Produced by hit maker Mark Burnett (Survivor, The Apprentice, The Voice), Shark Tank premiered August 9, 2009 on ABC. The show features a panel of potential investors, called "The Sharks", who consider offers from aspiring entrepreneurs seeking investments for their business or product. Although The Sharks receive money for their appearances on the show, they invest their own money, according to Rob Owen in the Pittsburgh Post-Gazette.
The Shark Tank cast of self-made tycoons include billionaire Mark Cuban, owner of the Dallas Mavericks and owner and chairman of AXS TV; real estate mogul Barbara Corcoran; inventor Lori Greiner; technology innovator Robert Herjavec; fashion and branding expert Daymond John; and venture capitalist Kevin O’Leary. Guest Sharks have included Jeff Foxworthy, Steve Tisch and John Paul DeJoria.
If during a presentation one of the Sharks is interested, he or she can make the presenting entrepreneur an offer; if all of the panel members decline the deal, the entrepreneur leaves empty-handed.
A real time, one hour pitch by an aspiring entrepreneur is edited down to a dramatic, 10 minute segment. The show portrays "the drama of pitch meetings and the interaction between the entrepreneurs and tycoons," according to Hilary Lewis in Business Insider.
The show initially required each contestant to sign an agreement with Finnmax, the producer of Shark Tank, promising Finnmax the option of taking a "2 percent royalty" or "5% equity stake" in the contestant's business venture, according to Ami Kassar in The New York Times. However this requirement was dropped in 2013, retroactively, due to pressure from Shark Mark Cuban. Cuban felt the requirement would lower the quality of the entrepreneurs, as savvy investors would be wary of trading away a portion of their company just for appearing on the show.
As of December 2012, according to TV Guide, the show's panel members had invested $12.4 million in business opportunities presented to them. During the show's 2012 season, 36,076 people applied to become contestants.
THE BIGGEST DEAL IN SHARK TANK HISTORY
GrooveBook is a photo-printing app and subscription service that creates 4.5” x 6.5” personalized photo books, featuring up to 100 of customers’ photos, shipped monthly. The cost of the service is only $2.99 per month, which includes shipping and handling.
“Billions of photos are taken every day from smartphones. Who doesn’t have a phone with hundreds, if not thousands, of photos? What do people do with all the photos they have taken? Absolutely nothing! For just $2.99 a month, including shipping and handling, the GrooveBook app allows you to choose up to 100 photos every month from your smartphone and create a beautiful bound photobook in just minutes. Each month, your GrooveBook gets delivered to you with an exciting new cover. Your photos are automatically stamped with the date and the location so you will never forget. They’re perforated for easy removal and 4” x 6”, which is the perfect size for framing and sharing,” said the Whitemans during the Shark Tank pitch.
The Whitemans walked into Shark Tank looking for $150,000 for 20% ownership of the entire operation. On the show, the startup scored a deal from Mark Cuban and Kevin O’Leary for a $150,000 investment for 80% of the licensing rights.
GrooveBook, which had acquired over 18,000 subscribers in the 8 months before the show, grew its business to 500,000 paid subscribers after its exposure on Shark Tank, the company announced in a later update.
Eleven months after making the deal with Cuban and O’Leary on Shark Tank, GrooveBook announced it had been acquired by Shutterfly. The $14.5 million deal includes an upfront purchase amount and an earn-out based on future performance. In addition, Shutterfly retained the Whitemans as consultants.
Why do GrooveBooks have a groove on the side of each book? Shortly after coming up with the idea to print photobooks from smartphone photos, Brian spent months trying to figure out how to make the books so they could be mailed in bulk. While brainstorming, Brian beat the spine of a book with a pen, creating a groove in the book that made it flexible — thus, each GrooveBook can be mailed for just $0.80 each. If the books were not flexible, then the cost of shipping would be $3-$4 higher. Brian has filed a patent for the idea to prevent other companies from copying GrooveBook.
SOME TOP SELLING SHARK TANK PRODUCTS
Some of biggest selling products by businesses backed by investors on Shark Tank episodes prove that a twist on a simple idea or a new innovation can result in millions in sales:
FiberFix is like duct tape on steroids. When this company did a deal with Lori Grenier, they had just opened a call center to sell into ACE Hardware Stores and other home improvement outlets. Within a few short months, they were shipping millions of dollars worth of product.
Lollacup scored a deal with Robert Herjavec and Mark Cuban in season three, because they “wanted to partner with winners.” They became winners themselves with the most successful children’s product on Shark Tank to date.
Grace and Lace partnered with Barbara Corcoran in season five, and in the week following their air date did over $1 million in sales. Since then, they continue to see strong sales due to their unique products.
ReadeRest is another product funded by Lori Grenier in season three, and is racking up over $1 million in sales each year. It’s a simple idea for the hundreds of millions of eyeglass wearers all over the world.
YOU DON’T HAVE TO MAKE A DEAL TO WIN
After Donna Khalife and her sister/co-founder Rosy made a presentation for their startup Surprise Ride — a program for kids that sends thematic, hands-on activities through monthly mail subscriptions — they were the only ones to receive an investment offer during that episode.
And they turned it down.
As Shark Kevin O’Leary noted: “Ladies, you are going to become legends. You came into the shark tank, you had a deal…and you didn’t close it.”
Investor Robert Herjavec praised the product. But his offer — $110,000 for 25 percent equity — exceeded their offer for 10 percent. So they turned the offer down.
Surprise Ride had launched earlier that year with $5,000 of the sisters’ money.
