‘Shark Tank’ Judge Daymond John Points Out One of the Most Common Mistakes an Entrepreneur Can Make
“Because you had that money, thats why you made the mistakes,” John said during the most recent episode of the show.
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After a holiday break, Shark Tank returned with two new back-to-back episodes on Jan. 7. In the 14th episode, Visconti pitched his invention that gave new parents a way to exercise while pushing their child in a stroller. He went in seeking $500,000 for a 40 percent stake in the company, but the sharks were only willing to give him a lesson in business.
Visconti spent $170,000 of his own money developing the prototype and acquiring the patents for the devices. While he didn't have any sales, he told the sharks he generated a lot of interest by taking the Elliptical Stroller to the beach. He admitted that his company isn't worth the high valuation he gave it, but that he needed the cash to get the stroller on the market. That's when the sharks tore into Visconti.
Kevin O'Leary asked why Visconti poured so much money into the patents instead of approaching an established stroller manufacturer and creating a licensing deal. O'Leary said it didn't make sense to give him more money to compete with large companies when there were other ways to produce the invention.
Mark Cuban, Lori Greiner, and Robert Herjavec also backed out, saying the risk was too high for them. Visconti insisted that he didn't just want to sell the product to turn a profit; he wanted the mentorship that would come with a Shark Tank deal. But Cuban bluntly retorted that Visconti asked for the wrong amount of money.
Daymond John chimed in with some advice. "You made one of the most critical mistakes that all entrepreneurs do make," he said. "I made my biggest mistake when I finally got money; I spent $6 million trying to build a brand that failed. Because you had that money, that's why you made the mistakes."
John insisted that if Visconti didn't have $170,000 to develop the prototype, he would have made a version of his invention from an existing stroller then shopped it to existing companies. John's message is an important one that every entrepreneur should take note of: Staying scrappy in the early stage is the best way to build your company.