What is ‘Unconscionable’ in a ‘Shark Tank’ Deal?

Posted on by sarahfield7
makeup junkie bags facebook

Tonight on Shark Tank, the first entrepreneur, Meredith Jurica of Makeup Junkie Bags, didn’t need a deal. But she was a bit of an unusual case. She didn’t seem to be on the show just for the promotion. She sincerely wanted a shark partner, even after more than half the panel was out — refusing to dilute her ownership in the company for which she had a knack and a passion.

(It feels demeaning to use the word “knack,” but I can’t think of a more appropriate term. Jurica’s business felt right. It fit her. She seemed to have an intuitive sense of what she was doing. Nothing felt forced, and the numbers seemed to be working in her favor.)

As the pitch unfolded, it brought up a series of questions. Most prominently, should a shark make a deal with an entrepreneur, when that entrepreneur is probably better served by not taking on a shark partner (and the shark knows it)? Jurica was likely on the cusp of a slow build, and could have figured out how to up her manufacturing without a shark’s help. Do the sharks have a responsibility to tell her that, especially when they have something to gain (at her expense) by agreeing to invest on terms that take advantage of her different vision of the future?

Of course, Jurica may have wanted a shark for other, unstated, reasons. She had a small, in-house manufacturing operation that allowed her to perform quality control. The company was debt-free, and profitable. But a business on solid ground does not mean that an entrepreneur does not want to take the business in a new direction, one that they envision may lead to greater profit, less personal sacrifice, or just a different day-to-day routine than they currently have.

That’s to say Shark Tank viewers don’t know why Jurica applied to be on the show (or agreed to be recruited). It was a bit surprising that she seemed set on making a deal that included an equity stake. That’s a detail Sara Blakely honed in on, reminding everyone that she still owns 100 percent of Spanx. But Jurica said she wanted someone who was invested in the company’s success. She didn’t appear to want a shark to be her banker, but rather, to provide her with some insight and advice that maybe she couldn’t get from Google. (Entertainingly, during her pitch, she described turning to the search engine to look up what a potential buyer was asking her about before agreeing to supply product).

In many ways it’s a balance: you can come on to Shark Tank and demonstrate that your company is doing so well it doesn’t need an investment; but then you’re faced with explaining why you want to sacrifice equity in your company in exchange for mere money.

That’s the situation Jurica was in. And it lead to an interesting series of on-camera negotiations, ultimately between Kevin O’Leary, Sara Blakely, and Lori Greiner — who ended up getting the deal.

Things got interesting when Barbara Corcoran weighed in. Corcoran spoke in response to Jurica saying she wanted to increase brand awareness, but PR people wanted to charge her $5,000 a month, which she could not afford. Corcoran said not having money was not a liability — that when she had started her own company, lack of cash made her watch every penny.

Then she went out, using what I know as a legal term, although she may not have meant it in a legal sense: “I would be unconscionable going in with you because I don’t think you need anybody.”

This made my ears perk up even more at what was already a compelling pitch. Frequently on Shark Tank you wonder if the entrepreneur is taken advantage of, their vulnerability exploited. Presumably that’s one reason why due diligence follows any on-air dealmaking.

(In real-life venture capital, due diligence happens before the negotiations and companies only pitch to one investor at a time).

An enforceable contract has to meet many legal elements. That’s because the law is supposed to be fair (although, sometimes, I would argue, that fairness is situation-specific and not about social justice). Here’s one definition of what it means for a contract to be “unconscionable”:

“An unconscionable contract is one that is so one-sided that it is unfair to one party and therefore unenforceable under law. It is a type of contract that leaves one party with no real, meaningful choice, usually due to major differences in bargaining power between the parties.”

It’s easy to read definitions of legal terms and think that a particular situation meets it — but perceptions vary, and legislation and legal precedent decide how decision-makers apply these doctrines. That’s why lawyers and judges have jobs.

But it leads to a question: even with due diligence, can a Shark Tank deal be unconscionable? I have a law degree, but I’ve never practiced — so I will posit what I’ll call a layperson’s assumption that it’s a very high bar to meet to void a contract, in whole or in part. So in all likelihood, armchair analysts of the program might say some deals — especially in the early years — were exploitative, unfair, or unwise on the part of the entrepreneur. That doesn’t mean a deal wouldn’t be enforced. But perhaps the parties wouldn’t make the same deal a second time.

