22 Feb Shark Tank Pitch Secrets with Kevin Harrington
Today’s guest on The Successful Pitch is none other than Kevin Harrington, one of the original judges on Shark Tank. If anybody knows what it takes to have a good pitch, it’s Kevin Harrington. He’s literally heard over 50,000 pitches in the many years he’s been doing this, from listening to pitches for infomercials to listening to pitches on Shark Tank. He has a really great key here which is that, “Consistency is the ultimate motivational tool.” He said, “When you’re out there, you need to show the investors how they’re going to get their money back.” He gives an example of exactly the kind of pitch he would like to hear in order to get him to say yes. He said, “You need to test before you invest.” He gives us great insights into what a magical transformation is that he is looking for when he hears a pitch.
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Shark Tank Pitch Secrets with Kevin Harrington
Hi. Welcome to The Successful Pitch podcast. Today, I am thrilled to have Kevin Harrington. You probably know him as one of the original Shark Tank judges. He has been so successful in so many different areas. He has written multiple books, one called the Key Person of Influence, and he is definitely a person of influence. He is known not only for his expertise on Shark Tank, but he is the inventor of the infomercial, the As Seen on TV pioneer. Now, he’s involved with Quantum Media, which is a digital media agency. He hears so many pitches. He’s going to give us insights into what makes a great pitch. Kevin, welcome to the show.
Hey, John. You said a mouthful there, thank you for all that.
I’ve been a big fan of yours for multiple years. I’ve watched a lot of your clips on television and your areas of expertise. I always like to go back to someone’s story of origin. Did you always know you wanted to be an entrepreneur?
I was lucky. I grew up one of six kids in Cincinnati, Ohio. My father was an entrepreneur and he always said, “Kevin, I want you to be an entrepreneur, own your own business, control your own destiny.” Now, my mother, her father was in banking, so she came out very conservative, “Oh no, I’d really like for you to be a doctor or a lawyer.” They struggled a little bit. The good news is I have two older sisters. One married a doctor, one married a lawyer. I got to be the entrepreneur.
Everybody filled the different dreams of your parents, so you got to do your own expertise there. One of the things that you’ve recently written about in Forbes is that, “Consistency is the ultimate motivation tool.” I’d love to have you talk about that.
I think that when I look at the infomercial business and I look at the infomercials space, that is an industry of consistency. We take Tony Little, who goes on in HSN and gives his pitch. Then, he hones it. Every time he comes on, he has to be consistently the same. He comes back week after week, month after month, year after year, and we’d take that infomercial and it continues that whole path, all around the world. When I get involved with products and companies and people like the Tony Littles of the world, I get involved once they have reached that level of knowing what the consistency of that pitch is and how powerful it is. Then we capture it on tape, put it up in front of millions of people and take it around the world.
Yes, consistency is important. That’s in a product but also running in the business. It’s the same thing. Why is McDonald’s so successful? It’s the special sauce. They give you the same thing. No matter where you go, you’re going to get that same quality little cheeseburger, whatever it is you’re getting. That’s why franchising works. Ultimately, successful businesses are good because they deliver on a promise of consistency. It’s important. People today, they don’t mind paying a little extra or the right price for something, whatever the deal might be. But they expect to get the same thing each and every time. I think, it certainly is as the millennials are coming out. They don’t want to be messed with. It’s a much more authentic world in the world of marketing and business today than it was even ten years ago.
I think we can use this as a through line for the whole episode because consistency is so important in what you’re doing with Quantum Media. When you’re talking about helping businesses increase their conversion rates and use social media and all these other digital tools to create a brand, it’s so important that brand would be consistent.
Absolutely. Let’s put it this way. In the world of marketing, when we first started, I didn’t even know what an infomercial was, we didn’t call it infomercial, we’re just putting them up. But it got down to where we were running our shows, looking for consistent dollar per phone call. We had an allowable with the station where we said, “Okay, we’re going to let you run this show and we need to get $10 for every time the phone rings.” That’s our allowable, that’s our consistency.
