Jason Cochran

Stuff you never knew you never knew

Me with Mark Burnett

Me with Mark Burnett

It has been a while since I wrote about Shark Tank here, but that doesn’t mean I don’t often still get questions about the show.

The most common one? It’s whether I can connect people to Mark Burnett. (If you think I can, perhaps you aren’t ready for the intellectual rigors of pitching the Sharks. Here’s the general application link.)

But there are other things you didn’t know that I could tell you.

 

 

Producers get a percentage even if no deal is made.

If you pause the end credits of every episode, you’ll see this:

SharkTankEquityGrab

Scott Jordan, the owner of Scottevest (Season 3) explains, “merely appearing on the show, whether a deal is made or not, I have to give 5% of my “business” or 2% of the profits forever to the producers. So, my appearance was not free. … Free? They make money out of every deal I make from here forward.”

Jordan posted this scan of the pertinent contract clause:

SharkTankEquity

Jordan says he went to great lengths during his segment to speak only about his product, but to make no mention of his brand name that would trigger perpetual equity ownership of his brand by Sony and ABC.

Entrepreneurs who agree to be taped by the show do it because thy think the national television exposure will compensate for the percentage. They may have a point. Most entrepreneurs report their websites are slammed following every broadcast. KissTixx, a lip balm product, saw its Web traffic skyrocket by 3,000% when its segment aired. Rackspace, the server host for Villy Customs bikes, reported 3.2 million hits in a span of just 25 minutes. Litter, a jewelry brand, sold more than $250,000 in goods within 72 hours.

With ratings steadily rising — Shark Tank is now Friday’s #1 show on any network, with more than 6 million viewers per episode — exposure will only lead to even more conversions. Is that worth a 2% royalty of losing 5% of future equity? Many businesspeople think so.

Update: Just before Season Five, there was a huge behind-the-scenes fight over this clause, and it would appear one of the Sharks threatened to quit it it wasn’t removed. I cover the rebellion in this post.

Each pitch begins with 30 seconds of silence.

The entrepreneurs never meet the Sharks before their pitch (this has been true since the pilot, when Tiffany Krumins struck a deal for Ava the Elephant, then called ‘Emmy’), nor do the Sharks know who is coming down the hall once the doors open. All the Sharks know is what the stagehands have pre-set on the oriental rug in front of them.

Then the Entrepreneur is released into the Tank while hand-held camera operators trail their progress down the hall. The visitor is instructed to wait on a spot on the rug and not to speak. This gives Production a time to clear the hand-held camera operators from the set and to get a few static shots of anticipation between the Sharks and the Entrepreneur. Finally, after an adrenaline-drowned, Wild West-style standoff, a cue is given and the business owner/s may commence their pitch.

The nickname for this long, painful pause is “the stare-down,” and it’s edited out for the broadcast, although the havoc it plays with the nerves frequently pays off in TV-ready dividends.

The Sharks are wired.

The control room can prod them to ask questions that need answering or wrap up the negotiations, if necessary. IFB earpieces are common host crutches in the reality show world, but take note that the Shark Tank pre-show title card confirms that the Sharks “invest their own money at their discretion.” You’ll notice, however, that Kevin O’Leary (always in the center chair) is usually the guy who applies pressure at key moments. It would be a dangerous drinking game to swig every time he asked, “What are you going to do?” because he often issues recaps so the editors will have a logical place to stick their commercial breaks.

Kevin's hidden earpiece: "Mr. Wonderful, now say, 'So what are you gonna do?'"

Kevin’s hidden earpiece: “Mr. Wonderful, now say, ‘So what are you gonna do?'”

O’Leary is the Shark who prompts tension because the control room has given him the role of segment narrator. He is a veteran of Canada’s Dragon’s Den, so he knows the format well. His role as the subtle pacemaker is a large measure of his value on this show, since few of his offers are realistic enough to be accepted by most of the Entrepreneurs. He also reliably embodies the soul of venal greed that drives the ethos of the Tank.

This makes O’Leary both the de facto ringmaster and the spoiler who compels the Entrepreneurs to make choices. Is he a plant? All the Sharks are. But whether by forcing decisions or lobbing spoiler offers, O’Leary is almost always the Prompter Shark.

Many deals fall apart.

Just as Judge Judy isn’t performing as a true judge but as a binding arbitrator, the buy-ins we see on Shark Tank are not done deals but actually good faith agreements. Due diligence kills many deals after they are shot. It could be that the patents aren’t airtight, or there’s irregularity in the books, — anything, really, can excuse either party from consummating their union. Nothing’s firm until everyone signs on the dotted line, and that happens off-camera much later.

In the case of one product Kevin Harrington (a Shark from the first two seasons) has sidestepped naming, a pattern of defective merchandise sank the deal. After Season 2 guest Shark Jeff Foxworthy took the bait with HillBilly Brand clothes, he says the owners confessed they only went into the Tank because they wanted publicity. And Season 1’s The Chef in Black, Dorene Humason, told me, her deal hit a rocky road almost immediately when she and her Shark investors clashed over strategy.

