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How Watching Shark Tank Helped Me Get My Startup Funded


shark

 

I have to admit it: I watch Shark Tank religiously. Every Friday, instead of going out, I turn on my television and glue my eyes to the show, sometimes humming along to the Jaws-like music.

Why am I addicted to this show? Because not only is this show a constant reminder that there is so much to still learn in the startup world, but also it was this show that taught me how to pitch to investors and secure funding for my startup, Tint. I thought I’d share with you those 3 lessons so you can draw new perspectives the next time you watch the show and apply it to your own experiences.

 

1) The Preparation — Focus on those who have smart money.

A classic mistake: An entrepreneur has a once in a lifetime opportunity to pitch to the sharks and they are willing to take any deal that comes their way.

Every time I see this, I shake my head. The reason? I would turn down a 100% guarantee deal from a non-relevant investor any day to try and secure a deal with the investor who has the connections I want and the expertise I need. I’ve seen many entrepreneurs on the show go around the room asking each investor if they be interested.

I learned that by doing this, 1) you seem desperate and 2) you don’t know what you’re looking for. Instead, if you are a web tech/scalable/product-that-solves-a-niche-product-but-can-expand-into-other-verticals, target Mark Cuban and Robert Herjavec. If your company is in the fashion industry or needs manufacturing help, target Daymond John. If you’re going for a licensing play, there’s no one better than Kevin O’Leary. If you have a product that targets the mass consumer, hone in on Lori Greiner. And lastly, if you need unique distribution methods, focus on Barbara Corcoran.

 

shark4

(The notorious Sharks)

The same method applies in the real world. When I needed to raise money for my startup, I first brainstormed which investors I want to target. This meant studying up on each investor I wanted to get in touch with. I then read their interests, found out who they knew for access, scanned through their other portfolio companies, and talked with some founders of companies those investors had invested in.

Even though this took a long time to set up, it allowed me to get a better chance of investments because think about it: very few real-estate investors would have interest in something tech-related. At the same time, how frustrating would it be if all your investor offered was money and no connections or expertise? That’s what I call dumb money, and dumb money can really ruin your company’s potential. Once I figured out the right people to target and secured a meeting with them, then came the pitch.

 

2) The Pitch — If you’re early, sell yourself. If you have traction, sell the numbers.

Some of my friends who’ve never watched the show sometimes ask me how in the world did an entrepreneur score a deal if they had the ‘WORST’ idea in the universe! But after watching all the episodes, I quickly saw that if those entrepreneurs never sold their product. They sold their vision and passion. Since they were very early in their company, they needed to sell themselves as entrepreneurs. Sell their passion. Emit their drive. Emphasize on their hustle. Mention about their previous successes. Stress their vision. Guide investors through their story. Since they had really no product traction or proof, the investors that invested were purely betting on the entrepreneurs and their won’t-stop-until-it’s-over mentality. (This usually is the case with Mark, Daymond, and Robert.)

shark5

(This entrepreneur sold her story and passion spot-on.)

They didn’t fret over their small numbers or convince investors that they were notable. Early entrepreneurs who did do this saw the investors judge their company’s worth based on those insignificant numbers. That closed the opportunity for the entrepreneur to sell their vision because all the investors heard was a big fat “my product has no sales or traction.” (Kevin O’Leary will usually be the first one to mention that).

What you can extract from this is to prove that YOU are the entrepreneur who will take your idea from inception to millions in sales. Even if you have the ‘worst’ idea in the world, the investor is betting that YOU will quickly figure out your product-market fit, even if it means pivoting your product. All that doesn’t matter to them because they trust you and that you will do whatever it takes to return their money, if not more :).

Now that’s the complete opposite if the entrepreneur’s company is taking off, has purchase orders, and is growing at an uncontrollable rate. If that’s the case, you can see that the ones who secured a deal focused on the numbers and how they’ve grown. They confidently described what the next steps were to take their company from Point A to Point B. They meticulously discussed how they could scale, bring costs down, and increase their company’s valuation with the help of the investor’s connections and money.

shark7

(This company was taking off  in growth and focused on the numbers throughout the presentation.)

As for me, I am your classic first time entrepreneur that had no reputational success, barely knew about the industry I was entering, and had no product traction whatsoever. BUT I took what I learned and pitched my potential investors that I would do whatever it took, learn whatever I needed, and execute on what needed to be done to build traction and succeed. I was the one they could trust to be the entrepreneur they could not miss out on.
In other words, when those investors told us to build a feature because it would help grow our product, our team did it. That showed we were flexible and open-minded. And when our investors asked to prove we could get traction, I got our product in front of Mark Cuban, Tim O’Reily, Steve Case, and other notable influencers. I sold my passion, hustling mentality, and most importantly, my vision. Following that strategy paid off and looking back, I could believe those answers were right in front of me watching Shark Tank.