In the world of digital marketing, it’s pretty much the same thing. If you’re going to go on Facebook and you’re going to use affiliates and you’re going to do different things, you have to be able to provide consistent everything. Because if you’re shipping your product within 48 hours and that’s consistent, and all of the sudden you have a delay on inventory and you’re shipping in three or four weeks. Your returns are going to go from 5% to maybe 20%. If you’re not consistent in the world of digital, it’s even a bigger problem today. In the old days, we could say at the end of an infomercial, “Hey, call the number, we’ll ship it within four to six weeks.” Can you do that in today’s world?
No. Not with the drones in Amazon and everything. That’s funny.
“Did you mean four to six hours or four to six days?” Don’t give me four days. I want this in 48 hours. The world expects authentic consistent performance. They just don’t allow for the alternative anymore.
It’s all about giving people an expectation that you can meet and then being consistent with meeting those expectations. Because the minute you lose credibility in an infomercial, on what you’re promising your clients from Quantum Media, or what the ad is promising people if they click on it that they don’t get, then everything goes out the window. Now, you have heard so many pitches. Let’s talk about of course your experience with Shark Tank, how did Mark Burnett pitch you to be a judge?
I’m going to tell you that in one second. I got to finish one point you just made. In today’s world, with the star system of rating people’s products and stuff, that is the other reason why consistency is so important. Because in the old days, you could ship something, if it wasn’t perfect, people didn’t have a way to complain other than call the number and say, “You know what? It’s not exactly what I wanted.” Now, you get one or two stars, you get yanked off the air, you get yanked off a website. You’ve got to be consistent. We’ll close that subject down.
I love that loop. Thank you. Even an Uber driver gets rated now, so everybody gets rated.
I was sitting there. I had done about 300 or 400 infomercials with Tony Little and George Foreman and Jack LaLanne and the juicer and all these different fancy shows and things. Taking them all around the world, built a public company with $500 million in sales and had done literally billions across the board. One day, Mark Burnett was on the line and he’s like, “Hey, Kevin. This is Mark Burnett. I’m a TV producer.” I said, “Mark, I know exactly who you are. I’m in your industry.” He said, “Look, I got a new reality show I’m doing. Would you come out to LA? I want you to meet my team and tell you what we’re up to. It’s something I want to see if you might be interested.”I said, “Mark, what an honor to get this phone call. I appreciate it. Thank you. But any kind of heads-up you could give me so I can be thinking about it? Is there any news on it yet?”He said, “No, it’s coming out but we haven’t shot it yet. It’s called Shark Tank. Don’t worry, just come on out here. I’ll tell you more about it when you get out here.”
I said, “Mark, wait a minute. I’m not sure that this is going to be for me. I do know you do some crazy things to people on that Survivor Island show. I don’t know about a show called Shark Tank. What are you going to do to me?” He thought about it and said, “Look, it’s not crazy like that. It’s a business show, Kevin.” That’s when I said, “If it’s a business show, I’m interested, if you’re involved Mark.” My wife said, “How is Shark Tank a business show?”
It was kind of funny. Think about this. When I was shooting Shark Tank, nobody knew what it was. I tell my wife, “I’m heading out to LA. I’m shooting Shark Tank.” She says, “What are you going to do?”I said, “I’m going to be investing money.” She said, “Wait a minute, they’re not paying you? You have to pay them?” “That’s how it works, yes.” She said, “How much are you going to invest?” I said, “I don’t know. It could be hundreds of thousands, it could be millions.” She said, “When would we get that money back?” I said, “I don’t know, maybe never.” She said, “Why do you want to be on this show?”
