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Is there anything quite like secondhand embarrassment? While watching people succeed is awesome, there is something just a little bit delicious about watching people bomb. And that’s what Shark Tank is for.
For those unfamiliar, Shark Tank (also known as Dragon’s Den in the original British version), is a show where various inventors, business owners, and entrepreneurs, pitch their ideas to a group of millionaire investors.
We can hear some of you saying ‘…why is Product School talking to me about Shark Tank?‘ That’s because during the long days and weeks of lockdown, Shark Tank became a binge-worthy saviour. And that’s when we realized that these pitches actually provide plenty of food for thought and words of wisdom for Product Managers.
Plenty of the mistakes made by these budding business owners are actually pretty common mistakes in many areas of tech. So find an excuse to stop for a snack break, settle back, and learn some valuable lessons. And remember that at least when you make mistakes, they’re not broadcast on international television!
Lesson #1: Check Your Legal Requirements
Our first lesson comes to us from Shark Tank Australia, when entrepreneur Dave Levato came to the sharks, looking for seed funding for his property startup. His vision was to bring property investment to the masses via a peer-to-peer lending platform, allowing those without millions of dollars in the bank to invest alongside sophisticated investors (those with $2.5 million in assets). By cutting out the middlemen (banks), the technology would also be cutting a better deal for both investors and property developers.
He had a solid idea, the peer-to-peer market was worth millions overseas despite not yet having taken off in Australia. He wanted $80,000 AUD for 20% equity, valuing the business at $400,000 AUD.
However, the return came under the fire, when it was revealed that smaller investors would receive only a 4% return on a mezzanine type loan…with the industry standard being between 17-25%.
He also walked into the tank without a financial services licence, despite needing one to operate in the space, rendering his entire pitched business model…illegal.
The lesson: ethics is everything
As Dr Glen Richards says during the collapse of the pitch…
“I’m a shark, but I’m starting to feel like a guppy.”
If you treat your customers like idiots, or cash cows, they will feel it. It takes a very long time to build up trust with your users and a good reputation within your industry, and it can take only a second for it all to crumble away.
Dave walked into the tank seeking seed funding in order to build “legitimacy and trust” as his business plan was toying with people’s life savings. Unfortunately, legitimacy and trust can’t be bought or sold. Unless it is written inherently in everything your product or service is about, you’ll find yourself playing a losing game.
When building digital products, take care not to cut corners when it comes to things like safety and cyber security. Be wary of any regulations that need to be adhered to in your industry, and make sure your customer know how seriously you take their trust.
You might also be interested in: How to Be An Ethical Product Manager
Lesson #2: Listening to Customers is… Overrated?
Yes, you read that right. According to Mark Cuban, listening to customers is overrated.
But actually, it’s more about listening to them in the right way. When Jordann Long and Liz Charm brought their cake accessory company, Surprise Cake, into the tank, the sharks were all very impressed with the product. But having a successful idea wasn’t enough, and the entrepreneurs soon saw the sharks drop out one by one.
The company had a great core product, but with too many add-ons and too many full-time employee salaries to pay to make it all happen, they simply weren’t turning enough profit to deserve their $2.5 million valuation.
The lesson: Don’t drown in opportunity
We’ve seen this happen with digital products in the past, too many to name! With too many different revenue streams and too many overheads, companies who focus more on revenue than profit suffer from ‘drowning in opportunity.’
Customers will always ask for more, and they’ll always tell you what they think you need to do. But that doesn’t mean you have to listen to them. Scaling just to keep users happy, when you’re not ready for the next stage of growth, will cut through your profits faster than you can blink. You may end up with a runaway train.
So when listening to customers, give them what they need and not what they want.
Lesson #3: Research Isn’t Enough
More legal trouble in the Australian Shark Tank. Two young CrossFit athletes/personal trainers resented the amount of supplements and protein shakes they were carrying to and from the gym every day.
They conducted some research around the health benefits of dark chocolate, along with other supplements like caffeine and amino acids, and came up with the Peak Performance bar. Looks and tastes like chocolate, with all the benefits of a pre-workout shake, but with none of the mess and the fuss.