 

3) The Negotiation — It’s all about leverage.

Now comes the most intense, nerve-wrecking process for the entrepreneurs—hearing the verdict. I’ve seen this a whole lot where the entrepreneurs now stay quiet, be passive, and not have a game plan at all. And through those mistakes, I’ve seen and realized that it does not have to be nerve-wrecking or intense at all. What I’m saying is that if they strategized correctly, they could have gotten the sharks fighting each other for a piece of their company. How?

shark6

 (This unforgettable duo played the leverage game perfectly.)

I always say that getting an investor agreeing to invest in you is equivalent to you trying to get that girl to say yes to your high school prom. To catch her attention, you need to be talked about or hear other girls dreaming of getting asked by you. But if you’re the math geek that no one knows about (which most of us are in the startup world), you can still strategize and get her to say yes. This means building leverage. Do something that captures buzz around the school, get other girls talking about you, and show that you’re “hot” and wanted.

The same can be applied to pitching investors. Go get some purchase orders from large customers, build some buzz around your brand from influencers or big press, or show that other investors are interested. Here’s an example. Let’s say an entrepreneur REALLY wanted Daymond John to invest in their fashion startup, but by the look of his face, he doesn’t seem too impressed yet. Instead of waiting for the inevitable “no,” they should do their best to get 1 or more of the other 4 investors intrigued with their business.

daymond

 (Mr. Daymond John)

If one bites, this signals to Daymond that he is probably missing something the other investor sees. All of a sudden, you can use that offer to leverage and get Daymond by saying something like “Daymond, I really like Robert’s deal, but I am looking for a partner like yourself who is very well-connected and knowledgeable in the fashion space. Would you be willing to either come in or offer something that we could work out?” You have leverage and you are going after smart money.

After I saw this on Shark Tank, I tried it myself, and to my surprise at that time, it worked. Basically you want to play this strategy to either raise your valuation to get better terms or want to close a deal quicker than the usual long process. The key here is also to be as humble, considerate, and transparent as possible. As soon as you come off arrogant, needy, or stuck up, you will lose all interest immediately as investors do not want to work with those types of people.

The basic premise is to get other people interested in “going with you to prom” and get the “one you want” jealous or see the urgency in “saying yes” to you. It’s all about the leverage.

———-

Do you watch Shark Tank? Have you learned things that you have gone off to use? Do you agree or disagree with what I said? Let me know in the comments section below!