“From what I’m told, only about 50% of the deals you see made on Shark Tank actually officially get DONE,” writes Fleetwood Hicks of Villy Customs Beachcruiser Bikes. “As a guest on the show, you have the right to pass on the deal and the Sharks have the same right. The deal made on TV is simply a “good faith” agreement that you will begin the due diligence process.  I’ve heard that some companies just go on the show to get PR, but my intentions were to close our deal. ” He did.

The weekly “update” usually shows you the deals that went right. But lots go wrong and you’re never told about them.

Daymond John has called out a plus-size designer named Gayla Bentley for taking his and Barbara’s money and then vanishing. “They’re not going to tell you they’re going to disappear. They’re not going to tell you they’re buying a Mercedes-Benz.  They’re not going to tell you that type of stuff. They’re not going to tell you they have tax liens or their wife really owns the company.”

Here I am interviewing Bentley. Tell me—does she look like a scammer to you?

They shoot way more than they use.

For many reasons  — timing, mood, variety, legal concerns, telegenic performances, complexity — some segments don’t make it to the final broadcast. How many? As many as 40% to half. When I shot on-set interviews during Season 2, several Entrepreneurs interviewed with me that did not make it to the final show edit. (Out of respect for the businesspeople and the show, I did not release those interviews.) For Season 3, the reported ratio was 52 used but 82 shot.

Likewise, some negotiations can go on for an hour or much longer, but the key moments are edited into palatable acts for television. Everything you see is true, none of it is re-taped, and the elements that are crucial to the outcome are included. But rather than drowning viewers in a Shark Tank that subjects viewers to, say, long minutes of going over sales numbers and distribution plans that don’t amount to much, the editors compress events.

Daymond John says the longest interrogation was for a product called Plate Toppers, which went on for 2 hours and 45 minutes. By the end of the segment, the entrepreneur is so tired of standing he’s seen rubbing his legs. But he got the deal.

The pitch for the Nubrella Hands Free Umbrella aired and an update was filmed on location with Daymond John, but that update was yanked from its scheduled broadcast when the deal ran aground. I’m sorry that never saw the light of day. It was pretty funny watching Daymond walk down a public street wearing a plastic umbrella bubble hat on his head.

The ‘stew room’ is on separate sound stage.

The area where Entrepreneurs are interviewed after their pitch is not on the same sound stage as the Tank. The filming location is on another stage nearby. This is mostly so the talking won’t interrupt the filming of the next incoming pitch and also Entrepreneurs can be kept away from the people who are next up in the Tank. After all, nothing will unnerve a pitchman more than seeing the person before them fleeing in tears.

Yes, the Sharks fly into Los Angeles several times a year (often in July and October, if not more) and shoot several marathon days in which 20 or so business pitch, one after the other, with time in between to set up for the next one and get make-up touch-ups. Then the segments are mixed and matched over multiple episodes — which is why Barbara Corcoran and Lori Greiner wear the same outfit week after week. They have to for continuity, so the look will remain the same no matter when the segment airs. The guys are wearing the same clothes, too, but few people seem to notice that. Sexism!

The set, by the way, is on the Sony Pictures Studios lot in Culver City, California. It was once the M-G-M lot, where The Wizard of Oz and countless classic musicals (Easter Parade, Singin’ in the Rain) were filmed. The Tank (click here to watch my tour of it) is not on the same sound stage for every season, but it is on the same lot. If another major picture (like Spider-Man) or TV show (Jeopardy! or The Wheel of Fortune) is shooting, it can slip into just about any size stage.

Anyone can take a tour of the Sony lot. Click here for details.

The real sharks aren’t real, but they are from Reno.

The sharks you see swimming on either side of the corridor into the Tank are not there. They’re on video.

More surprising is where they come from. The end crawl credits the 1,635-room Peppermill Resort and Casino for them.

Maybe the sharks were downloaded from its Bimini Steakhouse, where “you dine in the surrounds of a virtual aquarium.” The fact they come from a casino means that like their human counterparts, Shark Tank‘s sharks are gamblers, too.

Here are the Nevada sharks up close:

After your pitch, you talk with a shrink.

“ABC sent in a psychiatrist to our room to make sure I was ok,” wrote Hicks. “I think they do that to make sure you aren’t depressed or freaked out, but, I was good because I was excited.” Then the network reminds you that if you breathe a word about the outcome to anyone before your air date, it will sue you to a crisp.

Now if it would just make sure some of those crackpots passed the psych test before they hit the Tank…

Update: I’m often asked how much the Sharks earn per episode. Until recently, there were guesses, but no proof. But now we have a paper trail that reveals a Sharks’ salary: It’s in my post How much do the Sharks make per episode?.