Here’s my impression of Meredith Jurica. First: awesome. I don’t even wear makeup, and I want to buy her bags. Second: smart. Third: gutsy. Fourth: empowered. Overall, I liked her a lot. And her stated rationale for taking the deal with Lori, instead of Sara — she wanted more hands-on attention from a shark, and thought Lori was more likely to provide it because she had an equity stake, which Sara would not — was reasoned and logical. But it’s interesting to note that Sara only came back in on the deal to give Meredith an “out,” by which she could get a deal without having to give up equity.

While a Shark Tank deal may not reach the level of unconscionability, the on-air negotiation with Makeup Junkie Bags perhaps demonstrated something else: the entrepreneur is typically at a severe disadvantage, because the sharks have decades of experience, and have negotiated hundreds of these deals. The entrepreneur is likely new to business, and it’s probably their first negotiation with a potential investor. On a television set. In front of cameras. Where there’s an added pressure to — knowing the pitch will be broadcast — promote the product as much as impress the sharks.

Which says only that, perhaps at the end of the day, it’s a show — with real-life consequences for the parties to the deals that are eventually signed. And I secretly hope Jurica backed out of that deal with Lori.

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That Odd Acne Ad In Kevin O’Leary’s Podcast Is Reason Enough to Listen

Posted on by sarahfield7
Shark Tank's Kevin O'Leary and Barbara Corcoran

I’ll admit, I’m a bit of a Kevin O’Leary fan. At one time or another, I’ll call him my favourite shark (although that title tends to rotate equally between five of the core six). I’ll put up with his blowhardedness, because I think much of it is a rouse, and his attention-seeking, because as long as he seeks attention, I’ve got content I enjoy consuming — whether that’s a new episode of Shark Tank or, very recently, the Mr. Wonderful podcast. 

But that doesn’t excuse the quite strange, and giggle-inducing, product placement in Episode 2, “I love to go to bed richer than when I woke up (with Barbara Corcoran).” There’s the obvious and properly identified ad at the beginning for the podcast’s sponsor, a clothing company, and then there’s this odd segment where, seemingly out of nowhere, Kevin and Barbara are talking about acne. 

(Part of O’Leary’s apparent podcast schtick is talking about a variety of issues. In Episode 1, he and his former CBC co-host Amanda Lang were debating whether kids should have nannies, and whether a liberal arts degree had any worth. Note to Mr. Wonderful: yes, it does).

But O’Leary telling a “caller” that there was medication to fight acne that takes about a year to do the job and that he should talk to his doctor about it — and Corcoran jumping in to say that a specific acne medication would help — was just, well, weird.

It was a weird spot in an otherwise enjoyable podcast. Corcoran tells a great story about suing Donald Trump — after some prodding from O’Leary, to whom she said more than once she didn’t want to talk about her dealings with Trump, lest the conversation drift into politics — saying yes, he owed her money, but he was going through a tough period and that happens in business. She was lucky to be having a good year, and therefore could afford the lawyer’s fees to actually sue. Then she tells this nice little tidbit about sending him flowers after she received each monthly payment, flowers that Trump promptly and consistently sent back.

(Barbara Corcoran’s own podcast, by the way, has useful tips like not overusing exclamation points in emails, but that’s the only episode I’ve listened to so far.)

I only ended up listening to that episode of Mr. Wonderful’s podcast because I went to iTunes, looking for a different podcast: Ram Dass. That, of course, has 137 episodes because — as far as I can tell, starting from the beginning — it’s not a podcast in the modern sense. Its first few chapters are lectures, more than 50 years old now, but still with a deep resonance for those of us “inclined that way,” — whatever way that is — which makes it a podcast with purpose. A podcast with a message, compared to just a new way to monetize content. I had the experience more than once of streaming the old lectures through Ram Dass’ Love, Serve, Remember Foundation and falling into peaceful sleep, with pleasant Ram Dass-infused dreams, and wanted to download the library. Call me crazy, but I hope I don’t have O’Leary and Corcoran-infused dreams, where the two are talking about acne medication. 

Of course, the Ram Dass podcast has a sponsor too, a place in California called 1440. But Ram Dass doesn’t stop mid-lecture in 1967 to say, “India: when psychedelics fail to give you enlightenment, head east to find a guru.” Or, “Let’s take a coffee break. You know who makes the best coffee to help you achieve enlightenment? Sanka.”

