Interview with a Shark: Barbara Corcoran Lays Down 6 Rules for Entrepreneurs
Barbara Corcoran is a busy woman. When she’s not selling her company for $70 million, grilling entrepreneurs on the hit TV show “Shark Tank,” or appearing on the TODAY Show with the latest real estate tips, she’s writing her latest book. And when she’s not putting pen to paper, she’s going through a full day schedule of interviews with media and bloggers like me.
I interviewed her Wednesday to get some tips for entrepreneurs; I got those, but I also came away impressed by a woman with sound advice for success in both business and life.
Barbara’s own incredible success started with a $1,000 loan, which she parlayed into a five-billion-dollar real estate business that sold in 2001 for nearly $70 million. She could be sitting on the beach somewhere instead of talking to guys like me, and running around building her other businesses.
The reason she’s working so hard? It may boil down to:
“I’m trying to make those people as rich as I can. To actually see businesses grow and bloom in front of you, that’s the fun part,” she said.
Sure, she likes money. But she genuinely wants to help others reach similar success.
We chatted a bit about a new ski home her family bought at Deer Valley in Park City, Utah. Then we went into the meat of the interview. Here are six highlights that discuss branding, entrepreneur hurdles, when to get business loans vs. VC or angel funding, and advice for women entrepreneurs:
1. Aside from a good product, what’s the most important factor that determines whether you’ll fund a startup?
“The entrepreneur himself,” she said. “It’s not intelligence, either. I’ve bought into some people who I wouldn’t want to give the founders an IQ test.
“The single most important thing is equally real passion, the ability to communicate well and to sell the idea on their feet. ‘Shark Tank’ is a great test under fire. You can’t fake passion, except with me and my husband in bed,” she said laughing.
On “Shark Tank” (if you haven’t seen it, watch it Friday nights on ABC), business owners come in and pitch their ideas to a panel of investors, similar to our own CrowdPitch events.
Appearance is also something she says business owners must pay attention to. She credits a lot of her own success to buying an expensive coat with her first commission check.
“You certainly have to look the part,” she said.
In a recent episode of “Shark Tank,” a man pitched his beef jerky business. The product was good, but his appearance turned Corcoran off immediately.
“He was wearing a stained apron; I was like ‘forget it.’ The fact that he couldn’t buy a new apron before coming on national TV was mindboggling to me. I immediately had so many negative interpretations.”
She said he wasn’t the kind of business owner that would have the right energy, that’s trustworthy and thankful – traits that she talks about in her new book “Shark Tales.”
2. When should someone apply for a business loan versus approaching VCs or angels?
“Always a business loan first. The business loan always answers the need,” she said.
When Corcoran was struggling early in her real estate business, she became desperate and nearly sold 85 percent of her business for $50,000. She would have sold it, but the investor changed his mind at the last minute.
“Four years later I sold it for $66 million,” Corcoran said. “In my desperation I was willing to sell 85 percent of my business. You really don’t know the riches in your hand at a bad hour. You can’t trust your judgment.”
Corcoran started with a loan of $1,000 and bootstrapped her business to what it became. Her advice is to only approach VCs or angels when you are ready to turn your company into a national brand and you need really deep pockets to do it.
“The bank is going to charge you interest, but they’re not going to take a bite of equity,” she said. “Thank God that guy changed his mind. I met him seven or eight years ago, and he said ‘What was I thinking?’ This guy had money to burn. It would have been a gross mistake for me.”
3. What is the biggest hurdle entrepreneurs need to overcome?
“Negative self-talk is the biggest hurdle. When you are having a bad patch and you are thinking you have nowhere to turn, you feel kind of like you are in the Loneliest Club. You hit many bad patches, and at one point I was really wondering if I could stay in practice.”
She talks about this in her new book, including advice she got from her mom. When she hit this low point, she said her mom “slapped me in the head over the phone.”
“My mom said, ‘You’re not worrying about money are you? What a waste of time!’ and I stopped worrying about money.”
That “negative self-involvement” is typical not only for entrepreneurs, she says, but for people in general. Her cure?
“I try to think of someone I can thank and I’ll do something like drop flowers for someone,” Corcoran sad. “It’s the best switch in the world. You’re all wrapped up in yourself and then you help someone else. They love it and you feel kind and lovely.”
4. What industry(s) are you sick of hearing pitches for?
“Every restaurant pitch that I hear from every cabbie in New York City. The Last thing I want to hear is ‘My brother and I want to open up a restaurant …'”
The two main products pitched to her on “Shark Tank” are barbecue and golf related. Some of the products include a small refrigerator that you can attach to a golf cart so you can bring extra beer, and golf balls that float in the water.
“I can’t stand golf,” she said. “So the minute they’re talking about golf, I’m out.”
5. Why is the right brand crucial for success?
In the last episode of Shark Tank (see above video), a guy pitched the “Broccoli Wad,” a band that can hold cash and replace a wallet. Corcoran hated the idea at first, until the idea evolved into renaming it the “Vinny Wad” and having celebrity Vinny Pastore as the face of the company. She then struck a deal to invest in the company.
“The right branding is 75 percent of it. Even if their business plan makes no sense,” she said.
Interestingly, Corcoran told me they never took her money.
“They bowed out. Vinny wanted to do it, but the owner just wanted prime time TV.”
She says about two businesses every year come on the show just for prime TV.
“I’m getting better at spotting it now,” she said “But I’m reborn as a sucker every season. One of the businesses from last year tripled their price after the show. Sharks swim both ways.”
6. What advice do you have for women entrepreneurs?
“The majority of new businesses are started by women. It can be more satisfying for women to start a business because they have so much more on their plate, which I know men might argue. Women are still doing 80% of the work at home, and there’s not enough time and they don’t have enough control of their time.
“What a better way to take control of their destiny and time than to be the boss. Entrepreneurship doesn’t mean you won’t work your ass off, but it means you can do it on your own terms. You can move your life a whole mile if you take control of your own destiny.
“I decided when exactly I wanted to work, and people walked around my drum. That will not happen by working for corporate America, or even mid-sized businesses. It can only happen by starting your own business where you’re in charge.”