Getting Schooled by Sharks

A few weeks ago, I was watching a show called Shark Tank with my 10 year old son and almost immediately realized that it’s a great way to subtly expose your kids to a subject that wouldn’t necessarily interest the majority of the tween/teen-ager set.  The subject – venture financing – including start-up capitalization, equity negotiations, licensing, revenue sharing, the power of salesmanship and a whole host of other key aspects of starting and building a successful business.  It’s like sneaking spinach into brownies (hey – it’s Mrs. Seinfeld’s recipe).  Airing on ABC on Friday’s at 8pm (EST), the show is mainly comprised of entrepreneurs and business people pitching a wide range of business/product ideas to five “sharks” who decide there on the spot whether or not to invest in the “contestant’s” business.

The five sharks are usually Dallas Mavericks owner Mark Cuban, real estate mogul Barbara Corcoran, technology innovator Robert Herjavec, fashion whiz Daymond John (started FUBU) and venture capitalist Kevin O’Leary all who usually battle each other for a piece of the action (sometimes they work together to partner on a deal). They actually have a fun repoire with each other but it sometimes can get a bit nasty – which makes for more interesting viewing.

What became clear is that the show’s hook is whether the offer (usually in the form of equity) is worth the risk that the investors take in order to invest in the company. Sometimesthe ideas are really great but the valuations are completely off, sometimes it’s the other way around. During the back-and-forth between the sharks and the entrepreneur, there’s great moments – especially with a young kid (10 years older) watching, where you can pause the show (assuming you’ve got a DVR) and ask them to compute what a company is worth if the entrepreneur is offering 20% of his company for $100,000. There’s a lot of moments like that…

As the sharks react, negotiate and ultimately decided whether they’re in or not, there’s a slew of mini-lessons on the fundamentals of valuing businesses and what is involved to take an idea from inception and bring it to market. Here’s a link to some video clips. It’s a well-paced entertaining experience with the typical reality-show manufactured dramatic build-ups and resolutions but despite the contrived nature of the productions – the real value is the way that kids can develop an understanding of what is seemingly the boring dry financial aspects of business without feeling they’re in a lecture. Think of it as sugar coated spinach.