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Built on Entrepreneurship, Horizon Media Hosts ‘MKT’ Event for Local ‘Treps

Posted in Small Business, Working, tagged , , , on December 17, 2014| 1 Comment »

This post was written in anticipation of MKT, an entrepreneur event hosted by my employer, Horizon Media. The event took place on December 15.

I’d been working at Horizon Media for a few months when I heard the story of how the company’s CEO and founder, Bill Koenigsberg, started his ad agency back in 1989.

Koenigsberg was his early twenties, fresh out of college with a marketing degree in hand, when he went to work for a boutique media buying agency in Manhattan. (When an advertiser wants to buy space on a billboard, in a TV show, or on a website, it typically uses a buying agency to negotiate the price and purchase the ad for them.)

It was meant to be a temporary gig until he found something better. But he had a knack for the ad business, and ended up working at his first agency for six years.

He was doing so well, in fact, that the president of the agency promised Koenigsberg a car as a reward for his hard work. But when it came time to actually give Bill the car, the president reneged. Bill was not happy. When a headhunter called him with a job offer shortly after, he took it.

Koenigsberg eventually parlayed that job (from the headhunter) into an opportunity to buy the company that would later become Horizon Media, which he still owns today.

A small business in a big business’ body
Horizon Media is the largest privately held media agency in the world and boasts a client roster that includes GEICO, Capital One, and Burger King. With nearly a thousand employees across its New York and Los Angeles offices, it’s no mom-and-pop shop.

So it wouldn’t surprise anyone if Horizon’s office culture leaned towards the corporate end of the scale—by which I mean a stuffy, serious workplace straight out of Office Space—considering its size and the brands it reps. But it doesn’t.

Instead, Koenigsberg and Horizon have gone in the other direction when it comes to office culture.

Philanthropy is a major part of Horizon’s identity, forging partnerships with City Harvest, 96 Elephants, NY Cares, and Toys for Tots. Employees are empowered to host charity happy hours on The Terrace, our outdoor space which includes beer taps, with the proceeds going towards important causes.

In late October Horizon invited 75 first graders from a local elementary school to trick-or-treat in our offices. Afterwards the company treated the kids to lunch and surprised them with costumes the agency and its employees had purchased for them.

Horizon employees are also afforded myriad perks—many of which are unheard of at most companies—not to mention everyday use of its gorgeous office space. But at Horizon the extras go beyond happy hours or company sports teams or World Cup viewing parties.

At Horizon’s SoHo office it’s not uncommon to find Stephen Hall, Horizon’s chief marketing officer, in The Dunes—Horizon’s cavernous all-purpose space—interviewing guests like baker and Cronut inventor Dominique Ansel, or Upright Citizens Brigade comedy troupe co-founder Matt Besser. This past September renowned film director Robert Rodriguez stopped by for a talk as part of Horizon’s Hispanic Heritage Month event series.

MKT
In December Horizon will host MKT (pronounced “market”), inviting entrepreneurs to set up pop-up shops in The Dunes and sell their products and services. Businesses run by Horizon employees and their families and friends get first priority, after which vendors from the local small business community like Brooklyn Renegade, Union Square Holiday Market, The Market NYC, Scoutmob and Etsy populate the remaining spots at MKT.

You might be asking what a local marketplace of entrepreneurs selling their wares has to do with planning and buying media, i.e. Horizon’s area of expertise.

“Business is Personal is intangible,” says Hall, referring to Horizon’s company tagline. “You have to experience it to believe it.”

Hall points out that every media agency is constantly trying to differentiate itself from the competition to land its next big client. But an event like MKT, he says, “turns words into action.”

The idea for MKT came from Leena Danan, Horizon’s VP of business development. “We started MKT as a celebration of entrepreneurship on [Horizon’s] 25th anniversary.” December 2014 marks Horizon’s third MKT event in two years. “This year,” Danan says, “we had multiple referrals both internally and externally, so we are thrilled that employees and past participants are excited to see MKT succeed.”

Horizon Side Hustle
Several Horizon employees have used MKT to showcase their talents outside of their day job.

Meeting and events specialist Brandon Smith, who raps under the name SMTH (pronounced “Smith”), has performed his songs at several Horizon events, including MKT.

“The second I get out of work it’s just straight to the studio, or straight to a shoot,” says Smith. “Every free minute that I have, I just put it into my music.” The music videos for SMTH’s songs, “Ticket to the Moon” and “Last Straw,” have been featured on MTV.

Alex Pagano has really taken Business is Personal to heart, running events for Horizon during the day—including MKT—and running her own business, Look Sharp Events, by night. Pagano recently organized her company’s largest event yet for beer brand Stella Artois, the “Butcher, Baker, Belgian Beer Maker” series kick off in New York City.

