Editor’s note: This article is part of a series that looks at the impact of Shark Tank on the entrepreneurs and businesses that have appeared on the show.
When it comes to appearing on Shark Tank, sometimes the risk--of failing to get a deal; of being sneered at by Mr. Wonderful in front of millions of viewers--is worth the plunge.
Going on ABC’s hit show, which starts its 10th season on October 7, doesn’t guarantee you a deal with a celebrity investor. But it almost always guarantees a bump in revenue--one that until now has been a bit of a mystery.
After nine seasons on the air, Shark Tank has touched hundreds of companies in industries ranging from food to toilet gadgets, and Inc. set out to quantify the Shark Tank bump. This exclusive analysis uses historical revenue data from more than 250 companies appearing on the show--starting from the year the startup was launched to projections for 2018--regardless of whether a deal was accepted, a company has been profitable, or the founding structure of a company has changed since it appeared on the show.
As it turns out, in most cases, a company’s revenue increased the year after it appeared on Shark Tank, occasionally doubling or tripling--and, in some cases, doing even better than that.
“The two months following Shark Tank, we had a huge lift in our business and established a new floor of revenue,” says Randy Goldberg, co-founder of the New York City-based e-commerce sock business Bombas, which struck a deal with Daymond John during season 6. Bombas's revenue soared by 250 percent the year after its Shark Tank appearance, and it has continued to climb--it’s projected to grow by nearly 2,600 percent this year.
Alice Rossiter Lewis suggests the bump can be even longer lasting. In season 9, she pitched her Boston-based company, Alice’s Table, an online platform that provides women with tools necessary to launch their own flower-arranging businesses. In exchange for 10 percent of her business, she landed a cool $250,000 from Mark Cuban and guest Shark Sara Blakely. “It’s been incredible for us and has had long-term effects on the business,” says Rossiter Lewis. “The show has name recognition and saying we got a deal has allowed us to grow the business in a dramatic way.”
Goldberg and Rossiter Lewis are hardly alone. Of the 149 companies that shared complete revenue data with Inc.--many anonymously--101 saw an increase in revenue the year after their turn on Shark Tank. Twenty-two of those businesses said their revenue had doubled, and 44 said it had tripled.
Even Losers Win
It’s worth underscoring that a Shark Tank bump doesn’t hinge on striking a deal with a Shark. Many entrepreneurs walk out of the Tank without a handshake agreement, or see their deals fall through after the due diligence process, and still experience large increases in revenue. To cite one example, a women’s dress retail business from season 4 walked out of the Tank empty-handed--and still saw an 800 percent increase in revenue the year after.
And not all Shark Tank bumps last. Some of the companies Inc. spoke with reported seeing huge growth spikes after being on the show only to watch them contract just as quickly. Another retail business--one from season 7--saw a 1,400 percent increase in revenue the year after it appeared on Shark Tank. It dropped 600 percent from that peak the following year.
Even Bombas's Goldberg cited a sales drop after an initial bump. “Traffic spiked around the show and went back down, but never went back down to previous levels,” he says.
It is, of course, impossible to be absolutely sure what caused these companies’ revenue spikes. But Inc.'s data strongly suggests that entrepreneurs who’ve appeared on the show have seen marked revenue upticks as a result. And companies spotlighted in later seasons have seen higher returns than those in earlier episodes, presumably thanks to the show’s increasing popularity over time.
For example, a consumer organizing business from season 1 saw a 100 percent increase in annual revenue the year after its episode aired, while a beauty startup from season 9--the most recent season--saw its revenue increase by 375 percent the year after its appearance on the show.
And the Shark Tank bump doesn’t just happen once. Entrepreneurs regularly refer to the frequent reruns of the show on CNBC as “the gift that keeps on giving.”
Julie Goldman, the founder of the Original Runner Company, which makes and sells custom aisle runners for weddings, says her episode has re-aired at least 40 times since its debut in 2011. After each rerun, she has experienced a small boost in interest from customers. By now, she doesn't need to check the schedule to know her episode has been replayed. She can tell based on the increased volume of consumer inquiries.
It’s unclear if ABC is aware of the Shark Tank bump or of the effects a lack of preparation might have on companies. The network failed to respond to a request for comment in time for publication.
How to Win and Lose
Goldman believes her Shark Tank appearance greatly benefited her company. But she was quick to stress that she was prepared for sales surge she’d receive. (Her company’s annual revenue increased 30 percent the year after her episode debuted.)
“You should go on it if your business is prepared--it’s an asset,” Goldman advises. “It’s one of the best things I did for my company.”
Indeed, Shark Tank's roster is filled with companies that were not prepared for the surge. Matt Reed pitched the Sharks his Portland, Oregon-based beehive-making business Bee Thinking in April 2015. He didn’t get a deal, but shortly after the episode aired, his company partnered with Flow Hive, an Australian startup, to make beehives that can be tapped for honey, much as maple trees can be tapped to make syrup. Bee Thinking’s revenue jumped to $5.8 million in 2016, from a little more than $1 million in 2014.
However, the surge in orders--both from Flow Hive and Shark Tank fans--along with manufacturing woes led to the demise of the startup in April 2017. Despite the huge spikes in sales and interest, Reed couldn't produce hives fast enough to keep up with customer demand.
“It was the hardest thing accepting it was over--it was my life’s work,” says Reed. “We sold over $12 million in products and went on Shark Tank, and still failed.”