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64 comments. Add a Comment:

  1. This information was excellent for informing my decision to apply or not apply. I have a venture that is totally new but is a huge success for the service that is being run by a state.

  2. Daymond says:

    Wow I never would have though there was so much going on behind the seans of shark tank, I cant believe they take 5% cut from the Businesses appearing on the show that’s steep, although the potential exposure is really appealing. I am glad I read this article it really sheds a light on some of the key questions and mysteries of Shark Tank.
    O’Leary’s questoes about money are the best I wonder if they are pre-scripted?

  3. nikkas klozet says:

    This has been awesome info. Im actually preparing to cast for the show. I would really like a mentor if anyone can help that would be great. 404-604-0826

  4. duchess says:

    ciao,
    o.k.
    i’ll get right to the point just like the sharks……
    i think you should ask damon to step down as he just takes up space on stage…..i am a loyal follower of the show and i can count the amount of times he’s invested on ONE hand…..
    my interest is fading because he’s ALWATS out and i become angry where i just want to change the channel and sadly I DO.

    secondly, the new set is TERRIBLE…..ABSOLUTLY TERRIBLE…..i am aware of feng shui the huge over bearing desk makes the people who ask for money at a great disadvantage……because it is above their eye level…..maybe this was intentional to shake them [the potential clients]up that much more…….
    the money on the desk is in REALLY poor taste……come on……flashing money is never a good idea…very crass,tacky……

    their’s a perfect adage: DON’T FIX IT IF IT’S NOT BROKEN …..

    the set that was best was where the sharks we’re seated in low back chairs……heavly cushioned……what seamed like leather chairs and they had a coffee tables in front of them……the setting was relaxed……and the large persian carpet……looked like a beautiful magic carpet……the floor was one level which [if you will] an even playing field……
    keep it simple…….
    the sticks and bowls in the backround are a distraction and unnecessary…….how about some plants [real,live]……..
    seasonal perhaps……..
    i could go on and on……..but i’ll stop……
    thanks for letting me share with you what i see on the shark tank……
    thank you for the time…..
    the duchess
    the duchess

  5. Amy Beach Gilch says:

    I was wondering what clothing lines do Barbara and Lori wear. Barbara, especially because she is petite, looks fabulous in the dresses she wears. It’s a perfect style for her. Are you allowed to tell the clothing line,mdesigner or the name of the person, who works for the show, that picks out the dresses for the women? I’d love the contact info, if you would be so kind as I’d love to finish off my wardrobe with a handful of those dresses. Again, both women are dresses beautifully. Thank you for your time.
    Amy Beach Gilch

  6. Sunchea Phou says:

    Thank you Jason for all these great info. I would like to apply but not sure if my business is appropriated for the Shark Tank as my business is based on a profit and non-profit platform…20% of my company’s profits go to help poor families in Cambodia.

    I strongly believe my product YaYwallet will get the Sharks interested. It’s the first ultra slim wallet/credit card holder that’s functional, fashionable and designed for every personality from cute to classic to hippie. It’s a fun new concept which redefines the perception of a slim wallet where both men and women can now use a wallet as a fashion accessory mixing and matching as their style changes day to day.

    Any feedback on the application would be appreciated.

  7. Ted Scheidler says:

    Gene Savage, I too dealt with Davison. If they are not helping you. Don’t hold your breath. All they will do is send out $345.00 emails at your expense. Not to mention your lose of 10-15k you may have lost. Google Davison scams. THEN FIRE THEM!!!! That’s what I did. I’m doing better by myself and hope you do too

  8. Kendall says:

    Wow thanks for the information ..Shark Tank really is not all its cracked up to be. Its Just a “Show” like anything else on TV
    these days.

  9. Amy Mushet says:

    I love Shark Tank, especially Lor Greiner. Question. Where does she get her clothes. I love her dresses and would like to buy them for myself.

  10. My family members all the time say that I am wasting my time here at web, however I know I am getting experience every day by reading such pleasant articles
    or reviews.

  11. Sandra D says:

    Thank you for this fantastic “behind the scenes” look. It is FASCINATING, and SO informative! It lets me know that if I ever have a PRAYER of going on a show like Shark Tank, that I need to have my STUFF together!! Thank you again, for such a great read, and good luck to all who consider trying out!!

  12. Robbie says:

    Dean, thanks for the comments. Was considering going on Shark Tank with a great business that provides therapy to children with autism…would be interesting if they would turn their backs on a business that is helping children that makes them money at the same time…I am now going to look into SCORE as we look to expand our operations.

  13. Don says:

    shark tank is a fraud..use stupid people begging..3 of them made money off of data dot com collapse..insider trading..bilking investors outta millions..nothing but fuckin punks

  14. Lisa Simcot says:

    What are the rights of the person pitching their idea if they don’t have a patent yet? I see numerous products I’ve seen pitched on Shark Tank that are now on QVC as “Lori Grenier’s” Does that mean they sold her their product or did she make a product just like theirs and patent it first?

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