Swimming in the Shark Tank

Last night I got to go on a new web-based show called Shark Tank JV, modeled after the TV show, on which people pitch their products to a group of independent investors (sharks) to try to get someone to invest in their company.

On the TV show people usually have a physical product and are looking for a shark to invest a certain amount of money in exchange for a percentage of the company. Some of them make deals that can make them rich and some don’t get a deal at all for various reasons. It’s interesting and educational to watch the negotiations to see what it takes to get one of the high net worth sharks to invest some money.

shark tankI’m a big fan of the TV show, which features sharks like Mark Cuban, Daymond John, Robert Herjavec, Kevin O’Leary, and Barbara Corcoran, people who have made hundreds of millions or even billions of dollars in business and are looking for places to invest their money.

I was invited to go on Shark Tank JV as a vendor, someone looking to get a shark involved with his project. I was in uncharted territory, since this was the first episode of Shark Tank JV, so no one really knew what would happen or what a “normal” deal would look like.

What was it like going on Shark Tank JV and what lessons can be learned from it?

What Happened in the Shark Tank

It was definitely a huge advantage that I’ve seen most or all of the episodes of Shark Tank on TV, because that helped me avoid the mistakes a lot of people make. Here are a few of them.

They get greedy and ask for too much by overvaluing their business. A lot of vendors use logic like “Soft drinks are a $10 billion dollar industry, and if we could get just 1% of that, we’d make a fortune.” The big word there is IF. Just because an industry is huge doesn’t mean your personal brand of cola is going to be able to compete with Coke, Pepsi, and all the other well-established drinks in that market, or even get 1% of the market share.

Some people seem to think that if they make an outrageous offer, the other person will just negotiate something more reasonable, but what usually happens is that people just laugh and walk away. It’s like if you listed your house for sale for $1 million when the real market value is $200,000. People will see you’re so far from reality that they won’t bother to make an offer.

A sign of a successful negotiation is when everyone involved thinks they got a good deal, even a better deal than the others. To me that means you should generally start somewhere close to what you think the others will accept.

I’m not going to say here what my starting offer was; you’ll have to watch Shark Tank JV when it airs to find out, but let’s just say it got the job done.

Many people screw up by going into the shark tank when they don’t know their numbers. Sometimes vendors are asked what their sales are or what their profit is per unit and they don’t know the answer, or there is more than one person doing the presentation and they don’t agree on the answer.

It looks pretty bad to a shark if their basic questions like that can’t be answered. It’s hard to make a rational business decision without the numbers, and it makes the person look unprepared or unprofessional. It’s like going on a job interview and not knowing what a typical salary is for that job.

I had that one covered by doing a little digging before the show and looking up my number of sales and refunds, conversion rates, etc. I had some of the numbers in my presentation and had the others handy assuming someone might ask. It wasn’t hard to do, but if I hadn’t done that little bit of preparation beforehand, it wouldn’t have gone so well.

If someone asks how many copies of your product you’ve sold and you don’t know, that looks pretty bad, since it’s something you should expect to be asked in the shark tank. Sales numbers help show you have a real product that people will buy, not just an idea that may or may not work.

Another big mistake people make on Shark Tank is that they go in too early with an unproven idea. They’ve invented something or created a product that they think is great, but all they have is a prototype or not even that, with no sales. Sharks don’t usually invest in ideas; they want products or services that have been tested in the marketplace and have some sales to show their potential. A crazy idea with proven sales record is usually better than a good idea with none.

Some people go into the shark tank too late. I’ve seen some people on there whose products had been on the market for years with few sales, and that makes sharks think there’s not much demand for the product. Of course it could just be poor marketing, but the feeling seems to be that if the vendor hasn’t made something happen with their product after several years, something is wrong with either them or the product.

I got lucky there on the timing aspect of it, in that my product has made enough sales to show it’s viable and been around long enough for the sharks to get an idea of what refund rates will be, yet only a small fraction of the potential market has heard of the product. That’s just about perfect. If I had just released it last week, that’s not long enough to see if people like it, and if I had already sold 50,000 copies it might look like the market is getting saturated and most of the people who might buy it already have done so.