Des’ Sweet Treats was founded by Desiree Walker and her daughter, Shayna, who works in human resources at Horizon. Desiree found baking therapeutic while undergoing chemotherapy for breast cancer. “I began playing around with a simple bread pudding recipe to create a variety of flavors,” she says. “My family and friends were my taste testers since my taste buds were off. … The rave reviews received were encouraging and many people began to suggest that I make baking more than a pastime.” Des’ Sweet Treats has attended every MKT event since it started.

External MKT-ers
Brooklyn-based TGT (pronounced “tight,” as in keeping it tight), founded by entrepreneur Jack Sutter, is one of the most exciting new entrants in this year’s MKT.

“I came up with the idea for TGT because I hated using a bi-fold [wallet]; it wasn’t the product for me,” says Sutter, who was at one point using a broccoli rubber band to carry his money. “I knew there was something better.

“I really had a need for this wallet and I kind of had a vision for what it could be,” says Sutter.

After producing some prototypes using scrap leather from a furniture store, Sutter took to Kickstarter—an online platform for crowdsourcing creative ventures—to fund production of his wallets on a larger scale. His funding goal was $20,000. He has raised $317,424 from more than 7,500 backers.

Sarah and Carlos Perla run Made with Nachos, a t-shirt company out of Brooklyn. The Perlas are design school grads who design all their own shirts, and hand-print them in their home studio. They shared the story behind their unique company name:

The name Made with Nachos came about one night when Sarah was cooking dinner. She asked Carlos if he could taste that “special ingredient.” Knowing she meant “love,” he responded with a wink and a smile “What…nachos?” and from that day forward they described things that made with love as Made with Nachos.

The Karako cousins, Michael, Sean and Daniel, are the founders of the reversible tie company Flip My Tie. The Karakos are the sons of the founders of Karako Suits, established 32 years ago in New York City, so men’s fashion is in their blood. They are participating in MKT for the first time.

Sean Karako says he was inspired to start a fashion line while watching ABC’s Shark Tank, the hit reality TV show where entrepreneurs pitch their ideas to big name (and big bank account) investors. “I saw all these entrepreneurs bringing great ideas and I thought to myself, our fathers have built such great relationships overseas that we should take advantage of it.”

Meanwhile another tie company is making its second MKT appearance. Davor Anic is a former TV producer in Europe with a master’s in fashion design and technology, who moved to the U.S. and started his own tie brand. Anic says he chose to specialize in ties because Croatia, where he’s from, is the “homeland of neckties.” (It’s true. I looked it up.)

It’s a great thing that a company like Horizon Media encourages entrepreneurship—not unlike the kind that Horizon itself was built on. But at the end of the day they still have a media agency to run.

“If everyone [quit Horizon and] did their own start-up we’d have a problem,” Hall jokes, “but we want to create an air of opportunity.

“MKT is like an open mic night,” he says. “If you’ve got some jokes or you can carry a tune, here’s a stage.”

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The Profit Follows Signs to South Carolina

Posted in Small Business, TV, tagged , , , on December 3, 2014| Leave a Comment »

This week’s episode of The Profit has Marcus Lemonis in Surfside Beach, South Carolina, helping ASL Sign Sales and Service. (Why do I have a hunch that the “S” stands for signs?)

ASL’s owner is Anthony Leggio, who you could probably guess from his accent has relocated to SC from Long Island. With a $200K loan from his dad, Louis, Anthony had the shop up and running. Revenue ($441K YTD) seems in pretty good shape, but Anthony, who I’m going to call Strong Island, is apparently very ambitious.

Strong Island is rocking some transition lenses with plastic black frames, a fade with spiked hair, tattoo sleeves and big arms, but is also thick through the mid-section. This has nothing to do with the episode, but it’s a very unique look.

ASL manufactures and sells any kind of sign you can think of. This is a big deal, Marcus says, because I guess most companies that sell signs have to get them manufactured by someone else.

Turns out, ASL is actually Anthony’s, I mean Strong Island’s, initials (middle name Sal because of course it is). But Anthony says ASL could also stand for “American Sign Legion,” which is pure gibberish, but I’m giving myself partial credit for that one. The logo, of course, is a cartoon version of Anthony himself.

It's about to go down... (Photo credit: cnbc.com.)

Just a coupla guys talkin’ about signs. (Photo credit: cnbc.com.)