When you think about it, I was investing one of the first deals I did, I’d put a half a million into a company. She closed the doors six months later. It was a very risky endeavor and I was one of the original sharks in putting money up and wheeling and dealing and all that. I think the bottom line is this, once we got distribution, once it was on the air, once it got the buzz, then everybody understood. “Okay, there’s the Shark Tank show. Yes, I understand. Kevin’s on that show called Shark Tank.” Then, it started paying off for me. Much like why are we doing a podcast today. I’ve taken now 50,000 pitches over the last 30 years. This is why Mark Burnett wanted me, because I had taken so many pitches before I’ve even got on Shark Tank that I was an experienced pitch taker, if that’s the right way to say. I go to tradeshows every week somewhere. I’ll do 30 tradeshows this year. I’ll invest in products in every show that I go to, whether it’s the pet show or the fitness show or the beauty show or the golf or the toy fair or the house wares or the hardware. That’s what I do for a living and that’s what I love to do.
The one thing I can tell you, John, is that I have learned what it takes to give a good pitch because I’ll sit there in a day, I took 96 pitches in one day. Just think about this, do five minutes times 96, it’s 500 minutes, and do it back to back to back, it’s an eight hour a day and beyond, and there was time in between. Sit there for eight to ten to twelve hours and take pitches, you’re going to learn a thing or two when you get to 47 and you think you’ve taken 500. You’re ready for a little break in the action and you’re ready for a good pitch. I learned a thing or two about good pitches. That’s what I love sharing with people right now. That’s part of my DNA.
I’ve been called The Pitch Whisperer because that’s equally something I’m passionate about as well. I love helping people become great story tellers, and you and I are on the same page. I’ve heard you talked about the need for a pitch to have a magical transformation. Can you describe what that is for you?
I’m in a very visual business, in the world of as seen on TV products. If it’s Tony Little in fitness, we want to see people losing weight. We want to see people getting stronger. If it’s acne, we want to see their bad skin get cleared up. Just think about it. If it’s a kitchen gadget, we would take a little gadget and turn an apple into a bird, “Wow, what was that? That was pretty amazing.” The bottom line is this magical transformation sells. It’s before and after, before and after. It’s visual, it’s demonstrable, and it works. We know that it does.
People ask me a lot of times, and you’re the expert to ask this question to. How real is it on Shark Tank compared to when somebody pitches someone like yourself in front of an Angel group? Because I know you’re involved with the Angel Investor Network as well. The contrast obviously is quite different, but I’d love to hear your answer on TV versus reality.
Look, the one thing that I would always say, Shark Tank is a great show but Mark Burnett is a television producer and he looks for ratings. He’d come down halfway through a day and say, “Nobody has invested any money, what’s going on here? If we’re going to have good television, we’ve got to have some deals.” We’d say, “Mark, you want good television, but we want good deals.” There’s a mix there. We could make fun of people or whatever, which I never really particularly wanted to do that. I was more of a constructive guy. Mr. Wonderful, that’s his brand, to make fun of people. That’s okay. He built his brand on that. Me, I like to empower entrepreneurs.
I would say this, that Shark Tank was about making good TV and getting good ratings and getting lots of viewership. They’ve done a good job of that. Along the way, you’ve got to have a mix of some good deals, or the sharks aren’t going to be interested. I’d be sitting there and somebody would come out with something that you just knew. They were looking for ten grand, for 20% of their company, they haven’t even started and it’s this crazy idea, and you just knew this one that it was just made for television.
Do you think that Mark Cuban, who owns a multibillion dollar enterprise and the Dallas Mavericks, is interested in really investing ten grand in one of these teeny little deals? It’s made for TV that they had to do, whereas when we’re pitching equity deals like Angels network and some of these things, these are hardcore deals where we want to see research. We want to see competitive analysis. We want to see exit plans. We want to see the risk analysis where we can really get into the hardcore crunch of the deal.
I did dozens of deals on Shark Tank and I know Cuban’s done probably, I think I read an article that he had done about 35 or 40 deals. He said a third of them are making some money or in business, a third of them are out of business and don’t know it, and a third of them are never going to make it and are virtually done. Two-thirds were done almost and just selling and not really understanding that they really don’t have a business.