In 9 months they earned $65,000 in sales, with 50 retailers. The sharks seemed to enjoy the samples, and the entrepreneurs’ presentation was engaging and succinct.
What could go wrong?
The micro-copy promised that the product was engineered to ‘accelerate muscle growth.’ It was soon revealed that the entrepreneurs, despite being law students, had not conducted any clinical trials to prove that their product did as promised.
They were relying on their research, which showed that dark chocolate was somehow linked to muscle growth. A very thin connection that actually offered them no legal justification to make their bold claims.
The lesson: prove your own hypothesis
Putting this into the context of digital products, this would be akin to building your very own short-term lets app, just because it worked for Airbnb. But there are so many variables that could have spelled success for their product, which would mean disaster for yours.
Which market did you break into, vs which market did Airbnb first break into? Does the country/city you’re trying to launch in have restrictions against short-term lets and career landlords? Not to mention that Airbnb didn’t have competition when they launched…and now Airbnb are your competition.
So when you’re trying to build something new, don’t focus on data from experiments of the past. You have to try your own experiments
This is precisely why, in the agile methodology, MVPs are so popular. They allow you to test your idea and understand whether/how it works without having to plow through all of your money and resources.
Lesson #4: People Skills Matter
We’re skipping across the pond now to look at a truly disastrous pitch from the British original, Dragon’s Den.
There’s plenty that goes wrong on this pitch, although the product itself isn’t that bad. The problems all start when the entrepreneur, Eddie Middleton, seems reluctant to give the dragon’s the information they’re after. He claims that it’s to protect the future of his company, but Deborah Meaden is adamant that no investor would ever spend a penny on someone who wouldn’t disclose the information needed for an offer to be made.
Eddie finds himself in hot water with Theo Paphitis, who says…
“You’ve totally alienated me. I’ve lost interested in the product, I don’t care how good it is. I find you arrogant, rude, and insulting. That’s not somebody that I would want to work with irrespective of the business.”
The lesson: always play nice with others
As a Product Manager, a hugely important part of your job is working with cross functional teams and stakeholders, which are fancy words for ‘people.’
As someone with no official authority, you have to lead and influence without it. At the end of the day, it doesn’t matter how great your work is, if you’re awful to work with nobody is going to care.
This doesn’t mean that you have to go out of your way to be everyone’s best friend. But keeping your communication friendly and transparent will be the key to your blossoming career.
Try fostering good working relationships with your coworkers. Empathize with them and listen to them, and make sure they know that you’re reliable and willing to help out where you can.
You’ll go a long way.
Lesson #5: Sell Your Story
We’re ending our list with a hefty dose of positivity…and reggae.
This man, Levi Roots, is a legend amongst Dragon’s Den fans and most British supermarket sauce aisles too.
Roots enters the Den with a song which tells the story of his product. During his pitch he fills in the gaps and his backstory, including the very impressive million pound deals he’d already signed. While he did fluff up some of the numbers on those deals, he didn’t let himself be phased.
The combination of his product, his story, and his personality, proved to be a winning combination. This was the starting point of one of the show’s biggest success stories.
The lesson: products need personality
As a Product Manager, you may not be directly responsible for branding, but you can do what you can to ensure that the personality of your product shines through. If Reggae Reggae Sauce and Levi Roots can teach us anything, it’s that a bit of charm goes a long way.
You might also be interested in: Branding for Builders by Fmr Netflix VP of Product
What does that look like in practice?
The most obvious is to take a look at your marketing strategies. What can you do to inject some personality? Even in the B2B space, there may be room for some levity.
You could also go over the microcopy of your website and/or product. Is there anything that reads as very dry which could do with some spicing up? Is there any room to bring your company’s brand and personality to the forefront?
If your brand isn’t one that would benefit from humor, then try to find space to be sincere. Show your audience that you’re clear on your mission and that you truly care about solving their problems.
Did you enjoy this list? Let us know what your main takeaways are on Twitter, or share your favorite Shark Tank/Dragon’s Den clips with us!