As the caliber of entrepreneurs and their companies appearing on “Shark Tank” has gone up with each new season, the investors have gotten more eager to fiercely compete for a deal.
Sometimes, though, the prospect of getting in on a potentially huge company is so appealing that the Sharks decide to split an investment.
Daymond John usually hates when that happens.
“I don’t want to team up with any Shark at any given time, ever,” he told LinkedIn executive editor Dan Roth in a recent interview.
The show is appealing to a certain type of entrepreneur because, while a traditional angel or venture capital deal may involve handing over a board seat or advisory role to the investor, a “Shark Tank” deal is essentially for a new business partner who typically takes a decent chunk of equity but promises to be as hands-on as necessary.
Therefore, when multiple Sharks get involved in a single deal, things can get complicated, John told Roth.
“First of all, those other Sharks, they all have egos, they all think that they know everything … So teaming up with them, you have, ‘Who’s the chef, who’s the cook?'” John said. “Also, it’s a little confusing for the entrepreneur.”
He does have an exception: “Instead of becoming a Shark, I can become a leech and get a free ride.”
When he decides to split a deal, he is conceding the driver’s seat, but will happily take a shot at making a profit for less work rather than losing the deal entirely.
He gave Roth an example: He and Mark Cuban are both very interested in a tech company. Cuban, the show’s only billionaire, has had a long career in the tech sector and would not only help the entrepreneur with his wisdom but help John, as well. Rather than drive up the price of a deal, John can concede and say, “Hey Mark, come on, why don’t you let me in, let me get a free ride on that tech mind of yours.”
John told Roth that when he does decide to join a Shark in a deal, “I learn so much from them in their area of expertise.”
But as he explained to Business Insider earlier this year, calling a truce with an investor is his last resort; it’s not as fun, and it doesn’t make him as much money.
“Think about this,” he said, “if you ever beat another Shark, these are filthy rich people that not only do you get to embarrass on national television, but you’re also making a profit at the same time.”
You can watch John’s full interview with Roth at LinkedIn’s New York office below:
from Business Insider http://ift.tt/1OuefaG