“It was a total whirlwind,” said the District entrepreneur, who created Eyebloc, a Webcam cover that prevents hackers from peering in. “There is absolutely nothing like this in the real business world.”
Reality TV shows such as ABC’s “Shark Tank,” NBC’s “The Apprentice” and AMC’s “The Pitch” have brought boardroom proceedings into American living rooms, and have catapulted small businesses to overnight fame. But while they give audiences a taste of entrepreneurship, analysts and venture capitalists say the shows paint a distilled picture of what it’s really like to start — and run — a successful business.
“It’s a very shortened, sound-bite-filled version of what we do,” said John Backus, co-founder and managing director of New Atlantic Ventures, an early-stage venture capital firm. “On TV, they’re making a decision in minutes. In real life, we make decisions in months.”
On “Shark Tank,” budding entrepreneurs pitch their businesses to a panel of millionaire — sometimes billionaire — investors. Hopefuls rattle off the merits of their company — annual sales, profit margins, distribution deals — and within moments are given an answer: Yes, I’ll invest $70,000 for a 20 percent stake in your company. Or, No, I’m out.
At least that’s how it works on TV.
In real life, local entrepreneurs who have appeared on the show say the process is much more rigorous. Many of the negotiations last more than an hour. There are detailed questions about valuations and royalties. Even after entrepreneurs and investors shake hands on air, there are weeks of due diligence in which every part of the business is parsed and analyzed before the contract is finalized. A portion of the deals made on air end up falling through for one reason or another.
“At least 50 percent of the people that show up on [‘Shark Tank’] don’t get deals, and some of them, frankly, get shredded,” said Clay Newbill, the show’s executive producer. “There are times when the sharks don’t like their ideas and it doesn’t go well. It’s one of the things we do try to represent. We like to be honest about what’s happening.”
For the current season, the show’s producers received 35,000 applications. Of those, 157 — that’s 0.4 percent — were selected to film in front of the sharks. In the end, Newbill estimates that 112 pitches will actually make it to air.
For the companies that do appear on TV, the prime-time exposure can lead to millions of dollars in revenue. Already this season, two businesses managed to snag $1 million in sales within 48 hours of appearing on air, Newbill said.
“The show puts everything on fast-forward,” said T.J. Hale, creator of Shark Tank Podcast, which specializes in follow-up interviews with entrepreneurs. “When a company gets five years worth of publicity in 10 minutes, it becomes very, very dramatic.”
At Pork Barrel BBQ in Alexandria, phone calls and e-mails rolled in by the hundreds after a successful run on “Shark Tank.” As soon as real estate developer Barbara Corcoran agreed to invest $50,000 during a September 2009 episode, the company was in high demand.
Costco called the next day to inquire about stocking the company’s products. NASCAR teams approached with partnership opportunities. Country singer George Strait asked if the sauce and rub maker would sponsor his tour.
“It was literally overnight,” said Heath Hall, who started Pork Barrel BBQ with Brett Thompson in 2008. “We had spent eight months trying to get into Whole Foods. After the show aired, they picked us up immediately.”
With about $4 million in annual revenue, Pork Barrel BBQ has become one of the show’s successes. At the time the episode aired, the company’s barbecue rubs were sold in three stores. Within a year, that number skyrocketed to more than 1,000 locations. Today, 3,500 stores in the U.S., Europe and Canada carry Pork Barrel BBQ’s rubs and sauces.
“I can’t imagine that we would’ve been able to do all of this without ‘Shark Tank,’” Hall said. “We got millions of dollars of free air time.”
The “Shark Tank” appearance was Hall and Thompson’s first attempt at finding outside funding. Since then, the pair has secured $1 million in venture capital, a process they say was much less nerve-wracking.
“Normally, when you meet with an investor, they’ve already looked at your pitch and have expressed interest,” Thompson said. “On TV, you have a very short time to catch their attention and state the value of your company.”
Industry insiders say there are other differences, too. “Shark Tank” investors tend to offer deals that rely on loans or royalty payments. In the case of Pork Barrel BBQ, for example, the company must contractually pay royalties to ABC, Disney and Sony on all future sales.
“Those terms are not standard,” said Diana Kander, a senior fellow at the Kauffman Foundation for Entrepreneurship. “Most early-stage investors are much more hands-off. They don’t expect any returns until the company is sold.”
Corcoran has continued to be involved. Hall and Thompson say they exchange e-mails with the real estate developer at least once a week, and have Skype meetings every quarter. When the duo opened their restaurant in 2011, Corcoran showed up wearing a pig costume.
“To this day, we talk to her all the time,” Thompson said. “Barbara has become the biggest champion of our company. It’s hard enough to find that in business, but on reality TV? What are the odds?”
Part of the success behind “Shark Tank,” which averages between 7 million and 8 million viewers every week, is in its timing, Newbill said. The show debuted in August 2009. The country was in recession and Americans were looking for ways to start anew.
“It really came about at a time when the country needed it,” he said. “So many people were losing their jobs, their 401ks, their homes — they were losing all the security they thought they had.”
When Donald Trump signed on to host “The Apprentice” 10 years ago, he said the outlook was much different.
“People said to me, ‘A business show will never make it on prime-time television,’” Trump said. “But it resonated very well with the audience. ‘The Apprentice’ went on to became the number one show on television.”
Today, a number of series, including “The Profit” on CNBC and “Restaurant: Impossible” on the Food Network, are trying to recreate the show’s success.
On “Shark Tank,” the show’s line-up of investors, which currently includes Dallas Mavericks owner Mark Cuban and FUBU founder Daymond John, have funded hundreds of ventures. The producers would not disclose the success rate among the companies that appear, but said that several have gone on to become multimillion dollar enterprises.
Isakow, 34, hopes his Webcam blocker becomes one of those success stories — even though all five sharks turned him down.
The biggest problem, they told him, was that his $9.99 plastic gadget was overpriced.
“I can take a piece of gum, I can take a Post-it note, I can take anything and pop it over [my Web cam],” Cuban said on the episode.
“Honestly this, to me, a buck,” TV personality Lori Greiner echoed.
Isakow, who created his first prototype last summer using a 3-D printer in a D.C. Public Library, took that advice to heart. By the time the show aired, the Eyebloc had been marked down to $6.99. Within 48 hours, he sold 2,000 units, doubling the company’s overall sales.
“In many ways, getting on the show was the goal,” he said. “The funding was secondary.”