1 UNDERSTANDING THE POWER OF CHOICE

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The Shark Tank panelists. From left to right: Mark Cuban, Daymond John, Barbara Corcoran, Kevin O’Leary, Lori Greiner, and Robert Herjavec.

ENTREPRENEUR’S DILEMMA Any entrepreneur with a potential idea faces a lot of uncertainty as they get started. Normally, working out the details for a cost-benefit analysis of this idea is practically impossible, but just picking and starting with the first plan that comes to mind is risky. At the start, entrepreneurs must choose between taking time to learn more and deciding when to take action.

CHAPTER OBJECTIVES

• Discover why entrepreneurs need to balance learning and action
• Understand that there is always a trade-off between costly learning and keeping options open
• Identify why experienced mentors can help guide entrepreneurs in their choices
• Recognize the need for a systematic process to use in making choices

Who is your favorite Shark? As the most popular television show about entrepreneurship, Shark Tank features six widely celebrated entrepreneurs. Moreover, each Shark has achieved success in their own unique way. Daymond John (second from the left) had to learn how to sew as he launched FUBU (“For Us, By Us”), ultimately turning a $40 budget to design clothes for his friends into a multibillion-dollar clothing brand popular throughout the world. In the late 1990s, Mark Cuban (on the left) recognized the value created by making a wide range of traditional broadcast radio stations available through the early Internet, grew this idea to produce Broadcast.com, and sold it to Yahoo! for $4.5 billion in 1999. Barbara Corcoran (third from the left) built the Corcoran Group not through a single “aha” moment but by forming a loyal, high-quality team that established itself as the leading brokerage firm in high-end New York residential real estate.

In fact, an important aspect of the show is that each Shark brings a different approach or path to entrepreneurship. Each of these distinctive paths is reflected in the type of start-ups that Sharks are attracted to and the advice that they offer. Lori Greiner (the “Queen of QVC,” pictured second from the right) often leads discussions with executives of branded consumer products (e.g., Scrub Daddy, a line of unique non-scratch sponges) that can benefit from her experience in identifying the best sales channels and forging valuable partnerships. In contrast, Kevin “Mr. Wonderful” O’Leary (third from the right) is best known for offering blunt assessments of whether a given business can truly be scalable and how entrepreneurs can leverage their limited capital to achieve growth.

Behind the debates between the Sharks lies perhaps the most fundamental question facing an entrepreneur: how can an entrepreneur form, pursue, and turn their idea into a reality? Tackling this question is the central purpose of this book. At first glance, this might seem like a simple question. If, for every idea for a new venture, there is only a single entrepreneurial path to pursue, then the central challenge facing an entrepreneur is whether to pursue that path or not. However, for most (if not all) entrepreneurial ideas, there will be multiple potential paths forward. For example, on their show, the Sharks often give different advice about how to best move forward with a given venture. While Shark Robert Herjavec (at the far right on p. 4) might advocate that an entrepreneur pursues cooperative partnerships with existing players, Kevin O’Leary seems more likely to suggest that entrepreneurs compete head-on against them.

FIGURE 1.1 Choosing Your Path

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Two Shark Tank entrepreneurs embrace Barbara Corcoran. A display in the background, staffed by two people dressed in cactus costumes, showcases the product, Priklee Cactus Water.

These differences are not simply “mistakes” made by one Shark or another. They reflect the fact that for any new business idea, there are likely to be multiple paths to translate that idea into reality. Entrepreneurs should move beyond trying to figure out which one of these paths is “right” or “wrong” and instead think more strategically, asking important questions about the possibilities. If there are multiple paths you can follow, before choosing one, what can you learn about each approach and how can you experiment with them to see which you should choose? What experiments should entrepreneurs choose when they have limited resources? And what should entrepreneurs do when, even after learning and early experiments, they have more than one viable option? Ultimately, we see entrepreneurs on Shark Tank choose the path that best aligns with their passions and resources (Figure 1.1).¹ For the rest of this chapter, we will discuss how this is not a unique experience to a TV show, but a fundamental strategy centered around choices that every new entrepreneur can and should take.