I think that’s probably not too far off the investor rule in investing in Angel-kind of deals, is if you can get a third of your stuff to work, that’s probably pretty good. However, I wonder how many of the third that are still in business, as Mark says, are actually going to have any kind of an exit to where he might get his money back even. That’s really the ultimate thing. People forget, when they come on Shark Tank, it’s not really about them, it’s about how do they get the shark to want to write the check. That’s the perspective people pitching a lot of times forget. They’ve got to get the shark to write the check. It’s more about understanding really the motivation of the shark to want to be your partner.
Would you say, for someone like yourself who has heard as many as 96 pitches in one day, that having a really compelling story is a way to get people to standout out of all those pitches? You remember the story more than the product, typically?
I’ll say this. I think the story is important, absolutely. I want to hear the story, but at the end of the day, I focus on a couple of things. I want to know, is there an exit strategy, because one of the challenges is this. If it’s a private company, let’s say somebody wants to have half a million dollars for X percent of their private company. There is never a distributions in these small companies. They always need more money. Here’s my half a million, I’m not going to get it back for a long time unless you sell the company or go public. I want to know that there’s an exit strategy.
This is the other trick that I talk about, and Mr. Wonderful uses this one quite a bit. Is there a way to accelerate the pay back to the shark? When I say shark, to the investor. I’ll give you an example. If somebody says to me, “Look, I want your half a million. I’ll give you 20% of my company, but I’ll give you 100% of the profits until you get all your money back. Now you’re whole. Now you own 20% for the rest of your life. You don’t have to be worrying every day, “Where’s my money? Where’s my money?” You got your money back right away. Now, you can focus on building the business to the exit.
I tell people to always focus on getting that money back to the shark. If you’d notice, O’Leary, in many cases is talking about, “Okay, you’re a donut business. I want 50 cents for every donut you sell,” as a way to monetize his investment. That’s because he realizes that he’s going to be riding these people like crazy if he just has equity and he’s never seeing any distributions. But if he’s getting 50 cents back on every donut sold, he’s getting a distribution on a weekly basis and having the chance to have equity also.
I love it because not only does the investor get their money back sooner than the exit strategy, but also it takes the pressure off the founder not to have an exit strategy until they’re really ready because the investors already made their money.
Exactly. In all of the years of watching and doing Shark Tank and being there myself for 175 of my own segments, never did one person ever actually lay it out to me, the shark, “Hey, look. I’m so focused on you to get your money back fast. My goal as the entrepreneur here is to tell you that I’ve got a great business, here’s my plan, here’s my execution, here’s my team. But my goal is to get you your money back within one year, and this is how I’m going to do it.” If somebody came with that storyline, that’s going to be powerful pitch.
It’s really about showing empathy for the investor as opposed to what you need, isn’t it? I love that, Kevin.
I’ll give you an example. I had a company I got involved with. They needed $20 million. We went out and did a raise. They said, “Would you help us go on the road show?” I said, “Absolutely.” They said, “Look, give us a couple of weeks up in New York. We’re going to have people coming in one at a time, have a couple of group meetings. We’ll have you, if you could. There’s a couple of billionaires as part of this, if you could maybe go and sit in their big building that they own at the corner of 15th and Madison or something. We’ll make a couple of appearances here and there.” I made 90 something pitches over that two and a half week period of time.
We made 90 something pitches to individual investors. The first thing that I did was sat, talked, got to know them for a few minutes. What is it that you like? What have been some of your most successful investments? They would instantly tell me what it was going to take for them to get the money. “This is what I’ve been doing. When I invested in this deal, I love it. I ride it out for years, and boom, boom, boom.” They would basically, within five minutes, tell me what it was I needed to do to convince them that we might have the right investment for them. Sometimes, you’ve just got to sit and listen.
