I watched a show called Shark Tank on the recommendations of a friend. It’s basically this – an inventor or business person pitches their idea to and answers questions from four or five potential investors who are using their own money. These investors will either decline or make an offer – combinations of cash, equity demands, business concessions, etc.
I had watched a TV show about inventors a few years ago. The stories were varied. From people who spent years of their lives, all the money they had, all the money they could borrow, and squandered it all for lack of just a little bit of market research. 1 Others were people who had pushed their ideas as far as they could go by themselves but couldn’t move them any farther without additional backing, marketing, or connections.
Tonight there was this guy who had raised $600k from friends, family, and an undisclosed angel investor. 2 He had no patent, his now ex-CEO didn’t even try to get him a deal with a major company, and he refused to answer a single yes-or-no question in a straightforward manner. The best offer he got was to be bought out for about $250k, he would be fired, and he would have a 7% royalty in perpetuity. He turned it down and was offended.
Here’s the thing I’ve learned about business. If you’re running a business, you do what’s best for the business. I rather like my other business. That said, if I believed the best thing for that business was to cash out and toss the keys to a new owner, I’d do it. In the words of a famous businessman, “It’s not personal, it’s just business.” True business, the exchange of goods and services for money, has almost nothing to do with ego.
Um, I wasn’t really going anywhere with this. I guess I was just really shocked this guy would turn down that offer. I was surprised that he’d put his ego ahead of his business and business interests. But, hey, it’s good TV, right?
- Seriously. There was one guy who was pitching this coffee mug that you put grounds into the cap, poured boiling water into, and had instant fresh coffee. He spent years of his life, thousands and thousands of dollars… and then was told by a potential investor – on the show – that they thought the idea was brilliant! And, they thought it was brilliant the first time they saw it years ago in some cold environment where it was literally commonplace. [↩]
- I’ve got $5 that says it was his wife. [↩]