Kevin O’Leary: 3 Things It Takes to Get a Deal on Shark Tank
In remarks at the iCONIC:DC conference in Washington, D.C., on Wednesday morning, Shark Tank star Kevin O’Leary said that all of the entrepreneurs who have gotten funded on the show have done three key things.
“If there’s anything you remember [today], remember these three things,” the reality-show star told an audience of 650 entrepreneurs in an on-stage interview with Tyler Mathisen, co-anchor of CNBC’s Power Lunch. To get funded by a Shark–or any investor–here’s what you need to do.
1. Articulate your idea succinctly.
O’Leary said 100 percent of the entrepreneurs who have gotten a deal on Shark Tank were able to describe their business idea in 90 seconds or less. Eighty-two percent were able to do it in 60 seconds or less. The data he referred to was compiled by a professor who watched 10 years of unedited video of pitches from Shark Tank and its predecessor shows.
“The faster you can articulate the opportunity, the more successful you’ll be,” O’Leary said.
2. Explain why you have the right team.
O’Leary said when entrepreneurs comes on the show and describe what appears to be a good business idea, the Sharks start hitting them up with questions. One hundred percent of the entrepreneurs who have been able to clearly explain why the founding team has the right experience to execute the plan, and is essential to executing it, get a check from a Shark.
When entrepreneurs get to this stage on Shark Tank, he said, you can feel it in the air. “The room starts to sizzle like an isotope,” he said. “Things are simmering.”
3. Know your numbers.
Lastly, to get funded on the show, you have to understand and be able to assuredly respond to questions about your company’s financials–how it’s performing now as well as how you project it will perform in the future.
This includes: your gross margins, when you’ll break even, how fast the sector is growing, how much market share you have now, and how much you could gain in five years. “If you don’t know your numbers, I will personally eviscerate you,” O’Leary said. “You got a spot [on Shark Tank] and you don’t know your numbers? If you don’t, you should bring someone who does.”
O’Leary said entrepreneurs pitching on Shark Tank often have down pat the first two criteria of a winning pitch–how to articulate their ideas, and why they have the right team–but lose out on getting funded because they don’t understand the fundamental business metrics.
“If you don’t know your numbers,” O’Leary said, in the bluntness characteristic of his Mr. Wonderful persona on Shark Tank, “you should burn in hell.”
Later in his remarks, O’Leary had more candid advice for entrepreneurs, only this time on an entirely different kind of deal: choosing a spouse.
He related that during an evening class he taught recently, a young business school student talked about his compliance software company. The student said that while the company was generating $5 million in revenue a year, he was facing a dilemma: “This morning my fiance said, ‘Listen, I can’t live like this anymore. You never spend time with me, you don’t come see my family. Last week you didn’t come to my family’s picnic.'”
O’Leary said the entrepreneur asked: “What do I do? I’m planning to marry this woman.” O’Leary’s response: “Which is easier, to replace your business, or this woman who doesn’t understand the journey you’re on?”
The audience erupted in laughter. O’Leary wasn’t really kidding.