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Mark Cuban makes Shark Tank remove equity clause in contract

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Re: Mark Cuban makes Shark Tank remove equity clause in contract

#21

Post by avalaunch »

morgante wrote: post #14

I still don't think many "savvy entrepreneurs" would/should turn to reality television for VC, but glad this ridiculous term got removed. Any other VC who demanded equity just for a meeting would've been laughed out of town years ago.

True but this isn't exactly a normal meeting. It's 10-15 minutes of television coverage in front of ~6 million potential customers. Estimates have put the value of that advertising at about 600k. 5% of one's company is actually a pretty good deal for a lot of small B2C businesses when you look at it that way. If you already have a product being sold and it would do well on a show like QVC then the deal was pretty good. If, on the other hand, your company is B2B, or too big, or the product isn't being sold yet, than it's a lot more questionable.

I'm glad they made the change. We'll probably start seeing a more diverse range of companies appear on the show.

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#22

Post by contextual »

pzxc wrote: post #11
marcamillion wrote: post #9

I love this. Never knew this was a clause...glad he pushed for this. Mark really does seem like a stand up guy. Shark Tank sounds kinda 'fluffy' and I never paid it much attention for the first few seasons - but then I heard about a company that pitched and I was intrigued so I was searching through the episodes of one of the earlier seasons and I realized how awesome the show is. It is amazing to watch and see how q…

I've read interviews before where it was indicated they know nothing (and want to know nothing) until they walk through the doors to make their pitch. The extensive due diligence is done after the show, which is why deals struck on the show often fall through later on. For example, some of the companies that pitch indicate that they have patents, but of course the validity and defensibility of such patents is somethi…

Having been on the Canadian Dragons' Den[1] to pitch my game Rejection Therapy[2], I can verify a lot of what you said.

To add: the narrative and chronology of the exchange between contestant and the Dragons is sometimes manipulated, either to spice up the drama (let's face it, some contestants are boring) or create a more logical sequence of events or questioning.

That said, there was lots of drama before and during my pitch. I had my ass kicked.

[1]http://www.cbc.ca/dragonsden/m/site/ [2]http://rejectiontherapy.com

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#24

Post by netcan »

A show like this really needs someone like Mark Cuban in a very strong position as the equivalent of a creative director. The reality TV people could be good at turning whatever goes on into a good episode (or using enough nasty tricks to keep you watching for the next 5 minutes). To be a great show they need great material. In this case, that means the best companies need to want to pitch. The deals need to be envied by other investors. That's hard to manufacture and it probably won't be achieved unless someone like Mark Cuban is making it happen. A TV producer thinking from the perspective of shots & scenes & backstory shouldn't be making any decisions about deal terms.

Exhibitionist fundraising might actually work if the deal terms were acceptable and your intended market happened to watch Shark Tank. Imagine square raised-launched on this kind of show.

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#25

Post by porter »

001sky wrote: post #2

Savvy entrepreneurs aren't willing to trade an automatic stake in their company for appearing on a show without a deal

Kinda sounds like a jab at all the entrepreneurs that have appeared on the show already in exchange for an automatic stake.

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#26

Post by e40 »

marcamillion wrote: post #19

This is also interesting that he waited to push for this until now. It just goes to show that no matter how rich you are, you have to understand your value. If he had pushed for this change in Season 1 - which I suspect he may have - he probably didn't get anywhere because the show could always replace him. Now that he has become synonymous with Shark Tank, he has much more leverage, along with the fact that maybe th…

Cuban wasn't on the show in season 1. He joined later.

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#27

Post by e40 »

ck2 wrote: post #4

I know very little about him but this instantly makes me think he is a decent person at heart. (and retroactive too, nice detail)

Before seeing Cuban on the show, I really didn't like him much. I had read things by him and heard things. It was all just impressions. I've watched (with my son) every episode of Shark Tank. He is now my favorite investor on the show. By far.

I remember on one show it went off on a guest for their having a patent on something stupid. Cuban went on a tirade about patents and it really warmed my heart.

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#28

Post by pitt1980 »

jordanthoms wrote: post #10
marcamillion wrote: post #9

I love this. Never knew this was a clause...glad he pushed for this. Mark really does seem like a stand up guy. Shark Tank sounds kinda 'fluffy' and I never paid it much attention for the first few seasons - but then I heard about a company that pitched and I was intrigued so I was searching through the episodes of one of the earlier seasons and I realized how awesome the show is. It is amazing to watch and see how q…

I think it's also because the pitches are actually much longer than what goes on TV - cutting a few hours down to 10 mins or so, while still trying to make it flow well.

full length unedited pitches might make for interesting DVD extra material

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#29

Post by chrisgd »

e40 wrote: post #26
marcamillion wrote: post #19

This is also interesting that he waited to push for this until now. It just goes to show that no matter how rich you are, you have to understand your value. If he had pushed for this change in Season 1 - which I suspect he may have - he probably didn't get anywhere because the show could always replace him. Now that he has become synonymous with Shark Tank, he has much more leverage, along with the fact that maybe th…

Cuban wasn't on the show in season 1. He joined later.

Regardless of the season he joined, the point still stands

Re: Mark Cuban makes Shark Tank remove equity clause in contract

#30

Post by yogo »

marcamillion wrote: post #15
pzxc wrote: post #11

Earlier quoted context omitted.

I've read interviews before where it was indicated they know nothing (and want to know nothing) until they walk through the doors to make their pitch. The extensive due diligence is done after the show, which is why deals struck on the show often fall through later on. For example, some of the companies that pitch indicate that they have patents, but of course the validity and defensibility of such patents is somethi…

Have always seen Dragon's Den but didn't pay it much attention for the same reason. I may just revisit it now, based on your recommendation. Thanks :) The patent move always had me scratching my head - how they could just take their word for it and move on so quickly. Never understood it, but now it makes sense.

I'm sure there is always due diligence since the people pitching can always lie about purchase orders and the like. Sometimes a shark will even explicitly mention that the deal is contingent on something else coming through.

I've watched both and for some reason I find Shark Tank much better. I'm not sure if it's production or just that spark for reality TV that seems to be perfected in America. The personalities of the sharks probably has something to do with it, or the mix since both Robert and Kevin are also on Dragon's Den.

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