I just watched last Friday’s episode of Shark Tank. If you don’t already know, it’s the hit Friday night show on ABC that allows entrepreneurs to pitch five venture capitalists for funding in exchange for equity of their business.
Sidenote: I feel like this season of Shark Tank, they have been especially selective of who receives funding and/or the entrepreneurs are setup for failure by not coming prepared with solid metrics or signs of major growth.
Enter Garrett Gee from Scan.me, a mobile application that offers scanning of QR Codes and their service does what hundreds of other free apps do — price comparison, website traffic, links to social media profiles, etc. In pool sandals, jeans and a hoodie, he casually asked for one million dollars for five percent equity in his business.
He proceeded to give the standard dog-and-pony show for the merits of QR Codes. You know, the barcodes that the early and late majority do not yet know how to use (or have pains surrounding them).
When pressed for business metrics, he pretentiously grabbed his iPad and said, “Oh look, there are over 50 million downloads.” Even the sharks rolled their eyes a bit. 50 million downloads is amazing, but it’s not a business — certainly not a business that will scale at 10X.
Mr. Wonderful, Kevin O’Leary, was unimpressed. He asked about revenue and Gee did some great deflection. He claimed that thousands of businesses are using QR Codes to drive sales. But he had no evidence or specifics to demonstrate that.
Mark Cuban was too kind. Of all the sharks, he gets technology fads, trends and is a no-bullshit kind of investor. Instead of spilling blood in the studio, he offered poignant advice — and arguably one of his best forms of feedback I’ve seen on the show:
MARK CUBAN: I’m a big fan of the sensor business. I think that’s the future of technology. The fundamental problem I have is scans versus sensors. In a sensor-driven world, the information is accumulated and gathered everywhere with no action by the user. Whereas, in your world, whether it’s Google Glass where you have to talk, or where have to take your phone and scan, in a sensor-driven world, these [QR codes] don’t exist. For that reason, I’m out.
So, next time you have a hit software application that requires effort of users to get value, using an open-source technology, leading with user acquisitions, not customer acquisitions and aren’t profitable, expect to be eaten by the sharks. And don’t expect to impress anyone by acting like Zuckerberg with jeans, sandals and a hoodie when asking for a million dollars. That’s not creative; that’s disrespectful and pretentious.
Maybe one day I’ll eat my words. Maybe one day, the app will crank up advertisements and “monetize” by CPM deals made with ‘partners.’ I don’t know, but this isn’t a sustainable business.
It’s a technology. There’s a difference.