If there’s one cliche that Shark Tank entrepreneur Daymond John hates to hear during a startup pitch contest, it’s the fuzzy math of how big an industry is. “I constantly hear that the app market is a $50 billion market or that the dog food market is a $50 billion market,” John tells SUCCESS. “Almost every market in the world is a billion-dollar market. Avoid saying ‘It’s a $50 billion market and if we only get 1 percent this is how much our business is worth.’” It doesn’t quite work that way.
John will hear dozens of startup pitches at the Miller Lite Tap the Future live pitch contests being held in Dallas, Atlanta, Los Angeles, Miami and Philadelphia. Twenty-five teams of friends-turned-entrepreneurs compete live for a chance to win $200,000 at the Chicago final competition. SUCCESS Associate Editor Jennifer Chang was among the panel of judges for the Dallas event.
Daymond John spoke to SUCCESS in advance of the competition to share his do’s and don’ts of an entrepreneur pitch.
SUCCESS: What are one or two of the most common mistakes you see an entrepreneur commit when opening his or her pitch? Same question for closing the pitch—what “infraction” do you see most?
DJ: I feel that one of the biggest mistakes an entrepreneur makes when opening a pitch is starting off by telling their problems. I don’t mean in regard to a solution, like saying “Hey, I was doing this and I thought there’s got to be a better way.” I’m talking more about entrepreneurs saying “Hey, I need this money because I spent all the money that I had already, my dog just died and I haven’t eaten in three days.” Coming in with baggage is one of the biggest problems.
The next biggest thing would be when somebody makes up a bunch of hypothetical assumptions and/or guesses on the market or the business when someone else sitting across the table could actually know the facts. You have the liberty to make your own opinion, but not your own facts.
In terms of closing remarks, the biggest problem is when an entrepreneur hides certain facts and tries to circumvent the big elephant in the room. For example, if a company has a significant drop in sales for one year, address what happened. Be forthright and don't force a potential investor to ask. It's always best to volunteer info and take responsibility.
Also, be sure to follow up with “I’ll be glad to take any questions” or “I’m open to change, but I want to work with you.” When people only say what they need, you already feel like the person is hard-headed because they didn’t have an invite in their closing.
SUCCESS: Which do you feel is more important to a winning pitch—the opening or the closing? Which is more indicative of a stronger pitch?
DJ: The opening indicates a stronger pitch because if you don’t grab their attention at the beginning, then you won’t have the audience’s attention in the closing.
SUCCESS: If you could coach contestants right before they go on stage, with a few words to bring out their best, what would you say?
DJ: No. 1: Be very passionate in the pitch because energy is contagious. No. 2: Be yourself. Talk about your flaws and talk about your strengths. Don’t go out there thinking that people expect you to be perfect. Nobody believes somebody who is too good or too perfect. I’m probably the only person that is perfect in the world, but that’s about it. [John says laughing.]
SUCCESS: Why is the art of the pitch so important for startup entrepreneurs?
DJ: The art of the pitch is important for anybody, no matter what. There are no new ideas ever in the world. The idea is only as good as you convey it to other people. We are very visual learners and we love to take in information and stories with energy, and the pitch is culminating everything collectively at one time—from the information of the company, to the selling of you as an individual and the need for this “thing” that you’re pitching in the market.
SUCCESS: What do you hope to hear from this year’s lineup of Miller Lite Tap the Future contestants’ live pitches?
DJ: I would love to hear why and how there is a need for their product or service in the world. I would also like to hear about their challenges on how they got to this level and what they had to overcome in business or in their personal life (to a lesser extent) to show their grip for wanting success. I want to know realistic projections on how their company, product or concept will grow, be monetized and will benefit not only the individuals running the company, but the group of people surrounding them: the team, investors, vendors and consumers.