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Once you have drunk from the water of unconditional love, no other well can satisfy your thirst. The pangs of separation may become so intense that seeking the affection of the Beloved becomes an obsession. When we were with Maharaji, we were intoxicated with his form, the colors of his blanket, the buttery softness of his skin, his tapering, almost simian fingers, the long eyelashes that so often hid his eyes, the red toenail on his big toe. As with any lover we, too, became fascinated and enamored of every detail, although these cues triggered spiritual bliss instead of physical desire. 🌊 In their way intoxication and addiction are analogies for devotion. Once you experience unconditional love, you really get hooked. The attraction is to that intimacy between the lover and the Beloved. 🌊 You are so drawn into the songs, stories, images and constant remembrance of the Beloved that you may hold on to the form and not want to go on to the next stage. You are always thinking about it and tuning your being to stay in that intimate loving relationship with this person you love. 🌊 But the Beloved is not a person in the usual sense, and the form is just a costume for the play, the lila. Ultimately, this form is the one that takes you beyond form. What the Beloved, your guru, reveals to you is your own soul. Even so you may choose like Hanuman, to remain in a kind of duality to serve and remain immersed in the ocean of devotion. 🌊 The devotional path isn’t necessarily a straight line to enlightenment. There’s a lot of back and forth, negotiations if you will, between the ego and the soul. You look around at all the aspects of suffering, and you watch your heart close in judgment. Then you practice opening it again and loving this too, as a manifestation of the Beloved, another way the Beloved is taking form. Again your love grows vast. In Bhakti, as you contemplate, emulate, and take on the qualities of the Beloved, your heart keeps expanding until you see the whole universe as the Beloved, even the suffering. 🌊 continued in comments 🌊 📸:: Love Serve Remember vinyl boxset insert circa 1970

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Yes, I know. Product placement started way, way, back in the early days of television where the stars would smoke as part of the plot to plug the cigarettes. My favourite current sitcom, Superstore, had an entire episode that revolved around Target. But those made sense, unlike a property developer and venture capitalist giving out advice on acne medication.

But you know, if you want something weird in your business podcast, check it out. It is fun. More ideas, and ads, to fill our conscious space. 

Oat Meals on ‘Shark Tank’: Two Investors Trying to Replicate Past Success

Posted on by sarahfield7

I personally love when Barbara Corcoran and Lori Greiner are on Shark Tank together, because the women are so different. As if it didn’t need to be said, but sometimes it helps if it’s shown, that simply putting a female face on a panel isn’t enough to ensure diversity.

Episode 7 of Season 10 put this on display (spoiler alert!) brilliantly when the woman behind Oat Meals, Sam Stephens, pitched her business to the sharks. But what was she pitching, exactly? She ran a small brick-and-mortar eatery in New York City that sold various sweet and savoury dishes, all with oats as a base ingredient. She was profitable, but not wildly so.

At one point, she said she wanted to expand into more locations. When asked, she said she was also interested in selling a line of branded oat products in grocery stores — as she said, bringing oats to the rice and pasta section instead of letting it languish in the breakfast section. 

Those of us who watch Shark Tank regularly already have the roll call of past entrepreneurs who have made highly-touted deals with each of the investors, and can therefore predict who’s most likely to jump on a pitch. With Oat Meals, I kept thinking of “Bagel Stuffins,” aka Bantam Bagels, who also had a small NYC shop, and whose deal with Lori Greiner also allowed them to segue into the prepackaged food market. 

(Fans of Beyond the Tank might recall the proprietors’ reluctance to give up the name “Bantam Bagels,” and how hard Greiner seemed to push to get them to adopt a brand that she felt better expressed what the product was, hence “Bagel Stuffins.”)

As if on queue, Lori said she would get a new line of Oat Meals goods into Starbucks, as she had with Bantam Bagels. Barbara, however, made the incredibly strong pitch back to the entrepreneur that Stephens needed to focus on having food carts — getting out of that 380 sq. ft. of space. 

Again, the roll call: Corcoran mentioned her beloved Cousins Maine Lobster, but could also have discussed Tom+Chee (although some research indicates maybe that one doesn’t have a happy ending, so maybe the choice to leave it out of the discussion was deliberate). 

Corcoran asked for 50 percent, Greiner 33 1/3 percent. A couple of the “out” sharks indicated Barbara’s deal was more sound (in their opinion), but Stephens went for Greiner, leading to a bit of a heated discussion after the entrepreneur had walked off the set. 

(Those moments, by the way, are always the best. In this one, Cuban’s already checking his phone, indicating they assumed the segment was over). 

Corcoran cleverly said oatmeal doesn’t freeze well. Kevin O’Leary said Lori made a dumb deal. Daymond John noted that Barbara wanted half the company, while Lori wanted less.

