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