Anyone who’s watched even a few episodes of Shark Tank notices there’s a pattern: some entrepreneurs get deals, set to uplifting music, while others don’t, and those who miss out on getting a shark partner sometimes express disappointment or regret.
Those who don’t get a deal are rarely profiled on Shark Tank updates, and even those who do get a deal don’t always get a coveted where-are-they-now spot. In a New York Times interview in January, Kevin O’Leary was asked if the show’s reluctance to show the businesses that fail in effect glamorizes entrepreneurship.
“No. Even in the updates you see how brutal people’s lives are. Entrepreneurship is a personal sacrifice for a long period of time. I never saw my kids grow up — they just went from zero to teenagers when I was traveling the world selling software, and yet today they enjoy certain freedoms that I could never have afforded had I not been successful.”
Of course, the point that O’Leary misses with his response is that not all entrepreneurs find success. They can put in the hours, sacrifice not only time with family but a substantial amount in assets to be left with nothing except a roller coaster of negative and positive life experiences.
The Shark Tank effect is often used to describe the boost in sales companies usually experience after their pitch airs, regardless of whether or not they get a deal. But Shark Tank may also have another, less appealling, effect: creating a mythology around entrepreneurship that largely masks a difficult reality.
Back in 2015, Kauffman Currents reflected on what was then seen as a troubling trend in media portrayals of business: the “celebritization of entrepreneurs.” Although faulting Shark Tank less than other shows, the article noted an odd disconnect between the popularization of the entrepreneurship myth and the numbers of actual young people starting companies. Millennials are far less likely to run companies now than were people of previous generations.
“We still don’t know what the relationship actually is between exposure and real entrepreneurship rates, but perhaps we see this gap between intention and actualization because of how unrealistic the popular narratives are.”
Kauffman noted that the media portrayals, apart from Shark Tank, tend to focus on young, hoodie-wearing startup founders working in tech. The reality is that entrepreneurship is not glamorous, success is not a foregone conclusion and startup founders are usually older and working in diverse sectors.
That last point — that startup founders are older — is backed up by even more recent research. In April 2018 TechCrunch reported on a study that found most startup founders are not only older, but more successful, than the current stereotype. In fact, the younger founders, although more likely to get venture capital backing, have less chance at growing a successful company.
“Overall, we see that younger founders appear strongly disadvantaged in their tendency to produce the highest-growth companies.”
So how does this link back to Shark Tank, and its refusal to feature the companies still struggling to gain footing after their prime-time appearance? Although Shank Tank‘s most touted successes are typically not young, hoodie-wearing tech entrepreneurs — family-run, single-product businesses like Scrub Daddy, Tipsy Elves, Grace & Lace, Bubba-Q’s Boneless Ribs, Red Dress Boutique and O’Leary’s own Wicked Good Cupcakes are more common — the show could still be accused of sanitizing the reality of the entrepreneurship experience.
For a short period of time, it seemed that problem was addressed with the addition of Beyond the Tank to the schedule. In more in-depth features, viewers were exposed to more complex issues faced by entrepreneurs after they got the backing of a shark. In some cases, such as that of Plated — whose deal with Mark Cuban fell apart after the show but who later got an investment from O’Leary — the companies were shown to be draining cash and recovering from serious operational issues.
In the case of Plated, it all eventually turned out fine — more than fine, actually, since the company was sold to Albertsons last fall for $300 million.
But not every Shark Tank entrepreneur will get a huge exit; many will falter and close up shop. Some sharks are not shy about revealing their own statistics when it comes to the current state of their Shark Tank companies. Back in 2015, Mark Cuban told a conference that some of his own investments were not doing well, and even those struggling entrepreneurs were unaware of the challenging state of their affairs.
“Of the 71 startups that I’ve invested in through Shark Tank, two have gone out of business, three are so stupid they don’t know they’re out of business, and then probably 50, give or take, are in growth.”
Cuban went on to say about 30 percent of his Shark Tank deals had returned his investment, but he was more concerned about the 80/20 rule — that he would be all right if 20 percent of his investments really took off.
While those comments reveal honesty on the part of Cuban, they also reveal that if an entrerpeneur gets a deal on Shark Tank, it doesn’t necessarily mean the investor foresees a path of smooth sailing. Getting the backing of a shark — which can cost more in equity than deals entrepreneurs would make in the non-televised world — does not mean the lack of hardship ahead.
Failing to show those stories as part of the Shark Tank vernacular might do a disservice to entrepreneurship in the real world, even if it makes for better television. Entrepreneurship on Shark Tank might not be as glamorous as in some other media, but it still only tells half the story, which real-life business owners might be left to discover on their own.