d have to be a pretty canny producer to be able to spot the mingers among the blingers and singers.

Entrepreneurs and innovators are pretty good at seducing others with their optimism (mostly).

Second, the ‘Sharks’ did seem to give most of the aspiring entrepreneurs the benefit of the doubt and were able to ask some pretty astute questions. (Although, the producers are, of course, paid to make them look good, while emphasising the singer, blinger, minger qualities of everyone else.)

But the moment my own state of semi-distracted voyeurism shifted to genuine intellectual curiosity was when one of the Sharks (Steve Baxter, I think) discovered that the reason why a duo of capital seekers was raising money was to pay their own $150k a year salaries.

He said, genuinely appalled, ‘So, you want us to pay for you to shift from one comfortable job to another?’ (Or words to that effect.)

The lesson here is that investors want investees to have skin in the game. They want the founder to have a good reason to stick around when times get tough. A little bit of hurt creates commitment.

The other reason is that an investor wants to know that every dollar spent will add value to the company and their investment. (This second point was never said. But it’s worth writing down if you ever intend to raise money.)

And, as my brain made those two observations, I realised that I was invested in this television show.

It demonstrated how ‘normal’ people can launch something new and opened up discussions, that normally happen behind closed doors, to a broader mainstream audience.

Of course, that was one of the reasons why I launched Anthill Magazine 12 years ago, when ‘entrepreneur’ was still a dirty word — to change attitudes toward innovation and entrepreneurship in Australia.

That’s why, over coming weeks or months (however long the show lasts or however long it takes me to grow bored), I plan to identify some of the hidden lessons that the Sharks might not always have the self-awareness to communicate or that the producers might not have the desire to share.

Is it good for Australia? Well… it’s gotta be better than I’m a Celebrity, Get me out of here!

Other lessons from Episode One (#1)

BURGER/HOTDOG GUY: Burger/Hotdog man gave up half his equity for $2. Was this a good investment? Yes. His idea was a one-trick patty. (I mean pony!) If it doesn’t get picked up by a franchise and score some royalties, he can only make money defending the idea, and that requires coin. Furthermore, sometimes an investor with connections and skills is far more valuable than an investor with capital. One thing I would say, even though the $2 was just for the purpose of ‘consideration’, Burger/Hotdog man should have asked for a larger token amount, just enough to make the investor give it some proper love and attention. (Having ‘skin in the game’ goes both ways.)

Do you agree? Disagree? Leave a comment below.

ELECTRIC SKATEBOARD GUY: Electric skateboards are cool, like segways. And this guy patented a version that folds into a suitcase. He didn’t ask for much cash and gave away a big chunk of equity. In doing so, he triggered a bidding war. It was fun to watch and the young fella clearly understands the value of ‘smart money’ (getting investors that can put in more than money). However… last year, when interviewing Rick Chen, the founder of crowdfunding site Pozzible, I had the opportunity to ride an electric skateboard. What I discovered is that, unless you live a super-flat world, electric skateboards are about as useful as… a segway in the Australian outback.

Do you agree? Disagree? Leave a comment below.

RENT RESUME GUY: The real challenge with this pitch was not that fact that he valued his business at $2.5 million (despite it being a website that could be built for one hundredth of that and only had 2,000 customers after several years) is that it targets renters with a product designed to help them over the long-term. You see, the thing is, only very few renters believe that they will be renting for the long-term. They want to buy a house (at least, that’s the case in Australia) and the people who do plan to rent long-term probably don’t give a damn about having a ‘rental resume’ to seduce real estate agents and property owners. It was a solution looking for a problem. Enough said?

Do you agree? Disagree? Leave a comment below.

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  • DesmondSherlock

    I really enjoy watching this stuff as an wanabee entrepreneur myself but I have to tell you that it feels more like I am a test cricketer and I am watching a 20/20 match. It is very very light on information and no investor in his right mind would dream of investing in someone or something just on a 5 min pitch.

    But it is great to get us all a little bit excited about the real game. Cricket is cricket and pitching is pitching, and with both games it all comes down to the pitch! ha!
    Just on pitching for anyone that knows my brother Steve and myself, we are off to try our hand in an new accelerator program in the USA that specialises in insurance startups only, in Des Moines.
    So looks like another 100 days of a new venture and adventure, a real test match for us.

  • Maurice Grasso

    James – agree with your sentiments, but it was a very condensed view of the process from a time constraints perspective. Desmond is correct when he likened it to a 20 over game – the real thing plays out more like Test Cricket, but the learnings/failings on the entrepreneurs side which you have enunciated can only be good for the entrepreneurial community who think that Shark Tank and Dragons Den is the norm behind closed doors. The reality is that a good Investor will take the time to understand the Entrepreneur ( because they may be wedded for the next 5 or 6 years ) and vice versa, rather than the made for entertainment “take the money and run”.  As you well know – once the in principle investment decision has been reached there is still a long long way to go to get the deal documented and signed off, and the money in the bank account.

  • http://www.techtidal.com David Ryan

    It’s been a lot of fun (and insightful) to read and listen to the take-aways from others in the startup community. Even with the broader scope of the show, there’s a lot to talk over and think about, and the entertainment factor can’t be ignored. We attended the launch at River City Labs and it was genuinely fun to catch the show in that shared context, and we’re aiming to make that a bit of a routine in weeks to come.

    From our perspective, I threw together some of my personal observations of the pitches, and of the debut in general: http://techtidal.com/2015/02/10/shark-tank-australias-queensland-launch-at-river-city-labs/

  • jacksonballan

    That fold up electric skateboard looked pretty stupid. If I was going to commute around with an electric skateboard I would just go with one of the other various brands out there that look like normal long boards… then I’d carry it into work like a badass. Seriously, if someone is willing to ride an electric skateboard around, they probably don’t care what people think, at least not to the point where they would be worried about folding it away into a box and hiding it.

  • Vital_Wealth

    6  Lessons I learned from Shark tankBe committed, show dedication,  focus is essential.Investors are looking for passion.Make sure your target market fully understands your offer. Be credibleKnow what you are looking for from your market or investorsIf you are lacking in skill or knowledge develop it or find others who can provide it.

  • Geoff Germon

    I found it very disturbing and a sad indictment on the state of manufacturing in Australia that all the Sharks with the possible exception of the woman from Boost Juice were from service industries, while quite a few of the products they were commenting on were physical products. This became pretty obvious when one of the Sharks said that the business could grow thru recycling cash flow, hard to do in manufacturing. obviously a lot of the products on the show are going to be tangible, a new accounting software is not very exciting telly. But it is a shame they couldn’t find somebody who actually makes stuff and hasn’t gone broke in the last couple of years.