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    First, let's get a little historical perspective on American health care. This is not intended to be an exhausted look into that history but it will give us an appreciation of how the health care system and our expectations for it developed. What drove costs higher and higher? To begin, let's turn to the American civil war. In that war, dated tactics and the carnage inflicted by modern weapons of the era combined to cause ghastly results. Not generally known is that most of the deaths on both sides of that war were not the result of actual combat but to what happened after a battlefield wound was inflicted. To begin with, evacuation of the wounded moved at a snail's pace and this caused severe delays in treating the wounded. Secondly, many wounds were subjected to wound care, related surgeries and/or amputations of the affected limbs and this often resulted in the onset of massive infection. So you might survive a battle wound only to die at the hands of medical care providers who although well-intentioned, their interventions were often quite lethal. High death tolls can also be ascribed to everyday sicknesses and diseases in a time when no antibiotics existed. In total something like 600,000 deaths occurred from all causes, over 2% of the U.S. population at the time! Let's skip to the first half of the 20th century for some additional perspective and to bring us up to more modern times. After the civil war there were steady improvements in American medicine in both the understanding and treatment of certain diseases, new surgical techniques and in physician education and training. But for the most part the best that doctors could offer their patients was a "wait and see" approach. Medicine could handle bone fractures and increasingly attempt risky surgeries (now largely performed in sterile surgical environments) but medicines were not yet available to handle serious illnesses. The majority of deaths remained the result of untreatable conditions such as tuberculosis, pneumonia, scarlet fever and measles and/or related complications. Doctors were increasingly aware of heart and vascular conditions, and cancer but they had almost nothing with which to treat these conditions. This very basic review of American medical history helps us to understand that until quite recently (around the 1950's) we had virtually no technologies with which to treat serious or even minor ailments. Here is a critical point we need to understand; "nothing to treat you with means that visits to the doctor if at all were relegated to emergencies so in such a scenario costs are curtailed. The simple fact is that there was little for doctors to offer and therefore virtually nothing to drive health care spending. A second factor holding down costs was that medical treatments that were provided were paid for out-of-pocket, meaning by way of an individuals personal resources. There was no such thing as health insurance and certainly not health insurance paid by an employer. Except for the very destitute who were lucky to find their way into a charity hospital, health care costs were the responsibility of the individual. What does health care insurance have to do with health care costs? Its impact on health care costs has been, and remains to this day, absolutely enormous. When health insurance for individuals and families emerged as a means for corporations to escape wage freezes and to attract and retain employees after World War II, almost overnight a great pool of money became available to pay for health care. Money, as a result of the availability of billions of dollars from health insurance pools, encouraged an innovative America to increase medical research efforts. More Americans became insured not only through private, employer sponsored health insurance but through increased government funding that created Medicare and Medicaid (1965). In addition funding became available for expanded veterans health care benefits. Finding a cure for almost anything has consequently become very lucrative. This is also the primary reason for the vast array of treatments we have available today. I do not wish to convey that medical innovations are a bad thing. Think of the tens of millions of lives that have been saved, extended, enhanced and made more productive as a result. But with a funding source grown to its current magnitude (hundreds of billions of dollars annually) upward pressure on health care costs are inevitable. Doctor's offer and most of us demand and get access to the latest available health care technology in the form of pharmaceuticals, medical devices, diagnostic tools and surgical procedures. So the result is that there is more health care to spend our money on and until very recently most of us were insured and the costs were largely covered by a third-party (government, employers). Add an insatiable and unrealistic public demand for access and treatment and we have the "perfect storm" for higher and higher health care costs. And by and large the storm is only intensifying. At this point, let's turn to the key questions that will lead us into a review and hopefully a better understanding of the health care reform proposals in the news today. Is the current trajectory of U.S. health care spending sustainable? Can America maintain its world competitiveness when 16%, heading for 20% of our gross national product is being spent on health care? What are the other industrialized countries spending on health care and is it even close to these numbers? When we add politics and an election year to the debate, information to help us answer these questions become critical. We need to spend some effort in understanding health care and sorting out how we think about it. Properly armed we can more intelligently determine whether certain health care proposals might solve or worsen some of these problems. What can be done about the challenges? How can we as individuals contribute to the solutions? The Obama health care plan is complex for sure - I have never seen a health care plan that isn't. But through a variety of programs his plan attempts to deal with a) increasing the number of American that are covered by adequate insurance (almost 50 million are not), and b) managing costs in such a manner that quality and our access to health care is not adversely affected. Republicans seek to achieve these same basic and broad goals, but their approach is proposed as being more market driven than government driven. Let's look at what the Obama plan does to accomplish the two objectives above. Remember, by the way, that his plan was passed by congress, and begins to seriously kick-in starting in 2014. So this is the direction we are currently taking as we attempt to reform health care. Through insurance exchanges and an expansion of Medicaid,the Obama plan dramatically expands the number of Americans that will be covered by health insurance. To cover the cost of this expansion the plan requires everyone to have health insurance with a penalty to be paid if we don't comply. It will purportedly send money to the states to cover those individuals added to state-based Medicaid programs. To cover the added costs there were a number of new taxes introduced, one being a 2.5% tax on new medical technologies and another increases taxes on interest and dividend income for wealthier Americans. The Obama plan also uses concepts such as evidence-based medicine, accountable care organizations, comparative effectiveness research and reduced reimbursement to health care providers (doctors and hospitals) to control costs. The insurance mandate covered by points 1 and 2 above is a worthy goal and most industrialized countries outside of the U.S. provide "free" (paid for by rather high individual and corporate taxes) health care to most if not all of their citizens. It is important to note, however, that there are a number of restrictions for which many Americans would be culturally unprepared. Here is the primary controversial aspect of the Obama plan, the insurance mandate. The U.S. Supreme Court recently decided to hear arguments as to the constitutionality of the health insurance mandate as a result of a petition by 26 states attorney's general that congress exceeded its authority under the commerce clause of the U.S. constitution by passing this element of the plan. The problem