Or was the timing really luck? Shark Tank JV just started, so I couldn’t have gone on it a few months ago, and I certainly wasn’t going to wait a long time to apply for it. However, I did have complete control over which product I submitted, so if I had used one that’s not finished yet or has already been heavily promoted, I probably wouldn’t have done too well with that.

Like they say, you often make your own luck.

One final mistake people make on Shark Tank is they just assume they will get a deal and the only issue is what the details will be and which shark(s) will sign on. It’s great to be confident, but assuming a deal will happen is borderline arrogant. I think people do that because they desperately want or need to make a deal, but that doesn’t mean a shark will want to make a deal.

You never really know til you go in the shark tank what each shark is looking for or what kind of deal they might do. Having a great product with a proven track record isn’t enough; it has to make sense with the shark’s business. It’s quite common for a shark to say they love the product but are going to pass on it because it’s not what they’re looking for or they’re not an expert in that area.

If you’re going to get a deal, especially working with a shark, rather than just getting an investment of cash, it should be with a person who can help you the most, like someone who specializes in the industry or niche your product is in, or who already has a list of contacts in that area.

I think the sharks can smell when someone just assumes they will get a deal, and they find that insulting. Sharks don’t like being taken for granted. Just because someone has a lot of money or is an expert in what you need or is a major player in your industry, doesn’t mean they will want to work with you, especially if you come across like you think you’re entitled to it.

It’s a delicate balance, but I went into the shark tank with the attitude that no one there owed me anything, that they would give me a fair shot if I made a good presentation, that I have a good product that people like, and that probably at least one shark would be interested enough to make some sort of deal, but that it was possible I would get nothing but at least learn something from the experience.

When I found out I was going to be on Shark Tank JV, I didn’t know how many other vendors would be on or what order we would be on. I was relieved that someone else went first, so I had a chance to see what they did right or wrong and how the sharks reacted. I even made some adjustments to my presentation based on what I saw. I didn’t know when I would be on until they put up the slide with my bio, then I knew I had about a minute before going on.

So What Happened in the Shark Tank?

Since the show hasn’t aired yet, I can’t say too much, but I will say that I made a deal that I’m pretty happy with. (You don’t think I would write a long post about it if I had crashed and burned, do you?) In fact I had multiple offers and got more than I asked for, but I’m not going to say any more about the details or the people involved. You’ll have to watch the show to find out exactly what went down on Shark Tank JV.

The reality of what happened in the shark tank didn’t quite hit me til this morning, when I woke up thinking did I really just go on a show where top people competed to work with me, or was that some crazy dream?

I can also say that not every vendor got a deal; some went away empty handed. (I’m grateful to not be one of them, and I can only imagine how bad that must feel.) I saw people make some of the mistakes I’ve discussed here, and I’m wondering how many of them have seen the TV show Shark Tank to at least get a rough idea of what to expect. Watch Shark Tank JV Episode 1 online to find out what happened to everyone.

Thanks to the guys at Shark Tank JV for having me on, all the sharks for giving up a couple hours of their valuable time to sit through our presentations, and especially to my friends who did their best to help me get ready for my stint on Shark Tank JV.

BTW, be sure to catch Shark Tank Friday nights on ABC.

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Bike You Very Much, Savannah

I had one of those amazing life experiences the other day that I just have to document so I won’t start wondering if it really happened.

I stopped in Savannah, GA for a day and a half on the way home to Florida from North Carolina, because it’s right on the way and I hadn’t been there in a few years. I drove instead of flying so I could make stops like that.

Monday night, I got in town and after stuffing myself at Paula Deen’s restaurant, I wandered around the streets looking for something to do since it was too early to go back to my room. There wasn’t much happening on a Monday night, but a neon sign caught my eye so I went to check it out. It turned out to be a famous 90-year-old ice cream shop. More food was the last thing I needed, but then I noticed a bike shop next door. It had closed hours earlier, but I noticed a sign mentioning rentals, so I mentally filed that and kept walking.

