“Shark Tank,” the popular ABC show that puts everyday inventors in front of multi-millionaire investors looking for the next Scrub Daddy, is under fire. Some of those who’ve appeared on the show say the game is “rigged” and many so-called deals never get off the ground.
Alan Kaufman, a Massachusetts inventor who pitched his hands-free umbrella six years ago has just filed lawsuit claiming “Shark Tank” producers lied about nearly every aspect of the show.
Two sharks embraced his idea, which he calls a “Nubrella,” and agreed to invest $200,000 in his company. But Kaufman said the sharks turned out to be deadbeats. He never got a penny.
The show also faked a follow up that portrayed him signing a deal to sell his product through high-end retailer The Sharper Image, according to The Boston Globe.
In fact, sharks on the show seem only interested in helping inventors who are already successful, much like a major record label that will only sign a band that sells 50,000 records on their own; or a movie studio that will only buy films that have already gone viral.
The show’s regulars include Robert Herjavec, Daymond John, Barbara Corcoran, Mark Cuban, Kevin O’Leary and Lori Greiner.
Despite claiming to have huge bankrolls and an eagerness for deals, Mr. Wonderful and company, more often than not, only bite on products that have already made the jump to Walmart, Costco or Bed Bath and Beyond–or at least have an order on hold for half a million units.
Anytime someone appears with just a prototype or a plan, they’re sent packing, no matter how good the idea. Without an overflowing order book or a 50-page prospectus, the answer is almost uniformly “I’m out.”
“Come back when you have a track record of sales, and some kind of evaluation,” the sharks admonish.
Of course, that’s not how the show is pitched.
It advertises itself as a chance for inventors to get in front of successful investors who are willing to “take a chance” on a product they think can crack a particular market.
Would-be moguls have been clamoring to appear, especially since the sharks forced producers to remove a nasty percentage clause from all prospective participants’ contracts in 2012.
Beginning with the show’s inception in 2009, the non-negotiable clause automatically gave either five percent equity or two percent of profits to ABC and the show’s executive producer, Mark Burnett regardless if the sharks reach a deal.
A casting director recently said the show now has more than 100,000 applications in the hopper. Only 80 to 100 pitches make it on the show each season, and even fewer of those end up with a deal.
Even when they do invest, however, the sharks usually take a huge bite out of an entrepreneur’s business, knowing full well the deal is hedged in their favor.
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The budding entrepreneurs are free to say no, but when you’re on television and the pressure is on, most folks will take the deal, no matter how unfavorable it may be for them.
Kauffman says he was not only flim-flammed by the investors: “They didn’t even bother doing diligence,” he said. “They just blew the whole thing off.”
But, he has also been hurt by re-runs of the show that feature his product.
“For the first six months it was great exposure,” Kaufman told The Globe. “But I never knew they’d be running reruns for six years, after Nubrella has gone through a massive transformation.”
Customers who watch the re-runs expect to buy the product for its 2010 price, $29.95. But the new redesign now sells for $59.95, he says.
Even after being stiffed on the investment, he said the show pressured him to “fake” the Sharper Image deal so the sharks could look good.
In reality, he said, his company is broke. After his “Shark Tank” debacle, other investors won’t touch a deal, he added.
Kauffman isn’t the only guest on the show who has been seen deals evaporate once the cameras stop rolling. Others have also come forward with similar tales.
Which just goes to prove, once again, that “Shark Tank,” just like most reality shows, often has very little to do with reality.
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