How Would You Respond to a Shark Tank Ultimatum?

shark_tank_logoI continue to be fascinated by the TV show Shark Tank. I’ve written about this before, but today I wanted to focus on a specific aspect of the show: ultimatums.

At least once per episode, one of the investors will propose a deal to an entrepreneur, and they’ll end it with something like: “I need your answer now.” They often say directly or indirectly that if the entrepreneur talks to anyone else, the deal is off and they’re out.

As an entrepreneur myself, it seems absolutely crazy that anyone would want to work with someone who doles out those types of ultimatums on the spot. And it seems just as crazy that an investor would want to work with an entrepreneur who is willing to get pushed around and takes the first deal offered to them.

But it’s become a pillar of the show. Really, it happens in every episode. And if the offer is retracted due to the entrepreneur asking other sharks if they’d like to make offers, they’re treated like they made the mistake.

I understand that the investors are negotiating, and they want to get the best deal before it turns into a bidding war. But it just seems like a terrible way to begin a relationship with someone.

If I were on Shark Tank and an investor gave me this type of ultimatum, I’d like to think I’d say something like, “I want to find a partner who appreciates when I make a fully informed decision, so I’m going to have to decline.”

What would you say if a shark gave you an ultimatum?


5 Responses to “How Would You Respond to a Shark Tank Ultimatum?”

  1. Sean says:

    From what I’ve read that most companies go into Shark Tank for the exposure, it regularly has 5+ million views, and you just can’t get those eyeballs paying attention to your product, listening to your pitch any other way. For some companies like clothing or other businesses that the Sharks have experience in, I’d say I’d go in with an idea of who I’d accept and offer from, and at what terms.

    For a company like yours, where they have little experience with the board game community and market, I’d go in ready to decline most any offer, just going for the exposure.

    • Jamey Stegmaier says:

      Oh yeah, I’m not actually interested in going on Shark Tank! It’s definitely not a good fit for my company. But I still picture myself in the shoes of those entrepreneurs just for fun. I agree that the exposure is a big part of it.

  2. Stephen says:

    I don’t recall it happening on the UK equivalent, Dragon’s Den.

    The closest is when one or more of the dragons make an offer in exchange for far more equity than was originally on the table, which if there’s two people pitching rather than one almost always results in “Can we consult?” ‘Of course.’ *proceeds to the back of the cavernous room and have quiet words with each other* Which isn’t the same at all.

    And you don’t tend to get bidding wars on Dragon’s Den, either… You sometimes get multiple offers, but they tend to be approximately equivalent, like two dragon’s offering half the money for 20% equity each, and a third offering it all for 35% (A better deal, but less experience to work with), and occasionally “I was going to give you an offer, but I can’t beat that, so I’m out.”, or at least that was how it was when I was watching the show regularly.

    If that aspect of the show interests you, though, I’d also recommend the Channel 4 show Four Rooms, which is entirely that. Someone brings in a historic or artistic (or both) item and shows it to four dealers, then they go to each dealer in any order and tries to negotiate an offer. Each offer is take it or leave it, in private rather than in front of the others (and this is done much later in the filming day so the dealers have no idea what order they’re being seen in), and is often riveting viewing.

    • Jamey Stegmaier says:

      Four Rooms sounds fascinating! I need to check that out.

      On Shark Tank, if the entrepreneur asks to consult (with a partner who is there or on the phone), the sharks usually warn them not to leave. That always seems a little odd to me too, especially when such large sums of money are involved, though I kind of understand that they’re looking for someone who is able to make key decisions instead of always checking with other people first.

  3. Joe Pilkus says:

    Stephen,

    Great example…while on holiday with my daughter over the summer we actually saw “Dragon’s Den” (and of course, Top Gear!, a favorite of mine when I lived in England; when you mentioned Channel 4, I remember fondly having only 4 channel, BBC1, BBC2, ITV, and Channel 4…and there was always something to watch!). Anyway, yes, the idea that individuals could confer makes, much more sense.

    Jamey,

    I’m with you…I think jumping at the offer speaks to their character in at least some small way. Do you, as an entrepreneur, fee strong enough in your company to make the hard, and at times, ethical decisions.

    Cheers,
    Joe

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