What Shark Tank investor Daymond John looks for in a business pitch | Big Think
I get asked all the time what do I look for in a great pitch. Influence is the first thing, and somebody may say, “You mean influence? Well, how do you create influence for this pitch? Do you think it becomes stage one and then stage two?” No, influence is if you happen to be in an elevator with me, and you didn't know you were gonna meet Daymond John.
You have 90 seconds, and you pitch me. You're going to have to be able to tell me something fairly quickly, how it's of interest to me, and how you have done well with it, and leave a card for me to look into you later on. I'm gonna go immediately to one of your social media accounts, and that's where I'm going to either see if influence was planted over the years or not.
What do you believe in? Who are you around? What are your causes? I will either look there and say, “I don't want this type of person in my life, and I'll never call you back,” or I'll look there and say, “I've been looking for this the rest of my entire life. This is a problem-solving person that believes in the things that I believe in, and whether I work with this person or not, they're gonna be a success no matter what.” So I got to find that person.
In regards to pitching people, it's not transactional at the moment. You almost never get anywhere in the initial pitch. People believe that this was a walk-away like Shark Tank with $500,000 or a million dollars. We do our due diligence when those people weigh after eighty percent of those deals close, and it takes anywhere from six to nine months to close.
But did you create influence, and then how was the negotiation when you were talking to me? Did you listen to what I wanted, or did you sit there and tell me your problems? Remember the old saying: don't tell people your problems. Twenty percent of people don’t care; the other 80% are really happy that you have them. So make sure that throughout the negotiation you're communicating like your face has one mouth and two ears.
That means you talk once and you listen twice, because the things that I'm saying at the table, if you keep cutting me off or assuming, you're never gonna hear it. The most important things through communication, when people are negotiating, are in the last couple of words that they're saying. Remember, they're coming down this rabbit hole all the way to land right here, and a lot of people aren't letting them land.
Are you making sure that you’re helping me solve the problem by asking, “How do I make this easier for you? What are your obstacles? Where do you see this going?” That’s the importance of negotiation. It's not a one-transaction thing, and it's all about what's in it for the other person on the other side of the table.
Various other things I look for in a pitch: I look for, first of all, confidence. I look for the fact that the person has gone down the road, has failed a couple of times, but they actually learned and then repeated. They still have passion about this project, and they know all the other things they don’t need to do.
I look at the person themselves—will they be a problem solver or a problem creator? So whether you're pitching me to come work in my office or you're pitching me to have a business with you, can I stand sitting next to you for eight hours a day, five days a week for the next five years of my life?
The reality is we want people around us who are going to be problem solvers—Swiss Army knives. They're specialists here, but they also jump on the team, and they're gonna add other value to your life. So that even if this business fails, we're gonna do another business together, and those are the type of people.
They're also listening and they know how to transfer power to other people on the team, and they're very, very open. They've done their homework, and they say to me, “Listen, Mr. John, I want to do this business with you, but I realized that you don't want t-shirts anymore because you have ten brands of t-shirts. You want other things, and I've done this research, and this is how it affects your portfolio.”
Because when you go and sell to a department store, you'll take more real estate instead of just a t-shirt area. “I have these electronics; you're already a vendor of record. You can take more real estate in there, and it adds to my portfolio because that person did their homework.”
They showed how they can make more value to me, and in return, because I'm a vendor of record and I have manufacturing capabilities and I know the buyers, I can add more value to them. Guess what? We'll both add more value to each other because hopefully, we'll have a good business and make a lot of money.
Let me tell you about a pitch in the tank that blew my socks off. These guys come in; the company's name is Bomba Socks. They're doing only eight hundred thousand dollars a year in business, but every pair of socks that they sell, they give away another pair to the homeless, because the homeless have a big challenge in getting socks for their feet.
Normally, I don't want to do any other apparel business because I already have ten clothing brands, and eight of them are dead. So the last thing I want is apparel. But the guys sell me on various different things. Number one, Mrs. Jean, are you aware that we are a social cause brand, and we are also growing at the same time? But you're going to be helping people.
Are you aware that we have a new way to design and manufacture socks? Seamless! Are you aware that we sell directly to our consumer and we don't need retail? I'm sitting here going, “Wait a minute! I usually give at the end of the year, but now every single time somebody buys, I can give, and I'm gonna hit more people! They’re gonna show me how to manufacture socks better. They’re gonna show me how to talk directly to my customer with my other brands because now I won't be dependent on retail.”
They’re the number one brand that was ever invested in on Shark Tank, doing about 250 million dollars a year. They've given over 30 million pairs of socks away. They've trained me and showed me another way to do business, and they are great guys. We made money, and that's a perfect example of a power shift.