Expert Tips for Entrepreneurs from Shark Tank’s Lori Greiner
by Martin Lieberman, Staples®
If you’ve seen Lori Greiner on Shark Tank, then you’ve seen what a smart investor she is. But there’s so much more to “the warm-blooded Shark” than what you see on the hit ABC TV show every Friday night.
Lori is a prolific inventor of retail products — having created more than 400 of them — and the holder of 120 U.S. and international patents. Over the years, she’s become well known for identifying whether a product is a “hero” or a “zero.” And, of course, she turned an idea into the multimillion-dollar international brand QVC. Suffice it to say, Lori’s been on both sides of the entrepreneur coin, so she has plenty of insight she can share.
We asked Lori some questions about building a business and finding an investor. Here’s what she had to say.
What is the best way to prepare for a pitch to investors?
You must prepare to show investors in a clear, visual way what your product or business is all about. Visuals are very important. If someone can't see it, they can't relate to it. You want something that looks great or works great, so an investor can respond to it immediately with, "I love that. That looks great. That's interesting." That's very important.
You should also know the answers to every question that could be thrown your way. Really know your business; that's the type of person an investor wants to partner with. Someone who’s extremely knowledgeable, on top of things, and knows all the answers. You feel confident in a person like that, and you want to partner with them.
Can you ever be too prepared when you're in front of an investor?
I don't think so. But I think you can overtalk. Some people make the mistake of going on and on, not responding or waiting for a response from the people they're pitching to, or not listening to who they're pitching to. That can be a fatal mistake. If they give you feedback or they're squirming in their seat like they're bored, you have to react with the person you're pitching to and change your direction if they give you a feeling or vibe that you're doing something that's not right.
Kevin O'Leary frequently takes a royalty deal, where he gets a cut of each purchase, instead of equity in the business. Is there a pro or con to which kind of deal is better?
Kevin gets a lot of flak for his royalty deals, but they’re really not a bad thing. They happen all the time in business. For example, people hire sales reps, and they typically get a cut of sales; they're getting a commission. I look at a royalty deal sort of like a sales commission. If a partner can get you the benefits you need to help you grow your business, that you can ultimately sell for a lot of money, then you want to keep as much equity as you can. As long as the royalty doesn't drain too much cash off per unit, it can be the way to go.
But if you need a long-term partner and you think you’ll have thin margins for a while and you're not really able to give a cut, you probably need someone who's willing to put their money in and then stick it out with you. They’ll get the reward when you sell the company or get to large volumes.
Depending on what the situation is, both can be a good thing. It just depends.
How often would you say you invest in a person and not necessarily the product?
For me, it’s almost 50-50. I have to like what the product or the business is and feel that it's a “hero.” But if I don't like the person, I’ve learned over the years that no matter what, no product or business is worth working with someone I don't think is going to be a good partner or enjoyable to work with. It's just not worth it.
A lot can happen to a small business after they appear on Shark Tank or after they get an investment from somewhere else. How do you coach your entrepreneurs to be ready for an influx of attention?
Often, something that happens is their website goes down. If it does, then you're playing a horrible game of catch-up, and, of course, depression from losing so many potential sales. I've seen it happen no matter how prepared someone feels. I suggest they test and test and test — through the shopping cart checkout process — because if they fail, it usually is because they didn't test.
A Shark like yourself, or any other investor, offers so much more than just money. Can you talk a little bit about the benefits of an investor beyond just the financial part?
One of the most obvious things is clout and connections, and a lot of information and support from their experience. It's very important to have somebody you can use as a sounding board to run ideas by and get the benefit of their experience.
I do feel that learning by doing things on your own and making mistakes is a very good thing, because you really learn some important lessons. But it’s valuable to use the wisdom of people who’ve been down the road before. There's a lot to learn from people who have already experienced something.
Believe me, it's a long road when you're an entrepreneur. Learning from their mistakes just helps you learn things faster. When I was starting out, I know I could have avoided a lot of mistakes if I had had a mentor. I didn't, so I had to figure things out for myself.
Are you happy you had that experience of having to figure things out for yourself, or would you have wanted to have a mentor when you were starting out?
I never look back. I'm a very optimistic, positive person. I always think that every lesson learned is a great one. I've learned so much. I think that's what made me who I am today. So I wouldn't go back and change anything.
That said, if you could go back and say something to your younger self that would have helped when you were starting out, what would it be?
It's interesting. If I was talking to anyone just starting out, I think I would say that being an entrepreneur and starting your own business is a 24/7 job. I'm known for saying often, "Entrepreneurs are willing to work 80 hours a week to avoid working 40 for someone else." I really think that's true. But you have to understand it’s a true commitment. There is nobody who will drive your business like you, or who will care about it, and it's not something that you can ever do just 9 to 5 and walk away. I think I would make them aware that that is the case. I'm very much a believer that there are no “no’s.” Just “How can I?’s.”
I think having an attitude that you will figure things out, and you won't accept when something doesn't work, is critical. Learn from your experiences. Listen to people who are wiser. I would say don't be headstrong — in a negative way, I mean. Don't take things personally.
But isn't everything personal — especially when you’re an entrepreneur or inventor?
No, because in business, you cannot take things personally. If you encounter someone you need — for example, a buyer at a retail store — and maybe they've insulted you or you don't like their attitude or whatever it is, but they're the buyer for your product, you have to live with it. Work with it. Charm them over. Win them over. Don't get angry and say, "They're a jerk. I don't want to deal with them." Don't be...what's the saying: penny-wise, pound-foolish?
Ignore that and think of your end goal. I think that's very important. I've seen a lot of entrepreneurs just throwing in the towel because they didn't like somebody or because somebody treated them badly or whatever. Turn that around. Get what you need. Get in that store, because that's the end goal.
The bottom line is you can make anything happen. That is my true feeling and my mantra. It's what I tell people and I believe it. I'm living proof.
Between QVC and Shark Tank and everything else you do, you obviously are a very, very busy person. As you've said, being an entrepreneur is a 24/7 lifestyle. How do you balance everything? What do you tell people when they ask for advice on balance?
I tell people that you have to try to have fun along the way. You have to try to take some time for yourself, do some things that you enjoy — don't make it just work, work, work. Whether that's just going out to dinner with your family or spending a day doing something you all enjoy, you have to find time to do something that makes you happy.
If you have a family or a spouse, it's important that you try to enlist them into your business. Get them involved so that they can also feel personally vested in it, that you're doing something together and that you have a mutual common goal, because that's more like a team effort. Everybody can take pride in it and people don't mind so much the long hard hours if everybody is chipping in. I think it's important to do that.
Watch Shark Tank Fridays 9|8c on ABC.