Anthony’s non-Jersey Shore looking girlfriend Christina Christian (did I hear that right?) works at ASL for free and has no equity. I believe this is the way most Fortune 500 companies do it, so…

In Marcus’ little cartoon infographic he always does in every episode, he says ASL makes a sign for $45 and sells it for $450, so they’re basically printing money.

But Marcus has a wicked burn for ASL when it comes to their sales process: “1985 called and they want their sales process back.” OHHHHHHH SNAP. Don’t forget to tip your waitresses.

Despite his overbearing personality, Anthony is not aggressive enough when engaging a walk-in customer in Marcus’ view.

Marcus asks why Anthony why he called The Profit. If business is good, what does he need an investor for?Anthony is obsessed with growing business as quickly as possible. He reminds me of a young, Italian, tan, stocky Walter White. “I’m getting in the sign business,” Marcus says. “The question is, am I’m getting in the sign business with you.” Sort of a weird thing to say.

I just realized ASL also stands for American Sign Language. Why do I feel like Anthony has never heard of this?

Marcus says he’s not prepared to write a check today. He is putting the check book away.

Other people in the business, including Anthony’s dad (who BTW doesn’t have any equity, either) told Marcus that Anthony is a know-it-all. Also the shop is kind of messy as is the sales process, per the 1985 joke. But all in all the place is making money. It’s still not clear why Anthony would want to give away equity to Marcus for his help, which he doesn’t really seem to need.

Next, Marcus finds out that Anthony has been picking ugly, hard-to-read fonts for customers. Anthony is not a designer. He is also not a sales guy. The Bobs from Office Space and I are wondering, What would ya say…ya do here?

Josh, ASL’s head designer (for the sign company, not the sign language), and Anthony, give a customer conflicting estimates on how long it’ll take to refurbish his sign. Josh conservatively quotes him three weeks, but Anthony says they can bang it out in a week. (Okay, he didn’t say “bang it out,” but it seems like something he would say.) Marcus pulls Anthony aside and he seems to get it…or does he? Five seconds later (in TV time) he reprimands Josh in front of the customer for trying to quote the customer a cost.

Anthony reveals that he doesn’t need money but does want Marcus’ business–I guess making signs for Marcus’ hundreds of businesses? He says he wouldn’t be willing to do a deal with Marcus if Marcus didn’t throw a bunch of business his way.

Okay now a former customer of ASL’s finds out Marcus is in town and tells Marcus that Anthony–crap I was supposed to be calling him Strong Island this whole time–has a bad reputation in Surfside Beach and actually sued this guy. The guy says Anthony/Strong Island has a bad temper.

Later, Marcus walks into the shop and Anthony tells him, “Ya late!” IT’S ON. Only Marcus can call out tardiness on his show. There’s some yelling which is all macho-like, but no one throws a punch and both guys storm off in opposite directions. Lame.

Eventually things cool down and Anthony tells Marcus “I bent ova backwards for that son of a bitch,” re: the disgruntled customer he sued.

“Sometimes you gotta take a pile of poop and stick it in your mouth,” Marcus says, meaning you have to make customers happy even if they give you a hard time. I didn’t go to business school but I assume this poop thing is a common metaphor you learn in the better MBA programs.

With 17 minutes in the episode, Marcus says he’s walking out without doing a deal. I like when this happens, especially when Marcus says that lots of other small businesses can use investments and he’s not going to waste his time with the ones that don’t deserve his money. I couldn’t agree more.

“Marcus kicked me right in my f-ing a$$,” Anthony says through tears, ostensibly realizing the errors of his ways, i.e. trying to scam Marcus into investing in ASL a way to get sign business from him. It’s hard to take him seriously when he’s wearing a shirt with a cartoon of himself on it, but he sort of seems genuine.

Back from commercial and now we’re in…Los Angeles? Marcus is now revisiting a gourmet popcorn company called Planet Popcorn, which he walked away from in another episode of The Profit. Apparently after agreeing to invest, Marcus found issues with accounting and inventory. Also the owner, Sharla, seemed reluctant to make changes.

It kind of seems like Marcus feels bad for Sharla because after the episode aired she came out looking really bad, and she lost a huge account with Disneyland. That’s gotta hurt.

Marcus looks around and sees a more organized office and a more professional-looking Sharla (despite her dress’ plunging neckline) who knows her sh-stuff. But when Marcus asks her about the Disneyland account, Sharla says she doesn’t want to talk about, tears up, and goes into what appears to be a closet to hide. I mean I’m sure it still stings, but, like, get it together when the money man is standing in your office potentially ready to make you a deal.

Aaaaand she’s back. Despite losing Disney and apparently some other accounts and being humiliated on TV, she has picked herself up by her bootstraps (classic entrepreneur word!).

