Robert Herjavec has good news and bad news for small business owners.
"This is the best time in history to start a small business," he says. "It's also the most competitive."
As a former small-business owner, Herjavec knows that standing out from the competition is one of the greatest challenges that come with building a brand. To show his support for entrepreneurs during Small Business Week, the Shark Tank co-host and cybersecurity expert has helped release a series of online documentaries and photo essays about 100 promising small businesses around the U.S. The project was produced by a group of acclaimed filmmakers and photojournalists in partnership with check-printing company Deluxe.
Inc. sat down with Herjavec recently while he was in New York promoting the project to talk about his outlook for business and his hit show Shark Tank.
What's the hardest thing you've had to tell one of your entrepreneurs about their business?
That they're wrong and they're in trouble. When you're caught up in the moment, it's very difficult to step back and see the problems. Sometimes the best thing any of us on Shark Tank do for these businesses is give them brutally honest advice.
What's your best advice for entrepreneurs on how to convince a Shark to invest in a startup?
If you can't sell yourself, you're never going to be able to sell anything else. When I went on Dancing With the Stars, I asked my partner, Kim, about the first way she can tell that somebody can't dance. I thought she would say it's their feet or something like that, but she said it's that they can't sell the performance. It's the same in business.
You've said that you're more of an operator than an investor, whereas Mark Cuban is a pure investor. Does having different investment philosophies create any conflicts when you partner with the other Sharks?
What we've all figured out is everybody has their own strengths and everybody has their own weaknesses. We argue, we fight, we partner, and we get along. We're like a big family.
Your Christmas sweater company, Tipsy Elves, has grown from $600,000 in sales upon appearing on Shark Tank to roughly $7 million last year. Is that your favorite Shark Tank investment?
So far, yes. I've got some other ones that are very promising, but this one combines a great product, great sales, and great entrepreneurs. It's always fun for me when I like the people I invest in.
Do you have a most regrettable investment?
I'm happy to say that I haven't had any go to zero. I have some that are on life support, but not at zero yet.
You sometimes tell entrepreneurs that their companies are too young to invest in. When's the perfect time to pitch your business on Shark Tank?
When you need the capital. The purpose of getting outside investment is to pour kerosene on a fire. Outside capital has to give you scale, because equity is the most expensive form of debt. Before you get outside investment, get a loan or use a credit card.
Who have been your mentors when it comes to building and investing in companies?
One of my good friends is Asheem Chandna, a senior partner at Greylock Partners. I'm very good at seeing what the future of technology is going to look like in three to four years, but he has the ability see what it's going to look like in five to seven years. It doesn't seem like a big difference, but he has the ability to invest way ahead of the curve, and I admire that. I also used to work for Warren Avis, the guy who started Avis Rent-a-Car. He said to me, "Your only payback as an entrepreneur is the equity. Hang on to as much of it as you can for as long as you can."
When you look at the U.S. economy, what's one of the biggest problems that you think needs to be solved to help drive growth?
I think that we have a real problem in this country with student debt. The size of student debt right now is bigger than the housing crisis of 2008. How's that going to go?
Do you think private company valuations are too high? Do you see any bubbles?
You've always got San Francisco and Silicon Valley valuations, which seem nuts, but I'm actually very bullish on the U.S. economy. We're seeing people adding jobs and we're seeing economies of scale.
What would Shark Tank fans be surprised to learn about what happens behind-the-scenes during the show?
When the cameras aren't rolling, we actually do a lot of dancing. We partner up, we put on some music, some mood lighting, and we dance.