Getting Caught in the Shark Tank May Stunt Your Success
Shark Tank has transformed modern American Entrepreneurship, but the core principle of the show has created a potentially insidious result on the way we think about business. The effect is built into the premise of the show: budding entrepreneurs pitch their ideas to five of the most prolific venture capitalists in the U.S. with hopes of landing an investment from a "Shark" whose backing can launch their business into the stratosphere. There is nothing inherently negative about the concept. In fact, I have watched every episode, and have even used it as a teaching tool for entrepreneurship classes. However, today I was reading Seth Godin's book, This is Marketing, and his idea of “smallest viable market” resonated deeply in my soul. I suddenly realized a mindset presented in “the Tank” held my business back and I didn’t even know it was happening.
In the Tank, ideas that appeal to a national audience are the bait to the Sharks. Since they are investing a significant amount of money, they naturally want a high return on their cash, and the most feasible way is a product that appeals to the masses. Likewise, many entrepreneurs trying to bait the Sharks have products which benefit from volume. This is core to a traditional business model, which is highly effective and makes intuitive sense.
The overly simplified traditional model breakdown:
1. Build a product that has substantial margins and a compelling value proposition
2. Ensure it sells to a massive pool of consumers
3. Market it well and watch your profits grow
This model works, which is why most businesses use it, including many found on Shark Tank. Often, great products won't receive a deal from the Sharks because they are too niche and don't have a large enough market. Remember, though, the reason being that the return on the Shark's capital might not be as high. The stakes are high in the tank for them too, after all.
I was stuck here in my personal business experience. I tried to make products that would appeal and apply to everyone. Then Godin challenged my line of thinking.
One of the intriguing aspects of Godin's model is a path to stay small and intentional for your market, resulting in high returns and happy customers. The Smallest Viable Market embodies the effectiveness of delivering a tailored, world-class experience to your target market, which Godin says will prove a few things:
The audience is more significant than you initially think
If the experience is positive, people will tell their friends
Your product will sell, your service will be valued, and your business will grow
The goal main becomes creating positive experiences: consumers bite the bait and become raving fans because the product is designed specifically for them. Delivering a high impact experience to your target market leads to financial gains and intentionally designed services, which are arguably invaluable.
I would contend, in agreement with Godin, that almost any business will benefit by focusing on your smallest viable market. Start by considering what your consumer wants, needs, expects, and desires. This refines your goal so you can then focus on delivering a life-changing product, experience, and service to your refined niche. Once you are consistently dependable at providing your service, the market will demand that you grow in scale. Shark Tank is successful for obvious reasons, but the traditional, mass-scale business model isn't always the smartest route.
The hardest step in the process is understanding where to start.
How can Godin's philosophy strengthen your business?
The biggest contrast between Shark Tank's appeal and Godin's challenge is the difference in selling a product to everyone and selling a product specifically designed for people who care deeply. This is an essential factor to distinguish: serve a niche clientele who raves about your product instead of finding a mass audience who simply doesn’t care as much.
We should always start with the end in mind, but our focus in the process should always be in the ripple we create in the present. It's ok to start small. It's ok to focus on a small group of customers who deeply resonate with your product. If you deliver what you promise, that small group will help tell the world for you and you will grow. Being content in starting with the smallest viable market takes a lot of courage, and courageous idease often lead to reaching your big goals.