For an entrepreneur who needs money, is the chance to make a televised pitch on ABC’s Shark Tank a good idea? Not if you ask Scott Jordan, the entrepreneur who famously sparred on the air with Mark Cuban in March of 2012. The founder of popular tech-enabled travel clothing company SCOTTEVEST pitched an investment in TEC-Technology Enabled Clothing®, which holds the patent for the integrated wiring system SCOTTEVEST’s clothing employs. As millions watched, Jordan refused the Shark’s offers for $1M that would have extended the TEC brand and licensed its patent to other clothing makers as well.
Two years later, Jordan’s infamous quote, “I’m out of here. I don’t need you,” plays on highlight reels while his spat with Cuban continues on Twitter.
For the visibility he gained, the experience was worth it, Jordan maintains. He also takes pleasure in social media’s ability to “level the playing field” between an entrepreneur like himself and a “billionaire bully” (his description of Cuban).
However, Jordan’s advice to other prospective entrants is this: “If you need money, go to your bank, go to your family, to the angel community or even alternative lenders. Don’t pin your hope for success on the show. I see too many entrepreneurs thinking the chance to pitch for funding on Shark Tank is akin to a lottery win.”
So what happened in Jordan’s experience to inspire this advice?
Like many entrepreneurs, Jordan had entered the show thinking it would be a chance to help his thriving company (SCOTTEVEST) gain additional visibility and fuel further growth. (It was initially SCOTTEVEST–not TEC–he’d submitted. He’d been interested in the possibility of a deal with Daymond John due to his background in the clothing industry with FUBU.)
The process went smoothly through two rounds of selection, but came to an abrupt halt several weeks later when the Shark Tank contract arrived. On page 42 was a clause he hadn’t expected: Prospective candidates were required to give 5 percent equity in featured ventures to Mark Burnett Productions, the owner of Shark Tank, regardless of whether the company received an offer of funding or not. The other shoe had dropped, after a significant investment of time and excitement about the chance to pitch on the show.
Thankfully, current participants report the 5 percent stipulation is no longer required. For Jordan, however, the clause he found at the end of the contract effectively killed the possibility of a workable deal for a company on track to achieve $20MM in sales. Surrendering 5 percent in perpetuity whether or not there’d be a deal or an offer for funding was not a viable choice.
But rather than withdraw, Jordan got creative and devised a new pitch: His patent-holding company TEC could get the chance it was deserving at last, as a license opportunity for other major clothing manufacturers. TEC’s success as a standalone would be worth the 5 percent stipulation, and SCOTTEVEST could experience some peripheral awareness as well. It could be a good deal all around.
The shift was fine with producers, but only with the strict stipulation that if Jordan were to promote SCOTTEVEST at any time during filming–even if the mention were cut– SCOTTEVEST would be subject to the 5 percent stipulation together with TEC. A slip of the tongue would be a million dollar mistake for Jordan, even if the gaffe didn’t appear on the air. He went forward.
The Sharks, of course, have no information about participants or deals before filming. As cameras rolled they quickly realized Jordan’s “retail company” (unnamed) was the primary source of TEC’s revenue. The forbidden fruit became the thing they wanted most. Drama built quickly as the Sharks honed in on the company Jordan didn’t want to relinquish and couldn’t reveal.
Adding to the frenzy, Cuban denied the validity of the TEC patent at all. “This is a dumb-ass patent,” he said. “You can’t patent clothing.”
By now the presentation had hit a full-on impasse. With opportunities for a good deal dwindling, Jordan took matters into his own hands, resulting in the pointed finger and the famous quote: “I don’t need you!” and Robert Herjavec’s response, “Show a little more respect.”
As he left the taping, Jordan heard words from Daymond John he remembers with pride, “We were playing you, but you were playing us, too. It was brilliant.” In the spirit of television, Cuban admitted on a podcast afterward, “It was my mission to make him cry.” Reality TV at its best.
Two years later, how has the show affected SCOTTEVEST’s business?
“We were told to anticipate a giant bump in our business,” Jordan says. He purchased $3 million in inventory in anticipation. The bump never came (admittedly the fact that he couldn’t mention “SCOTTEVEST” didn’t help).
Several of the Sharks approached Jordan after the show with distribution offers, but as the confrontation continued, relationships have proceeded downhill. Jordan resents accusations he entered the show as a publicity stunt, and that nondisclosure prevents him from going as far as he’d like in setting it straight.
“On the whole, it was a good opportunity,” he says. He’s still a fan of the show as an avenue for education and entertainment. But as a golden lottery ticket for entrepreneurs seeking funding? Not so much.
“You have to remember, always, this is television,” Jordan concludes. “Don’t ever forget it’s the producers who control the results you see on TV.”
Meanwhile, SCOTTEVEST grew 209 percent from 2010-2013 and ranks in the Top 100 for consumer products according to Inc. 500/5000. Jordan continues to mix it up with Cuban as he crusades for enforceable patents on wearable tech. He’s still irascible. And he’s still smiling (or is it smirking?) all the way to the bank. (You can see his own take on the Shark Tank experience here.)