Now they’re sitting down talking business. She offers 20% of her business for $50K; he’s not having it. He’ll take 40% with a 50-cent per popcorn bag royalty, a la Shark Tank‘s Kevin O’Leary. The check book is coming out. Sweet redemption for Sharla and Planet Popcorn! Maybe Marcus will call ASL when Planet Popcorn needs a new sign! Maybe not.

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StartUp Podcast: The Prequel to Shark Tank?

Posted in Small Business, tagged , , , , , , , on November 16, 2014| 1 Comment »

I wasn’t a lemonade stand kind of kid.

Instead, when I was 8 or 9 years old I told my mom that when I grew up, I was going to own an entire fleet of ice cream trucks. Back then ice cream was the most valuable currency I dealt in. So, naturally, my dream job involved having unlimited access to it.

I would sit in an office above an ice cream distribution center—where the ice cream men went to fill up their trucks on in the summer—and do whatever one does in an office when one owns an entire fleet of ice cream trucks. (This was before the internet and even before computers were ubiquitous, so I imagined some sort of hopper for my papers and maybe even a paperweight.) And the best part, I told my mom, was that she could come visit me at work whenever she wanted and I’d give her free ice cream.

More than two decades later, shockingly, I do not own a fleet of ice cream trucks. I do not have an office above an ice cream distribution center. Hell, I barely even eat ice cream anymore. As best laid plans of third graders often go, this one sort of fell apart after I got really into Teenage Mutant Ninja Turtles.

For Alex Blumberg, the host, producer and subject of the new podcast StartUp, there’s a little more at stake than free ice cream.

Blumberg is best known for his work with public radio, including the program This American Life (producer) and podcast Planet Money (founder, co-host). But he recently quit both those gigs to start his own project: he’s starting his own media company which will focus on producing and distributing high-quality audio content via podcasts. Oh, and the best part–for us, anyway–is that he’s letting listeners in on the process. Here’s how Blumberg describes it on his website:

This show follows what happens next – my difficult journey from man to businessman. It’s a classic start-up story, but one that’s recorded in real time. I’ve documented disastrous pitches to investors, difficult conversations with my wife, and tense negotiations with my co-founder. The result is an honest, transparent account of something that happens all the time, but that we can rarely listen in on: starting a business.

StartUp is not a prescriptive how-to guide to starting a business from the ground up (this, despite several episode titles beginning with “How To”). It’s quite the opposite. It’s a show about a guy who knows very little about starting a business, and what happens along the way as he starts to figure it out.

The weekly series, which premiered on September 5, is just seven episodes in. So far Blumberg has taken us through a failed investor pitch, the process of taking on a business partner (after realizing he couldn’t do it alone), figuring out how to share equity with that business partner (a very cool insider’s look at emotional side of the process), assigning a value to a company that doesn’t make any money yet, and even picking a name for the company.

As I’ve written about previously on this blog, I’m big fan of ABC’s Shark Tank. On that hit reality show, entrepreneurs come to the sharks (i.e. potential investors) with a fully (or partially) formed companies asking for investments in exchange for shares of their businesses. Some entrepreneurs get deals, others are sent packing. On the show it all seems so simple.

StartUp is, in many ways, a prequel to Shark Tank.* As of episode #7 Blumberg’s company, Gimlet Media (for the origin of that name, check out episode #5), is still “pre-revenue.” On Shark Tank most pre-revenue business don’t get a deal unless the idea is very, very novel.

 *If StartUp is the prequel to Shark Tank, then shows like Hotel Impossible, Restaurant Impossible, and The Profit–all of which deal with businesses gone bad–are the sequels.

For those of us who have dreamed about owning their own business—for the record the ice cream thing is still on the table, though I haven’t figured out what I’d do all winter yet—and those who haven’t, StartUp gives listeners a fresh look into those steps between concept and actually taking those steps towards turning that concept into a living, breathing, (and hopefully) profitable thing.

The most interesting stuff for the listener tends to be that which is most gut-wrenching to Blumberg–from figuring out how much equity to give his partner (episode #3), to the constant self-doubt that comes with starting a business in your forties when you have a wife and two young children to consider every time you make a decision about anything.

In episode #2 Blumberg debriefs with his wife on the phone after an investor, Matt Mazzeo, in Los Angeles. Blumberg has been out to L.A. before, in episode #1, to meet with Mazzeo’s business partner, Chris Sacca. Mazzeo and Sacca are venture investors and business partners at Lowercase Capital. They have successfully invested in the technology space. After talking with Mazzeo, Blumberg is left with a pit in his stomach:

I’m feeling the same shitty way I’m feeling the last way I was out here. … It just makes me feel like I don’t know what I’m doing. … This is the thing: I’m sitting there talking to this guy and I’m describing something that feels like the biggest thing I’ve ever done, a scale beyond my wildest imaginings, something that I can’t even tell if I can pull off, and it’s totally not big enough. Like it seems small to him.