But apart from the disparate views of how to grow the company, the pitch was notable because of the revelation, so starkly demonstrated, of what the sharks often do: offer to do again what they have already done for someone else. In one sense, it’s like showing off your resume in order to convince the entrepreneur to choose you. In another sense, it’s nothing more than saying, “I have this template. At first glance, it looks like you might fit that template. So let me invest and we’ll give it a shot.”

Really, if you are a wealthy investor faced with a novice entrepreneur — like many of the pitches on Shark Tank — it’s irresponsible for the investor to offer to do anything else other than what they know how to do. Cuban has said he doesn’t like to be “dumb money,” and all the sharks seem to have some version of that philosophy. It’s up to the entrepreneur as to whether they want to use that particular template, or not. 

‘Shark Tank’ Season 10: Stray Observations

Posted on by sarahfield7
Season 10 of Shark Tank

So it’s (almost) December already, and somehow, we’re only up to Episode 7 (as of Sunday) of Shark Tank. But in that time I’ve come up with some observations about Season 10, and why it’s different from the rest.

(I was trying to figure out how to write about this, and have decided to just spit out a list of observations.)

It’s a good season.

My first one is personal — I like this season, a lot. So far. I could do without the “Decade of Dreams” tagline, but I feel like the pitches have been more substantial than in previous years. By that I mean it’s less about emotion, more about numbers. Not that emotion doesn’t have a place, but it feels like the entrepreneurial backstory is no longer the core of the pitch. 

(On that note, I’m not sure exactly when — it must have been years ago — that they got rid of the video preambles that introduced the entrepreneurs. I’m glad they no longer waste time on that segment.)

Scheduling must have been a bitch.

Is it me, or are there a lot of guest sharks? And they seem to keep coming. Just this week ABC announced that Alli Webb, founder of Drybar, would join the panel. She’s in addition to the seven — count ’em, seven — guest sharks already announced. So there’s got to be a reason behind that. Say, one of the core six doesn’t plan to come back for Season 11 and these are “unofficial” auditions. Or, “life happened” with the filming schedule this year and some last-minute replacements were needed. Or something. 

Who seems a little too absent so far this season? There have always been sharks we see more of — Kevin O’Leary and Mark Cuban are in every episode, the rest rotate (from my casual observation). Do any of the other four seem to be slipping off the radar? It’s hard to say. And trying to predict which one of the regulars might be quitting seems like a mean game, so I won’t engage in that line of discussion.

All I know is — tonight there was a promo for an upcoming Shark Tank episode that has TWO guest sharks on the panel. That feels a bit like sacrilege, as if the rowdy teenagers are trashing the parents’ home when they are away on vacation. Rohan Oza and Bethenny Frankel on the same episode seems wrong, but who knows — maybe it will be an excellent pairing. 

But for the people who set up the filming days, I’ll echo the subtitle: scheduling must have been a bitch. 

Sharks have executive producer credit. 

I feel this is significant, but I don’t know exactly what it means. Maybe they own part of the show now, or have creative control over the editing. It only applies to the regular sharks, and seems to be only on the episodes in which they appear. So, who knows. But if I was a shark, and knew that I’d invested in a company whose pitch was about to air, I’d like to have at least a heads up — if not the final say — about how that pitch was edited. 

So, here’s to Season 10 — and let’s hope it follows previous seasons and ends up with a good 25 or 26 episodes. That would mean we’ve got plenty more new Shark Tank to come. 

If It’s True That Robert Herjavec Was a Last-Minute Replacement for Mark Cuban on ‘Shark Tank,’ That Makes a Lot of Sense

Posted on by sarahfield7
'Shark Tank' judge Robert Herjavec

I like Robert Herjavec. I really do. But I always thought it was odd that the folks at Shark Tank had tapped not one, but two, stars of Canada’s Dragons’ Den to sit on the panel of the new program when it started 10 years ago.

If a new article in Vulture is to be believed — that is, if you want to assume Clay Newbill wasn’t kidding in this group interview (with all of the regular sharks except Herjavec) — Robert only got the gig because ABC wouldn’t cast Mark Cuban for season one.

If your memory goes back as far as mine, you’ll recall Kevin Harrington was at the table for Seasons 1 and 2. Mark wouldn’t show up until he was a guest in Season 2, Lori Greiner not until Season 3. In the Vulture piece, the producer said that Herjavec was given the slot in Season 1 after ABC wouldn’t budge on Cuban.

Mark, why were you rejected the first time you auditioned?
Mark Cuban: We won’t go there. [Laughs.]

Clay Newbill: I will say that me and Mark Burnett definitely wanted Mark.

Mark Cuban: Yeah, it wasn’t Mark and Clay. It was ABC.

