Potential Investor: "I loved your pitch, and I think your business model is great, but in going over your projected financials, I see you're planning on taking a $4,000/mo salary from day one. Don't you think you should have a little more skin in the game?"
Entrepreneur: "At my last consulting gig, I was making $8,000/mo before I left to start this company. I haven't been taking any salary for the last two months while I built a prototype, so I would certainly say I've got skin in the game. At the same time, this business is going to sustain a lot more than just one $4,000/mo salary - if you don't think it can, then you shouldn't invest in the first place"
There was a Shark Tank a few months back of a guy starting a "design your own shoes" clothing company -- When Mark Cuban asked him what salary he could comfortably live with, the guy said "I guess I could be comfortable with anything over six figures"
Of course Cuban then said he was out, stating he wanted the kid to be sweating on a mac 'n cheese diet in order to ensure he was working his ass off as opposed to living the "LA lifestyle." Was a pretty interesting conversation, because the kid was currently turning a decent profit already and claimed he had already done the blood sweat and tears thing.
I saw it. That shoe guy is exactly the kind of guy you should fund. He wasn't saying he demanded a high lifestyle income they were asking what he was working for and then they pretend like he was expecting that now.
The whole show is really quite hilarious. I think it gives people the wrong impression though.
The sharks pass if a company is profitable and the owner wants a fair valuation. The sharks pass if the company has no traction yet.
What the sharks really bite on is profitable companies (or high potential companies) where they can get a controlling stake for cheap, or a minority stake for super cheap.
He did say that he wanted a 6 figure salary to "live the L.A. life", and he repeated that statement more than once.
I like the show but agree with a lot of your points, my understanding is that these pitches are more than an hour so we only get to see the "juicy" parts.
Agreed -- while I absolutely love watching the show, there have been very few times when I have felt the entrepreneur has gotten a great deal from the sharks.
Entrepreneur: "At my last consulting gig, I was making $8,000/mo before I left to start this company. I haven't been taking any salary for the last two months while I built a prototype, so I would certainly say I've got skin in the game. At the same time, this business is going to sustain a lot more than just one $4,000/mo salary - if you don't think it can, then you shouldn't invest in the first place"