This is a really important insight, and one that I suspect a lot of startup business owners face when pitching investors. Especially in the tech space.

Can you or I invest in companies like Gimlet Media?
Episode #7 was about crowdfunding Gimlet Media. According to the episode, the 2012 Jumpstart Our Business Startups (JOBS) Act allowed for Americans to invest in private companies like Gimlet Media, which they were formerly not allowed to do. This means that through companies like Alphaworks, would-be investors could go online, find a company they wanted to give money to, and in exchange they’d receive equity in that company. (This is different than sites like Kickstarter, where you “donate” money but don’t receive any equity.) A Shark Tank for the Average Joe, right? Wrong.

Due to current Securities and Exchange Commission regulations, only “accredited investors,” i.e. those who make $200,000 a year and/or have a network worth of $1 million, may do so. (Alphaworks covers this in their FAQ.) If you’re an Above Average Joe, invest to your heart’s content. Otherwise you’re out of luck until the SEC loosens those regulations. Fortunately for Gimlet Media, they had enough friends in high places–in part thanks to attention the StartUp podcast has been getting–to get to their investment goal.

New episodes of StartUp are available about every two weeks. Whether you’re a future ice cream magnate or not, I recommend you give it a listen.

You find the StartUp podcast here: http://hearstartup.com/ – or you can use a podcasting app on your phone or tablet and search for StartUp. Happy listening.

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CNBC’s ‘The Profit’ Knows When to Walk Away (UPDATED with Larissa Swanson’s POV)

Posted in Small Business, TV, tagged , , , , , , on October 29, 2014| 31 Comments »

“You know, I do business on handshakes and I try to help people, and I do it to make money.”

That’s a quote from Marcus Lemonis, the star of CNBC’s hit show The Profit. Each week on the show Lemonis tries to help a failing business get back on its feet. Sound familiar? Well, it should (especially if you have read this blog).

Reality shows like Hotel lmpossible, Restaurant Impossible, and Bar Rescue feature industry experts visiting foundering businesses, addressing problems big and small, and within a week, transforming former money pits into profit machines.

But The Profit is a little different. Lemonis isn’t necessarily an expert the type of business, like hotels or restaurants, that he’s trying to rescue. He’s an expert in business. (For more on his background, check out his Wikipedia page.) His oft-repeated mantra is People, Process, Product. In each episode he examines all three and determines if the business has any hope for a turnaround.

And here’s the kicker: Lemonis isn’t just a hired gun, like Hotel’s Anthony Melchiorri or Restaurant’s Robert Irvine. Lemonis is putting up his own money, a la Shark Tank, to revive these businesses but also make a profit for himself. (The name of the show is just one big spoiler, isn’t it?)

Lemonis’ financial contribution is typically enough to pay off the business’s debt, plus some money for some upgrades to equipment that will have an impact on the bottom line. In exchange for his cash—it’s always such a baller move on when he whips out his checkbook and writes a million dollar check to a business owner—he asks for a large chunk of equity, often as high as 50%. He also requires full operational control of the business.

Like the “Impossible” shows, most of the time Lemonis business proposal and management style are met with some initial resistance from the owners, but eventually they realize that what’s good for him is what’s good for them. Happy ending, right?

Not quite. Sometimes, and this is much rarer on the various Impossibles, Lemonis can’t come to an agreement with the business, and he backs out. (While the check presentation is a big moment on the show, in reality I’m sure there are lawyers and accountants digging into the company’s financials and the owners’ credit histories to make sure the business isn’t a lemon.)

On the episode I caught last night, featuring Swanson’s Fish Market in Fairfield, Connecticut, Lemonis wrote the business a million dollar check to temporarily buy the building in which the market resides and clear up its debt, which he believed would be the pecuniary boost they needed to get back on track.

But as Lemonis (or his lawyers, off camera) dug deeper he discovered that the mortgage on the building was not, in fact, “in good shape” as the business co-owner Gary had said it was. It was in foreclosure.

Besides that, Lemonis couldn’t get past the fact that Gary owned a boat while some of his employees were covering the costs of the fish out of their own pockets. He also couldn’t get through to the other co-owner, Sue, about why her owning a BMW with $500 a month payments was sending the wrong message to her employees. Neither were willing to sell off their toys in order to take a little pressure off the business and, ya know, pay their frickin’ employees. (Unlike many struggling businesses I’ve seen on shows like this, these two had no guilt over paying themselves.) The icing on the cake was that when Lemonis came back a few weeks later to check in, he found out the owners were doing renovations on their home.

