Daymond John has seen a lot people flail -- and fail -- in the pressure cooker known as Shark Tank. They freeze and forget what they're saying. They beg, cry, stammer and crumble, sometimes understandably so.
Sweating under the hot Sony Pictures studio lights while persuading an intimidating row of rich, famous and experienced investors can’t be easy.
No matter where you pitch, though, John says, coming off as knowledgeable and enthusiastic about your business and your value proposition is critical. It’s also paramount that you present a clear, succinct step-by-step plan as to exactly how and when investors will reap a return on their investment, and in the most memorable way.
We asked the Shark Tank star to sum up the worst type of pitching blunder he’s seen entrepreneurs make time and again. “There are so many, I can’t name just one,” he joked not far from the massive wooden Shark Tank doors during a recent press event. “How many do you have time for?”
(By the way, we were surprised to see those ominous iconic doors swing open via two thin, clear strings from above. They mustn't weigh much -- chalk it up to Hollywood smoke and mirrors.)
Here are the two worst mistakes John says entrepreneurs make when pitching investors, on Shark Tank and off:
1. Incorrectly sizing up their market.
“They might say, ‘I have this idea and it’s tapping into a $50 billion dollar market, most of which is going to be mine.’ That means absolutely nothing. That’s like me saying I just bought a house in a trillion-dollar market and I'm cashing in. If you have too many options, you don’t have enough information. You better have some solid research and documentation to back up your claims.”
2. Overvaluing their company.
“Valuing yourself and your company at more than it’s worth is a big problem. You’re only as valuable to an investor as the money you bring to their portfolio. Going in and saying you need $2 million dollars for something you sold $50,000 dollars worth of doesn’t make any sense. Properly valuing your company isn’t about guesswork and talk. It’s about having hard numbers and being able to explain them quickly and properly.”
For more of John’s advice for startup success, check out Shark Tank’s Season Eight premiere on your local ABC station. It airs on Sept. 23 at 9 p.m. ET.