It also sounds like you’re really smart in asking the investors before you even pitched what their criteria is of what makes them say yes. Also, you get them in the mindset of remembering a positive experience before you even pitch, which I think is also very clever.
Exactly. Because on Shark Tank, the advantage that people have today is they can watch all the Shark Tank segments, and they see what Barbara is looking for, what excites O’Leary, how to make those pitches. But when you’re one-on-one with an investor you just met for the first time, how are you going to pitch them? You’ve got to get in their head real fast. That’s what I like to do.
Kevin, one of the key things I know is so important to investors like yourself is, who’s on the team? Recently, I interviewed Laura Wagner of Digitzs. She put together such an impressive team of people from Apple and PayPal and Google, plus herself. Is that a key factor for you when you’re looking at a company that’s pre-revenue and maybe even pre-minimum viable product, is will they have a great team?
Yes. There are various things that I do look for. If someone says to me, “What is the one thing that an entrepreneur really needs to do to be successful?” I say, “They’ve got to have passion and vision and all that. But they need to surround themselves with experts and a dream team that supports their strengths and weaknesses, and more supports their weaknesses than strengths.” I think at the end of the day, Laura surrounded herself with some amazing people and was very, very successful in doing that. What was interesting is that when she first tried to raise some money via crowdfunding, she had some challenges. The bottom line is, it landed soft in the first part and then when we brought the shark stuff and brought more of this dream team aspect to the table, it has super charged what she was doing. The bottom line is we had some very powerful stuff happen as the dream team came together.
You’ve had your pulse on success for so long, from being on the cutting edge of what’s going on in infomercials, being one of the first Shark Tank judges when there was a lot of risk for you, it obviously paid off. Now, you continue to invest in a lot of startups. Let’s talk about where you see the future with what you’re doing with Quantum Media. What is it about that that you feel is so exciting and has so much growth, and how can people possibly use Quantum Media, and who are you targeting?
What’s happened is there’s been a disruption in a lot of industries. Uber has disrupted taxis and Airbnb is disrupting hotels. Not that they’re putting all these out of business, necessarily. They’re tightening up some of these industries. The TV industry has been disrupted itself. There is 50% fewer viewers on TV. By the way, there is big financial drain in the world of television right now. ESPN is losing millions of viewers every single year. ABC owns ESPN and Disney, they’re hurting because of this. What’s happening is, where do the eyeballs go? If they’re not watching TV, they’re watching digital. They’re on digital. They’re on Facebook. They’re on Pinterest. They’re on Instagram.
The bottom line is that there’s this mass exodus to other places. What do I do? I follow the eyeballs. Quantum Media, what we’ve done, five years ago, it was 80% TV, 20% internet digital. Now, I’m 80% digital, 20% TV. We’re doing campaigns for major corporations, for products across the board. We call it a test before you invest kind of a format and do a lot of stuff long before we go to TV, because TV is so expensive. Quantum Media is our new baby. We shoot very inexpensive videos, test them up on social media channels to see what the results are before we go to the next steps. It’s the new way for us. Digital is without a doubt the future in my mind for not only testing products but also rolling them out and, as you started off this conversation, getting the consistency you need as an entrepreneur.
Nice. We’re going to tweet that out. I love that line, test before you invest. What a great sound bite that is. That’s fantastic. I know that people are probably going to want to follow you on social media. Your handle is @HarringtonKevin. You have thousands and thousands of people listening to your advice. I just want to personally thank you for being such an advocate and inspiration for so many people, myself included.
John, it’s been a pleasure to be here today. Thanks for having me. Keep the pitches coming for both of us. I love to take the next home run pitch. I love every single day when I wake up because I never know what I might be pitched that day. That’s what keeps my days exciting, is knowing that I’m going to be hearing some cool new things. I look forward to doing some more business with you. Good luck in your podcast ventures and taking new pitches.
Thanks a lot, Kevin. I appreciate you being on the show.
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