Left Shark Tank: How do you put a price tag on something truly new?
My dad is totally hooked on the show ‘Shark Tank.’ Sorry for the bad pun, but this guy can tell you what Mr. Wonderful is going to offer an unsuspecting entrepreneur before the initial pitch is over. “50% stake, 10% royalties in perpetuity for $500,000,” he blurted out last week. Guess what? He nailed it.
Watching the sharks just makes me mad. It isn’t Cuban and his ilk angering me either. I don’t mind their ruthlessness. After all, what else do they have to offer? I get mad at some of these entrepreneurs. What are they thinking trying to sell out to this unimaginative lot anyway?
I admit it. I skipped the Super Bowl. But I did hear an earful the next day about “Left Shark”, the Katy Perry misbehaving halftime performer in a foam fish suit. It seems we need to have some malfunction to obsess about at every Super Bowl. If you missed the scandal, the shark to the left of Katy was out of time for the entire performance. I watched the YouTube video. I am no Fred Astaire, but I could not tell which shark was out of time with the other. All I could see was they certainly were not in synch.
But isn’t it always this way? When you are doing something new and different it obviously falls out of synch with the way things are done now. The same holds true with entrepreneurs looking to change the world as with dancers dressed as sharks. With respect to the ‘right sharks’, ‘left sharks’ are on a different song sheet. But with respect to Katy, it was much more difficult to tell. Was the left shark routine any better or worse than the right shark? Who’s to say?
In the same way, the sharks on ‘Shark Tank’ critique each passing entrepreneur asking them how they might get the world to start moving to their new beat. But at the same time they lambast them over the ease with which anyone could copy their ideas. You can’t win with these sharks, and that’s the point.
For example, last week none of the sharks liked the way “Slawsa”—a unique condiment that combines cabbage and salsa– tasted. That doesn’t mean it won’t become a culinary hit if placed on the right endcap with the right ingredients, though. It tastes different than ketchup. That is for sure. And we all know the future will be different than the present. The trouble is, predicting future tastes cannot be computed on a balance sheet. The questions is which would you rather have? A fantastic manager with no new products, or no manager and lots of fantastic new ideas.
My vote falls for the latter. Here’s why:
Capital markets are notoriously fixated with assessing risk, not judging potential reward. The simple fallback position for the sharks is, “I’m out.” That is, unless they can get enough control of the business to turn it into a run-of-the-mill operation with a tried and true formula they already understand. By doing so, they have probably torn the heart and soul out of countless businesses with great ideas.
Sometimes there’s a reason to seek capital for a new idea. More money than an individual entrepreneur can easily find may be needed to manufacture or properly market a new idea. But here is the catch:
If an idea is merely innovative (an extension to existing technology or process), it can be easily copied by definition.
If an idea is new, that is a whole other kettle of fish. It may still be easy to copy, but fewer copycats will be ready to take the risk of duplicating it. Who would ever want to copy ‘Slawsa’ at this stage of the game? This gives an entrepreneur with a fantastic new idea and the right vision the luxury of time to develop it and perfect the model. Getting ahead of a copycat can be the difference between capturing market share or falling flat.
I wonder about how many fantastic ideas sit idle because the creator fears them being deemed the ‘Left Shark.’ I wonder what would happen if more entrepreneurs were willing to follow their passions and forget about chasing capital. What if instead of a pitch they simply stated that this idea belonged to them and would change the way we all thought or went about our daily business? Followed by: ‘See you in hell, Sharks!’
When I speak to other startups they often boast about their funding over what their company does or what value their business provides. How upside down it that? Imagine being more proud of your bank account with one year’s worth of money in it than your own ideas, mind and hands.
Maybe the world needs more Left Sharks and less Shark Tanks.