After its Shark Tank presentation, Surprise Ride became a winner. In the year that followed the episode’s airing, Donna has said that she wouldn’t change a thing. She says the drama that unfolded on the Shark Tank has been a big win for the Washington, D.C.-based business:
“Our sales have skyrocketed,” she said. “We’ve shipped over 30,000 boxes across the country since appearing on the show. We partnered with country music star Sara Evans and Hidden Valley to design a ‘ride’ that gets kids involved in meal planning and eating more veggies.” The partnership with Hidden Valley earned Surprise Ride a promo on ABC’sThe View, where all audience members received Surprise Ride subscriptions.
On the Shark Tank episode, Donna projected $500,000 in sales from 3,500 new customers over this past year. Thanks to their appearance on Shark Tank, the business exceeded those expectations and surpassed its one-year projections a full year ahead of schedule without spending a penny on marketing.
“Shark Tank put us on the map in a way we couldn’t have achieved without a ton of capital,” Donna says. “You can’t buy over 10 minutes of primetime TV on the number one watched show on Friday night. Beyond the 7 to 8 million viewers who watch the show, the episodes re-air and are often watched on demand.
“For an entrepreneur, it’s a dream opportunity to share your product and personal story with millions of potential customers. We received over 2,000 emails during the first week after airing and still hear from fans every day. We’ve gotten dozens of investment offers and it’s allowed us to be selective and strategic in our fundraising strategy.”
Donna and Rosy believe that an appearance on Shark Tank can be worth $4 million to $5 million in marketing.
WHAT’S THE NET WORTH OF THE SHARKS?
So just what are the Sharks’ qualifications and just how big are the warchests that they draw from for those potential business ventures with the entrepreneurs?
According to Squander, an online magazine dedicated to the most expensive items in the marketplace, this is the line up:
Mark Cuban, Net Worth: est. $2.5 billion — An author, investor, and tactical entrepreneur, Mark Cuban founded HDNet, MicroSolutions, and Broadcast.com. In addition he has invested in a number of startups, purchased the Dallas Mavericks in 2000. Cuban is co-owner of the Landmark Theater Chain, Magnolia Pictures and Magnolia Home Video. He predicted the dot com bubble burst, and in preparation sold 100% of his Yahoo shares (valued at $163 per share, which eventually declined to $8.11 per share), netting himself an enormous fortune.
Barbara Corcoran, Net Worth: est. $40 million — Corcoran’s fortune started with a $1,000 loan she took from her boyfriend. Working 20 jobs by the time she was 23 years old, Corcoran decided to take the $1,000 loan and start a small real estate company in New York City. Over the next 25 years, she transformed that loan into the $five billion real estate empire, The Corcoran Group. She has written three books, serves as a real estate contributor for the Today Show and CNBC, and is a columnist for MORE Magazine, Redbook, and the Daily News.
Lori Greiner, Net Worth: est. $50 million — Lori Greiner is a successful inventor of retail products. She holds 120 U.S. and international patents. Greiner has created more than 400 products from jewelry and cosmetic organizers to kitchen tools, and has served as a celebrity personality and host on QVC for nearly 20 years. Greiner is known throughout the industry for her legal and patent process expertise and as a speaker for the U.S. Patent & Trademark Office.
Robert Herjavec, Net Worth: est. $100 million — Epitomizing the rags to riches dream, Robert Herjavec emigrated from Croatia to Canada with his family as a young boy. Herjavec launched his first technology company, BRAK Systems, in 1990. It was sold to AT&T in 2000 for $100 million. He then helped negotiate the sale of RAMP Network to Nokia for $225 million. Today, Herjavec heads the security software firm The Herjavec Group, and spends a lot of his time at his own private island near Miami.
Daymond John, Net Worth: est. $250 million — An expert in urban fashion and a sportswear revolutionary, Daymond John is the founder, president, and CEO of FUBU, an apparel line known for its vibrant colors. Growing up in Brooklyn, his mother taught him how to use a sewing machine so he could make his own tie-top hats, and then sell them on the streets of Queens. Together with a friend, he began branding his apparel and using his home as a factory and office space.In 1994 after a successful showing at an industry trade show, FUBU signed a contract with Macy’s. To date, FUBU has earned more than $6 billion worldwide in revenue, and John has earned himself the reputation as a branding and business expert.
Kevin O’Leary, Net Worth: est. $300 million — O’Leary started his company SoftKey Software Products in his Toronto basement, with a $10,000 investment from his mother. Over time , SoftKey bought out most of its competitors, including The Learning Company (TLC), and in 1999, O’Leary sold the company to Mattel for $3.7 billion. As the founder of mutual fund company O’Leary Funds, of which he is now the chairman, O’Leary raises hundreds of millions from investors and is inspired by investments that are not only financially beneficial, but also environmentally friendly.
Shark Tank is signed up for another season on ABC, and last October the network announced an upcoming companion series, called Beyond the Tank, that will follow a company after a deal was made, and detail what happened afterwards.
According to ABC, the show will answer the questions, What lies in the aftermath of their investment? Did a promising deal turn sour, or launch a million dollar profit margin? After closer inspection of the business, did the Sharks or the entrepreneur back out of the deal?
“Beyond the Tank will feature a look back at past Shark Tank pitches and deals to examine the highs and lows that can come from an appearance in the tank. The series will revisit entrepreneurs whose businesses were groundbreaking in terms of their technology, business model or branding who have taken their business to new heights with the help of the Sharks, entrepreneurs and their Shark investors who gambled on their businesses and lost, businesses that multiple sharks fought hard against each other to secure and even those entrepreneurs who did not get deals from the Sharks, but continued on in pursuit of their dream.”