I bought a bike a few months ago and got seriously into it, but I hadn’t been on it for a couple weeks for various reasons, and it was killing me to not ride for that long.

This doesn’t really have anything to do with business, right? Or does it?

The next morning I stuck with the plan of taking the bus tour around town. That lasted 90 minutes, but included the option of getting on again all day long. It was time for lunch so I started walking toward a restaurant I saw from the bus that is famous for being famous and very old. It was a hike to get there, and the route just happened (or did it?) to go right by the bike shop,so I stopped in to get the details on that. The walk also took me by another shop that does bike tours and has a lot of nice testimonials posted on the window. So on the way to lunch I started debating with myself about renting a bike by myself vs. taking a tour with a guide.

Although the weather was perfect, sunny and 70s, my phone was telling me it was going to rain around 4, and the hourly weather on a phone is never wrong, is it? So I had a third option of assuming it would rain and doing nothing because some app said so.

The nect bike tour just happened to be scheduled for 4, so I nixed that idea and went back to the bike shop. I was disappointed that the only bikes they rent are single speeds with baskets on the front that make them look like something Pee-Wee Herman would ride. I hadn’t been on a one-speed bike since I was about 12 and big enough to ride a real adult bike, which means at least 10 speeds, right? But I figured why not, since it was only $10 for 3 hours, so if I hated the bike it wouldn’t cost me much.

 

bike

I was expecting a leisurely ride, because it was on city streets with things like intersections and cars to slow me down. I’m used to riding on bike paths and roads where there are often no traffic lights or stop signs for miles, not a downtown, grid-style street system.

Savannah is famous for its squares, which are little parks with one-way streets wrapped around them, like roundabouts, but bigger and less round. They look nice but are a pain to drive around.

The first time I got the bike into a square, it took me about a quarter turn to realize that if I rode on the left of the lane instead of the right, I could go around forever without anything crossing my path except “stupid is as stupid does” pedestrians.

Then it hit me that this was not a sightseeing opportunity, but a cardio one. I started hauling ass around the squares, riding as fast as I could until I had to stop and catch my breath before doing it again.

Sometimes I had the square to myself and was surprised to see how much I was leaning into turns and so on. Pretty soon it didn’t matter if I was riding right next to a large tour bus that could barely navigate around the square, or anything else for that matter. Total Third World bike rules in effect (which means almost no rules beyond don’t hit anything).

When I got tired of going around in circles (or actually, rounded squares), I would just slingshot myself over to another square or ride straight down a street for a bit.

After an hour my legs were killing me and I had the bike for two more hours. Excellent.

I wsa wishing the bike had a speedometer and odometer so I could know how fast and far I went. It had to be 20 miles or so, and I would kill to see a map of my route, which reminds me that I have an app on my phone that does that, if I had remembered to use it. Doh!

This was my first time riding a bike around horses. There are a lot of horse-drawn carriages around town, and at first I tried to follow them around the square, not wanting to spook them. I always thought of horses as fast animals, but it turns out they’re trained to walk pretty slow, slow enough that riding behind them on a bike is a challenge. Riding really slow is one of the hardest things to do on a bike.

Those horses aren’t easily spooked since they’re so used to cars and busses going by them, and they’re definitely smarter than the pedestrians. So pretty soon I was riding right past the horses like that was an everyday thing.

The whole time it kept hitting me that all this fun was only costing me $10. Ten bucks, less than my pirate-themed lunch, cheaper than just about anything else I bought, but the most fun I’ve had in a long time and one of the best workouts.

I alomost felt bad for people I saw who paid five or six times as much to stand on a Segway for an hour and not see much. Might as well just take the bus tour since it’s a lot cheaper and there’s no dorky helmet involved. Which reminds me, I signed a bunch of forms saying I didn’t want a helmet, because why start now? That would have totally ruined the experience.

It was tempting to keep the bike until the shop closed at 6, but traffic started getting heavier and the IQ level of the pedestrians kept dropping as their numbers increased (as if there is a total IQ divided among all of them)… so as much as I hated to, I took the bike back at 5.

