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Comment by skizm | Hacker News Reader

I believe there was a point when Shark Tank would take some amount of equity from every business that came on the show regardless of if one of the sharks invested or not. Cuban called BS and said he wouldn't be on the show if that was the case. The policy was removed as a result.

Smart move too, since you will probably get better companies on the show without that sort of policy.

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I too had a lot of respect for Cuban regarding this.

Article from Inc:

Mark Cuban Made Shark Tank Change Its Contracts After threatening not to return until an equity clause was removed from contestants' contracts, Mark Cuban finally got his way.

Just for appearing on the show, owners agree to give up 5% of their company or 2% of future royalties.

...

Cuban said the clause was removed retroactively, meaning every contestant who's appeared on the show since Season One will be relieved of the commitment. However, how that will work out logistically remains unclear.

https://www.inc.com/will-yakowicz/mark-cuban-forces-shark-ta...

I love when "medical" products with incredible claims show upon Shark Tank because Cuban usually shreds the owner's claims in about 2 seconds. He doesn't seem to tolerate grifters very well.

This venture seems like a shot across the bow of anyone trying to squeeze an unfair percentage on top of generic drugs. Kudos to Cuban for launching this but it is something the US government should have been doing decades ago through drug price negotiation for medicare.

Yes. I can confirm this is exactly what happened (roommate almost went on the show, pre-Cuban. though I'm sure theres a lot more to the story that insiders would know).

Curious: does the show take equity IF the sharks invest? I haven't really seen the show beyond a few episodes.

No. The negotiations are real, and while there is a follow-up due diligence to close (or not) the deal, that is it. Note that anywhere from 1/3 to 2/3 of deals fall through in the due diligence phase, depending on the shark.

The first season, before they brought on Marc Cuban, the show took a percentage just for appearing on the show (so even if you didn't get a deal, you still gave up equity). The second season, Marc Cuban came on and insisted they remove that rule.

https://www.forbes.com/sites/emilycanal/2016/10/21/about-72-...

https://www.cheatsheet.com/entertainment/do-the-deals-on-sha...

I have attended a few presentations where Phil Dumas, founder of UniKey, described his experience winning an investment on Shark Tank. He explained that there were many unattractive terms in the agreement he received after the recording that made him ultimately decline the investment. My takeaway was that it doesn't matter what happens on the show, the real offer is more complicated.

(I have never seen the show, so I don't know how the offers are described. As an investor, I cannot imagine any offer that can be made verbally in the timespan of a television episode being meaningful.)

It's meaningful in getting future guests/contestants to be willing to appear on the show. If all of the sharks only ever said no, nobody would want to go on the show. They have to at least make the audience think deals are happening to keep an audience. After that, if the deal actually completes or not are not relavent to the producers of the show. They just need to line up the next round of chum to bring out in front of the sharks.

I have never seen the show, so I don't know how the offers are described.

Usually it's just one of the sharks offering something like "I'll pump in $500k for a 20% stake." (numbers made up) No details beyond that.

The shows are edited for time. Each negotiation, which airs for about ~10 minutes on the show, takes an average of 2 hours to shoot (with a surprisingly wide variance).

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