Clay Newbill: When we found out that we couldn’t get Mark, that is when Robert was plugged in instead in the eleventh hour.

Mark Cuban: What?!

As for O’Leary, he said Mark Burnett called him and asked him to join the US version of the show, because they needed, “an asshole.” Why Herjavec was also considered, it’s tough to say — surveying the Canadian cast at the time, one could say Brett Wilson was just too Canadian, Jim Treliving too “Jim.”

And Arlene Dickinson? Probably my choice if I’d been asked, but as Barbara Corcoran said once, Shark Tank only had room for one woman in Season 1. She revealed in an interview last year (and perhaps before) that she was offered a slot in 2008, only to have the offer taken away because the “lone female seat” had been given to someone else. Corcoran fought for her spot and won.

In a way, the casting folks are to be forgiven, because it’s not easy finding the right mix of people on a show such as this, where it’s really all about the investors, and only tangentially about the entrepreneurs. Of course, it is a bit ridiculous to say there can only be one woman in a cast of five (the rotating group of six didn’t come together until Season 4). One might assume the powers at be looked at it this way: we need a group of potential investors, and we need repesentation. So one woman should suffice. Ten years is not that long ago, but back then plugging in one female was probably considered gender diverse.

On the other hand, casting the Shark Tank panel can’t be that easy — because it’s a big ask. The panelists have to agree not only to a couple of weeks of intense episode filming twice a year, but they basically have to agree to participate in business development off-screen. They have to spend their own money. They trust the show to cast interesting entrepreneurs, and they have to bet on at least a few businesses. There’s an expectation that the sharks won’t be entirely silent partners in those businesses, adding to the burden (or opportunity).

It’s the ultimate “reality” gig, in that way. The sharks even said as much in the interview, with O’Leary noting that they are footing the bill for those investments.

What do you think Shark Tank gets right about the reality-TV experience that other shows can’t always crack?
Barbara Corcoran: A lot of associations with reality television revolve around it not being so real. But not us. Nothing is prompted, nothing is scripted.

Lori Greiner: Genuine. That’s the biggest word.

Kevin O’Leary: And it is our real money. I think this is the only show on TV where the people on the show are actually putting out their own money.

Barbara Corcoran: You can lose more money than you may get paid.

Hopefully, all the sharks have ended up ahead in this deal. Although I wouldn’t feel too badly for them. Ten years in, they have much bigger profiles, even become famous — although at least Cuban was famous already. And as for Herjavec, well, he got a gig on Dancing With the Stars.

In Light Of Cave Shake On ‘Shark Tank,’ Let’s Discuss Incubators

Posted on by sarahfield7

I know nothing about incubators, except the Investopedia definition, and the fact that the word’s been bandied about a lot the past few years since startup culture has become trendy. But the Shark Tank grilling of the proprietors of Cave Shake tonight got me curious as to what, exactly, are the normal parameters of such an arrangement. Judging from the sharks’ questions, one could assume that, just like there’s the possibility of getting a bad deal on an early investment, there’s the chance an incubator may offer less-than-ideal terms on the partnership as well.

According to Bloomberg, Cave Shake has operated as a subsidiary of L.A. Libations LLC since August 31, 2018. That would have likely been after the Shark Tank segment was taped, and therefore after the company got a handshake deal with Charles Barkley. (Who, by the way, warmed my heart with his sincerity when he said he invests in people, and “I like you guys.”) So, did the deal with Barkley go through? Can we have a Beyond the Tank update, please?

On the website of L.A. Libations LLC, Cave Shake is prominently displayed. Not surprising given the name, Libations is a beverage brand incubator. It turns out Coca-Cola owns a minority stake in that entity, at least according to this article from Daily Coffee News — my source for all answers to random investment queries — so, if Cave Shake was actually getting the development assistance and marketing push that is the promise of an incubator, maybe they weren’t in such bad shape after all. But then again, the Cave Shake proprietors mentioned the L.A. Libations/Coca-Cola link on the show and the sharks weren’t particularly impressed; more “what did you give up?”

On this point, I wish I understood more about how it works. Any deal where you have deferred royalty payments means you’re in debt to a previous investor, which, although it might not make you toxic to a new investor, it might indeed cause them to think twice.

To me, it is not what I envision of an incubator, although it may meet the definition. It feels more like a marketing strategy, but then, maybe it’s all the same at the end of the day.

As for Shark Tank, let’s give further props to Charles Barkley for that casual statement that he’s struggled with his weight since he stopped playing. What a nice guy. Even if he didn’t invest in Cave Shake, I’ll give him props for being a good addition to the Shark Tank panel.