In the end Lemonis walked. There was no text at the end, like you’d see at the end of Hotel Impossible (“Occupancy is up 75% since Anthony’s visit. The hotel has plans to upgrade all rooms within the next six months.”) It was Lemonis’ quote (from the beginning of this post), and then the episode just kind of ends.

In a previous post I wondered why this didn’t happen more often, as it did in an episode of Hotel Impossible last season. If these people aren’t willing to do what it takes to run a successful business, why does the show still insist on helping them? I imagine there are so many American businesses doing things the right way (or at least what they believe is the right way) and still struggling. Why not help them instead?

(Here’s an idea for a show: when one small business is too stubborn or foolish to accept the free help of an expert—who, by the way, they called!—that expert goes across the street and helps their biggest rival. Or better yet, the expert starts his own business just to crush them. Too much? Watch the Hotel Impossible episode about the Thunderbird Motel–or read my post about it–and tell me those people deserve to stay in business.)

The only regrettable aspect of Lemonis walking away from Swanson’s was that the owners’ 24-year-old daughter, Larissa, was apparently working the hardest of any of them to keep the company afloat. She also seemed to be the only one who saw the value of Lemonis’ involvement and potential investment. Maybe somewhere in the near future she’ll open her own fish market and put her parents out of business? Or at least buy them out? After all, what better way to learn how to run a successful business than seeing first-hand all the ways not to run one?

***UPDATE*** I’m not sure about the sequence of events here but Larissa Swanson, the daughter of the owners of Swanson’s Fish Market, wrote a treatise on the company’s website in response to the way their episode of The Profit was edited and the deal that Lemonis ultimately walked away from. You can read the whole thing here, but the her key points are quoted or paraphrased below (with my own thoughts in italics).

  • “When we sat down for the deal they told us before hand that if he writes us a check, it is only for show purposes and we have to hand it right back.” That sounds about right.
  • “We also did not film for 4 weeks, the filming process started at the beginning of June and ended in September! We were strung along for 4 months. They don’t add that my mom had a contractor at the house painting bc we are fixing it up right now to SELL and put it on the market. We never even did a building deal with him, where he said he would buy It for one million. We did not see a penny for the entire 4 months.” This was not clear at all on the episode. In terms of timing Lemonis mentioned that he went back four weeks later, and that’s when he discovered the property was in foreclosure. More on that…
  • “On August 26th I was served papers by a sheriff on the building for kasowitz (the guy who did a mortgage for it)  I notified Marcus immediately via text..we were not aware that a foreclosure process even started. Our building is fine now and we are taking care of it. Our building also had a contractor Lien put on it 3 years ago and we had the lien removal paper but our mortgager never brought it to city hall to be taken care of and of course they never aired that either!” It’s starting to sound like a he said-she said thing, but ultimately if Swanson’s was even close to foreclosure Gary shouldn’t have said it was “in good shape.” Or was that creative editing, too?
  • “When the boat happened he moved it from the marina and put it in someone’s backyard before hurricane Sandy hit and the motors became ruined and it turned into a salvaged project. He bought that boat 15 years ago.” The fact remains that he’s apparently paying marina fees on a boat, but Marcus made it out to be a luxury yacht.
  • “Marcus even asked me to negotiate with people and had me promise to pay them the next day certified check and never even came through. Those people are so angry now that they are sueing us.” Um…
  • “They also didn’t add how my little brother has a serious mental illness that he was diagnosed with 3 years ago of schizophrenia and it’s so severe that we are constantly in and out of hospitals and have paid over 100k in medical,hospital,ambulance bills and medications.” The show easily could have gone the other way with this and played up this angle, a la Restaurant Impossible, but they chose to go in the direction of villainizing the Swansons instead.
  • Sue had three deaths in her family around the time of the taping, explaining her disconnected, erratic behavior.
  • “Halfway through filming [Sue] agreed to sell the BMW and we filmed a cute scene where we taped for sale signs on her car windows to show we would sacrifice for the deal but they didnt show that either of course.” It’s starting to sound like the producers made the call to cut this into one episode’s worth of content, even though they clearly needed more time to tell the story completely.
  • “I also wanted to touch base on our employees chipping in for product- that i agree was not right but it was a total of only two times and they got their money back right at the end of the day only because we had vendors who wanted cashiers checks in the morning for product and my mother or father were not there to get to the bank and there was not enough to cover it with cash in the register.” Again, they really played up this angle as if it was all the time. That said, it’s no way to run a business.
  • Larissa addresses the circumstances around the fires that destroyed their property and imputes them to a former employee with a drug problem. I’m not sure this is relevant except that it casts doubt for those who may have thought the Swansons may have set the fires themselves for the insurance money.
  • There are also some images on the site including Larissa’s text to Lemonis about the foreclosure and some other critical documents that the show glossed over.