is that if the Supreme Court should rule against the mandate, it is generally believed that the Obama plan as we know it is doomed. This is because its major goal of providing health insurance to all would be severely limited if not terminated altogether by such a decision. As you would guess, the taxes covered by point 3 above are rather unpopular with those entities and individuals that have to pay them. Medical device companies, pharmaceutical companies, hospitals, doctors and insurance companies all had to "give up" something that would either create new revenue or would reduce costs within their spheres of control. As an example, Stryker Corporation, a large medical device company, recently announced at least a 1,000 employee reduction in part to cover these new fees. This is being experienced by other medical device companies and pharmaceutical companies as well. The reduction in good paying jobs in these sectors and in the hospital sector may rise as former cost structures will have to be dealt with in order to accommodate the reduced rate of reimbursement to hospitals. Over the next ten years some estimates put the cost reductions to hospitals and physicians at half a trillion dollars and this will flow directly to and affect the companies that supply hospitals and doctors with the latest medical technologies. None of this is to say that efficiencies will not be realized by these changes or that other jobs will in turn be created but this will represent painful change for a while. It helps us to understand that health care reform does have an effect both positive and negative. Finally, the Obama plan seeks to change the way medical decisions are made. While clinical and basic research underpins almost everything done in medicine today, doctors are creatures of habit like the rest of us and their training and day-to-day experiences dictate to a great extent how they go about diagnosing and treating our conditions. Enter the concept of evidence-based medicine and comparative effectiveness research. Both of these seek to develop and utilize data bases from electronic health records and other sources to give better and more timely information and feedback to physicians as to the outcomes and costs of the treatments they are providing. There is great waste in health care today, estimated at perhaps a third of an over 2 trillion dollar health care spend annually. Imagine the savings that are possible from a reduction in unnecessary test and procedures that do not compare favorably with health care interventions that are better documented as effective. Now the Republicans and others don't generally like these ideas as they tend to characterize them as "big government control" of your and my health care. But to be fair, regardless of their political persuasions, most people who understand health care at all, know that better data for the purposes described above will be crucial to getting health care efficiencies, patient safety and costs headed in the right direction. A brief review of how Republicans and more conservative individuals think about health care reform. I believe they would agree that costs must come under control and that more, not fewer Americans should have access to health care regardless of their ability to pay. But the main difference is that these folks see market forces and competition as the way to creating the cost reductions and efficiencies we need. There are a number of ideas with regard to driving more competition among health insurance companies and health care providers (doctors and hospitals) so that the consumer would begin to drive cost down by the choices we make. This works in many sectors of our economy but this formula has shown that improvements are illusive when applied to health care. Primarily the problem is that health care choices are difficult even for those who understand it and are connected. The general population, however, is not so informed and besides we have all been brought up to "go to the doctor" when we feel it is necessary and we also have a cultural heritage that has engendered within most of us the feeling that health care is something that is just there and there really isn't any reason not to access it for whatever the reason and worse we all feel that there is nothing we can do to affect its costs to insure its availability to those with serious problems. OK, this article was not intended to be an exhaustive study as I needed to keep it short in an attempt to hold my audience's attention and to leave some room for discussing what we can do contribute mightily to solving some of the problems. First we must understand that the dollars available for health care are not limitless. Any changes that are put in place to provide better insurance coverage and access to care will cost more. And somehow we have to find the revenues to pay for these changes. At the same time we have to pay less for medical treatments and procedures and do something to restrict the availability of unproven or poorly documented treatments as we are the highest cost health care system in the world and don't necessarily have the best results in terms of longevity or avoiding chronic diseases much earlier than necessary. I believe that we need a revolutionary change in the way we think about health care, its availability, its costs and who pays for it. And if you think I am about to say we should arbitrarily and drastically reduce spending on health care you would be wrong. Here it is fellow citizens - health care spending needs to be preserved and protected for those who need it. And to free up these dollars those of us who don't need it or can delay it or avoid it need to act. First, we need to convince our politicians that this country needs sustained public education with regard to the value of preventive health strategies. This should be a top priority and it has worked to reduce the number of U.S. smokers for example. If prevention were to take hold, it is reasonable to assume that those needing health care for the myriad of life style engendered chronic diseases would decrease dramatically. Millions of Americans are experiencing these diseases far earlier than in decades past and much of this is due to poor life style choices. 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We wind up accessing doctors for these and more routine matters because "health care is there" and somehow we think we have no responsibility for reducing our demand on it. It is difficult for us to listen to these truths but easy to blame the sick. Maybe they should take better care of themselves! Well, that might be true or maybe they have a genetic condition and they have become among the unfortunate through absolutely no fault of their own. But the point is that you and I can implement personalized preventive disease measures as a way of dramatically improving health care access for others while reducing its costs. It is far better to be productive by doing something we can control then shifting the blame. There are a huge number of free web sites available that can steer us to a more healthful life style. A soon as you can, "Google" "preventive health care strategies", look up your local hospital's web site and you will find more than enough help to get you started. 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  • Dr. Jeremy Weisz www.inspiredinsider.com/

    Good points...yes the show has some great learning and patterns that occur. I would love to hear your comments on this interview done with company on sharktank.... http://www.jeremyweisz.com/brooksdame/
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  • How Watching "Shark Tank" Can Help You Get Funding For Your Startup @FounderCode foundercode.com/how-watching-shark-tank-can-help-you-get-funding-for-your-startup/

    [...] One of my guilty pleasures on television lately is Shark Tank. I can’t help it; I’m addicted. Apparently, I’m not alone. Tim Sae Koo, co-founder of Tint, shares his story of how watching Shark Tank helped him get funding for his startup. [...]
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  • Angad Singh twitter.com/preetangad

    I actually really enjoyed reading this. Proud of you, Tim!
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  • Andersen Shen www.facebook.com/andersen.shen

    great read, great show.
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