After 11 seasons on the hit show Shark Tank, celebrity investor Robert Herjavec says within seconds of an entrepreneur approaching him to make a pitch, typically he's already formed an opinion. Herjavec is that confident in his ability to judge a founder's character from body language.
And yet, he wants all the entrepreneurs out there to remember one thing: He could be dead wrong.
"Yes, we are the smartest five business people in the land," he says, referring to his fellow Sharks. "But a rejection from us [or any investor] doesn't mean anything. As Mark Cuban says, 'You can be wrong a thousand times; you just have to be right one time.'"
Herjavec made the remarks in front of a live audience at the Small Biz Challenge, an event hosted by Inc. magazine and The UPS Store on July 25 in Los Angeles. During the event, he put three small-business owners through a series of five challenges designed to test their business know-how in topics such as sales, marketing, and budgeting for a potential grand prize of up to $25,000 in cash. The contestants included Kate Beever, founder of Falmouth, Maine-based music therapy business Maine Music and Health; Samia Bingham, founder of Flavors Culinary Group, a co-working space for food entrepreneurs in Prince George's County, Maryland; and Bryan Traficante, co-founder of Garden in Minutes, his family's gardening bed company based in Orlando. As Herjavec judged their performances, he also dispensed wisdom he's learned as both an entrepreneur and investor.
In one exercise designed to test their customer service chops, the contestants had 30 seconds each to respond to two hypothetical situations involving positive and negative customer feedback in a Yelp review and in a tweet. The entrepreneurs visibly struggled to type their responses as the clock counted down--and only Beever managed to write responses without typos, making her the winner of that $3,000 challenge.
"Typos are really bad," Herjavec warned. "And I always thank someone for their business--they're helping put food on my kids' table."
In another hypothetical scenario, the contestants had 30 seconds each to choose the three most effective marketing tactics to reach customers for both a plumbing business and hybrid car business. Beever again won the challenge--and $7,000--largely because she emphasized the importance of search engine optimization to zero in on the right kind of customer.
"The most common mistake in marketing is the shotgun approach," said Herjavec. "You need to take a sniper rifle approach: Before you decide to market, decide whom to market to."
While each contestant picked up cash for winning specific challenges, the overall winner of the night was Bingham with $14,000. In addition to winning a $5,000 budgeting scenario, she picked up $9,000 during the final, and most difficult, challenge: Without viewing the slide deck ahead of time, the contestants had to devise a pitch for a hypothetical product in real time as a series of slides flashed on the screen in front of the audience. Calm and collected, Bingham gave a two-minute pitch for an illness-detecting health care wristband.
"Samia didn't have a single 'um' in that pitch, and she added humor and inflection," Herjavec said before crowning her the winner.
Bingham has experience dealing with the unexpected in her business. After years of running her own consulting firm doing government subcontracting, she decided to open a co-working space for entrepreneurs in Landover, Maryland. She quickly noticed that the majority of the members using the space happened to work in the food industry and they all faced similar challenges--they needed a work space where they could both prepare food and handle administrative tasks for their startups. So she pivoted and invested $40,000 (plus an additional $10,000 from an investor) to renovate a new space to include kitchens, private offices, a podcasting studio, a corner for delivery services, and dedicated room for pop-up restaurants. Flavors Culinary Group, which Bingham refers to as "the WeWork of kitchen spaces," is slated to open in February 2020.
She already knows exactly what she's going to do with the $14,000 in prize money she won: "We need cooking equipment!"
Aside from the financial boost, the most important moment for Bingham was when Herjavec reminded the entrepreneurs and the audience that rejection doesn't matter.
"As entrepreneurs, we tend to hold on to who will validate the business. But we start a business because we see a need," she said. "So don't let someone you meet for a 10-minute pitch decide if you should continue on with the business."
Herjavec will head to New York City to judge the next Small Biz Challenge, on August 15.