So, what are we as fans of The Profit to make of all this? Well, we all know reality shows edit their footage in order to tell a succinct, compelling story in their allotted amount of time, usually about 44 minutes for an hour-long program. Some edits don’t matter as much, like the exact phrasing of a quote, but others can be specious, like some of what Larissa alleges above.

While I’ve enjoyed what I’ve seen of Lemonis and The Profit so far, at this point I’ll really need to take what he and the show are saying with a grain of salt. And I won’t be so quick to write a blog post that paints these small businesses featured on these shows in such a negative light, at least not until hearing both sides of the story.

As for you, I suggest you watch at your own risk.

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ABC’s Shark Tank & the ‘Swimming With Sharks’ Special

Posted in Small Business, TV, tagged , , , , , on May 21, 2014| 3 Comments »

I started watching ABC’s Shark Tank less than a year ago and since then, I haven’t been able to stop.

The concept of the show is simple: product inventors and/or owners of nascent businesses stand in front of five millionaires and billionaires–would-be investors in their business, or “sharks”–and pitch them on why they should invest their own money in exchange for part ownership (i.e. equity) in a company they’ve never heard of run by someone they’ve never met before.

Most of the presentations are what I’d call “professionally cheesy” (or “cheesily professional”?). They’re rehearsed little 30-second intros that tell the sharks the name of the company and tease what it does or makes, finishing with a flourish in the form of a catchy slogan often uttered in unison. (Jelly company Mango Mango went with, Are you ready for this jelly?) At some point during the little song and dance the entrepreneur(s) (or “treps,” for brevity’s sake) reveals what share of their company they’re selling and for how much equity, e.g. $50,000 in exchange for 20% equity in the company.

Depending on the product, there’s usually a short demo of how it works or what it does, after which the floor is open for sharks to pepper the treps with questions about manufacturing costs, margins, annual sales, their background, and anything else germane to a potential investment.

The better presentations–and the ones most likely to whet a shark’s appetite–are the ones where the treps A) know all the answers to the sharks’ questions and B) have good answers. By good answers I mean the company is profitable, the margins are high (i.e. the product sells for a high price but costs very little to make), and sales have increased year over year.

(One pet peeve of mine related to the Q&A portion is that almost every trep’s answer starts with, “So,” as in, “How much do you make it for and how much do you sell it for?” “So…right now it costs about $5 a unit to produce and we sell it at retail for $9.99.” I know it’s just a stall word in a nerve-wracking situation to let them gather their response, but they do it every time!)

Where was I? I blacked out. Ah yes, the sharks. Each has their own distinct business background (click the links in each shark’s name to learn more), personality, area(s) of expertise, and investment strategy. Episodes features five sharks from a rotation of six. The sharks, far more than the treps, make the show what it is. For the uninitiated, the sharks are:

  • Mark Cuban. The moral compass of the show. Usually very supportive and free with advice even if he doesn’t make a deal with the trep. Calls out his fellow investors for bad deals that don’t favor the trep. Occasionally calls out treps (2:20 mark) whose products/companies he deems specious, irresponsible, or who are on the show for free advertising and not actually seeking a partnership. (Cuban also forced Shark Tank‘s production company to change its policy re: taking 5% of all businesses that appear on the show, regardless of whether a shark chooses to invest his/her own money. What a guy.)
  • Kevin “Mr. Wonderful” O’Leary: Shark Tank’s answer to Simon Cowell and the show’s constant reminder that it’s not a charity—it’s about making money. On almost every episode Kevin will eschew equity and request a royalty deal where he recoups his investment upfront by taking a cut of every unit sold until he’s paid back in full, then taking a smaller royalty for each unit sold “in perpetuity”—meaning FOR-EV-ER.
  • Robert Herjavec: The nice family guy—but don’t jerk him around or he’ll say things like, “I’m a very nice guy, but don’t mistake my kindness for weakness.” Also loves kids and dogs.
  • Lori Greiner: A Chicagoan (listen to the accent) and big player in the QVC world—which is the driver behind most of her deals, as in “This will sell very well on QVC.” (Incidentally, I had no idea QVC was such a huge moneymaker but based on the size of some of the checks she writes, it’s doing a-OK.)
  • Barbara Corcoran: The wacky older woman on the panel–wacky like a fox, that is–also with ties to QVC.
  • Daymond John: Tends not to stray too far from his forte, fashion. Will regularly mention that he started out selling hats on the street (he founded FUBU).

