Here's Why You Shouldn't Always Take The First Offer On 'Shark Tank'
When a husband and wife team walked into the tank on the most recent episode of ABC's reality pitch show "Shark Tank," the investors didn't seem too interested in Rick and Melissa Hinnant's lace sock business.
That was until the Hinnants announced that their company Grace and Lace had made $800,000 in 2012 and $1.25 million in the past 12 months.
With high profit margins and no money so far spent on advertising, the investors were suddenly quite interested.
The pitch got intense, however, when investor Robert Herjavec offered the Hinnants exactly what they wanted — $175,000 for 10% equity in their company. The catch: Herjavec wanted them to accept or decline the offer immediately, before hearing how the other Sharks might counter.
"I don't think it's fair to me ... I'd like an answer now," said Herjavec. "I've given you exactly what you're asking for. I'm a very nice guy, but don't mistake my kindness for weakness."
Would the entrepreneurs jump on a great offer or get greedy, hoping a better one might come along?
That's when investor Kevin O'Leary warned the Hinnants about the "bone in mouth" disease: when a dog looks into a pond, sees his reflection, and drops the bone he has for the reflection of the bone in the pond. The result is that the dog loses the only bone he has.
Indeed, the Hinnants hesitated and ended up losing the offer from Herjavec, but they had their eye on investor Barbara Corcoran from the beginning. Ultimately, they survived the "bone in mouth" disease and struck the deal they wanted with Corcoran.
- What It's Like Working With The Meanest Investor On 'Shark Tank'
- 13 Scientific Reasons To Drink Coffee
- Here's The Ominous Demographics Chart That Shows What China Will Become In Less Than 2 Decades