It was an intense, self-guided, crash course in urban cycling. My biking skills, everything from turning and banking to balance to riding with horses and busses, got a lot better fast, because they had to. I can now turn my head completely around to check for traffic, like Linda Blair in The Exorcist.

It was also like being in a life-size video game, except there are no extra lives, so you have to max out the one you have.

I went back to my room to get fresh clothes and ended up taking a deep two-hour nap like I had been chloroformed.

I was glad I didn’t make the bike tour, because that would have just slowed me down. There’s no way they were sprinting laps around the squares like I was.

The rain didn’t show up til I was deep into my nap, and it was over by the time I woke up and went out again.

Ten bucks. And I almost didn’t do it.

Think about it.

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Getting a Facebook Page to 10,000 Fans

A really cool milestone happened last night- one of my Facebook pages passed the 10,000 likes mark.

Facebook pagesThis is the first page of mine to get into five digits. Another completely unrelated page of mine hit 7000 last night.

If you’re curious, neither of the Facebook pages are about me or business, but completely different subjects.

As Facebook pages go, 10,000 fans is not going to win me any trophies, but it’s a big deal to me personally. I know there are pages with millions of fans, and although I haven’t seen any statistics, my guess is that the vast majority of Facebook pages have a few hundred fans or less.

I think the reason for this is that people create a page and don’t know how to get likes, or they work on a page for a bit and when it doesn’t become an instant hit, they lose interest and forget the page.

I’ve done enough of that myself. I’ve been creating Facebook pages off and on for almost two years, but until the past few weeks, I had never gotten one to even 1000 likes.

I’m about to head to Austin, Texas for a long weekend for a really cool event, so I’ll be back after that with more details on how my Facebook pages are doing and how I got them to where they are.

Update: After writing this post, I eventually got many pages to the 10,000 fan mark and several beyond 100,000, just doing the same things I did with the page in this article.

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A Bonus I Would Avoid

There’s a bonus I’ve seen some people offering that I wanted to warn you about.

Some people are offering “your own opt-in list of 100,000″ or some other large number.

People keep telling you the money is in the list, so these offers might look tempting. No doubt you’ve heard of people who have a list of 100,000 or more who make a fortune from it and might think this offer is a way to get yourself to that level.

Sometimes in business it makes sense to buy things rather than doing them yourselves- for example, you can pay people to get links to your site, to write articles for you, and so on, trading your money to save time, both personal work hours and calendar time.

A list like this might look to some like this type of opportunity, so I am writing this to correct that impression.

There are many reasons I would steer clear of these lists.

First, they aren’t your list. You’ll see in the fine print that they are being given to several people.

These subscribers did not sign up for your list and probably have never heard of you, your website, or your product. So what do you think will happen if you start emailing them?

Many people will assume your messages are spam or at least resent getting them since they never signed up to get email from you.

A list like this might technically be opt-in since the people did subscribe to something. However they never opted in to YOUR list, and that is the key problem, ethically, legally, and in terms of effectiveness.

Such a list of 100,000 is nowhere near the same thing as a list of 100,000 you built yourself the right way (by getting people to fill out a form to get info on a specific subject from you). In fact, I’d rather have a list of 500 people built the right way than one of these lists of 100,000.

These lists are NOT the same ones the guru offering them to you sends his messages to- they would never give up their good list.

Also consider that you are being offered the list for a cheap price, usually as a bonus to some product that costs a few hundred dollars.

If the list is any good, why is it being offered for so little? Why doesn’t the person just keep it and mail to it himself?

The answer to both is that the list is not worth much.

If you get a list like this, one of the first things you’ll learn is that most autoresponder companies won’t let you use it with their service. Some will, but you will have to import it very slowly, so it will take a long time to get the whole list into the system. The longer you wait to contact people, the less effective the list will be.

You may decide to go the route of using an autoresponder script on your server to get around this. If you don’t already have a script, there’s another expense to be able to use your new list.

Then if you have shared hosting (what most people have), you may find your account shut down once the spam complaints start flowing in. Plus the odds are high your IP address will quickly get blacklisted and a big percentage of your messages will never get delivered.