Any time I talk about Shark Tank (which is often) to someone and they’ve actually seen the show, the response is almost always “You watch it, too? I LOVE Shark Tank!”

On May 2 ABC aired a behind-the-scenes special, “Swimming With Sharks” (click the link to view the special) that gave fans a look at the sharks when the camera wasn’t rolling, and some dirt about some of the show’s biggest deals (and non-deals)—as well as some of the stinkers. Below is a recap of each company update:

  • Breathometer ($50): A device that plugs into smartphones and works with a mobile app to perform a self-Breathalyzer test. Per the special, Breathometer expects $10 to 12 million in sales in 2014.
  • Lollacup ($15): A children’s drinking cup with a weighted straw that allows kids to drink even when the cup is not right side up. Profits from Lollacup netted the trep couple who started the company with their $1M dream home.
  • Simple Sugars ($22): All-natural sugar scrubs. Was doing $88,000/year in sales pre-Shark Tank, finished 2013 with $2.1M in sales.
  • Bubba’s Boneless Ribs: A patented process for removing the bones from ribs (without losing the essence of the rib, of course). $200K in first ten days after appearing on Shark Tank.
  • PRO-NRG ($2): A Brandon Jacobs-backed energy drink eventually repackaged as a protein water–after Daymond’s investment and intervention. Per its founder, they’re over $1.5M in sales. During their presentation Mr. Wonderful repeatedly referred to the company as “Pro Nerg.”
  • Stella Valle: A jewerly line made by two female U.S. veterans. $2.5M in sales post-Shark Tank ($50K before).
  • Tipsy Elves ($60): Intentionally ugly Christmas sweaters. No sales figures given.
  • Grace & Lace ($20-36): Lacy women’s socks designed to be seen partially while wearing boots. No sales figures given.
  • Tree T-Pee ($6-7): A mini tent designed to put around trees keep in water from sprinklers to save water. After appearing on the show the trep scored a deal with Home Depot.
  • Voyage Air Guitar ($429): A guitar that folds in half. Working with Kevin, the trep licensed his product to Fender. No sales figures given. Despite their business partnership, the trep and Kevin seem to genuinely dislike each other.
  • Wicked Good Cupcakes ($8): Cupcakes in a jar. Kevin’s royalty deal of 45 cents for every cupcake sold paid off. They’re selling $265K/month.
  • Toygaroo ($40/month): “The Netflix for toys,” lost $200K and went out of business in six weeks. Per Mark, Kevin and the trep had different visions and that caused the company to go under.
  • Copa Di Vino ($3): The trep rejected the sharks on two separate episodes. Mark called him a “gold digger” who was only on the show for the PR. The $300K investment the treo was seeking at the time of his second appearance would have been work $3M today. Now doing $25M in revenue. Trep has a private jet, apparently. Good for him.
  • ReadeREST ($9): A ridiculously simple magnetic hook on which to hang reading or sunglasses. $8.2M in sales so far.
  • Scrub Daddy ($7): A scratch-free scrubbing sponge. The most lucrative trep in Shark Tank history is expected to finish 2014 with $16M in annual sales, and is projected by shark investor Lori to do $30M next year. Within the first hour of their episode airing, Scrub Daddy had 30 to 40K website hits.

Some other thoughts from the special:

  • Mark, according to Robert, is worth more than the rest of the sharks combined ($2.6 billion per Forbes), which I didn’t realize. I’d imagine in some cases, though not all, this gives him an advantage when negotiating against the others.
  • “We are the Mick Jaggers of the business world,” according to Robert. Um…
  • Mark mentioned that it was a family show and people come up to him and say their 9-year-old daughter is obsessed with valuation. Adorable.
  • “Buying a nicer car isn’t as powerful as taking care of my children,” says Robert. He’s so quotable!
  • Interestingly in the “shark on shark” interviews the two female sharks said Mr. Wonderful was a teddy bear, while the guys called him a jerk (excluding Mark Cuban, who wasn’t interviewed, probably because they actually hate each other in real life).
  • We can certainly debate the “realness” of Shark Tank, the vibe I got from all the shark interviews is that it’s genuinely competitive and that none of them wants to be bested by the others. And while this might be viewed as a bunch of rich men and women gambling with these treps’ companies like they’re at a high stakes poker table, the treps stand to gain the most if one of the sharks bets big on them.

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