What ‘pisses off’ Shark Tank stars
THE Shark Tank judges have revealed the big mistakes contestants make when they pitch their ideas on the popular show.
Three of the "sharks" - internet investor Steve Baxter, Greencross founder Glen Richards and human resources pioneer Andrew Banks - took news.com.au behind the scenes ahead of tonight's season premiere to explain what would-be entrepreneurs did to ruin their chances of making big bucks.
Richards said he was still "really pissed off" by the number of contestants who didn't know their numbers.
"This is the fourth season of Shark Tank and they're still turning up, they don't know their numbers," he said.
"We ask pretty similar questions for most businesses and they can't tell us where they hope to be in the next two to three years."
Banks added, "We ask them, have you seen this show before? 'Yep.' Did you actually listen to it? Because I'll tell you, you haven't prepared."
He said many also came in with a "stereotypical Channel 10-infused view of what we're good at".
"I'm the 'tech guy'," Banks said.
"Yes, Ten pushes a certain persona on us, but these people are coming to pitch for investment, you think they could at least pull up LinkedIn and check what we've invested in."
But he said the biggest disappointment for him this season was their bargaining skills.
"Their negotiation skills are horrible," he said.
"For the most part it's very hard to negotiate if only one person's left in the deal, so their role should be to leave as many in the deal for as long as you can to get the best outcome. It's an auction."
On what he looked for in a pitch, Banks said he hated businesses that were "too dependent on just an idea or an individual, and don't have any sort of defensibility where someone could copy it very easily".
"I like pitches or businesses that can scale so there's a real good market for it," he said.
"One of my early investments was just a shoe insert, a competitor to Dr Scholl's. There's nothing new about it, but we all have feet, and we all want to spend money to make our feet more comfortable. If you can make something a little better and cheaper, then it's an amazing business."
Banks said the quality of the pitches was getting better each year, and Richards' annoyance at unprepared contestants was partly Channel 10's fault.
"That's partly the way they curate it," he said.
"Let's be frank, the show is about entertainment as well as business.
"It's legitimate, because you want to show the viewer the good, the bad and the ugly, so you've got to have some businesses that are clearly saying the wrong things, with us doing the dissection to demonstrate to the viewership, hey, it's not as easy as it looks."
Baxter agreed that it was the "natural tension of the whole format".
"Ten want good TV, the entrepreneurs want a good TV ad, and we want some good deals," he said.
But he said they had "some colourful characters turn up" this season who "you'd run a mile from doing business with".
"We had a couple that came out and you just know something's up, it's weird, maybe you get a sixth sense for it," he said.
"But in general a red flag is when they've got a lack of focus, or a second business."
Richards said some had "multiple businesses". "They're a serial entrepreneur with 10 businesses by the time they're 25 - you know there's got to be some carnage behind them," he said.
Banks said his big red flag was "when it's too much about them and not enough about the business". "I don't want to hear language which is all about me, I want to hear about the customers, the market, my team, and how I'm going to help you as an investor get somewhere," he said.
All agreed, however, that the entrepreneur's personality was important. "You've got to work out whether you're just going to give them the cash and hope like hell they give you some back, or are you going to a partner on their journey," Richards said.
"If we are actively mentoring and partnering with them we're probably going to be around these businesses for five to 10 years, you've got to like them."
But ultimately, Baxter said it came down to whether the product was worthwhile. "What problem are they solving? How big is it? Do people really give a stuff about it?"
Of course, not every deal ends up going ahead after the cameras stop rolling.
Earlier this year, news.com.au revealed how the biggest deal in the show's history fell through after a biodegradable coffee pod business stepped away from Banks' $2.5 million investment.
Shark Tank returns to Channel 10 on tonight at 8.30.