By Mick Spencer
One national TV show, 10 minutes and a whole lot of exposure.
That best describes my experience of appearing on Channel Ten’s reality show Shark Tank.
For those of you who don’t know, here’s a quick recap: On Sunday night [May 8] viewers were treated to the spectacle of myself, a 25-year-old businessman with big dreams for a company I founded and love, pitching a business deal to five of Australia’s most successful entrepreneurs.
After walking in to raise $300,000 I walked away with an offer of $600,000 from three of the “sharks”.
Boost Juice founder Janine Allis, Talent2 International’s Andrew Banks and tech startup multi-millionaire Steve Baxter wanted a combined 30% stake in ONTHEGO Sports.
Following the wave of interest on social media about my appearance on the show, here are my tips for swimming with the sharks in any negotiation you enter. The Shark Tank negotiation lasted about 10 minutes, so here’s a minute-by-minute breakdown pointing out key moments and decisions that helped secure the deal.
I don’t wear traditional business suits. In fact, I recently commented on social media that the real estate industry could do with some shirt-wearing entrepreneurs to shake things up a bit.
But I do believe first impressions count. I wanted to look professional, but show them I am 110% dedicated to my brand – I wore an ONTHEGO branded shirt under the business jacket – to the items we make and the DNA of ONTHEGO.
I’ll admit it. I was nervous. My aim was to walk into the tank confidently, all the time making sure I eyed off the sharks. I was there to do business, not to muck around. But I was also there for a good experience and to have fun on the way.
I had no more than two minutes to explain my company’s entire message and hook the sharks. This is the hardest part of any pitch.
Often you’re sunk if you don’t hook them in the first 10 seconds. And for me, going on the program, there was a bigger risk. Allowing myself to be savaged by potential investors in front of millions of Australian viewers would not have been the best career move.
During the pitch introduction, which may go for two minutes or less in many cases, the most important piece of information to impart is why you do what you do. Your purpose in life.
Follow up by explaining what you do and the problem you are solving and how you do this.
Then explain the opportunity you have spotted in the market. As the Shark Tank panel heard, ONTHEGO operates in a market which has a $200 billion opportunity, with a niche of $10 billion that we are going after.
Finish by detailing how much money you need to fill the gap to get you from where you are now to where you want to be. Close by stating the worth of your business and be prepared to back up the numbers with evidence.
Oh then it starts – the questions. Where am I making money? Where am I losing money? Where do I want to spend money? How can I back up what I’m saying? Who is the team I am taking on the journey? How coach-able am in?
Fortunately, I’d prepared for a long list of possible questions prior to walking in.
I’m getting ready for them to throw an offer at me. It arrives. Three sharks put forward individual offers of $300,000, each wanting a 20% stake.
In my head, I have a plan: Acknowledge, but don’t accept.
I make an important decision – I phone my chief financial officer.
It’s important to show them I’m brave.
If I fail to negotiate well on national television, it will not look good. And for the sharks, if I can can’t communicate well now, it could spark some tricky questions. If I can’t negotiate well here, how could I have crucial conversations with them when things aren’t going well? Do I have the ability to negotiate better deals with suppliers?
This is my chance to swim. And swim hard.
I offer three sharks the chance to come in together on the same deal: 15% equity for a total of $300,000.
But here’s an important point: I’m respectful. I admire these sharks hugely. I tell them it would be of massive value to work with them.
The sharks offer $600,000 for a 35% stake. I’m happy to sell 30% – and no more – for that sum of money. It’s a stalemate, until Steve Baxter breaks and agrees to 30%.
What a relief. The preparation has paid off.
To win the trust of these talented business people is a great win for the ONTHEGO team and a confidence boost.
The quick calculation is this: a $600,000 offer in the space of a 10-minute pitch works out at $1000 per second.
The moral of the story? Make every second count. Make every day matter. This is the same for business pitches not conducted on national TV.
Sometimes the shortest meetings are the most productive, particularly if you walk in with evidence to back up what you’re saying and a well-prepared strategy.
Mick Spencer is the founder and managing director of ONTHEGO Sports.
This article was first published on LinkedIn and StartupSmart. Follow StartupSmart of Facebook, Twitter, LinkedIn and SoundCloud.
Smart Company is a sister publication to The Mandarin, catering to Australia’s entrepreneurs, small and medium business owners and business managers.
