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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

#41

Post by rst »

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…

The broadcast versions of the negotiations are edited, sometimes heavily, so you can't necessarily assume that things happened as quickly in real life as they did on the screen. (Every once in a while, I'll catch them referring to a remark someone made earlier which I didn't hear, presumably because it didn't make the broadcast.)

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

#43

Post by giarc »

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 believe they mentioned in one of the Dragon's Den specials that something like 75% of the deals fall through during due diligence.

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

#44

Post by giarc »

joelrunyon wrote: post #40

> Cuban said the clause was removed retroactively, meaning every contestant who's appeared on the show since Season One will be relieved of the commitment. That's probably a huge sigh of relief for all past entrepreneurs.

I wonder if they will be paid back any funds that were paid to the production company.

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

#45

Post by nchuhoai »

I know everyone here is cheering for that move and inherently it probably is good. But what will inevitably happen is that we will see more people that come on the show for solely/mainly publicity reasons. We already see that happening right now occasionally when people ask for like 5% equity with clear objective or not making a deal with the sharks

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

#46

Post by lesterbuck »

Recently, the I Love Marketing podcast had an hour discussion with former-Shark Kevin Harrington:

http://ilovemarketing.com/episode-118-the-one-with-kevin-har...

Harrington details why he left the show, mainly because all the little deals were sucking his time and it would be a full time, low return occupation managing them. Apparently Barbara Corcoran now does nothing other than tend to her Shark Tank flock.

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

#47

Post by FamousWarrior »

contextual wrote: post #22
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…

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…

Why can i not buy your game? :/

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

#48

Post by jaredsohn »

kronholm wrote: post #35
avalaunch wrote: post #21

Earlier quoted context omitted.

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 goo…

Just to add to your post, I don't remember ever seeing anyone getting a deal at 5%. It's usually more around the 20-30% range, and sometimes with equity stakes on top of that.

The GP is referring to the equity given up just for being on the show (not the equity given up if a deal is made.)

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

#49

Post by bradleyjg »

mathattack wrote: post #39
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 thought the clause was a good way to charge for the free marketing they're giving companies. Maybe it was too high, but most couldn't afford the cash. Perhaps the reason he was able to convince them to do it retroactively is the companies weren't worth much. Watching a company worth 100K for your 5% stake just isn't worth the time and effort.

The reality TV show model is so profitable because they get free actors. It seems a bit much to expect those actors to pay to provide free content.

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

#50

Post by fuzzythinker »

e40 wrote: post #27
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.

It may be this one you're talking about: http://techcrunch.com/2012/03/07/a-very-special-episode-tv-t...
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