One of the great things about an autoresponder service like is that since the emails get sent from their servers, the spam complaints go to them, not your hosting company. And no matter how you build your list, you will get some spam complaints – some email providers make it too easy to make complaints by pressing one button (easy to do by mistake). Plus some people are just idiots and sign up for your list, then make a spam complaint anyway instead of just unsubscribing.

Once you go with an autoresponder script on your server, you might decide to go with a dedicated server, which gives you more control and protects you from someone else’s activities getting your emails blacklisted.

Have you priced dedicated servers lately? They can run a few hundred dollars a month, and if you don’t already have one it would be a big waste to get one just so you can use your new list of 100,000. You’d be lucky to make enough to pay for the server.

By now you may be wondering how these lists are created. Usually there is a website with a signup form with a fairly generic offer on it, such as “Please send me info on work at home opportunities.” Then lots of traffic is sent to that page and eventually lots of people sign up. The offer is intentionally broad and vague so it will cover lots of different areas, so later it can be claimed that people opted in for the messages.

Sure, technically they did opt in, but most people who fill out the form probably expect to hear from one company, not to have their info passed around to a bunch of others who will send them email. What privacy policy was stated? You don’t know.

Think about it- terms like “work at home” or “business opportunity” could cover anything from babysitting to stuffing envelopes to ebay or any of 1000 other things. That means the list is highly untargeted from the beginning. When you add in the fact that the people don’t know you and don’t recall asking for info from you, the list is about as effective as going door to door to sell stuff.

What if your niche is something like pets, travel, or health? Then the list of “opportunity seekers” or “home business” people is even less targeted.

Let me give you an example of something I tried long ago that illustrates just how useless these lists are. I found a service that offered to send me subscribers cheap- something like 500 subscribers for under $50. And I got to provide the name and description of my list, which people would see on the page where they could subscribe. So these would be only people who saw my description and checked a box indicating they wanted to be on my list.

These subscribers were delivered right to my autoresponder. Out of 500, how many do you think confirmed their address? I think it was literally 2 or 3 people. That’s not even 1%, and remember they had seen the exact description of my list.

So just imagine how much worse the numbers would be if they hadn’t seen my description, just a generic one.

I was able to see the unconfirmed names and addresses, and many of them were obviously fake – many obscene and unprintable. You have to wonder why, since these people were not offered any gifts or incentives to sign up.

The service DID send me 500, but as I said the number who actually confirmed was so low that it wasn’t worth the time it took me to sign up for the service, let alone the money I spent.

Again I would avoid any lists someone offers to sell you cheap, since they are so ineffective, and I would also think twice about buying anything from someone who is providing these lists.

I think they are taking advantage of people’s desire to have a big list fast and lack of knowledge about what the list actually is, just to sell more copies of their main product.

And I think intentionally selling something (even as a bonus) to people when you know it is practically useless to them is a crock.

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The Myth of 100% Profits

There’s a common belief online that selling downloadable products means that your profit margins are 100%. Today I will debunk that myth.

I’m sure this idea comes from the fact that there is no inventory to buy or make, no storage space needed, no packing materials or shipping costs involved, and so on.

But let’s look at the other costs involved.

Unless all your customers are sending you checks or cash in the mail, you’ll have to use a payment processor to take credit card orders, and they will charge a fee.

If you have affiliates or JV partners, about half your retail price is gone right there. (And if you don’t, you are probably missing a lot of sales you could be making.)

So you make all your sales on your own? Are you paying for advertising, such as PPC or ezine ads?

Oh, you’re just relying on free search engine traffic? Did you spend any money to achieve that- maybe by buying links, hiring a freelancer to run a linking campaign or write articles for you, using an SEO company (*cough*), or maybe paying someone $800 a month to teach you?

If not, then you probably put a lot of time into getting and maintaining high enough rankings to get that free traffic.

Maybe you are just marketing to your own lists… if so, you are missing a lot of potential customers. And didn’t you invest some money and/or time into building those lists?

