With another drama-filled, dynamic week in the Tank, we have seen it all. Whether from second chances in the meat industry to an entrepreneur creating a new industry for his own product, this episode featured many great takeaways for businesses of all levels.
Echo Valley Meats received another opportunity after a failed pitch last season. Dave Alwan, the founder, made major improvements in not only his business, but also his perception and vision for the company. He redid his entire business model (by splitting his revenue streams of retail and mail order into different entities) and had a better grasp of his numbers. The Sharks were thoroughly impressed; Daymond was surprised: “Man, you have your numbers down.” Of course, we should all learn from constructive criticism. But more importantly, build on the advice and scrutinize aspects of your business that were not even mentioned by others. Take it upon yourself to completely revamp what needs changing.
Knowing your Numbers
Dave Alwan had his numbers perfect for his pitch. As explained, his customer acquisition was $12, with a $1 retention rate. His profit on the mail order business was 18.3%…and many others. Knowing advanced metrics like these is key to any pitch. However, it is imperative that you respond to potential investors authoritatively and immediately when asked–this creates a sense of ethos in your organization and trust in your knowledge of the finances.
Creating a Need for your Product…or an Entire Industry
EmazingLights is a unique product–lights on the tips of gloves. Where have you seen that before? They own 80% of the global market for this product, and thus have the path to industry dominance in their hands. They took a unique path to marketing the product: an international competition was created in order to create fans and generate interest in “gloving.” As Robert explains, “You’re creating your own industry.” For many businesses with a unique product, they should realize that they have control over and potential to draw in new consumers. Through innovative programs (like global competitions, contests, extensions on the base product), a company can create an ancillary program or event that relies on the use of its product to run, thus generating consumers.
Over-Hyping your Business
AquaVault fell for the classic Shark Tank trap: hesitating on a deal and ultimately losing out. The three men pitching tried to elaborate on their product after Robert already offered $75K for 25%, eventually leading to him pulling out. While they ended up receiving a deal from Daymond, they were almost left empty-handed. Indeed, while pitching, entrepreneurs should beware not to “over-hype” their product or service. In other words, get to the point, and once an offer is given, let investors ask their own questions. This eliminates the perception that you neglect their offers and are attempting to stall for a more favorable one.
Attitude and Respect toward Investors
Catalina Girald from the Naja lingerie company was quite adamant about her beliefs throughout her pitch. She continually corrected the Sharks and blatantly refuted all critcisms to the brand. Daymond asks toward the end, “So how do you think your negotiation style has worked today?” He later goes on to assert, “I just don’t think that it was the proper way.” In pitching, it is key to admit mistakes or pitfalls in your business rather than attempting to appear correct in all statements, which adds hostility and decreases chances to make a deal, as Girald found out all too well.