If you’re making 100% profits I assume you are using free hosting, free autoresponders, and so on. You’re either doing all the work yourself or found someone who will work for free, and apparently you (or they) don’t assign any monetary value to time.

You’re probably also running an illegal business if you aren’t spending any money on licenses or taxes.

Let’s look at an example with real (rounded) numbers. A $40 ebook is sold. The payment processor, such as Clickbank, PayPal, 2checkout, or your merchant account, takes $2-4 of that.

Oops, did I call 2checkout a payment processor? How silly of me! It is actually “an authorized retailer of goods and services provided by a vendor”. Even though the only reason you as a marketer would use its services is to process your payments.

And Tony Soprano is in the waste management business.

If an affiliate was involved, there’s another $15-20.

Now we’re down to $16-23 on a $40 sale, without considering any overhead or product development costs or taxes.

Oh, some of my products involve a partner who gets half of the “net”, so on this $40 sale, I’m down to as little as $8 for me on a $40 sale. That’s 20%, quite a bit less than that 100% the others are claiming.

If I used PayPal (cheaper fees), there was no affiliate, and I used a really good PPC ad, I might have $30 out of the $40 left. That’s 75%, before splitting with a partner.

So what’s my point? I’m not here today to demonstrate my math skills, but I have some key things to point out that you should recognize:

1. You (and other people) are not making as much as you think you are. In other words, don’t confuse your sales (gross) with your income (net). I make a lot of sales through PayPal, so when I see $300 or $500 or whatever come in, it’s easy to think I made that much. But I still have to pay for advertising and affiliate commissions and a bunch of other things from that.

It can be tough to tell exactly what you’re really making (i.e., your “take home pay”, what you can actually spend outside of business).

2. Your profit per sale is less than your customer thinks it is, and you should ask yourself how much of your time people are entitled to when they buy a low-priced product. To them, they spent $40 and downloaded the product, so they think you made $40 profit. So some customers think nothing of expecting you to provide hours of free consulting, answering unlimited questions about whatever subject your product covers.

I’m not talking about basic support issues, like people who had downloading problems or lost login info or things like that.

I’m talking about people who buy an ebook on something like weightlifting, and then expect you to set up a customized workout plan just for them, for free.

(Of course, I’m assuming your website doesn’t promise this type of personalized service. If it does, you need to deliver.)

I’ve found that the more questions like this someone asks, the more likely they are to ask for a refund after using all your personal time. It’s sad but true- you might spend several hours over a month answering a dozen questions for someone (most of which are covered in your product), and the thanks you get is having to give back the money. You just went from making Wal-Mart wages to zero.

There’s something about the Internet that raises people’s expectations. In the offline world, nobody would expect this type of free consulting. If you bought a Donald Trump hardcover book, would you think that entitles you to spend an hour or 2 on the phone with him? Or have him personally answer your email questions? Of course not.

Maybe you think Trump is a clown, but you still have to agree it’s pretty silly to expect some of his personal time to be included with your low-priced purchase.

You need to decide how much of your time you’re willing to give in exchange for that $15 or $20 you just netted. Should you have to spend 3 or 4 hours answering questions? I don’t think so, unless you have some back-end consulting program and are providing some free help to get clients into it.

Or maybe you are doing this to get testimonials for a new product, or compiling people’s questions and your answers for a followup product. Those are good ideas.

I know some people will misread this, and say I’m telling you to ignore your customers, not help them, and so on. That’s not the case at all.

I’m not saying don’t answer questions, just keep in mind what you are really making per sale and what your time is worth.

Say you made 10 sales of this product per day that netted you $200. If each customer expected an hour of your time, there’s 10 hours a day right there. When are you going to get your other work done?

Remember, the whole point of selling downloadable products like ebooks is supposed to be that, once the product is created and set up on a site, the sales and delivery is automated so that you can focus on marketing and creating other products.

So why put yourself in a position where you have to all this after-the-sale pro bono consulting?

Even if you love doing it, what happens when you start selling 50 or 100 per day?

3. Keep #2 in mind when you are the customer.

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